REFinBlog

June 25, 2013

National Mortgage Settlement: Not Too Compliant

1. Bank failed to offer loan modification/loss mitigation opportunity.
2. Bank failed to provide single point of contact.
3. Bank failed to make a determination on the borrower’s loan modification no later than 30 days after receiving the complete application.
4. Bank foreclosed while a loan modification/loss mitigation was pending.
5. Single point of contact failed to carry out responsibilities of working with borrower on loan modification/loss mitigation activities.
6. Bank failed to notify borrower of any known deficiency in initial submission of information no later than 5 days of receipt.
7. Bank failed to communicate with borrower’s authorized representatives.
8. Bank failed to keep the same single point of contact assigned until all the borrower’s needs were met.
9. Bank failed to provide one or more direct means of communication with the single point of contact.
10. Bank failed to acknowledge receipt of first lien loan modification application within 3 business days. (8)

I assume that the servicers are not willfully flouting the settlement because of the negative publicity they would receive for doing so as well as the millions of dollars of fines that they could thereby accrue. So these complaints must reflect some kind of systemic incompetence.  Servicers must either continue to be dramatically under-resourced to handle their work or they are bloated bureaucracies that cannot consistently disseminate key information internally or externally. Taking just the most extreme example, it is shocking (if true) that in 2013 banks are still foreclosing while loan modifications are pending with homeowners.

The Monitor, Joseph A. Smith, Jr., concludes, “It is clear to me that the servicers have additional work to do both in their efforts to fully comply with the NMS and to regain their customers’ trust. There continue to be issues with the loan modification process, single point of contact, and customer records.” (9) Amen to that.