Mortgage System Still Leads to Unnecessary Foreclosures

by San Antonio Attorney

There are a number of problems in the way the United States banks and lenders process the mortgage payments, according to a report issued by the Consumer Financial Protection Bureau (CFPB) on Wednesday.

The agency’s oversight power covers all of the major mortgage lenders in the country, and also modest specialty operators.

CFPB Director Richard Cordray wrote in a statement that the report documented failures of the entire industry.

The CFPB report pointed out problems in standard activities, like haphazard transfer of accounts between banks and flaws in dealing with property loans on which homeowners had difficulty paying. One company did not inform homeowners when the address to which the payments should be sent was changed. Some lenders charged borrowers fees for default that should be paid by investors who had purchased the loans. There are even mortgage companies that had troubles paying from escrow accounts.

A large number of problems were in connection with loss mitigation, which involves attempts by mortgage lenders to help delinquent customers remain in their homes. Examples of these are efforts to curtail bank losses and avoid foreclosures when homeowners find it difficult to make the payments. Messed up loss mitigation can result in foreclosures, and this has caused trouble for banks ever since the 2008 financial meltdown. The agency’s report stated sporadic fees and interest rates, lengthy review time periods and lacking documents as major problems, as well as incomplete and unorganized files.

These issues have been repeatedly lamented by homeowners for a long time before the 2012 settlement deal, which should have ended poor mortgage handling, like borrowers being kicked out by one wing of their lender after another wing had recklessly carried out their paperwork. The CFPB cautioned that paperwork problems could still lead to unnecessary foreclosures.

Regulators have directed mortgage companies to pay their customers whose homes were unfairly foreclosed on.


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