Complaints Surging, Modifications Decreasing As Loan Servicers Snap Up Mortgages From Banks – Consumerist

 

(RAWRS)

(RAWRS)

It’s been a rough few years for homeowners. Since the collapse of a housing bubble in 2008, mortgage-holders have been yanked around every which way by the banks that own their loans. Mega-banks like Wells Fargo and Bank of America have earned their reputations for being impenetrable, hostile bureaucracies to their customers. The industry has done everything from issuing loans that borrowers had no chance of repaying, to “losing” paperwork that distressed borrowers endlessly resend, to foreclosing on borrowers who have actually paid, and even discriminating based on race and gender.

But it’s not just the banks making life harder for homeowners anymore. Loan servicers are buying up more mortgages every day, and borrowers are plagued with just as many problems from these third-party companies as they have been from the big banks.

 

As the New York Times reports, loan servicing companies now own about 17% of the mortgages in the country. While that may not sound like a huge number, these servicing companies held only 3% of mortgages in 2010. That’s an enormous change in a very few years.

 

It’s also a change that’s proving difficult for consumers that need help. It’s hard enough for a borrower to request and receive a loan modification from a big bank; getting one from a servicer, when your loan keeps being handed off among them, can be even harder. By the time you finally have someone agreeing you’ve sent the right paperwork, you might have to do it all over again with yet another company.

 

Borrowers with two huge servicing companies, Ocwen and Nationstar, have particularly low chances of seeing a modification approved for their mortgages. While Bank of America has approved roughly 44% of modifications since 2009, the NYT says, Ocwen has approved just 23% and Nationstar, 22%.

 

Meanwhile, complaints against the servicing companies have been increasing. One couple who won a modification from BoA told the Times that it vanished into thin air when Nationstar took over managing their mortgage a few months later. Another homeowner described to the NYT her experience being bounced among three servicers in less than two years: “I either get conflicting answers or no answer at all.”

 

In January, the Consumer Financial Protection Bureau announced new rules requiring mortgage servicers to provide actual service to customers in need. The deputy director of the CFPB, Steve Antonakes, said at a conference on Wednesday that he was “deeply disappointed by the lack of progress the mortgage servicing industry has made” in helping consumers.

 

“There will be no more shell games where the first servicer says the transfer ended all of its responsibility to consumers and the second servicer says it got a data dump missing critical documents,” Antonakes added, saying that situations where servicers refused to honor loan modifications “would not be tolerated,” and that loan handoffs should be “seamless” for consumers.

 

Rep. Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, has also urged regulators to extend greater oversight over mortgage servicers.

 

Loan Complaints By Homeowners Rise Once More [New York Times]
Official ‘Deeply Disappointed’ by Mortgage Servicing Problems [Wall Street Journal]

 

Housing Scorecard: Nearly 6 Million Fewer Underwater as Prices Hit 2005 Levels

Jan 13 2014, 10:49AM

Rising home prices are continuing to drive down the number of homeowners who are underwater according to the December Housing Scorecard published by the Departments of Treasury and Housing and Urban Development (HUD).  HUD Associate Deputy Assistant Secretary for Economic Affairs Edward J. Szymanoski said, “Since the beginning of 2012, the number of homeowners underwater has declined by 5.7 million and homeowners’ equity has risen by 55 percent to $9.7 trillion.”  Homeowners’ equity jumped $418 billion, or 4.5 percent, to $9.669 trillion in the third quarter of 2013, returning to a level slightly higher than at the end of 2003.

As of October 2013, the Federal Housing Finance Agency (FHFA) purchase-only index rose 8.2 percent from last year and ticked up 0.5 percent (seasonally adjusted) from September, showing that home values are now on par with prices in early 2005. The S&P/Case-Shiller 20-City Home Price Index for October posted returns of 13.6 percent over the past 12 months and was up 0.2 percent (not seasonally adjusted) over September, indicating that home values are at the same level as in mid-2004.

The Scorecard notes there is much good news to report but the overall recovery remains fragile.  Szymanoski said there remains more work to do to address the 6.4 million homeowners who remain underwater; “Nevertheless, these are encouraging signs that the housing market recovery is providing millions of American homeowners with more economic security.”

The Scorecard is a monthly recap of housing data from sources such as FHFA and S&P Case-Shiller as well as RealtyTrac, the National Associations of Home Builders and Realtors®, and the Census Bureau, most of which has been previously reported by MND.  It also contains by reference the monthly record of the Making Home Affordable (MHA) Program and nearly half dozen initiatives operating under that umbrella.

The MHA report this month contains data through November 2013 and this month spotlights the Second Lien Modification Program (2MP).  That program was expanded in September and now, when a borrower’s first lien is modified under the GSE Standard Modification requirements (which applies to loans owned or guaranteed by Fannie Mae or Freddie Mac) and the first lien satisfies the Home Affordable Modification Program (HAMP) eligibility criteria, the 2MP servicer must offer to modify or extinguish the borrower’s second lien under 2MP.

The report says that more than 123,000 second lien modifications have now been completed through 2MP and homeowners with an active permanent 2MP modification save a median of $153 per month on their second mortgage and a median total of  $784 on first and second mortgages, 41 percent of the pre-modification payment.  Homeowners who receive a full extinguishment of their second lien receive a median total first and second lien monthly payment reduction of $1,047, or 53 percent of their before-modification payment.

MHA says the various programs it operates, HAMP, 2MP, Home Affordable Foreclosure Alternatives (HAFA) and the UP Forbearance Program, have assisted 1.9 million homeowners since they were initiated in 2009 and later.  Of these, 1.3 million were modifications done through HAMP.  Since the last HAMP report there have been 22,814 permanent first lien modifications initiated and a total of 35,869 assisted through all MHA programs except its . Principle Reduction Activity (PRA).   That program has eliminated $10,124,838,950 in outstanding principal and another $2.5 billion in principle has been reduced outside of PRA.  GSE loans are not eligible for principle reduction.