TELLING YOUR BORROWERS WHAT TO LOOK FOR ON THEIR SERVICING STATEMENTS MAY ENDEAR THEM TO YOU AND IN FACT CREATE MORE BUSINESS
For starters, as of Jan. 31, there were 187,818 complaints filed with the Consumer Financial Protection Bureau. When you complain to the CFPB (which you can do through its’ on-line website at http://www.consumerfinance.gov/complaint/) the CFPB will send investigators into the office of the mortgage servicing firms to check their accounts for evidence of unfair and deceptive practices. In doing so, they have found some of the following:
1. Abuses in mandatory cancellations of private mortgage insurance premiums. Federal law with some exceptions requires a servicer to stop collecting insurance premiums one the principal balance on a mortgage reaches 78% of the original value of the property. However, some servicers do not follow the law here. In one case according to the CFPB, a servicer invented a requirement that premium payments could only be canceled if a loan was more than two years old! There is no such requirement in federal law. In some cases servicers did not return excess mortgage insurance payments to the borrower within the 45 days required by federal law.
2. Bi-weekly mortgages. Some payments were not really treated as bi-weekly. In some cases servicers charged a fee to set up bi-weekly payments. This is where the borrower makes payments every two weeks to pay off the mortgage earlier and thereby save thousands of dollars in interest over the term of the loan. CFPB investigators found evidence that one company it did not identify marketed deceptive biweekly payment programs to its mortgage customers. However the finding was the servicer instead “submitted payments monthly and retained the extra money” in its own accounts until the end of the year when it made an extra monthly payment. The net result is the borrower received a lesser benefit than promised.
3. Credit bureau reporting. The servicers have a legal obligation to correctly report the payment status of the loans to the credit bureaus. Investigators found that in some cases servicers misreported mortgages where payments had been modified by lenders as foreclosures instead of as modifications. They also reported some short sales (where the lender takes less than the balance in satisfaction of the loan) as foreclosures. This causes a large hit on the borrower’s credit scores. (You as a borrower can fight this by asking the credit bureau to change it and the bureau checks with the entity that recorded it first. If there is no change complain to the servicer and CFPB on line and you may get it done.)
4. Transfer of loans from one servicer to another. CFPB investigators found that some servicers mistreated customers whose loans had modified payment terms. Instead of honoring the modification terms, servicers insisted on independently determining that the lower payments were offered “properly,” either on a trial basis or permanently by the previous servicer thus creating delays and paperwork to torment borrowers. (lat2914pb9)
File your complaint on line with the CFPB at the link I have shown above. If enough of you complain about the same servicer, you are sure to create an investigation. On-line is easy. Remember the old proverb: “Grease the squeaky wheel first?”
ECOA UPDATED SO THAT IN HOUSE VALUATIONS FOR HOMES MUST ALSO BE GIVEN TO THE CONSUMERS
The Equal Credit Opportunity Act has been revised effective Jan. 18 to read: “A creditor shall provide an applicant a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling.
Previously, the phrase “other valuations” was not included in the language of section 1002.14(a); but the inclusion of “other valuations” clearly means that even in-house valuations must be provided to the applicant as required by Regulation B. Section 14(b)(3) of the Official Staff Interpretations to section 1002.14 clarifies this, stating that a “valuation” includes a “document prepared by the creditor's staff that assigns value to the property.”
Because FIRREA regulations require a valuation, and because Section 1002.14(a) requires the lender to “provide a copy of each such appraisal or other written valuation promptly upon completion, or three business days prior to consummation of the transaction (for closed-end credit) or account opening (for open-end credit), whichever is earlier,” financial institutions should consider adding certain disclosures to any valuation sent to applicants.
Don’t you just love all the new regulations you have to learn and now comply?
ALABAMA MAN GOES FROM POLICE OFFICER TO MORTGAGE FRAUD TO ATTEMPTED MURDER OF WITNESS
On Feb. 6, Kinard Henson a former Alabama police officer pleaded guilty in a New Jersey federal courthouse to charges of conspiracy to commit wire fraud and conspiracy to commit money laundering and attempting to murder a witness to the fraud. He was one of eleven defendants in a $15 million mortgage scam.
Henson and his co-conspirators recruited straw buyers and submitted fraudulent loan application documents to mortgage lenders in order to obtain mortgages. Once the loans were approved and the lenders disbursed the proceeds, Henson received a portion of the money.
When Henson learned of a subpoena seeking documents connected to straw buyer Larry Baker, he contracted with his cousin to kill Baker, according to the FBI. Henson and the would-be assassin lured Baker into the woods, where Henson’s cousin shot Baker three times, according to a report by the New Orleans Times-Picayune.
Henson faces up to 10 years in prison and a $250,000 fine for the money laundering conspiracy charge, up to 30 years and a $1 million fine for the wire fraud conspiracy charge, and up to 30 years in prison and a $250,000 fine for the attempted murder charge.
Henson is already serving time in Alabama for a conviction in a related state criminal case, published reports say. (mpa2714)
That comes to 70 years and no parole in the federal system if he gets sentenced to the full 70.
CALIFORNIA BRE CAN REVOKE LICENSE IF ANYONE DESTROYS OR ALTERS OR FALSIFIES DOCUMENTS
As of Jan. 1, the Bureau of Real Estate can suspend or revoke the license of any real estate broker, real estate salesperson, or corporation licensed as a real estate broker that knowingly destroys, alters, mutilates, or falsifies any of the books, papers, writings, documents, or tangible objects that are required to be maintained and provided pursuant to notice, or that have been sought in connection with an investigation, audit, or examination. (Chapter No. 349)
So what’s new? They could always do that and do it for nothing more than failure to produce the records. (See B&PC §§10176, 10177)
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE