California’s housing counselors find the nation’s largest banks already are failing to comply with the national mortgage settlement and the state’s Homeowners Bill of Rights.
A new survey conducted by the California Reinvestment Coalition suggests banks are violating several
The “Chasm Between Words and Deeds IX: Bank Violations Hurt Hardest Hit Communities” report is based on feedback reported in February and March 2013—soon after the California Homeowners Bill of Rights went into effect on Jan. 1, and only a few months after all NMS servicing guidelines became effective on Oct. 1, 2012.
Over 70% of the 84 counselors and
Over 60% of counselors reported that the so-called dual tracking problems when lenders simultaneously start loan modification and foreclosure processing on a loan persist. It continues to happen “sometimes,” “often” or “always” with Bank of America, Citibank, JPMorgan Chase and Wells Fargo.
The survey is based on the opinion of counselors—not actual data they have provided and can be disputed by the banks. No apparent response to the survey was forthcoming from the banks at deadline.
In addition, over 60% of the participating counselors said the Big 5 Banks “rarely” or “never honor the settlement requirement to make a decision or complete a loan modification no later than 30 days after the documents’ submission. Plus, servicers denied loan modifications to seemingly qualified homeowners because “banks continue to lose documents.”
CRC has so far conducted nine surveys that monitor mortgage banking activity through the eyes of housing counselors and legal representatives. While findings may reflect residue from past banking behavior, it is clear lenders and servicers have a long way to go until they manage to significantly improve their distressed customer response practices.
For example, according to Cheyenne Martinez-Boyette of MEDA in San Francisco, who participated in the survey, auto SPOC transfer practices are not helping borrowers who cannot speak to anyone else at the banks and as a result cannot get a loan workout due to missing information. “The SPOC has been completely ineffective in creating a basic and fundamental avenue of communication between the servicer and their customer."
Reports also suggest bank violations are disproportionately affecting disadvantaged homeowners and hard-hit communities including limited English proficiency borrowers, widows and people with disabilities.
Over 60% of respondents said minorities, immigrants, widowed clients who are not on the original loan and the disabled are among the borrowers who “may face additional challenges to accessing relief.”
Findings indicate “regulators need to hold servicers accountable” for violating the new laws and settlement agreements that have already clarified servicing procedures, aggravating the state's economic recovery, said CRC’s Kevin Stein.
