Even After Mortgage Modification, Shoddy Bank Practices Hurt Homeowners

Even After Mortgage Modification, Shoddy Bank Practices Hurt Homeowners

by Paul Kiel ProPublica

Chanel Rosario was supposed to be one of the lucky ones. After years of sending and re-sending documents, waiting on hold and attending court hearings to avoid foreclosure on her Staten Island home, she’d finally received a much-needed reduction on her mortgage. Eagerly, she and her husband signed it and mailed it in last September. “We thought it was over.”

It wasn’t. After months of making payments, Rosario called the bank handling her mortgage, Chase Home Finance, and found out Chase was still reporting her as delinquent, damaging her credit score and putting her home in jeopardy. Despite months of trying to get an explanation with the help of a legal-aid attorney, she still doesn’t know why Chase isn’t abiding by the agreement.

It’s a disturbingly common occurrence, say consumer advocates: Many homeowners have been granted a hard-fought mortgage modification [1] only to have their mortgage company effectively pull a bait and switch. The problems range from homeowners being hit with unexpected extra charges to the bank simply ignoring the signed agreement.

Handling these types of cases “seems to be our specialty these days,” said Noah Zinner, an attorney with the nonprofit Housing and Economic Rights Advocates in Oakland, Calif. In addition to the prospect of losing their homes, homeowners can also see their access to other credit cut or have their interest rates on their credit cards jump as a result of being reported delinquent.

To get a sense of how common this problem is, the nonprofit Connecticut Fair Housing Center conducted an informal survey of 16 legal aid organizations and one private attorney. In nearly a quarter of the 655 cases of modifications they reviewed, the mortgage servicer didn’t abide by the terms of the agreement. In the worst cases, homeowners who thought they’d successfully run the gauntlet of servicer errors and delays found themselves once again facing foreclosure. Sometimes the house was actually foreclosed on.

“It’s not just one servicer screwing up,” said Andrew Neuhauser, an attorney with Advocates for Basic Legal Equality of Toledo, Ohio. “It’s industry-wide practice.”

ProPublica investigated six cases in which banks and other mortgage servicers offered modifications they didn’t abide by. In some cases, like Rosario’s, the bank was accepting new lower payments but seemed to have no record of the agreement. In another, accounting mistakes resulted in a buildup of arrears and late fees. One homeowner was hit with a bill for more than twice the agreed-upon payment three months into a modification. Another received a foreclosure notice out of the blue. You can see our rundown of these cases and the servicer responses here [2].

In general, the servicers contacted by ProPublica either corrected the problems or said they’d work to do so. None responded to a question about what steps the company was taking to prevent these sorts of problems.

Attorneys interviewed by ProPublica said that they were usually successful in getting servicers to correct the problem but that it often took the threat of litigation. “It certainly seems that when the servicers have to, they’ll fix it,” said Zinner, the legal-aid lawyer from Oakland. That may work for those who can afford lawyers or find free legal help, but most homeowners don’t have legal representation [3].

The frequent errors are par for the course for mortgage servicers, the companies that collect payments from homeowners and handle modifications and foreclosures. From widespread forgery to “robo-signing [4]” to mistaken foreclosures, the failures [5] have stemmed from the industry’s choice to devote inadequate resources to handling troubled loans [6]. Those issues, it turns out, can continue to affect borrowers even after a modification has been signed.

All this has happened on the watch of federal banking regulators, who only launched an investigation of the servicers’ practices when they became front-page news.

Bryan Hubbard, a spokesman for the Office of the Comptroller of the Currency (OCC), the primary regulator for the country’s biggest banks, said regulators were aware of the problems and are putting processes in place to address them. The banks, for instance, will soon be required to provide a “single point of contact” for each homeowner [7], so that when an error does occur, the homeowner will supposedly be able reach someone knowledgeable about their case.

The homeowners interviewed by ProPublica often complained of being unable to get an explanation for why their servicer wasn’t following the signed contract. One had even complained to the OCC without any results. Inevitably, they found themselves passed from one servicer employee to another, none of whom seemed to understand the situation.

“What they did was put blame on me, burden on me to get this straight when they already knew what the mistake was,” said Carolyn Chaney of Seattle, Wash., after battling with Bank of America.

As we’ve noted [5], advocates have criticized regulators like the OCC for their poor track record in identifying servicer abuses and are skeptical that the new regulations will substantially improve the experience for homeowners.

In April, regulators ordered 14 of the country’s largest banks [5] to make a variety of changes to their servicing operations and to review their foreclosure actions over the past couple years. Servicers violating modification agreements is “among the kinds of issues that the enforcement actions are intended to address and that the foreclosure ‘look back’ review will help quantify,” the OCC’s Hubbard said.

Under the foreclosure review, homeowners could be reimbursed for “impermissible or excessive penalties, fees, or expenses, or other financial injury suffered,” he said, including somehow compensating the homeowner if there was an improper sale of the house. As we’ve reported, many details of the reviews remain uncertain [5], including how much banks will be compensating wronged homeowners.

“The biggest factor in determining an appropriate remedy is to determine the actual financial harm suffered by the homeowners as a result of an improper foreclosure action,” said Hubbard.

Homeowners seeking redress often face an additional hurdle due to the servicer not returning their signed copy of the agreement, said Jeff Gentes of the Connecticut Fair Housing Center. “You’re arguing uphill,” he said, if you don’t have conclusive proof that the servicer agreed.

Told of this problem, the OCC’s Hubbard said regulators would consider requiring servicers to return the signed agreements to homeowners.

Follow on Twitter: @paulkiel [8]

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4closureFraud.org

Comments
7 Responses to “Even After Mortgage Modification, Shoddy Bank Practices Hurt Homeowners”
  1. l vent says:

    Those who DID NOT get a loan mod, were the lucky ones. Loan mods are illegal. They are creating a debt out of thin air to be payed to a debtor who is not owed that money. Our homes are paid for because of their Ponzi Scheme. The loan mod debt they create is not only fake and fraudulently induced but, it is unsustainable. The housing market and the trust and confidence of the American people in “investing” in a home has been completely destroyed because of their Foreign Multinational Ponzi Scheme swindle and heist.

  2. Jason Werner says:

    To do justice and judgment is more acceptable to the LORD than sacrifice. A modification is absolute sacrifice. Banks burned me in their fraudulent “modifications” and promises of lame settlements, don’t make the same mistake as me. Trust in the Lord to fully deliver you from the criminal bankers.

    Do NOT negotiate with the criminals. Let the Lord Jesus Christ bring them to their knees by putting a bright spotlight on the truth.

    • Kevin says:

      And how is that working for you? Apparently Jesus isn’t Lord or even a bank vice president, just some dead guy with no authority to get you a loan mod, or even forgiveness for impure thoughts.

  3. l vent says:

    This is the clear proof that a loan mod is NOT a gift.

    You are NOT lucky if you get a loan mod.

    They are stringing people along because the more outrageous they act, the more chance the WORLD BANK, IMF, FEDERAL RESERVE, CRIME SYNDICATE WILL ACHEIVE THEIR ULIMATE GOAL OF MAKING THE UNITED STATES OF AMERICA A NATION OF RENTERS.

    THEY ARE PLAYING HEAD GAMES WITH THE AMERICAN PEOPLE WHO THEY ROBBED BLIND IN THE BIGGEST PONZI SCHEME SWINDLE AND HEIST IN U.S. HISTORY.

    THIS DEBT THEY CREATED IS UNSUSTAINABLE AND THAT WAS INTENTIONAL.

    THIS ENTIRE PONZI SCHEME PLAN WAS DONE BY DESIGN BY THE U.N./NEW WORLD ORDER TO DESTROY AMERICA AS WE KNOW IT.

    THEY HATE OUR FREEDOM.

    THIS WAS A DIABOLICAL PLAN TO DESTROY OUR PROPERTY RIGHTS AND OWNERSHIP RIGHTS.

    THEY NEVER WANTED US TO OWN OUR HOMES.

    THE U.N. ALREADY HOLDS ALL LAND IN AMERICA IN FEE SIMPLE THANKS TO TRICKY DICKY NIXON

    . WE NEVER OWN THE LAND AS LONG AS WE PAY TAX TO THEM.

    NOW THEY WANT THE SAME THING WITH THE HO– USES. THE PROOF IS IN THE SET UP TO FAIL, AND THE MASSIVE PREDATORY LENDING PRACTICES AND THE BUNDLING OF GOOD AND BAD LOANS THAT THEY KNEW WOULD LEAD TO THIS CATASTROPHIC FINANCIAL COLLAPSE AND THEN A HO– USE GRABBING FREE FOR ALL FOR THEM OF HOMES THESE FOREIGN MULTINATIONALS DO NOT OWN.

    THEY POSED AS AMERICAN INSTITUTIONS TO PULL THIS SCHEME OFF AND HAD INSIDE HELP.

    MERS SHOWS THE ARROGANCE OF THIS ROGUE REGIME OF FINANCIAL TERRORISTS..

    THIS IS A DIABOLICAL AND MANICAL PLAN BY THE U.N./NEW WORLD ORDER TO DESTROY NATIONAL SOVEREIGNTY IN THE UNITED STATES AND AROUND THE WORLD.

    THEY HAVE ALREADY DONE IT TO GREECE. THEY OWN GREECE NOW AND THEY ARE NO LONGER A SOVERIEGN NATION BECA– USE THE ONLY WAY THEY CAN PAY OFF THEIR DEBT TO THIS TYRANNY IS TO BORROW MORE MONEY FROM THEM.

    I SAY SCREW THEM.

    SCREW RAISING THE DEBT CEILING, DECLARE OUR NATIONAL SOVEREIGNTY FROM THEM BY THROWING THEM OUT OF AMERICA AND TELL THEM WE ARE BROKE, THANKS TO THEM.

    TIME TO SEND THE FEDERAL RESERVE, BEN BERNANKE, GOLDMAN SACHS, TIMOTHY GEITHNER, THE BIG BANKS PACKING.

    WE DO NOT NEED ANY MORE CREDIT FROM THEM.

    LET THE OLIGARCHY CARDS FALL WHERE THEY MAY.

    WE THE PEOPLE CAN NO LONGER TRUST TO DO ANY BUSINESS WITH THEM.

    THEY INTENTIONALLY CREATE AND AN UNFAIR AND UNJUST PLAYING FIELD FOR THE PEOPLE.

    WE CAN NO LONGER PAY FOR THEIR WALL STREET CASINO OF FRAUD.

    WALL STREET ONLY MAKES THE PERPS AND THEIR MASTERS FILTHY RICH AND CREATES IMPOVERISHMENT FOR ALL OF THE REST OF THE 99%.

    THEY HAVE NO RESPECT FOR THE AMERICAN PEOPLE, OUR U.S. CONSTITUTION, OUR U.S. BILL OF RIGHTS AND THEY WANT TO PUT AN END TO NATIONAL SOVEREIGNTY IN AMERICA AND AROUND THE WORLD.

    DEATH TO THE U.N./NEW WORLD ORDER FASCIST NAZI TYRANNY!!!!!!!!!!

  4. Readdocs says:

    Document, document, and document and document some more. Build as extensive a paper trail as possible.
    Be preemptive in preparing a worst case scenario so you’ll be ready if they try to blind side you.
    Never, ever, trust anything agreed to even if signed, sealed, and notarized. Fact check and then verify.
    And always check your back trail

    • david b. says:

      ONe of these days, everyone is going to get it.

      CHASE IS DOING WHAT THEY ARE BEING TOLD TO DO BY THE FEDERAL RESERVE AND THE OCC AND THE TRASURY DEPARTMENT.

      ANYONE KNOW ABOUT REG 30 OF THE NATIONAL BANKING ACT. LOOK IT UP. ALL OF THIS STUFF COULD BE STOPPED IN A HEARTBEAT BY THE FEDS.

      ANYONE HEARD OF THE NET PRESENT VALUE MODEL — USED BY ALL BANKS BY ORDER OF THE FEDERAL RESERVE. THE SOFTWARE CAN BE FOUND ON THE INTERNET. IT IS CALLED i THINK INTELLIVALUE.

      ALL BANKS HAVE TO — USE IT AS OF JULY 1, 2011. IF YOU FLUNK YOU GET FORECLOSED.
      THE POINT IS WHEN YOU FILE FOR A MOD. YOU FLUNK. NO ONE WILL PASS.

      AND THEY TAKE YOUR PAYMENTS AND THEN FORECLOSE WHILE CHASE ET AL. ALLEGEDLY LIES TO THE HOMEOWNERS.

      SOME PEOPLE WOULD CALLL THIS A SETUP BUT NO ONE IS GETTING EDUCATED.

      THI SIS ALL AGAINST FEDERAL LAW UNDER THE FAIR HOUSING ACT OF 1964 FOR MORTGAGE DISCIMINATION KNOWN AS PREDATORY LENDING PRACTICES AND REVERSE REDLINING.

      YOU CAN GET A FREE ATTORNEY TO FIGHT CHASE FROM HUD AND AN ALJ JUDGE AND A CIVIL RIGHTS ATTORNEY ASSIGNED TO YOUR CASE.

      BUT NO ONE IS FILING COMPLAINTS AND NO ONE SEEMS TO KNOW WHAT IS GOING ON AND/OR GETTING EDUCATED.

      THE BOTTOM LINE IS DO NOT APPLY FOR A MODIFICATION.

      COMPLAIN TO HUD.

      AND KEEP COMPLAINTING AND COMPLAIN TO YOUR CONGRESSMAN AND SENATOR AND STATE LEGISLATURE.

      AND HAVE THE NPV MODEL — USE BANNED FOREVER.

      AND SHUT DOWN CHASE JP MORGAN CHASE FOREVER.

      WHO NEEDS ‘EM.

      BEST REGARDS
      dAVID

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