CFPB Again Finds Loan Servicers Routinely Violate Federal Laws Causing Injury to Homeowners
In the final days of June, 2016 the Consumer Finance Protection Bureau (CFPB) released its eleventh Supervisory Highlights report. The Report offers a summary of findings from CFPB regulatory investigations on loan servicing practices and compliance with federal statutes including the Real Estate Settlement Procedures Act (RESPA). The report is a devastating critique of the loan servicing industry, providing the general public a look into the continued systematic abuses of law and institutional incompetence of the companies that oversee collection of mortgage payments nationwide.
For homeowners who have been victims of loan servicing errors, the report offers a small bit of relief knowing that “you are not alone.” For attorneys representing homeowner victims, the report is a new arrow in the quiver because it details industry wide patterns of practices in violation of federal law. RESPA specifically awards statutory damages where a pattern and practice of wrongful behavior is exhibited and now consumers have government backed research to show industry wide patterns of abuse.
The latest CFPB report is not surprising to consumer advocates who speak daily with homeowners about their mortgage loans. The report concludes that the “magnitude and persistence of compliance challenges since 2014, particularly in the areas of loss mitigation and servicing transfers, show that while the servicing market has made investments in compliance, those investments have not been sufficient across the marketplace.” In other words, the loan servicing industry still has failed to ensure that homeowners are afforded all of their rights under federal law. There are five specific areas that the CFPB has found loan servicing industry compliance to be lacking:
- Loss mitigation acknowledgement notices – “Examiners found that one or more servicers failed to send any loss mitigation acknowledgment notices due to a repeated loss mitigation processing platform malfunction over a significant period of time.” Simply put, software malfunctions are responsible in many cases for the lack of loss mitigation notices that should have been sent to homeowners. Under RESPA if a homeowner submits a loss mitigation application, the bank is required within a few days of receiving the application to provide the homeowner with an acknowledgment of receipt. According to the CFPB this acknowledgment has too often not materialized.
- Loss mitigation offer letters and related communications – The CFPB also found that some servicers “engaged in a deceptive practice by misrepresenting to borrowers that it would defer such charges to the maturity date of the loan.” Basically, servicers told borrowers in writing that their homes would not be foreclosed on prior to the deadline date for submitting documents. Yet, frequently before the date was reached the servicer foreclosed on the home. This is a common theme among clients who have contacted me about loan servicing issues. Also, the CFPB uncovered many instances of loan servicers refusing to convert trial loan modifications to permanent modifications, despite borrowers having successfully completed the trial loan modification terms. Perhaps most importantly the CFPB acknowledged in its report that rejection of the permanent modification causes damages to borrowers because interest accrues at the original contract rate, which is higher than the trial modification rate, and late fees are tacked on as well.
- Loan modification denial notices – Loan modification denial letters continue to have errors. Among the errors is that “one or more servicers failed to state the correct reason(s) for denying a trial or permanent loan modification option as required.” Moreover, many servicers are failing to advise borrowers that they have the right to appeal the loan modification denial, a failure which often results in major consequences since under RESPA borrowers only have a limited time to appeal their denial.· Servicing policies, procedures, and requirements – The CFPB found that servicers have failed to follow policies and procedures instituted to obtain the following objectives: “providing timely and accurate information; properly evaluating loss mitigation applications; facilitating oversight of and compliance by service providers; and facilitating transfer of information during servicing transfers.” RESPA requires that servicers maintain written policies and procedures for how they will comply with the above objectives. Yet, despite this requirement, many borrowers still are unable to acquire servicing records from lenders, even when the request is in the form of a QWR (Qualified Written Request). It seems clear from the CFPB report that banks are failing to provide their policies and procedures not because they fear revealing trade secrets, but because they don’t actually have policies in place to ensure compliance with federal law.
- Servicing transfers – According to the CFPB “one or more servicers failed to honor the terms of in-place trial modifications after transfer. Some borrowers who completed trial payments with the new servicer nevertheless encountered substantial delays before receiving a permanent loan modification.” This is among the biggest complaints voiced by homeowners. Repeatedly I have encountered situations where a borrower has honored a trial loan modification for six months, and then immediately following the final payment the borrower’s loan is transferred to a different servicer. And, lo and behold, that servicer announces that they will not honor the trial modification.
Attorneys such as myself who defend borrowers against loan servicing violations have encountered all five of the above issues addressed in the CFPB report. The benefit of the CFPB report is that it proves these violations are not “one-offs”; they are part of a systematic practice across the industry. The CFPB continues to apply pressure to the servicing industry, but it is clear that government oversight alone has not motivated loan servicers to be compliant with the law. The only way to ensure compliance and to prevent a loan servicer from causing injury to a home owner is to bring suit when violations occur. The consumer law landscape that includes RESPA is intended to be enforced by individuals. By exposing industry-wide abuses, the CFPB has provided consumers an excellent tool to fight for their own rights by exposing individual offenses in the context of macro-abuses.
Adam Deutsch is a Senior Associate Attorney at Denbeaux & Denbeaux in Westwood, NJ, currently concentrating his practice on consumer rights litigation.
If you are in New Jersey and are looking for help with foreclosure, call Denbeaux & Denbeaux at (or fill out their online form for a FREE Case Evaluation. Let the lawyers and staff at Denbeaux & Denbeaux serve you!
~
I was able to get a postponement on my foreclosure sale till September 26th . this will give me time to get my complain/suit in the Federal Court . I basically told the Law Firm that Rescission has been affected by operation of Law and anyone that had standing to challenge it , waived that right as the time is passed for them to do so . The Mortgage documents have been cancelled and you cannot foreclose on void documents . I also told the Attorney that , I can see why you would think a valid mortgage exist , because documents exist , but that’s not the case here !!! Option One , was NEVER a Mortgage Lender . because they never lent anyone any money ! They created Mortgage documents but NEVER executed the terms of any Mortgage Because , they were the SERVICER of an illegal contract created behind your back and without your permission . They serviced the income stream created by that illegal contract between an Investment Bank and Investors , and that contract was ” TABLE FUNDED ” by the Investors . So , no consummation ever occurred in a Mortgage contract and no Mutual assent could ever be reached in a contract brokered behind your back and without your permission !! Both are VOID !!!
Agaim my appreciuiation to you. I can only empathize with the “auction” you arte facing. I was forcably evicted in 2014 and my :theives finally devalued the property and sold it to who I have no clue. No “auction” just the Judge gave them my home, kicked me out then sold my $340k home for $150K. I look forward to hear from you. Meanwhile God Bless your efforts in your own battle.
Bruce
I have been in loan mod for 7 years ( since 2008 ) the first 2 were before my husband passed . Then 2 or so more years after he passed at which time I was told the reason I / we had not received a loan mod was because I needed to assume it as well as modify it , baffled that I was told this after 3 mod applications and almost two years after his passing . All total 5 years trying with Chase “your tail Bank ” . Then they sold it to M&T Bank/Bayview Financial . Now 4 loan mod applications during the past two years with them … Still waiting .
The CFPB needs to go even further in their investigation and declare that ” THERE WERE NO LEGAL MORTGAGES ” to be serviced , because the Straw Man entity that took on the role of lender , NEVER met that criteria !!!! What took place was an illegal contract for obscene profits under fraudulent concealment , cloaked with Mortgage documents . The Fraud was perpetuated by the in Concert criminal acts of the servicers . It is called , THE INTENTIONAL TORT OF CONVERSION ! They stole your personal property 9NOTE ) and used it for self gain in violation of the TRUTH IN LENDING ACT ( TILA ) as well as ( RESPA ) , and the E SIGN ACT or the ( Uniform Electronic Transfer Act ( UETA ) that is besides State Law being violated , and especially contract Law was violated . All the Investigations seem to fall short of telling the American people the truth , THERE WERE NO MORTGAGES !!!!
Mike Drouin It would sure be helpful if you could let me know how/if AHMSI and Ocwen Financial and HSBC fit in your list in these 2 violators. I know, for a fact that when this triumverate stole my home with the support of Federal Dist Ct Judge Brown (Portland, OR) that they had zero proof of standing before Brown yet Brown decided to give my $340k equity to these 3 alleged criminal companies (I say alleged becuase I know HSBC,financial partners with Ocwen was charged by FBI for laundering Souh American Drug cartel illicit profits from cocaine sales to USA. Ocwen was “given” the right by CFPB to be Ombudsman to recover losses to homeowners from a 2 billion recovery fund ( I have not received a dime and to this day I offered to mitigate my $340k los IF they will PROVE their standing, lawfully (orig note, orig Mortgage) I inspect at their Clearwater office with my expert document examiner. If they produce such proof (I know they can not) I will expunge my claim and walk awy. They refuse so far to comment on that. Their “ombudsman analyst, DanBritton claims I will hear something by mid August, which I know they will reject because they have lied to me for over 2 yrs. But I am a fair gentlman so I figure let them prove, legally under TILA that they owned or ever owned via AHMSI which Ocwen bought from Wilbur Ross after Ross lost by Polk County 12th Dist Ct Circit Court in court apprx late 12/2009 when his attorney, Teresa Shill admitted under oath she (AHMSI) did not posess nor any other TILA required proof of standing. Ross sold AHMSI to Ocwen and Ocwen partnered up with the drug money launderer, set a Federal Ct trial dat for which my single aurgument (pro se) was to be Prove your Standing under TILA and I would cede my claim. Instead HSBC/Ocwer?AHMSI represented I assume in part by Ms Shill apparently convinced Judge Brown to waive TILA argument, dismiss me with Prejudice and handed over my $340,000. equity to these unsavory litigants. In finality I was flushed down the toilet of poverty with the sweep of Browns hand.
Hence if you can let me know if this “tried” against me if referenced to the report you might have and if I could obtain that before I hear from Dam Britton before mid August this 77 yr old disabled vet would be forever grateful.
God Bless America
Bruce R Nelson
geezerkatz@yahoo.com
Bruce , First and foremost , Thank you for your service . I’m sorry to hear that you are going through this and treated with such disrespect by our Judicial system . My case was also dismissed with prejudice by Federal Court Judge Laplant , here in NH . Even though there was hard evidence of fraud . I too had AHMSI and now OCWEN claims to have the right to foreclose on behalf of Wells Fargo Bank N/A , and in two days , on the 26th of July , they will perform their dog and pony show at my home and have a foreclosure auction .I’m about to file a complaint with the Federal Court approaching this matter in a totally different way , and I suggest you do the same . I thought that all was lost at one point , and ready to walk away in disgust , but I’m going to share with you some information that will hopefully be your defense against these thieves !!! There are several families here in NH with a couple already in the courts using this remedy . All the previous litigation is void , ab initio !! It all has to do with the origin of the Loan and Mortgage documents . I have your e-mail and will contact you asap .
Mike, I too am sorry you are going thru similar circumstances. First my sincere appreciation that you commented my reply. In over 2009 to present from the beginning of my struggle to presnt you, sir, are the very first comment I have rceived on a mutually similar matter with the SAME criminal compamies. I continue to be amazed that Cordrey handed tyhe “ombudsman job to the very thieves who commited so many crimes against you, me and undreds of thousands of other vitims. It took 2 yrs for these wolves to finally even recognize my existence. I have blabbered about this experience endlessly on this site. I finally got enough oil on the squeeky wheel (Ocwen) that Dan Britton, so called ombudsman “analyst” to commence a dialogue. I made him an “offer” that so far he has ignored, that if he will produce both the (TILA Required) NOTE and MORTGAGE, in his office, I will travel to Clearwater with an expert document examiner to review the ORIGINAL Note and Mortgage (along with legal transfers that were made but never recorded in Polk County, OR and IF he actually produces those original documents , no if, and, or buts, I will walk away and Ocwen will never hear from me again.
You and I both know those documents no longer exist as far back as 2007 when Wells Fargo sold the loans to Option One which put thos items in their “shredder”. My “offer” require that IF he can not produce TILA rrequired proof of statndin/interest then he must hand me a cashiers checl equal to AAGs reverse mortgage offer to me in the amount of that appraisel ($340,000.) Mike I am not so niave to believe these gutless gutter snipes will perform but I made thre offer in good faith. If the fail (and they will) then tyhat will prove bad faith in the here and now…I hope against hope.
Just thought I’d pass this on for your info. Dan Britton “assures me” in Ocwen letterheard that I will “hear from him by mid August (if the Feds/SEC has not crashed thru Ocwens doors in meantime. He says that IF I do nothear from him mid August that he will renotify me of any further delay which, no doubt, will be the case.
Thanks for bending an ear, Mike. I am happy to hear from you. If you wish feel to email me or call 8283674610