Many homeowners who qualify for loan modifications are continuing to be wrongfully foreclosed on because the nation’s largest banks and mortgage servicing companies continue to violate standards and laws mandated by the National Mortgage Settlement, the California Homeowner Bill of Rights, and new federal mortgage servicing rules.
Report on Loan Modification Violations
A new report released by the California Reinvestment Coalition (CRC) and the legal advocacy group Housing and Economic Rights Advocates (HERA) took a closer look at these violations. Based on a survey of 66 HUD certified housing counselors who assist homeowners seeking loan modifications, the report investigated whether new loan servicing rules are putting an end to wrongful practices that have led to so many foreclosures.
Not Just Foreclosures
But it’s not just foreclosures – the impact is far reaching – further damaging California’s communities by displacing families, evaporating their savings, and depressing local tax revenues. “The foreclosure crisis is not over, in fact, it’s made worse and longer by servicers who refuse to abide by the rules,” said Kevin Stein, Associate Director at the California Reinvestment Coalition. “Servicers are incentivized, and in many cases, required to provide assistance, but what we see instead is incompetent servicing, homeowner run-arounds, improper denials, and unreasonable delays, all resulting in homeowners being pushed closer to foreclosure.”
Banks Still Behaving Badly
New federal rules have failed to change the behavior of the banks. Only 13 percent of those who responded to the survey felt new federal loan servicing rules are improving the practices of the banks and mortgage servicers. Federal and state authorities still continue allowing the nation’s banks and servicers to violate laws without serious repercussions. “We are urging regulators to more closely monitor and enforce existing rules,” said CRC’s Stein
Source: East Bay Express, Report: When It Comes to Mortgage Loan Servicing, Banks Are Still Failing to Comply With the Law, May 20, 2014