Monitoring the Mortgage Agreement

In February of 2012, the five biggest mortgage servicers signed on to a legal settlement with 49 states and the federal government. The servicers committed themselves to doing more and better mortgage modifications and using principal reduction as a tool. They also agreed to abide by a set of new rules designed to better protect homeowners.

In recent months, New York has threatened to sue Bank of America and Wells Fargo, while the attorneys general of Illinois and Florida have voiced concern that servicers are still not consistently following the new rules. Now the National Housing Resource Center (NHRC) has released a report documenting evidence of widespread noncompliance. The NHRC based its report on feedback from 212 housing counselors working with clients across 28 states.  An earlier survey by the California Reinvestment Coalition of counselors in California alone found similar results.

Here are some of the NHRC report’s most striking findings:

  • Mortgage servicers frequently take far beyond the mandated maximum of thirty days to respond to completed loan modification applications. Citibank’s review process, according to one counselor, “takes an average of 8 months to more than a year.”
  • Servicers routinely lose important documents and demand they be sent in again. Unexplained delays by the bank mean that borrowers must repeatedly update time-sensitive documents. Counselors complained of inefficient collection procedures, with one commenting (about GMAC/Ally Bank) that “Not all documents are scanned together at intake and often times they are lost and no one knows where the client is in the process ….”
  • Dual tracking – the servicer practice of moving forward with a foreclosure while the homeowner is actively seeking a loan modification – is unfortunately alive and well. “62% of respondents said that the mortgage servicers continued to dual-track at least ‘sometimes.’”
  • Qualified SPOCs (Single Points of Contact) are few and far between. The national settlement mandates that a borrower have consistent access to someone who is familiar with his or her case. In fact, servicers don’t always provide such a contact, and when they do, the SPOC often fails to return phone calls or isn’t knowledgeable about the borrower’s case. Speaking of Bank of America, one counselor said: “The voicemail machine is the only answer you get and there is never a call back within those 48 hours as they stated on their voicemail.”
  • Borrowers who don’t speak English face an uphill battle. According to the report, “Nearly half [46%] of counselors said their LEP clients ‘never’ received translated foreclosure-related documents and 76% of respondents said their LEP clients were ‘never’ or only ‘sometimes’ able to speak to a servicer in their native language or through a translator provided by the servicer.” Those with hearing and other disabilities are often literally ignored. “Servicers will typically hang up when they are ‘picked’ up by a relay call center for deaf/hearing impaired.
  • 29% of respondents believed that people of color must jump through extra hoops when trying to modify their loans. “Banks seem to take more time in doing work-outs with our white borrowers,” one respondent said. White borrowers “are sometimes offered services never offered to others.
  • Servicers often refuse to negotiate loan modifications with widows and surviving children when the deceased is the only name on the mortgage.  The Catch-22 in some of these situations is the servicer’s insistence that the mortgage be current before the inheritor can take it over and seek an affordable modification.

— Mitchell Margolis

Complete report is available at

2 thoughts on “Monitoring the Mortgage Agreement

  1. I tried for for 8 months to do a loan modification with Chase bank paying a total of over 8,000 dollars and one day my son came home and said our house was being forclosed on ?It was horrible my sons last year of high school .we had lived there for 22 years my childrens whole life!I now received a check for 1484.21 thats hardly compensates for what my children and I have been through,Is there any thing I can do about it>It was 2 years ago and it makes me cry writing this letter! Please tell me what I can do.I know life is not always fair but I have always worked hard and was going through a divorce at the time. Sincerely Jill Mack

  2. For roughly ten years my family was in the business of destroying mortgages: original notes and liens and we were not alone. In fact, it became a lucrative cottage industry, and for at least one other family from our area it developed into a practice on an industrial level.

    We did so using desk-top scanners.

    Professor Christopher L. Petersen, formerly of Quinnie Law School, presently working for the Consumer Financial Protection Bureau, or, CFPB, wrote, “Two Faces: Demystifying the Mortgage Electronic Registration System’s Land Title Theory”. Once digested, it becomes obvious that once notes and liens become separated or “bifurcated”, the mortgage is then rendered null and void.

    Certainly, MERS rendered notes and liens to computer disc. After all, they are little more than an electronic boutique which allowed participants, devoid of capacity or standing, within its forum to transfer copies of mortgages endlessly with no clear record of proper assignments in the absence of a paper trail.

    MERS was not alone. I personally threw thousands of mortgage documents into our town dumpster; both original notes and liens; we never differentiated one from the other in any attempt to preserve the ultra-necessary, wet-ink signature note; those not disposed of in the dumpster were shredded when the truck came.

    When my brother-in-law died, I inherited a number of boxes of mortgages which filled the bed of my pick-up and were then transferred under the stairs in my garage. They stayed there for some months and became a nest for a family of groundhogs.

    The paper is long-gone; to suggest otherwise is to suggest paper was never rendered to disc in the first place and two systems as more economical than one. Absence of a paper trail has produced document forging entities such as LPS and DOC.X and denied billions to recorders in all 3100 counties in these United States.

    In our present litigation, the loan in question is a Countrywide to Bank of America loan. No less than 5 managers from BOA failed to produce the documents the opposing counsel now claims as in his possession. It is also a MERS loan and I want to see when the opposition acquired it and the amount they paid for it. The money trail will show the truth, all else is subject to question.

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