Mortgage Rate News

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There have been some interesting developments lately that have many wondering just how diligent mortgage servicers have been. While mortgage servicers were recently chastised for being slow to help with loan modification and foreclosure prevention, it appears an even bigger problem is brewing. Perhaps mortgage servicers are slow because some of them are making some serious mistakes.

Problems with the mortgage lending community are coming to light as more borrowers go to court. During bankruptcy and other proceedings, it is becoming clear that some mortgage servicers are not doing what they should be doing. Once mortgage servicers start having to keep track of problem payments, things really start to fall apart. The Huffington Post reports on what is happening right now:

As mortgage delinquencies rise, more and more homeowners are learning the central role that mortgage servicers play in their lives. The legal cases show that role can be distressing. Judges have found that major mortgages servicers regularly mess up basic accounting, improperly credit payments and charge unwarranted fees. They’ve “not done a very good job of keeping the records,” said Judge Samuel Bufford of California. …

In many rulings, judges have shown frustration and even outrage. They’ve ruled that servicers have attempted to collect unjustified fees, charged homeowners for unnecessary insurance, failed to properly credit homeowners’ payments and failed to provide evidence to back up fee requests. In most cases, judges demand that servicers fix the problems and unwind the unjustified fees; sometimes, judges award damages and attorneys’ fees.

The current climate has been perfect for exposing these types of problems. With delinquencies and bankruptcies occuring with increasing frequency, it is no surprise that we are now getting a better idea of what goes on with mortgage servicers. And the knowledge isn’t exactly comforting. However, fixing just the caught problems from the bench is not enough. Clearly, something needs to be done in order to get something systemic fixed in the way mortgage servicers are doing business, and handling transactions.