Late-fee profits
Some say one problem is that mortgage servicers make their money from late fees and other penalties charged to borrowers.
“There’s a built-in incentive for the servicing industry to really rip people off,” contends Richard Gaudreau, a Salem attorney who specializes in consumer bankruptcy law. “If they can throw your payment into a suspense account because it’s a dollar short, then they can impose a late fee.”
Maroney said some mortgage servicers should be prosecuted for their actions, which he characterizes as “fee-skimming.”
“If you manufacture a default, and you take somebody’s house, explain to me for a second why that isn’t theft,” he said.
In a recent telephone interview, Porter said the typical market constraints aren’t there to help consumers. “You don’t get to pick your servicer,” she explained. “I could refinance my loan, but I could still end up with the same servicer.”
“I wish this were just a one-bad-apple story. It’s not,” she said. “These practices are across the industry.”
And there is no single entity to handle consumer complaints, she noted. “Who your regulator is, or is supposed to be, depends on who made your loan and who currently holds your loan.”
Read the rest of the Union Leader.com story here
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On CNBC, there’s an article about high profile exec. expected to meet before Congress regarding their bonus packages.
I truly hope the senators will use this opportunity to also question the CEOs on loss mitigation and rate modification practices.
Everyday, thousands of consumers follow the “preached” advice President Bush, Sectary Paulson, and HUD Chairman, in contacting their lender as a first step towards mortgage recovery when facing hardship.
It makes me so angry when many of the lenders like Countrywide, are the first to jump on the soapbox and act as the “golden-boy” in wanting to help and protect homeowners from foreclosure.
Ask them, how many of their consumers have applied for help, and what percentages are approved?
Ask them, why is there such a internal discrepancy between Loss Mitigation/Work-out department and the Credit Reporting Division; who tact on lates to consumer credit?
Ask them, why is a consumer told by loss mitigation/work-out dept not to make payments because once their modification is “approved” the back payment amounts will be reinstated, only to find out that the Credit Dept., has been tacking on “lates” to their credit report, placing them in a worse situation then when they started? Not to mention that their modification is then denied, forcing them to come up with thousands of dollars in back-payments or be forced to sale/foreclose. Thus making the consumer now unable to qualify for a refinance anywhere, because of the reported mortgage lates!
Ask them why Moody’s found that most subprime-loan servicers this year had modified only about 1 percent of their adjustable-rate mortgages (ARMs) that had reset to higher rates by the end of July
So much misinformation is given to consumer and false expectation, when in the end the Lenders have not taken any serious action to follow through on their empty promises. They love playing the “role” of a rescuer in front of CNBC and CNN, but in reality CEOs of these banks continue to line their pockets with $1000 bills.
It seems only the consumers feel the affects and understand the tactics being used by lenders, while senators and lenders watch from the sidelines pretending to be advocates for the people!