It looks like Senator Chris Dodd is going to bat for one of his Connecticut mortgage buddy’s, Bruce Rose (pictured) and one of the worst mortgage servicers in the country, Carrington Mortgage Services. Forbes is reporting that Dodd wrote a letter to the Federal Reserve asking for some leeway and TALF money for the independent servicers like Carrington. He claims that these servicers will be unable to modify loans for struggling homeowners because of the servicers lack of funds.
Oh yeah Senator Dodd? That is news to me because don’t mortgage servicers have a fiduciary duty to modify these loans “for the investor” when in default or imminent default may occur in order to bring these loans current? Yes they do!
Here is the letter that Dodd wrote to the Fed. Here is the Ohio Attorney General, Richard Cordray who announced last month that he is suing Carrington for abusive business practices on Ohio homeowners. The first lawsuit of its kind in the country.
I would guesstimate that 95% of the Pooling and Servicing Agreements (PSA’s) that govern the terms between the investor and mortgage servicer have this loss mitigation clause built into these contracts. When a servicer is servicing loans for an investor and the homeowner is is default or default may occur, per the contract, the servicer MUST modify the mortgage if the borrower has the ability to pay the loan at a reduced rate and it is in the best interest of the investor.
It appears as if mortgage servicers may be operating their businesses on what is best for their bottom line and pocket books. All the while they continue to ignore struggling homeowners, betray investors and break contracts. My advice is that if companies such as Carrington cannot afford to service these mortgages correctly, then investors and the government should demand that another company service these loans.
Nowhere can I find in any PSA a clause that says, “If mortgage servicers do not have enough money to modify loans properly, then the servicer has the discretion to foreclose because it is cheaper for them.” And that is exactly what these goons are doing America!
This is really hurting not only investors, but families and local economies. This is just another example of this rogue industry that NO ONE is regulating.
Here is the actual wording from a real Carrington Mortgage Pooling and Serving Agreement from July 2007 . The text below is from page 77. This may be boring for some people and VERY INTERESTING to those that follow the industry:
SECTION 3.07 Collection of Certain Mortgage Loan Payments.
The Applicable Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Mortgage Loans, and shall, to the extent such procedures shall be consistent with this Agreement and the terms and provisions of any applicable insurance policies, follow such collection procedures as it would follow with respect to mortgage loans comparable to the Mortgage Loans and held for its own account.
Consistent with the foregoing, the Applicable Servicer may in its discretion
(i) waive any late payment charge or, if applicable, any penalty interest, or
(ii) extend the due dates for the Monthly Payments due on a Mortgage Note for a period of not greater than 180 days; provided, however, that any extension pursuant to clause
(ii) above shall not affect the amortization schedule of any Mortgage Loan for purposes of any computation hereunder, except as provided below. In the event of any such arrangement pursuant to clause
(ii) above, the Applicable Servicer shall make timely advances on such Mortgage Loan during such extension pursuant to Section 5.03 and in accordance with the amortization schedule of such Mortgage Loan without modification thereof by reason of such arrangement.
Notwithstanding the foregoing, in the event that any Mortgage Loan is in default or, in the judgment of the Applicable Servicer, such default is reasonably foreseeable, the Applicable Servicer, consistent with the standards set forth in Section 3.01, may also
(1) capitalize any amounts owing on the Mortgage Loan by adding such amount to the outstanding principal balance of the Mortgage Loan,
(2) defer such amounts to a later date or the final payment date of such Mortgage Loan, (
3) extend the maturity of any such Mortgage Loan,
(4) amend the related Mortgage Note to reduce the related Mortgage Rate with respect to any Mortgage Loan,
(5) convert the Mortgage Rate on any Mortgage Loan from a fixed rate to an adjustable rate or vice versa,
(6) with respect to an Adjustable-Rate Mortgage Loan, extend the fixed period and reduce the adjustable rate period, and/or
(7) forgive the amount of any interest and principal owed by the related Mortgagor; provided that, in the Applicable Servicer’s reasonable and prudent determination, such waiver, modification, postponement or indulgence:
(A) is not materially adverse to the interests of the Certificateholders on a present value basis using reasonable assumptions (including taking into account any estimated Realized Loss that might result absent such action) and
(B) does not amend the related Mortgage Note to extend the maturity thereof later than the date of the final maturity date on the latest maturing Mortgage Loan;
provided, further, with respect to any Mortgage Loan that is not in default or if default is not reasonably foreseeable, unless the Applicable Servicer has provided to the Trustee and Securities Administrator a certification addressed to the Trustee and Securities Administrator, based on the advice of counsel or certified public accountants that have a national reputation with respect to taxation of REMICs that a modification of such Mortgage Loan (including for this purpose, any extension of due dates described in this Section 3.07(ii) above) will not result in the imposition of taxes on or disqualify from REMIC status any of the REMICs hereunder, the Applicable Servicer shall not permit any modification with respect to any Mortgage Loan.
Links:
http://loanworkout.org/2009/07/ohio-ag-dept-of-commerce-first-to-sue-mortgage-servicer/
How does one get in touch with the actual lender with Carrington Mortgage Services? My documents for a loan modification have been on file since October 14, 2009 when I faxed them. They never return phone calls.
Is the CEO Bruce Rose? Is there a physical address in Santa Ana where it is a brick and mortar business or just a PO box?
I want to fly to Santa Ana and speak to someone in the office; so I need to know if anyone actually works at the office?
same here laurie. They can never find anything. If I were you, I would look at NACA’s website and find out if they are coming to a town near you and get their negotiators to work on your behalf.