Fourteen mortgage servicers and two service providers were issued cease and desist orders last week by the Office of the Comptroller of Currency (OCC), to be lifted upon signing consent orders with that office that “promised to improve their processing systems and treat delinquent borrowers better,” according to a report from the New York Times[1]. Not surprisingly, among the signers were Bank of America, Wells Fargo, JPMorgan Chase and GMAC. A number of critics believe that the consent orders were not nearly harsh enough and that the OCC could have weakened the effect of an ongoing attorney general probe into the robo-signer fiasco. Melissa, Huelsman, a foreclosure defense lawyer in Seattle, describes the consent orders as “something that says they promise to follow the laws that they have been breaking for years with no real penalty for those illegal acts.” She adds that she wonders why anyone would start to trust the servicers and lenders now.
It appears that members of Congress agree, to at least some extent, with Huelsman, as both houses have initiated legislative actions to change servicing practices and “reform the way delinquent homeowners are handled industry-wide”[2]. The four pieces of legislation would not only require lenders to evaluate homeowners for modifications before entering the foreclosure process rather than in conjunction with it, but they would also necessitate servicers proving that they have the legal right to foreclose on a property following denial of the modification. This alone could increase the odds of loan modification dramatically given the number of “lost” titles in the system. Furthermore, foreclosure related fees would be limited under the new legislation, and there will be a formal appeals process instated for homeowners denied modifications.
Elijah E. Cummings (D-MD), a sponsor of the new legislation, believes that it is vital to “increase consumer protections, level the playing field at the bargaining table and hold banks and servicers accountable for providing relief to qualified homeowners.” Do you agree that this type of legislative action is necessary? Will it work?
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[1] http://www.detnews.com/article/20110418/BIZ01/104180318/1001/biz
[2] http://www.dsnews.com/articles/lawmakers-move-to-make-servicing-reforms-law-2011-04-15
Finally some light in the end of the tunnel. I still do not understand why the attorneys are not addressing Supplemental Directive 10-15 initiated and effective February 1, 2011. This directive adds more onence on the Servicer to comply and meet the requirements outlined therein. The only problem that I see with this directive is that there is no mention of a penalty when servicers violate the directive. I plan on filing a complaint against BAC and B of A pro se. Any help would be appreciated.
Lee