I have blogged about the Alice In Wonderland-like and Dickensian situations faced by defaulting homeowners, but now the CFPB has offered a broader look at the problems that borrowers confront when facing foreclosure. The CFPB’s Supervisory Highlights Summer 2013 profiles some of the problems in the loss mitigation field, including
- Inconsistent borrower solicitation and communication;
- Inconsistent loss mitigation underwriting;
- Inconsistent waivers of certain fees or interest charges;
- Long application review periods;
- Missing denial notices;
- Incomplete and disorganized servicing files;
- Incomplete written policies and procedures; and
- Lack of quality assurance on underwriting decisions. (14)
The CFPB also noted some serious violations in the transfer of loans between servicers: “For example, examiners found noncompliance with the requirements of the Real Estate Settlement Procedures Act (RESPA) to provide disclosures to consumers about transfers of the servicing of their loans.” (12)
They also found problems processing default-related fees: “Examiners identified a servicer that charged consumers default-related fees without adequately documenting the reasons for and amounts of the fees. Examiners also identified situations where servicers mistakenly charged borrowers default-related fees that investors were supposed to pay under investor agreements.” (13-14)
Millions To Share £1.3bn Bank Compensation
Regulators have confirmed a compensation fund of £1.3bn for up to seven million victims of another insurance mis-selling scandal.
The announcement, which was made 12 hours after Sky News was handed details of the Financial Conduct Authority’s agreement with banks, outlined how Card Protection Plan Limited (CPP) and 13 high street banks and credit card issuers would pay.
The FCA said the mis-selling centred on CPP’s Card Protection and Identity Protection policies between 2005 and 2011 – with many people not even needing the cover.
WASHINGTON — Sen. Elizabeth Warren (D-Mass.) sent a letter to Attorney General Eric Holder Wednesday questioning whether a major government settlement with the nation’s largest mortgage companies is merely a way to absolve banks of malpractice under a “timid enforcement strategy.”
The letter follows months of criticism from Warren over weak penalties imposed on banks accused of defrauding consumers and investors. She has denounced settlement strategies that allow financial firms to set aside past violations without acknowledging wrongdoing.
Wednesday’s letter addresses a settlement among the U.S. Department of Justice, the Federal Housing Administration and 49 state attorneys general over charges that major banks submitted a torrent of false claims in pursuit of government benefits. In February 2012, Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial agreed to pay $25 billion to settle allegations that they forged signatures, fabricated documents and engaged in other illegal practices during foreclosures.
Banks report $51 billion in consumer relief in mortgage settlement
In the past year and a half, five mega banks dished out$51.3 billion in consumer relief to borrowers impacted by foreclosure abuses, the Los Angeles Times writes.
The banks, which were part of the national mortgage settlement between attorneys general, regulators and servicers, claim to have provided a substantial amount of principal reductions, short sale transactions and monthly payment reductions.
The Los Angeles Times elaborated on the relief reportedly offered:
The average borrower received $79,742 in relief, the report said. The aid includes completed modifications and other assistance as well as efforts still in trial phases.
Joseph A. Smith Jr., the official monitor of the settlement, said the banks’ self-reported information had not yet been confirmed. But based on the data, he said, the banks have either met their obligations under the settlement or will do so soon