Frustration With Mortgage Servicers Enters The Courts
If you have ever tried working with a mortgage servicer to have a modification made on your loan, odds are you have experienced one of Dante’s levels of hell. The combination of terrible service, overwhelmed employees, and an ever changing federal mandate has made mortgage servicers the scourge of the financial community. And that is saying a great deal.
Now Bankruptcy judges are starting to take notice, which could lead to some interesting situations. The failure of mortgage companies and servicers to respond in a timely and ethical manner to customer inquiries is creating a stir in the bankruptcy courts.
While the onus is still on the borrowers to repay the loans, the banks also have a responsibility to follow through in a timely manner to let the customer know if the modifications have been approved, or that the paper work needs additional information.
Hopefully, as this Bankruptcy Judge has done in Arizona, the banks and servicers will be held accountable.
On Thursday, something happened. She questioned a Wells Fargo official about the bank’s lack of response — under oath.
The spectacle of a high-ranking banking executive being grilled by an ordinary homeowner was the result of an unusual decision by Judge Randolph J. Haines of the United States Bankruptcy Court to summon a senior executive from Wells Fargo to appear in Mrs. Giguere’s bankruptcy case.
At the hearing, Judge Haines made it clear that he was acting out of concerns about Wells Fargo’s mortgage modification practices generally.
“This is certainly not an isolated case,” he said. “The kind of story I hear from this debtor is one that I and other bankruptcy judges around the country are hearing over and over and over again.” via the NYTimes.com.
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Comment by Brandon Green on 4 September 2009:
It’ll be interesting to see how these bankruptcies play out in the next few months.
Comment by Arn Cenedella on 5 September 2009:
The truth is the loan modification process is not working.
Our so-called government leaders in an attempt to show that they care and feel for the “little people” have come forth with a variety of loan modification programs. In truth VERY FEW people relative to the number of people in mortgage trouble have EVER been helped by these programs. The banks and lenders also “talk a good game” about how they want to help people but again in truth, it is just a PR shell game where some bank CEO wants to sound compassionate and understanding and then promises to streamline and quicken the process while there loan modification departments back hom lose paperwork, drag their feet, and generally make the process impossible.
I do not know what the answer is the problem but I do not that current system does not work, PERIOD. It is a total sham – one that the politicians and bankers are in together.
Comment by Gainesville Real Estate on 5 September 2009:
It’s not uncommon down here to here about people trying to work a short sale, only to be foreclosed on by a different department at the same bank.
Comment by Home Mortgage Toronto on 15 September 2009:
Very interesting article. Maybe if we resolve this problem some of the liquidity problems in the market maybe lifted.