CFPB discovers Unfair, Deceptive and Abusive Practices persist with Loan Servicers


Between January 2014 and April 2016, the Consumer Financial Protection Bureau conducted “supervision work” on mortgage servicers, focusing particularly on compliance with new servicing rules and any unfair, deceptive, and abusive practices. CFPB has issued a report on those findings—and the bureau is not pleased.

“The magnitude and persistence of compliance challenges since 2014, particularly in the areas of loss mitigation and servicing transfers, show that while the servicing market has made investments in compliance, those investments have not been sufficient across the marketplace,” CFPB stated in its report. “Outdated and deficient servicing technology continues to pose considerable risk to consumers in the wider servicing market.”

The bureau pointed out, for instance, that if a servicer receives a loss mitigation application 45 days or more before a foreclosure sale, it must notify the borrower in writing within five days acknowledging receipt of the application. If the application is incomplete, the notice must state the additional documents and information needed and a reasonable date by which to submit them.

Yet CFPB examiners found that “one or more” servicers failed to send any loss mitigation acknowledgment notices due to a platform malfunction.

[A loss mitigation application is a delinquent borrower’s notice to the servicer that he or she wishes to try to work out an arrangement on the debt. To the servicer, this is an opportunity to reduce the mortgage investor’s loss on the troubled loan.]

“Mortgage servicers can’t hide behind their bad computer systems or outdated technology,” said CFPB Director Richard Cordray. “There are no excuses for not following federal rules. Mortgage servicers and their service providers must step up and make the investments necessary to do their jobs properly and legally.”

More violations cited by CFPB

Perhaps “properly and legally” should be interpreted as “perfectly.” Many of the violations cited by the bureau could be attributed to simple error. Among them:

• Requesting unnecessary documents.

• Requesting documents the borrowers already submitted.

• Failing to include a due date for additional documents and information.

• Failing to specify which additional documents and information are needed to complete a loss mitigation application until several weeks after acknowledgment of its receipt.

• Giving borrowers 30 days to submit additional documents, but denying borrowers’ applications for loss mitigation before that period ended.

• Failing to tell borrowers they should consider contacting servicers of any other mortgage loans secured by the same property to discuss available loss mitigation options.

Ron Haynie, senior vice-president of Mortgage Finance Policy at the Independent Community Bankers of America, says the bBureau’s intolerance of even minor error sets an unattainable standard.

“Transfer of servicing is an incredibly complex process,” he explains. “You don’t just send somebody an Excel file with a bunch of loan numbers and it’s all done. It requires an exchange of data records, an exchange of physical files, processing of all the legal documents—there are lots of moving parts, so there are lots of opportunity for things to go wrong.”

Some of the actions the CFPB takes assumes there was a deliberate attempt to do it wrong, according to Haynie.

“CFPB assumes the entities involved were looking to try to harm borrowers when the majority of these incidents are ones where there are actual errors. I don’t know any lender who deliberately loses paperwork on a borrower or deliberately tries to make sure a borrower gets thrown out of their house,” says Haynie.

Don’t push the wrong button!

The report bears out Haynie’s concerns. In a case where a servicer sent warnings that foreclosure was imminent to borrowers who were current on their HELOCs, CFPB deemed that a deceptive practice instead of a clerical error.

Another servicer was cited for mistakenly sending letters soliciting loss mitigation applications to borrowers who were ineligible………….

For More:

In this eleventh issue of Supervisory Highlights, we share findings from recent supervisory examination observations in mortgage servicing.  To provide additional context for readers, we integrate these recent observations with observations from previous editions of Supervisory Highlights by subject matter loss mitigation acknowledgement notices; loss mitigation offers and related communications; loan modification denial notices; policies and procedures; and servicing transfers.  The report also discusses Supervision’s approach mortgage to servicing exams, including a description of recent changes to the mortgage servicing chapter of the CFPB Supervision and Examination Manual.

Full Report

20 Responses

  1. Jeanni
    Call Nicolette Glazer of Glazer and Glazer in LA…Knowledgeable

  2. Eight years ago today I sent my last check to Wells Fargo.
    Never happier.

  3. “LET FREEDOM RING ” and yet we are IMPRISONED by the feckless CFPB and the likes of the criminal hoodalums of OCWEN/HSBC/AHMSI and dozens of other “servicers” run amok.

  4. MA. People, please call your Rep. and tell them foreclosures are soaring in numbers again and we need mediation. Call this week.
    Every little bit helps!

  5. 2016
    Posted on July 2, 2016 by MAAPL
    It’s crunch time for the rights of Massachusetts residents—and our state economy!

    Foreclosures, which destroy lives (this crisis has taught us WHY the Constitution protects equally: “life, liberty and property”), are skyrocketing again—more than twice what they were a year ago. And with the sun-setting of recent legislative protections, foreclosures may double in the near future—rivaling Massachusetts foreclosure numbers in 2009!

    Foreclosures literally kill (with 5 times the suicide rate, significant increases in heart attacks, strokes, etc.). Predatory loans that keep households financially underwater also prevent the start-up of small businesses (70% of small business start-ups are funded by mortgages), further destroying the economic well-being of whole neighborhoods and decreasing jobs. Not to mention the inflationary pressure on rents.

    And the economic damage that brought down the world economy is still undermining our state!

    New laws MUST pass by July 31st.

  6. The fact that CFPB really thinks docs are falling through the cracks due to lack of technology by servicers is laughable… It appears the CFPB drank the same Cool aide as the courts… the servicers have all the technology anyone else does. I don’t buy it for a moment.

  7. Mr Haynie must be walking thru a cloud of crack smoke. The report just below his BS comment Gods Honest truth!

  8. Oh look, another one.

    ” They falsely stated that RLG routinely obtained positive results for homeowners, including lower monthly payments, reductions in principal balance and lower interest rates. ”

    So did ‘Hope for Home Owners ‘ and ‘HAMP’ Why aren’t they all in jail.

  9. Jeanni wrote:

    Voters are only important to our representatives for a single solitary day – Election Day. The day after the election, kiss your representatives goodbye as they are off to do the bidding of their financiers.

    Well said. And as they say in Minnesota, “You bet’cha!”

    I knew a highly esteemed BK attorney in Minneapolis who was invited to speak to CONgress on the then upcoming 2009 Bankruptcy Act. This lady was extremely bright on the subject, and was a consumer advocate from the get-go. She told me she went off to D.C. a few days early in order to speak with various representatives on the importance of this bill for the average consumer. It didn’t work like that on the hill.

    Instead, she found the halls were so crowded with K Street Grifters that it was impossible to get in to see a single rep. They were all so busy selling the American people’s rights away that they had zero time for this highly regarded professor of law. The halls of CONgress were so full of lobbyists that there was literally no way to get through….she gave up.

    And by the way, this is the same bill that when passed, took away most of the 99%ers rights in BK….trashing student loan relief, eviscerating any mortgage help that we had prior to this graft. But conveniently, it allowed the 1% to write off second homes, yachts, jets, and I’m sure it also allowed a tax write off on the wads-O-cash they stuffed in the reps pockets.

    This is the same bill that Elizabeth Warren is referring to in this Bill Moyers clip. It’s very telling about the soon to be installed president Clinton and how she’ll sell herself to the highest bidder. But unfortunately, it’s also embarrassing, or should be, for Senator Warren due to her recent whoring for Queen Clinton. Those two might as well have been wearing pasties and feathers on that stage….disgusting knowing how these people change like chameleons when they need a fix of campaign graft.

  10. all of this is just stall tactics with the banks to drive you further in debt. the fact that the numerous times that banks have claimed (lied) saying you did not send what they required or it was not received and you keep sending it just shows incompetence on the banks behalf, enough in fact that it should be criminal and when they pile all they extra unexplainable money they claim you owe on the back end of the loan is bs and why do we have to be billed more because of their (lies) incompetence. Believe me they received it all the first time. I am so sick of these big banks and I hope they all fall down. I will never deal with them for a mortgage and hopefully no other type of loan either. Boycott them. Learn to stay within your means and if you cant buy it outright, you probably dont need it anyway. these banks have screwed us all and doesnt look like they will stop.

  11. When Bank of America trasnfered servicing rights to Specialized Loan Servicing LLC (SLS), all that we got was a letter in the ordinary mail stating that the alleged loan was transferred. When we sent a Qualified Written Request for certified copy of the wet inked signed promissory note, we got a three page papers with no signatures in it. Copy of promissory note without signatures is getting too much when it became a standard practice of sending mail with no signatures in them.

    CFPB may investigate out right fraud done by current servicer and previous servicers. with the help of the FBI and provide proof of such with signatures to home owners so as to file Quite Title or defend with authoritarian documents. This may be the only solution to end the illegal foreclosure crisis in this nation.

  12. Dear Jeani, Bruce Nelson here. As an aside back in1979-80 I waworked for KSURF fm in Santa Monica and also KJOI FM and I alkso managed at street band, Quiet Riot. In 2009 my 44yr old son died in his sleep a week afte he paid AHMSI $1400 fee to obtain a promised loan mod. Then I worked as an interpreter for Washington State Parks as at Lewis & Clark Interpretive Center. my son, Michael owned a nice home in Salem, OR which he finannced thru Wells Fargo in Denver, CO. I was 70 when my life changed. I am also a USAF disabled vet. I gave up my work at mouth of the Columbia to manage his finalities. I was executor and I “inherited my sons home.His “servicer had changed several time. He goy behind 4 months with AHMSI. I contacted AHMSI with a view towards making up the 4 payments in March of 2009. I contacted the CEO, (Mr Dave friedman, direct wanting to know my sons status but my quick study caused me to request Proof of Standing which Friedman assured me that he/they would meet the TILA reqirements and he would provide same within 2 week. It was approx mid March 2009.

    I have been at war ever since with AHMSI (Now OCWEN/HSBC) and I had the home awarded to me by Polk County OR Circut Judge Horner late Dec 2009. Sounds good, right? WRONG a year or so later (and I have commented on most of this in Foreclosure Fraud and Living Lies) so I won’t rehash thos writings again BUT perhaps we can share eachothers pain if you care to e mail me at . Drop me a note and we can exchange phone #s. I now live in near complete poverty in Banner Elk, NC 28604 in the Blue Ridge Mts near my older brother.

    I am stuned that CFPB has just annoubed they have “discovered” that servicers like Chase and OCWEN have been “loosing” critical docs. I warned Richard Cordrey of this over 2 years ago when he became head of CFPB. They have a thick file on me. I provided, FedEx ever single documentt OCWEN asked of me. I am now 77, living alone with two “comfort cats. I have been eipped off and fileted lke a salmon by Ocwen who just recently had its CEO, Bill Emnret, a fat faced fat ass barbarian who is now running from prosecution for securities fraud (heading to Malta with my $340k free and clear equity. And now, all of a sudden CFPB “discovers that Ocwen, et have beet cheating us on reco very pebalties (Ocwen was penalized 2 billion by CFPD several years back. As recent as this March, after I put some heat on CFPB) promised me I would get resolved by March 31st. Instead they actually sent me a letter USPS saying “we lost all of your file you sent us several years ao so we need you to resnd everything.” In other words they round filed my entire case. I am sure I hadf also sent copies to CFPB several years ago, but I bet wats left of my life CFPB “also lost” my files. Who knows. I have been “dancing” with CFPB and the criminals at OCWEN for years now. I am getting close to the end of my pipeline with no light and the end of my tunnel.

    nuff said now dear lady. I am deeply sorry for your suffering. Its 1884 and eerything is down the Orwellian memort hole.

    May God Bless you

    Bruce R Nelson

  13. I have also filed two complaints with the CFPB and they just dropped the ball after Chase Bank replied and refuted everything I reported. No surprise they lied. Chase has had me in the endless doc loop now for 2 yrs this time around, and most recently I involved the MHA escalation team to help me (2nd time around). In May after being required to submit their RMA and all supporting docs for the fourth start-over (docs expired, lost, not sent timely (tho they were), etc. etc. ad nauseum), I typed a cover letter stating same, and included a list of the 15 documents attached, with how many times I had already supplied those docs previously. I took the whole package to a Notary, had her review the letter/list of docs, verify that all was there, and notarized a document for me attesting to it. I have not shared this notarized info with Chase, just keeping it for the lawsuit I have yet to file.

    My MHA rep believed this would be the end of the resubmitting, and was stunned to hear they called me a week later to claim I was missing 4 documents (that were among the 15 I supplied them). I forgot to mention I had faxed these 57 pages via my local Chase branch and waited for the bank rep to provide me with a copy of her internal document showing it was received–all 57 pages. I also used an overnight mailer they had provided to me to send a duplicate hard copy of all 57 pages by FEDEX, so if their lousy FAX machine ate my docs as they always mysteriously go missing, I had sent them a second hard copy by mail. Didn’t make one bit of difference.

    Got a letter from my SPOC requesting 4 of the items I had supplied. I argued with her and hung up, and received another letter asking for same. I supplied the 4 docs after the MHA rep reportedly went over my entire history with the SPOC, and they narrowed it down to these few items. I just received a third letter requesting the same 4 items for the 3rd time SINCE the 57 page package.

    I am in my 7th year of this BS – two years in the initial loan mod hell – two years in lawsuit – two years plus in this loan mod hell. Need a great lawyer in Los Angeles if anyone has any recommendations. I am so DONE with this! When I read things like the banks don’t do these things on purpose, I am incredulous that they actually think anyone believes them anymore! It is simply astounding to me that our entire government and media has totally failed us – knowing this is still happening to millions of victims of fraudulent foreclosures.

    People say that if Trump is elected Democracy will end. How is it that the entire nation is so oblivious to the fact that our entire Congress is in bed with K Street and beholden to Wall Street for their re-election, which means that Democracy is already non-existent in this country.

    Voters are only important to our representatives for a single solitary day – Election Day. The day after the election, kiss your representatives goodbye as they are off to do the bidding of their financiers. Democracy has been bought and paid for by the 1 percent, while we are left dealing with the likes of the crooked bankers, lawyers and judges. Cynical? You bet I am.

    By the way…I met David Dayen at a book signing in Santa Monica and he is awesome. Not only that, I feel as though he and a handful of other authors are the only hope we have on our side – the truthful side! I am only part way into the book as I’ve been busy dodging trustee sale dates and supplying endless docs to Chase the past month, but so far he is a brilliant writer, and the story and expose is awesome, and for many who frequent this site the main characters are well known and widely respected members of the foreclosure fraud community: Lynn Syzmoniak, Esq., Lisa Epstein and Michael Redman!!

    David’s book is called “Chain of Title” – if you want to feel hopeful that someone out there ‘gets it’, and maybe justice will prevail eventually, go pick up a copy today! This is what keeps me sane….

  14. Botom line for me is I cvomplied 100% of everything required on me byway of CFPB and that of Ocwen Pombudsoman. CFPD gas a trhich file on me unless CFPBhas lost that as Ocwen now claims. I believed and trust CFPN and even my adversary Ocwen. They put me in their “round file” and have kept me there in over 2 yesars.I was 75 then and now 77. CFPB elected as far as I know to abandon me to whatever Ocwen shose to do with me, ie shut me down. Tw0 yaers later I beged CFPB to police Ocwen and forced them to communicate with me. They shuck and jived CFPB, sent me a brie letter thena week laeter advised me “Ocwen Ombedsman has LOST or missplaced the files Ispent hour of my life preparing and snding to Ocwen over 2 yrs ago. As far as I am coincerned CFPB abanbdoned me and failed at every level toforce Ocwen Ombudsman to comply wiuth whatever CFPD ordered them to do. I.E CFPB is complicent in the outrageous theft Ocwen truned loose on us. Shame on CFPB.

  15. I have no idea how you managed five years responding to the CFPB. Their online system dropped my case and quit allowing me to submit any responses. They did manage to get my lender to reply to a few of the listed complaints but my lender tried lying as I resubmitted more proof catching them in their lies. Still, after a few correspondences they simply cut me off.

  16. Nearly everyone knows how inept and dysfunctional the CFPB is and how poorly it is being led. I have been begging and pleading with them for FIVE YEARS and inept fearless leader Richard Condroy who does nothing and not even a reply to countless letters and faxes.

    Just remember who created the CFBP which should be renamed the GFPB the way they go to great extremes to avoid upsetting the apple cart. They do nothing when one has undisputable proof that loans are forged, fabricated, and phony.

    It the CFPB, USDOJ, and state governments, with the exception of the great state of Montana who said “enough” and stood up to nasty old B of A in late 2014 would do their job and work for we the people what a wonderful world this would be!!! If you have never read the “Morrow Case” you should do yourself a treat and see how a very proactive state took a stance with the Montana Supreme Court and the filing of an Amicus Brief by the Montana AG. My hat goes off the one state that decided to do the right thing and protect the property owners.

    Thank you have states like Colorado and Rule 120 that go completely in the opposite direction to collaborate with the lenders and their phone pawn scheme and continue wrongful and completely illegal foreclosures!!!!

    It is, indeed, time for big change, but I don’t see anyone, including Clinton or Trump even giving this a second thought. After all Clinton is supported by big money and so has Trump in the past and nasty, ruthless B of A is one of his prime tenants- this can’t be a good thing!!

  17. As far as I am concerned, the CFPB is rather toothless. The servicers are in the business of foreclosing so they can get all the fees, insurance, etc. and so the forged and fraudulent documents associated therewith get cleaned up. I did 10, TEN sets of documents for a HAMP loan modification. It took the better part of a year, and they allegedly lost all the documents. When I sued them again, all the allegedly lost documents were produced by opposing counsel.

  18. In exchange for the government guarantee on their MBSs, GSEs promise that all their contractor/servicers will abide by :loss mitigation” guidelines in advance of foreclosure..

    Call your congress people to make sure the GSEs who own your loan abide by their promise.

  19. ” I don’t know any lender who deliberately loses paperwork on a borrower or deliberately tries to make sure a borrower gets thrown out of their house,” says Haynie.

    Haynie has never heard of AHMSI. I could provide documented proof which I sent to the CFPB years ago.

    Also from that incredibly complex process, it took a year after foreclosure just to get them to comply to the QWR.

    They all lie.

  20. Mr. Haynie says the Bureau’s intolerance of even minor error sets an unattainable standard.

    “Transfer of servicing is an incredibly complex process,” he explains. “You don’t just send somebody an Excel file with a bunch of loan numbers and it’s all done. It requires an exchange of data records, an exchange of physical files, processing of all the legal documents—there are lots of moving parts, so there are lots of opportunity for things to go wrong.”

    MINOR ERRORS: Are you kidding me? If it is that difficult to be transferring these mortgages, maybe they shouldn’t be doing it. Did they mention whether or not this difficult task was a legal one? They never fail to send out those default letters in duplicate to all parties on the note on the exact date they can show default. Never a single day late with those. I also heard no mention of how they misapply payments and escrows, add junk fees, and so on and so on and so on.

    Last but certainly not least was his final comment …
    CFPB’s apparent determination to find wrongdoing does not serve consumers, Haynie says.

    Please excuse me, I have to go throw up now.

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