California Attorney Patricia Rodriguez: The Transferring of Servicing Rights to Avoid Reviewing Complete Modification Applications

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The Transferring of Servicing Rights to Avoid Reviewing Complete Modification Applications

The Transferring of Servicing Rights to Avoid Reviewing Complete Modification Applications

The Rodriguez Law Group, Inc

After years of litigating against alleged lenders, investors, servicers, and foreclosure trustee’s we are starting to see a clear trend of the servicing rights being transferred upon receiving a complete loan modification application. What is an alleged lender – this is usually the party that claims to have funded the original loan or the originator. The alleged investors are those who claim to have received an ownership interest in the loan through an assignment and endorsements or multiple assignments and endorsements. The foreclosure trustee in non judicial foreclosure states such as California are entrusted with overseeing the foreclosure process. The servicers are entities that claim a right to collect payments, modify the loan, etc. as agents of the principals (lender or investor). The servicer’s through an agreement with these other entities claim to have the right to enforce the note on behalf of the principal (lender or investor).

The servicer can start as one entity in the Deed of Trust and be changed by a simple letter from the original servicer to the borrower advising them that there is a new servicer. The borrower typically has agreed to such in the Deed of Trust. It is generally this servicer that the borrower or the borrower’s representative is negotiating with in order to conduct a short sale, short pay, cash for keys settlement, reinstatement, forbearance, and/or modification. The servicer could stay the same the life of the loan or switch anywhere from 1 to 10 times.

Each time the servicer changes the new servicer is obligated to credit the borrower’s account with all prior payments, honor any pending offers (for a short sale, short pay, settlement, reinstatement, forbearance, and/or modification), and continue to review any pending complete applications for a short sale, short pay, etc. However, many times this is why servicer changes are made so that the new servicer can claim they will not honor an offer to short sale, short pay, etc. or to state that the new servicer never received the complete package.

The above scenario will at most times be actionable; meaning this is something that is a cause of action. There is an obligation on the part of the new servicer to honor offers and pending complete applications otherwise, it is a breach of contract, among other claims. In addition, to there being an obligation on the part of the servicer to honor offers and pending complete applications you need to make sure that their failure to do such caused you or the party you are representing harm (damages).


Making homes affordable is an official program of the United States Department of Treasury and the United States Department of Housing and Urban Development. HAMP and HARP were government funded programs in existence until December 31, 2016. As of December 31, 2016, the programs no longer exist as there was a sunset statute. These two programs were designed to help struggling borrower’s who could no longer afford their mortgages to modify their loan under specific government guidelines. Now that these government programs have ended that does not mean modifications will end.

As far as the consumer financial protection bureau (CFPB) and Mark Mc Ardle, deputy secretary for the Office of Financial Stability is concerned ‘the economy is still not back on track and may take much more time while many homeowners are struggling, they still are having a difficult time making  their mortgage payments. The CFPB has issued non-binding guidelines based on proven principles and protocols. Based on NPV (net present value); with this foundation the CFPB has stated principle goals for financial institutions to follow when dealing with at- risk homeowners including affordability, accessibility, sustainability and transparency.  The overall goal is to prevent “avoidable foreclosures” and offer a win-win situation for investors and homeowners.  ~ David Smith

There are still government sponsored programs as well to help struggling homeowners such as the hardest hit funds that reaches eighteen states. It is Keeping Your Home California for the state of California and offers funds to help with a portion of the arrears for reinstatement or modification. Additionally, the Making Homes Affordable website still has a vast amount of information contained on it; especially, if you are already in a HAMP trial or permanent modification.


If you are in California and are looking for help with foreclosure, call The Rodriguez Law Group, Inc  at 626-888-5206 or fill out their online form for a FREE Case Evaluation. Let the lawyers and staff at The Rodriguez Law Group, Inc serve you!

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7 Responses

  1. Reblogged this on California freelance paralegal.

  2. What is concerning in the above article is separation of the “alleged lender” (funder of original loan), and “alleged investor” (those who claim to have ownership interest). This implies that the investor is not the lender. 1) All consumer protection laws are based on the LENDER. It one does not have one, one does not have any consumer protection. 2) How did this name transfer occur? That is – from lender to investor? Investors in any commodity change all the time. Who then actually is the loan contract with? Who would a modification be done with? Passing investors?
    With Freddie/Fannie loans, the bank remains your Lender, despite Fannie/Freddie becoming an investor — which is of no relevance to the borrower. So, how did private entity investors come to “cancel” the Lender and insert themselves as the “owner.” You can’t just cancel a Lender.
    If you think these private shell trusts are still operating with investors –I have a bridge to sell. All were just a shell for already classified default debt.
    Change of servicer for default debt can happen at any time.
    TO Rhondy — I think SLS is foreign owned. check it out.

  3. Anyone heard of Specialized Loan Servicing (SLS)? Who really is this company? Is this a sub-servicer of B of A?

  4. RE Your comment…
    “The servicer can start as one entity in the Deed of Trust and be changed by a simple letter from the original servicer to the borrower advising them that there is a new servicer. ”

    I understand the point you were making was that servicers are changed, easily. But additionally, what you conveyed was that the Servicer is provided in the Deed of Trust.

    In my experience as a former mortgage broker in CA and a defrauded home owner who has done EXTENSIVE recorded Deed of Trust research, I have never seen a Deed of Trust name the Servicer entity, but rather referred to only generically as ‘the Loan Servicer’.

    The Lender entity may or may not have a servicer division with its same name to service the loan.
    This function may be sub-contracted out.

    Most borrowers that I have spoken with don’t know the difference between who their lender is and who their servicer is and the HUGE difference – function, standing, and liabilities- between them. This further complicates matters and even blinds them from being able to discern possible fraud by contract trespassing servicers.

    It is important to be very clear about what is written here because this blog IS where the ignorant home owners get educated …to then fight their battles… administratively with servicers or/and in the court room with Lender’s attorneys.

  5. To suggest that the servicing of an individual loan is transferred to a new servicer to avoid modifying the loan is, well, stupid! MSR’s are sold in large pools, normally in the billions, and to suggest that a couple loans are transferred, because your client was close to getting a mod, is outrageous and naive. Sounds like a lazy attorney to me, stay away!

  6. Reblogged this on Deadly Clear and commented:
    The sale and movement of “servicing” is an area Congress has neglected to properly regulate. It’s bad enough that only servicing requires homeowner notification when its the sale, pledge, transfer, rehypothecation of the actual collateral that significantly effects the homeowner – and there is no notification requirement. IMHO the servicing requirement notification should include a copy of the agreements between the banks selling or transferring the servicing rights – it should be made public and accessible. We should know if the investor is in agreement and/or willing to have the servicing transferred or sold.

    Think of it this way – what if the servicing is moved to an undesirable entity? Maybe the trust is not notified. However, if they are notified and the servicer is under investigation by the SEC or OCC then maybe the investor/Trustees should also be investigated, including “Fannie, as financial agent for the United States.” Maybe then we’d find out why there is so much servicing maneuvering.

  7. I think everyone is getting familiar with how the phony “pretend” sevicers and lenders operate. They are backed by our very own government in FHFA, GSE (which has been Fannie and Freddie since 2008 when they took them over) and especially the CFPB that was supposedly creaetd by Warren and Obama that is useless, corrupt, dysfunctional, and a fraud. They do just enough to convince some people they are doing good.
    The phony “pretend” servicers state that Fannie Mae and Freddie Mac are the “investors” who allegedly own the loans, but when you try to work with them directly you get the same identical stall tactices as with these pretend servicers!!! I have undiputed proof of this and have asked the white house over and over again these past years to wake up and take action in the best interests of ALL property owners.
    Yet, they ALL continue to stall, refuse to replyl or acknowledge, and play along with all the other “pretenders”!!
    The biggest joke of all is the supposed stance that Fannie has taken with the alleged “flex modification” as this appears to be a total myth!!! Even the white house refuses to acknowledge this so far because of the terrible, nasty, dirty swamp that was created several years ago in this huge racketeering scam that involves our government and most of the people in it!!! How do you defeat that without the new Trump Administration recognizing and taking action to change all this.
    Like I have said many times before it is my belief that we would have been a whole lot further ahead if our government had bailed out the property owerns with two stipulations: 1)pay off your mortgage and 2) buy a new car. Semper Fi

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