Attorney Survey Highlights Questionable Servicing Practices

A new survey conducted by two consumer advocacy groups finds that it is not uncommon for servicers to initiate foreclosure proceedings while a homeowner is awaiting a loan modification.

The survey of consumer-protection attorneys, which was conducted by the National Association of Consumer Advocates (NACA) and the National Consumer Law Center (NCLC), further shows that improper fees and payment processing are often the reasons that borrowers fall into foreclosure.

In total, survey respondents reported representing over 2,500 homeowners placed in foreclosure while awaiting a loan modification. Over half of respondents say they have represented borrowers who were placed into foreclosure due to the misapplication of payments or improper fees, such as late fees, broker price opinions and inspection fees.

NACA and the NCLC say consumer advocates have documented ‘a pattern of shoddy, abusive and illegal practices in the mortgage servicing industry’ for years.

‘We must eliminate the two-track system in which banks proceed with foreclosures while evaluating borrowers for a loan modification,’ NACA and the NCLC say in a joint statement. ‘Homeowners should be properly evaluated for a loan modification before a foreclosure is initiated and that evaluation should be completed before any foreclosure fees are incurred. Servicers must not be allowed to profit from improper fees and unnecessary foreclosure initiation.’



Please enter your comment!
Please enter your name here