CFPB Empowers Borrowers To Fight Servicer Misdeeds

As part of its campaign to educate the public on its new mortgage rules that went into effect on Jan. 10, the Consumer Financial Protection Bureau (CFPB) has added new materials to its website, including sample letters that borrowers can use to find solutions to various problems with their mortgage servicers.

One of the sample letters is designed for when a borrower thinks his or her servicer has made an error. The template describes what information to include and how to identify the error, and offers tips such as what to expect from the servicer once the letter is sent.

A second sample letter is for when a borrower is requesting information from a servicer. It explains what information a borrower should include in the letter and provides examples of information requests, as well as other tips.

Other elements added to the CFPB’s website, as previously announced, include a new Guide for Housing Counselors that will help counselors better understand the new federal protections. This, in turn, will enable them to help borrowers pursue all possible options before beginning the foreclosure process. In addition, the CFPB will be offering training to housing counselors so that they are completely familiar with the new rules.

The bureau has also published a FAQ on its website that answers many basic, mortgage-related questions. The new FAQ, dubbed “AskCFPB,” includes an interactive online tool designed to answer consumers’ most frequently asked questions in plain language.

The bureau has also added a new tool to its website that helps consumers find local housing counseling agencies that can answer their questions or address their concerns. Consumers who have an issue with consumer financial products or services, such as a mortgage, can also submit a complaint.

In addition, the bureau has published a fact sheet with an overview of all of the new consumer protections in the new mortgage rules - as well as a summary of the new procedures to facilitate borrowers’ access to foreclosure-avoidance options.


Ocwen Settles With
CFPB For $2.1 Billion

Mortgage servicer Ocwen Financial Corp. and its subsidiary, Ocwen Loan Servicing, in December was ordered by state and federal regulators to provide $2 billion in principal reduction to underwater borrowers for the company’s alleged “systemic misconduct at every stage of the mortgage servicing process.”

In addition, the company - the largest non-bank mortgage servicer and the fourth-largest servicer in the U.S. - has been ordered to refund $125 million to nearly 185,000 borrowers who have already been foreclosed upon and must adhere to significant new homeowner protections.

The punitive and compensatory action brought by the CFPB, as well as authorities in 49 states and the District of Columbia, comes as a result of an investigation that began in early 2012.

At that time, examinations by the Multistate Mortgage Committee, which comprises state financial regulators, identified potential violations at Ocwen. As the investigation developed, and as federal authorities became involved, it was revealed that Ocwen had pushed some borrowers into foreclosure as a result of “servicing errors,” including failing to apply payments made by borrowers in a timely manner and failing to maintain accurate account statements.

In addition, the servicer is accused of charging borrowers “unauthorized fees for default-related services,” imposing force-placed insurance on consumers when they “already had adequate home insurance coverage,” and providing “false or misleading information in response to consumer complaints,” according to a CFPB press release.

Ocwen is also accused of deceiving consumers about foreclosure alternatives and improperly denying loan modifications. Specifically, the company “failed to effectively assist, and in fact impeded, struggling homeowners trying to save their homes” by “failing to provide accurate information about loan modifications and other loss mitigation services; failing to properly process borrowers’ applications and calculate their eligibility for loan modifications; providing false or misleading reasons for denying loan modifications; failing to honor previously agreed upon trial modifications with prior servicers; and deceptively seeking to collect payments under the mortgage’s original unmodified terms after the consumer had already begun a loan modification with the prior servicer,” the CFPB’s release states.

What’s more, Ocwen is accused of “providing false or misleading information to consumers about the status of foreclosure proceedings where the borrower was, in good faith, actively pursuing a loss mitigation alternative also offered by Ocwen” and “robo-signing foreclosure documents, including preparing, executing, notarizing and filing affidavits in foreclosure proceedings with courts and government agencies without verifying the information.”

“Deceptions and shortcuts in mortgage servicing will not be tolerated,” Richard Cordray, director of the CFPB, says. “Ocwen took advantage of borrowers at every stage of the process. Today’s action sends a clear message that we will be vigilant about making sure that consumers are treated with the respect, dignity and fairness they deserve.”




HARP Volume
Still Declining

Rising interest rates resulted in a significant decrease in refinancing volume during the third quarter of 2013, according to the Federal Housing Finance Agency’s (FHFA) Third Quarter 2013 Refinance Report.

A total of about 900,000 refinancings were approved during the quarter, about 200,000 of which were through the Home Affordable Refinance Program (HARP), according to the report.

As of the end of the third quarter, a total of 778,000 HARP refinancings had been approved for the year. As of December, more than 2.9 million homeowners have refinanced through HARP since the program began in April 2009, according to the report.

HARP volume represented approximately 23% of total refinance volume in the third quarter, the report states. Borrowers with loan-to-value (LTV) ratios greater than 105% accounted for 36% of the volume of HARP loans.

The number of completed HARP refinances for deeply underwater borrowers - those with LTV ratios greater than 125% - continued to represent a significant portion of total HARP volume, the report states. Sixteen percent of the loans refinanced through HARP in the third quarter had higher LTV ratios.

HARP continued to account for a substantial portion of total refinance volume in certain states. Through the third quarter, HARP refinances represented 57% of total refinances in Nevada and 49% of total refinances in Florida - more than double the 22% of total refinances nationwide over the same period.

HARP was originally set to expire on Dec. 31, 2013, but was extended to expire on Dec. 31, 2015.

In September, the FHFA launched a new website and hired HGTV personality and Power Broker star Mike Aubrey to help raise awareness about HARP, which has been less popular with borrowers than was initially expected. The new website, www.harp.gov, and celebrity endorsement are part of a nationwide campaign to boost HARP participation rates.

Launched in 2009 as a joint project of the FHFA and the Treasury Department, HARP was designed to assist borrowers with existing mortgages owned or guaranteed by government-sponsored enterprises (GSEs) Freddie Mac or Fannie Mae with refinancing, even if they had little or no equity, or were underwater.

Initially, the FHFA had forecast that 4 million to 5 million borrowers would take advantage of the program, but by September 2011, the participation rate was fewer than 1 million. In response, the FHFA, along with the GSEs and other industry stakeholders, identified several issues that were deterring homeowners from using the program, including the fact that loans with LTV ratios greater than 125% were not eligible for HARP refinances and that the program’s short duration (approximately 15 months) was discouraging lenders from participating.

After soliciting feedback from stakeholders, many of the problems with HARP were addressed, compromises were made and in October 2011, a re-branded program, “HARP 2.0,” was launched. Changes included removing the 125% LTV ceiling and extending the duration of the program by 18 months.

Since that last round of changes, however, participation has continued to decelerate. According to the FHFA, HARP refinancing volume continued to drop during the second quarter of 2013 - although volume remains at above-average levels prior to program changes implemented in 2012.

Meanwhile, the Office of the Inspector General has identified additional barriers to HARP participation, and a new round of modifications to the program has been proposed; however, the so-called “HARP 3.0” program is yet to be approved and codified.




Fannie, Freddie Stave
Off 3M Foreclosures

Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac have completed more than 3 million foreclosure prevention actions - including modifications, refinancings and short sales - since the start of conservatorship in September 2008, the Federal Housing Finance Agency (FHFA) notes in its third quarter Foreclosure Prevention Report for 2013.

Former FHFA Acting Director Edward J. DeMarco called the milestone “a significant achievement.”

“It represents real assistance to homeowners, improved stability for their communities and has produced meaningful savings for taxpayers,” he said of the GSEs’ foreclosure prevention activities, including loan modifications through the Home Affordable Modification Program (HAMP) and other non-HAMP modification programs, forbearance plans and repayment plans.

The foreclosure prevention efforts also include deeds-in-lieu of foreclosure, streamlined modifications and short sales, which have helped roughly 2.5 million borrowers stay in their homes. More than 500,000 borrowers had avoided foreclosure through short sales or deeds-in-lieu through these programs, as of the third quarter, the FHFA says.

The FHFA points out that during the past several years, it has introduced and refined a number of programs to enhance the GSEs’ foreclosure prevention efforts. For example, in August 2012, it consolidated four existing short sale programs into one, thus helping mortgage servicers expedite the short sale process. In March 2013, it eliminated the administrative barriers associated with document collection and evaluation by introducing a program requiring servicers to offer eligible borrowers who are at least 90 days delinquent on their mortgage a trial offer, including new mortgage terms, without also requiring borrowers to document their hardship or financial situation. s

Agency Updates

CFPB Empowers Borrowers To Fight Servicer Misdeeds




































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