Suits Filed Against Sleazy Servicers – Treasury Knew

AP News reported today that mortgage servicers, the same mortgage servicers that have received and continue to receive hundreds of millions in federal funds to modify mortgages as part of President Obama’s Making Home Affordable program, are engaging in practices that would make the worst loan modification company in history look like the Boy Scouts of America.

According to the AP’s report, which came out today:

  • At least 30 servicers are being sued for charging illegally high fees, using illegal collection practices, and foreclosing on homes prematurely.
  • At least 14 have been accused lying to homeowners about whether they would qualify for loan modifications or how low their payments would be if they did receive a modification.  And in many cases, the servicers are accused of telling borrowers not to make payments because their applications for modification were being reviewed… and then moving to foreclosure anyway.

Apparently, three servicers settled federal predatory collection allegations by promising to change their behavior, and since then they’ve been sued hundreds of times by homeowners who say they were victims of such illegal practices.  Some say that the problems result from no one monitoring servicers to make sure they’re not abusing borrowers.

Julia Gordon, senior policy counsel with the Center for Responsible Lending, was quoted by AP as saying: “Servicers have flown under the regulatory radar.”

The AP story also described the plight of Jerry Turner, who was promised a loan modification as part of a court ordered settlement, but instead his loan’s servicer, Select Portfolio, foreclosed on the property and then the bank took the house back at auction.

It gets worse… Select Portfolio never told Turner that his house had been sold.  And they kept sending Turner invoices and continued cashing his monthly checks.  Incredibly, Mr. Turner didn’t find out that he had lost his home until it was sold a second time at auction – because Select Portfolio failed to pay the property taxes on the home on which they had long since foreclosed.  There’s a lawsuit pending in West Virginia courts, it should come as little surprise.

According to AP, “Many servicers in line for government money are accused of ongoing, systematic abuses”.  Read that again.  “Many” servicers?  “Many”?  I don’t remember hearing that during Obama’s speech on the Making Home Affordable program… or on the news at anytime since.

Select Portfolio, as part of its 2003 settlement with government regulators, pledged to stop collecting illegal fees and forcing borrowers to buy insurance.  But the company is now owned by Credit Suisse, and since then they’ve been sued dozens of times for the same sort of thing.

And check this out: Craig Bullock, a spokesman for Select Portfolio, said the company doesn’t comment on inquiries “about our practices and so forth.”

Is that right, Craigers, you spineless sycophant?  What is it that the company does comment on?  How about I write up all the crap you’re company has obviously been involved in… and I mail it in an invitation style envelope to your Mom.  How would that be, Craigy-poo?  Do you think you could comment on that, ass-face?

Another servicer, Ocwen, is apparently in line to receive more than $500 million from the Treasury, but is defending a federal class-action suit for harassing homeowners, charging illegal fees, and adding unnecessary insurance premiums to borrowers’ bills.  The complaint states that Ocwen was involved in:

“A nationwide scheme of illegal, unfair, unlawful, and deceptive business practices.”

Get involved in a national scheme of illegal, unfair, unlawful, and deceptive business practices that harm homeowners and cause them to lose their homes, and this government’s response seems to be: No problem, Sir, the line for the $500 million is right over there.”

Get involved in trying to help homeowners get their mortgages modified and they’ll shut you down, call you a scammer, and possibly even file criminal charges… because you failed to give someone 100% of their money back in 72 hours after working on the file for six months.

Paul Koches, Ocwen’s general counsel, in an email said: “We have a deep and continuing commitment to foreclosure prevention.”  Jackass.

Now, please pay particular attention to this next part:

According to AP, at least 28 other mortgage servicing companies on Treasury’s list also have been charged with, and in many cases settled, similar accusations.

And Treasury still says that it has no choice but to work with all servicers, no matter how dubious their records.  Treasury spokeswoman Jenni Engebretsen said that refusing to work with a particularly bad player would “deprive homeowners who have mortgages with that servicer from getting modifications.”

Oh, I see.  Like the way working with those servicers is getting people modifications now, Jenni?  Well, I suppose it’s working 9% of the time, according to data published today (August 4th) by the U.S Treasury.

President Obama, Secretary Geithner… this isn’t funny… you guys should be ashamed of what you’ve done here.  And the fact that neither of you have had the decency to say anything to the American people, the fact that you paid these corporate hooligans hundreds of millions while people were losing their homes and their jobs… well, it is repulsive.

Obama you lied to millions of others and to me.  You’ve squandered untold millions on servicers you knew had no ethics, and a track record that could not be trusted.  And in doing so you’ve caused pain beyond anything I’ve ever seen from a president.

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