Foreclosures, Timothy Kingcade Posts

U.S. Regulators Order Banks to Quickly Improve their Foreclosure Practices

U.S. regulators have ordered 14 financial institutions to lay out plans to clean up their mortgage-servicing operations- and another 60 days to make the changes. Recently Fannie Mae, Freddie Mac and their federal regulator established new guidelines designed to encourage more successful modifications while preventing foreclosures from dragging on. The rules will require servicers to approach borrowers earlier and more frequently after a first missed payment in order to have a better chance at modifying loans. The mortgage titans will also pay more to servicers that meet certain benchmarks and establish timelines for banks to modify loans or process foreclosures.

Below are the requirements of the new regulatory order and how the banks have adjusted so far:

  • Single point of contact. Borrowers who have been bounced from one bank employee to another must get a “single point of contact” to steer them through loan modification the foreclosure process.

In June, Wells Fargo & Co. began assigning an employee and backup employee to each borrower seeking a loan modification. It plans to expand the effort to foreclosures and short sales, or sales for less than what is owed on the property.

Ally Financial Inc. assigns borrowers who have had trouble submitting a completed financial package a team of employees to help them gather documents, execute a final loan modification or weigh other foreclosure alternatives.

J.P. Morgan is working on a software program to make it easier for employees and borrowers to track loan-modification requests. Last year, it started providing some borrowers with a “relationship manager” to advise on the process.

Citigroup now provides borrowers with a single point of contact for gathering documents and handling short sales. In the next months, it will roll out a “concierge” system that will assign a small team of employees to help delinquent borrowers and homeowners at risk of default navigate the system.

  • Deadlines. Banks are required to set “appropriate deadlines” for deciding whether borrowers can get a loan workout.

Wells Fargo’s initial reviews average 79 days. Ally Financial said it responds to the average borrower within seven to 10 days of receiving a complete financial package. At Citigroup, the goal is to give borrowers a final answer about a permanent modification within 22 days of their final trial payment.

  • Staffing levels. Banks must make sure they have enough employees to deal with the tidal wave of troubled loans.

J.P. Morgan said it will add as many as 3,000 new home-lending jobs, mostly drawing the workers from elsewhere in the company. BofA said it hired roughly 3,000 people in the first quarter to work on troubled mortgages. Citigroup said it will expand its loan-modification unit by 500 employees.

Wells Fargo doesn’t expect to increase staffing because the number of borrowers behind on loan payments is declining. It might transfer employees from other parts of the company with excess capacity.

To read more about this story visit: http://online.wsj.com/article/SB10001424052748703367004576288833360386502.html?mod=googlenews_wsj

Foreclosure defense attorney, Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade & Garcia, P.A. website at www.miamibankruptcy.com.