Recent “robo-signing” and foreclosure scandals suggest that for thousands of homeowners, fairness and competency have not been so readily available. According to witnesses at recent 
congressional hearings, borrowers with on-time payment histories who sought loan modifications frequently were told they needed to stop payments for two to three months before they would be eligible to even discuss changes to their loan terms. When these individuals and businesses applied for modifications, they were sent foreclosure notices because they were in default.
It’s also suggested that servicers “pyramid” late fees and sloppy documentation, have had an increasing affect on borrowers’ debts to the point where foreclosure has become inevitable.
Some of the most blatant errors involve property insurance records. According to the National Consumer Law Center, $30,000 in fees were added to one homeowner’s principal balance by a bank during the seven months it took to process the modification request. It is reported abuse such as this that’s led to hundreds of lawsuits against banks and servicers that are clogging court calendars nationwide. This has prompted state attorney generals to negotiate a national settlement with the 14 biggest banks and servicers.
The draft proposal calls for billions of dollars in penalties from the banks along with additional billions in principal reductions for distressed and underwater borrowers. The core of the agreement would essentially amount to a new mortgage servicing bill of rights for borrowers. It sets out minimum standards and operating procedures that would govern how homeowners are treated in the future.
Below is a quick overview of the proposed “borrowers’ bill of rights”:
• Servicers would be required to employ enough trained loss-mitigation staff to deal with all borrower inquiries and request for loan modifications
• Servicers would be required to identify the bank or investor that is the legal owner of the mortgage
• Servicers will have to provide mortgage customers with a “single point of contact” – a designated employee, with a name and contact information – for their loan modification requests
• Dual-tracking of modifications and foreclosures would be banned
• Servicers would be prohibited from advising on-time customers to default, or discouraging borrowers from seeking help from non-profit counseling organizations.
• “Force-placed” insurance practices would be severely limited, including prohibitions on obtaining high-premium policies from subsidiaries, affiliates, the lender or servicer
If the proposed settlement occurs, it could give significant new protections to homeowners and borrowers, even for those that never had a payment problem or a need to modify their mortgage terms.
To read more on this story, visit:
http://www.miamiherald.com/2011/03/20/2119880/a-borrowers-bill-of-rights.html
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.
Florida’s foreclosure mediation program, designed to settle residential foreclosures and sort through the huge backlog of cases, is scheduled to end due to a recent ruling by a judicial committee. The program, which mandated that homeowners attend a mediation meeting with their lenders before a foreclosure case goes through the courts, began in late 2009. This ruling comes as another setback for struggling homeowners, placing them at a greater disadvantage against the government and big banks. A report presented to the high court said three main factors led to the program’s demise: borrowers not trusting the program; lenders not willing to settle cases in mediation; and officials not publicizing the program. This could not come at a worse time, as Florida has a backlog of about 350,000 foreclosures and more to come.