US Banking oversight FAILURE

A recent article on CNBC,com on June 19th tells the story of banks not being helpful to homeowners still in need of payment reductions. More than a year after the nation’s five-largest mortgage servicers signed a $26 billion legal settlement with 49 state attorneys general and the U.S. Department of Housing and Urban Development over blatantly improper foreclosure procedures, those banks still need to do better. That is the conclusion of the National Mortgage Settlement’s monitor, former North Carolina banking commissioner Joseph A. Smith, in a report released Wednesday.

“It’s better than it was. It’s not as good as it needs to be, and we’re going to keep at it,” Smith said in an interview. File a complaint with the Mortgage Oversight website here…and good luck getting any response.

In addition to $26 billion in relief to customers wronged by so-called, “robo-signing” foreclosure document fraud and other abuses, the five lenders, Bank of AmericaJPMorgan Chase, CitiMortgage, ResCap (formerly Ally/GMAC) and Wells Fargo, are required to comply with 304 servicing standards.

The banks are required to use their own employees, albeit those separate from their servicing operations, to work with members of the monitor’s staff to assess their performance using 29 separate metrics; these range from foreclosure sale errors to modification denials to workforce management to servicer decision timeliness.

Four out of the five banks reported failures in the latest and most comprehensive round of testing. Only ResCap showed no violations of the servicing settlement parameters. Both Bank of America and Chase reported two failures each, both having to do with response times to customers. CitiMortgage and Wells Fargo each reported one, again relating to document collection timeline compliance.

“I think the failures that are important are the failures with regard to prompt response to borrowers who are seeking to file an application for relief,” said Mr Smith. “The timeliness is important to the borrowers and to the people who advise them.”

The four lenders now have a chance to correct their violations, under the settlement agreement. If they cannot or choose not to, then the monitor can seek punishment in the form of penalties up to $1 million or, in certain circumstances, $5 million. As of the monitor’s last relief progress report on May 21, 2013, the servicers reported distributing $50.63 billion in direct relief to more than 620,000 homeowners, or approximately $81,000 per homeowner.

So again we see fines being administered against banks, but how does that put money back in the hand of tax payers who bailed out the banks?

Now our stance on this situation…..It’s NOT GETTING BETTER, it’s worse than it’s ever been. The banks are playing shell games with consumers and our personal experience is summarized in a few of the main issued below:

– No process in place to confirm submission was rec’d, we have to call to confirm and then calendar.


– Employee’s leave or are re-assigned and their files just stay in limbo until someone realizes no one is working their files.


– No accountability of when the file came in, so technically no start date for the mod process, that way when they are audited they can make it up.


– Requesting updated documents via phone not mail, so there is no paper trail, and most people don’t return calls so the file goes dead.


– Keeping the file under a certain code that has no time parameter, so the account manager has no open tasks to complete.


– File is reviewed by a robot not a person, so specific details are missed, such as hardship for disability/death/newborn.


– File notes are vague, so there is no accountability for anyone who reviews or touches the file.


– No call logging, so they can’t confirm or deny that someone called for info/update.


– Delaying valuations so that prices can increase during peak months.


– Changing servicing close to approval, so file starts over for mod or short sale.


– Changing investors during review, so file starts over due to new investor guidelines.


– Government loans go through 2 processing paths, one with servicer and one with investor.


– 30 day doc expiration, and 90 day review process.  So basically, at the minimum you will have to update docs at least twice often up to 6 times designed to get homeowners to give up.


– 4506-T rejection excuse, IRS does not provide back end information, and the rejection is an internal servicer rejection for their system.


– Review of BPO values takes about 30 days, and in some cases, the valuations expire before they are even reviewed, vicious cycle of no accountability or timeframe.


– Trustee’s have no accountability for the information they receive from the lender, no checks and balance in place.


– Trustee’s switched in the middle of a review, and sale date is reassigned without notification.


– Trustee’s information does not match lender’s file information, very common, have to cross reference.


– File reassignment internally, to waste time and skirt around the review process for involved or less than straight forward files.


360 Group has been battling the system. As we uncover these obstacles, we creatively counteract them with legal president governed by HUD which forces the lender to comply. Knowledge of the system helps us to know just where to hold them accountable. It is not a perfect science, but it has been helping push things through when it gets tough. What used to take 30 days now takes 90, but it still eventually gets done.

If you know anyone who needs help navigating the bank regulations, we can help. Our consultations are always free and we are here to serve.



Bye Bye Reverse Mortgage Piggy Bank

Seniors looking for a big cash payout from a reverse mortgage will have to look elsewhere for needed funds. A small but increasing number of defaults on the loan product has prompted a crackdown by the Federal Housing Administration (FHA) on the biggest payout loan to homeowners.

The basic theory behind reverse mortgages — you must be 62 or older to apply — and instead of making payments to a lender like in a traditional mortgage, the borrower receives non-taxable money from the lender, which does not have to be paid back for as long as the person lives in the home.

Borrowers are now restricted in how they get one type of reverse mortgage known as the standard fixed rate Home Equity Conversion Mortgage Loan, or HECM. The HECM has been the most popular with borrowers because it yields the greatest amount of money — often in the hundreds of thousands of dollars — in one lump sum. HECM loans are still available — but instead of having fixed mortgage rates, they are offered only with variable rates, which yield less immediate cash.

Financial Lifeline

The FHA insures some 90 percent of reverse mortgages purchased from private lenders. It says about 58,000 loans — or nearly ten percent of its reverse mortgages — were in default in 2012. That’s up from 2 percent ten years ago. The FHA says it faces some $2.8 billion in losses from the defaults, which could force it to seek a bailout from the federal government next year.

By halting the fixed rate standard HECM, the FHA said in testimony before Congress late last year that it hopes to prevent more defaults in the future. “This does limit an option for people thinking about reverse mortgages, but you can understand why the FHA is doing this,” executives explained. “There’s some real concern about people spending their cash too soon and defaulting. “The amount of the loan is based on the equity or sale value of the house, as well as the type of interest associated with the loan. Payments to borrowers are monthly for a specific time or as long as the borrower lives in the house. The borrower retains title of the home, but the loan does have to be repaid when the person dies, sells the property or no longer uses the home as their primary residence. So basically, if you use all your equity and die, you leave a debt to your beneficiaries.

Borrowers still have to pay property taxes, home owners and mortgage insurance and any other home maintenance fees. Before applying, potential borrowers must meet with a government approved housing agency for counseling.

Critics of reverse mortgages say they come at too high of a price. Interest rates can be steeper than traditional loans — current rates are between 4 and 12 percent. There’s also closing costs and up-front fees, which can average anywhere between $2,000 and $10,000 depending on the lender and type of loan. For people who are cash poor and house rich and need the money to stay in their homes, the product may be helpful, but you really need to understand the products benefits and drawbacks.

Reverse mortgages are touted as a financial planning tool for seniors, however, one must be educated on the pro’s and con’s before signing on the dotted line. Not only are the transaction fees excessive, but they are usually a stopgap that leave seniors in a much worse financial position when they are exhausted of their funds from the loan.

As always, DO YOUR RESEARCH, be careful not to be too trusting, and speak to many sources before you decide to secure a Reverse Mortgage. For some, and used properly, it can be a good tool, for others, a financial disaster in the wake.

HowToSaveMoney helps people mitigate debt. If you have any questions, comment or contact us from our website.