Is the Mortgage Food Fight finally over?

food fightConsumer Watchdog says mortgage servicing still riddled with problems
Source: The Washington Post

Error-prone and even abusive practices still plague the mortgage servicing business, according to a new report from the Consumer Financial Protection Bureau (CFPB). The report indicates that servicers have made a variety of mistakes, including sloppy payment processing, poor communications with consumers, and insufficient programs to ensure compliance with federal laws. Under the 2010 Dodd-Frank law, the CFPB is tasked with oversight of consumer products, including mortgages and credit cards, due to issues that stemmed from the 2007-2009 financial crisis.

Making sense of the story

  • The CFPB has launched investigations into the conduct of banks and other financial firms since many companies continue to violate the terms of the 2012 National Mortgage Settlement.
  • In some instances, homeowners faced extra fees due to the sloppy payment processing of mortgage servicers. Also, some homeowners were not notified that their loans were transferred to another company.
  • Non-bank servicing firms, which are now subject to examinations, reportedly lack formal procedures to address consumer complaints or ensure quality control. The report shows an absence of systems for compliance management.
  • “Deceptive communications to borrowers” about modification requests remains an issue, and services failed to help struggling homeowners find more manageable repayment plans where possible. Applications for loan modifications also took too long to process.
  • New mortgage servicing standards are set to take effect in January 2014 to force servicers to give homeowners easy access to information about their loans, among other things. The CFPB issued the new standards to promote greater transparency.

Read the full story

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Do you ask Mom and Dad for the cash to buy that home?

parent loanAsking Mom and Dad for Cash to buy that Home

Source: Wall Street Journal

Loans from family members could go the extra mile in making a down payment, but financial experts say parental help is most useful when it comes as a gift rather than a loan during the mortgage application process. A family loan may not be viewed favorably by a lender and could lead to disqualification for a mortgage since the loan is considered unsecured debt.  Read the full story.

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