The more things change in the mortgage industry, the more things stay the same.
Case in point: Big banks in recent months agreed to pay, in aggregate, $26 billion to settle federal charges they engaged in unwanted evictions of underwater homeowners and charged erroneous fees when dealing with those mortgage holders. Now, similar complaints are being lodged about some of the small specialty firms that are increasingly moving into the space.
Known as servicers, such companies wield considerable power in deciding mortgage modifications and home surrenders. Such firms are also snapping up servicing rights at warp speed, despite lingering questions about their ability to handle the increased workload, which has increased by as much as six times since 2010. The rapid changes leave homeowners drowning in mixed-up paperwork and repeated requests for the same documents.
In response, federal housing regulators are stepping in. New York State’s top banking regulator Benjamin Lawsky halted the transfer of $39 billion in servicing rights from Wells Fargo to Ocwen Financial earlier this month, and officials with the Consumer Financial Protection Bureau are taking a closer look at sales to protect homeowners mired in the shuffle.
“The process should be seamless for consumers,” Steve Antonakes, a deputy director at the agency, told the New York Times. [NYT] — Julie Strickland