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July 4, 2011

Mortgage servicing woes

When the brouhaha over foreclosure "robo-signing" hit last fall, mortgage servicers said the bogus court documents were just minor deviations from the rules and didn't change the fact that borrowers were way behind on their payments.

But it's increasingly clear now that servicing problems aren't limited to foreclosure documentation or to people who aren't paying.

Consider, for instance, Lutherville doctor Anca Safta, whose servicer threatened to start foreclosure proceedings this spring even though she'd never missed a payment. The company wasn't crediting her account because of an error in its records.

Or consider the Massachusetts couple whose Florida retirement home -- paid for in cash -- was broken into and cleaned out by a servicer's contractor last year in a case of mixed-up addresses.

You can read more in Sunday's story about mistakes and misbehavior. But there was lots of interesting stuff I couldn't fit in the story, and it seemed a shame not to share. For instance:

Borrowers (and some number of mortgage-less victims of the foreclosure crisis) aren't the only ones with complaints. Increasingly the pension plans, investment funds and other investors that bought loans as mortgage-backed securities are making it clear that they're unhappy with their servicers, too.

"As difficult as it may be to believe, many of the most sophisticated investors were as victimized and abused by the servicers and their affiliates as were many consumers," said Chris J. Katopis, executive director of the Association of Mortgage Investors, in May testimony to a Senate banking subcommittee.

I'll be parceling some of the other interesting tidbits into blog posts this week. In the meantime, here's a video in which Safta explains some of the twists and turns in her situation. (You'll have to see the story for the rest -- when we chatted at her home, she had yet to get an explanation for what exactly had gone wrong.)


Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Mortgage servicing, Mortgages, The foreclosure mess


I hate to say it, but an awful lot of these mixups sound ominously like the types of errors that are likely to occur when the lenders, big and small, aren't willing to invest in the salaries and training necessary to have qualified staff to do the work. Certainly a way to keep their costs low, but at the expense of customers.

Lisa, I've definitely heard complaints to that effect.

I would like to acknowledge that many of those people who were in fact missing payments were not necessarily in homes that were too much for them as we hear so often. One must consider where home prices are now to know that those artificially inflated prices and interest rates with which many of those home owners closed were unjust and a mandate given to write-down the principle should/would have kept many in their homes

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie

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