Mortgage servicers and servicing critics agree on at least one point: The industry has made mistakes, and things should change. What's in dispute is the scope and type of problems -- and how often misbehavior plays a role.
David H. Stevens, president and chief executive of the Mortgage Bankers Association, a trade group whose members include servicers, talked with me for this week's story on the state of servicing and said he's supportive of the idea of nationwide mortgage servicing standards -- which seems likely to happen under the guidance of the new Consumer Financial Protection Bureau.
"Coming out with a common set of standards that applies to everybody, ideally applies to all states, would create a system in this country that would have integrity and protect consumers and be enforceable, and that's what we're lacking right now," said Stevens, former commissioner of the Federal Housing Administration. (He expressed concern about competing sets of rules, some in place, some in the works.)
On the subject of servicing problems, he said "mistakes were made, and they were made in a variety of different ways." He said servicers were caught off guard and overwhelmed by the extent of the housing crisis, though he said some companies were more adept than others.
The problems Stevens is talking about are the ones struggling borrowers are well acquainted with by now. He rattled off a list "from lack of trained resources, to being able to properly explain these new [assistance] programs that had been created, to operational challenges of handing off a borrower who calls a call center to someone knowledgeable about underwriting guidelines."
That all falls into the broad category of foreclosure-prevention assistance -- loan modifications, short sales and the like. Situations such as Lutherville doctor Anca Safta's -- where a servicer sent an intent-to-foreclose notice because it wasn't properly recognizing her on-time payments -- "would be an extreme rarity in the process," Stevens said. Loan-modification issues are "the more common challenges we have heard," he said.
Homeowner advocates say problems such as foreclosing on the wrong people, locking people out of their homes and throwing away their possessions when they weren't behind on any mortgage or weren't yet to the point of foreclosure auction, and charging inappropriate fees are more common than the industry acknowledges.
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