Archive for May, 2013
The LA Times is reporting that Bank of America and JPMorgan Chase Bank say they have each satisfied their obligations under the multi-bank $25 billion mortgage settlement agreement. Wells Fargo claims that it is 90 percent of the way to meeting its obligations.
This self-reported information will not be credited officially until Joseph J. Smith Jr., the national monitor for the settlement, reviews the data. So far Smith has certified completion only by Residential Capital, a subsidiary of Ally Financial Inc. (formerly GMAC).
As a foreclosure defense attorney, I view this as a major signal that Bank of America and Chase are about to get much more difficult in their foreclosure and loan modification approaches. Up until now, they have been under some scrutiny in light of the global settlement. However, if they are released from any kind of oversight or any restrictions imposed by the settlement terms, it’s going to be back to business as usual. So, if you have a loan that is either owned or serviced by Bank of America or JPMorgan Chase, it’s more important than ever to get out in front of any difficulties you may have with your mortgage. Do not simply sit back and assume you will get a modification at the 11th hour before a foreclosure. It can and does happen, but the more lead time you give yourself, the better.
The federal government is very good at national defense. They tend to screw up most of the other functions they attempt. CNBC reports that the Federal Reserve announced that some 96,000 borrowers who received checks to compensate them for wrongful foreclosures on their mortgages will be getting an additional check to correct for errors in the initial payment. The Federal Reserve said the initial checks that homeowners received were too low because of errors made by Rust Consulting, the company handling the payments. The report states that affected borrowers had loans serviced by subsidiaries of Goldman Sachs and Morgan Stanley.
These settlement checks were part of the global settlement agreement among 13 banks that totaled $25 billion (which is a lot less than it sounds when you divide that number up among the millions of mortgages impacted by it).
To me, these check errors are representative of the whole mortgage mess of the last 4 years. Even when the banks and government try to do the right thing, they screw it up and borrowers get short-changed (literally, in this case). This is why I reiterate to people that, if you are facing problems with your mortgage–or you anticipate facing problems in the near future–go on the offensive with your lender. Don’t just sit back and assume everything is going to be ok. If you’ve submitted modification paperwork, don’t assume that they are going to promptly process it and come back with a happy result. Stay on top of things and document EVERYTHING–who you talk with, what you sent, when you sent it, what the bank representatives told you, etc. The more you stay on top of your lender, the more likely you will have a positive outcome.
Every time I think about force-placed insurance, my stomach turns. It is the definition of kicking someone while they’re down (and in some cases, pushing them down first). As most people know, mortgage lenders require homeowners to maintain insurance on their property to protect their home (the bank’s collateral). When a homeowner fails to do this, the mortgage servicer will acquire what’s referred to as “force-placed” or “lender placed” insurance. This force-placed insurance is often times anywhere from two to ten times as expensive as a normal homeowners policy. And it usually doesn’t cover contents or liability.
The reason force-placed insurance makes me sick is because mortgage servicers do not look for favorable rates for homeowners. To the contrary, they charge homeowners ridiculous premiums. Many times, these homeowners are already in a financial bind, and servicers just pile on excessive charges. Well, people are starting to notice this. As I wrote about here, force-placed insurance giant Assurant/American Security Insurance Company was fined $14 million by the New York State Department of Financial Services.
Well, it turns out this wasn’t the first slap on the wrist that Assurant/American Security Insurance Company has received. In October 2012, the California Department of Insurance announced that Assurant/American Security Insurance Company would be lowering its rates in California by $47.2 million for its policyholders. Why? Basically because American Security Insurance Company had been overcharging homeowners. This rate-lowering impacted 74,000 Californians.
If you believe you have been overcharged for force-placed insurance, or had force-placed insurance wrongly charged to you while you maintained conventional homeowners insurance, call the attorneys at Duke Seth, P.L.L.C. at (214) 965-8100.