Yesterday, the Consumer Financial Protection Bureau (CFPB) released a report on mortgage servicing issues.  In relevant part, the CFPB highlighted ongoing loss mitigation mistakes made by banks, noting that CFPB examiners discovered problems like:

  • Inconsistent communications with borrowers, giving them conflicting instructions for loss mitigation processes;
  • Inconsistent loss mitigation underwriting, waiving certain fees and interest charges for some borrowers but not others;
  • Long application review periods, making the loss mitigation process especially hard on consumers whose accounts are also dual-tracked for foreclosure;
  • Incomplete loan files, making it challenging for consumers to find out about their loan modification applications when they call the servicer for help;
  • Poor procedures for requesting missing or incomplete information from consumers, making it difficult for consumers to provide the correct documentation; and
  • Deceptive communications to borrowers about the status of loan modification applications, leading some consumers to faster foreclosure.
To remedy the issues described above, the CFPB stated that where it found any servicing errors, it alerted the company to the problem and instructed the company as to specific remedial or corrective measures.