Rogue Loan Modification Servicers, What Are The Signs?

The Loan Modification Program is not exactly 2009 success story. Out of the 750,000 trial loan modifications around 31,000 have become permanent, not great odds even if you are a betting man (or woman).

What makes things worse is that in order to manage such a volume of trial loan modifications for HAMP (Home Affordable Modification Program) servicers are employed to do the paperwork and provide advice for the borrower. However some of these servicers have been known to provide bad advice, ask for illegal contracts to be signed and other examples of malpractice.

Keeping away from bad egg servicers is important if you are to be successful in your loan modification. This article will provide some pointers on what to look for to set apart the good from the bad and the ugly of HAMP servicers.

Unfortunately bad HAMP servicers are a uncomfortable reality. Just this week Ohio Attorney General Richard Cordray filed a lawsuit against Barclays Capitol Real Estate working as HomeEq Servicing.

Why was Barclays sued? Although the complaints filed against Barclays are still to be proven and we all like to think we are innocent until proven otherwise, it will prove a good example for the point this article is making. Which is, choose your HAMP servicer wisely.

HomeEq was accused of:

1) Violating Ohio’s Consumer Sales Practices Act (CSPA) through incompetent and inefficient service. More specifically HomeEq failed to return customer calls or reply to inquiries, lost borrowers paperwork and more importantly failed to provide timely and affordable loss mitigation options to their customers.

2) Not reacting to repeated warnings by the Attorney’s office. According to the Attorney General Richard Cordray, ample time has been provided to servicers in Ohio and elsewhere to change their ways and stop their negligent behavior.

HomeEq services more than 10,000 subprime loans in Ohio alone, becoming a HAMP participant in August. HomeE q is not exactly overachieving in the loan mod department being one of the lowest performing servicers.

Not surprisingly HomeEq feels the complaint is groundless and that they are commited to quality customer service and to work with financially distressed borrowers… bla,bla, bla.

What signs identify Roque Hamp Servicers?

There are many, too many to number but some big ones stand out.

- For instance if your mortgage servicers asks you to sign one sided agreements that obviously are biased toward the lender the alarm bells you are hearing are not imaginary.

- Upfront fees. It is illegal to ask for fees for servicers that have not been supplied.

- If you are asked to waive your right to defense by a HAMP servicer, run, they are trying to take your for a ride.