Latest News

CFPB: Michigan Bank Must Pay $37.5M For Failure To Provide Consumers With Relief From Foreclosure

http://ift.tt/1xuv4KD

Consumers facing the prospect of losing their homes have few avenues of recourse and when even one of those options is taken away, the results can be devastating. That’s just one reason why the Consumer Financial Protection Bureau announced action – to the tune of a $37.5 million – against a Michigan bank for its illegal conduct in blocking borrowers’ attempts to save their homes.

According to the CFPB, Flagstar Bank must pay victims $27.5 million and a $10 million fine to the CFPB for failing borrowers in every step of the foreclosure process.


Flagstar, a federal savings bank and mortgage servicer, administers foreclosure relief programs provided by the owner of the loan. The programs are meant to mitigate losses for both the borrower and the owners of the loans by providing alternatives to foreclosure.


The company is responsible for soliciting borrowers for mitigation programs, collecting applications, determining eligibility and implementing the loss mitigation program.


However, an investigation by the CFPB found that from 2011 to the present, Flagstar failed to devote sufficient resources to administering the programs.


The CFPB alleges that Flagstar took excessive time to process applications for foreclosure relief, failed to notify borrowers when applications were incomplete, denied loan modifications to qualified borrowers and illegally delayed finalizing permanent loan modifications.


To illustrate the company’s shortcomings, the CFPB provided an example from 2011 when Flagstar had 13,000 active loss mitigation applications but only assigned 25 full-time employees and a third-party vendor in India to review them.


At one point it took the staff up to nine months to review a single application and the average wait time for Flagstar’s loss mitigation call center was 25 minutes.


In addition to providing relief for borrowers and paying a fine to the CFBP, Flagstar must end all loss mitigation mortgage servicing violations, stop acquiring default servicing rights from third parties and engage in efforts to help affected borrowers preserve their homes.


CFPB Takes Action Against Flagstar Bank for Violating New Mortgage Servicing Rules [CFPB]




by Ashlee Kieler via Consumerist

No comments:

Post a Comment

THE PLUG MAGAZINE Designed by Templateism.com Copyright © 2014

Theme images by Bim. Powered by Blogger.