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Report: Homeowners Cheated by Special Finance Firms

A family in California, not realizing where else to turn, recently called their local news station to report that their home had been foreclosed upon – despite the fact that they had never missed a payment and were in compliance with an earlier home loan modification they reached with their mortgage holder.

However, their loan was then resold to a company called Nationstar Mortgage. They received notice of this in the mail. A few months later, they got a knock on their door, telling them their home had been foreclosed upon and resold to an equities firm. This family with four small children were told they had to leave in two weeks and would need to pay rent in the meantime. The family was utterly baffled.

Our Miami foreclosure defense lawyers know that what happened here is likely to continue happening across the country, so long as banks continue to sell their mortgage loans to third-party investment firms.

Here’s basically what happened:

Their original bank was one of the five lenders who became beholden to the terms of the National Mortgage Settlement, an agreement reached in early 2012 wherein major banks agreed to collectively pay $25 billion to borrowers who had been negatively affected by mortgage fraud during the housing crisis.

The terms of that settlement also resulted in a series of protections for homeowners to ensure that they would not once again be vulnerable to victimization by these financial giants. Those protections include better communication with borrowers, the creation of a single point of contact, adequate levels of staffing and training and certain standards for execution of foreclosure documents.

This signaled good news for borrowers. However, it meant banks would have to pay additional funds to ensure that these guidelines were being met.

So they found a way to skirt their responsibilities. These mortgage servicing rights could then be sold to third-party servicers – companies that were not bound by the terms of that settlement agreement. In fact, they aren’t required to even abide by earlier agreements reached between banks and borrowers – including home loan modifications.

So what happened in this case (and many others) is that Nationstar was expecting the family to pay the full amount of the loan as it had stood prior to the loan modification agreement. However, it failed to let the family know this (after all, the firm isn’t required to adhere to those good communication standards laid forth in the settlement). So the family had “defaulted” on their mortgage, even though they had kept current with each payment, per the terms of their loan modification.

In addition to Nationstar, other “specialty financial firms” include Ocwen, Green Tree and Walter Investment Management, and several other banks are jumping on board with this stunt.

Last fall, Ally Bank’s entire portfolio – some $329 billion in loans – was purchased by Ocwen,which also bought part of JPMorgan Chase’s servicing rights and some from OneWest Bank as well.

Nationstar purchased servicing contracts from Bank of America and Aurora Bank last year, and more again earlier this year. It’s also gearing up to purchase servicing rights from Wells Fargo.

These third-party servicers have atrocious customer service records. But again, they aren’t bound by the terms of that national settlement agreement.

Still, that doesn’t mean you have no means to fight back. If you have learned that your mortgage has been snapped up by one of these firms, be mindful of the traps these companies set. If there is any attempt to cheat you out of your home or alter the terms of an earlier agreement, call us today to learn more about how we can help.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

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