California Reinvestment Coalition

New Report Finds Ongoing Servicer Mistakes Push Homeowners to Foreclosure

Published May 20, 2014 12:56

Problems include servicing transfers, Single Points of Contact not working, and widows facing red-tape.

San Francisco, CA: May 20, 2014- A new survey of housing counselors and attorneys finds homeowners are facing unreasonable delays, numerous obstacles, and servicer run-arounds in seeking help from their mortgage servicers, despite new laws, programs, and settlements intended to protect homeowners. Housing counselors report that loan servicing transfers, Single Points of Contact not being available, and a lack of accountability prevent homeowners from accessing much-needed relief to avoid foreclosure. In conjunction with the survey (completed by 60+ counselors), eleven homeowners shared declarations that outline the many problems they and their nonprofit attorneys encountered in trying to obtain relief.

Kevin Stein, Associate Director at the California Reinvestment Coalition (CRC), explained: “The foreclosure crisis is not over, in fact, it’s made worse and longer by servicers who refuse to abide by the rules. Servicers are incentivized, and in many cases, required to provide assistance, but what we see instead is incompetent servicing, homeowner run-arounds, improper denials, and unreasonable delays, all resulting in homeowners being pushed closer to foreclosure. We are especially concerned that promised relief is still not getting to the hardest hit communities. With the release of this report, we are urging regulators to more closely monitor and enforce existing rules; address the many obstacles faced by widowed homeowners; provide dedicated funding for counselors and attorneys; and increase transparency to verify if relief is getting to homeowners and communities equitably.”

Lisa Sitkin, Managing Attorney at Housing and Economic Rights Advocates (HERA), worked with several of the homeowners whose declarations are included in the report, and commented on the specific challenges faced by widowed homeowners and other family members in similar situations: “When a borrower dies, the survivors – often a spouse or child – still face an uphill battle getting the servicer to speak with them, let alone help them resolve any delinquency or other problem with a mortgage account. The process drags on unnecessarily, the information provided to the borrower’s loved ones is incomplete, inconsistent or just wrong, and the survivors sometimes end up facing foreclosure while they are still grieving. The servicers can – and should – be doing a much better job for these families.”

In addition to the survey results, the report also includes summaries and declarations from 11 homeowners located throughout California, who faced a range of problems when seeking help from their servicers. The declarations are included in the appendix of the report, as are links to individual declarations.

The California Reinvestment Coalition advocates for the right of low-income communities and communities of color to have fair and equal access to banking and other financial services. CRC has a membership of over 300 nonprofit organizations and public agencies across the State.

Housing and Economic Rights Advocates (HERA) is a California statewide, not-for-profit legal service and advocacy organization. HERA's mission is to ensure that all people are protected from discrimination and economic abuses, especially in the realm of housing. We focus particularly on the needs of those who are most vulnerable, which includes lower-income people, the elderly, immigrants, people of color and people with disabilities.

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CRC has a membership of over 300 nonprofit organizations and public agencies across the State.