Mortgage Settlement Overseer: Complaints Are Pouring In
August 2, 2012
The primary effort to pressure banks into offering home loan modifications to reduce how much borrowers owe has been the $25 billion, 49-state settlement with the largest U.S. banks connected to a "robo-signing" scandal. Joseph Smith, who heads the Office of Mortgage Settlement Oversight, says that since the settlement was signed over four months ago, his office has received nearly 1,000 complaints from consumers and about 85 from professionals who work with homeowners facing foreclosure. One problem with the settlement is that it has a lot of flexibility, with not all of the money going toward modifications. Some estimates say that the banks could do as little as $10 billion in actual principal reductions. Smith's office says that it is still unclear how many of the reported complaints are legit, or new. Attorneys at Staten Island Legal Services (SILS), which logged gripes with the mortgage settlement office, say there has not been a major change in banks' behavior since the settlement. For example, the banks now are supposed to provide a single contact for consumers. Although SILS senior attorney Joseph Sant says that banks are doing this regularly, he notes that the single point of contact tends to change every few weeks, and they appear to have little knowledge of borrowers' loans. Banks also must tell borrowers within 30 days whether they have qualified for a workout, but this seems to happen only rarely. Banks have until early October to fully comply with the settlement's servicing standards and three years to complete all required mortgage modifications. Smith says he is worried about the complaints, which are coming not only to his office but also to those of state attorney generals. Smith's office plans to release a preliminary report in August to report on the number and type of modifications banks have completed under the settlement.
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