Banks should improve their communications with homeowners seeking mortgage relief, according to UC Irvine law professor Katherine Porter, who is the California monitor for the $25 billion National Mortgage Settlement.
The 2012 deal compels the largest U.S. lenders to address mortgage and foreclosure abuses; but in a recent report, Porter said homeowners often are confused by letters from lenders. She cites ongoing problems for homeowners that include vague requests by banks for missing paperwork and poorly worded explanations of why loan modification applications were declined. Many mortgage servicers also tend to leave door hangers on homes inspected during the foreclosure process to make sure they have not been abandoned. Seeing these door hangers often caused consumers to feel confused and alarmed.
Porter did praise Bank of America's outreach in extinguishing homeowners' second liens, letters from CitiFinancial to inform borrowers that they were approved for reduced interest rates, and JPMorgan Chase's helpful website. The California monitor also devised a “co-branding” project that sent letters that included the state attorney general's name and symbol along with those of the banks. Many homeowners who had not responded to repeat letters from banks did respond to the co-branded letters, resulting in more than 700 additional families receiving $151.3 million in principal forgiveness on their mortgages, the report said.