Banks will soon roll out a single website and phone number for borrowers whose loans were handled by the 14 servicers to request an internal review of their foreclosures. Loan servicers are hiring or redeploying thousands of employees to handle the additional workload. Fixing all the problems found by the U.S. government “is a multiyear process,” says a spokesman for the Office of the Comptroller of the Currency.
A year after U.S. banks slowed down the foreclosure machine as a result of pressure from judges and regulators, the foreclosure process remains snarled.
Lenders are back in the foreclosure business, and loan servicers say they have been working hard to improve their systems. The robo-signing controversy unleashed a legal, regulatory and public-relations nightmare that still haunts the nation’s largest home-loan servicers, including Bank of America Corp., J.P. Morgan Chase & Co. and Wells Fargo & Co. Banks say their reviews haven’t uncovered evidence of wrongful foreclosures but have acknowledged weaknesses in their processes.
A widely expected settlement of a probe of foreclosure procedures by U.S. regulators and state attorneys general could cost servicers as much as $25 billion, according officials involved in the talks. But the talks have stalled over the extent of any release that would protect banks from additional legal claims.
In addition, consent orders issued by federal banking regulators require 14 financial firms to create a single point of contact for borrowers and make other changes.
“You have a number of places in the country where the banks don’t know what to do or continue to violate the law. The courts are all over the map,” says Ira Rheingold, executive director of the National Association of Consumer Advocates, a group of lawyers and consumer advocates who work with homeowners. “I wish I could tell you I see much of a difference.”
The mortgage industry says it has been working hard to improve the handling of shaky loans. Industry practices are “far better today than a year ago,” says Ed Delgado, a former Wells Fargo senior vice president who leads the Five Star Institute, mortgage-training provider.
The snags are a temporary reprieve for some troubled borrowers who are desperate to hang onto their homes. Other borrowers have seen their negotiations with lenders stall.