The Loan Servicing Horror Stories Continue For Homeowners

A recent story by The Associated Press gives an "honorable mention" on the fine work of mortgage servicers Bayview Loan Servicing, Select Portfolio Servicing, and Ocwen Financial Corp. in their dealings with the average consumer homeowner. With respect to Bayview:

• In February 2005, Janet Simmons was more than $30,000 behind on her mortgage. Bayview Loan Servicing began foreclosure proceedings on her home, located on 3.1 acres in rural Rockingham County, Va., between Washington and Charlottesville. But Bayview — which stands to receive up to $44.3 million from Treasury's loan-modification program — foreclosed without providing required written notice, the Virginia State Supreme Court found. Bayview never sent Simmons a letter by certified mail, as required under her loan. Unbeknownst to Simmons, the home was sold at auction in July 2005. She didn't find out she had lost the house until the new buyer asked why she was doing yard work on a home she no longer owned, said her lawyer, Kevin Rose. The courts awarded Simmons $156,809 — the difference between what her home was worth and what it had received in a foreclosure sale.

In connection with Select Portfolio (formerly known as Fairbanks Capital Corporation):

• For six years, Jerry Turner made payments to Select Portfolio for a Charleston, W.Va., house he no longer owned. In 2000, Turner was promised a loan modification in a court settlement. His mortgage belonged to a bank-owned pool of loans eventually serviced by Select Portfolio. Instead of lowering Turner's payments as the court had ordered, the bank foreclosed on Turner's home, court documents show. The bank then bought the house at auction.

• Select Portfolio never told Turner his house had been sold. Instead, it continued sending him monthly invoices and cashing his checks. He didn't find out he had lost the house until it was sold a second time, at auction — because Select Portfolio hadn't paid property taxes on the home. "I had excellent credit at one time," Turner said. "Now, I can't borrow money on the house, I can't leave it, and it's been tied up so much I don't know what to do." Turner's case against Select Portfolio is pending in West Virginia state court.

Ocwen, which was reportedly found in 2004 by government regulators to be engaged in illegal, unsafe and unsound collection practices in the course of their mortgage servicing activities, hasn't fared much better:

• Ocwen, which is in line to receive up to $553.4 million from the Treasury, faces a federal class-action complaint for harassing homeowners with excessive phone calls, charging illegal fees and adding unnecessary insurance premiums to borrowers' bills. Ocwen engaged in "a nationwide scheme of illegal, unfair, unlawful, and deceptive business practices," the complaint contends.(1)

For the AP story, see Gov't mortgage partners sued for abuses (if link expires, try here).

(1) For a story on a Texas woman who reportedly alleges in a recent lawsuit that Ocwen foreclosed her residence even though she was on time with her payments, see The Southeast Texas Record: Kemah woman says mortgage company foreclosed despite payments. QuestionableServicingTacticsSigma