Since early 2010, it seems as if the whole thing revolves around ‘the problem servicers.’ These are the companies and the team of people tasked to ensuring that your mortgage loan stays alive. Are they innocent victims of their own greed and over- specialization, or are they victims of their clients and the industry as a whole?
One of the main areas of fueled controversy has been the servicing business exchange. This has all been tied into foreclosure problems we experienced in the second quarter of 2010. This was the origination part of the process.
refers to the part of processing your mortgage application where loans are originated. In what has been roundly criticized as being totally incompetent, wrong-headed and openly dishonest the servicing agent simply acts as a buffer between the bank and the origination team so that all parties involved don’t have to step foot in the room where the loan is processed.
Granted, this is completely understandable and understandable because it could have deadly consequences if overlooked.
However the issue makes its way to the headlines and the media when Wells Fargo Servicing was exposed as being fraudulent in a state of affairs that the media-hype brings to the attention of the public. The originating loan team was so busy making lots of money that they simply agreed to rubber-stamp every troubled loan they came across. So what happens when defective loans are filed into the system by inaccurate or fraudulent originating loan teams? Because the originate too are just as sloppy and unprofessional they don’t find out until their computer crashed that the bad loans were being originated. How could mistakes be made? Just as in a car crash, the causes could be purely of originator’s origin.
Looking at the servicing team who’s supposed to take these on, they seem to be as guilty as the originating loan originators. This leaves lenders confused as to what they can do. They charge to process these loans … now … they don’t.
A major problem with servicing is that most of the time, the servicing team is unfamiliar with, if not MacDonald’s meats as a whole or anything else for that matter. This is the classic case of back-side-finance.
The originating mortgage loan is being handled by the processing team. In this case, the servicer may have several hundred loans they’re managing. A service provider is sending the originating loan to and unknown to the originating loan, the servicer in on your account may have a different title; they’re the unit which actually owns and processes your loan-and your private information.
The service provider, which is generally a mortgage lender or bank, may then hold its borrower’s account to process and take ownership of the loan in return for an adjustable-interest rate mortgage.
If the compensation agreement is intended to avoid oversight, this can be an invitation for claims of abusive conduct. What most troubles me is the fact that people’s homes are being placed on the line for lack of knowledge.
oversee payment of the mortgage
Collect monthly payment from the borrower
Automatic renewals fees
Handle the payment of the property tax and insurance premiums
Seconds periodic actions
Refund the loan amount to the borrower
File tax and insurance claims
Assist in selling the property at the minimum possible value (that’s what the headlines read about many servicing programs nowadays)
Own the property (and have many work-related claims on their title)