Tales of a Paralegal: Servicer Abuse

Author: Katie-Lee Harrison, Paralegal
 
A recent article in the New York Times  points to the ongoing problem of mortgage servicer abuse. Loan Complaints by Homeowners Rise Once More (What is the difference between a mortgage servicer and mortgage investor? find out here.)

We have experienced the problems with servicing transfers first hand:

1. We submit a loan modification application to Bank of America.
2. A week later the homeowner recieves a notice that Bank of America will be transferring  servicing rights to Select Portfolio Servicing (or any other number of servicers) next month.
3. So the loan modification sits in limbo until servicing rights transfer and SPS has processed the loan into their system.
4. We call SPS who tells us that although all other records have transferred over, we will have to submit a new loan modification application because they don't receive that information from Bank of America (plus 60+ days have gone by since we originally sent everything and since no one looked at it or reviewed the items they have all become outdated).
5. We resend the application to SPS with updated financial documents and then SPS tells us they have their own version of the required forms and can't use the forms Bank of America had accepted.
6. Finally, months after the original application was submitted and now a second application has been submitted and updated with the new forms, SPS begins to review the loan modification request.

It is a hassle and a pain and there is very little a homeowner can do to avoid such problems. However, there are things we have learned to make the transition as smooth as possible:

• Always keep a copy of the loan modification application and other documents submitted to avoid having to recreate the same information twice.
• When you receive notice that servicing rights will be transferred, look up the new servicer's loan modification requirements onlnine to find out if they have special instructions or required forms (if this information is not available online, you can call the new servicer before your loan has transferred to ask these general questions).
• The new servicer will send a letter with a new loan number as soon as servicing has transferred, prepare a complete loan modification application and write the new loan number at the top of every page.
• ALWAYS include updated & recent financial information when submitting the loan modification application to the new servicer.
• For most servicers, a loan modification application will be uploaded to their system 48-72 hours after it is received - call the new servicer to verify that all of the required documents have been received and sent to the correct department.

We've found that these tips have made the transfer much smoother and more timely. What has been your experience?