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gone by since we originally sent everything and since no one looked at it or reviewed the items they have all become outdated).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?

Tales of a Paralegal: The Loan Modification Paperwork Monster

Author: Rita Paolella, Paralegal


You've missed several mortgage payments and the letters and phone calls start coming in. Now what do you do? If you want to keep the home you need to ask your mortgage servicer for a modification. What is a loan modification? It is the request to a servicer to modify your current loan to a set of new terms that allow you to catch up on your missed payments. Sometimes the loan modification may involve principal forgiveness, sometimes it will extend the loan term, sometimes it may reduce your interest rate, and sometimes it may do all of these or any combination thereof.

When you apply for a loan modification, your servicer will ask you for all kinds of paperwork that may seem overwhelming. They will ask for bank statements, paystubs, profit & loss statements for business owners, proof of insurance, utility bills, letters of hardship, tax returns, RMA, 4506-Ts, and so on. It seems like a mountain of paperwork and often times it is. Once you submit this paperwork you may be asked to resubmit it again and again if the paperwork ages during a review. You may even be rejected for a loan modification and have to reapply. You may even have to start all over if your loan is transferred to a new servicer. How do you deal with this paperwork monster?

As a paralegal at The Rogers Law Group, I work with many people trying to get a loan modification while they are defending against foreclosure or trying to prevent foreclosure. Hiring an attorney does not necessarily mean you will win or achieve your goal. It means you are hiring someone to "do battle" for you. Most of my day is spent battling the paperwork monster. The paperwork requests by mortgage servicer's can be annoying and cumbersome, but you have to do it. You have to work with your mortgage servicer and comply with their requests. It's like playing a game of tennis. The ball is in your court and you have to hit it or lose it.

My tips for fighting the paperwork monster: 

1. When you are asked for paperwork and documents, you must provide them in a timely fashion. Servicers will deny your loan modification request if you miss deadlines.
2. Don't make enemies with your point of contact at the bank (or at your attorney's office!). Being combative and non-compliant will not help you. It won't change what is required and you may need your contact to help you in the future.
3. Keep good records. Know who you spoke to and when. Keep fax confirmations and copies of what has already been submitted and when. And don't toss your future paystubs and bank statements because more than likely, the mortgage servicer is going to want updated copies!

This will help the process go smoother and will help your attorneys if/when they need documentation evidence for court. The paperwork monster must be dealt with whether we like it or not, because the ball is in your court.