Reporter Kristi Marohn with the St. Cloud Times wrote an excellent article, "Experts: Improper fees play part in crisis--Servicers may benefit from loans in default" on how some loan servicing companies are engaging in abusive tactics which is helping fuel mortgage defaults across the United States.
The loan servicing companies typically do not own the loans they service and profit margins of just servicing loans is actually fairly small but they can make a tremendous amount of money in tacking on fees and penalties. Loan servicing companies can make even more money if a loan goes into foreclosure because they can charge even more fees.
The ongoing frustration for homeowners, attorneys, and others is that many loan servicing companies are simply none responsive to problems associated with the loans they service. We are seeing fees being charged to consumers for such things as Pre-paid Late Fees for all of 2009, 2010, 2011 or Pre-paid monthly inspection fees for years in advance when there is no inspection even done.
The charging of these fees is a direct cause for an increase in foreclosures across the United States. We are seeing these fees and many other unknown fees being charged now when borrowers enter into loan modification agreements which is why the default rates are so high for those borrowers who have entered into a loan modification only to find themselves stuck again in foreclosure because the fees that were charged forced them into foreclosure once again.
RESPA's Section 6 is routinely ignored by the loan servicing companies as most Qualified Written Requests are either totally ignored or the information they provide is non-information or a letter stating that the law does not require them to give information to the borrower on his/her own loan.
Loan servicing fraud is very prevalent and one must be very diligent when evaluating causes of action. When evaluating a claim please make sure you pull the courthouse records to make sure the signatures of the borrowers are actually the borrowers. We are seeing and hearing of many cases where the loan servicing employees are forging borrowers signatures to documents. These documents often increase the fees so much that it forces homeowners into foreclosure because they can't get anyone on the phone from the loan servicing companies to fix or even address the problems the loan servicer itself caused.
We urge everyone to call your congressman and senator and request they regulate this industry. This is a completely unregulated industry and the abusive behavior is fueling the credit and housing crisis in the United States. Consumers need real protection and relief from those loan servicing companies are preying on the American public.
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REAL ESTATE SETTLEMENT PROCEDURES ACT: LOAN SERVICING ABUSE REQUIRES QUICK GOVERNMENT INTERVENTION