A Senate Democrat is calling for an investigation into possible violations of terms reached a year ago as part of the $25 billion National Mortgage Settlement with five of the biggest lenders.
Sen. Barbara Boxer, D-Calif., urged Obama Administration officials to determine if borrowers are being denied protections, such as those against “dual-tracking” — foreclosing on homeowners who are trying to negotiate lower mortgage payments to avoid losing their homes.
Boxer wrote a letter Friday to U.S. Attorney General Eric Holder, Secretary of Housing and Urban Development (HUD) Shaun Donovan, and National Mortgage Settlement Monitor Joseph Smith.
“As a condition of the NMS (National Mortgage Settlement), participating banks agreed to ensure certain basic consumer protections in exchange for legal relief,” Boxer wrote. “However, while the banks have been relieved of that legal uncertainty, struggling homeowners continue to face a seemingly patchwork system that leaves them at risk of losing their homes.”
Other protections that should be investigated include the banks’ obligation to provide a “single point of contact” for borrowers to handle issues that arise and the requirement that servicers respond quickly to borrower concerns.
These alleged violations have surfaced in recent days after California homeowner advocates released surveys of nonprofit counselors and legal service providers who assist borrowers on a regular basis.
The survey of housing counselors also found that bank practices continue to disproportionately affect disadvantaged and hard-hit communities, including limited English proficient (LEP) borrowers, widows, and people with disabilities.
The banks that are parties to the settlement are Ally/GMAC, Bank of America, Citibank, JPMorgan Chase, and Wells Fargo.
Wrote Boxer: “In addition, the survey found that the banks continue to lose documents and improperly deny borrowers the assistance they seek to stay in their homes.
“These violations have meant that California homeowners – especially those in the most vulnerable populations – still are not receiving the assistance they need to stay in their homes, causing unnecessary harm to families, neighborhoods, and the state’s economy.”
NMS Monitor Joseph Smith responded this week to the allegations from the housing counselors.
“Through the complaints and my meetings with AG (attorneys general) staff, housing counselors and lawyers, I have gotten an earful about the issues that borrowers continue to experience,” Smith said. “… problems with single points of contact, dual tracking and the loan modification process in general are still occurring all too often. These are the issues that guide my conversations with the banks.”
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