As the Wall Street Banks continue their exodus from the home loan servicing business (the cost of foreclosures could very well be the reason), non-bank servicers such as Ocwen Financial and Nationstar Mortgage Holdings continue to pick up the slack and grow at an unabated pace. In the case of Nationstar, it now services (collects the monthly mortgage payments on), over $350 billion worth of mortgages. Of course, in the extremely crooked business of mortgage servicing, with that growth come consumer complaints about the way it conducts its business. In fact, so many complaints were made about Nationstar in the State of New York that the State’s top banking regulator, Benjamin Lawsky, opened an investigation into Nationstar’s business practices in March of this year.
Thus it should come as little wonder when we see cases such as Edward’s pop up on our radar screen. Edward is a client whose mortgage was originated by Countrywide in 2006. When Bank of America, in what has to go down as the dumbest corporate buyout ever, took over Countrywide in 2009, Edward was directed to make his mortgage payments to BOA. Not getting satisfactory answers as to actually who owned his loan, Edward simply decided to stop making mortgage payments in 2010. Foreclosure ensued a year later. During the four years since, Edward has been continuously fighting for mortgage relief in an effort to save the home.
Enter Nationstar into the picture in April of this year, when Edward received a letter from it advising him that it had taken over the servicing of his mortgage. Actually, another non-bank servicer, Specialized Loan Servicing (SLS) took over the servicing for a short time between Bank of America and Nationstar. Little has changed in Edward’s fight for a loan modification since Nationstar took over the servicing, except there seems to be a new spirit of cooperation as we draw closer to a trial of his case. If Edward’s case is any indication, these new non-bank loan servicers, such as Nationstar, Ocwen and Specialized Loan Servicing, are going to be in for a rude awaking as they inherit the sins of the servicing forefathers when it comes to proving their foreclosure cases in court. It might just turn out that they will be chased out of the business for the same reason their bank predecessors were—the cost of fighting the foreclosure battle, largely due to the mortgage mess they created, begin to outweigh the profits to be earned through foreclosure. One can only hope.
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Kate Eyster contributed to this article.
Copyright 2014 Daniel L. McGookey