March 2, 2014

The Non-Bank mortgage servicer ugly fiasco!

By Timothy Stull (

The Wall Street Journal has recently published a series of articles relating directly the current problems in the nonbank mortgage servicer arena ~  These articles focus on the abuse that has accelerated by servicers like Ocwen, Nationstar, Walter Investment Corp & National Mortgage Holdings     Let us all keep one important thing in mind ~ mortgage servicing problems aren’t real problems until people start losing their homes.  Now that foreclosure evictions are spiking, a definite serious problem is brewing.  This is a major fiasco that will very painful for many families to endure….and very tough to watch from the outside.  So why did I start this article with such doom and gloom?  Really to set the tone of “reality” regarding this huge problem.  Because I firmly believe that “reality” has not been part of the post-recession recovery yet.  In order to really understand the roots of this problem, we must turn back that clock.  When the financial crisis hit severe levels in 2009, The Federal Reserve slashed interest rates to 0% on the treasury index….plummeting mortgage rates to record lows and spurring and incredible refinance boom.  At the same time mortgage delinquencies soared and property values declined sharply….this led to more and more severely delinquent loans.  Traditional bank servicers did their best to service the huge barrage of delinquent loans.  However, the delinquency numbers grew quickly….as a sour job market and a negative attitude towards “paying your mortgage” spread like wild fire.  Soon it became very costly and very controversial to service severely delinquent loans.  The overall controversy that surrounds the touted “silver bullet” Government HAMP modification programs has been enormous.  It has led to a series of lawsuits, sanctions and levied fines imposed on the big banks servicers.  If you were a big bank servicer, would you want to be involved in this mess?  Remember all the big refi boom revenue?  The revenue that funded all the distressed mortgage servicing operations….well that all ended abruptly recently.  Big bank mortgage servicers no longer want to handle severely delinquent loans….it is very unprofitable and just too risky.  Therefore selling the debt servicing rights to non-bank mortgage servicers just makes sense….for the banks that is.  For the delinquent home owners, it is a nightmare in the making.  A long run nightmare that may never end.  You see, non-bank mortgage servicers are nothing more that large glorified collection agencies.  Since they have purchased these debts at a severe discount, they have a clear motive to foreclose in order to make high profit margins.  They are not motivated help the home owners in need or modify mortgage payments.  Now since property values are climbing aggressively, we have created the perfect storm.  Even though non-bank mortgage servicers are under a lot of scrutiny by the regulatory agencies, this a free market capital issue.  Collection agencies aggressively collecting on mortgage debt is a recipe for disaster.  Stalling and biding time is no longer an option for home owners without strong defensive strategy.  There are definitely many ways to stop the vulture debt collector in its tracks…..the same debt collector forcing many folks out of their homes.  However, it very complex, tedious and aggressive process.  Without proper representation, battling the non-bank mortgage servicer is impossible.  In todays restricted and high cost rental market, losing a home to foreclosure will lead to homelessness and financial ruin.  It is time to get real about this problem, eliminate the phony government programs and start funding some “real deal” aggressive programs.  As always, feel free to call 877.297.7011 with questions, comments or concerns.

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One Response to “The Non-Bank mortgage servicer ugly fiasco!”

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