November 23, 2014

Battling Ocwen, NationStar and non-bank mortgage servicers

By Timothy Stull (http://www.fresh-start.co)

The non-bank mortgage service industry is in the line of fire right now.  It is under pressure, politically charged, but also a huge money machine.  Regulating the industry is on the forefront of many Government Agencies.  However, the topic of regulation is both complex and controversial.  Ultimately, regulation of the industry crosses the lines of free enterprise.  However, the industry itself is littered with abusive practices all driven by big money and greed.  To understand the challenges and turmoil within the industry, you must understand the infrastructure itself.  Though the non-bank mortgage service industry has existed for over 40 years, it has recently grown to a huge business over the last 5 years.  Ocwen Mortgage Corporation and NationStar Mortgage Corporation dominate the playing field, so we will focus on their business models.  Both of these firms essentially purchase and / or service distressed mortgage debt ~ loans that are severely delinquent.  The mortgage debt is sold in large pools, typically backed by hedge fund investors.  Most of this debt was originated during the mortgage explosion era (1999 to 2008), and many of the loans originated were initially sold off as mortgage backed securities.  This is where the paper trail on these debts gets very complex, so try and revert to the origin if you get lost.  Nearly all of the mortgage backed securities were sold at a grade A bond level, even though they were junk bonds by Wall Street standards.  When the bond market collapsed in July 2007, all the bonds were labeled junk, essentially dropping values from 100% to 10% or lower.  This loss forced many investors to sell off and cash out, leaving a lot of open debt in the market place.  Since real estate values were plummeting at the time, who would want buy this garbage debt?  Main Street felt deceived by the economic calamity and felt paying the mortgage was last on the list of priorities.  However, hedge fund investors saw huge future value in the risk and bought the debt in large piles.  This debt in turn was turned over to non-bank mortgage servicers, which are essentially collection agencies.  The debt may be sold 100% or partially sold (20%, 30%, ect) at a steep discount.  These mortgage servicers reap the rewards of the extra fees associated with escrow accounts and foreclosure action.  Since there are multiple owners of the debt, it is very difficult to get a decision rendered on loss mitigation / loan modification efforts.  Escrow account padding and loan balance distortion runs rampant.  Negligence towards the home owner and poor customer service is common practice.  Collection agencies and mortgage servicing are a bad mix, since there is a family’s home involved.  Keep in mind that collection agencies have operated the same way for hundreds of years.  Their goal is to collect as much money as possible, not modify mortgage loans and save homes from foreclosure.  However, since firms like Ocwen and NationStar have been deemed collection agencies by corporate standard, they must abide by the Fair Debt Collection Practices Act (FDCPA).  They must prove up the validity of the debt from all levels.  They also must have proper affidavits to show ownership of the debt and the allonge to the mortgage note.  Without all documents in order, the debt is invalid and uncollectable.  Pressing these issues through regulatory complaints or litigation, ultimately is best defense against these rogue firms.  Though standard laws are being created by the CFPB, there is still a lot gray area in the system, since law can’t restrict free enterprise.  Ocwen and NationStar both have been fined and sued on a class action level.  However, they continue to violate the law and abuse home owners because the profit margins are extreme.  The business itself is a huge cash cow and Wall Street investors coupled with their attorneys are in the game.  Based on serious past case experience, the best offense an excellent defense.  Without proper defensive strategy, you will be sunk trying to battle these monsters.   We have a proven track record in this arena and will implement a great defensive strategy for you free of charge to start.  Feel free to call us at 877.297.7011 for further insight on this topic.

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One Response to “Battling Ocwen, NationStar and non-bank mortgage servicers”

  1. Stacy Dunn Says:

    My 1st and second mortgage was with Homeward resolutions. Ocwen purchased Homeward and assumed the servicing of the first during the tail end of a HAMP re-fi process that took over a year. They apparently :wrote off” the second because Real Time Resolutions is now collecting on it. Ocwen added more than $25K in fees, is inflating my escrow balance and billing me for questionable services. I can never seem to speak to a real person when needed unless it is someone in India who is reading off a script and can’t (or won’t) help me. I feel like I must address RTR regarding my second mortgage but when I tried a couple of years back the were aggressive, hostile and unwilling to work with me. Ultimately after reading your article I feel it is just a mater of time before Ocwen starts harassing me as well over fees and escrow balances I believe are erroneous even though I have never been 30 days past due. I didn’t think the home could be foreclosed upon for a second mortgage but now I’m not sure? What should I do to protect myself?

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