We recently worked with a couple who made literally over a hundred calls to their bank after problems developed with their home mortgage. Although they received a letter saying their application for a HAMP mortgage modification had been accepted, there was apparently no communication within the bank, let alone with the bank’s mortgage servicing folks. Calls would go unanswered, call center staff would place them on interminable hold and in one instance, a harried bank employee admitted to the couple that everyone in his department was clueless.
Luckily, they recorded their calls.
If you think this is an isolated incident, its not. Problems like this occur everyday throughout the United States. Loan servicers bid on mortgage work. The low bid usually wins and customer service often suffers.
Federal regulators are now focussing on mortgage servicers. Recently a major servicer, Walter Investment Management Company, disclosed in a public filing that is is being investigated by the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB). Walter Investment operates Green Tree Servicing LLC.
Customers are often left in the dark when they apply for a modification or when a bank switches servicers. Years ago banks held their own mortgages but today, the common practice is to sell them, often several times.
Ask anyone who went through a modification process and they will likely tell you a horror story. Proving negligence or intentional misconduct is difficult without a whistleblower, however. With traditional lenders and banks, whistleblowers can file a claim under the federal False Claims Act or FIRREA, the Financial Institution Reform, Recovery and Enforcement Act. Both laws can pay whistleblowers millions of dollars.
The False Claims Act kicks in if the bank issues mortgage backed by the FHA, Fannie Mae or Freddie Mac. FIRREA applies if the lender’s misconduct “affects” a federally insured bank or lender.
Unfortunately, whistleblowers have a tougher time collecting cash awards when the offender is a mortgage servicer. Some services are literally nightmares. Recently the CFPB and several states settled with Ocwen Financial Corp. The company paid $2.1 billion to resolve charges. (Ocwen still has an F rating on the Better Business Bureau website.) If the servicer is a non-bank like Ocwen or Green Tree, collecting an award may be difficult.
Many banks, however, such as Bank of America, Chase and Wells Fargo often service their own loans. If a bank servicer fails to perform properly, there may be real opportunities for whistleblowers to earn sizable awards.
Collecting an award in bank servicing cases is certainly tricky. Having a good whistleblower lawyer is the first step. Having inside information about the misconduct is essential too. This makes it difficult for customers to become whistleblowers, although its not impossible.
If you think you have information about fraud or misconduct within a bank mortgage servicer, give us a call. Our whistleblower lawyers have helped people across the United States and are presently representing the whistleblower in the largest bank False Claims Act case in the nation; HUD’s $2.4 billion case against Allied Home Mortgage.
We also represent whistleblowers in non servicer financial cases as well. Mortgage underwriters, mortgage bankers and bankers… we want to hear from you as well.
(Whistleblower photo courtesy of Dave Winer – scriptingnews)