Michigan-based Flagstar Bank was ordered to pay $27.5 million to homeowner victims and pay an additional $10 million in fines for obstructing homeowners’ attempts to save their homes from foreclosure. The Consumer Financial Protection Bureau (CFPB) was the agency who brought the legal action forward September 29, 2014.
The CFPB is responsible for consumer protection in our country’s financial areas. They oversee banks, credit unions, foreclosure relief services, securities firms, payday lenders, mortgage servicers, debt collectors and other finance-oriented companies in the U.S.
Flagstar Bank, a holding company of Flagstar Bancorp, Inc., is a federally chartered stock savings bank. They are headquartered in Michigan and have more than 100 branches throughout that state. Three years ago, they sold off their branches in Indiana (to First Financial Bank) and Georgia (to PNC Financial Services) to concentrate on their Michigan branches. Today, they’re considered a national leader in home lending with loan centers across the country and have thousands of wholesale mortgage brokers and agents as customers. Flagstar has neither admitted nor denied the allegations.
CFPB Director Richard Cordray said “Because of Flagstar’s illegal actions and unacceptable delays, struggling homeowners lost the opportunity to save their homes. The Bureau has been clear that mortgage servicers must follow our new servicing rules and treat homeowners fairly. Today’s action signals a new era of enforcement to protect consumers against the cost of servicer runarounds.”
The CFPB said the bank allegedly took excessive time to process borrowers’ applications for foreclosure relief, denied loan modifications to borrowers who were qualified, illegally delayed finalizing permanent loan modifications and failed to tell homeowners their applications were incomplete.
As part of the CFPB’s investigation, they found in 2011 alone, Flagstar had 13,000 active loss mitigation applications and had only 25 full-time employees and a third-party vendor located in India to review the applications. In many instances, Flagstar took as long as 9 months to review one application. The average wait time for an applicant calling was 25 minutes, and half those calls were dropped or disconnected before the homeowner could talk to an agent.
When the CFPB’s new mortgage servicing rules went into effect in January 2014, Flagstar committed even more violations under the new rules. Flagstar did not inform homeowners of their choices to save their homes that ultimately led them to drop out of the loss mitigation process and into foreclosure.
The Deputy Director of CFPB added, “What we are requiring of servicers are the kind of basic practices of customer service that should have been implemented long ago. We have said that in the early months we will look to see that those subject to the rules have made a good faith effort to comply. A good faith effort, however, does not mean servicers have the freedom to harm consumers. It has felt like ‘Groundhog Day’ with mortgage servicing for far too long.”
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Keith Gantenbein, of The Gantenbein Law Firm, Colorado foreclosure defense practice includes: Rule 120 Foreclosure Hearings, post-foreclosure deficiencies, foreclosure prevention, loan mods, Colorado foreclosure help, foreclosure help in Denver, judicial foreclosure, post-foreclosure litigation, HOA foreclosures, foreclosure settlement, foreclosure settlement, foreclosure assistance, evictions, foreclosure assistance, cash for keys, loan modifications, short sale assistance, foreclosure set-aside, and all other foreclosure defense legal help.
His real estate practice includes real estate litigation, quiet title actions, lien issues, real estate closings, , title issues, real estate contracts, mortgage negotiations, bankruptcies, contracts, lender liability, evictions, and landlord/tenant. Keith Gantenbein also practices HOA defense- including helping homeowners with defense against wrongful covenant enforcement, their HOA foreclosures, HOA lawsuits, and HOA liens.
Gantenbein Law Firm practice includes Colorado and Federal Tax Law, Colorado Foreclosure Defense, Colorado Real Estate Law, Colorado Business Law, Credit Dispute and Credit Repair, and Colorado Wills & Trusts. For more information, visit our website: www.gantenbeinlaw.com