Three national mortgage companies have agreed to play by the rules when foreclosing on people's homes. They’ve promised to not lie when they sign foreclosure documents, not to foreclose when a borrower is obtaining a mortgage modification and not to charge improper fees to borrowers.
Isn't that nice of them?
The companies -- Morgan Stanley, Saxon American Home Mortgage and Vericrest Financial -- signed an agreement with New York's Department of Financial Services promising to adhere to new practices aimed at protecting borrowers. The agreement also says the firms will not robosign affidavits and will not claim that documents were reviewed when they weren't.
The agreement was announced Thursday and it's similar to what other servicers -- Goldman Sachs Bank, Ocwen Financial and Litton Loan Servicing -- signed a couple of months ago.
It's such a relief to learn that these companies are willing to follow the law!
"Today's agreements are an important step forward in cleaning up some of the mortgage industry's most troubling practices," says Benjamin Lawsky, superintendent of the department.
He commended the servicers "for being leaders in agreeing to implement this new higher standard to protect homeowners from abuse" and urged "others in the industry to follow their lead."
I'm not sure how this helps homeowners who were victims of improper practices that became so common in the servicing industry. But they didn't pay their mortgages, so I guess it doesn’t matter if their foreclosures were handled properly, right? What do you think?
Here is consolation for some of those borrowers: As a result of recent enforcement actions by federal regulators, some of the nation's largest mortgage servicers are now required to offer foreclosure reviews to borrowers who faced foreclosure in 2009 and 2010. If the independent review determines that the borrower suffered "financial injury" because of the servicer's improper practices, the borrower may receive compensation. Read my previous post about the foreclosure review process.
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