Mortgage Servicing Rights: A Cash-Cow for Servicers But A Nightmare for Consumers.

 



A recent trend in the mortgage lending industry is the sale by banks and mortgage companies of the lucrative servicing rights on the loans in their portfolios. Special servicers like Nationstar and Ocwen are taking over the collection of mortgage payments, processing of modifications and the foreclosure and collection of delinquent accounts. This is probably a positive development  as  the banks and mortgage companies have been doing a horrible job at it.

 

Unfortunately, the assignment of servicing rights on a mortgage loan can cause the consumer much grief. I can't count the number of times that a client has complained that they were current on their mortgage until the servicing rights were transferred and they suddenly had to make payments to another company. Invariably in the transition a payment would get lost or delayed and then the collection letters would start, late charges applied and suddenly a perfectly good loan was in default.

 

A Chapter 13 bankruptcy is often the only way to cure a loan that is in default. Those who do not qualify for Chapter 13 must file Chapter 7 and reaffirm the debt or surrender their homes and get a discharge of the mortgage debt. These filers who surrender their homes, however, should carefully monitor their credit after their discharge as the original lender, the original servicer and the successor servicers quite often will continue to report the account to the credit bureaus. And successor servicers will often act like the loan is still collectable. With all these assignments it is not unusual to find  the original lender or servicer and the successor servicer reporting to the credit bureaus on the same loan and pulling credit reports when there is no longer any account relationship. This inaccurate reporting can significantly delay the recovery of a filer's credit score.

 

So, if you get a notice in the mail that the servicing rights on your home mortgage are being assigned to a new company be wary, monitor your credit reports carefully and if you find something that doesn't look right, seek professional help..

 

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Buy Now, Pay Later; A Ticking Time Bomb:

The other day I called a client to advise her that upon reviewing her credit reports I had discovered that one of her former creditors was pulling her credit reports almost every month. I explained that since she had filed bankruptcy and she no longer owed this creditor anything, that they didn't have the right to pull her credit reports. But when I explained that she could sue them for violating the FCRA and for invasion of privacy, she responded that since she had allowed herself to get in a financial mess, that she deserved any fallout that resulted from it.

 

Hearing this I just shook my head in frustration. What my client didn't realize was that she had been targeted and lured into debt by dozens of banks and lenders of every sort who were making obscene profits off her and millions of other Americans every year. And this didn't happen by accident. Every year these banks and lenders spent millions of dollars in advertising making consumers believe they could live in luxury now by paying for it later. The key to the American Dream is good credit, they insisted.

They knew, however, that with so much credit extended to consumers who couldn't afford it, that there would be a significant default rate. So, they set up and funded organizations whose sole purpose was to assist consumers in budgeting and personal finance to enable them to lower their standard of living enough to keep paying their huge debt run up by living high above their means. The later of "buy now, pay later" had come and it had brought with it financial ruin. 

 

These banks and other lenders are very concerned about consumers paying their debts and honoring their commitments, but when it comes to obeying consumer protection laws it's a different story. While they claim to be meticulously following the law, the truth is they are always searching for loopholes or ignoring these laws altogether hoping not to get caught. And I have yet to find a lender who felt the least bit guilty about violating the FCRA or a bankruptcy discharge injunction.

 

I have found, however, that most consumers don't want to file bankruptcy and only do it as a last resort. The buy-now-pay-later mentality that has been ingrained in us all is a ticking time bomb that will eventually go off.  It makes consumers vulnerable to misfortune.  Sickness, unemployment or business failure just happen and consumers rarely have any control over these unfortunate events.

When the time bomb explodes bankruptcy is the only sane option. Unfortunately, many consumers file for divorce, turn to drugs or alcohol or even suicide. They consider their life a failure and give up on the future. So, there is no shame in filing bankruptcy and consumers should never hesitate to file when the bomb goes off. And after the dust settles and they get their fresh start after bankruptcy, they should never let guilt stop them from enforcing their right to privacy and fair credit reporting. Banks and other lenders are not above the law, no matter how rich and powerful they have become by fostering a consumer dependency on credit.

 

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Consumers Need to Monitor Their Credit After Bankruptcy

It is a common belief that bankruptcy ruins a consumer's credit, but that's not necessarily true. The fresh start consumers are searching for when they file bankruptcy can apply to their credit too. When a consumer files bankruptcy all of his existing debt should be reported as "discharged in bankruptcy" and "balance -0-." If that actually happens, filing bankruptcy gives the consumer a clean slate. Sure, the bankruptcy is a negative, but its impact on the consumer's credit score will diminish in time. This gives the consumer an opportunity to re-establish their credit fairly quickly--often in six months to a year. Sure, a consumer won't have perfect credit with a bankruptcy on his record but his credit score will often be high enough to get car loan, rent an apartment or even refinance a home at market interest rates.

 

Unfortunately, this won't happen automatically. Creditors often do not report the bankruptcy to the credit bureaus, Experian, Transunion, and Equifax, correctly which will prevent the credit score from recovering the way it should. This is why is imperative for consumers to monitor their credit after bankruptcy. This can be done with a credit monitoring service or simply by going to AnnualCreditReport.com and doing it themselves.

For our clients it is part of our service. We help them get copies of the credit reports and then review them to be sure the reporting is correct. If it turns out to be wrong we get it corrected and do our best to make the offending creditors pay our fees. Either way, our client's never pay us a dime out of pocket.

For information on how to obtain your credit reports follow this link or, if you would like our assistance in getting a fresh start on your credit, visit our Website.

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Plastic Gods

 

PLASTIC

 

They came from everywhere

Over here and over there

The mail, the phone, in the mall

Unsolicited, one and all

 

Get them one, two or ten

Don’t wait—pick up the pen

It’s a simply wonderful game

All you do is sign your name

 

Now jump for joy, and yell, hooray!

Cause baby they’re on their way

Dillards, Penneys to name a few

Visa, Mastercard and Amex Blue

 

Do it now, live the American dream

Stand right up and let out a scream

Whatever you want, no money down

You’ve got credit all over town

 

Sit back, watch your dreams come true

Not a worry now, only pennies due

For Moses it was manna from the Lord

But for us today, plastic is our sword

 

Now its silver, gold and platinum too

Macy’s, Sears to name just two

Cars, clothes, a ten day cruise

Gambling, clubs and lots of booze

 

You’ve got it all and then some more

Until the bills flood in the door

It cannot be, I didn’t spend that much

Just a few odds and ends and such

   

Eighteen, Twenty, Twenty-four

Interest, interest, bills galore!

Oh my God, it’s all a scam

To steal my life, I’m in a jam

 

Collectors call day and night,

Every balance out of sight

I can’t sleep, or even think,

Go to work—I need a drink

   

My lover scorns me, yells and screams

God, what happened to all our dreams?

Letters, calls, demanding blood,

From my lover’s eyes there is a flood

   

Now she’s gone, couldn’t take the heat

I’m here alone, tired and beat

Bankruptcy. Is that all that’s left for me?

I can’t believe it, I just didn’t see

   

But now I do, clear as glass

I fell in love with cold, hard cash

Visa, Mastercard, Amex Blue

Lucifer got his due

 

copyright William Manchee

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What the critics said about Plastic Gods.

"This is easily one of the most exciting fiction novels of the year. . . ."

"Plastic Gods is a suspense packed thrill ride through the worlds of power politics, the legal system, and finance. This is a very well written book that draws the reader into the storyline and doesn't let them go until the very end. I had to read the entire book at one setting to see how Matt would resolve his problems. ... An excellent story, masterfully done, and recommended for those who like a good suspense story. Harold McFarlen * Amazon.com * Top 50 Amazon Reviewers (#39)

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"Non-stop plotting action makes Plastic Gods’ a book you can't put down...."

"As an expert at bankruptcy laws, and having practiced it in his field for a quarter of a century, author William Manchee has penned his second exciting novel featuring lawyer Rich Coleman and his son, Matt. . . . While the subject matter might seem daunting and somewhat uninteresting, such isn’t the case. In fact, credit cards and enormous debt makes for a unique premise, for many of us are caught in that trap already. Well-drawn characters and a nearly perfect balance between narrative and dialog make this ‘financial thriller’ a winner." Denise Clark, Denise's Pieces Book Reviews

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 ". . . Manchee offers the reader a peek into a side of banking and credit most of us never realized might exist."
One of Manchee’s best Plastic Gods is a nail biter. From the opening paragraphs when Rich Coleman reflects over his own life and muses about his son’s surprising decision to become an attorney through the whole action packed tale we follow Matt on his headstrong journey into a life he never expected. Matt’s impulsive determination carry him and those with whom he associates into jeopardy, lethal danger and a crassness the naïve young man never suspected existed Molly Martin, Booklore.co.uk

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 "Action aficionados will not be disappointed, and although the book is a work of fiction, its theme is tantalizing."
". . . a surprising and unpredictable ride that keeps you in constant suspense as what is around the next bend. . . . Action aficionados will not be disappointed, and although the book is a work of fiction, its theme is tantalizing. It is sure to leave many a reader thinking about some of the unsavory banking practices pertaining to credit card marketing and what is looming behind closed doors of these institutions. Robert P. Goldman, The Best Reviews

Creditors Can’t Seem To Stop Illegally Accessing Credit Reports

It is a perplexing phenomenon but some creditors can’t stop illegally pulling consumers’ credit reports even after they are caught doing it. On numerous occasions we have sued a creditor for illegally accessing our client’s credit reports after their debt was discharged in bankruptcy. Once the debt is discharged they have no legitimate reason to be pulling them, yet sometimes before the ink on the settlement agreement is dry, they start pulling the credit reports again. In a few cases we have had to sue them three times before they finally stop. And it’s not because the penalties are small. Damages can run $500 to $1500 per illegal pull, plus actual damages, costs and attorney’s fees. If anybody has an explanation, let me know.

 

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Fair Credit Reporting Act Protects Creditors As Much As Consumers

Although you would think the Fair Credit Reporting Act was written to protect consumers, it also has provisions that protect creditors. One specific requirement that insulates creditors, at least under federal law, from liability exposure, is the requirement that consumers dispute erroneous items on their credit reports and give the offending creditor 30 days to confirm or correct the reporting. This may seem fair at first glance, but what if the erroneous reporting was intentional or resulted from gross negligence, which is often the case. Why should creditors be insulated from liability when they cause a consumer to lose an opportunity to buy a house or a car? Why should consumers have to endure the humiliation of a credit denial without recourse when a creditor makes an obvious mistake? Why should creditors get a free pass when they injure a consumer? It doesn’t make sense. There is no doubt the credit industry lobbied long and hard for this provision in the FCRA. Luckily there are state laws that don’t recognize this requirement to dispute erroneous credit before action can be taken against the offending creditor.
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