Treasury yields have posted historical lows for the past several years, implying strongish economic growth and the potential...
Congresswoman Maxine Waters, D-Calif., sent a letter Tuesday to Christy Romero, Special Inspector General for the Troubled...
Freddie Mac, its servicers and the Federal Housing Finance Agency fell short in reporting serious servicing complaints from consumers, the Inspector General for the Federal Housing Finance Agency alleged in a report.
The FHFA-OIG claims Freddie Mac and its eight largest servicers received 34,000 escalated consumer complaints between October 2011 and November 2012. Escalated cases generally involve allegations of servicing fraud and regulatory violations reported by borrowers.
The report, according to Congressman Elijah Cummings, D-MD, shows Bank of America, CitiMortgage, Provident and Wells Fargo "did not report any escalated cases to Freddie Mac despite handling more than 20,000 such cases."
The FHFA servicing alignment initiative requires servicers to report all escalated cases and resolve those cases within 30 days. In addition, Freddie Mac’s own servicing guide stipulates that servicers must report their escalated complaints on a monthly basis.
As of December 2012, 1,179, or 98%, of Freddie’s servicers had not reported on any escalated cases, despite the firms managing 6.6 million mortgages for the GSE, FHFA-OIG said.
And when looking at Freddie’s eight largest servicers, four did not report any information on escalated cases, even though the firms handled more than 20,000 cases in 14 months, according to the report.
"Further, of the 25,528 escalated cases resolved by the eight largest servicers during the 14-month period between October 2011 and November 2012, 5,372, or 21%, were not timely resolved within 30 days," the inspector general report said.
The inspector general checks up on Freddie, the FHFA as well as the servicers in the report since the GSE pays its servicers to interact with borrowers and handle all consumer complaints in a timely fashion.
The main purpose of the audit was to ensure the FHFA, as conservator of the GSE, is overseeing Freddie Mac’s handling of escalated servicing complaints.
At the end of 2012, Freddie Mac owned or guaranteed more than 10.6 million residential mortgages with an unpaid principal balance of $1.6 trillion.
The FHFA-OIG report calls Freddie Mac’s oversight of servicer compliance “inadequate” and notes the GSE failed to implement procedures for testing compliance.
FHFA also is critiqued in the report for not identifying the problems through its own examination and of relying solely on Freddie’s own on-site review reports even though those reports do not mention servicer-reporting issues.
To rectify the ongoing issues, the inspector general is recommending the FHFA ensure Freddie Mac requires timely servicer reporting in the future and "accurately categorizes escalated cases."
In addition, the inspector general wants the FHFA to make sure Freddie enhances its oversight of servicers’ performance and creates fines for noncompliance, while also developing and implementing examination guidelines to test the roll out of directives.
Congressman Elijah Cummings, D-MD, ranking member of the House Committee on Oversight and Government Reform, published the report on his website, saying "mortgage companies that service loans backed by Freddie Mac have largely failed to implement requirements to resolve escalated cases of serious homeowner complaints alleging abuses such as improper foreclosures and fraudulent servicing practices."
Don’t miss out: get HW delivered via email