The Consumer Financial Protection Bureau took action Monday against Michigan-based Flagstar Bank for violating the bureau’s new mortgage servicing rules by illegally blocking borrowers’ attempts to save their homes.
At every step in the foreclosure relief process, Flagstar failed borrowers, the bureau said. The bank took excessive time to process applications for foreclosure relief, failed to tell borrowers when their applications were incomplete, denied loan modifications to qualified borrowers, and delayed finalizing loan modifications.
The bureau is ordering Flagstar to halt its illegal activities, pay $27.5 million to victims, and pay a $10 million fine.
“Because of Flagstar’s illegal actions and unacceptable delays, struggling homeowners lost the opportunity to save their homes,” said Richard Cordray, director of the bureau.
Flagstar, a federal savings bank and mortgage servicer, administers foreclosure relief programs provided by the owner of the loan.
The bureau’s investigation found that from 2011, Flagstar failed to devote sufficient resources to administering foreclosure relief programs for distressed homeowners.
For example, in 2011, Flagstar had 13,000 applications but only assigned 25 employees and a company it hired in India to review them. It took the staff up to nine months to review an application.
In Flagstar’s call center, the average wait time was 25 minutes and the average call abandonment rate was almost 50 percent. And Flagstar’s application backlog was more than a thousand.
The bureau’s order is available at: http://files.consumerfinance.gov/f/201409_cfpb_consent-order_flagstar.pdf.
It is so frustrating to read about the on-going saga of these banks and their ‘policies’. Most individuals cannot on their own fight these bureaucracies. They do not care at all about the customers.
I agree with you about the frustration of the “policies” of the banking industry these days. The practices they use to “rake in money” from consumers are despicable. In this case, Flagstar Bank’s poor management of its foreclosure relief program led to consumers losing their homes.
Rita