A regulatory report indicates that a few servicers of residential loans are illegally engaging in dual tracking or runarounds.
Dual tracking — where a mortgage servicer moves forward with a foreclosure while it is processing a modification application for a borrower — continues to be a problem this year.
As a result, distressed home loan borrowers
could be misled and wrongly believe that their trial loan modifications were canceled.
Those findings were discussed in supervision report announced Tuesday by the Consumer Financial Protection Bureau.
The report outlined illegal practices uncovered by examiners during the first-four months of this year.
One mortgage servicer was found to have sent notices of intent to foreclose to borrowers who were already approved for trial modifications.
A system error at another servicer led to imminent foreclosure notices being sent to borrowers who were current on their loans.
Another issue outlined in the report were illegal runarounds on loss mitigation applications.
CFPB examiners reportedly found one servicer requesting additional documents from borrowers that didn’t apply to their circumstances or asking for documents that had already been submitted.
Other servicers never sent acknowledgments to homeowners upon receipt of loss mitigation applications — even though such a response is required by CFPB rules.
“We are extremely concerned that one year after the CFPB’s mortgage servicing rules went into effect we are still finding runarounds and illegal dual-tracking,” CFPB Director Richard Cordray said in the statement.
