How the Feds Are Making the Mortgage Mess Even Worse

So goes the title of a July 7th letter to the editor of Delaware Online by Linda A. Moffett, a Realtor from Newark. In it Linda charged the Feds with forcing mortgage lenders to deal "with such ridiculous government-imposed regulations that it is becoming more and more difficult to settle on time, if at all... Banks laid off the majority of their mortgage department staff and hired temps with little or no real estate knowledge to get through the overabundance of refinances and short sales."

"Obama mortgage plan needs work" proclaimed the title of another article on CNN Money the next day. Apparently, many borrowers were asking, "Mr. President, help us get one of your mortgage workouts now." Nearly five months after President Obama unveiled his housing rescue plan it was still beset with problems, said borrowers, housing counselors and even the president himself: "Loan servicers are overwhelmed by the numbers of homeowners applying for loan modifications or refinancing. Borrowers are frustrated that their paperwork is being lost, and calls are not returned. Administration officials are racing to roll out new features to improve the program."

Fast forward to August and things appear to only be getting even worse. The largest non-bank mortgage player and the third largest originator of Federal Housing Administration (FHA) loans in June, Taylor Bean & Whittaker was shut down quickly following the August 4th raid of their Florida headquarters by federal agents. The special inspector general for the Troubled Asset Relief Program (TARP) said its agents had executed search warrants in conjunction with the Federal Bureau of Investigation (FBI) and the inspector general for the Department of Housing and Urban Development (HUD).

At that time Ginnie Mae President Joseph Murin said, "I would like to reassure TBW's customers whose loans serve as collateral for Ginnie Mae securities that, although this action will result in a new servicer, the transition will be seamless for them." I hope it really was seamless for Ginnie Mae backed mortgagees, but as my own experience shows, it has been anything but that for some of us.

My mortgage loan was serviced by Taylor Bean & Whittaker. In late July, in an effort to pay down my mortgage, I sent TB&W a regular check, which they rejected, for its amount exceeding their maximum. At the time, a TB&W customer service supervisor assured me that there was still plenty of time for me to send them a cashier’s check, which they would receive and credit to my account by August 15th. According to her, this would result in an identical amortization schedule adjustment.

Unaware of the raid or the pending change in my mortgage processor, I mailed a replacement cashier's check to TB&W on August 8th. Yesterday, I received a welcome letter dated August 18th from my new mortgage processor, Cenlar in Minnesota, informing me that my Freddie Mac (FRE) mortgage loan, previously serviced by Taylor Bean and Whittaker, was transferred to Cenlar for servicing, effective August 12, 2009. The letter included new instructions for making loan payments, said that TB&W stopped accepting payments on August 11, 2009 and showed a due date for the next payment as August 1, 2009!

I created an account on Cenlar's website and sure enough, that cashier's check has still not been applied to my mortgage. Needless to say, the old TB&W phone number has been greeting callers with a busy signal (or dropping calls while on hold) for weeks now. So, I called Cenlar to find out what happened. Instead of the answer, I heard, "Due to unforeseen circumstances we are not able to service your call.”

I placed a call to Freddie Mac - they have a special set up to deal with former TB&W customers – 800-373-3343 (press 3 in response to each of the automated messages - three times in all). The lady I spoke to verified that my loan was a Freddie Mac and said that Cenlar will be able to answer my questions as soon as they start picking up their phones… soon. (Very useful - NOT!) She had no further information and was unable to tell me when "soon" may happen. I placed more calls: to Senator Michael Bennet, to the Department of the Treasury, to the FBI and even the White House. The furthest I got, of course, was talking to volunteers and receptionists...

Most mortgage loans specify the first of the month due date, but allow an interest free 15 day grace period. I am sure that most people take advantage of this "free ride" and make their payments in the first two weeks of the month. Thus, the Government’s timing in raiding and forcing a closing of Taylor Bean in the first two weeks of the month and without prior notice to TB&W’s paying customers potentially caused more problems than it solved. And what about all of those who were only days away from closing their loans with TB&W? What are they suppose to do now? Just another stupid action by government bureaucrats - so much for "seamless," so much for helping "ordinary people!"

Comments

[john s. gordon:]

'causing more problems than it solves' is not unusual in dealing with the govt.
> jack'

Aug 28 10:10 AM

[Trane250:]

Statements in the letter don't make sense. Why would she have to send the mortgage servicer a cashier's check? Maybe she's bounced checks in the past?

Aug 28 10:39 AM

[bajappraiser:]

Maybe TB&W wanted the money for themselves before the doors finally closed...no trace on a cashiers check.

Aug 28 01:28 PM

[Jake Berzon:]

No, I have never bounced a check. Cashier's checks are required for amounts over a certain threshold every month. TB&W is apparently not the only ones with such a policy.


On Aug 28 10:39 AM Trane250 wrote:

> Statements in the letter don't make sense. Why would she have to
> send the mortgage servicer a cashier's check? Maybe she's bounced
> checks in the past?

Aug 28 04:23 PM

[Meridell:]

I have a mortgage, owned by Freddie Mac that was serviced by Taylor, Bean and Whitaker. I was in the middle of a refinance that was supposed to close in September. This refinance was under the DU Refi Plus program as I don’t own 20% of my home. Frankly, I don’t believe I’ll own 20% of my home for decades and because of that, no bank will refinance my loan, the only hope I had was under this program.

Cenlar now services my mortgage. I called yesterday and was told that Cenlar does not honor this program or do refinancing. My current interest rate is 7%. My refinance under the DU Refi Plus was going to be 5.75%. I will loose over $100,000 over the life of this loan.

At the very least, someone needs to force Cenlar to honor the terms Taylor Bean gave me with the refinance and reset my loan to 5.75%.

Since Taylor Bean filed Chapter 11, I filed a proof of claim (I am now a creditor in that bankruptcy) for $105,627.38, the amount of money I will loose. I encourage others to do the same.

Aug 28 06:59 PM

[AllStreets:]

How in heaven can the government just shut down a $30+ billion mortgage originator/servicer on the strength of mere "suspicions." What are they accused of and how could it possibly be so serious as to warrant complete and sudden shut down with no due process? I realize that their primary source of funding, Colonial Bank was accused of fraud in connection with trying to obtain TARP funding, but why punish TBW, and the Colonial situation wasn't even proven yet.

Oh, and I hate to be the bearer of bad news, Jake, but your credit rating might get ruined on top of your difficulties if some mindless clerk or computer system reports your payment as a 30-day mortgage late...your credit will drop by 100 points right now. Take it from one who was similarly victimized. Homecomings' processing equipment shredded my timely submitted May mortgage payment check. They sent it back to me with an apology letter dated May 28. I immediately sent a replacement check. Suddenly in June I began getting notices from credit card companies slashing my limits and raising my rates. When I checked my credit report there was a mortgage late report for a $49 late fee reported for May, and no doubt my credit scores bombed out big time.

Aug 29 11:37 AM

[Jake Berzon:]

All is good! CENLAR caught up with processing my payment and they processed it correctly. If they have not processed yours yet, you should give them a call.

CENLAR will not be assessing late fees for payments that were not credited on time, but were received by TB&W within 60 days following the transition. October 9 sounds like the deadline for that.

Sep 03 04:33 PM