Consumer complaint received 2019-10-12
Company: Aldridge Pite, LLP
State: CA
Product: Mortgage
Sub-product: Conventional home mortgage
Issue: Struggling to pay mortgage

Complaint:
I have received a loan modification packet from XXXX XXXX XXXX XXXX and have submitted all documentation they have requested to them fax. Im in review but my foreclosure sale date is still showing online as active on XX/XX/XXXX. Im scared and do not know what to expect from the company. Im working with them but do not know if they are willing to do the same and follow the California Homeowners Bill of Rights Act. 
As part of this bailout, on XX/XX/XXXX, the United States Government took over Fannie Mae and pumped billions, which in XX/XX/XXXX, then Treasury Secretary XXXX XXXX said as much as {$200.00} billion would be pumped into XXXX XXXX and XXXX XXXX, each, which was separate from the {$700.00} in TARP funds given out to other lenders. 

1. The guidelines issued by the United States Treasury set forth a detailed process whereby a participating servicer, either action or not acting through its subsidiary, must : a. identify loans that are subject to modification under the HAMP program, both through its own review and in response to requests for modification from individual homeowners ; b. collect financial and other personal information from the homeowners to evaluate whether the homeowner is eligible for a loan modification under HAMP ; c. institute a modified loan with a reduced payment amount as per a mandated formula, that is effective for a three-month trial period for borrowers that are eligible for a modification ; and d. provide a permanently modified loan to those homeowners who comply with the requirements during the trial period. Whether the homeowner qualifies for a modification or not, participating servicers are also required to provide written notices to every mortgage borrower that has been evaluated for a loan modification, whether or not the borrower has been found eligible.

HAMP and its associated directives also set prohibitions against certain conduct including demanding upfront payments in order to be evaluated for a loan modification, instituting or continuing foreclosures while a borrower is being evaluated for a loan modification, assigning a single point of contact, maintaining an adequate level communication with borrowers, maintaining proper caseload to ensure HAMP objections are met, and restrictions on the way a servicer may report the borrower to credit reporting agencies.

All servicers have systematically failed to comply with the terms of the HAMP directives and has regularly and repeatedly violated several of its prohibitions. Now that HAMP is over and expired due to servicers prolonging these modifications they are now proceeding with other alternatives.

Under HAMP, the federal government incentivizes participating servicers to make adjustments to existing mortgage obligations in order to make the monthly payments more affordable. Servicers receive at least {$1000.00} for each HAMP modification. However, this incentive is countered by a number of financial factors that make it more profitable for a mortgage servicer avoid modification and to continue to keep a mortgage in a state of default or distress and to push loans toward foreclosure. This is especially true in cases where the mortgage is owned by a third-party investor and is merely serviced by the servicer. However, this incentive is countered by a number of financial factors that make it more profitable for a mortgage servicer such as XXXX XXXX XXXX XXXX, XXXX to avoid modification and to continue to keep a mortgage in a state of default or distress and to push loans toward foreclosure. This is especially true in cases where the mortgage is owned by a third-party investor and is merely serviced by Service companies because Service companies do not carry a significant risk of loss in the event of foreclosure. 
California Business and Professions Code 17200 et seq., also known as the California Unfair Competition Law ( UCL ), prohibits acts of unfair competition, including any unlawful, unfair, or deceptive business act or practice as well as unfair, deceptive, untrue or misleading advertising. XXXX XXXX XXXX XXXX, XXXX and all other previous servicers and their Investors conduct was unlawful in that : They illegally began and prosecuted the non-judicial foreclosure based on the lien to the 1st Deed of Trust, despite i was not in breach of payments on said lien ; They engaged in the uniform practice of requesting unnecessary documentation, seeking repetitive submissions of the same documents, and never rendering a decision, and in doing so, such activity provides the basis for an unfair inquiry and could deceive the public because it places burdensome requirements on me that served no purpose but to provide a basis for either engaging in Dual Tracking by selling my home and by denying loss mitigation options, such as loan modifications ; They failed to properly consider loan modification applications before trying to sell my home. 

1. On information and belief, XXXX XXXX XXXX XXXX, XXXX does not own a significant majority of the loans on which it functions as servicer. 

2. Economic Factors that discourage XXXX XXXX XXXX XXXX, XXXX from meeting its obligations under HAMP by facilitating loan modifications include the following : a. XXXX XXXX XXXX XXXX, XXXX may be required to repurchase loans from the investor in order to permanently modify the loan. This presents a substantial cost and loss of revenue that can be avoided by keeping the loan in a state of temporary modification or lingering default. 

b. The monthly service fee that XXXX XXXX XXXX XXXX, XXXX, as the servicer, collects as to each loan it services in a pool of loans, is calculated as a fixed percentage of the unpaid principal balance of the loans in the pool. Consequently, the modifying of a loan to reduce the principal balance results in a lower monthly fee to the servicer. 


c. Fees that XXXX XXXX XXXX XXXX, XXXX charges borrowers that are in default constitute a significant source of revenue to it. Aside from income XXXX XXXX XXXX XXXX, XXXX directly receives, late fees and process management fees are often added to the principal loan amount thereby increasing the unpaid balance in a pool of loans and increasing the amount of the servicers monthly service fee. 

d. Entering into a permanent modification will often delay a servicers ability to recover advances it is required to make to investors of the unpaid principal and interest payment of a non-performing loan. The servicers right to recover expenses from an investor in a loan modification, rather than a foreclosure, is often less clear and less generous.

e. Fixed overhead costs involved in successfully performing loan modifications involve up-front costs to the servicer for additional staffing, physical infrastructure, and expenses such as property valuation, credit reports and financing costs. 

3. Rather than allocating adequate resources and working diligently to reduce the number of loans in danger of default by establishing permanent modifications, XXXX XXXX XXXX XXXX, XXXX has serially strung out, delayed, and otherwise hindered the modification processes that it contractually undertook to facilitate when it accepted billions of dollars from the United States. XXXX XXXX XXXX XXXX, XXXX delay and obstruction tactics have taken various forms with the common result that my loan serviced by XXXX XXXX XXXX XXXX XXXX XXXX, in which im eligible for permanent loan modifications, and have met the requirements for participation in HAMP, have not received permanent loan modifications to which iam entitled.

4. By failing to comply with the California Homeowner Bill of Rights ; specifically, by engaging in the unlawful practice of Dual Tracking, XXXX XXXX XXXX XXXX, XXXX has left me in a state of despair and panic as I seek a loan modification from XXXX XXXX XXXX XXXX, XXXX, only to have my home wrongfully, oppressively and illegally sold out from under my feet. 

Here is some information from previous servicers and what has happened. 
I received a loan modification package from XXXX XXXX with a proposal trial period payment for 3 months in the amount of {$3600.00} which is around {$1700.00} over the amount i used to pay before to XXXX XXXX XXXX. My payment was {$1900.00}. How can i afford to pay more then what i couldn't pay before in the first place? 
I have spoken to a lot of my close friends who were in the same situation as me and around the same loan amount and property size, they have received a very good loan modification of around {$980.00} a month, another friend received a loan modification in the amount of {$660.00} a month. How can this be that they are receiving loan modifications to help them stay and pay for their home while i can not even get a close amount to my old payment of {$1900.00}? 
Please help me as this is getting out of hand and Im worried for my family and losing my home to this banking scam. It seems to me that they are just transferring loans to get away from giving out a loan modification. 
I have sent XXXX XXXX XXXX XXXX my full Request for Mortgage Assistance package and they have received it with no error. I called them asking if there is anything else needed and what the status was, XXXX representative replied that they do not need anything else and that the loan modification is under review. But while in review I still show that the sale is scheduled and coming up on XX/XX/XXXX.

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation