Consumer complaint received 2016-08-22
Product: Mortgage — Conventional fixed mortgage
Issue: Loan modification,collection,foreclosure — 
Company: Servis One, Inc., Titusville, PA Branch (PA)

BSI participates as a servicer in Home Affordable Modification Program ( HAMP ). In a letter dated XXXX XXXX, 2016, BSI notified XXXX XXXX that her request for a loan modification under HAMP was denied on the grounds that her loan is not eligible because BSI services her loan " on behalf of an investor or group of investors that has not given us the contractual authority to modify [ her ] loan under the Home Affordable Modification Program. '' A copy of the letter is attached to this complaint. 

XXXX XXXX disputes this finding, and believes that BSI 's denial is improper. 

The vast majority of servicing contracts permit loan modifications. In fact, HAMP rules specifically note that HAMP reflects " usual and customary industry standards for mortgage loan modifications contained in typical servicing agreements. '' However, if the owner of XXXX XXXX 's mortgage loan does in fact prohibit modifications, then BSI must not only identify the owner of the loan, it also must specifically identify the document and restriction prohibiting BSI from offering a HAMP modification, pursuant to 12 C.F.R. 1024.35 ( b ) ( 11 ) and 12 C.F.R. 1024.41 ( d ) ( 1 ). The Official Interpretation of 12 C.F.R. 1024.41 ( d ) ( 1 ) specifies that the denial on the basis of an investor restriction " must identify the owner or assignee of the mortgage loan and the requirement that is the basis of the denial. '' In addition, a " statement that the denial of a loan modification option is based on an investor requirement, without additional information specifically identifying the relevant investor or guarantor and the specific applicable requirement, is insufficient. '' In its denial letter, BSI failed both to identify the owner of the mortgage loan and also to state the specific applicable requirement that is the basis of the denial. By letter dated XXXX XXXX, 2016, XXXX XXXX, through her counsel, asked BSI to correct that servicing error, pursuant to 12 C.F.R. 1024.35. ( Letter attached. ) Further, HAMP rules require that BSI make reasonable efforts to request that the investor waive any restrictions, and to maintain records related to the restriction. In her XXXX XXXX, 2016 letter, XXXX XXXX included a Request for Information pursuant to 12 C.F.R. 1024.36, and asked BSI to provide : ( 1 ) A copy of the document that prohibits BSI from offering a HAMP modification ; ( 2 ) The date and manner by which BSI requested that the prohibition be waived ; ( 3 ) A copy of any writing requesting a waiver of the restriction or prohibition ; and ( 4 ) The investor 's response to the request for a waiver. 

In response, BSI refused to provide this information and to correct the servicing error on the grounds that ( 1 ) the document is confidential and ( 2 ) BSI did not need to identify the investor restriction, nor did it need to ask that the restriction be waived because the investor is a non-participant in HAMP. ( Letter attached. ) This is a circular reasoning. HAMP rules are clear : if an investor prohibits a HAMP loan modification, the servicer must ask for a waiver and maintain documentation of such. In addition, Reg X requires BSI to specifically document the restriction. 

BSI 's response violates Regulation X section 1024.38 ( b ) ( 2 ) ( v ), which requires servicers to implement procedures to achieve the objective of " [ p ] roperly evaluat [ ing ] a borrower who submits an application for a loss mitigation option for all loss mitigation options for which the borrower may be eligible pursuant to any requirements established by the owner or assignee of the borrower 's mortgage loan. '' Here, HAMP establishes a process by which BSI must ask for a waiver of any investor restrictions, and BSI appears to not be complying. BSI also failed to properly correct a servicing error and respond to a request for information.