According to a federal oversight official Freddie Mac and its regulator are not doing a good enough job of investigating the complaints that have been coming in by homeowners about the companies that have been handling their mortgages. Between October of 2011 and November of 2012 Freddie Mac’s mortgage servicers settled over 25,000 complaints from homeowners that were escalated. However they failed to resolve an estimated 21% of the complaints within the requiring 30 day window the inspector general overseeing the Federal Housing Finance Agency noted in a report. Even more interesting the report also noted that the majority of the complaints filed were never even reported to Freddie Mac. Also the proper procedures were not in place to handle the more alarming complaints by the FHFA, which is the agency that oversees Freddie Mac.
Borrowers often do not have enough time to explore alternative solutions and in a lot of cases can end up losing their homes to foreclosure if the issues are not resolved within a quick time period. Guidelines were put into place in 2011 which required servicers to observe strict protocols when a borrower files a complaint. Usually the complaints are generally fielded by agents who handle the phone lines for the servicer. When the agent cannot resolve a problem quickly the complaint escalates and is transferred to a specialist who has more control. That is when the complaint becomes an official escalated case and the servicer must report the complaint to Freddie Mac within a 30 day time period and resolve the problem.
Although that is what is required, the report also found that four out of eight of Freddie Mac’s eight major services (Wells Fargo, CitiMortgage, Provident and Bank of America) did not report any of the cases between October 2011 and November of 2012. These complaints were not reported even though it is said that the servicers received and handled more than 20,000 cases during that time period. The inspector general also said that Freddie Mac did a poor job of making sure that its servicers followed the rules and that they failed to setup any penalties for servicers who failed to meet the needs of reporting escalated cases. The watchdog also says that the FHFA allegedly did not even address the failure of the servicers to resolve and report the cases within 30 days when they assessed Freddie’s implementation of the new guidelines.
Congress made the FHFA in the year 2008 as a regulator that had special powers to oversee and control Freddie Mac which required over $180 billion dollars in taxpayer bailout money that has not been repaid. Legal complains have been filed by hundreds of thousands of foreclosed homeowners that stated that their mortgage company presented roadblocks that were preventing them from participating in government sponsored programs that lowered home payments and helps prevent foreclosure. Freddie Mac’s data showed that around 98 percent of its servicers reported no escalated cases during a 14 month time period which ended December 31st according to the inspector general report.
So in addition to failing to adequately monitor servicers and punish them for not following protocol, Freddie Mac’s servicers are also ignoring escalated cases which are ultimately resulting in many people losing their homes to foreclosure – and the data proves it. Bank of America alone was marked as the worst performing institution, which failed to resolve almost half of its cases within the 30 day time span for escalated cases. The FHFA is also at fault for failing to validate the data provided to it by Freddie Mac.