I read an article today from the Austin American Statesman (the local news paper here in Austin, Texas) about how the “consumer lending watch dog” has new rules on how loan servicing companies must report and cooperate with their clients, you the home owner. They approved some items like requiring the loan servicer to provide statements so I assume this means no more coupon books, but we will see how that plays out. The one thing I see here that I actually like is they are now forcing the lenders if they provide forced coverage insurance that the borrower does not have to pay it. What is forced coverage? If you have a home loan most likely a requirement in the loan is that you maintain insurance on the property. If you do not the lender has the authority to insure it for you to protect their investment. Normally the cost of these policies is 3-4 times the amount you can get on your own.
I do think there needs to be more regulation of the servicers. I have had many instances where the loan servicer has really made some huge mistakes. One instance is where I had a very large insurance claim for water damage. I had to send in the check from the insurance company to the lender (Wells Fargo) so they could endorse it so I could pay the contractors. Instead of sending it back they cashed the check and then credited it to someone else’s account!!
Some of the other recent changes that the larger banks love are forcing mortgage lenders to compensate their loan officers the same way the banks pay to try and level the playing field…to their level at the expense of the consumer. It means a lender now has to charge the same % on a 100K home as they do on a 400K home!! So a loan officer has to charge someone with a large loan amount a huge fee because they cannot deviate from their fee schedule. It also requires lenders to order appraisals through 3rd party companies which charge more than the appraisers used to charge, the appraiser makes less money and then the lender gets terrible service. So I laugh when I hear the name “Consumer lending Watch Dog”. Let’s hope they prove me wrong and really do protect us consumers. So far in all the laws passed since the sub prime loan mess I see very few that protect the consumer, instead I see things that protect the large banks at the expense of the consumer and small lenders.
In my opinion it is time for these “watch dogs” to start watching out for us and not the big banks.
Here is the link to the article from the Statesman:http://www.statesman.com/story-2434964.html