Millions of people face losing their homes in the continuing foreclosure crisis, but homeowners often have more than the struggling economy and slumping house prices to worry about: Disorganization within the big banks that service mortgages has made a bad problem worse. Sometimes the communication breakdown within the banks is so complete that it leads to premature or mistaken foreclosures.
Chase Home Finance has rejected some mortgage modifications because it considered the homeowners’ hardships to be temporary. The Treasury Department has since barred that practice, but those homeowners are left struggling to avoid foreclosure.
An examination shows how mortgage servicers have created unnecessary hurdles to getting loan-mods and have violated the government’s rules for the program. “There’s a real resistance on the servicers’ part to making permanent modifications,” said Diane Thompson of the National Consumer Law Center.