Article by Sandusky attorney Dan McGookey. He writes weekly.

“Ever been treated rudely by your mortgage company? If you answered this question “no,” I’ll bet you’re in the minority.

Why is this so? Why does it seem that your bank wants to drive you away rather than help you out? The answer most often is that that party is not your “bank” or your lender at all, but rather a “loan servicer,” or simply a collection agency.

DIRTY LITTLE SECRET

There is a dirty little secret which lies at the heart of the loan servicing industry, a secret which explains why millions of homeowners across the country are being victimized by them. That is in the way servicers are paid for what they do.

Unlike normal collection agencies, which are paid a percentage of the amount they collect, servicers are paid a percentage of the mortgage balance. This fact makes it profitable for the servicer to keep the balance up, and with it its own compensation.

FRAUD IN MANY FORMS

The goal of keeping the mortgage balance up manifests itself in many ways in servicer misconduct. We have seen dozens of homeowners denied HAMP mortgage relief when they in fact qualify.

Just as often, we see people led along for months, or even years, to believe they were going to get a loan modification only to have the rug pulled out from underneath them by being denied help. We have seen many cases of totally bogus modifications which add unjustified charges onto the new mortgage balance.

The types of fraud are endless, but have one thing in common — all are profitable for the servicer.

And with no government enforcement of the laws to curb these abuses, it can truly be said that crime pays in the mortgage servicing industry.”

Original link to article is here: http://www.sanduskyregister.com/Blog/2016/01/28/Crime-pays-in-mortgage-servicing.html?ci=stream&lp=1&p=1