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DS News Webcast: Tuesday 9/30/2014

The Consumer Financial Protection Bureau ordered Michigan-based bank Flagstar to pay $37.5 million dollars in penalties for violating the new mortgage servicing rules by failing to devote sufficient resources to its foreclosure prevention programs, CFPB announced on Monday. CFPB said that Flagstar illegally blocked borrowers' efforts to avoid foreclosure by unnecessarily delaying the processing of foreclosure relief applications, intentionally delaying permanent loan modifications, failing to notify borrowers when their applications for foreclosure relief were incomplete, and denying loan modifications to qualified borrowers.

CFPB discovered upon examination that during 2011, Flagstar had more than 13,000 active loss mitigation applications but only 25 full-time employees and a third party vendor in India reviewing them, increasing the wait time to review a single application to nine months in some cases. CFPB found that the average wait time to Flagstar's loss mitigation call center was 25 minutes, with more than 50 percent of calls being abandoned. Flagstar was ordered to pay $27.5 million dollars in restitution to the victims and an additional $10 million dollar fine, totaling $37.5 million dollars in penalties.

Refinance activity remained more or less level from June to July, though interest in the government's Home Affordable Refinance Program continued to dwindle, the Federal Housing Finance Agency reported. In a recent release, the agency reported a combined total of nearly 120,000 refinances were completed at Fannie Mae and Freddie Mac in July, slightly down from the figure reported for June. While low compared to the boom in recent years, refinance volumes over the last few months have shown more life than earlier this year as mortgage interest rates have hovered in the low 4.0 percent range.

About Author: Jordan Funderburk

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