Flagstar faces a loan modification lawsuit with allegations claiming that Flagstar engaged in an illegal practice referred to as “dual-tracking” by continuing to foreclose on a homeowner’s home, at the same time contemplating the homeowner’s application for a loan modification. Based on violations of home loan modification laws, the Consumer Finance Protection Bureau has declared an enforcement action opposing Flagstar Banking practices. According to the Bureau’s investigation, Flagstar was found with numerous violations of the Bureau’s recent mortgage servicing rules.
For instance in 2011, Flagstar had mandated only 25 full-time employees along with a foreign contractor to manage about 13,000 operative applications for home loan modification and Flagstar was not able to explain why a number of applications for loan modification were rejected. Although the company acknowledged the concrete reasons for denials in its internal records, the only statement it would give the applicant was “denied for loss mitigation options by the owner/investor of the loan”. For some debtors who have received loan modification trial periods, Flagstar unnecessarily moved those trial periods out. Throughout the mortgage crisis, it was common for mortgage servicers to advance a foreclosure at the same time telling the homeowner that she or he was in succession for a loan modification. Most of the time the homeowner would wind up with whichever one was accomplished first, in most cases a foreclosure. Due to “dual-tracking” homeowners who were certain that a loan modification was approaching were surprised to completely lose their homes to foreclosure. As a result to this issue, the Consumer Financial Protection Bureau announced a rule and a number of states have passed laws in current years to limit mortgage servicers from continuing the foreclosure process if the homeowner is trying to acquire and secure a loan modification.
The Bureau orders Flagstar to pay $27.5 million to the consumers damaged by the bank’s mismanagement of their loan modifications. In addition, the Bureau announced that this action of prosecution will not prevent borrowers from taking some other legal action against Flagstar since according to the director of the Consumer Protection Bureau, Richard Cordray, Flagstar took lots of time to process debtors’ applications but failed to tell them when their applications were not complete, resulting in rejected loan modifications to eligible borrowers as well as illegally delaying process of finalizing permanent loan modifications. This illegal practice not only pushed hard working families from their homes, but also destroys communities. If you or anyone you know has experienced unnecessary and unfair foreclosures.Please Contact Us and provide any details along with contact information. If you prefer to leave a voicemail you can call 1.858.236.9020. GetClassActionMoney.com can then forward these requests to our network of attorneys that may contact you if a Class Action Lawsuit is to be pursued.
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