The death of a homeowner often brings out the worst in a mortgage company, according to a report from the Consumer Financial Protection Bureau (CFPB), which found that many homeowners say that mortgage companies try to push them into new, higher-interest loans instead of letting them keep their existing mortgage.
Additionally, homeowners often have to deal with delays and repeated requests for the same documents, sometimes lasting months or even years.
“When someone loses a spouse or goes through a divorce, the last thing they need is their mortgage servicer giving them the runaround or pushing them into an unaffordable loan,” said CFPB Director Rohit Chopra. “Mortgage servicers have clear obligations under federal law to help these homeowners.”
Survivors of domestic violence face extra challenges, such as mortgage companies sending important information to the abuser, putting their safety at risk. Mortgage servicers often blame issues on investor requirements or other technical problems rather than taking responsibility for poor service.
CFPB Director Rohit Chopra said that mortgage servicers are required by law to assist homeowners in these situations. The Department of Veterans Affairs (VA) also emphasized that surviving spouses of veterans should be able to assume their spouse's VA loan without delay.
Problems cited in the report
The CFPB’s report highlights several problems:
- Homeowners being pressured to take out higher-interest loans even when they can keep their existing loan.
- Long delays in processing paperwork.
- Refusals to release the original borrower from liability, even when the new homeowner has been making payments.
- Risks for domestic violence survivors, with servicers requiring the abuser’s consent for changes.