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Blog » The Serious Need for Mortgage Servicing Laws

The Serious Need for Mortgage Servicing Laws


Trying to work with your mortgage servicer is like stepping into the world of Alice in Wonderland. Nothing is as it seems and everything is subject to change. Just speak with any one of the tens of thousands of Oregonians working to save their homes from foreclosure and you’re likely to hear a similar story of frustration, uncertain delays, conflicting information and lost paperwork.

The first response from major banks was to blame the homeowners for the delays and lost paperwork. Now the common refrain is to chalk it all up to an unforeseen accident. After it was revealed that mortgage servicing employees were illegally signing off on thousands of foreclosures, attorneys general from all 50 states stepped into the debate and launched an investigation into the nation’s mortgage servicing industry.

The investigation is an important way to look back and ask what happened. We also need to look forward and ask state lawmakers to address this ongoing crisis with rules guiding the basic business practices of mortgage loan servicers. Of all of the players wrapped up in the foreclosure crisis, mortgage servicers have the most contact with homeowners, yet there are few laws in place regarding those interactions.

Our economic recovery depends on finding a real fix to the foreclosure crisis - and any real fix must include mortgage servicers. If we’ve learned anything over the last two years, it’s that dangling carrots like incentive payments to banks for HAMP loan modifications and allowing voluntary compliance has proven to be a dismal failure. Outlined below are a few basic improvements Oregon lawmakers should adopt to establish reasonable rules that tackle the most common abuses. Enforceable rules and better accountability for mortgage servicers should include:

  • Clear procedures for how servicers will handle homeowners in danger of foreclosure.
  • A requirement to have a sufficient staff on hand.
  • Written procedures for consumer inquiries and complaints.
  • Reasonable deadlines and clear communication with homeowners regarding the status of their account, including information about any pending loan modification.
  • Methods for ensuring that homeowners do not have to submit multiple copies of required documents.

Want to learn more or get involved? Contact angela@economicfairness.org