Sen. Patrick Leahy (D-Vermont), chairman of the Senate Judiciary Committee, and Sen. Richard Blumenthal (D-Connecticut), a member of the committee, sent the letters after a review by the Executive Office for the United States Trustee “revealed that the rate of obvious, facial errors in proofs of claim in the bankruptcy courts may be 10 times higher than previously disclosed,” according to the letter.
The senators called this “a shocking and disappointing statistic.”
According to Leahy and Blumenthal, homeowners are receiving confusing and contradictory information from
servicers about what they must do to remain in their homes.
“[W]e write to seek clarification of the policies and procedures in place at your institution or mortgage servicing subsidiary that affect mortgage foreclosures, and your practices and policies related to filing proofs of claim and motions for relief from stay in the bankruptcy courts,” the senators wrote.
The senators note several major obstacles homeowners are facing when trying to work with their servicers.
“In some cases, these individuals struggle to even have a conversation with lenders and servicers regarding their mortgages, are unable to get the terms of their agreements in writing, or discover in follow-up interactions that no record was kept of previous discussions. And to make matters worse, it is clear that these problems are continuing within the bankruptcy courts,” the letter states.
As the nation’s largest servicers hold nearly one million properties, are foreclosing on almost one million more, and are likely to hold several million more over the next several years, Leahy and Blumenthal believe it is important to ensure servicers are following the laws and providing homeowners fair, consistent treatment.
In order to allow servicers a chance to respond to the letters, Leahy and Blumenthal have not yet revealed which servicers received their letters.
