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Limiting Abuse and Opportunism by Mortgage Servicers

Kurt Eggert

Chapman University School of Law

December 23, 2010

Housing Policy Debate Vol. 15, No. 3, 2004

This article discusses the opportunistic and abusive behavior of some servicers of residential mortgages toward the borrowers whose loans they service. Such abuse includes claiming that borrowers are in default and attempting to foreclose even when payments are current, force-placing insurance even when borrowers already have a policy, and mishandling escrow funds.

The causes of such practices and the market forces that can rein them in are discussed. A case study of one mortgage servicer describes its unfair treatment of borrowers and the reforms imposed by federal regulators and other market participants. Both regulatory agencies and rating agencies appear to have increased their scrutiny of servicers' behavior, and states have passed new legislation to limit abuse. This article concludes with a discussion of proposals for further reform should these steps prove inadequate.

Number of Pages in PDF File: 32

Keywords: mortgage servicers, securitization, subprime, predatory lending

JEL Classification: D18, G21

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Date posted: June 10, 2007 ; Last revised: December 26, 2010

Suggested Citation

Eggert, Kurt, Limiting Abuse and Opportunism by Mortgage Servicers (December 23, 2010). Housing Policy Debate Vol. 15, No. 3, 2004. Available at SSRN: http://ssrn.com/abstract=992095

Contact Information

Kurt Eggert (Contact Author)
Chapman University School of Law ( email )
One University Drive
Orange, CA 92866-1099
United States
HOME PAGE: http://www.chapman.edu/law/faculty/eggert.asp

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