Loan Originators---------àMortgage Servicers----------àMERS, Contractors, and “Foreclosure Mill” Law Firms------------àRobosigners
Loan Originators/Mortgage Issuers – Banks make mortgage loans to homeowners, which homeowners must repay. The home serves as collateral in case the borrower defaults on the mortgage.
Mortgage Servicers – Mortgage servicers collect mortgage payments and foreclose on delinquent loans. These are usually the nation’s biggest banks [2], which all have mortgage servicing units.
As we’ve noted [3], these servicers have also been charged by the federal government with helping eligible homeowners avoid foreclosure through the government’s Making Home Affordable loan modification program.
The discovery of robo-signing (see our entry for robo-signers below) by employees at major servicers — including GMAC [4], Bank of America [5], JPMorgan Chase [6] and Wells Fargo [7] ($) — has initiated a joint investigation by the attorneys general of all 50 states [8]. GMAC, Bank of America, JPMorgan Chase and Litton Loan Servicing, a mortgage servicer owned by Goldman Sachs, have all temporarily halted [9] all or some foreclosures and are reviewing procedures. Wells Fargo, which the Financial Times has also flagged as using robo-signers, so far has not [10] halted foreclosures.
Other contractors – Lender Processing Services, as we’ve noted, helps servicers manage data [11]. When loans fall into default, servicers sometimes transfer the loan information to these processing firms, effectively outsourcing management of the foreclosure process to companies like LPS.
“Foreclosure Mill” Law Firms – In states that require judges to vet a foreclosure, law firms execute affidavits certifying a number of facts key to the foreclosure case.
Also, Propublica outlines on MERS [Mortgage Electronic Registration Systems], Robosigners, Investors, and ties of 'Foreclosure Mill' Law Firms to Freddie Mac.
Read more from Propublica.
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