"Specialty" mortgage servicers are businesses whose business purpose is to make their money by servicing mortgages. Specialty mortgage servicers are now reportedly engaging in the same allegedly unfair mortgage servicing practices which investment banks settled. See Jessica Silver-Greenberg and Michael Corkery, "Loan Complaints by Homeowners Rise Once More / Old Abuses, New Front / Taking Over For Banks, Mortgage Servicers Sidestep Rules" p. A1, col. 6 (New York Times Nat'l ed., Wednesday, February 19, 2014).
Investment banks have settled potential claims over their mortgage servicing activities in the so-called National Mortgage Settlement, and they have settled actual claims in suit in individual litigated cases over their allegedly unfair mortgage servicing practices including lender force-placed insurance.
Did they agree not to do it again by other means?
Did they agree to bind the parties to which they sold their contracts for mortgage servicing?
Putting it another way, did the investment banks agree, when they settled their mortgage servicing practices, that their agreement would be binding on specialty mortgage servicers to which they sold their servicing contracts?
This is a very important issue especially for future mortgage servicing activities involving lender force-placed insurance. More to come on this subject.
© 2014 by Dennis J. Wall. All rights reserved. No claim to original U.S. Government works.
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