Reno loan servicing company determined guilty

The first significant suit questioning actions of loan servicers has been decided. In Reno, Nev., loan servicer Compass/Silar has been determined liable for $5.1 million in injuries. Mortgage investors banded together to bring this suit. Mortgage holders will likely not see any of the cash. That is one business that is going to need a huge personal unsecured loan to make up for damages. Article source – Loan servicers found guilty of gouging in Reno, Nevada by MoneyBlogNewz.

All about loan servicing

The organization of loan servicing is often something that is not seen very well. Mortgage business generally hides it too. The loan is managed by a loan servicer that is hired by a financial institution or mortgage company after a consumer gets a mortgage. Investors that get mortgages as investments often will get a loan servicing company to do the job. The mortgage, taxes and other costs is where the cash is split up into while the customer makes payments to the loan servicing company who does this.

Loan servicing company gets prosecuted

A loan servicing company, Silar/Compass, has been sued by a group of 50 mortgage investors. Silar Advisors is a loan servicer that was combined with Compass Partners. In 2009, the deal that Silar/Compass tried to make with the Federal Deposit Insurance Corporation failed so the assets of IndyMac weren’t purchased. The group of 50 investors is suing Silar/Compass in court in Reno as they won't get any interest on the bad credit loans the investors put cash into back after Silar/Compass took cash out of mortgage investments with their own costs.

What costs loan servicing demands

A jury said the Silar/Compass fees by the loan servicing company were improper. The mortgage investors were very excited to discover out that Silar/Compass stopped the fees and charges immediately. This was exciting for them. There were many fees charged. These included origination fees, late costs and unauthorized interest. There is more though. The loan servicers might have to deal with the mortgage modification process as well. The mortgage holder may approve the change to the mortgage. It won't happen though if the servicer does not think it should.

Articles cited

New York Times

nytimes.com/2010/12/19/business/19gret.html