Why Flagstar Borrowers couldn’t get a Loan Modification

Why Borrowers at Flagstar couldn’t get a Loan Modification

As one of the largest savings banks in the United States, Flagstar has around $10 Billion in assets. They are definitely a “big bank” and if you were a borrower who sought to get a loan modification from them, you found that out the hard way.

Flagstar has denied thousands of customers the opportunity to modify existing loans. In September, Flagstar was fined $10 Million Dollars by the Consumer Financial Protection Bureau (CFPB) for failing to property modify home mortgages serviced by Flagstar. Why did things go so wrong at Flagstar?

Flagstar only had 25 employees who were tasked with evaluating homeowner requests for loan modifications. These 25 people were assigned to work a total of 13,000 loan modification files between them. That means there were over 500 files assigned to each employee! Additionally, to make matters worse for borrowers, Flagstar has recently been cited for various deficiencies related to Customer Service such as:

• 25 Minute Average Hold Time
• 50% Call Abandonment. (Calls which were ended in frustration by customers before they received any help or assistance)
• Failed to adequately alert Borrowers of Incomplete Applications.
• Failed to make good faith efforts to convert trial modifications to permanent modifications.

Flagstar has agreed pay ten million dollars in fines as well as twenty-seven million dollars in restitution to loan modification victims. For more info about Flagstar’s fines see the CFPB website.  If you live in Florida and requested but did not receive a response to your loss mitigation package submitted after January 1, 2014, contact us today to discuss your legal options.