But the third cohort is most often overlooked and most troubling, which is victims of servicer abuses. This problem is very much underdiagnosed because the servicer is judge, jury, and executioner as far as its charges are concerned. Borrowers find it a pitched battle to get the detailed payment records from servicers, even with a lawyer’s help. Even then, the statements are usually incomprehensible. Attorneys have told me they typically have to hire a forensic accountant both to get to the bottom of the mess and to serve as an expert witness.
Given how expensive it is to fight this sort of case on the real issue, the borrower’s belief that the servicer has overcharged him, many of these cases are instead fought on the simpler grounds of standing. That feeds the perception that borrowers are taking advantage of bank errors, rather than having legitimate grounds for opposing a foreclosure.
So the best we can go by is estimates by attorneys that actually handle these cases. Remember, most people who really cannot afford their house will not put up a fight. Nevertheless, Diane Thompson, Counsel for the National Consumer Law Center said in testimony before the Senate Banking Committee last November that in 50% of the cases she handled, the foreclosure was the result of a servicer driven default. I’ve had attorneys who’ve handled hundreds of cases put the percentage even higher.
Now some readers no doubt may be skeptical that servicer screw-ups or venality can have that sort of impact, so let’s look at the Michigan couple highlighted in Huffington Post as a case study.
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