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Mortgage lenders must improve customer service, FDIC and FHA leaders say

Posted by  on May 29, 2012
 

If you've tried to shop rates online only to find some mortgage lenders reluctant to take your deal to the closing table, you've experienced what one top government official calls the banking industry's "trust deficit." FHA Commissioner Dave Stevens made waves when speaking to audience at a Mortgage Bankers Association conference in January. However, his catch phrase and his opinion have been floating among industry insiders since last fall, when the Wall Street Journal reported on a similar speech he delivered to the MBA's national gathering in Atlanta.

The former Wells Fargo and Freddie Mac executive also warned of potential difficulty in achieving significant reform among mortgage lenders and government-sponsored agencies, given the current political climate. Although some Tea Party-backed lawmakers have floated the idea of fully privatizing Freddie Mac and Fannie Mae, more moderate Republicans have told reporters that such moves would "derail" the recovery of the real estate market.

Customer Service Crucial to Mortgage Lenders' Future Survival
Stevens has suggested that mortgage lenders' reluctance to cut new home loan deals could put the financial futures of an entire generation of American consumers at risk. Despite government pressure on mortgage lenders to initiate loan modifications on "underwater" properties, few homeowners have benefited from the Home Affordable Modification Program. Without a stronger commitment to customer service, Stevens has warned, mortgage lenders run the risk of alienating consumers who could see long-term renting as more convenient and secure than shopping for home loans.

On her Realty Check blog, CNBC reporter Diana Olick noted that a wave of hiring at mortgage lenders has resulted in a surge of inexperienced underwriters and customer service agents. Meanwhile, Olick writes, lawyers paid to "ram foreclosures through the system" have caught the attention of FDIC Chairman Sheila Bair. Bair proposed a claims commission on improper foreclosures similar to the one overseeing claims from the BP oil spill.

Fortunately, online mortgage quotes remain one of the best resources for finding lenders committed to transparency and customer service. With real estate sellers cutting prices to help fuel purchasing at the end of 2010, mortgage brokers helped facilitate an unexpected surge in property sales. As property values stabilize in many parts of the country, mortgage lenders committed to helping customers reach the closing table will play a crucial role in regional recoveries.

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