Freddie Mac is not handling homeowners mortgage complaints as well as they should, federal officials announced Thursday.
According to a report from the inspector general overseeing the Federal Housing Finance Agency, a major Freddie Mac’s mortgage servicers handled more than 25,500 “escaled” complaints from homeowners between October 2011 and November 2012, however, it failed to take care of 21% of them within the required 30-day window.
Furthermore, the report uncovered that the overwhelming majority of complaints went un-reported to Freddie Mac and that FHFA, the agency that oversees Freddie, did not have the proper procedures in place to handle some of the most serious borrower complaints -- including allegations of servicing fraud and improper foreclosures.
Russell Rau, deputy inspector general for audits, pointed out that: “When such issues aren't resolved quickly, borrowers don't have adequate time to explore alternatives and, in some cases, end up losing their homes to foreclosure.”
In 2011 a new set of guidelines were put in place under which servicers are supposed to observe strict protocols when a borrower lodges a complaint.
According to CNN Money, complaints are often fielded by an agent manning the phones for the servicer. If the agent can't immediately resolve the problem, it gets kicked upstairs to a specialist. Once that happens, the complaint is officially an "escalated case" and the servicer must report it to Freddie and resolve the problem within 30 days.
But, the audit revealed that four out of Freddie's eight major servicers -- Bank of America, CitiMortgage, Wells Fargo and Provident -- never reported any cases between October 2011 and November 2012, even though the group handled more than 20,000 during that time.
Furthermore, the inspector general said Freddie did an "inadequate" job of making sure its servicers complied with the rules and failed to establish any type penalties for servicers who failed to report escalated cases.
Freddie Mac didn't immediately return calls seeking comment.