Problems rampant in mortgage servicing, advocates and regulators say

Errors, misbehavior point to need for reform

"I'm checking my balance on my account on almost a daily basis now," she said.

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What critics are saying

Mortgage servicers, which accept borrowers' payments, handle escrow accounts and oversee foreclosure, have been buffeted by a storm of criticism in recent months. Here's a taste:

"Servicers do not believe that the rules that apply to everyone else apply to them. This lawless attitude, supported by financial incentives and too-often tolerated by regulators, is the root cause of the robo-signing scandal, the failure of [the loan-modification program] HAMP, and the wrongful foreclosure of countless American families." — Diane E. Thompson of the National Consumer Law Center, in testimony to the Senate Banking Committee in November.

"Servicing is a crucial piece of the securitization industry, and so far it is being run on the cheap, half in the dark, with little effective regulation or oversight. … On a regular basis, servicers attempt to foreclose on property where either the borrower is current on the note or would be but for bad behavior by servicers, or where the investors would benefit from a loan modification." — Kurt Eggert of the Chapman University School of Law, in testimony to the Senate Banking Committee in December.

"[D]eficiencies and weaknesses identified during the reviews represent unsafe or unsound practices and violations of applicable law. … The results elevated the agencies' concern that widespread risks may be presented — to consumers, communities, various market participants, and the overall mortgage market." — Federal Reserve, Office of the Comptroller of the Currency and Office of Thrift Supervision, in a joint report in April after examining the largest servicers' foreclosure files.

"Since the focus [of the federal agencies' review] was so narrow, we do not yet really know the full extent of the problem. … Flawed mortgage banking processes have potentially infected millions of foreclosures, and the damages to be assessed against these operations could be significant and take years to materialize." — Federal Deposit Insurance Corp. Chairwoman Sheila C. Bair, in May testimony to the Senate Banking Committee

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