Mortgage Modifications neglected admits Bank
Another insider in a foreclosure department af a major mortgage
lender here in the U. S. has surfaced to blow the whistle on their
employer in the distressed mortgage neglect game. It does seem
that slowly but surely, insiders of the mortgage servicers are coming
forward to reveal the sandbagging of distressed mortgage owners
seeking mortgage modifications, or even short sales. I call the
readers attention to the first video on the home page of this blog.
Mandelman has written about this before also. This particular
confession comes from an employee in the mortgage servicing
division working in the foreclosure department. Which lender and the
location is not really important. This particular office services
foreclosures in all 50 states. The staggering number of failed
mortgage modifications makes the location and lender a moot point.
If the reader must know, you can follow the link below to my source.
It could be, and might as well be, your lender.
This particular informant had absolutely no prior experience with
mortgages or in real estate. He ended up working in the mega-bank’s
mortgage servicing area. The interview process included a “panel” of
servicer executives asking a variety of questions primarily in two
areas. They asked if he was the type of person that could handle
working with people that were emotional and in foreclosure, and if his
computer skills were up to snuff. They asked him nothing about real
estate or mortgages, or car sales for that matter.
The training program turned out to be almost exclusively about the
critical importance of documenting the files that he would be pushing
through the foreclosure process and ultimately to the REO
department, where they would be put back on the market and
hopefully sold. Documenting the files with everything that transpired
was the single most important aspect of his job.
In fact, it was what his bonus was based on, along with the pace at
which the foreclosures he processed were completed. A perfect
foreclosure took 120 days, period. He started at an annual salary of
$30,000, but he very quickly became a “Tier One” employee, earning
a monthly bonus of $1,000 because he documented everything
accurately and because he always processed foreclosures at as
close to a “perfect” pace as possible. His day-to-day job was
primarily to contact paralegals at the law firms to file foreclosures,
publish sale dates, and myriad other tasks required to effectuate a
foreclosure in a given state.
“Seemed like more than 95% of the time, the instruction came back
‘proceed with foreclosure,’ according to Jerad. “Files would be on
hold pending modification, but still accruing fees and interest. Any
time a servicer does anything to a file, they’re charging people for it,”
“Foreclosures are a no-lose proposition for a servicer. The servicer
gets paid more to service a delinquent loan, but they also get to tack
on a whole bunch of extra fees and charges. If the borrower
reinstates the loan, which is rare, then the borrower pays those extra
fees. If the borrower loses the house, then the investor pays them.
Either way, the servicer gets their money.”
“Our attitude was to process everything as quickly as possible, so we
can foreclose and take the house to sale. That’s how we made our
“Servicers want to show investors that they did their due diligence on
a loan modification, but that in the end they just couldn’t find a way to
modify. They’re whole focus is to foreclose, not to modify. They put
the borrower through every hoop and obstacle they can, so that
when something fails to get done on time, they can deny it and
proceed with the foreclosure. Like, ‘Hey we tried, but the borrower
didn’t get this one document in on time.”
He often took a smoke break with some of the guys handing loan
modifications. “They were always complaining that their supervisors
weren’t approving modifications, There was always something else
they wanted that prevented the modification from being approved.
They got their bonus based on modifying loans, along with accurate
documentation just like us, but it seemed like the supervisors got
penalized for modifying loans, because they were all about finding a
way to turn them down.”
“There’s no question about it, my employer is in the foreclosure
business, not the modification business.”
Eighteen months after being hired, with numerous investors having
filed for bankruptcy protection as a result of the housing meltdown,
he was laid off. An investor is the entity that actually owns the
mortgage in question; in this case a non-performing, or troubled,
asset. When an investor files bankruptcy the loan files go to the
bankruptcy department, presumably to be liquidated by the trustee in
order to satisfy the claims of creditors.
During the 18 months that he worked there, his foreclosure
department of 15 people would receive 30-40 borrower files a day
just from California alone, so each person would get two to three
foreclosure a day to process from California alone. He also said that
in his office, there were no more than 5-7 people in the loan
modification department, but in loss mitigation there were 30 people
who processed forbearances, short sales, and other alternatives to
foreclosure. The REO department was made up of fewer than five
people. You don’t suppose that the number of employees in a given
office is an indication of where the priorities are, do you?
Now I understand why servicers want foreclosures. It’s the extra fees
they can charge either the borrower or the investor related to
foreclosure… it’s sort of license to steal. No one questions those fees
and charges, so I’m sure they’re not designed to be low margin fees
and charges. They’re certainly not subject to the forces of
competition. I’d bet they’re not regulated in any way.
I also now understand why so many times it seems like they’re trying
to come up with a reason to NOT modify, as opposed to modify and
therefore stop a foreclosure.
And, now we know why. They’re not trying to figure out how to
modify, they’re looking for a reason to foreclose and sell the house.
If the source of this whistleblowing came to understand how things
worked inside a servicer in just 18 months, then I have to believe that
many thousands of others know these things as well. How about
Geithner ans Summers and FDIC Chair Sheila Bair.
So, why do so many of our elected representatives continue to stand
around looking surprised and even dumbfounded at HAMP not
working as it was supposed to… as the president said it would?
They don’t actually do that, do they? In fact, our elected
representatives don’t look surprised at all, come to think of it. They’re
not surprised because they knew about the problems. It’s not often
“in the news,” because it’s not “news” to them.
Again, the judges are taking notice. The REST Report is proving to
be an iron-clad foreclosure defense. Once your judge sees the
results and realizes that the calculations are accurately from the
bank itself, they will rule from the bench that the lender negotiate
your distressed mortgage in good faith. There is no reason to pay a
third party to negotiate a mortgage modification when you can do it
yourself and incur the sympathy of a concerned judge.
Call me. I’ll get you your REST Report so you can negotiate your
own mortgage modification. It works.
Call me at: 970-242-2600
Email at: info ‘at’ Mortgage-Mod-Monster ‘dot’ com
Please surf: http://www.mortgage-mod-monster.com/
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