When it comes to homeowners applying for loan modifications, mortgage servicers come in three types: Terribly Annoying, Unbearably Annoying, and Make-You-Want-to-Burn-Your-House-to-the-Ground Annoying.
Some people laugh at that description, and I might have laughed at it too, before I came to realize that it was such a dramatic understatement.
Not only are all mortgage servicers absolutely God-awful to deal with all the time and in every conceivable way, but they haven’t changed even one iota in three years. They were entirely incompetent when they started modifying loans and they are every bit as incompetent today. It’s really quite stunning… the only thing they do consistently is perform poorly.
A couple of years ago, with homeowners all saying how difficult it was to reach their servicers, I asked some Bank of America management types why the bank was having such a hard time answering the phone. Was it all those buttons? Because I would understand that… I hate all those buttons.
As I told them, I was asking because I happened to be one of the 44 million people carrying a Bank of America Visa card around, and I had discovered that I could call the toll-free number on the back 24 hours a day, 7 days a week and within a couple of minutes talk to a live person that could tell me where I bought gas last Thursday and how much interest I paid in 2005. But apparently, were I to have a question about a loan modification… oh no… Bank of America couldn’t seem to answer the phone? Is that what BofA was expecting me to believe?
Chase is no better… might even be worse, although in a race to the bottom it does get murky towards the finish line. For the longest time Chase maintained that they simply weren’t able to hire enough people to handle the volume of calls they were receiving related to loan modifications, as if the whole foreclosure-modification thing had caught them entirely off guard. So, wherever it was that Chase was, the financial sector was apparently running at full employment.
But then I met Jared, an ex-employee of Chase’s servicing company. He had worked in the foreclosure department for 18 months, left on very good terms, and agreed to an interview.
Jared explained that it was his responsibility to make sure foreclosures were being completed in compliance with Fannie’s guidelines, and to document everything that went on with each file. “Everything the homeowner sends in has to be scanned, copied and attached to their file,” he said.
So, how come servicers are always losing paperwork submitted by borrowers, I asked? He said that didn’t happen at Chase. “We never lost anything, it was a big part of how you’d be awarded the maximum bonus of $12,000 a year.”
I must be thinking about Wells Fargo, I replied under my breath.
“Half of the bonus was tied to documenting your files in case investors wanted to audit them,” and the other half was based on how fast you’d foreclosure… at Chase they say that the ‘perfect foreclosure’ is 120 days,” he said.
Well, that must have been something to aspire to, I replied. I mean, not every foreclosure can hope to be “perfect,” right? He nodded in agreement, not quite sure of my meaning.
Jared recalled what his boss had told him during his first week on the job: “We’re in the foreclosure business, not the modification business.”
“Foreclosures are a no lose proposition for servicers,” Jared explained. “The servicer gets paid more to service a delinquent loan, and they get to tack on extra charges. If the borrower reinstates, which is rare, then the borrower pays the extra fees. If the borrower loses the house, then the investor pays them. Either way, the servicer gets their money.”
What about modifications, I wanted to know.
“Their whole focus is to foreclose, not to modify. They make borrowers jump through every hoop so that when something fails to get done on time, they can deny it and foreclose. That’s what it seemed like to me, anyway,” explained Jared.
I told him that it seemed like that to me, too.
It was all starting to make sense to me. They weren’t trying to figure out how to modify… they were trying to find a reason to foreclose.
That had to be why so many of the stories about modifications sounded like they came straight from the reality television show: “The Amazing Race”.
“You have exactly 11 hours to sign and notarize this form. Then deliver three copies to one of three addresses in your home city between 3:00 PM and 4:30 PM on Thursday. The catch is that you must arrive by elephant. When you arrive at your destination a small Asian man wearing one red shoe will give you your next clue. You have exactly $3.95 to complete this leg of THE AMAZING CHASE!”
It’s easy to laugh about… unless you’re the one trying to hail an elephant inStockton,California.
But, what about modifying loans to avoid foreclosures whenever possible? How could the servicers get away with this sort of institutional behavior? Were they trying to torture people and destroy all of the equity in the country? Why?
Each night, I prayed for the answer to come… Dear Lord, I would say quietly to myself so my wife wouldn’t slap me for praying about HAMP… help me to understand… send me a sign…
And, sure enough HE did… on CNBC. It was during an interview with JPMorgan Chase’s CEO, Jamie Dimon when the light began to shine through the darkness…
"Giving debt relief to people that really need it, that's what foreclosure is,” Dimon said. They (Homeowners) are probably better off going somewhere else, because they get relieved almost 100% of the debt through foreclosure."
Oh, no he didn’t. Did he just say what I thought he said? He has got to be the most astonishingly arrogant, out-of-touch, uncaring jackass I have ever come across. I don’t even think The Donald would say something like that.
Foreclosures weren’t bad for people… they were more like a gift… a way of providing much needed relief from the burdens of having a home in which to live. Foreclosures weren’t debt collection… they were debt forgiveness.
Rejoice, people, rejoice! Rejoice and revel in the fact that you’ve got thirty days to pack your crap and move out of your house!
At that very moment I knew two truths to be self-evident:
1. I had found the source of the problems with mortgage servicers... bankers. I don’t know why I hadn’t seen it clearly before.
2. I would feature that obnoxious, hardhearted and seriously twisted man in my column because without a doubt he is one of the biggest REAR ENDS mankind would ever come to know.
Martin Andelman is a staff writer for The Niche Report. He also writes an almost daily column on ML-Implode called Mandelman Matters. He also publishes a Monthly Museletter and you can follow “Mandelman” on Twitter. Send your responses to Martin@TheNicheReport.com.