Mandelman Matters website:
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’s 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.
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