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.
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," Jerad says.
"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 money."
"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." Get Internet #1 - Litton Loan Servicing Reo Department @ http://realestatecure01.webs.com and change your financial life forever!
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. Get Internet #1 - Litton Loan Servicing Reo Department @ http://realestatecure01.webs.com and change your financial life forever!
# # #
How come everyone is earning from Real Estate? Want to get rich during the Downturn?
Get Internet #1 - Litton Loan Servicing Reo Department @ http://realestatecure01.webs.com and change your financial life forever!