Investor Tired of Servicers Not Modifying Take Action
You know how when you call Bank of America to request a loan modification they’re always so helpful and do everything so quickly… NOT. And Countrywide too? Yeah, right. And GMAC? You betcha’.
And you know how they often seem to prefer foreclosing to anything else? And how they always blame it on the investor, saying that they can’t possibly do anything because the investor won’t let them even though it seems like the investor would make more money by modifying the loan?
Well, as it turns out, one investor, Impac Funding/Impac Holdings, has run a calculator on this and discovered that you’ve been right all along. They would in fact be better off modifying… but they can’t seem to get servicers like Bank of Ameerica, Countrywide, and GMAC to do anything but foreclose. How’s that for a switch?
So, here’s what happened:
A modification firm’s borrower got a call from a representative from Impac who was calling to make sure that borrowers knew that Countrywide was now Bank of America Home Loans and that they should continue making their payments to that new entity. Apparently, Impac had noticed that a large number of borrowers had become 30 and 60 days late and they were concerned it was due to the change from Countrywide to Bank of America Home Loans.
As the conversation went on, the borrower started asking about what the caller did at Impac and learned he was a portfolio manager. Next thing you know, the portfolio manager started talking about how Impac was very aggressive about getting loans modified for delinquent borrowers and even had modified loans in advance of hardship based delinquency. The borrower, who had two years to go before his adjustable rate loan would adjust higher and was not yet delinquent, asked if Impac would consider modifying his loan.
To make a long short, it worked. Impac agreed in principal to modify the loan, although there would be a cost, if approved of $1995. And it was done in something like 72 hours!
Next thing you know, a loan modification firm received a call from one of their clients who had received a letter from Impac offering to modify their mortgage. Obviously, Impac has become impatient with their servicers who aren’t quite working in their best interests when it comes to modifying loans. What do you know about that?
Go investors! Wake up and realize that the interests of your servicers are not the same as yours. They’re foreclosing when modification would make you more money… all the time. And they’re blaming you, when we all know they never even ask you.
Congratulations Impac! Way to go…
Dear Sir,
This is the heart of the problem. The left hand is clueless what It's counterpart is doing.
I recently called GMAC for a loan mod. Please note I have 25 years experience in loan origination for a bank.
It was a brutal experience. The person at GMAC, who is supposed to be experienced in matters of modification, was so uninformed it was breath taking. She flat out told me in 3 minutes that I was not qualified for a mod.
When I explained to her that my modification request might be a little "out of the box," but would benefit the bank more than me, she shot me down without understanding what my request even was.
Do you think the servicers man the phones with obviously unqualified employees in an effort to save money, or to simply make people give up hope?
Banks will never relent to investor interests in a big way. Two main reasons why.
First, banks are in large part still "drinking their own kool-aid" on how the properties couldn't possibly be worth much less than they lent for. From that perspective, greed would imply foreclosure.
Further, there was so much fraud in origination, that the banks fear entering into negotiations with investors to modify loans. Once you start re-examining the loan and its issuance, there is the opportunity to uncover fraud ... which is in large part fraud on the investors.
This would be so widespread (possibly a majority of loans) as to destroy the financial system (which is going to happen anyway eventually, because the loans were just so damn over-valued).
What would you do if you were a sleazy originator, facing steep mark-downs in value, and the prospect of your sloppiness/fraud being discovered? Probably convince yourself the properties were still really worth most of their original "value", and then pretend, extend, postpone, or foreclose (and then not sell).
It's a lot like all those Ponzi schemers who swear to the grave that it was all just "innocent" (Madoff only said otherwise to avoid his family and close associates taking any of the heat).
So how exactly do you find out who the investor is? My husband and I have been trying to get a modification done with Countrywide/BOA for over a year now. We never hear from them and when we call there is always a new excuse. At one point we were finally approved, made two payments and then they called us back and told us they screwed up the paperwork and they have to rework the loan! That was in June 2009.
Any suggestions?
Hello,
You have to write them a "Qualified Written Request" Letter. It is crap really. At first I thought the investor was the ones hidding, but now it may be the servicers hidding who the investor really is in fear the borrower will just go directly to them.