Tuesday, August 4, 2009


A report from the trenches.

Today my staff called Bank of America to follow up on a loan modification which had been in pending status. She reached a call center and provided the loan information to the person answering the phone with the social security number, name of client, etc. The representative stated that they could not locate this loan. They checked and double checked and could not find the loan. So we asked to speak with a Supervisor. A supervisor came on the line and they checked their computer system as well. We pulled out the actual mortgage payment coupon and recited the information to the Supervisor. The Supervisor could not find the account either. They insisted that our customer did not have a Bank of America loan.

It occurred to my very experienced and wise staff member that perhaps the person that she reached for Bank of America did not have the same access to computer information as the state-side customer service representatives. She asked the supervisor, "What country are you in?" The supervisor replied, "Indian.!" She thanked them for their time and hung up.

Staff member calls another Bank of America number and reached a state-side BofA. They had NO TROUBLE locating the account or the status.

What is appalling to me is that my clients will call their bank to ask about status of loan modifications and they bank will say that they have never even heard of our law firm. The client will come to our office incensed that we have taken their money and have done nothing. They sit down with us, and they review their file, their chronological log of activities, the faxes, fax confirmation sheets and letters and are equally shocked and appalled that their bank has LIED TO THEM about our company. In fact, when a client comes to my office, we sit down with them and call the bank at that moment so they can confirm that they have in fact received our letters and they know who we are AND the client can complain to the bank about the sorry and incompetent Bank representative who lied to them previously.

Now I caution every reader not to think that the banks are just lying. It is possible, if not probable that they just don't have access to the same information that the Home Retention Departments have in comparison to that which Customer Service has.

It has also been my experience that when I have called to get a loan modification, I will have one customer service representative tell me client does not qualify. Then I will call back and get another representative who says they have been "Pre-Approved."

If one can imagine, this is maddening a law office to try to do business in this environment of deception and incompetence. If you are struggling with your loan modification, you must document every phone call. Get the name and identity of the person that you spoke with and get a fax number where you can fax a letter confirming the conversation you had. Otherwise you will never be able to prove you had conflicting information provided to you.

I would also urge you to document your complaints about your bank and contact your Senator or Congress member and show them that the BANKS HAVE LIED about their willingness to help homeowners stay in their homes.

Monday, August 3, 2009

Dawn Kopecki is Reporting that Cram-Down Bill may be BACK!

House Financial Services Committee Chairman Barney Frank threatened to revive the mortgage “cram- down” bill that stalled in Congress this year, saying lenders aren’t being aggressive enough in modifying troubled home loans.

Cram-downs let federal judges lengthen terms, cut interest rates and reduce mortgage balances of bankrupt homeowners, even if the lender objects. Congress gave the mortgage industry every legislative tool it requested to allow them to more easily modify loans for those facing foreclosure, and the results have been below expectations, Frank said in a statement today.

“People in the servicing industry and in the broader financial industry must understand that if this last effort to produce significant modifications fails, the argument for reviving the bankruptcy option will be extremely strong, and I think there is a substantial chance that the outcome will be different,” Frank, a Massachusetts Democrat, said.

Foreclosures and delinquencies have continued to rise since President Barack Obama began rolling out relief programs in February. Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, assailed the sluggish results at a hearing this month, while industry executives blamed “confusion and delay” from how the government sets rules for the programs.

“Congress is very irritated with the banks, they don’t think they’re moving fast enough,” said Paul Miller, a bank analyst at FBR Capital Markets in Arlington, Virginia.

Convincing the Senate

Frank managed to get a cram-down bill through the House of Representatives in March, only to see the legislation stall in the Senate as lawmakers there bickered over whether to limit the provisions to certain loans or a specific timeframe.

“Barney Frank can threaten to bring back the cram-down bill all he wants, he will never get it past the Senate in its most recent form,” said Josh Rosner, an analyst with Graham Fisher & Co. in New York.

Frank said he will re-attach the provisions to any new legislation requested by the industry, “unless we see a significant increase in mortgage modifications and foreclosure- avoidance.”

More than 1.5 million properties received a default or auction notice or were seized by banks in the six months through June, Irvine, California-based RealtyTrac Inc. said July 16, a 15 percent increase from a year earlier. Miller estimated that roughly 22 percent of homes in the U.S. are tied to mortgages that are higher than the market value of the property.

“There’s no easy answer and the political establishment is searching for a simple answer,” Miller said.

Servicer Meetings

Mortgage servicers pledged to step up their modification volume in meetings yesterday with officials from the U.S. Treasury and the Housing and Urban Development Department. The Obama administration, which originally targeted as many as 4 million borrowers for modifications in February, said roughly 200,000 trial modifications are underway.

Servicers at the meetings yesterday complained of the “piecemeal changes” the Obama administration has made to the program, according to Jay Brinkmann, the chief economist at the Mortgage Bankers Association in Washington.

“There’s an issue of announcing programs prior to when the details are figured out,” Brinkmann said. “When an announcement like that is made, suddenly the servicers start getting a lot of calls. That clogs up their call centers with questions they can’t answer and leads to a lot of frustration with servicers and consumers.”

To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net.