Six months after the long-awaited state attorneys generals’ settlement with (sell-out to?) the big mortgage loan servicers, the status quo seems unchanged for homeowners fighting to fend off the ongoing foreclosure feeding frenzy.
For those of us who have been dealing with the banks’ nonsense for years, the faint hope that someone in power finally fought for the banks to deal with borrowers in good faith has proven in vain according to Peter S. Goodman’s recent Huffington Post article featuring the travails of one New York homeowner.
“… the $25 billion foreclosure settlement the Obama administration and state attorneys general struck in February with the nation’s five largest mortgage companies -– servicers, in industry parlance … resolved complaints of unlawful foreclosure practices, detailed standards mortgage companies must meet or face fines up to $1 million per initial violation: Servicers must approve or deny loan modification applications within 30 days of receiving them, and must also provide distressed borrowers with a single contact person to discuss their cases in a bid to eliminate confusion.
President Barack Obama touted the “landmark settlement” as a curative, asserting that it would “speed relief to the hardest-hit homeowners, end some of the most abusive practices of the mortgage industry and begin to turn the page on an era of recklessness that has left so much damage in its wake.”
Despite the approach of an early-October deadline by which servicers must fully comply with the new standards, those who defend and process foreclosure cases say little improvement has emerged.
“We’re not seeing any changes in servicer behavior,” says Megan Faux, director of the foreclosure prevention project at South Brooklyn Legal Services, a legal aid firm that represents poor people confronting foreclosure in New York City. “We’re still seeing huge delays, improper denials of modification, very few principal reductions. None of their practices are really changing.”
Katie Diaz’s experience might be the story of any of us. She’s a hard-working middle class person caught up in an economic downturn that she didn’t cause and couldn’t have foreseen. When her household income changed, she did the right thing by getting in touch with her bank for assistance. What she got instead is all too familiar to anyone trying to get a loan mod: her bank “losing” paperwork, keeping people on hold for hours before providing conflicting information, denying loan mods with the excuse the homeowner didn’t send paperwork it turns out the bank never requested. As I read, I just kept thinking “been there, done that.”
“Diaz, 52, is here for a settlement conference, a face-to-face meeting of lender and borrower mandated under the foreclosure process in New York state. As soon as she sits down at the wooden conference table, an attorney representing Bank of America confirms that she is under review for a loan modification. A few minutes later, the bank lawyer corrects himself: Her case has been closed, he says, because she supposedly never sent required documents. Fifteen minutes after that, he corrects himself again: Her file was never reviewed, because her paperwork has been sitting in the wrong office inside Bank of America.”
Same BS, different lender. Same excuses, different state. Same incompetence, different homeowner. Same. Same. Same.
Goodman’s article marks the first time I have seen a mainstream reporter raise a point that I have written about before:
- Is it credible that the banks are merely horrifically incompetent after several years not to have developed efficient systems to deal with mortgage mod review?
- Or are the banks purposely playing a game of delay and deny with borrowers seeking mortgage help?
“Ever since the beginning of the foreclosure crisis, as stories of bureaucratic dysfunction have become legion, those who represent distressed homeowners have argued over the cause of this grief. Are the servicers merely disorganized, trying but failing to manage a mountain of paperwork? Or is something more malevolent at work, a kind of strategic incompetence in which they have devoted inadequate staff to problems they have no real incentive to fix quickly, while profiting from extra fees they accrue from the foreclosure process?”
Just how many years should it take for the banks to get their $#!+ together? They seem to have had long enough to get together and share info. on how to thwart homeowners modification quests. But not long enough to find one person among their thousands of employees who can design a system for handling financial paperwork and calculate a loan re-structure? Really?
As for malevolence, watch this excellent video created by a homeowner whose bank won’t review his application for a mod until he proves he’s dead. Really. Dead.
Is anyone going to enforce the settlement requirements? I suspect not.