NEW YORK - Bank of America Corp. said it will lay off about 2,500 workers in Illinois and 1,500 in Michigan over the next two years in connection with its $21 billion purchase of LaSalle Bank Corp. from Dutch bank ABN AMRO Holding NV.
40% of those denied were just testing the waters? Could it be that they are laying the groundwork for when they do qualify? "I knew this was coming and I tried to tell IndyMac but they wouldn't listen and now I'm losing the house and the Hummer and the jet ski and it is all their fault for not listening!"
"The other 40% of loans that are denied loss mitigation are to borrowers who are current on their mortgage payments but who contacted IndyMac in an effort to get a lower rate, she said."
I'm curious, when all the Wall street/banking scmucks requested a rate cut from Ben Dover Bernanke what percentage were denied?
Could it be that they are laying the groundwork for when they do qualify?
I often get people asking me why inquiries are shown on credit reports. Why should anyone keep a record of who pulled your CR six months ago?
So that when you go back to IndyMac in six months, having blown your "surplus" on jetskis, the nice Ms. Huey (past whom I suspect much does not get) will say, "Hmmm. . . we just looked at your credit report six months ago . . . "
Seriously, I'm not sure how much they were "testing the waters." I suspect Ms. Huey is putting it like that because she's a nice respectable professional. Another way to translate her remark is that Indy and 40% of these people have different points of view about what constitutes necessary expenses and budget-tightening. That is, really and truly, taught in Workout 101. The first thing you do with some people is help them understand that the jetski payment is not "non-discretionary."
IMB was the king of no-doc and piggybacks. Their borrowers didn't offer income verification before. Why should IMB be surprised that those requesting mods would all of a sudden be willing to provide that top secret information?
They're not surprised. You are not hearing the bewildered cry of wounded innocence here.
You are hearing a very diplomatic spokesperson pointing out that workouts only work out if income (and expenses and cash assets) are verified.
Nobody ever thought modifications were going to do anything for the liar loan crowd.
The point here is that Indy is making it clear that not even a borrower who once documented income, but now wants to try to get a "stated doc mod," is going to get through. You cannot call your servicer and say you got a big pay cut since your loan was originated without supplying the docs. Some of these people who don't "follow up" with docs were lying on the original loan, and some are, um, exaggerating on the mod request.
"Wallstreet just refuses to understand the words "slow economy","
I think Wall Street understands it, our trade partners around the world have to recycle 2-3bil a day and now that ABS has burnt their ass that kind of leaves less places for the winners to return the marble to the losers. This game will end bad like it always does but probably the hope is that a booming stock market will keep the wealth effect spending going game where by Americans buy their crap to keep their people employed. Carry trade on.
I really think a lot of folks forget that mortgagors who are truly in financial distress, particularly of the sort that everyone now tells them they should have seen coming, are usually suffering from profound, often paralyzing, shame and depression. They do not jump right up, on the whole, and call servicers looking for a deal. They're the ones who would probably most benefit from a workout, but it's hardest to give them one because you have to coax them out of the woodwork before things get so bad it's a no-hoper.
I've developed enough experience lately with emergency rooms and pain medications to have seen the version of this in the medical world: the ones with a stubbed toe hollering to high heaven about the agony they're in are likely to get an aspirin and then get ignored for an hour by an experienced triage nurse. The folks sitting quietly over in the corner, sweating, biting their lips, and whispering that they're just in a bit of discomfort are likely to get whisked in and put on a morphine pump, and they'll probably need it.
Bear Stearns (BSC 119.0, +4.76) is a standout this morning. Briefing.com is hearing that the stock is up on chatter that a Chinese bank could take a 30% stake in the company. A Bear Stearns spokesperson would not comment on the rumor
NEW YORK - Bank of America Corp. said it will lay off about 2,500 workers in Illinois and 1,500 in Michigan over the next two years in connection with its $21 billion purchase of LaSalle Bank Corp. from Dutch bank ABN AMRO Holding NV.
There's a lot of "people fat" in the banking industry. With ATMs and online banking, customers don't need personal help in branches, but banks have kept a lot of branch staff on in boom times. Now, those times are ending. Rising benefit costs (especially health insurance) is a big issue.
I'll bet a lot of those cut are tellers and loan officers. LaSalle is main street branch banking. This is a warning sign of huge layoffs ahead in retail banking. Of course, a lot of the laid-off bankers will end up in foreclosure. It's sad, poetic justice.
It's not that I don't care about freeloaders, it's that if I give a sob-story to my landlord he's going to come back with: "that's nice, but where the check, bitch?"
``His decision to back out suggests either that this is a negotiating ploy to get a lower price or he's looked at everything and sees such a mess that he cannot deal with it,
it's that if I give a sob-story to my landlord he's going to come back with
Really?
My experience with landlords, at least those of the long-haul been-at-this-a-long-time variety, is that they're just as willing as lenders to work things out when it makes economic sense to do so. If vacancies are high enough, you'll be surprised at how much landlords can be brought to work with you. If vacancies are low enough, you'll get the boot.
What fascinates me to no end is just the upset over this basic business-self-defense strategy of taking a nickel instead of a dime when the only other option is taking nothing instead of a dime. A lot of people just can't stop seeing this as some kind of game-playing ("hiding losses"). There's nothing hidden about it, nor is there anything "charitable" about it. If you are in the business of lending people (or companies) money, you will eventually end up in a restructuring situation. If you don't, you're so damned risk-averse that you probably haven't made much of a profit lending money.
Excellent point, Tanta. JK is referencing a population of borrowers WHO CALLED IN asking about workouts. Those are odd birds, my friends.
I'd be supercurious to know the raw counts behind the 60/40 pile of rejections. Anyone care to guess? Better yet, can someone find out, plz. Over/Under is 25.
I concur with Tanta, you self-sufficient types should have no worries about "riskloves" being bailed out.
Banker consensus is that the FHASecure program is going to be 3/4 point more expensive than regular FHA product. FHASecure have to be pooled separately because noone wants to contaminate conventional FHA pools. The big banks will participate, but they don't expect much volume.
Industry-wide, servicers can barely keep up with delinquencies, much less entertain resource-dependent workouts. And almost 100% of subprime borrowers are defaulting BEFORE the reset.
And it gets worse. The bigger challenge will be in 2009 when the first wave of AltA & OptionARMs reset. Larger balances, larger resets, more payment shock.
"There's a lot of "people fat" in the banking industry. With ATMs and online banking, customers don't need personal help in branches, but banks have kept a lot of branch staff on in boom times. Now, those times are ending. Rising benefit costs (especially health insurance) is a big issue."
BofA laid off nearly all its full-time tellers ten or fifteen years ago and replaced them (in my area, anyway) with part-time college kids. The WaMu down the way from me has a lower average age of employee than your average college-town coffee house.
Some banks are not that way, but plenty are. Including BofA. If they've got too many people in their branches, it'd simply be because the cost is low. As for job losses after a merger, that's probably the dreaded post-merger "consolidation": data center, HR, marketing, centralized loan operations, etc.
When a loan has been put into a securitized pool and sold, who has the authority to restructure if the borrower cannot make payments after adjustment? If the originator has kept servicing rights, can the originator restructure individual loans? Is there an incentive to do this? What if the originator is out of business and another organization has servicing rights?
With ATMs and online banking, customers don't need personal help in branches
Oh, suuuure. You wait 'til the ATM mechanic can't get here today and the website is down and you go to all the trouble to drive to the bank to find out that there's only one human being in the whole joint who can get cash out of the vault and she's at a combination luncheon-baby shower that's going to take most of the rest of the afternoon.
AHAHAHAAAHA. Listen, I can almost always tell how a De Novo is going to do by the quality of the tellers they hired and by the quality of their training.
Well, if you mean do servicers count that as "spendable cash" in determining whether you're a hardship case? Not as far as I know. Basically, if money is BK-proof, servicers will treat it as off the table for purposes of covering current expenses.
Which is not to say they won't point out to some people that saving for retirement while losing all the equity in your home is, um, not great strategy.
The branch has been closed, now is a taco shop, you are really in a line for tacos hoping you can get cash back
Yeah, well, see, the bank was happy to let all those merchants with ATM card readers supply cash back, since it saves on tellers. The bitchy part is when the merchants can't get cash . . .
I'm not talking about the quality of customer service in banks. It's no better or worse than in most other segments of retail in the self-help era.
I'm talking about banks' perception of their branch networks and how to maximize profits. Most banks know they don't need all these brick-mortar branches. They'd be happier with a bank of ATMs ond an awning. But they are stuck with the leases and customers who require face time, or they will go elsewhere.
Banks can't chop as many branches as they want and retain customers and assets. But they can chop branch employees. It's possible before this recession is done retail banking will have as many layoffs as any U.S. industry. It will be the incredible shrinking industry.
I'm talking about banks' perception of their branch networks and how to maximize profits. Most banks know they don't need all these brick-mortar branches. They'd be happier with a bank of ATMs ond an awning. But they are stuck with the leases and customers who require face time, or they will go elsewhere.
But Rich, my point is that we in banking went through this little exercise in stupid back in the 80s when "Dial A Bank!" was invented. We were just sure that as soon as all the customers upgraded to touchtone from rotary, we could fire the tellers, quit polishing all that marble flooring, and become lean mean money makin' machines.
I have been through it with ATMs, I have been through it with the internet, and if I live long enough I firmly expect to go through it again with the iPhone.
A fair number of those "jewelbox" branches they're thinking about closing down now were built after the ATM revolution (once we realized we had to have brick & mortar again and all our old branches got turned into Taco Bells).
And while there is certainly a customer segment who wants a human being, thanks, not a machine and not the drive-up, even, there is also a customer segment (like me) who uses direct deposit, online account management, and ATMs 99.8% of the time, but bloody well expects a teller somewhere in this MSA on the one day in a year I need a cashier's check or else accounts will get transferred to some real bank, buster.
(Full disclosure: I have spent most of my career working for banks and thrifts. My own DDA accounts are all at credit unions.)
We still get a touchtone surcharge on our phone bill. WTF? But that isn't the rant. Bank ATMs were supposed to -save- money. Whyinthehell do they charge for the cheaper service and provide the more expensive marble floored lobby face time for free?
End of rant. Tanta, you made me feel real good reading your last comment. As much of my stuff as possible is also in a credit union.
"The branch has been closed, now is a taco shop, you are really in a line for tacos hoping you can get cash back"
I don't know what it's like where you are, but over here new bank branches have been proliferating like mad in recent years, though branch-building seems to be coming to a peak, mainly because once you've got one on every block, and a Charbucks on every block, and a cell-phone store in between, there's no place left to go.
Robert, I know someone who works for an institution who had this big "BANK WHERE YOU WORK!" campaign (from the infernal marketing department), including the obligatory fliers, lunch & learns, and T-shirts, in a desperate attempt to get the employees to open accounts.
Eat at restaurants that chefs eat at. Have your tonsils out at hospitals that doctors will have themselves admitted to. Open a checking account where bank employees do: credit unions.
i was just looking at the BSABS 05-HE11 sept. remittance report; there's a fair amount of detail in there about the mod activity on that deal (subprime, btw), which seems to be more active than most, if anyone cares. sorry, no link.
And while there is certainly a customer segment who wants a human being, thanks, not a machine and not the drive-up, even, there is also a customer segment (like me) who uses direct deposit, online account management, and ATMs 99.8% of the time, but bloody well expects a teller somewhere in this MSA on the one day in a year I need a cashier's check or else accounts will get transferred to some real bank, buster.
(Full disclosure: I have spent most of my career working for banks and thrifts. My own DDA accounts are all at credit unions.)
Tanta
See, here's the thing: while I'm not 100% up on all the negative convexivity stuff - hey, I'm a chem/phys guy, and we model different stuff - it is reassuring to read these sorts of things and see similar consumer choices. Your personal banking behavior matches mine.
I started to comment on this before - during the mortgage thread. The only difference for me during this refi free-money free-for-all is that I refied out of a 30yr fixed into a no-points, significantly cheaper 10 year fixed product. Sure, the payments take a bigger bite out of my ass, but I didn't cash out and I'll be paid off in just five more years. When I went to refi, I was shocked by some of the "products" available - and was amazed they could be marketed with a straight face. The loan officers asserted I was the oddball for thinking these were insane products. I figured 'there's a sucker born every minute'...but I never figured the purveyors of this garbage would be drinking their own coolade.
I am surprised at the persistence of brick-and-mortar banking establishments (and I'll include drive through in that) - even if you pay tellers next-to-nothing, the storefront costs are significant. What the failure of the dial-a-bank, ATMs and online banking revolutions suggests to me, is that a majority of our fellow citizens remain late-adopters WRT 'high tech'. I think this will change as the boomers die off - not before. GenX will happily make do w/ 1/3-1/4 of the brick and mortar branches. That once-a-year trip, using leave time since it's gonna be during 'banker's hours', can be made to an inconvenient location.
GS downgrades Merrill - cites possible multibillion dollar writedown. Kind of putting a crimp in the quarter-end party the stock market was trying to throw.
Are loan mods done much for non-owner occupied homes? I have a house next to me where the couple had the dad buy the house( subprime 2006 no doc) for them while they repaired their credit. Dad has another mortgage for his home. Well the couple both voluntarily quit their jobs and cant buy the house but has left dad on the hook for the mortgage. The couple was paying the low teaser rate of the mortgage as rent but it is soon to reset much higher. The dad wants to refinance or mod the loan to a more affordable level in hopes the couple can still pay the mortgage.
there is also a customer segment (like me) who uses direct deposit, online account management, and ATMs 99.8% of the time, but bloody well expects a teller somewhere in this MSA on the one day in a year I need a cashier's check or else accounts will get transferred to some real bank, buster.
Tanta,
There will still be a teller in your branch. But only 1, not 3. You will have to stand in line longer.
The big difference between now and when you were in banking is generational. Older people need to talk to other people. Younger customers like to use machines. Most banks think old folks are a pain in the rear, because they count the decimal points on CD rates. Banks want to get more young customers to whom they can sell credit cards, consumer loans, and insurance that will pay off your mortgage if you get hit by a train. Younger is dumber.
You will still have lots of smart old folks to talk to while you stand in line.
i'm a high tech using gen X-er, but when it come to my money, I want a real human being. Sure $20 bucks, i'll trust to an atm, my phoNE and cable bill i'll do online, but when i need a couple of thousand, or transfer a sum over say $1000 I want to go in and speak to a live person to make damn sure they do excactly what I'm asking.
What the failure of the dial-a-bank, ATMs and online banking revolutions suggests to me, is that a majority of our fellow citizens remain late-adopters WRT 'high tech'.
Well, that's part of it, but the issue here is really cash. As Vader notes, we haven't yet figured out a (safe and sound) way to spit the stuff out of laser printers in the supermarket.
As long as people want currency, there will have to be some secure way to dispense it. ATMs are great until they get a paper jam or the network goes offline. Even when they work fine, they do occasionally run out of money, especially those on the "slower" routes. It costs a fair amount of money to drive those Brinks armored trucks around (with packin' guards) to fill the ATMs. Plus, you still have to balance the things, just like you have to balance a teller drawer. The ATM may not be off as often as a teller drawer, but you can't just assume that all those twenties got spit out to the right people at the right time.
And there still have to be night depositories for merchants (like Taco Bell) who end their business day with a big bag of currency and checks but don't have a vault to keep it in overnight.
This gets us back to those periodic "death of currency" articles you see. I've been reading those for thirty years, too. We haven't even gotten rid of the penny yet.
I'll tell you why I'll never switch over to online banking unless I have no choice: I have no faith in the system - too many things can go wrong.
These day I get a bill, I write a check, and by golly, it goes in the mail and gets to the company in question.
Online banking works great: until your computer dies, the internet connection is shot, their server is down, etc. Then what? Suddenly, you have late fees on everything.
Same idea with any form of banking more complex than that - I want to speak to a real person, not hope that I've found the right form on some website and that it actually goes through to some person, somewhere, that I cannot see or speak to when needed.
When it comes to money, I just don't like doing all the bookkeeping in the ether of the internet.
There's some truth to the "Blue Hair" thing, but really. Ask your average teller.
They probably spend as much time running your 12-year-old's piggy bank contents through the automated change counter than they do listening to old Mrs. Persnicketty complain about her statement being off by exactly nine cents. (It's always exactly nine cents. It just takes at least an hour with a manager to convince Mrs. Persnicketty that embezzlement is not going on here.)
Lots of people have lots of different motivations for doing lots of things. These generational generalizations are actually POTP. Bank management relied on shallow consultants who made broad-brush generalizations about customers based on age and technological adoption, without drilling down into that to consider all the myriad counter-pressures and other concerns people have.
You could have a bank whose customer base is about 100% tech-savy young people (E*TRADE?), that still has to have tellers because the Feds won't give you a bank charter if you have no way to deliver cash to demand-account holders in the event of electronic systems failure. You all do know that it is actually illegal for banks to be closed for more than three consecutive days, unless it's an officially-declared disaster?
My problem with 100% reliance on tech-heavy banking is that I know too much about our "Disaster Recovery Plans."
"I think this will change as the boomers die off - not before. GenX will happily make do w/ 1/3-1/4 of the brick and mortar branches."
That's about when most of these little dumb asses will have the foreclosure off of their credit report.
Kevin
Wow Kev! Thanks! As a proud Genx-er, I'll have you know that I won't have a foreclosure on my credit report...I'll have the last of my debt paid off before then...and when things get really ugly in the coming months, I ought to have enough cash on hand for some vulture buying from a few distressed boomers who don't seem to have realized just how old they are (and how much debt ought to be paid off by now). As I noted, I've only 5 years to go on a house I purchased in '98 (I hit my local bottom of market, pure luck), and refi-ed in '02. I did not cash out, and that's my last outstanding debt. Although I visit my CU building regularly, I haven't interacted with a 'human' there since I needed a cashier's check...oh, about 14 months ago...when I was paying cash for a car. Being "older" does not make people particularly wiser. And doing things the old-fashioned (and slow) way isn't necessarily superior.
I have to admit: I now work in software/IT, so I have my biases, but at least I am somewhat self-aware of them. Lemme ask you a question: What exactly do you think the nice teller is writing down your transaction on back there? A nice Bob Cratchet (TM) leather bound double-entry ledger? Guess what: it's a computer - the same one the ATM updates. There is precious little difference in the receipt the teller gives you and the one from the ATM - the blame for an off-drawer might hit the human teller before it hit you.
Cash is passe in many, many respects [1], insofar as money transfers - clearing house transfers - are little more than bits in a computer file. This has been more or less the case since I was just an annoying whippersnapper. If you enjoy pulling out the old Remington Manual to make a check out to cash and driving down to visit the teller (I borrow from the image of my late father-in-law, a mattress-stuffing child of the depression if ever I met a stereotype in person), by all means do so - but don't fool yourself - the minute it hits the teller's hands, it's a digital transaction. See? Aren't inter-generational slings and arrows fun?
Pondering - answering this more seriously: all the banks, and all the companies, and everyone else does this on redundant computer systems. The banks really led the way in the development of reliable, redundant (failover) computing systems (Tandem Systems in particular). I too stuck w/ checks for certain things for a long time - since they make great receipts should you ever wind up in a dispute - but how many banks still provide you paper copies? Most now provide you access to a scanned digital image. Check handling/processing is enormously expensive, and it's a privilege that's going to start co
Illinois has very limited branch banking. Most of the people LaSalle will lay off are probably quite highly paid HQ types (hopefully not my friend L. who's a very pretty forex trader). The hollowed out papermache economy claims another couple thousand victims.
Oh boy...so that ended originally with something less offensive and mentioning how nice it was for anyone to have read it all...but it got badly truncated.
Suffice to say: I agree cash will be with us, and to the extent that retail banking is needed to provide that distribution network, it'll be with us. Cash will be with us since too many people will want a means of keeping some measure of financial privacy.
Llama - yep, the 10 year note payments are steep, but the house got so much cheaper...and I get back like 20 years of debt servitude. The IRS will still take their share for any bailout from the quarterlies...but nope, I'm not contributing much to the bottom line am I?
It's funny; over here, I have less trust in the mail. A little paper envelope that might fall out of the sorting machine, or behind a bin somewhere in the bowels of the post office or mail room? Sure, it might make it there in a day or two, but it could also be a week.
At least when I make a payment online, I get a nice little confirmation I can print and wave around. In a very short time, I also see a corresponding debit in the bank or credit card company's system. Sure, I'll see when the check hits, but that can be much later, and that's something I don't like if I'm paying close to a due date.
Are loan mods done much for non-owner occupied homes?
As a generalization, I'd say almost never.
You understand that the situation you are describing was at least borderline fraudulent to start with. (How come we needed a "no doc" loan here? Did Dad inform the lender that it wasn't going to be owner-occupied?)
Look, you don't offer mods to people who "need" them. This is a misunderstanding of the issue. You offer mods to people who are demonstrably committed to maintaining ownership of the home and who need them, when foreclosure would clearly be more expensive to you.
People who own investment properties for which the rent cannot cover the mortgage are rarely "committed" to continuing to own them. I rather doubt Dad is going to find someone who wants to refi the thing, let alone modify it. You'd have to show at least some cash flow on a rental to get any mortgage servicer interested in a workout. And if the current tenants are relatives, there is no lease, and you cannot document that they pay something close to market rent?
Dad tried, basically, to game the system for the kids the first time (get them into a house even though they patently didn't qualify). Now he wants to game the system again by getting the noteholder to subsidize the kids' rent? I can't believe anyone's that stupid.
Remember the deal here: why did people lie about occupancy? Because we charge higher rates and require bigger down payments for rental properties. Why did we do that? Because people will walk away from money-losing investments (when they won't walk away from the home they live in). So those who "got around" the pricing/LTV issue by lying about occupancy aren't going to get much sympathy from a servicer.
So do you take a hit to your FICO score for renegotiating?
If not I'd sure like to drop my 30 year fixed down to 2% or so. You can't expect me to live with my Dell 833 much longer. Quad core is an inalienable right dammit!
But seriously, does the lender disclose the renegotiation to the credit reporting agencies?
Scott,
You are one savvy Gen-Xer--took the words right out of this ex-banker boomer's mouth. I knew some of the people who built and tested electronic systems at "my" bank, and I confidently entrust my money to their systems. I've also audited disaster recovery plans at this bank--unlike Tanta, I found them reassuringly obsessive-compulsive.
Scott, technology is good but ... don't forget some of us old folks understand it as well as you do. After all, it had to start from somewhere (before India, etc).
I use on-line services for many things but not in every case. Sometimes I do send checks particularly if I've had prior bad experiences with certain services (even if with a different company).
A couple of years ago I was overbilled by quite a large sum by a company. It was a mistake in their software but they refused to admit it. Even though I had all the documentation, receipts, etc. I fought these people all the way down the line (even after they tried to trash my credit) and eventually WON the case. Fortunately, I had the resources to do this, a lot of people don't.
So I take what you write with a couple of grains (large ones) of salt.
But seriously, does the lender disclose the renegotiation to the credit reporting agencies?
It depends on what you mean by "renegotiation."
If you "forgive principal" somehow--short sale, short refi, a mod that writes off loan balance--then you are doing the original meaning of the term "settling for less."
Your credit report will not show a tradeline "paid in full" if it was "settled for less than amount due." So that stuff does appear and it does hurt you.
In most of these cases, what's showing up on the credit report is the series of late payments that led to the workout. It's not that the modification is reported, it's that while you will show as current from the mod date onward (if you make the modified payments), those old lates don't come off for seven years.
Currently I have 2 different companies that have to tract my credit report due to some dumb ass letting some young hot shot take my personal information home on his lap top and it like got lost or stolen or he just doesn't know WTF he did with it. This kinda like pisses me off to the frigging max if you get my drift. I own 3 homes free and clear, I'm debt free, I pay most of my bills by cash or check and I ocasionaly us a CC an I usualy have a credit on it a I round them off to the next even 100 and pay them off every month. I trade online, check my ballances and have been building my own computers since 96. All the people I know that are in forclosure are little smart ass such as your all knowing self. Pack sand.
I remember going to the old Crocker Bank, with its marble floors and 20-30 foot ceilings.*
Like Tanta, it's not something to be done regularly, but when I do stop in, it's likely for something semi-important. And while the interior doesn't have to rival Gringott's, there should be a human who knows what they are doing on the other side of the desk. (And yes, I'm of the "internet generation", or whatever it's called.)
*The building has since been carpeted and cubified (diced?) It's like seeing a tent city in a cathedral, except not quite that bad.
Contacting troubled borrowers is a big challenge because many avoid communicating with servicers out of fear or embarrassment. Quantums Caravetta has found that troubled borrowers respond better to customized stationeries and personalized letters than to official communications that show the company logo. The response rate is 10-15 percent greater than a conventional official letter, he reports.
However, rising interest rates over the next few years, coupled with further house price declines, will make it difficult to do loss mitigation, according to Freddies Padgett. As the economic conditions, especially in the pocket areas, start to deteriorate, we will probably again have to change from loss mitigation to short sales, he warned.
Padgett said the dynamic of a short sale has changed over time and that servicers may not have the experience to deal with those changes. A major new factor, he explained, is the proliferation of second mortgages that inhibit the lender/servicers ability to do a standard short sale.
Padgett said todays mortgages are larger in size and are supported more by mortgage insurance compared to loans in the past. The more participants in the transaction, the more difficult loss mitigation becomes because each party wants a bigger piece of the pie. The participants usually end up negotiating against each other, which kills the deal, he said.
Also, the transition of Alt A loans into REOs is occurring at an alarming rate, Padgett added. Not only are the loans becoming REOs at a faster pace but they are also difficult to modify because borrowers, typically those with little or no income documentation, are not able to support the debt service on the modified loan. All the factors that can fuel the shift from loss mitigation to short sale inability to repay, declining property value, and second liens with MI are present, and thats the dynamic were going to see in the next couple of years, Padgett concluded.
I've also audited disaster recovery plans at this bank--unlike Tanta, I found them reassuringly obsessive-compulsive.
You know, it's actually the obsessive-compulsive ones that tend to worry me.
See, that's the thing about disasters. Any plan with too much detail, too many moving parts, quits working in the first 20 minutes or so.
But hey, I live near Washington DC. In the event of something that forced evacuation of this city, I'd simply stay home, because I really don't need to die in bumper-to-bumper unmoving traffic on 395 surrounded by a bunch of hysterical people who are running out of gas. Call me incorrigible, but the emergency personel trying to get me to join that throng would have to shoot me.
As someone who has spent a fair amount of time in operations, I have a healthy respect for how often elaborate structures fail to work in a non-disaster regular old Tuesday at 3:00 p.m. I therefore approach DRPs with a certain healthy skepticism. I like the ones that focus on keeping cash secured but flowing, and that worry about how account correspondence will be printed without the letterhead stock somewhat later.
CNN Money.com
Subprime: Big talk, little help
Lawmakers are talking the talk, but mortgage lenders are having a hard time walking the walk when it comes to helping at-risk borrowers.
SLM Corp., the biggest U.S. provider of student loans, said it was informed the group planning to buy the company doesn't expect to consummate the $25.3 billion purchase.
SLM will pursue all legal remedies, the Reston, Virginia- based company known as Sallie Mae said in a statement today on PR Newswire. Under the planned buyout, SLM was to be sold for $60 a share to an entity 50.2 percent-owned by J.C. Flowers & Co., with JPMorgan Chase & Co. and Bank of America Corp. each holding 24.9 percent.
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The stock price was really already pricing this in but this looks like confirmation.
1st,2nd and 3rd
Bank of America to cut 4,000 jobs
NEW YORK - Bank of America Corp. said it will lay off about 2,500 workers in Illinois and 1,500 in Michigan over the next two years in connection with its $21 billion purchase of LaSalle Bank Corp. from Dutch bank ABN AMRO Holding NV.
[snip]
40% of those denied were just testing the waters? Could it be that they are laying the groundwork for when they do qualify? "I knew this was coming and I tried to tell IndyMac but they wouldn't listen and now I'm losing the house and the Hummer and the jet ski and it is all their fault for not listening!"
"The other 40% of loans that are denied loss mitigation are to borrowers who are current on their mortgage payments but who contacted IndyMac in an effort to get a lower rate, she said."
I'm curious, when all the Wall street/banking scmucks requested a rate cut from Ben Dover Bernanke what percentage were denied?
Robert C,
The other 40% are like me, can pay, but darn cheap.
Speaking of which, gotta go and shop rates now they are dropping too.
Durable goods drops are more indicative of the slowdown.
Wallstreet just refuses to understand the words "slow economy",
I give them until next spring.
Peace in our time!
Could it be that they are laying the groundwork for when they do qualify?
I often get people asking me why inquiries are shown on credit reports. Why should anyone keep a record of who pulled your CR six months ago?
So that when you go back to IndyMac in six months, having blown your "surplus" on jetskis, the nice Ms. Huey (past whom I suspect much does not get) will say, "Hmmm. . . we just looked at your credit report six months ago . . . "
Seriously, I'm not sure how much they were "testing the waters." I suspect Ms. Huey is putting it like that because she's a nice respectable professional. Another way to translate her remark is that Indy and 40% of these people have different points of view about what constitutes necessary expenses and budget-tightening. That is, really and truly, taught in Workout 101. The first thing you do with some people is help them understand that the jetski payment is not "non-discretionary."
IMB was the king of no-doc and piggybacks. Their borrowers didn't offer income verification before. Why should IMB be surprised that those requesting mods would all of a sudden be willing to provide that top secret information?
Why should IMB be surprised
They're not surprised. You are not hearing the bewildered cry of wounded innocence here.
You are hearing a very diplomatic spokesperson pointing out that workouts only work out if income (and expenses and cash assets) are verified.
Nobody ever thought modifications were going to do anything for the liar loan crowd.
The point here is that Indy is making it clear that not even a borrower who once documented income, but now wants to try to get a "stated doc mod," is going to get through. You cannot call your servicer and say you got a big pay cut since your loan was originated without supplying the docs. Some of these people who don't "follow up" with docs were lying on the original loan, and some are, um, exaggerating on the mod request.
Publius:
Ben "Dover" Bernanke. The funniest thing I have heard since the rate cut. LOL. AWESOME.
"Wallstreet just refuses to understand the words "slow economy","
I think Wall Street understands it, our trade partners around the world have to recycle 2-3bil a day and now that ABS has burnt their ass that kind of leaves less places for the winners to return the marble to the losers. This game will end bad like it always does but probably the hope is that a booming stock market will keep the wealth effect spending going game where by Americans buy their crap to keep their people employed. Carry trade on.
I really think a lot of folks forget that mortgagors who are truly in financial distress, particularly of the sort that everyone now tells them they should have seen coming, are usually suffering from profound, often paralyzing, shame and depression. They do not jump right up, on the whole, and call servicers looking for a deal. They're the ones who would probably most benefit from a workout, but it's hardest to give them one because you have to coax them out of the woodwork before things get so bad it's a no-hoper.
I've developed enough experience lately with emergency rooms and pain medications to have seen the version of this in the medical world: the ones with a stubbed toe hollering to high heaven about the agony they're in are likely to get an aspirin and then get ignored for an hour by an experienced triage nurse. The folks sitting quietly over in the corner, sweating, biting their lips, and whispering that they're just in a bit of discomfort are likely to get whisked in and put on a morphine pump, and they'll probably need it.
Bear Stearns (BSC 119.0, +4.76) is a standout this morning. Briefing.com is hearing that the stock is up on chatter that a Chinese bank could take a 30% stake in the company. A Bear Stearns spokesperson would not comment on the rumor
Why - what did his real name "BS" Bernanke (Ben Shalom Bernanke) do wrong?
There's a lot of "people fat" in the banking industry. With ATMs and online banking, customers don't need personal help in branches, but banks have kept a lot of branch staff on in boom times. Now, those times are ending. Rising benefit costs (especially health insurance) is a big issue.
I'll bet a lot of those cut are tellers and loan officers. LaSalle is main street branch banking. This is a warning sign of huge layoffs ahead in retail banking. Of course, a lot of the laid-off bankers will end up in foreclosure. It's sad, poetic justice.
It's not that I don't care about freeloaders, it's that if I give a sob-story to my landlord he's going to come back with: "that's nice, but where the check, bitch?"
Fremont Says Ford Isn't Prepared to Complete Purchase
Fremont Says Ford Isn't Prepared to Complete Purchase (Update3) - Bloomberg.com
``His decision to back out suggests either that this is a negotiating ploy to get a lower price or he's looked at everything and sees such a mess that he cannot deal with it,
it's that if I give a sob-story to my landlord he's going to come back with
Really?
My experience with landlords, at least those of the long-haul been-at-this-a-long-time variety, is that they're just as willing as lenders to work things out when it makes economic sense to do so. If vacancies are high enough, you'll be surprised at how much landlords can be brought to work with you. If vacancies are low enough, you'll get the boot.
What fascinates me to no end is just the upset over this basic business-self-defense strategy of taking a nickel instead of a dime when the only other option is taking nothing instead of a dime. A lot of people just can't stop seeing this as some kind of game-playing ("hiding losses"). There's nothing hidden about it, nor is there anything "charitable" about it. If you are in the business of lending people (or companies) money, you will eventually end up in a restructuring situation. If you don't, you're so damned risk-averse that you probably haven't made much of a profit lending money.
Excellent point, Tanta. JK is referencing a population of borrowers WHO CALLED IN asking about workouts. Those are odd birds, my friends.
I'd be supercurious to know the raw counts behind the 60/40 pile of rejections. Anyone care to guess? Better yet, can someone find out, plz. Over/Under is 25.
I concur with Tanta, you self-sufficient types should have no worries about "riskloves" being bailed out.
Banker consensus is that the FHASecure program is going to be 3/4 point more expensive than regular FHA product. FHASecure have to be pooled separately because noone wants to contaminate conventional FHA pools. The big banks will participate, but they don't expect much volume.
Industry-wide, servicers can barely keep up with delinquencies, much less entertain resource-dependent workouts. And almost 100% of subprime borrowers are defaulting BEFORE the reset.
And it gets worse. The bigger challenge will be in 2009 when the first wave of AltA & OptionARMs reset. Larger balances, larger resets, more payment shock.
"There's a lot of "people fat" in the banking industry. With ATMs and online banking, customers don't need personal help in branches, but banks have kept a lot of branch staff on in boom times. Now, those times are ending. Rising benefit costs (especially health insurance) is a big issue."
BofA laid off nearly all its full-time tellers ten or fifteen years ago and replaced them (in my area, anyway) with part-time college kids. The WaMu down the way from me has a lower average age of employee than your average college-town coffee house.
Some banks are not that way, but plenty are. Including BofA. If they've got too many people in their branches, it'd simply be because the cost is low. As for job losses after a merger, that's probably the dreaded post-merger "consolidation": data center, HR, marketing, centralized loan operations, etc.
When a loan has been put into a securitized pool and sold, who has the authority to restructure if the borrower cannot make payments after adjustment? If the originator has kept servicing rights, can the originator restructure individual loans? Is there an incentive to do this? What if the originator is out of business and another organization has servicing rights?
With ATMs and online banking, customers don't need personal help in branches
Oh, suuuure. You wait 'til the ATM mechanic can't get here today and the website is down and you go to all the trouble to drive to the bank to find out that there's only one human being in the whole joint who can get cash out of the vault and she's at a combination luncheon-baby shower that's going to take most of the rest of the afternoon.
Question:
Does $ in IRAs figure into modifications?
I could make a case for either.
Tanta
Actually she has been let go because the bean counters see that her costs are greater than the income generate by her presence.
The branch has been closed, now is a taco shop, you are really in a line for tacos hoping you can get cash back
customers don't need personal help in branches
AHAHAHAAAHA. Listen, I can almost always tell how a De Novo is going to do by the quality of the tellers they hired and by the quality of their training.
Does $ in IRAs figure into modifications?
Well, if you mean do servicers count that as "spendable cash" in determining whether you're a hardship case? Not as far as I know. Basically, if money is BK-proof, servicers will treat it as off the table for purposes of covering current expenses.
Which is not to say they won't point out to some people that saving for retirement while losing all the equity in your home is, um, not great strategy.
The branch has been closed, now is a taco shop, you are really in a line for tacos hoping you can get cash back
Yeah, well, see, the bank was happy to let all those merchants with ATM card readers supply cash back, since it saves on tellers. The bitchy part is when the merchants can't get cash . . .
Tanta,
I'm not talking about the quality of customer service in banks. It's no better or worse than in most other segments of retail in the self-help era.
I'm talking about banks' perception of their branch networks and how to maximize profits. Most banks know they don't need all these brick-mortar branches. They'd be happier with a bank of ATMs ond an awning. But they are stuck with the leases and customers who require face time, or they will go elsewhere.
Banks can't chop as many branches as they want and retain customers and assets. But they can chop branch employees. It's possible before this recession is done retail banking will have as many layoffs as any U.S. industry. It will be the incredible shrinking industry.
Of course service will suffer. But so what?
I cannot believe it! My question gets a post here on CR and also is the focus of Mr. Practical over at Minyanville!
Countrywide: Mortgage Restructure Free-For-All?-Minyanville
The greatest day of my life!
JL
I'm talking about banks' perception of their branch networks and how to maximize profits. Most banks know they don't need all these brick-mortar branches. They'd be happier with a bank of ATMs ond an awning. But they are stuck with the leases and customers who require face time, or they will go elsewhere.
But Rich, my point is that we in banking went through this little exercise in stupid back in the 80s when "Dial A Bank!" was invented. We were just sure that as soon as all the customers upgraded to touchtone from rotary, we could fire the tellers, quit polishing all that marble flooring, and become lean mean money makin' machines.
I have been through it with ATMs, I have been through it with the internet, and if I live long enough I firmly expect to go through it again with the iPhone.
A fair number of those "jewelbox" branches they're thinking about closing down now were built after the ATM revolution (once we realized we had to have brick & mortar again and all our old branches got turned into Taco Bells).
And while there is certainly a customer segment who wants a human being, thanks, not a machine and not the drive-up, even, there is also a customer segment (like me) who uses direct deposit, online account management, and ATMs 99.8% of the time, but bloody well expects a teller somewhere in this MSA on the one day in a year I need a cashier's check or else accounts will get transferred to some real bank, buster.
(Full disclosure: I have spent most of my career working for banks and thrifts. My own DDA accounts are all at credit unions.)
OT Home sales by zip code,
https://www.melissadata.com/lists/ezlists/ezHomeowners.aspx?zip=60126
Tanta
Yep saving for IRA/401K while losing the house is not a good strategy.
I'd not thought of that angle.
Nor for that matter paying 24% in credit card interest while chasing returns in the IRA.
Tanta
I can see a new terminal at the checkout. One that prints cash.
It's sad, poetic justice.
rich | 09.26.07 - 12:10 pm | #
is there a profession that is deserving of riches or hi wages?
would you care to name you top 20 worthy jobs?
Excuse the personal rant but it is topical.
We still get a touchtone surcharge on our phone bill. WTF? But that isn't the rant. Bank ATMs were supposed to -save- money. Whyinthehell do they charge for the cheaper service and provide the more expensive marble floored lobby face time for free?
End of rant. Tanta, you made me feel real good reading your last comment. As much of my stuff as possible is also in a credit union.
The greatest day of my life!
JL
Jerry
that's really sad...
"The branch has been closed, now is a taco shop, you are really in a line for tacos hoping you can get cash back"
I don't know what it's like where you are, but over here new bank branches have been proliferating like mad in recent years, though branch-building seems to be coming to a peak, mainly because once you've got one on every block, and a Charbucks on every block, and a cell-phone store in between, there's no place left to go.
Bank ATMs were supposed to -save- money.
Well of course they were, and they did.
OH! You thought they were supposed to save your money!
Robert, I know someone who works for an institution who had this big "BANK WHERE YOU WORK!" campaign (from the infernal marketing department), including the obligatory fliers, lunch & learns, and T-shirts, in a desperate attempt to get the employees to open accounts.
Eat at restaurants that chefs eat at. Have your tonsils out at hospitals that doctors will have themselves admitted to. Open a checking account where bank employees do: credit unions.
OT - Bank of Canada Governor warns of housing bubble in Canada:
This page is available to GlobePlus subscribers
i was just looking at the BSABS 05-HE11 sept. remittance report; there's a fair amount of detail in there about the mod activity on that deal (subprime, btw), which seems to be more active than most, if anyone cares. sorry, no link.
And while there is certainly a customer segment who wants a human being, thanks, not a machine and not the drive-up, even, there is also a customer segment (like me) who uses direct deposit, online account management, and ATMs 99.8% of the time, but bloody well expects a teller somewhere in this MSA on the one day in a year I need a cashier's check or else accounts will get transferred to some real bank, buster.
(Full disclosure: I have spent most of my career working for banks and thrifts. My own DDA accounts are all at credit unions.)
Tanta
See, here's the thing: while I'm not 100% up on all the negative convexivity stuff - hey, I'm a chem/phys guy, and we model different stuff - it is reassuring to read these sorts of things and see similar consumer choices. Your personal banking behavior matches mine.
I started to comment on this before - during the mortgage thread. The only difference for me during this refi free-money free-for-all is that I refied out of a 30yr fixed into a no-points, significantly cheaper 10 year fixed product. Sure, the payments take a bigger bite out of my ass, but I didn't cash out and I'll be paid off in just five more years. When I went to refi, I was shocked by some of the "products" available - and was amazed they could be marketed with a straight face. The loan officers asserted I was the oddball for thinking these were insane products. I figured 'there's a sucker born every minute'...but I never figured the purveyors of this garbage would be drinking their own coolade.
I am surprised at the persistence of brick-and-mortar banking establishments (and I'll include drive through in that) - even if you pay tellers next-to-nothing, the storefront costs are significant. What the failure of the dial-a-bank, ATMs and online banking revolutions suggests to me, is that a majority of our fellow citizens remain late-adopters WRT 'high tech'. I think this will change as the boomers die off - not before. GenX will happily make do w/ 1/3-1/4 of the brick and mortar branches. That once-a-year trip, using leave time since it's gonna be during 'banker's hours', can be made to an inconvenient location.
GS downgrades Merrill - cites possible multibillion dollar writedown. Kind of putting a crimp in the quarter-end party the stock market was trying to throw.
Hmmm... you think GS went short on them then?
Pot calling the kettle black?
Goldman Sachs cuts Merrill Lynch profit estimates - MarketWatch
Tanta,
Are loan mods done much for non-owner occupied homes? I have a house next to me where the couple had the dad buy the house( subprime 2006 no doc) for them while they repaired their credit. Dad has another mortgage for his home. Well the couple both voluntarily quit their jobs and cant buy the house but has left dad on the hook for the mortgage. The couple was paying the low teaser rate of the mortgage as rent but it is soon to reset much higher. The dad wants to refinance or mod the loan to a more affordable level in hopes the couple can still pay the mortgage.
Tanta,
There will still be a teller in your branch. But only 1, not 3. You will have to stand in line longer.
The big difference between now and when you were in banking is generational. Older people need to talk to other people. Younger customers like to use machines. Most banks think old folks are a pain in the rear, because they count the decimal points on CD rates. Banks want to get more young customers to whom they can sell credit cards, consumer loans, and insurance that will pay off your mortgage if you get hit by a train. Younger is dumber.
You will still have lots of smart old folks to talk to while you stand in line.
i'm a high tech using gen X-er, but when it come to my money, I want a real human being. Sure $20 bucks, i'll trust to an atm, my phoNE and cable bill i'll do online, but when i need a couple of thousand, or transfer a sum over say $1000 I want to go in and speak to a live person to make damn sure they do excactly what I'm asking.
Convienance, and service are NOT the same thing.
C'mon Scott, 10 year fixed? Now you don't have anything leftover to support the bailout of the unfortunate sub-prime borrowers.
What the failure of the dial-a-bank, ATMs and online banking revolutions suggests to me, is that a majority of our fellow citizens remain late-adopters WRT 'high tech'.
Well, that's part of it, but the issue here is really cash. As Vader notes, we haven't yet figured out a (safe and sound) way to spit the stuff out of laser printers in the supermarket.
As long as people want currency, there will have to be some secure way to dispense it. ATMs are great until they get a paper jam or the network goes offline. Even when they work fine, they do occasionally run out of money, especially those on the "slower" routes. It costs a fair amount of money to drive those Brinks armored trucks around (with packin' guards) to fill the ATMs. Plus, you still have to balance the things, just like you have to balance a teller drawer. The ATM may not be off as often as a teller drawer, but you can't just assume that all those twenties got spit out to the right people at the right time.
And there still have to be night depositories for merchants (like Taco Bell) who end their business day with a big bag of currency and checks but don't have a vault to keep it in overnight.
This gets us back to those periodic "death of currency" articles you see. I've been reading those for thirty years, too. We haven't even gotten rid of the penny yet.
I'll tell you why I'll never switch over to online banking unless I have no choice: I have no faith in the system - too many things can go wrong.
These day I get a bill, I write a check, and by golly, it goes in the mail and gets to the company in question.
Online banking works great: until your computer dies, the internet connection is shot, their server is down, etc. Then what? Suddenly, you have late fees on everything.
Same idea with any form of banking more complex than that - I want to speak to a real person, not hope that I've found the right form on some website and that it actually goes through to some person, somewhere, that I cannot see or speak to when needed.
When it comes to money, I just don't like doing all the bookkeeping in the ether of the internet.
"I think this will change as the boomers die off - not before. GenX will happily make do w/ 1/3-1/4 of the brick and mortar branches."
That's about when most of these little dumb asses will have the foreclosure off of their credit report.
There's some truth to the "Blue Hair" thing, but really. Ask your average teller.
They probably spend as much time running your 12-year-old's piggy bank contents through the automated change counter than they do listening to old Mrs. Persnicketty complain about her statement being off by exactly nine cents. (It's always exactly nine cents. It just takes at least an hour with a manager to convince Mrs. Persnicketty that embezzlement is not going on here.)
Lots of people have lots of different motivations for doing lots of things. These generational generalizations are actually POTP. Bank management relied on shallow consultants who made broad-brush generalizations about customers based on age and technological adoption, without drilling down into that to consider all the myriad counter-pressures and other concerns people have.
You could have a bank whose customer base is about 100% tech-savy young people (E*TRADE?), that still has to have tellers because the Feds won't give you a bank charter if you have no way to deliver cash to demand-account holders in the event of electronic systems failure. You all do know that it is actually illegal for banks to be closed for more than three consecutive days, unless it's an officially-declared disaster?
My problem with 100% reliance on tech-heavy banking is that I know too much about our "Disaster Recovery Plans."
"I think this will change as the boomers die off - not before. GenX will happily make do w/ 1/3-1/4 of the brick and mortar branches."
That's about when most of these little dumb asses will have the foreclosure off of their credit report.
Kevin
Wow Kev! Thanks! As a proud Genx-er, I'll have you know that I won't have a foreclosure on my credit report...I'll have the last of my debt paid off before then...and when things get really ugly in the coming months, I ought to have enough cash on hand for some vulture buying from a few distressed boomers who don't seem to have realized just how old they are (and how much debt ought to be paid off by now). As I noted, I've only 5 years to go on a house I purchased in '98 (I hit my local bottom of market, pure luck), and refi-ed in '02. I did not cash out, and that's my last outstanding debt. Although I visit my CU building regularly, I haven't interacted with a 'human' there since I needed a cashier's check...oh, about 14 months ago...when I was paying cash for a car. Being "older" does not make people particularly wiser. And doing things the old-fashioned (and slow) way isn't necessarily superior.
I have to admit: I now work in software/IT, so I have my biases, but at least I am somewhat self-aware of them. Lemme ask you a question: What exactly do you think the nice teller is writing down your transaction on back there? A nice Bob Cratchet (TM) leather bound double-entry ledger? Guess what: it's a computer - the same one the ATM updates. There is precious little difference in the receipt the teller gives you and the one from the ATM - the blame for an off-drawer might hit the human teller before it hit you.
Cash is passe in many, many respects [1], insofar as money transfers - clearing house transfers - are little more than bits in a computer file. This has been more or less the case since I was just an annoying whippersnapper. If you enjoy pulling out the old Remington Manual to make a check out to cash and driving down to visit the teller (I borrow from the image of my late father-in-law, a mattress-stuffing child of the depression if ever I met a stereotype in person), by all means do so - but don't fool yourself - the minute it hits the teller's hands, it's a digital transaction. See? Aren't inter-generational slings and arrows fun?
Pondering - answering this more seriously: all the banks, and all the companies, and everyone else does this on redundant computer systems. The banks really led the way in the development of reliable, redundant (failover) computing systems (Tandem Systems in particular). I too stuck w/ checks for certain things for a long time - since they make great receipts should you ever wind up in a dispute - but how many banks still provide you paper copies? Most now provide you access to a scanned digital image. Check handling/processing is enormously expensive, and it's a privilege that's going to start co
Illinois has very limited branch banking. Most of the people LaSalle will lay off are probably quite highly paid HQ types (hopefully not my friend L. who's a very pretty forex trader). The hollowed out papermache economy claims another couple thousand victims.
Oh boy...so that ended originally with something less offensive and mentioning how nice it was for anyone to have read it all...but it got badly truncated.
Suffice to say: I agree cash will be with us, and to the extent that retail banking is needed to provide that distribution network, it'll be with us. Cash will be with us since too many people will want a means of keeping some measure of financial privacy.
Llama - yep, the 10 year note payments are steep, but the house got so much cheaper...and I get back like 20 years of debt servitude. The IRS will still take their share for any bailout from the quarterlies...but nope, I'm not contributing much to the bottom line am I?
Pondering:
It's funny; over here, I have less trust in the mail. A little paper envelope that might fall out of the sorting machine, or behind a bin somewhere in the bowels of the post office or mail room? Sure, it might make it there in a day or two, but it could also be a week.
At least when I make a payment online, I get a nice little confirmation I can print and wave around. In a very short time, I also see a corresponding debit in the bank or credit card company's system. Sure, I'll see when the check hits, but that can be much later, and that's something I don't like if I'm paying close to a due date.
Are loan mods done much for non-owner occupied homes?
As a generalization, I'd say almost never.
You understand that the situation you are describing was at least borderline fraudulent to start with. (How come we needed a "no doc" loan here? Did Dad inform the lender that it wasn't going to be owner-occupied?)
Look, you don't offer mods to people who "need" them. This is a misunderstanding of the issue. You offer mods to people who are demonstrably committed to maintaining ownership of the home and who need them, when foreclosure would clearly be more expensive to you.
People who own investment properties for which the rent cannot cover the mortgage are rarely "committed" to continuing to own them. I rather doubt Dad is going to find someone who wants to refi the thing, let alone modify it. You'd have to show at least some cash flow on a rental to get any mortgage servicer interested in a workout. And if the current tenants are relatives, there is no lease, and you cannot document that they pay something close to market rent?
Dad tried, basically, to game the system for the kids the first time (get them into a house even though they patently didn't qualify). Now he wants to game the system again by getting the noteholder to subsidize the kids' rent? I can't believe anyone's that stupid.
Remember the deal here: why did people lie about occupancy? Because we charge higher rates and require bigger down payments for rental properties. Why did we do that? Because people will walk away from money-losing investments (when they won't walk away from the home they live in). So those who "got around" the pricing/LTV issue by lying about occupancy aren't going to get much sympathy from a servicer.
Tanta,
Have you commented on this?
From BusinessWeek
Surprise: 'Toxic' Mortgages Are the Best
Expired
= Expired
Joh
Have you commented on this?
Yesterday. I believe someone who printed it said it came out to six pages. But apparently it was easy to miss . . .
So do you take a hit to your FICO score for renegotiating?
If not I'd sure like to drop my 30 year fixed down to 2% or so. You can't expect me to live with my Dell 833 much longer. Quad core is an inalienable right dammit!
But seriously, does the lender disclose the renegotiation to the credit reporting agencies?
Scott,
You are one savvy Gen-Xer--took the words right out of this ex-banker boomer's mouth. I knew some of the people who built and tested electronic systems at "my" bank, and I confidently entrust my money to their systems. I've also audited disaster recovery plans at this bank--unlike Tanta, I found them reassuringly obsessive-compulsive.
Scott, technology is good but ... don't forget some of us old folks understand it as well as you do. After all, it had to start from somewhere (before India, etc).
I use on-line services for many things but not in every case. Sometimes I do send checks particularly if I've had prior bad experiences with certain services (even if with a different company).
A couple of years ago I was overbilled by quite a large sum by a company. It was a mistake in their software but they refused to admit it. Even though I had all the documentation, receipts, etc. I fought these people all the way down the line (even after they tried to trash my credit) and eventually WON the case. Fortunately, I had the resources to do this, a lot of people don't.
So I take what you write with a couple of grains (large ones) of salt.
But seriously, does the lender disclose the renegotiation to the credit reporting agencies?
It depends on what you mean by "renegotiation."
If you "forgive principal" somehow--short sale, short refi, a mod that writes off loan balance--then you are doing the original meaning of the term "settling for less."
Your credit report will not show a tradeline "paid in full" if it was "settled for less than amount due." So that stuff does appear and it does hurt you.
In most of these cases, what's showing up on the credit report is the series of late payments that led to the workout. It's not that the modification is reported, it's that while you will show as current from the mod date onward (if you make the modified payments), those old lates don't come off for seven years.
Scott
Currently I have 2 different companies that have to tract my credit report due to some dumb ass letting some young hot shot take my personal information home on his lap top and it like got lost or stolen or he just doesn't know WTF he did with it. This kinda like pisses me off to the frigging max if you get my drift. I own 3 homes free and clear, I'm debt free, I pay most of my bills by cash or check and I ocasionaly us a CC an I usualy have a credit on it a I round them off to the next even 100 and pay them off every month. I trade online, check my ballances and have been building my own computers since 96. All the people I know that are in forclosure are little smart ass such as your all knowing self. Pack sand.
I remember going to the old Crocker Bank, with its marble floors and 20-30 foot ceilings.*
Like Tanta, it's not something to be done regularly, but when I do stop in, it's likely for something semi-important. And while the interior doesn't have to rival Gringott's, there should be a human who knows what they are doing on the other side of the desk. (And yes, I'm of the "internet generation", or whatever it's called.)
*The building has since been carpeted and cubified (diced?) It's like seeing a tent city in a cathedral, except not quite that bad.
in case you just can't get enough on mods:
Contacting troubled borrowers is a big challenge because many avoid communicating with servicers out of fear or embarrassment. Quantums Caravetta has found that troubled borrowers respond better to customized stationeries and personalized letters than to official communications that show the company logo. The response rate is 10-15 percent greater than a conventional official letter, he reports.
However, rising interest rates over the next few years, coupled with further house price declines, will make it difficult to do loss mitigation, according to Freddies Padgett. As the economic conditions, especially in the pocket areas, start to deteriorate, we will probably again have to change from loss mitigation to short sales, he warned.
Padgett said the dynamic of a short sale has changed over time and that servicers may not have the experience to deal with those changes. A major new factor, he explained, is the proliferation of second mortgages that inhibit the lender/servicers ability to do a standard short sale.
Padgett said todays mortgages are larger in size and are supported more by mortgage insurance compared to loans in the past. The more participants in the transaction, the more difficult loss mitigation becomes because each party wants a bigger piece of the pie. The participants usually end up negotiating against each other, which kills the deal, he said.
Also, the transition of Alt A loans into REOs is occurring at an alarming rate, Padgett added. Not only are the loans becoming REOs at a faster pace but they are also difficult to modify because borrowers, typically those with little or no income documentation, are not able to support the debt service on the modified loan. All the factors that can fuel the shift from loss mitigation to short sale inability to repay, declining property value, and second liens with MI are present, and thats the dynamic were going to see in the next couple of years, Padgett concluded.
Tanta, you'll note I've been very, very silent on mods.
I said what I had to say about them a while back. No more commentary from me.
I've also audited disaster recovery plans at this bank--unlike Tanta, I found them reassuringly obsessive-compulsive.
You know, it's actually the obsessive-compulsive ones that tend to worry me.
See, that's the thing about disasters. Any plan with too much detail, too many moving parts, quits working in the first 20 minutes or so.
But hey, I live near Washington DC. In the event of something that forced evacuation of this city, I'd simply stay home, because I really don't need to die in bumper-to-bumper unmoving traffic on 395 surrounded by a bunch of hysterical people who are running out of gas. Call me incorrigible, but the emergency personel trying to get me to join that throng would have to shoot me.
As someone who has spent a fair amount of time in operations, I have a healthy respect for how often elaborate structures fail to work in a non-disaster regular old Tuesday at 3:00 p.m. I therefore approach DRPs with a certain healthy skepticism. I like the ones that focus on keeping cash secured but flowing, and that worry about how account correspondence will be printed without the letterhead stock somewhat later.
CNN Money.com
Subprime: Big talk, little help
Lawmakers are talking the talk, but mortgage lenders are having a hard time walking the walk when it comes to helping at-risk borrowers.
Subprime: Big talk, little help - Sep. 26, 2007
i wonder what the response rate is if you send out a letter to a troubled borrower and sign it:
Hugs and Kisses,
Joe Servicer
puts on lipstick and kisses the letter
I bet it's at least 20% improved!
OT: but relevant
SLM Says Buyout Group Won't Consummate Purchase (Update1)
Sallie Mae Says Investor Group Won't Complete Buyout (Update3) - Bloomberg.com
SLM Corp., the biggest U.S. provider of student loans, said it was informed the group planning to buy the company doesn't expect to consummate the $25.3 billion purchase.
SLM will pursue all legal remedies, the Reston, Virginia- based company known as Sallie Mae said in a statement today on PR Newswire. Under the planned buyout, SLM was to be sold for $60 a share to an entity 50.2 percent-owned by J.C. Flowers & Co., with JPMorgan Chase & Co. and Bank of America Corp. each holding 24.9 percent.
.....
....
The stock price was really already pricing this in but this looks like confirmation.
-K
Tanta,
Sorry.
I didn't get past the words "negative convexity" in your posting.
John (the cringing unternerd)
if there are any servicers out there, i have more ideas where that one came from. i am willing to consult for a fee of:
(BD's salary + accrued annual bonus)*(1/(1mLibor - Fed funds)) + per diem