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aw, Clyde sent it before me? damn you Clyde!
Yes, dear, Clyde is da man today.
Once the cough syrup wears off I might try to root through some of these data tables. Maybe it's just me and my home cures, but I find the presentation of the statistics in the summary rather puzzling.
yeah, well i'm not giving Clyde a point. take that, Clyde!
2 yr note droppin llike a rock
"Some will be ruthless senders of "jingle mail." "
"Jingle mail", bankruptcy, etc are a intelligent and legitimate plan for many borrowers IMO. It would be stupid not to use legal, legitimate courses of action to help the banks bottom line and destroy your own bottom line.
Do not get me wrong I think borrowers, mortgage brokers, banks, etc. are all to blame and should not be bailed out.
I am also against debtor prisons. Maybe you would like to get rid of "jingle mail" and bring back debtor prisons?
Although I will concede many people who lied on their loans should be prosecuted for bank fraud. But, there are probably mortgage brokers guilty of this as well. Trust me it will not happen in any significant numbers
Is this level of speculation/investing normal?
So many words so little snark.
exceeded the number of foreclosures started, excluding those cases where the borrower was an investor/speculator, where the borrower could not be located or would not respond to mortgage servicers, and when the borrower failed to perform under a plan or modification already in place.
Of the foreclosure actions started in the third quarter of 2007, 18percent were on properties that were not occupied by the owners, 23 percent were in cases where the borrower did not respond or could not be located, and 29 percent were cases where the borrower defaulted despite already having a repayment plan or loan modification in place.
18+23+29=70%
Does the phrase desperate spin mean anything? 30% appear to not qualify.
I'm with Tanta. It is extremely troubling that so many could not be contacted. If the provenance of something as immobile and well documented as a dwelling unit can be lost the furball of claimants is going to be gordian. Orange County saw a 148% spike in their non-responsive property tax roles in the latest increment of Dec 10th. This does not bode well for every servicer, investor and municipality that depend upon cash flow.
Sorry - misread the investor %. They are % of foreclosures.
Maybe you would like to get rid of "jingle mail" and bring back debtor prisons?
Um . . . whatever are you talking about?
It is important to know whether the "not located/not responding" group are what the economists call "ruthless borrowers" or not because there is nothing to "respond to" with a ruthless borrower. They're exercising their put and that's that; you foreclose.
However, this data does not tell me how many borrowers in this category (or in the other categories) are "ruthless" as opposed to, say, "distressed." Now, there might be some useful response to large numbers of distressed borrowers short of just proceeding with the foreclosure. Like, um, homeowner counseling or legal services or something. If not DIL or short sale.
Why do you think you're being helpful by assuming that all non-responders are jingle mailers?
I still don't understand how you can be subprime and be considered an investor/speculator. Isn't the definition of subprime that your credit sucks? Why are people with bad credit allowed to buy houses as investors?
18+23+29=70%
Robert, I don't think those groups are always mutually exlusive. Some cases might even fit all three (i.e. N/O/O gorup, no contact group, and group who defaulted on repay/forbear plan)
fwiw, there was a fairly large upwards spike in the number of mods in the Dec. remittance reports for subprime ARMs (to 5400 from ~3000 in the previous few months).
I still don't understand how you can be subprime and be considered an investor/speculator.
Who coodanode? It cost 'em an extra 70 bps, but subprimers can be slumlords, too.
30% appear to not qualify.
Rob, I'm not sure that would be my conclusion.
I see it this way. Of the Q3 FC starts:
It seems likely that the 30% remainder simply can't carry the loan in any way, but there's no reason to think they're the only ones who can't. Obviously groups 1-3 have this problem too.
I think a venn diagram is in order.
Let's try this:
See the footnote on table 1.
Columns do not add to the total because some borrowers fell into more than one category. For example,
some borrowers were both investors and would not respond to mortgage servicers.
Thanks Shnaps for the footnote, shoulda caught it myself. As to the Venn diagram. No, not until the 2007 Vendage vintage takes effect if you please.
Tanta, can we start running late night service announcement on CNBC? "It's 2008, Do you know where your mortgage borrower is?"
In somewhat related off-topic ideas, check this out, if you didnt see it: The average LTV at origination of our Option ARM portfolio was 72% and the current average FICO of 694. As a result, as has been the case historically, many of these borrowers may refinance their loans before the loan is recast. The $2.1 billion of high-risk loans had an average LTV at origination of 90% which is why we have broken them out for you.
During the fourth quarter, these high risk loans collectively accounted for approximately 70% of our total real estate loan net charge-offs, but represented only 19% of our total real estate loan portfolio at year end.
When you exclude this group of loans, the remaining first lien loans have a weighted average LTV at origination of 66% and a current average FICO of 718, and the second lien loans have an average combined LTV at origination of 66% and current average FICO of 740. So the remaining portfolio has a solid customer profile with equity cushion to withstand declines in home values.
Washington Mutual Q4 2007 CC
Washington Mutual Q4 2007 Earnings Call Transcript -- Seeking Alpha
All my best,
DH
There were 183 thousand repayment plans and 62 thousand were prime borrowers (34% prime).
There were 54 thousand loan modifications done and 25 thousand of those were prime borrowers (46% prime).
There were 158 thousand subprime net foreclosures and 96 thousand prime net foreclosures (61% prime).
Since the prime borrowers should be better risks, they should have repayment plans > loan modifications > foreclosures. I'm dealling with %'age of activity here, not absolute numbers, but still, that doesn't seem right. Unless prime borrowers are smart enought to know when to throw in the towel???
Look at this beauty from MORON Hillary Clinton-
"Hillary's modest proposal (to wreck the housing market)
The current mortgage mess requires a more intelligent approach than the buzzsaw plan floated by Hillary Clinton.
By Jon Birger, senior writer
(Fortune) -- Hillary Clinton is no dummy. Even her detractors know that. And yet in last night's Democratic presidential debate in Nevada, Clinton floated what is perhaps the dumbest solution to the current mortgage mess I've heard from a top presidential contender.
"I have a plan - a moratorium on foreclosures for 90 days [and] freezing interest rates for five years, which I think we should do immediately," Clinton announced at what was the last Democratic debate before the Nevada Caucus on Jan. 19. A 90-day moratorium on foreclosures would throw a lifeline to some deserving homeowners, though I suspect it would only delay the inevitable for most. That's not my beef.
Where Clinton goes awry is her proposal to freeze mortgage rates for five years, which is essentially a much broader version of a deal President Bush recently hammered out with lenders to assist some subprime borrowers. If Clinton's only goal were to bail out homeowners facing steep rate resets on adjustable mortgages, her plan would work just fine.
For everyone else though, such a freeze would be disastrous. Interest rates on new mortgages would skyrocket - perhaps past 8 percent, as the mutual funds, pension funds and other investors who typically provide capital to the mortgage market shift their money into other investments where the government isn't impairing returns. With higher mortgage rates eroding buying power, the downward pressure on home prices would only increase. Lower home prices would lead to even more defaults, as more folks who'd lost the equity in their homes choose to walk away from their mortgages.
Hillary's modest proposal (to wreck the housing market) - Jan. 16, 2008
Dont kill me. Im done posting for several minutes, but this is interesting:
Thomas Mitchell Miller Tabak
Recognizing that setting an appropriate level of loss reserve is more of an art than a science, I cant help but note that your reserves at the end of 2006 were 59% of your non-performing assets and that despite growing your reserves aggressively during 2007, you ended the year with reserves at 36% of non-performing assets.
I could understand if the mix of business had change or the mix of non-performing assets had changed, that the expected ultimate losses on the change in mix might arrive at a lower level for setting reserves, but its a little difficult for an outsider to understand in a period where apparently the severity of losses being taken and the frequency is rising the severity is rising rapidly why it would be appropriate to reduce the relationship of reserves to non-performing assets.
So I am just wondering if you could explain to me the thought process you used in deciding to reduce your reserve relative to your non-performers?
Thomas Casey
Tom, thanks, obviously loan loss provisioning is a challenge for anyone.
Washington Mutual Q4 2007 Earnings Call Transcript -- Seeking Alpha
Washington Mutual Q4 2007 Earnings Call Transcript
Page 9 out of 10| posted on: January 17, 2008
Charlie Gasparino speculating the CFC/BA deal might not get done...
What is not clear to me now is wether this whole mess is about borrowers inability to pay/service a mort; or rather misdirected/dumb/unfortunate investment. [Actually, it may have been a good investment decision because of the liberal terms of getting casholla]
Would the numbers look so way out of the norm is you stripped out the expected % of investors?
The die is cast - the world now believes this whole mess was not due to lax lending but rather shady consumers so maybe the whole discussion is moot.
Tanta - can you put these numbers into some kind of perspective (from your experience or published data)... is this an unusually high level of 'non-response'? How unusual?
If 'high' is it high compared to all economic conditions or just compared to supposedly 'healthy economic' periods - as the MSM and the administration try to assure us (when they aren't peddling 'stimulus')... TIA.
I'm dealling with %'age of activity here, not absolute numbers, but still, that doesn't seem right.
This study looks at a universe of 32.8 million loans, of which 28.6 million or 87% are prime.
The FCs here are also not "completed," they're "starts." It isn't clear to me that servicers are always doing forbearance or mod prior to starting FC; they are likely to be sending out the old NOD (which defines FC start), and then negotiating a workout. It will vary by state and FC type, but you want to be slightly wary of making assumptions about the timeline here.
Charlie Gasparino speculating the CFC/BA deal might not get done...
crispy&cole | 01.18.08 - 1:26 pm | #
Not bad... only about a week behind the folks here.
Government mandates the price of a good or service to well below the recent market price.
What happes to the availabilty of the good or service?
I remember Robert Rubin pouting a lot in 1994.
Citi auctions Nikko merchant banking arms: sources
| Reuters
Like the spendthrift rancher Buffett used as an example, companies are selling off the family silver to pay down their debts.
My adopted state of Oklahoma let me down big time!!!! 70% non responders???
Thus, as a percent of foreclosures, the inability to get a borrower to respond to a mortgage servicer is a much bigger problem for prime-fixed rate borrowers than for subprime borrowers. Again the results differed widely by state and loan type. The highest was 69 percent for prime fixed-rate foreclosures in Oklahoma versus a low of 7 percent of prime ARM foreclosures in Wisconsin.
"1. For the purpose of this study, servicers identified "investor-owned" loans as those with a billing address different from the property address. This is a much better measure than the occupancy code the databases carry, since it is based on the declarations made by the borrower at loan closing, and we know how reliable some of those were. There would be no distinction here between a property that was never occupied by the owner and one that was occupied originally but subsequently rented. "
You left 2nd vacation homes of the list. I was talking to a county official who is tracking the foreclosures here and he said that the foreclosures in our county are running 50-80% 2nd homes. (Number is varying by the month with the least being 40% and most 80%.)
The little darlings are losing their $500,000 condos, the $800,000 'summer' house and the $1,300,000 beach house. No one here is wasting any sympthy on them - the 2nd home people are loathed for driving up prices far beyond the reach of the residents,
Tanta - can you put these numbers into some kind of perspective (from your experience or published data)... is this an unusually high level of 'non-response'? How unusual?
I'm not sure I'm willing to make a claim about that at this point.
First of all, non-response is not exactly new; it has always plagued the process. One of the reasons that smart servicers start counseling-type "outreach" calls early in the process--as quickly as a week after the payment was due--is that you have to "coax" some of these folks to the table. It's often the case that the situation isn't as grim as the borrower thinks; they're shell-shocked or sick or whatever and they don't realize they do have options.
There are, of course, always debt-skippers. Servicers are set up to do skip-traces. However, I'm not sure how hard they're working on skip-tracing right now.
That's the thing: the absolute numbers of problems are so large that I suspect too many servicers are giving up too quickly here on the contact issue, whether it's skip-tracing or distressed-borrower coaxing.
I still have to dig through these numbers, and I'm not sure just what this specific dataset can ultimately tell us. But I am hearing too much whining lately--can't process mods without the Hope Now streamlining, can't be troubled to follow SFAS 114--from servicers to trust that "non-responsive" reporting. I do fear that the other side of some of it is "didn't try too hard."
" the 2nd home people are loathed for driving up prices far beyond the reach of the residents"
Only by those that bought after instead of before.
Let's see now: Why are so many borrowers avoiding discussions of their actual finances with their lenders? That's a tough one.
You left 2nd vacation homes of the list.
Yes, in this method second homes will be lumped in with rental/spec properties. But the only way to distinguish the two would be to look at how the loan was originally coded, and if you do that you're likely to find that many of the so-called "second homes" were in fact specuvestor properties. It would take a study with decent sampling and digging through files and servicer records to find out exactly what all these "not mailing address" properties really are.
I have a feeling this 'non-response metric is based on subjective data and/or a lot of missing data points.
The disparity Julia points to would also indicate that.
dryfly - it's not really all that high, since they include in their definition not only 'skips', but also those who just ignore collection attempts. As they define this segment in the paper:
Servicers were also asked to identify those cases where borrowers either would not respond to repeated
attempts by lenders to contact them, or who could not be located at all.
Tanta,
Thank you for bringing this up. Quite interesting, this data. I look forward to more granularity on what's going on and I hope, now, that people who truly can and want to stay in their homes will receive proper treatment on the other side of the phone.
FDIC: U.S. "will step in" on subprime if needed per Chair Care Bair...
FDIC: U.S. will step in on subprime if needed
| Reuters
I have a feeling this 'non-response metric is based on subjective data and/or a lot of missing data points
Besides the fact that I'm still not sure whether we're talking 1) non-responsive to any collection effort or 2) non-responsive to any workout suggestion/offer. There's a difference.
Julia, I don't know OK FC law off the top of my head, but I know that in states like GA, those FCs can start as soon as the borrower is 30 days delinquent. So a "non-response" there might not quite be the same situation as a "non-response" in a state where the servicer won't start FC filings until 90 days down.
Where's our Okie Lawyer?
Standard & Poor's Ratings Services cut Washington Mutual Inc.'s credit ratings a day after the savings and loan reported a $1.87 billion fourth-quarter loss.
Forbes.com File Not Found
I think part of what we're struggling with here is that the whole idea of "jingle mail" presupposes that the borrower lets the servicer know somehow that he is walking away. (The joke is that the borrower just sends the keys to the servicer, which makes the mail "jingle.")
If there really are significant numbers of ruthless borrowers who are letting the servicer know they're walking, then they wouldn't be in the "non-responder" bucket. "Non-responder" should mean "no contact," not "had contact and didn't like the response." Me, I doubt that there are many people who really do send some variant on "jingle mail."
I'm ready to believe there are more people in the "non-responder" bucket who have had their phones disconnected than I am to believe that ruthless borrowers are telegraphing their intentions to their servicers.
Tanta, Crown, coke & lemon is not a FDA approved cough syrup hon.
In many cases the second home IS an investment property in that many people were persuaded they could afford a vacation home because of course the value would go up and it wasn't really self-indulgence, it was saving for retirement.
In many cases the second home IS an investment property
Sure it is. But if it were identified accurately as a second home up front, the borrower would have been qualified on the full payment, but would have been allowed (generally) to borrow more (that is, LTV limits are higher for seconds than for rentals). So some borrowers might have been motivated to claim that a property they intended to rent (or flip) was a second home, just to be able to borrow more of the purchase price.
Here, put this crack in your bong:
Bank of America predecessor BankAmerica Corp.'s 1983 purchase of Seafirst Corp. included new nonvoting preferred shares that left Seafirst shareholders bearing the financial risk of bad loans for five years. Chemical New York Corp., now part of J.P. Morgan Chase & Co., was able to spin off problem energy and real-estate loans into a separate bank when it bought Texas Commerce Bancshares Inc. in 1987.
One possibility is that Bank of America would seek some sort of tangible regulatory "reward" for rescuing Countrywide, said analyst Nancy Bush of NAB Research in Aiken, S.C., such as having the government take some of the bad loans off its hands, or forbearance on the deposit cap that hinders Bank of America's ability to do deals. "We're in an environment in which you could really say anything can happen," she said.
Holy crap !!!!
I read this and then thought "How bad is it gonna get when in Dec,FC=Sales in Charlotte county,Fl"
January is starting as a humdinger of a month with 36 FC's and 21 sales(vs. 450 sales in Dec).
I have friends all over the country and this is happening to some degree just about everywhere...
Chris
So-- What I get out of this is that lenders still have only a vague idea of who the borrowers are, physically and metaphysically. I'm not too surprised that they're unable to contact the borrowers, their paperwork is certainly suspect. And they are slowly coming to the realization that they have no idea of the mindset of the new breed of borrowers. We'll see if it's a case of "not trying too hard" or "making great efforts in the wrong direction".
AMBAC JUST GOT DOWNGRADED.
The whole second home/rental property has turned into more of a continuum rather than an either/or. Especially in beachfront or resort areas, a high percentage of the second homes (especially condos) are also rented out at least part of the year. I'm sure many purchasers consider their properties to be second homes - and represent them as such to the lender - even if they are rented for much of the year. So the LTV is higher. And since there is an income stream the purchaser considers they are able to buy a much more expensive property. I expect this whole chain of reasoning goes on on both sides - borrower and lender - part of the self-deceptive process that keeps the game going on - until, as Mr. Prince said, the music stops...
The non-responder issue is very frustrating. It's tough to get an assessment when your not sure what you've got on 1 out of 4 loans in your sample. It could be sloppy processing on the front end (loan was originated with incorrect contact info), occupancy fraud (loan is really an investor), or poor quality servicing (more prevalent than you might think). Based on my own limited experience I'd lean towards occupancy fraud. The investor % is probably much higher.
DOW is now doing the dead cat cliff dive -- down 110 (10 points in last 5 minutes) with only 50 points before it breaks through 12,000.
AMBAC JUST GOT DOWNGRADED.
safe_as_apartments | 01.18.08 - 2:40 pm | #
Yes, but only by Fitch.
Fitch Downgrades Ambac; Ratings Remain on Watch Negative
NEW YORK--(BUSINESS WIRE)--January 18, 2008
Fitch Ratings has downgraded the following ratings on Ambac
Financial Group, Inc. and its affiliated entities (Ambac):
Ambac Assurance Corp.
Ambac Assurance UK Ltd.
Connie Lee Insurance Co.
--Insurer financial strength (IFS) to 'AA' from 'AAA'.
Thats why the market just went down...
Look out below...AA is worthless for these guys
When all the hubbub started up with the monoline insurers started, I told my dad to see what his retirement was invested in. He told me he had a fund that was "asset backed securities" and he then questioned the salesman who sold him on that fund about the possibilities of defaults on the underlying assets. Here is the salesperson's reply:
I'm also glad you went with the bond you did. This is a good point, however there is always more than the current media hyperbole to watch. The claim 'crappy assets' is misleading. The foreclosure/failure rate for AAA assets is extremely small, a fraction of 1%. This is why the industry can safely insure so much with so little - the probability that they'll need to use much of their back-up money is small. So while the monoline insurers and the bonds they've insured may be re-rated and bond markets may gyrate a bit, the failure rates of the bonds has not shown to change historically. This represents a buying opportunity.
Have a great weekend
BTW - the "crappy assets" label was mine. Any comments?
Okay, forbearance is often used for breathing romm to work out a mod. How often has it been used for breathing room for a (non-short) sale? That's usually not going to work very often these days, but I certainly can imagine alot of cases where there was equity and a borrower who could no longer make scheduled payments where it makes alot of sense to give them forbearance while they try to sell.
I'm w/ dryfly, I would love some context for these numbers. I'm not all that worried about the non-responders, as our gracious hostess notes, they can't be reached, so how can you give the reason for the non-response?
I poked around a bit on MBA's site, but couldn't find any similar reports for previous quarters (maybe for subscribers?), anyway, I would love to see the same numbers going back a few years and would even be willing to do the crunching if I could find the data.
Obviously 04-06 shouldn't be nearly as bad, but I wonder what the last 20 years looked like.
lunatic fringe, I had the same type of situation. An older family member was in a senior income fund with huge fees of almost 5% if I remember right. To get their yield they needed like 11% return to pay the yield and the fees. Upon reading the fund said it invested in below investment grade bonds and used leverage. Secure indeed.
Hey, but AA is still pretty good though!
How often has it been used for breathing room for a (non-short) sale?
I don't know how often that happens. Remember that technically "forbearance" just means "I have the right to foreclose but I am (temporarily) agreeing not to as long as you do X." Typically, "X" is "making up the payments," but "X" can be "sell the property in 90 days." In other words, if you have a borrower actively marketing the property at an appropriate list price (which you verify with a BPO and inspection), then you might well just not bother with the payment plan, or make it a partial rather than make-up payment.
That's the nub: once a borrower gets three months down, it's hard to structure a repayment plan they can afford. If there's really no reason to catch up entirely--since they're trying to sell--you might accept a smaller payment and let them negatively amortize (for a short period of time).
I think the trouble is that all servicers think of "workouts" as this kind of continuum; the rest of the world might assume that the distinctions are clearer than they really are. In any event, I'm guessing that this MBA survey understands "forbearance" to mean primarily repayment plan--meaning a borrower committed to not selling. Those who are just delaying FC while the borrower makes good-faith efforts to sell would simply be part of the FC pipeline.
In many cases the second home IS an investment property in that many people were persuaded they could afford a vacation home because of course the value would go up and it wasn't really self-indulgence, it was saving for retirement.
trail | 01.18.08 - 2:23 pm |
When the median 2nd home around here is selling for $800,000 2,000,000 not sure how they would ever think the price would go up and they would still be able to find buyers. How many households could begin to afford that for a toy? (I mean legitimately afford it.) The market is not going to be large for a house that is only useable as a vacation home 3 months of the year and is located in the Midwest, is further north than Ontario Canada and is 4-5 hours from any city with more than 20,000 people and the interstate is 1 hour away and the airport terminal would fit in a football field.
These are not speculators are around here it was just a lot of people who thought they were entitled to the rich and famous lifestyle and wanted to boast about going up to the summer place.
Especially in beachfront or resort areas, a high percentage of the second homes (especially condos) are also rented out at least part of the year. I'm sure many purchasers consider their properties to be second homes - and represent them as such to the lender - even if they are rented for much of the year. So the LTV is higher. And since there is an income stream the purchaser considers they are able to buy a much more expensive property. I expect this whole chain of reasoning goes on on both sides - borrower and lender - part of the self-deceptive process that keeps the game going on - until, as Mr. Prince said, the music stops...
We have some of both types. The less-expensive houses (bought for $200k-400K) would be the ones rented out maybe around 25-40% of them. The upper end of the $400,000 - $2,000,000+ are not rented.
So far since just July there has been a 36% drop in closing prices from the 04-05 prices for anything under $900,000. There are upper-end properties ($1,000,000+) that have been on the market for 2-3 years. When money heads south, the first things cut are the extras like vacation homes and vacations.
It is not the local banks who are getting hurt by the foreclosures or who bought into the delusion that with a 11 week season a property could pay for itself through weekly rentals (locals know better) - it is Countrywide, Option One, Wamu and all the other usual suspects.
Even those who bought long before the pretentious 'just gotta have' vultures discovered us despise the 2nd home people. Tough to even keep the fire dept and EMS staffed when younger families can not afford even a modest 1000 sq ft house.
our gracious hostess notes, they can't be reached, so how can you give the reason for the non-response?
Well . . . you never just rely on people answering their phones.
Did the mail get returned? Did the calls just go to voice mail (meaning the phone is still connected, but they aren't picking up?) or has the number been changed/disconnected? Did you send an inspector out who indicates that the property is still occupied? Have you spoken to tenants? (Every servicer can use a reverse look-up to find the current phone number for the property; that number just might not be the owner's.) I just got an email a while ago from a CR reader whose relative died not long ago, and who was not planning on calling the relative's mortgage servicer to tell them that.
If in fact the borrower has abandoned the property, there's not much you can do. If the borrower simply will not pick up the phone, there's not much you can do. But if the situation is that the borrower's original setup did not have correct contact information and you made exactly one attempt to call and didn't get anywhere so you just decided to foreclose and call it "non-response," you're a lazy servicer and investors should have some concern about that. If there are some truly distressed borrowers out there who are just afraid to talk to their servicers (possibly they've learned to fear contact with the mortgage industry), we need to know that. We're looking at proposals to put a fair amount of money into homeowner counseling/referral centers. We need to know how many folks could have some option other than FC if we could just get them to talk to us.
I saw a Servicing Evaluation Form several months ago on a DQ property that said something like:
Called X
No answer: 0
Voicemail: 99
Meaning they servicer called the contact number 99 times and each time the call went to voicemail. When the # was called it turned out to be a fax machine. The level of servicing used was the lowest cost available. All the servicer did was continue to call the wrong #. They didn't even put "hey this is a fax #" on the form. In addition to low cost origination there is low cost servicing. The result is a lot of bad data.
" Look at this beauty from MORON Hillary Clinton-"
USCB - make your argument (which I believe Tanta has refuted many times), but kindly stay away from the adolescent name calling.
Also: There's a lot not to like about the Clintons, but you can be assured that every rock has been turned over with respect to their political and personal life. That's not so with anyone else in the field. And as far as this election is concerned, I prefer someone who knows how to run the railroad.
For 30 years I was a real estate atty, tho now I don't seem to be one anymore, after Aug 9 of last year.
Luckily, I do other stuff, plus I could retire if I wanted to be bored.
Anyway, in the "old days", say 30 years ago to 3 years ago, borrowers who realized they not only couldn't make their payments, but there was absolutely no hope, would be embarrassed, and just leave. No jingle mail, no nothing, they didn't quite know that the sheriff would move their possessions out eventually but they did know something bad would happen, and didn't want the neighbors to know. The only problem this posed for lenders was in judicial foreclosure states, the foreclosure mills will have to take the added step of publication. So it doesn't surprise me that the highest number of disappearing people are prime. They probably really did have a death divorce or job loss, and since they were prime, they are smart enough to realize that when there's no hope, there's no hope.
A few things from someone "in the trenchces."
First, servicing execs have often used a 50% figure for non-responders... yes, "half," and I heard this directly from a servicing outreach exec just a few months ago (yes, you know the company by name).
So, I'm not sure if the reporting here is accurate, or not. Is there a chance this is candy-coated? Is it reasonable to think that the servicers have really gotten their act together? Based on my daily interactions with them... I'm not so sure.
When they talk about "contacting the borrower," they're typically using a robot to do so, and then, if the borrower answers, they get this... "I have an important message- please hold."
Would you respond to that?
Next, the confusion over non-responders. The borrowers are experiencing a catastrophe, and I believe that the Kubler-Ross model applies- most borrowers are in denial. How long that denial lasts is anyone's guess. If you've never experienced this crippling state in response to a crisis, then you haven't lived.
I've heard business referred to as a combination of psychology and math. What the lenders have forgotten is the psychology of the borrower in default. You're expecting rational behavior from a person in crisis. That, in itself, is irrational.
Furthermore, all the rhetoric about "call your lender" is utter BS. The failure rate on many of these plans is high. Even Fitch's says that 40-50% of the mods fail. The focus seems to be less on "How do we get this person into a plan that will work?" and more on (moron) "How can I get this file off my desk?"
The reason that the aforementioned exec said that the defaulting borrowers don't contact them is, "They're afraid of what we might do to them."
Correction: "They're afraid of what you DO do to them."
I've often wondered if servicers are rewarded for their incompetence, as if following a "wash, rinse, repeat" process somehow increased their revenues. SO many of their plans fail, or have to be re-worked, and SO many of the borrowers who act unassisted / directly with their borrowers end up with workouts that never made sense in the first place, that there must be some incentive must be lacking for getting it right the first time.
The major servicers are an absolute train wreck of inefficiency, stupidity, and incompetence. Most of them can't even receive a freaking fax. [That's NOT a joke.] Sprinkled in here and there are a few good people.
Dilbert didn't work for a software company, he was a servicer.
I'm ready to believe there are more people in the "non-responder" bucket who have had their phones disconnected than I am to believe that ruthless borrowers are telegraphing their intentions to their servicers.
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