I’m the other guy. I’m the guy that takes your house.
I try to collect the payments. When a mortgagor’s position becomes untenable and they fall too far behind, I prepare the necessary documents and send them to the attorney. When the mortgagor gets served I often field angry and tearful phone calls. Once judgment has been obtained, the house goes to auction (at which we are the high bidder 95% of the time). If the house has been vacated at that time, I have it secured, all the personal property removed, and I determine what rehab and cleaning has to be done to get it ready to market. If the house is still occupied, I hire a team and coordinate with the local Sheriff as to a date to put the mortgagor and all his property out on the street.
Eventually we will sell the house to someone else. And when the dust clears we usually take a large loss on the whole episode.
Fun job, eh?
Now before you condemn me as someone who needs to have his Achilles tendons cut, let me explain a little bit further. I don’t work for one of those big, faceless banks. I work for a small non-profit organization that has a portfolio of about 2000 loans and does the loan servicing for seven or eight other loan companies. The majority of our loans are to low income people in the heart of Appalachia.
We work with people. I’ll not only give someone a second chance, I’ll give them a third and a fourth. I don’t lose sleep over sending someone to foreclosure because I’m secure in the knowledge that I’ve pulled the trigger only after they’ve burned me so many times that I’ve got Smokey Bear on speed dial.
Actually, the majority of the customers we have in foreclosure right now are not living in their homes; they are either deceased or have abandoned the property. Most of the folks that have abandoned their house have done so for two reasons: 1. They can’t afford it anymore and jump before they’re pushed or 2. Their health has deteriorated to the point where they simply can’t take care of the house any longer. In the case of only about 30% of our current foreclosures is the house occupied with someone that would prefer not to leave.
In each case, they have literally left us no alternative. We’ve done all we can. In several cases, this is not the first time they’ve been in foreclosure. It is not uncommon for us to allow someone to pay current to get out of foreclosure. But we almost never allow it twice. Some folks will continue to push the envelope as much as they think they can get away with. Oftentimes we end up having to send someone to foreclosure eventually even after we’ve done a loan modification for them. As I said, we really do give them every opportunity.
Speaking of loan modifications let me clue you in on a little secret. They aren’t all the complicated. The big banks make it seem as if they are a lengthy and arduous process, subject to endless documentation and spools of red tape. Well, it doesn’t have to be that way. I can write one in about thirty minutes, and most of that is just making sure the book and page number and dollar figures are correct.
If someone petitions for a modification, we ask them to fill out a one page financial statement and return it to us along with proof of income and documentations of their bills, as well as a hardship letter explaining their circumstances. I take a look at the money we used to fund the loan in order to determine what we lower the interest rate to, and I then work up a set of proposed terms to take before our Asset Committee. If approved I write it up and send it to the mortgagor to sign and have notarized.
It’s not rocket science.
If you’ve got a mortgage company that has recently purchased your loan and they don’t seem interested in working with you and not all that concerned about taking you to foreclosure, here is a likely reason why; they purchased your loan at a discount. And if your loan has been sold multiple times, there is a very good chance it was discounted each time.
Let’s say, for example, my company originates a $100,000 mortgage and we end up having to foreclose after five years. Take the remaining balance and add to it the legal costs and force place insurance. Now add on the cost of securing the house, winterizing it, cutting the grass, removing all the personal property, doing the rehab work, cleaning it, getting it appraised, and marketing it and it’s a pretty good bet that at the time of sale we’ll have about $125,000 in the property, it would appraised for $90,000 and will have ended up selling it for $84,000.
Ouch.
On average, we probably write off an average of 30% to 40% of the original loan balance on every foreclosure.
But a big bank or a company that specializes in purchasing portfolios from distressed mortgage companies does not have $100,000 in that property. They‘ve purchased it a discount. And if that loan has changed hands multiple times, there are probably multiple discounts involved. So they won’t take the same bath that we would. In most cases, they can probably foreclose and still make money. All they care about is the bottom line. Being a small company, we know our customers. They don’t see the faces behind the loans like we do. And that’s a shame.
I have a sign on the wall behind my desk. It reads “It’s not about money, it’s about people. It’s not about mortgages, it’s about relationships.”
Big business has lost sight of that. And it’s a tragedy.
SO. How do I get in touch with *this* guy? Because BofA doesn’t care if we stay in this house or not.
heather…go on my facebook page, his link is there!!
xo,
m
I believe it’s commonly accepted that Bank of America is run by a bunch of heartless pricks who were not hugged enough as children.
Blah, this is all about an asshole justifying himself. I’m sure he would rather be doing something else but he has bills too. This is a recession proof industry right now why not ride it to fortunes. Love the finger pointing spin that he isn’t some big evil bank. Unimpressed.
I love that you gave the other side of the coin view here. Thank you for sharing.
Although I don’t know this person and how much of what he says is gospel, he does intimate one thing that is absolutely true – there are people on BOTH sides of the equation trying to game the system. The ‘big banks’ just see numbers. They see you and me as “Marks”. The rules they set up are in THEIR favor – the rules they buy in Congress are in THEIR favor (if you don’t think so, just look at the changes in the bankruptcy laws), and they don’t care about anything except the bottom line – oh, and shareholder value – which they use to justify extraordinary bonuses paid to executive staff and management. The ‘big banks’ customers, on the other hand, would have you believe they are total victims and have been ‘had’. Yet many of them went to the ‘big banks’ because smaller banks and credit unions had turned them down. Why? Because those smaller banks and credit unions are RISK AVERSE – they don’t and won’t take unnecessary chances with depositors’ money – they, too, are concerned with their bottom line, but they are typically more circumspect in the decisions. All of that said, there is a much larger majority of people who truly do need help – laid off, or decreased salary or unexpected detrimental impact on income have put them in a position where they cannot meet their obligations. The ‘big banks’ don’t care – and because of insured risk, they won’t lose any money if a property goes into foreclosure. They aren’t stupid. Greedy? Certainly. Uncaring? Absolutely. Just not stupid – and trying to game the system is THEIR playground – it shouldn’t be your or mine, because THEY make the rules.
In response to the fellow who opined that I was an asshole, I can’t argue with that, but I am not one in this case. This is a non-profit company I work for, helping low income folks in Appalachia gain access to housing.
Previously I worked in blood banking, but when I moved to Kentucky from Florida there were no positions available in that field (it’s very limited) so, determined that I wanted to stay in the non-profit sector, I found the company I currently work for.
You would be amazed at the number of families in Appalachia that do not even have access to indoor plumbing in this day and age.
Now, there are many other ways and situations in which I can be an asshole. We can discuss those if you like 🙂