Journalism in the Public Interest

Despite Finding Big Problems in Mortgage Industry, Regulators’ Punishment Unclear

Federal regulators say they’re going to crack down after finding “critical deficiencies” with how banks and mortgage servicers have been handling struggling homeowners. But it’s an open question just what form a punishment will take.


(Justin Sullivan/Getty Images)

Federal regulators say they're going to crack down after finding "critical deficiencies" with how banks and mortgage servicers have been handling struggling homeowners. But it's an open question just what form a punishment will take, with one regulator reportedly pushing lighter penalties than the others.

In prepared testimony before Congress today, John Walsh, the head of the Office of the Comptroller of the Currency, which oversees the nation's largest banks, said banks and servicers had violated state and federal laws, regulations and rules in rushing to foreclose on homeowners.

Banking regulators launched their review after the robo-signing scandal erupted, but it also includes how servicers have been handling homeowners' loan modification applications.

In his testimony today, Walsh says regulators are in "in the process of finalizing actions that will incorporate appropriate remedial requirements and sanctions." But just what that means isn't clear.

Both The Wall Street Journal and Huffington Post reported this morning that the OCC wants to go easier on the banks than other regulators, specifically the FDIC. The OCC has proposed "relatively modest fines," reports the Journal. It's not clear what would be considered "modest" for a bank the size of Bank of America, the largest servicer, and one with a poor track record.

In his testimony Walsh said some servicers are worse than others, and the penalties will be tailored accordingly. It's also unclear when regulators will decide what the punishments should be.

As we've reported, the administrations' mortgage modification program has faltered in part because it relied on the banks' voluntary participation. Servicers violated the program's rules with no consequences. The Treasury Department has said it's powerless to punish servicers. But federal regulators like the Federal Reserve, OCC and FDIC have clear authority to punish banks for violating laws.

There are signs in Walsh's testimony of the OCC's more favorable views toward servicers. A review of about 2,800 homeowner foreclosure cases, he's careful to say, found that servicers had indeed been "in contact with troubled borrowers and had considered loss mitigation alternatives, including loan modifications." Only a "small number of foreclosure sales" were illegitimate, he said. The people in foreclosure were actually delinquent.

What Walsh's analysis misses is the possibility that homeowners fell behind because of their servicer's errors. For example, homeowners have been pushed into delinquency after the servicer wrongly told them that to be considered for a modification they should miss payments.

In recent months, OCC officials have defended their oversight of servicers in testimony before Congress. In December, the OCC's chief counsel Julie Williams testified that over the past several years, the OCC had issued "numerous 'Matters Requiring Attention,' requiring improvements in servicers' loan modification operations and increased staffing." A "Matter Requiring Attention" is essentially a stern letter from the regulator that can result in an enforcement action if the bank doesn't fix the problem. The continued problems with servicers are evidence the OCC's actions fell far short of what was needed.

There is no industry standard for modification—never has been, never will be.  If you can show me a note that has a “right to modify” in it, I stand corrected. This is a loss mitigation program, period.  Servicing was never designed to handle massive modifications, and HAMP although noble in its desires, was doomed to failure because of the sheer complexity of the slice and dice securitization, rating, insuring, etc, process that requires so many investors to be paid principal and interest for every loan in the pool uninterrupted by lack of paying on time.  In AZ, a principal reduction program that received over $100 million has modified ONE loan since September 2010 when the program went into effect (out 1055 applications)  Propublica’s time would be better spent suggesting legislation to mandate disclosures to borrowers that THEY DO NOT HAVE THE RIGHT TO MODIFY THEIR LOAN IF THEY FALL ON HARD TIMES OR CANNOT AFFORD THE LOAN OR LOSE VALUE IN THEIR HOME.  Or better yet, legislate a right to modify into the NOTE of every loan closed from this point on. Otherwise, scrap the program and come up with a graceful way to help these home owners find transitional housing without making any more payments to a modification program that won’t help them keep their home.

The whole financial crisis is by design. You can read about it here: No one is getting busted for this stuff on purpose. The World Bank is causing every nation to go bankrupt on purpose. They’ve been working on this since the 80’s. The end game is one currency for the entire planet and total economic control, among other things. Everyone needs to open their eyes to what is going on. It’s real folks. It all ties into a U.N. plan called Agenda 21. Those behind it all are international bankers and the Bank of International Settlements in Basel, Switzerland.

Whatever the government does to try and fix this will not work, because they are not addressing the true cause of the situation. They sit on their hands allowing the ungodly amount of fraud and chicanery to go unchecked when literally our country goes down the tubes.

Ok—I’ll bite. If it’s real, then what can we do?  If we take our hands out from under our collective a$$es, what do we do to plug the drain??

frank-I’ve got something you can bite. It is pompous ..s people like yourself who have contributed to our country being in the position it is now. Shouldn’t you be out foreclosing on some senior citizen who FELL ON HARD TIMES. Or maybe those who have never been late or missed a payment and have still been foreclosed. These programs haven’t worked MAINLY because the banks have not wanted them to. They have done criminal acts in being sure they wouldn’t. Taxpayer’s money is the ONLY reason they are still in business. They created this situation. You are from the school of thought that homeowners received loans for homes they couldn’t afford or used the equity they had like their own personal ATM machine. NOT TRUE! But everything is just fine in your world…cause you are smarter than everyone else…maybe due to your buying at the “right” time. Fricking troll I say you are!!!!!!!!!!!

@ “Frank” - is that you, Brian Moynihan, BAC’s CEO (stands for: can’t explain? obfuscate!)
Thanks but no thanks to the offer for help with “transitional” housing. I am staying put in my house and the bank can figure out how to dynamite me out. My MERS note is, er, tangled.
Take your time, fellas. I’m good where I am. Glad I didn’t scurry off and happy to take a stand. I’m insured (no forced place for me, thanks) and taxes paid up (nice work with the dummy tax lien companies, BAC.) I put 28% down and paid a six figure sum in monthly checks over 4.5 years. But, losing interest in paying this underwater loan. HAMP me, baby. Make me an offer. Current interest rates: good. Festooned fees: not good.
Meanwhile: No. More. Checks.

Starry-KUDOS to you!!! Stick to your word…change is coming dear lady. If you have time…please check out what is planned via site. We are going to try and take the underwriting out of the servicers hands. They always had help at their disposal, but the greedy bastards wanted it all to themselves. Talk out of one side of their mouth ‘we have limited help etc.” refusing help on other side. Just received my denial letter 2 days ago…after 11 months of dog chasing tail. BoA said I did not show a hardship (although income has been reduced by more than half) since I was current on my mortgage. Funny…why have they reported differently to bureaus. I guess having a shoulder replaced and unable to work is not a hardship. They got my 10k of savings…they are NOT going to get my retirement. Whether or not “frank” or any other f..khead thinks they should or not. Time for change…one way or another!

The mystery to me is the short sale phenomenon. The homeowner loses the house because he can’t keep up with the payment. So the lender foreclose, then puts the home on the market for a ridiculously low figure and cuts a sweetheart mortgage interest rate to the short sale buyer.
Of course, the bank is fully covered for its losses by the federal government.
It would seem the government would insist that the original homeowner be allowed to repurchase the home at the short sale price and remortgage it at the short sale interest rate the lender is offering. That way, the collateral would be maintained and/or improved, the taxpayers wouldn’t have to suffer the loss, and ultimately the real estate market could remain healthy.



Feb. 18, 2011, 2:28 a.m.

Roy, Starry well said, and for you frank, here is something to get you inform


Pastor Dave-Hope you are doing allright (as well as anyone can under these horrible circumstances). I remember your story from when I first started visiting this site (seems like many years ago). You bring up an EXCELLENT point. In my case the value of my home is 80k less than what I owe…this on top of coming to table with 90k down payment (decades of saving and hard work), now expected to lose after only 3 1/2 years. Your way of thinking at least gives the homeowner a chance. Banks get their’s regardless…on top of all concessions (taxpayer money) given them so they could stay in business and continue to pillage.
Acmod-excellent link. Glad to know you are joining in on Steve’s efforts. THANK YOU!

Karen, Roy, Dave, Starry:
You all missed my point by a mile and now are attacking me when I am on your side.  Yes, believe it or not, after 19 years in the mortgage business, I fully 100% agree that you should not lose your house and that you were all the victims of a speculative real estate scam.  I firmly believe that THE AMERICAN CONSUMER IS TOO BIG TO FAIL…the problem is, consumers have not realized the power they have to affect change.  That makes me very unpopular with colleagues in my industry. 
The problem is, the modification system is giving you all FALSE HOPE. On average, people are spending $3000 to $4000 towards mortgage modification efforts that 95% of the time will be declined.  I have volunteered at foreclosure prevention workshops for 2 years now and it was obvious from day 1 that HAMP could not work. The complexity of mortgage backed securities (read the National Consumer Law Center Report) and the servicer’s legal responsibility to the investor make it logistically and legally impossible to modify loans on the scale that it would take to stop foreclosures.
If Propublica and all of you want to get serious about change, then form an initiative that 1)legislatively mandates a 30 day process for approving or denying a modification by the MBS investors (not the powerless servicers) 2) mandates a new clause in all future mortgage notes that identifies the borrower’s rights to modify a loan.  And to acmodspecialist—How much are you charging upfront to homeowners to rip them off for loan modifications that will add thousands of dollars in fees to their loans, make them more upside down, on the promise they will keep their home when they can get it done for free with a nonprofit?

Well I think it would be nice to send a couple of them to jail. No amount of $$$$$ in a fine will keep banks from doing whatever they want. It is like they are exempt from the law until caught, then a tap on the hand. There is no doubt that Walsh sides with them in general.

The only thing that will make a difference is how they treat customers aka citizens. Will Walsh and the 50 AG’s have the balls to force modification on them, that is all that really matters now !!

I believe that 95% of all the homes in foreclosure or about to be can be modified. Other than the servicer, no one wins in a foreclosure - not the home owner, not the investor.

WHY can’t the OBAMA crowd and the banks pull their head out of where the sun don’t shine and treat people right. WHY???

Ron—what do you base your belief that 95% of all homes in foreclosure can be modified on?  You have to understand that the investors at the end of these loans make money WHETHER HOMEOWNERS MAKE PAYMENTS OR NOT.  You have to understand the way a mortgage backed security works to understand why modifications in their present form have not and will not work to prevent foreclosure.
The INVESTOR is protected by all kinds of legal protections and ultimately by their TBTF status. And as far as the investor “losing”—these articles may be enlightening:
New York Times: Homeowners and Investors May Lose, but the Bank Wins
Main Street: Banks Benefit from ‘Foreclosure Amnesty’
Memoirs of A Former Fat Cat Executive: This is how Banks Profit from Foreclosures, and how the U.S. Taxpayer Picks up the Tab


That you-tube video link you posted is AWESOME!!

Every bit of the whole situation is explained….in an understandable and amusing way…

EVERYONE should watch it…!

It’s the TRUTH—-now we just need JUSTICE!


Video is clever but innaccurate and again, gives false hope that somehow homeowners are not responsible for paying the loan under the original terms of the note.
Plus it only features one “banker” as the person who is the effective decisionmaker, when the reality is the banker (MBS pro rata investor) could be more than a dozen different people who invested unwisely in worthless triple AAA rated paper—think: your pension fund, your mutual fund, your 401k fund, foreign governments, and multi-billion dollar private investing firms…each one of them has to be willing to take less interest/principal than they agreed to if your loan is modified.  Should they? Yes—if they are investing specutively then all capital is at risk.  Will they?—just look at how many modifications are getting done to answer that question.

Federal Government in detail, OCC, HUD and FDIC are sharks with no teeth at all. Correct me if I am wrong. Are the Americans often talking about what so called “conflict of interests”? If yes, then why the Fed let the banks handle Loan Mod. To me, it just like you handle innocent girls to a serial rapist and said “Take good care of them. No matter what happened, we want to see them alive” !!!
I agree with Frank that we should not just bring up issues on media. Taking actions together. The evil banks back themselves by continously put money in politicians pockets to shut their mouths. If we also stay quiet, how could the problem solved ???

Mr. Frank:

Of COURSE the whole modification fantasy is just that—-equal to the fantasy of the illegal loans that were given…

If there was a way to start with a “clean slate”, that would be the answer…but how can we do that?

I just want to keep a roof over my kids heads…preferably not made out of cardboard…but the banking “situation” has ruined our credit so much to the point where I don’t even think I could rent an apartment…there are countless people in our same situation…

People HAVE some money to pay a mortgage each month…but the situation is so convoluted and illegal, that we don’t know to whom or how much to pay!

I’m just taking it one day at a time…doing what I can to survive and take care of my family…like so many others.

Jason—actually—all of those government entities do have teeth that have broken the skin…how many Americans have lived in their homes payment free for 12 months, 18 months—years?  That would not have been possible without government intervention (just read a deed of trust—it is supposed to be a 90 to 180 day process max).  Granted—it was self-serving, but also prevented an immediate overnite collapse of housing prices that would have certainly caused a great deal more economic calamity than the slow bleed we have experienced since 2007.  However, it is COMPLETELY UNACCEPTABLE that a “parallel foreclosure” process is legal while a modification is being pursued.  Here is Initiative #3 for Propublica and all the distressed homeowners:  Create an initiative that legislates the halting of ALL foreclosure proceedings while homeowners are waiting for a modification.  That way a homeowner cannot suddenly have their home sold a week after learning that their modification was declined because they didn’t know the day they made their first late payment on the advice of the servicing modification personnel that the foreclosure clock had actually started.

First, you have to understand that for better or worse, the loan was legal.  The Note you signed is legally binding—however, how your loan was sold to investors, and how it affects your ability to get help changing the original terms is what is being litigated right now in courts across the country.  Hopefully, relief is around the corner for you.

In the meantime, I can only hope you have contacted your local housing authorities, and nonprofits that work with foreclosure prevention in your area so they can help you with a plan if you are in danger of losing your home, and perhaps help you with safe, affordable housing transition if you do lose your home.  They often work with nonprofit attorneys who may be able to give you strategies to forego payments and budget money for a future rental for your family.  You might also ask a local congress person or senator if they have anyone working to help with loan modifications or foreclosure prevention…I know several here in Arizona have delayed or stopped foreclosures with a phone call to a person who has decision making authority.

Thanks, Frank—-but this is the problem…

not to mention our 2 dogs, a cat and a rabbit…who are
also family members…

Yes, I’ve done a lot more with regards to looking for “help” than I care to explain here…I am in “pre-foreclosure”, “under review” (for the 3rd time)
for a loan mod.

Sure, maybe the loan is “legal”, but how come they can’t prove they have the original promissory note I signed?  I asked for it, and they sent me a copy of something with the words “copy” stamped on it…sounds illegal to me…

Myron Budnick

Feb. 18, 2011, 3:40 p.m.


@ Frank - I am not “attacking” you, or anyone here. Nope. I asked if you were Moynihan of BAC. (Apparently you are not.)
We all know about reaching out to the non-profit assistance channels, trying to work the system thru our senators and congressional reps. And many of us have written to the OCC or other Fed entity, and state housing and banking officials.
That’s why we are mad. There is no “there” there - no-one is in charge and the Feds just shrug and refer you back to the bank. I believe this was the point of the propublica story - the banks got tossed a “regulate and monitor yourselves, dude” hot potato. And they muffed.
We *know.* But thanks for the updates.
BTW, I have written for months (as have many) that the temp mods are scams and just attempts to hoover up what remaining money you might have. I always urge people to consider declining a temp mod, or at least use money they can afford to lose. If you are going to lose your house, conserve your money for the move and your next step. Don’t send it to a bailed-out bank that is lying to you.
BAC declines almost 70% of its temp mods. Just makes 30% or so permanent.
I will not play those odds. No. More. Checks.

I guess the point I’m making is that these stories keep focusing on inadequacies in the servicers’ actions, because they are an easy target and merely powerless middlemen bound by a legal agreement to collect principal and interest on behalf of, in many cases, a dozen or more investors who are likely multi-millionaires and billionaires.  WHO ARE THE MBS PRO RATA SHARE HOLDERS OF YOUR MORTGAGE LOAN?  If you can’t talk to them about your modification request, you are not talking to the final decision maker.  No. More. Checks. From. You. Doesn’t. Matter. Unless. About. One. Million. More. Distressed. Homeowners. Stop. Making. Payments. At. The. Same. Time.

Frank, you really don’t need to be so condescending…

I tried three times to contact my “decision maker” investor with a certified letter explaining everything…and guess what…

they sent it to the servicer…


I apologize if I came off as condescending.

You explained the real problem perfectly in this post.  If the investor dishes the decision making off to the servicer, the same servicer who is employed by the investor and legally bound to pay the investor the principal and interest from your loan every month at the original terms of your note, whether you make your payments or not, how will anything get accomplished?  HAMP was designed to determine eligibility for a modification.  Once the servicer does that, they get paid.  It is the permanency of the modification process that needs to reformed and legislated so you and other homeowners in the same situation can actually get some finalized relief from this unnecessarily labor intensive process.

I know many will disagree but HAMP is a good program - it has failed not because of it design but because it was not implemented properly by the servicer and there was no enforcement by Treasury.  The only problem with HAMP is the NPV test.  Comments made here are accurate however I do not have the current figure but in the first year only 7% modifications where declined due to NPV.  That is 7% to many but you have to remember where that came from - The Chairwomen of the FDIC. Her job is to protect the financial institutions of the country so it is not suprise that was her position.  Everyone should know that the FDIC are the one’s fighting for the largest fines.

With regard to the creation of HAMP, it was not created by the banks.  It was originally based on the FDIC mod-in-a-box program.  They where flaws in that program so additions where made that enhanced the fairness of the program.  One enhancement was of the NPV test where the servicer “can” modify regardless it the test was positive or negative.  HAMP does not require a foreclosure if test indicated its better to foreclose.

There where suggestions made during the formulation of MHA (HAMP) that where not adopted.  Two examples are the 30 day requirement for underwriting and that underwriting be completed prior to a trial mod. These both where adopted later and are directives of HAMP. It is the servicer that is not following the guidelines and directives. You can argue the case that we need enforcement however look at the nexus of HAMP which is TARP.  The TARP legislation (EESA-2008) in Oct 2008 did not give enforcement authority to Treasury.  This was not done intentionally - I think - but was addressed in TARP II which pasted the House but dropped in the Senate.

HAMP can work, not for everyone but for many. It is nothing more than a loan product. This is not that difficult we just need to take the underwriting out of the hands of the servicer where possible.  We need to force this, join the fight.  (please read second post also)

Frank, I have to disagree with you on your point about HAMP can not work because of “The complexity of mortgage backed securities”.  I think we have over 2 million modifications both HAMP and conventional - how could that be if it is illegal?  That may be a stupid question “illegal”.  Let see someone doing something illegal….

Steve—-we’re getting somewhere but not only did TARP not give enforcement authority to Treasury—Treasury actually gives a safe harbor to investors if conflicts arise in enforcing HAMP in a modification effort.  You mention that we need to “take the underwriting out of the hands of the servicer”, but the servicers are money collectors and nothing more. HAMP makes them paper collectors, but the MBS pro rata share holders ultimately hold the decisionmaking authority.  As a mortgage professional for 19 years, I can tell you there is no way this is an issue with paper collection or underwriting ineffeciencies with servicers.  If this was just a “loan product” with uniform industry accepted/legislated standards the approval guidelines would be simple.  You provide the paperwork to meet eligibility.  If no appraisal or title work is required, really all that is being reviewed is income, date of loan, amount of loan, and whether they are eligible for the mod.  How can it take 6 months or multiple attempts like in Karen’s case to say “you’re approved” or “you’re declined?”.  I think you may be softballing the NPV issue a little bit too—if you are in a declining market then NPV is a moving target—and I haven’t found anyone yet that has come up with uniform way of explaining when the target stops long enough to get the “permanent modification approved” stamp.  If you are the Steve I think you are, then your effort is aimed at getting unemployed mortgage people to do the paperwork collecting thinking it will produce a more positive outcome for modification pursuits.  The problem is, there is an overwhelming amount of data that shows that the HAMP program is little more than a loss mitigation program for banks to slow down the impact of their losses, which is a world of difference from the foreclosure prevention vehicle it was advertised as.  I’m more than happy to join in the fight, but the rules of engagement have to be clear to all the parties.

The NPV point does beg a question though to the consumers who are trying to get modifications: have you been told that your eligibility for the loan modification depends on a “Net Present Value” test? Again—this gets to my point a few post ago:  The PERMANENT MODIFICATION APPROVAL process should be clear to the homeowners UP FRONT (notice I didn’t say eligibility determination process)—if they need to pass a “net present value” test to get that permanent mod approval, then give them something, in writing that they can follow to do that, or don’t waste their time (because they surely don’t have it to waste!!).

Frank, I don’t think you understand the depth of deceit here…

The NPV numbers are NEVER satisfactory——because “behind the scenes”, they know how to manipulate the NPV numbers so that NO ONE GETS APPROVED!  And they never tell you how they arrive at the numbers if you ask…it’s a “secret”...

Because everybody makes more money if they just foreclose…except for the homeowner…whom the banksters have decided are either suckers, or just collateral damage…

Parallel Foreclosure

Feb. 19, 2011, 12:03 a.m.

(Hi, this is a repeat response from another mortgage article to a repeat comment from Steve.)

Steve, HAMP requires parallel foreclosure before one can even apply for HAMP.  This may actually be a federal hobbs act violation, the extortion clause, under the color of right.

Using taxpayer funds to lure taxpayers into the accelerated loss of their home just does not seem legal to me, especially after I learned about HAMP.

Barack Obama could be charged with Federal Hobbs Act violations since he has been a big advocate of the program and used it to generate positive publicity for himself.

Bingo Karen & Parallel Foreclosure:  You hit the two major modification problem points on the head. That is why I think that consumers need to know their legal rights to stall a foreclosure with as little out of pocket expense as possible so they can stay in their homes as long as possible.  I’ve outlined 3 initiatives above that will level the playing field if Propublica and consumer advocacy groups would simply get behind them.  1). Legislate a 30 day paperwork to final decisionmaker process for all modifications 2). Legislate a notification to all future borrowers that there is no right to modify a loan or create a modification right clause in the note of all future notes. 3) Legislate the cessation of all parallel foreclosure proceedings while a home owner is waiting for a modification decision.  I’ve suggested these to local housing and state government housing agencies.


Feb. 19, 2011, 12:38 p.m.

frank, I just read your comment from yesterday, 4:26 a.m In rsponse to your comment, First, you should know that i don’t charge advance fees you can check that on my website, Second, as you stated, yes is very difficult to get a modification approved by the banks, you are right, so without any help is extremely difficult, somebody needs to be defending the borrowers against all their lies and false denials, somebody needs to be challenging the servicers and banks, documenting every phone call, conversation, fax transmissions, everything in written, proving that the homeowner qualify, and with all of their lies, false denials, losing documents, that the borrower has to confront, you do need a specialist and you need an experienced advocate that knows all the guidelines and have developed methods, networks and strategies that will help the borrower improve their possibilities of approval, someone that will contact other institutions if necessary, that will be on top of their particular case, someone that knows when the bank is lying or giving a false denial, that will fight for the borrower and will push back, and push back, is the only way to win it

ACMOD: So you provide this service for free? What is your backround in MBS securitization and servicer MSAs that allows you to “improve their possibilities of approval”?  How do you “know” the bank is lying if the approval process is arbitrary and no uniform standard exists? Do you have data to prove you have a higher success rate with permanent mods?  I have seen far too many mod scam artist in AZ to believe that ANY for pay modification specialist is anything more than a new version of the subprime predators that started this whole thing.  Hopefully, your data and proof of permanent modifications will prove me wrong…but in the meantime, I’ll continue to push for a consumer driven initiative to legislate a level playing field based on the three items outlined above.


Feb. 19, 2011, 1:09 p.m.

Frank i commend your on your 3 initiatives above. In regard to NPV test I have found out that 90% of the time when I request the NPV test with a QWR either I don’t receive a response until threaten to sue or a receive false NPV input calculations, even that they have all documentation in hand to do to the calculations right, and only until i push back very strongly i get the correct NPV test calculations and borrower pass it, don’t you wonder why that is?
I believe that probably at the end the foreclosures will be fight and won at the courts where maybe people will be able to fight the the Banks that are well known of doing Forged notes, lost notes, intentional destruction of notes, unauthorized people signing mortgage assignments or endorsing notes, missing documentation, fraudulently fabricated documents, different plaintiffs foreclosing on the same property, plaintiffs who do not exist, illegally breaking in to homes and the inability or refusal to provide proof of purchase and/or ownership of the promissory notes.FORGERY, FILING FALSE DOCUMENTS INTO GOVERNMENT RECORDS, EXTORTION, ABUSE OF PROCESS, FRAUD ON THE COURTS, and countless others of CRIMINAL VIOLATIONS


Feb. 19, 2011, 1:25 p.m.

Frank I never said I provide a service for free I said i don’t charge advance fee, to keep an operation open to assist and help the homeowner cost money, and yes There are many non-profit groups that are trying to help homeowners with saving their homes.  We applaud their efforts.  But because some non-profit groups were started by and are funded by the mortgage or bank industry or gov, they seem to be working on behalf of lenders.  Or just work as a fax or deliverers of docs and don’t put a strong fight for the borrower Therefore, they offer little value beyond what anyone could get by contacting the lender directly.

AC Mod—then you only charge a fee when you get a permanent modification, right?  I’m assuming you have no mortgage or banking industry experience, right?  Then how you can possibly do anything but “put on a strong” fight for a fee? Why would a bank be more likely to modify with you?  And why should a homeowner SPEND MONEY THEY DON’T HAVE to pay you if you can’t PROVE WITH DATA you can do better than the free services. I’m more than happy to be proven wrong, and will gladly endorse what you do, IF you can show me with data WHY your for pay service is worth more than a nonprofit service. Homeowners deserve definitive, timely permanent relief.  Anything less than that is not acceptable anymore.

One final note regarding the NPV test—scrap it. The benefit of the savings to the borrower and ability to repay should be demonstrated by the income documentation the borrower provides, PERIOD. The NPV tool is nothing more than a LOSS MITIGATION algorithm that allows for never ending delays in final modification approval. It needs to be legislated away if the true intent of HAMP and all other modification programs is FORECLOSURE PREVENTION.  Initiative #4: Get rid of the “eminent default” requirement for modification consideration.  How many borrowers were TOLD to stop making payments for 90 days.  Why was this guideline not put in writing?  Because it would have been evidence that an attorney very likely could argue caused FINANCIAL DAMAGES (credit scores, ability to get future credit, higher insurance rates).  A really sharp attorney should be gathering affidavits from every person who applied for a modification to build a case for financial damages incurred from influencing borrowers to prove ‘eminent default’ by stopping making payments for 90 days.  I know that a local nonprofit is trying to build that case…maybe she’s on to something. You think ANY of these borrowers were told parallel foreclosure would start the same day? The robosigning is a side show that will likely still only provide a delay for homeowners foreclosures—not a nullification.  Homeowners need a process that is simple & straightforward but based on some common sense underwriting approval process so they can get on with their lives knowing their home is safe from foreclosure, or can move onto building a life beyond foreclosure.














...have a nice day!

Frank, I too have been involved in real estate for 27 years. I am not sure I follow your logic, it appears that you are say the servicer is not the major player in the HAMP effort. That the final decision maker for every file is the owner. I am not sure if you ever read MHA 3.0 handbook - section 1.1 clearly lays out who is to do the work and what obligation they have under their MSA.  Modification can get done - 540k HAMP permanent and 1.5m conventional programs. If the servicer did not have the right to do them how have so many been completed. I think section 1.1 will clarify.

I agree that NPV is useless and is counter to a foreclosure prevention strategy no less stabilizing real estate values.

Imminent default is the most under use guideline in HAMP which can keep people out of the system without ruining their credit.

I do not know if I am the same Steve you think I am but I am ED of AAHMP. The problem from the start is that the wrong people where given the job to process and underwriter.  We have “employed processors and HUD DE underwriters.  We will be more than happy to hire unemployed professional processors and Underwriters when volume demands

If you have been involved in the mortgage industry like you say than you will remember underwriting guideline.  Historically defaults accounted for between 2 and 3% annually. Underwriting with good guidelines worked for 50 years, why will it not work now…

Let me say to everyone - there are many problem with the system, both processing and legally. I support any effort that will straighten out the mess we find ourselves in.  There are a lot of smart people out there that can pontificate on the different issues.  That has gotten us nowhere in the last two years.  The legal aspects of this may take years to settle in the courts if ever.  That does not help the people that are schedule for auction next month, or the people that have been fighting for the last year. Action needs to be taken now. We have an opportunity now with the possibility of fines and we need to capitalize on it.

Beyond fines, an immediate cause of action to stop foreclosures is needed…

Check out poster TMG’s list of 11 in the comment section of propublica’s other latest article on homeowners dealing with loan mod. and foreclosure issues!!


Feb. 19, 2011, 11:09 p.m.

Frank, you missed my point, I agree 100% NPV is useless. I only mentioned the NPV test as an example that the Banks lie because you ask how do I “know” the bank is lying if the approval process is arbitrary and no uniform standard exists, and I was just giving one example. I can give you 10 more.
With regard to the data to prove I have a good success rate with permanent mods,(I’m not saying they are easy) if you tell me specifically what kind of data you’re interested in, I ‘ll be happy to send it.
I think Steve is on to something good here. We have an opportunity now with the possibility of fines and we need to capitalize and push on that.  Karen, yes an immediate cause of action to stop foreclosures is greatly needed !!

Is there anyone out there who had dealings with a Luke Mai (loan mod negotiator) from BoA???? I would appreciate being able to share notes and experience!

acmod: I would like to see the final written terms of permanent mod showing the cumulative cost of the mod: interest tacked on to back, total cost to borrower including your fee, and the monthly savings, and the term of the new loan.  Out of initial apps, how many go to permanent, mod and at what point in process do homeowners owe you a fee.

Final point: 540 permanent mods is nowhere adequate enough if up to 7 million people are in some form of default. That is less than 10% of the total distressed home loan population—which is probably acceptable from a loss mitigation standpoint.  Yes—modifications can get done, but Steve—if you’ve been in real estate for 27 years like you say, you know the process is not that difficult for approval, as long as there is an industry standard for approval that is followed by every servicing/investor entity with a time line that is mandated by law.  540,000 mods in a couple of years is pathetic.
Without that, you’ll be doing the same thing and expecting different results, which yields the same insanity that homeowners have endured for 2 years now. You honestly think a couple of million in fines is going to push banks into suddenly approving permanent modifications?  I’ve laid out the 4 initiatives that could affect change. I’ve even pitched them to local housing and state housing government official.  Sadly, they have chosen the existing flawed system.  And for homeowners the results have been the same: more foreclosures.

Unhappy Texan

Feb. 21, 2011, 2:48 p.m.

To - regarding the link to your blog:

There is plenty of blame to go around, and Hillary could not have fared any better I will tell you why, though not in my own word s.  But first, deregulation started with everybody’s darling, with everyone’s support including those democrats who voted for him, the Reagan Democrats.  Why?  Because they, as many of you, believed and would have cut an an arm or leg if his slogan did not mean salvation:  “The problem is not with the government, the problem IS THE government”

Now I will be quoting Matt Taibbi from the book so many of you have recommended: Griftopia.  Earlier in the chapter and the ones before, with plenty of historical facts, he writes about:

“Goldman is not a company of geniuses, it’s a company of criminals.  And far from being the best fruit of a democratic, capitalist society, it’s the apotheosis of the Grifter Era, a parasitic enterprise that has attached itself to the American government and taxpayer and shamelessly engorged itself on us all.”

-Fast forward-  (page 213) ... “But then something happened”.  Jumping some lines on and off:  ” Robert Rubin followed Bill Clinton to the White House.  While American media fell in love with the storyline of a pair baby-boomer, sixties’ child, Fleetwood Mac-fan yuppies nesting in the White House, it also nursed an undisguised crush on the obnoxious Rubin, who was hyped as the smartest person ever to walk the face of the earth.  The press went bat…it over him and became almost a national cliché that Whatever Rubin thought was probably the correct economic policy.  And “what Rubin thought” mostly, was that the American economy, and in particular the financial markets, were overregulated and needed to be set free.  During his tenure the Clinton White House made a series of moves that would have drastic consequences.  The changes Rubin made to the regulatory environment would have their most profound impact in particular during the housing, credit and commodities bubbles.  But another part of his legacy was his complete and total inattention to and failure to regulate Wall Street during Goldman’s first mad dash for obscene short-term profits in the Internet years”

So the actor sold all of you (not me, I lived in Cal. during his governorship) a bill of goods.  Clinton/Rubin perfected it and the power behind Bush (poor guy, he did not know what he was doing) finished it for us all.

Goldman knows who and how to buy.  They can.  Rubin came from them, he was not bought, he bought on their behalf.  Paulson too, but what is Rubin/Clinton’s excuse?  G.S. controls Obama’s financial side of his well intended but broken promises, much as they would have controlled Hilary too.  We cannot continue to create Camelots where there are none,  There is no princess, frog, kiss.  Sorry.

Unhalppy Texan

Feb. 21, 2011, 3:06 p.m.

To Steve, Roy, Acmod, Nick, Shawn, Gabor and all participants in helping Steve’s effort, Frank definitely has something important going here, and if you think it is just as preponderant, but not to interfere with Steve’s effort, how about sending just a “personal” e-mail to the recipients in the list you already sent Steve’s message to, but cutting and pasting this Frank’s suggestion?  At the end of the day, they will have to plead for as much as it may be viable and I find this portion of Frank’s just as doable as Steve’s, don’t you think?

Here is Frank’s comment:
“If Propublica and all of you want to get serious about change, then form an initiative that”  (numeral below for cutting/pasting)

Here “his” key suggestion:

“1)legislatively mandate a 30 day process for approving or denying a modification by the MBS investors (not the powerless servicers)”

and I would add something like:  After all, if the underwriting is taken off the hands of the servicer, their staff will have more time and resources to respond just as promptly as it is done with any loan application when buying a new or used house.

unhappy texan:  blah blah blah blame blame blame.  The American consumer makes up 2/3rd of this economy—too big to fail by every standard.  Easy prey = easy money.  As of 2008 40,000 high school student can’t pass a basic financial literacy test.  These are the same kids that will be buying homes, investing in 401ks, and applying for credit cards in future boom/bust markets. There needs to be a “one-stop shop” for financial literacy/consumer literacy so people can learn how to counteract hard sell tactics of financial products that they don’t fully understand, or have been “undersold” the risks of.  Or better yet—mandate a grade of “C” for all graduating seniors on a complex financial literacy test before they start taking out student loans for college, buying houses, cars, or opening credit cards and 401ks. All of the financially predatory schemes of that last decade or so have one thing in common at the very beginning of their sale pitches: and endless supply of prey.

Here is initiative #5:
1) Require that the public and private education require at least C grade as part of graduation starting with the class of 2012, with goal of “A” by 2024, with that class representing the culmination of K-12 financial literacy education, in keeping with the recommendations of the Presidential Financial Literacy report findings in 2008.

Unhappy Texan

Feb. 21, 2011, 3:39 p.m.

to Frank - and how is your above posting going to help anyone’s effort to help those who the growing group is trying to reach?

Unhappy Texan

Feb. 21, 2011, 3:41 p.m.

I mean the posting over your initiative 5?

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

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