Will the Dell you buy for Christmas help fund your neighbors foreclosure?

“Dude You’re Getting A Dell” could have a whole new meaning. It could mean another process server has dropped the foreclosure bombshell on another American Family suffering from the subprime mortgage crisis and a lousy economy.

That’s right!!!

Michael Dell has joined forces with a few of the 21st Centuries newest Robber Barrons.
MSD Capital, L.P. is part of the partnership formed to purchase Indymac from the FDIC.
The new company is IMD Management Holdings and they are running One West Bank
which is among the worst performing lenders/servicers when it comes to offering
distressed borrowers assistance.

Calls to Dunes Capital and IMB Management Holdings are ignored as the new corporate
philosophy of throw the deadbeats into the streets and tell them to go scratch has permeated the entire company.

Managers who under the supervision of Sheila Baird and the FDIC use to help borrowers with a true empathy now dish out the lies of their corporate masters. Customer service representatives now tow the company line and Deny, Deny, Deny is the new corporate motto.

In lawsuits, complaints and interviews, borrowers contend that Indymac (Now One West Bank) denied loan modifications because borrowers failed to submit unimportant paperwork; because Indymac phone log notes did not detail discussions correctly or at all; because paperwork sent had mysteriously disappeared and as such was deemed “never submitted”, borrowers have been told routinely that “their investor doesn’t allow modifications”, borrowers have had “phony modifications” sent that were actually just a sleazy attempt at collecting arrears never intended to be really honored by the company and much, much more.

As I follow the exploits of borrowers who are unfortunate enough to have one of the Indymac Alt-A loans that were able to close within days of application because of lax underwriting guidelines and the knowledge that they could sell the “toxic paper” off their books before anyone would know the debt couldn’t be repaid, I am reminded of the Francis Ford Coppola Movie “The Rainmaker”.

Todays One West Bank follows the lead of the movies Great Benefit Insurance Company whose first, second and third courses of action are to deny a claim, hoping the people will give up or die. In one scene an insurance company employee reads a letter written to an insured “Dear Mrs. Black, On seven prior occasions this company has denied your claims in writing. We now deny it for the eighth and final time. You must be stupid, stupid, stupid.”

I have seen letters to Indymac borrowers along the same lines, their newest tactic is a letter that explains how complicated it is for the “stupid, stupid, stupid borrower” to understand who the “investor” in their loan is.

These tactics are apparently very good for mortgage company profits.

How a man like Michael Dell whose philanthropic efforts are to be commended could be dragged into investing with the kind of creatures who would treat people this way is beyond me.

But it certainly begs the question, does the phrase “Dude You’re Getting A Dell” now mean the same thing as “You’ve Been Served A Foreclosure Notice”?

Does Michael Dell actually subscribe to the philosophy of the Robber Barrons who deny, deny, deny in the hopes that suffering families will give up or die?

Your article is not only educational but it helps us as realtors communicate the bottom line realities and caution for our clients. The distressed are already experiencing hardships and they end up contacting their realtors for ways to navigate the system in helping them make a deicision to retain their home via the loan modifications or just sell it at either a loss (short sale). We are the point person and it is in our best interest that we provide or refer our clients to the proper steps and journey in reflective, thoughtful and ethical ways. I faced this situation with a client who was thinking of refinancing his loan. He would start calling or responding to these letters or phone calls about the mortgage service on I have a client who asked me about these letters and phone calls he received. He was ready to sign the dotted line and pay the company in CA a sum of $3500 – out of desperation and haste. I asked him to please hold back and reconsider while I do some research. He did hold off and now has worked with his lender to refinance without cost.

It is these times that your blog affirms our ethical ways of working and advising our clients.

Unfortunately this may have the unintended consequence of pushing some good providers out of the business.

Depending on how one reads the law it appears that attorneys have now been put in the same boat. They will now be representing clients seeking a loan modification on a contingency basis.

Will it be long before the “carve out” for attorneys pops up?

I am surprised that this one slipped past the attorney lobbyist.

“California has joined nearly two dozen other states in prohibiting foreclosure rescue companies from collecting advance fees for helping homeowners negotiate mortgage loan modifications.

Gov. Arnold Schwarzenegger on Oct. 11 signed into law a bill, SB 94, that prohibits any person from demanding or collecting an advance fee from a consumer for loan modification or mortgage loan forbearance services.”

“Sorry but I have never seen a Free HUD counselor offer to dig in this deep, they don’t have the time.”

I’m afraid you are right, Dan.

Question for you. At the state Realtor convention yesterday, one of the attorney/speakers said that negotiating the modification of a legal contract between two parties, for a fee, would be a definition of the practice of law.

What’s going on in your state regarding regulating loan modification firms and what they can/cannot do without it being considered as practicing law?

Thanks.

Many servicers are hiding behind “the investor” to deny modifications. Indymac has a form letter that goes out to borrowers to tell them that their investor doesn’t allow for modification.

When a request is made for the identity of the investor Indymac has a form letter that tells the borrower that their loanis not owned by a single investor, rather it is pooled and as such identity of the investor is complicated.

What nonsense! They just want to baffle their borrowers with crap.

They won’t offer the identity of the investor without a knowledgeable request. It is important to request the name of the Trustee and The Pass Through Certificate Number. With this information you can find the SEC filing and start to identify the investors in your “pool”. Contacting these “investors” can bear fruit I have experienced it 1st hand.

Imagine some pension fund manager getting a letter asking why he is invested in a mortgage pool that is forcing families into the street with a cc to their local news outlets.

Involvement of The American Securitization Forum can help rebut he claims by servicers that their pooling and servicing agreements don’t allow for modification.

A good attorney or loan mod practitioner will know how to navigate this chain with relative ease. If the person / cpmpany you are speaking to doesn’t understand this end of the business cross your fingers and hope you are in a GSE backed loan,or a portfolio loan where the investor can be easily identified.

Sorry but I have never seen a Free HUD counselor offer to dig in this deep, they don’t have the time.

I have had many servicers claim that the “investor” denied the mod only to find out that they are in fact the investor. Escalation to the executive offices at this juncture usually yields results.

This is what real loan mod practitioners do that sets them apart from the crowds, the real work in the trenches, really working to offer the best representation available. An absolute commitment to the client that they will go above and beyond what most others will do.

I don’t run into these people often.

Have you?

Here’s an example of well meaning legislation that hurts borrowers:

The State of Connecticut just implemented a rule that requires loan mod practioners to post a $40,000.00 bond and limits their fee to $500 to be collected after the mod is achieved.

That’s what happens when public officials who have never started or run a business set out to try to do something good.

The average loan modification today takes 4 to 6 months to process that’s 17 to 26 weeks.

Let’s use 20 weeks as an average. If your mod company is not following up on your file twice a week it will take longer. Let’s assign 2 hours per week of follow up.

It takes approx. 4 hours to set up a file and submit it to the lender. Let’s assume they acknowledge receipt of this file on the 1st try (this is fantasy; normally it takes 2 or 3 submissions to get acknowledgement – but play along).

As the file “ages” the lender will require update financials let’s assume 2 updates during the 20 week process taking a total of 3 hours.

So we have 4 hours to process, 40 hours of follow up, and 3 hours of updating. that is a conservative estimate of 47 hours to process a modification to completion. ( we haven’t counted the time speaking with the client, data entry, updating contact logs etc along the way).

But using the 47 hours with a decent employee in Connecticut wages should be at least $10 per hour, but I think more. With FICA and other taxes this employee would be costing at least $15 per hour.

47 hours at $15 = $705

How can anyone offer assistance to a borrower that is effective when their fee is limited to $500?

They can’t – borrowers in Connecticut are now left to do business with loan mod practitioners who will now flout the law and continue to charge what they want, or they will be forced into HUD approved counselors who are overburdened under funded and take no for an answer very quickly.

There is a caveat; the ruling provides a carve out that exempts attorneys, whether or not they have experience in the field.

I had a client in Connecticut about a year ago that had an attorney (the same attorney who closed her mortgage) represent her in a foreclosure action. Part of that action in Connecticut requires a mandatory settlement conference. At the settlement conference the attorney for Countrywide reviewed the borrowers financials and determined that the lender coudn’t offer any assistance and the ruling from the court was that as a result the foreclosure case could move forward. (the exact result that Countrywide wanted). Why the court allows the attorney for the lender to determine eligibilty with their client “the plaintiff” is beyond me.

With our assistance the borrower did get a loan modification from Countrywide that enabled them to keep their home.

Today I would be forced to turn that client away, they would quite simply lose their home….

Just some food for thought…

This statement is very simplistic:
“Also, before checking out the company, check out your lender… see what kind of programs your lender is offering, or if there are any programs available at all! Not all the banks are part of this program.”

The fact is that most lenders are also servicers, Citi services some Chase loans, Wells Fargo services some Aurora loans, and so on.

This is where the difficulty for the average homeowner begins. Without knowing who your investor is you are fighting with a blindfold on. It doesn’t matter who the servicer is if your investor has decided not to modify loans.

Dan Harris

Regardless of what the “Citi Representative” told you I find it inconceivable that Hala Farid would permit a system where they play “pin the tail on the loan mod” with peoples homes & lives. She came from an extensive non-profit background and has always come from the angle of an assistance practitioner. She truly has the interest of both sides at heart and wants to help those who need it. My experience with her office has shown a true fairness in the process of searching for a way to help distressed borrowers.

The sheer notion that this “blind awarding of mods” is going on would cause a scandal of epic proportions and bring the house down on their heads.

Dan Harris

My, my where to begin…

1st of all YES I think everyone regardless of license or lobbying efforts should be on the same playing field. So in answer to your question CONTINGENCY means CONTINGENCY for everyone.

I do however believe that the borrower should bear the cost of some of the work done. I agree that paying for a forensic audit is worthwhile and can produce results. I don’t believe the attorney or anyone else involved should bear the burden of this cost. In this instance the borrower is paying for a service that although I think is neccessary and complimentary in nature is independent of the modification process.

Dan Harris