Struggling to keep up with foreclosure complaints, JPMorgan Chase & Co., Bank of America Corp. and Citigroup have admitted to being understaffed during assessments released by the Federal Reserve (Fed). The banks were ordered to mend foreclosure and mortgage servicing due to large amounts of borrower complaints regarding lost paperwork, missed deadlines and unfulfilled assurances that ultimately cost homeowners their homes.
The Fed is demanding the implementation of new action plan documents that detail how the banks will strengthen staff training and communication with borrowers in order to limit foreclosures. After reviews concluded that a large number of their staff members had little to no experience in the home lending industry, JPMorgan, Bank of America and Citigroup are promising to require additional training of employees. Wells Fargo intends to hire a new chief compliance officer before further review of its staffing.
Although the Fed plans to closely monitor the implementation of the banks’ corrective policies, no concrete deadlines exist to mandate the bankers’ improvements.
first tuesday take: This public commentary on mortgage banking behavior with no mandate for corrections is old hat.
Since 2008, banks and everyone else have been more than aware of servicing inadequacies and the need for staffing to service delinquent loans and process foreclosures. With at least four years to improve delinquent loan processing, any increase in staffing desired by the lenders would have already taken place.
Instead, these banking institutions appear to be using their understaffed personnel as a deliberate ploy to not process loans that are not advantageous to their profit margins. Worse, reporting ever high levels of foreclosure would certainly result from better loan servicing. More foreclosures and disclosures of even more bad loans would instill fright in investors, further threatening the solvency of these banks. Thus, it is not in the best interest of banking institutions to process foreclosures quickly, much less efficiently through greater staffing and expenses.
There is no doubt the actions of these banks are detrimental to the nation’s economic recovery, no more so than the profitable but socially destructive lending techniques employed during the past decade. Still, for homeowners looking for optimism in a desperate part of their 25 billion dollar settlement over foreclosure practices, Bank of America is now offering cramdowns, somewhere at sometime for some loans. The sum California might get is less than 2% of the negative equity in all over-mortgaged homes in California.
In order to receive a cramdown, homeowners must first default on their mortgage by failing to make at least two monthly payments. Strategic defaults are now honored so the better informed may qualify for a cramdown, an alternative to a release from imprisonment by foreclosure – but only if the bankers hire staff to process the promised cramdown.
Related content:
Loan servicers scramble to enact the federal foreclosure prevention plan
Re: “JPMorgan, BofA Strain for Qualified Staff to Clear Foreclosures” from Bloomberg News
Mary…it is because experienced people will see the fraud that is happening in the Loss Mitigation Dept and they cannot have that.
I have 36 years experience in mortgage banking from sales to operations to management which includes loan processing, funding and investor shipping. Over the past 4 months I applied for over 30 various positions at JPMorgan Chase at 3 different locations. I had 3 interviews and 1 response which was a turn-down. Have not heard from the other 2 interviews. The other positions I applied for responded by saying I was not eligible for an interview. I have a friend that works in Loss Mitigation and she has told me they need experienced help desperately. So why not hire someone with good experience???? I am yet to figure it out.
It’s all a Big Farce! In spite of all the new regs. and procedures in force, the Big Banks are doing
exactly what they want to do. The shareholders and the bottom line come first. Screw everybody else.
Wake up people…the banks are already broke…dead broke. Any other business would have shut their doors by now. They became dead broke July 2007 when the investor world realized that they were selling MBS two or three times and each time there was nothing to sell.
When was the last time you got your NOTE back saying it was paid off when you sold, refinanced or paid off your house? Never ….you know why…because they have sold it so many times they “cannot” give it to you because they do not own it. No one really knows who owns it. We are allowing this scam to keep going…and it is beyond me to understand why. The joke is on us. Do you realize that everytime a home is foreclosed on…the taxpayers are foreclosing on themselves. Those of you who are paying on time…do not pay off your loan without going to court for a quiet title action because I can guarantee that you are not paying off the right lender and you are not getting clear title. Then someday the right lender/investor will show up and the jokes on you….because you paid off the wrong lender.
The major banks are deliberately stalling on accepting short sale offers and foreclosure homes with the expectation that property values will begin to climb wherein they will lose less money in deriving higher property comps.