I got a mortgage solicitors license, a P&C insurance license, and certification from The Appraisal Institute. With help from my folks, and my new bride, I set out to acquire, rehabilitate and resell existing, distressed homes. I concentrated on purchasing from homeowners who faced mortgage foreclosure who had VA or FHA (then assumable) loans which I did, successfully, until a serious injury and subsequent surgeries forced me to hang up my hammer. I had become quite proficient in purchasing foreclosures by working with the sellers (and their lenders) to resolve their housing and finance problems. In more cases than not, I was able to resolve their mortgage difficulties which allowed them to keep their homes. Those successes, though financially unrewarding, were satisfying and, years later, became the basis for SPOCH's mission which was to preserve continued homeownership.
One of my workout proposals was noticed by a new VP at GE Capital Mortgage (then the second largest mortgage loan servicer in the US). He flew from St. Louis to NJ and (despite my then and now shaggy, thinning hair and white beard)hired me for his prototype program to deal with non-performing mortgages. I worked a portfolio that included about 7,500 "bad" loans in New Jersey, New York, Pennsylvania...and New England on as "as-needed" basis.
In addition to field responsibilities, which included establishing borrower contact, devising and implementing loan workouts, assessing market conditions, and reviewing appraisals, I became the regional mortgage loan servicing expert who represented the lender in Federal Bankruptcy Courts. My role was to testify to the Court specific on debtors loan origination, servicing (collection and application of payments, attempts to resolve delinquencies, etc.), and foreclosure.
I traveled periodically to the St. Louis HQ for meetings with FNMA (Federal National Mortgage Association) FHLMC (Federal Home Loan Mortgage Company) and the FHA (Federal Housing Administration). The result of these meetings between the country's second largest loan servicer and GSEs (Government Sponsored Entities) and HUD became the basis for loss mitigation practices still in use today. Not to say GE was the sole contributor... Citibank's HQ was just across the street. Early on, I saw the cozy relationship between government and Wall Street capitalists.
I worked for GE until the loan portfolio to which I was assigned was "fixed" and sold to another servicer. Though GE offered me a similar position for a portfolio in California, I found myself out of work with a unique skill set. I had seen foreclosure from both sides of the table. I learned what power the loan servicer had, and saw first-hand how foreclosure and the threat of loss of homeownership devastated families. Unnecessarily.I had learned through experience most mortgage foreclosure were avoidable. Sadly, the real help distressed borrowers needed wasn't available.
As a private, independent fee consultant, I began reaching out to distressed borrowers and offered to help them in their fight against foreclosure to preserve their continued homeownership. There was no shortage of people needing help (then or now) but unfortunately, the very people who most needed help were unable to pay for the indicated services. I often (then and now) found myself working for virtually nothing.
In 1998 my wife, Lynn, a newly certified public accountant, and I decided to form a 501c3 organization (SPOCH) which would solicit grants and contributions to fund socially necessary services to financially distressed homeowners. Persevering night classes, independent study, and work experience for credit, I earned an executive MBA with a concentration in real estate, and certification in non-profit management.
Whew.
So, Dave, I have a much better sense of how your life experience has made you absolutely the right guy at the right time. How is what you're seeing now in foreclosures different from before the economic melt-down on Wall Street?
Well, certainly there are more of them. I think one in every eight homes with a mortgage loan are in some stage of collection or foreclosure. One in eight!
In years past, borrowers with a problem were able to pick up the phone, call their loan servicer, and then speak immediately to a company representative. This representative was able to identify the caller and have the loan info on their computer screen within a couple of minutes. The representative was able to listen to the borrower, classify the borrower's problem, and work to resolve the problem. Depending upon that particular loan's servicing criteria which is imposed by the loans owner, the rep could easily set up a forbearance (suspend payment for awhile), implement a temporary payment plan, waive late fees, or mark the file for a specialist's attention.
Now, it can be a 45-60 minute process just to get through to someone IF the borrower is lucky enough to not have the call disconnected, and reach a live person without winding up in a voice-mail-jail. Getting to the right person - meaning a representative empowered to offer meaningful help can take weeks, months, or in many cases, never.
Picture a funnel. Distressed borrowers making a call into their loan servicer enter the large end of the funnel. To get help one must navigate through the different levels of servicing to get through to the small end. Along the way the borrower must satisfy each level of collection activity before being allowed to proceed to the next level. Miss a call, miss a deadline and the borrower is sent back to the large end of the funnel. There are tens of thousands of people who have called their loan servicer, done everything asked of them by completing applications with financial disclosures, tax returns, pay stubs, bank statements, copies of bills, etc., only to be told "You haven't complied with our request for information. Go back to the end of the line and reapply if you want but the foreclosure continues." Oh yeah, begging for relief doesn't help. Pleas for help fall on deaf, well-trained ears.
In my opinion, this commonplace practice is not the incompetence of an individual clerk or the commonly held excuse the servicer is overworked, overwhelmed or ill-prepared for the volume of work.
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