Comments on: Place not your hopes in mortgage servicers http://blogs.reuters.com/felix-salmon/2009/08/20/place-not-your-hopes-in-mortgage-servicers/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: jhenry http://blogs.reuters.com/felix-salmon/2009/08/20/place-not-your-hopes-in-mortgage-servicers/comment-page-1/#comment-6187 Wed, 02 Sep 2009 04:46:16 +0000 http://blogs.reuters.com/felix-salmon/2009/08/20/place-not-your-hopes-in-mortgage-servicers/#comment-6187 Check out http://www.obamamortgagerelief.org/ There needs to be a program for the elderly but not quite to retirement age for mortgage modification when the have lost their job during this particular recession. I made a decent wage because I put my time into a company and now have no job. I am looking at $10 – to $12 hr jobs after working all my life. You can’t make a mortgage payment on that kind of money. I will eventually lose my home.

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By: K-squared http://blogs.reuters.com/felix-salmon/2009/08/20/place-not-your-hopes-in-mortgage-servicers/comment-page-1/#comment-5743 Thu, 20 Aug 2009 19:52:26 +0000 http://blogs.reuters.com/felix-salmon/2009/08/20/place-not-your-hopes-in-mortgage-servicers/#comment-5743 Ginger Yellow writes:

“given the lack of evidence that modifications do actually reduce losses on average, even a servicer with underwriting skills, contractual freedom and a fiduciary duty would probably be reluctant to do much modification.”

Naturally there is no evidence that modification reduce losses when (real, meaningful) mods have not even been tried. The circularity of this argument would make it hilarious were it not so pernicious.

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By: Ginger Yellow http://blogs.reuters.com/felix-salmon/2009/08/20/place-not-your-hopes-in-mortgage-servicers/comment-page-1/#comment-5736 Thu, 20 Aug 2009 17:39:37 +0000 http://blogs.reuters.com/felix-salmon/2009/08/20/place-not-your-hopes-in-mortgage-servicers/#comment-5736 I think it’s a fair argument when it comes to third party servicers – which are the norm in the UK for subprime mortgages. But in the US, there are huge volumes of loans serviced by subsidiaries or affiliates of the originators. In theory, they have access to all the underwriting expertise anyone could hope for. Now, in practice, there may be Chinese walls or simply cost considerations preventing this, on top of self interest. But Bank of America, say, can’t claim that it doesn’t know how to underwrite a loan unless it wants to lose whatever credibility it has left.

The “mystery” seems fairly simple to me, though the solution isn’t at all. An entire sector and accompanying infrastructure was built up around the idea that modifications would be an exceptionally rare event. This was reinforced by legally binding obligations designed to ensure that it remained that way. Then the foundations of that industry proved to be completely unsound, and modification became both widespread (compared to expectations and historical experience) and politically desirable. This is obviously going to cause strain, and given the lack of evidence that modifications do actually reduce losses on average, even a servicer with underwriting skills, contractual freedom and a fiduciary duty would probably be reluctant to do much modification.

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By: jonathan http://blogs.reuters.com/felix-salmon/2009/08/20/place-not-your-hopes-in-mortgage-servicers/comment-page-1/#comment-5735 Thu, 20 Aug 2009 17:17:52 +0000 http://blogs.reuters.com/felix-salmon/2009/08/20/place-not-your-hopes-in-mortgage-servicers/#comment-5735 Servicers are leeches. They contribute nothing other than to manage the flow of paper. They not only are incapable of decisions but they stand in the way of sensible decision-making because they insulate the lenders from their customers. I can’t tell you how difficult it is to get through a servicer to speak to the actual holder of a mortgage – commerical, residential, whatever. They simply pass paper through and that creates massive communication gaps and adds significant timing costs.

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