In the October 2007 edition of Servicing Management, I penned an editorial column titled ‘Loss Mitigation in Action.’ In it, I described my brother-in-law's real-life experience with delinquency, default and impending foreclosure.
‘After being bounced around the servicer's interactive voice response unit for a while, he spoke to a live body. The first, second and third representatives were not the right-party contacts. When he finally got to loss mitigation, he sat on hold for 45 minutes.’
‘The circumstances surrounding this default and foreclosure are not unique. And what we have here is a communicative borrower with the willingness and (most likely) ability to reinstate the mortgage. Don't these elements comprise the best-case scenario for loss mitigation departments?’
‘My brother-in-law's reinstatement is a bird in hand – and a fairly good one. The servicer can put the brakes on the foreclosure process, avoiding those expenses and all the risks and costs associated with REO. Are the pressures of today's market crushing this bird in hand?’
The October 2007 edition of SM was distributed at the Mortgage Bankers Association's (MBA) annual convention, and some attendees inquired with me about my brother-in-law's situation, as did a number of SM subscribers. By the time the MBA's servicing show in New Orleans was convened in February of this year, he was on a repayment plan. I was happy to report this news to anyone who cared to ask.
It's now July, and my brother-in-law's servicer has completely dropped the ball. Per the terms of the repayment plan, he remitted bank checks – as good as cash – to Waterloo, Iowa, in November and December 2007 and January 2008. He was allowed to begin sending personal checks once again with the February payment.
My brother-in-law mailed his February and March payments in usual course, on time. But upon reviewing his account activity, he discovered that neither check cleared. It seems the servicer lost the checks, but they were ultimately found – after he made repeated phone calls to the company inquiring about the mishap.
The same thing happened with his April and May payments: ‘lost’ checks. But this time, the collections department got involved – first with a phone call and then a letter explaining that he was in default.
Mind you, all along, my brother-in-law was having conversations with customer service representatives, trying to remedy the problem. On one hand, the servicer is lending a sympathetic ear. On the other, it's sending collections letters and making excuses.
He called me yesterday, livid, while I was in the office. He had just spent almost two hours on the phone with his servicer (most of that time on hold), unconvinced that anything would be corrected. He said he was thinking about draining 10 grand from his checking account and driving to the Midwest, to personally deliver an envelope fat with currency.
I told him that the cash, like his checks, would probably get lost, too. He'd be better off buying a used RV and letting his house go REO.
What else could I say? His servicer, unfortunately, isn't inspiring confidence.