Seeking a workout? Be patient |
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White says that since December, his case has been
handed to three debt negotiators. He had to send updated financial
information several times and spoke with many representatives who
served as a buffer between him and the debt negotiators. Finally,
in April, he was told to contact a credit counseling agency. "I
blew up," White says. "I said, 'You took four months to tell me
this?'"
He says he will try to refinance his mortgage with another company. But it will be difficult: With a loan
balance of $320,000, he owes $40,000 more than the house was appraised at in December.
New hires not up to speed
You don't have to ask for a rate freeze to go through the game of musical chairs among debt negotiators. Allen Butler, a real
estate agent who works in the West Valley suburbs of Phoenix, is becoming an expert in short sales. A short sale happens when
a lender agrees to let the owner sell the house for less than the loan balance, in lieu of foreclosure.
Butler is aware that a short sale takes plenty of paperwork and time. Short sales are for people who genuinely
can't afford their loans anymore; they're not intended as a bailout for would-be sellers who can make the monthly payments, but
owe more than their homes are worth. Lenders require a lot of documentation to distinguish between the two groups.
Knowing all this, Butler is still
scandalized by Countrywide's delays in processing two short-sale proposals. In one case, it took the servicer 27 days to
assign a negotiator to the file, and another month to send an appraiser.
The second short-sale case highlights Countrywide's "stunning incompetence," Butler says. "This is the one where
they also switched negotiators in midstream and assigned me a newbie who apparently was fresh out of loss-mitigation school."
The newbie incorrectly told Butler that Countrywide did not own the loan, and later said the loan had mortgage
insurance, when it didn't.
Countrywide says it no longer comments on its homeownership preservation efforts, beyond the news releases that
it issues. One of the more recent
releases says that Countrywide modified the mortgages of almost 10,000 customers in January, almost a tenfold increase over
the previous January, and that it approved 2,000 other workout plans, such as long-term repayments. Countrywide has 3,400 employees
in its home-retention division, and that includes hundreds of new people in the past few months.
Butler says Countrywide isn't alone; other servicers are hard to deal with, too. "Greenpoint was particularly
nasty to deal with," he says; in that case, the short sale was rejected on the mistaken assumption that Arizona is a recourse
state. The house eventually was sold after foreclosure -- for $30,000 less than the prospective buyer had offered in the short sale.
A few bright spots
As for companies that do a good job, Butler praises Aurora Loan Services, HSBC Mortgage Services and Wells Fargo. But impatient
homeowners should note that those companies make short-sale decisions in about a month, which Butler deems reasonable.
White's and Butler's experiences with mortgage servicers aren't rare. And that means that when you call a mortgage
company to arrange some sort of workout, it's probably best to expect things to proceed more slowly than you'd like. Servicers
prefer to work with fresh financial information, so don't be surprised if the mortgage company requests updated information
about your income and spending every month or so.
Government officials, from the head of the FDIC to the state foreclosure working group, have been urging servicers
to modify mortgages in bulk. But that's unlikely to happen. Delinquent loans will be worked out case by case -- and that takes time.
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