MSNBC.com recently posted an excellent investigative piece looking at the inner workings of the foreclosure industry–the sausage factory, as I like to call it. As you might expect, the article was full of stories of hastily generated documents and a culture of putting speed of processing foreclosures over accuracy.
If you follow this blog, or if you’ve even been awake for any part of the last couple years, you already know that the mortgage industry has less than clean hands, particularly when it comes to foreclosures. Nevertheless, it is refreshing to see a major media outlet look behind the curtain of the big banks’ foreclosure departments.
Some of the more interesting points of the article:
- A Wells Fargo employee who contacted msnbc.com via email told of a wide range of concerns about the foreclosure documents she processes. Some families apparently were denied loan modifications after only cursory interviews, she said. Other borrowers applying for help sent comprehensive personal financial documents to a fax machine that she discovered had been unattended for weeks. Others landed in foreclosure after owing interest payments of as little as $1.18 a day, according to documents she said she reviewed.
On the issue of quotas (whether loan processors have to generate a certain number of files per day)
- One manager, in a daily “3 p.m. pulse check,” e-mail reminded her team recently that “we need 11 new signed notarized files per reviewer per day,” reminding the staff that “I asked that you take a few files at a time to be signed [and] notarized; it does not appear we are following this process.” On other occasions, the reminders can be more pointed. When a backlog of 59 files needed to be completed by 11 a.m. the next day, another manager e-mailed his team: “No one should be doing anything other than [these] files. No socializing, no going for breakfast, no doing [other] files … until we are done with [these files]. It is that important. Help me out with this. If you finish all [the] files in your pipeline, you are expected to ask me for more.” Last December, with just a few working days left in 2011 and the pressure on to churn out the paperwork required to seize a batch of homes in Kentucky and Connecticut, one of the managers sent an e-mail urging his team….”You must sign at least 10 NEW files every day,” the e-mail said. “Less than 10 is unacceptable.”
- Federal investigators reported last month that Wells Fargo document processors had “signed the great majority of the judgment affidavits without personal knowledge or otherwise verifying the data and information.” That investigation took place in the fall of 2010. But the Wells Fargo employees who spoke to msnbc.com on condition they would remain anonymous said those practices persist in the Charlotte office. Their knowledge of a foreclosure filing is limited by a process that relies on data provided by a third party vendor and based on documents they don’t always have time to review, according to the employees. As they prepare each affidavit, which carries the same legal weight as sworn testimony by a witness in a courtroom, document processors are tasked with certifying two basic claims that Wells Fargo makes before it sends a homeowner out onto the street. The first includes the bank’s detailed accounting of what it claims the borrower owes in back payments. The second claim requires that processors sift through the paper trail that shows Wells Fargo has the legal right to seize a home.
Overall, the MSNBC.com investigative piece doesn’t reveal anything particularly new, but it is a good chronicle of previous bad practices and an unsettling reminder that these practices have not stopped. Most importantly, in my opinion, it is a cautionary tale to homeowners who are fighting the system. If you choose to take on the banks yourself, READ, READ, READ as much about mortgage lending as possible. And I don’t just mean blogs. Really learn how the process works, so that you can tell whether it worked properly on your loan. Millions of loans have been made over the years, and they’re not all bad. It’s not enough to simply cite an MSNBC article or 60 Minutes piece to a judge. You must be able to identify what went wrong on YOUR loan (and remember, banks aren’t required to give you a modification).
Sound daunting? It can be. If you think you’re in over your head, talk to a foreclosure defense attorney in your area or call your state’s attorney general. Afraid you can’t afford a lawyer? Many attorneys (including myself and my colleague Charles Parson in Utah) offer free consultations and can point you in the right direction. Additionally, most metropolitan areas have legal service clinics that may be able to provide a pro bono attorney for little or no cost. But as I’ve preached before, you must take action on your own. If you do nothing or wait on the bank, the result is probably not going to be good.