Bank of America’s Servicing Nightmare

An article in the Wall Street Journal about Bank of America’s says a great deal about the woes afflicting Bank of America, thanks to its enthusiastic embrace of Countrywide, both the biggest subprime lender and the biggest subprime servicer.

The irony is that one of the reasons BofA coveted a criminal enterprise like Countrywide (they knew it well enough that they cannot plead ignorance of its overly aggressive sales techniques, like calling customers six months into a mortgage and pushing them to refi with phony claims that their loans were about to reset) is that it was a very efficient servicer, at least before volumes exploded in the housing bust. Indeed, in a post last week at Institutional Risk Analytics last week (now sadly behind its firewall), Chris Whalen stressed how Countrywide was widely seen as having particularly well run servicing operations (note that being one of the best of breed may still not set the bar very high).

It is clear reading the WSJ article that the acquisition, at least on the servicing side, was botched.

The article that it is going to be harder for the Charlotte bank to clean up its 102,000 foreclosures with phony affidavits than it has confidently asserted to the public:

At five offices around the U.S., hundreds of Bank of America Corp. employees are slogging through 102,000 foreclosure files, trying to fix any problems.

The grunt work is slow. Just a “handful” of new affidavits were submitted to courts last week, a company spokesman says. Documents on “more than a handful” of restarted foreclosure actions will be handed over this week.

Fixing 102,000 foreclosure filings a handful at a time is going to take pretty close to forever.

And we soon get to the part that points to what went awry:

Cleaning up the mess is a huge challenge for the Charlotte, N.C., bank, a modest player in the mortgage-servicing industry before the 2008 acquisition of Countrywide Financial Corp.

Yves here. To make it blindingly obvious, BofA did not have a ton of expertise in servicing, particularly a big volume operation. This is an indirect acknowledgment of the point made more forcefully by Whalen and other industry experts, that Countrywide was better skilled here.

But nine time out of ten, even when buyers know they want to preserve skills and staff of the businesses they buy, territorial behavior takes over. The acquired business is an occupied nation, its leaders and much of its staff tribute to the acquirer’s managers. It’s much more attractive for them to occupy the new terrain rather than keep the best staff and systems of their purchase, and worse, have to fire their own staff. That’s a tacit admission their team was not as good, which of course ultimately reflects badly on them (and worse, those better skilled employees of the target might outclass the manager and put them out of a job. Can’t have that).

This part is telling:

After buying Countrywide, Bank of America decided to adopt the Calabasas, Calif., company’s homegrown mortgage-servicing technology. For more than a year, though, the combined company used two core systems that didn’t communicate with each other. The company’s resources were strained by the integration, the need to roll out new loan-modification programs and rising delinquencies.

I’ve seen quite a few deals between financial firms get nixed even though they made great strategic sense over concerns about IT systems issues. Some shrewd buyers simply won’t touch a business that needs to be integrated if the technologies are not pretty compatible. BofA appears to have underestimated the difficulties of dealing with a custom-built system.

There is a second issue:

Bank of America soon discovered that information was missing from many Countrywide loan files, making it more difficult to communicate effectively with borrowers. “You would shake your head and say: How can that be?” this executive says.

From what I can tell pre-crisis (and securitization experts are welcome to chime in) crappy loan files were pervasive in subprime (since may loans were no doc or low doc, inattentiveness to loan files is not exactly surprising). So this goes back to the idea that Countrywide was a relatively good performer; its absolute standards were no doubt lower than that of more mature areas of banking. And recall also, as we have stressed, that all kinds of processes went out the window as transaction volumes exploded, starting in the 2004-2005 timeframe.

And whether Countrywide was as good as Whalen suggests, or merely one of the best in a bad breed, it was still more skilled in this area than Bank of America. But as predicted earlier, BofA drove out key Countrywide employees:

It didn’t help that many Countrywide executives were let go during the integration, with Bank of America installing its own employees in key posts…. Former Countrywide executives ran the servicing operation until recently, says Dan Frahm, a company spokesman.

Fixes sometimes caused new headaches. Earlier this year, Bank of America installed new image-capturing fax machines to address borrower complaints of lost paperwork, but the machines didn’t work properly. “Those problems are long since taken care of,” Mr. Frahm says.

I’m not certain I trust Frahm on the issue of how many former execs were overseeing the servicing unit, given what appears to be an overstatement of the case on the matter of the troublesome fax machines. And while the execs are important, the staffers you really need to keep are front line managers. It appears they were driven out.

Now it is a fair point that all servicers are in world of hurt, between having to at least act like they are doing loan mods (this is a new operational demand) and the crushing volume of foreclosures and delinquencies. But it’s awfully convenient to blame the environment, when anyone could see the volume of subprime and later Alt-A and Option ARM resets, and figure out what the implications would be with refis for weak borrowers very hard to come by. Good managers plan for foreseeable probems, and this did not take place across the entire banking industry as far as servicing was concerned. As MBSGuy pointed out:

The real causes have little to do the difficulty of the task, and everything to do with management.

One of the reasons they don’t have the people to work all this complicated stuff out is because they fired all of the experienced people and kept the cheapest staff. As the market has modestly improved, anyone with any skills left the places that put such a low value on them, leaving behind the weakest workers (there has been a lot of turnover in the last 9 months or so).

Somehow, the big bosses are convinced this is not their fault.

It never ceases to amaze me how diseased the culture of American management has become: take credit, and of course, demand pay for any success, whether or not you had anything to do with it, and be sure to dodge responsibility for any failings.

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51 comments

  1. I’ve seen quite a few deals between financial firms get nixed even though they made great strategic sense over concerns about IT systems issues. Some shrewd buyers simply won’t touch a business that needs to be integrated if the technologies are not pretty compatible. BofA appears to have underestimated the difficulties of dealing with a custom-built system.

    Of course. Dealing with that would require actual work, and nobody in the biz wants to do that. It would be beneath their “talent”, which can be dignified only in this way:

    It never ceases to amaze me how diseased the culture of American management has become: take credit, and of course, demand pay for any success, whether or not you had anything to do with it, and be sure to dodge responsibility for any failings.

    1. mindful

      What many American managers don’t like – or can’t do — is deal with details. In my experience, this is particularly true of financial managers, who get rapidly promoted, or who think an advanced degree means that this level of work is only for grunts. As a result, they never master the details, and can’t adequately assess either the time or the costs associated with particular tasks. Because managers award those who get the work done the fastest, employees who want to climb the ladder are incentivized to cut as many corners as possible without getting caught.

      There is a reason that adages develop over time. With respect to the mortgage crisis, there is none better than the following:

      The devil is in the details.

      1. DownSouth

        Some of it may have to do with the “efficiency” that computers allow.

        My brother (now retired) was a mid-level manager for one of the major oil companies. He explains that, in joint-interest accounting for instance, when they used to get the statements for outside-operated properties, a human being had to enter each line-item manually into his company’s books. Now, all the oil companies use the same accounting program. The statements are transmitted digitally, which are inputted directly into his company’s books.

        This has three consequences:

        1) Each line-item is no longer looked at by a human being, and what used to require 20 people now requires one.
        2) When accounting was done manually, people understood what was going on with the accounting. Now you plug the spreadsheets into the program and the program spits out the results. Since the programs are the domain of one department and the accounting is the domain of another, it’s difficult to keep track of what’s going on inside that “black box.”
        3) Whereas it used to take an army of accountants and clerks to do accounting, it now only requires a handful of people. Therefore there’s no pyrimidal structure that allows bringing in people at the base of the pyramid. Or if there is a pyramid, it’s a very skinny one. You just don’t have the talent pool to draw from when selecting managers.

      2. Francois T

        In my experience, this is particularly true of financial managers, who get rapidly promoted, or who think an advanced degree means that this level of work is only for grunts.

        The author win a Cohiba Esplendido! Those financial managers, by definition, are unfamiliar with the “Operations” side of the business and, in my own experience, consider those who run Operations a bunch of anal-retentive whiners always concerned by mere trifles that dare to interfere and crimp with the Grand Vision that will make Da Korporation zee best in zee world muahahahaha! (Sorry! Couldn’t resist the cartoonish sarcasm)

        In reality, a lot of great businesses became so, in part because quite a few managers were from Operations, hence, were intimately familiar with the crucial details that makes or break a plan.

        For an example of how to break a great business with an invasion of financial Know-Nothing, just look at J&J.

  2. blahblahgurgleblegblah

    That custom IT system is likely why Countryside was so efficient to begin with. It is rare that a company can manage and track internal procedures using off the shelf software. Typically, to gain real automation, the firm hires internal developers to write custom tools that fit perfectly within the internal processes devised by the firm’s founders.

    I have seen many IT disasters whereby firms have decided to dump internally written systems that were perfectly functional in order to transition to COTS “solutions” that don’t in any manner automate internal procedures. However, by forcing that transition, the firm is able to fire its internal development team and claim a short term overhead savings. That is, until the whole system collapses and the firm goes bankrupt. But by that time the management team responsible for that decision has long since bailed and is off destroying the next company.

  3. Just a thought....

    Wow, for first time in a long while I agree completely with something Yves has said…

    “It never ceases to amaze me how diseased the culture of American management has become: take credit, and of course, demand pay for any success, whether or not you had anything to do with it, and be sure to dodge responsibility for any failings.”

    To be fair though, accountability isn’t just lacking in ‘American management’. Lack of accountability has been rampant across all aspects of American society but I have a suspicion it will be making a comeback. A very painful comeback.

  4. i on the ball patriot

    Its fraud and a poisoned market …

    The corporate media calling this a “servicing nightmare” and a “foreclosure mess” does the public a disservice.

    It is fraud against ALL property owners, mortgage holders or not, and non property owners and should be called mortgage fraud or mortgage note fraud or both or market rigging. Those who are not in foreclosure and paying their mortgages on time may very well be making payments for something that they may not be able to ultimately get title to or will have to jump through a nightmare of expensive legal hoops to get that title. They are also paying in a market that has been poisoned with prices skewed to reflect the fraudulent actions of the banks. A poisoned market that also affects all homeowners property value, mortgage or not, and all of the securities, owned by all, based on this crap fraud. Bye bye retirement funds!

    Bankers and crooked government officials should be hanging from lampposts.

    Deception is the strongest political force on the planet.

    1. Siggy

      Indeed, it’s massive fraud first and inane philopsy second. That’s a hat tip to good old Down South who’s so fond of Hanna Arendt etal, and that marching horde of philopsofiers who dither about this and that. It’s a regular diletante’s delight. All the while the fraud proceeds as a matter of course, after all, it’s the way we get things done around here.

      Unless and until there are serious prosecutions this morass will survive and corrupt all it touches. It’s a damm conceptual cancer. A cancer of no think. Two big entities want to merge, pick an IT system, preserve the people and go forward. But no we don’t need all those people and then comes the reality, who’s got the money and controls the deal.

      I went thru such a merger and in ours we picked the wrong IT system. We also elected to preserve each and every vice president, all thirty two of them, all charged to manage some 6,000 largely unionized employees. Each firm was over levered and deregulation was in progress. With a price war in full progress we couldn’t make the note payments.

      The autopsy of bankruptcy revealed that our IT system couldn’t price our services with accuracy or timeliness, customers went elsewhere. Debt continued and we even managed to incur a substantial increase. Took us all of two years to arrive at the bankruptcy court. All the while our thirty two vice presidents preened and postured. Sadly, we really only needed one vice president and perhaps a dozen or so managing directors.

      What did I learn? There is no boundary to the stupidity that ignorance and enscounced position can create and express. Turf wars will thrive and in that they are all a part of the malaise that will kill the business.

      BofA bot an effectively empty bag, the lost contents are the people who might have made the acquisition go a bit better. But then, there is fraud afoot and neither party is without fault. So perhaps it is fitting that BofA shall go to the wall. But then, will you and I be required to pay for that folly? I’m afraid so.

      It is my view that our society has neither the will nor the understanding requisite to a proper resolve of this problem. Tomorrows elections will be instructive, just how many of the incumbent poltroons will be ousted? My guess, not nearly enough.

      1. craazyman

        Yep Sig that sounds about normal operating procedure to me, for “private enterprise” based on what I’ve observed.

        Can’t quite figure how folks think government is worse at managing things, but I suppose the Gulag Archipelago and the Stasi and all that was enough to really scare the shit out of people.

        So we have to pay the price in nickels and dimes. And listen to all the monkeys scream about “Big Government”. It’s enough to make you stop watching TV. It made me stop. And I stopped reading the newspapers (when they were papers). All I really do is just look at the trees and at the sky. Everything you need is there.

        It’s just too much, all of it. The ceaseless thunder of stupidity, cracking and blowing like gigantic farts of God, showering it’s sputtering flecks of nonsense onto our heads like a meteor shower. A shower of little shit meteors.

        And then what? So our sons and daughters and mothers and fathers can work as prison gaurds or strippers or in some pathetic lick-spittle service industry job that grinds whatever God-given creativity they have into an exhausted and depressed dust? A dust that mixes with the little shit meteors into a cement that binds even the imagination to the bones of an absolute grotesque and utterly unredeemable stupidity?

        I hope the Demogogues and the Repulicons both get their asses kicked tomorrow. I realize that’s mathematically unlikely, but whatever imagination I have left, not sewn with sewtures to the bones of the corporate gulag, still can dream a little. A little dream in the middle of the dark night, like a flash of sun.

  5. f247

    It was funnier when Desoer was claiming that BofA had completely integrated CFC less than a year following the acquisition. Uuuuh, Countrywide wasn’t built for that. It was a ridiculous claim.

  6. KnotRP

    > but I have a suspicion it will be making a comeback. A very
    > painful comeback.

    The music has stopped, and management
    is now finding that they collectively burned the corporate furniture to fuel operations (tragedy of the commons), so
    there is much scrambling but few chairs left unburned…next up, downsizing/flattening of management hierarchies, and lots
    of “american management talent” getting “freed up to pursue
    new and exciting opportunities with a laser printer”.

  7. Keating Willcox

    Is it me, or wouldn’t a sensible banker a high risk loan on occasion just to check in and offer help, maybe a local class on Quicken, maybe a support group for folks with credit problems, maybe to begin the process of selling a house that is unaffordable, help folks find boarders or move back to an apartment?

    Seems that the banks did astonishingly little to preserve what in each case was a loan for more than $100,000.

    The one time I had a secured loan, as soon as the payments were irregular, I kept a close eye, and had to foreclose.

    I just find it amazing the lack of proper record keeping and management.

    1. readerOfTeaLeaves

      Amazing if, and only if, you thought they were actually banks in the traditional sense, who wanted what was in the long term interests of their customers.

      Not at all amazing if — like me — you suspect that one key function of the liar’s loans was to deliver ‘securities’, which would then form the basis of Credit Derivative products (CDOs), in which the securities were ‘securitized’. Step 2 was then to take out Credit Derivative Swaps (CDSs) against the possible failure of those ‘securitized’ loans to enter foreclosure. Step 3 was to speed up the foreclosure process so that enough of those loans failed by the CDS contract termination dates so that whoever bet on them could collect — at ratios as high as 1:30. (You bet $1 on the chance the CDO foreclosure rate will exceed ‘X’, and if it does then you get $30 returned via the ‘insurance’ – or ‘swap’ – that you bought to ‘protect your financial interests against loan failure’.) Step 4 is probably to buy really big boats, jets, private islands, and grease a lot of palms, but this step is pure conjecture on my part.

      If the ‘not at all amazing’ is your view, then this system makes creepy sense. Engage in liar loans, because what you really want are things that you can use as the basis of your bets. And then obviously, if you are betting, you want to increase your chances of winning the bet by selecting for those securitized CDOs the loans **most likely to fail**.

      After all, if people pay on their loans in a regular, timely fashion then you are likely to lose on the proposition that they’ll be foreclosed. And in addition, if you have a lot riding on the likely chance that homes will be foreclosed, then you want to ramp up the BigForeclosureMachine to full speed ahead, and the citizens, municipal and state budgets, and pension fund implications be damned.

      For more, google “Paulson, John + CDO”
      Also read the section in Econned about “Magnetar”.

      1. Enkco

        Also, read up on Bill Black’s fundamental concept of Control Frauds. The purpose and point of these enterprises is to *loot*, and this is driven by the management of the companies.

  8. R

    Hi Yves,

    I had dinner last week with a friend with a newly minted MBA, who works for a large tech company.

    It is amazing to me how even though we have witnessed the most spectacular example of “crony capitalism”, it is impossible to break the TINA argument. Faith in the existing system is unshakable and there is vehement denial of, as you say, the “diseased culture of American management”.

    Perhaps you can make some suggestions as to how training of upper management could be modified to decrease the sociopathic tendencies and focus on helping to create a sustainability society.

    1. i on the ball patriot

      NC has occasionally reported in the past on blood plasma donations as a measure of the “diseased culture” and failing economy (it is so bad that many have to sell their blood).

      Maybe its time to occasionally report on bankers being shot to keep tabs on the failing economy and at the same time instill a little sense into those with a newly minted MBA.

      Excerpt;

      “The mystery concerning Mount Clemens bank president David Widlak took yet another twist Wednesday with the report that he was killed “execution style” from a gunshot wound to the back of the head and a gun was found along with a bullet.

      The case is being handled as a homicide as Macomb County Medical Examiner Dr. Daniel Spitz is not ruling on the manner of death until police have wrapped up their investigation.”

      More here …

      Deception is the strongest political force on the planet.

      1. Skippy

        The Gods of Marketing mock him too, see *Gun Bugs Haven* SELLING OUT!!! ad right next to this dead mans photo.

        Disclamer currently listening to “A Mistake”

        Skippy…absurdity gauge is climbing exponentially every minute these days…eh iotpb.

    2. Mike D

      Throw some in jail.. all of a sudden, new talent would arrive, old talent would smarten up quickley. I see that few have been jailed… this time around, should have had at least 500 convicted or on trial at this stage. Something is really wrong with the system with out the usual suspects
      in these fiascos, being rounded up. Never in the history of the boom/bust cycles has this lack of criminal convictions happened. Are the powers that be only trying to “soft landing” approach? Could it be the threat is so large if exposed the cycle will have its wheels come off completly?
      More than anything else, after the election, people should deluge thier reps about this aspect… why is everyone going free?? And “are you in it also??”

    3. Francois T

      Training?

      What for?

      There is a very simple system: IF they can’t see the light, make’em feel the heat!

      But for that to take place, we must terminate all Congressperson, and replace them by those who will obey a public financing-only electoral campaigns.

  9. Austin L Wolff

    For the banks that do not have all the paperwork in perfect order it would seem to me the easy and fast solution would be to ask the home owner to sign a “quit claim deed” in favor of the bank. The home owner of course is not required to do this but most probably would.

    Or is this a too simple a solution?

        1. Yves Smith Post author

          If you do it under REPSA, they have to respond in 30 days or they owe you $2000. The address should be on the back of your monthly statement.

          1. Chris

            I faxed them via the link you provided a couple of weeks ago. I followed up this morning to SEIU’s request to see if JPM responded. I filled out the form and emailed the Attorney General in my state (Jerry Brown).

      1. Adam

        What do you mean, everyone know’s where the note is. It’s buried under 5 tons of trash at the local landfill. Nobody every really needed those silly pieces of paper before – right?!

  10. Jim Haygood

    We’ve all seen what happens when a giant acquirer absorbs a smaller, scrappier organization: the smart, self-actuating people leave; the drones stay behind to kowtow to the acquirer’s managerial drones.

    Yves does a fine job here of digging into a behind-the-scenes organizational angle which rarely can be reported in the mainstream press (though occasionally in books), since it’s quite subjective, yet very significant.

    Along similar lines, JPMorgan is bulking up attorney and foreclosure team hiring at its former Bank One subsidiary in Columbus, Ohio. This is an institution whose entrepreneurial glory days passed long ago in the Eighties. JPM’s drones now hire lower-level drones to ‘ensure staff takes minutes during conference calls,’ and perform similar spurious tasks of an unproductive bureaucracy drowning in its own fecklessness.

    These are object lessons in the true enormity of having foolishly bailed out money center banks, AIG, GM, Freddie and Fannie. Resuscitated zombies are economic vampires.

  11. threadkilla

    “One of the reasons they don’t have the people to work all this complicated stuff out is because they fired all of the experienced people and kept the cheapest staff”

    HAHAHA, didn’t circuit city try that? how’d that work out for them?

    i’ve always maintained that BofA buying countrywide would BK them…..

  12. Paul Tioxon

    Submitted for yr approval, Check 21, the federally mandated electronic check clearing system for the national banking industry. Why, because in 9/11/2001 jet liners were weaponized and all air traffic was grounded for days. The shocking consequence of this defensive response was to completely shut down the clearing of paper checks. It froze the wheels of commerce more than the attacks by their hitting of key targets. Congress, in a financial reform greater than the one most recently attempted, brought the entire banking industry kicking and screaming in the current state of technology for electronically clearing checks. That is why so many banks offer the little machines to businesses that sign up for commercial accounts. And what is the import of all of this? The banks are cheap bastards that would not spend a penny, or reinvest capital into their industry to keep it running up to date, efficiently, with measurable productivity gains.

    No, the twin towers had to fall down to get that simple modern amenity from slum-lord-capitalism. The BofA had other system integration tales to tell. The great synergy of merged banks, like Fleet and BofA was not apparent because the two computer systems were East is East and West is West and never the twain should meet. Why, because that too would cost money, another reinvestment of capital would have to happen. And, when you’re are in the middle of a cartelization of the financial sector of America, well, who cares, let the overworked and underpaid bear that cross in life. You would have to call two different 800 numbers to get West Coast account info, because East Coast computers were legacy technology, that had not been integrated. Oh well, someday. BofA and MBIA, more of the same, until their system integration D-day. Well, the profits from their fees and 32% default penalty rates could justify the capital reinvestment. It paid. Who knew that they should have stayed the course of cheapskates and not paid for the system integration in the face of credit card reforms.

  13. Wild Bill

    Come on, Countrywide was a criminal conspiracy. You can’t have all the lower level people seeing the documentation of the fraud, they’ll spill the beans for a measly re-ward.

    It’s why the robo-signers exist; the chief conspirator (lawyer) created the documents and got someone else to sign them. No way could you allow the robo-signer to see how the sausage was made.

    That created a bottleneck that is just now catching up with them. Still haven’t heard a word from the trusts, have we? And nobody (Cuomo) is making them talk.

  14. Matt

    The Mortgage Bankers Association reports that about 1.1 percent of the 58 million mortgages go into notice of default/foreclosure every quarter now. The servicers were hit with a tsunami several years ago and they don’t seem to be performing very well.
    Once rotten management reaches the top and rewards only short term performance metrics the babies are thrown out with the bathwater and the entire entity becomes riddled with rotten management willing to do anything for their 3 month or 12 month metrics.
    The management techniques required to run a successful car lot or pay day loan store don’t necessarily scale up to running trillions in assets over the long term.

  15. ftm50

    I’m curious how clouded title on condo units with securitized mortgages will impact other condo owners.

    Will condo associations be able to seize and sell units with unpaid charges if their title is clouded by the mortgage fiasco?

    Any lawyers in the house?

  16. steelhead23

    Yves, This thread may not be the right place for this question, but here goes: When I paid off my mortgage, Citi sent me a letter stating that my loan was paid in full – no loan document with a Paid in Full stamp, just a letter. I was told “We don’t do that anymore.” We checked with the county clerk and they assured us that we were the owners of record. Now, as I learn of the absolute hash the banksters have made of loan assignments, I wonder “Has the machinations of the banksters created not just a mess for tracking who is party to a loan, but created property title questions that may linger for years and years?” Could we maybe get a guest post from someone in the title insurance/county records business to shine a little light on this? I could care less if BOA or any other bank goes DOA, I am concerned that the paper trail from a king’s grant or Land Office deed to the present remains intact. Frankly, if the banksters messed this up, jail time would be an inadequate punishment, flogging would be required.

    1. BW

      Even if the lender does not send you a payoff confirmation letter, the lender still needs to record a Satisfaction of Mortgage in the county records. Without the Satisfaction, a title search will still show your mortgage encumbering the property. So go check the county records. If you can’t do it online, go to the courthouse.

    2. Enkco

      BW is right Steelhead23: you need to go to the county records and see for yourself what is recorded.

      But I second steelhead23’s request: I haven’t seen anyone take up directly the issue of clouded title for supposedly paid-off loans. I had a Countrywide Alt-A I paid off last year. My state is starting to have local cases decided with precedents that clearly implies my title is clouded.

      I am in the process of locating a lawyer (calling around today in fact), but a guest post from an informed academic or experienced legal pro would be invaluable.

      1. dejavuagain

        And, then the central issue is who executes the Release and Satisfaction of Mortgage.

        It should at the minimum be the lender named in the mortgage MERS.

        Now, hope that the lender still exists or that you can locate the Trustee in bankruptcy if it is in bankruptcy.

        Welcome to the new world all of you responsible homeowners paying off your mortgages, whether underwater or not.

        1. Matt

          When I sold a house in 2009, “MERS” sent a letter to the County Clerk, who noted it and forwarded it to me. Now since for 150.00 one time fee, anyone can input data into the MERS data base, it can get real interesting out there. A judge in Florida was told that there were two foreclosure cases for the same house in his court, two plaintiffs and affadavits were signed by the same person.

    3. Paul Tioxon

      You have a mortgage satisfaction letter, stating the note is paid. You are also inquiring about the mortgage note satisfaction piece, the original note stamped or signed paid in full. They would be returning the actual contract you signed at the closing, which is the note. By returning it to you, you would not have something anyone could hold over your head and use to make a claim against you.

      Those loan docs could be anywhere or destroyed. You should have a complete file copy of every closing doc of any loan you you took out whether to purchase or refi. In that file, the mortgage note should be in there. Typically, it is call THE MORTGAGE NOTE. It is the doc with the terms, the amount, the monthly payment, who you owe the money to, etc. The loan number should correspond to the loan number in the letter of satisfaction. This should be enough with most county recorders to remove the lien, provided that you follow state laws which usually involve a notarized letter of affidavit that you are the person in the letter and live at the address of the property in the letter and the note. Of course, feel free to get an attorney, a real estate attorney. A REAL real estate attorney. One that has been at a hundreds of loan closings. Dozens and dozens will do if its a young attorney.

  17. readerOfTeaLeaves

    I could care less if BOA or any other bank goes DOA, I am concerned that the paper trail from a king’s grant or Land Office deed to the present remains intact. Frankly, if the banksters messed this up, jail time would be an inadequate punishment, flogging would be required.

    Might I offer a ‘second’ to your sentiment, please?

  18. dave

    Will this movement produce any results for homeowners

    “Where’s The Note” Update

    SEIU or not, here is a status update from Where’s The Note, as the recently launched campaign to request proof of mortgage note existence approaches the 20 day limit by law within which banks have to respond to all properly-submitted verification claims.

    Heard Anything?

  19. Simon Sez

    After buying Countrywide, Bank of America decided to adopt the Calabasas, Calif., company’s homegrown mortgage-servicing technology. For more than a year, though, the combined company used two core systems that didn’t communicate with each other. The company’s resources were strained by the integration, the need to roll out new loan-modification programs and rising delinquencies.

    I’ve seen quite a few deals between financial firms get nixed even though they made great strategic sense over concerns about IT systems issues. Some shrewd buyers simply won’t touch a business that needs to be integrated if the technologies are not pretty compatible. BofA appears to have underestimated the difficulties of dealing with a custom-built system.

    Hi Yves,

    I’m glad you know agree. Loan mods are slow because of tech. issues the tsunami of problem loans, not because foreclosures are more profitable. Cheers.

    1. Matt

      Pretty well established that for some servicers foreclosures are more profitable, especially when you are rolling a package of homes to a colluding party. Not to mention the HAMP program for 900,000 borrowers who started trial modifications, made trial payments and then were hit with a pay all penalties or foreclosure happens. In other cases the foreclosure is not profitable because it would cause the servicer’s HELOC to be marked to zero. Which suggests you are either naive or a paid Bankster troll.

      1. Simon Sez

        Matt says:
        November 1, 2010 at 10:26 pm
        Pretty well established that for some servicers foreclosures are more profitable, especially when you are rolling a package of homes to a colluding party. Not to mention the HAMP program for 900,000 borrowers who started trial modifications, made trial payments and then were hit with a pay all penalties or foreclosure happens. In other cases the foreclosure is not profitable because it would cause the servicer’s HELOC to be marked to zero. Which suggests you are either naive or a paid Bankster troll.

        Matt, did I address you? Now go fuck yourself.

  20. Homeless Sysadmin

    A great irony is that management has always held some level of contempt for IT. It’s price, and of course, the employees.
    To Wall Street’s “credit”, they saw this “threat” of a highly educated speciality in the 70s, they prefer to indeminify with well known corporate software vendors, the in-house IT staff, if there are any – are always ready to be thrown out of a job. Since the priority is profit, you can pretty much guess the aim is to obfuscate, streamline and expedite questionable activities.

    I remember the H1-B who was working at Fannie Mae’s data center in Maryland – the company, most of the press and law enforecment spun a wild sensationalist tale of a rogue hacker who threatened to destroy Fannie Mae. It appeared to be a case of an abused employee who was acting out, and probably authored a few cheesy shell scripts that he would never run. A further irony is how labor rights have been destroyed in this cournty so that most people’s jobs are no longer secure anymore, yet the marks were still given subprime, 30 year “leg irons.”

    1. Simon Sez

      Texas Reader,

      Thanks for the insights but you were in lending and have no experience with regards to mods. in the current environment. Your comments about improvement of profits by reducing costs are valid regarding loan production but completely irrelevant to mods. I agree with the sentiments you express in your last paragraph.

  21. Texas Reader

    Austin L. Wolff – foreclosure is preferable (for the lender) to accepting a deed-in-lieu from the property owner because foreclosure wipes out any junior liens.

    I have over 25 yrs in lending and want to say that Yves characterization of how loan servicing operations have been grossly mismanaged, and many of the comments here, are EXACTLY right. I’ve never worked in servicing, but have dealt with the servicing folks.

    Since the mid 1990’s the costs have been reduced in servicing by having the employees manage more and more loans, and lowering compensation which drove out the experience and diligent people. Heck, if I made what the servicing people made even I’d have a hard time caring about the quality of my work.

    The improvement of profits by reducing costs is fine in the manufacturing realm where you can measure errors and hold management accountable. In a service business the reduction in costs ends up causing a reduction in work quality (as the best people leave for better paying jobs, and inexperienced people are hired to fill the jobs) and as “turnaround time” and “volume” determine the dept managers’ pay. Errors often go unnoticed because consumers don’t catch them. As a result, managers do not have any incentive to make sure the work is done properly – doing it properly takes longer and impairs the managers’ productivity numbers. With quality off the table business risk skyrockets because errors in consumer finance can be very expensive once lawyers get involved and start drumming up class action cases.

    All of this disgusts me having lived through it, and then having watched the big banks’ senior managers KEEP THEIR JOBS after my tax money bailed out their stockholders. For those of you who have not been keeping score, our federal tax dollars have bailed out Citicorp THREE times since the early 1970s. I believe in “too big to fail” but also believe that if the taxpayer has to bail a bank out to protect our economy, the stockholders of that bank should be wiped out so we taxpayers become the owners and get all the benefit when the bank recovers.

    Right now I’m not working in lending and am quite relieved for the reprieve.

  22. Fighting MERS in CA

    MERS Defense Flaw in California will make it harder for BofA and WFB

    On July 21, 2010 MERS registered with the California Secretary of State.
    MERS registration in California is not retroactive until its complete for the following reasons:
    1. As a result of MERS intentional failure from obtaining a certificate of qualification from the California Secretary of State as a “Beneficiary”, including filing returns and paying taxes, MERS is not allowed the right to defend a lawsuit when named as or defending its actions in a “Beneficiary” capacity, pursuant to California Revenue & Taxation Code Section §§ 23301, 23301.6, 23304.1.

    “A suspended corporation is not allowed to exercise the powers and privileges of a corporation in good standing, including the right to sue or defend a lawsuit while its taxes remain unpaid”
    PERFORMANCE PLASTERING v. RICHMOND AM. HOMES, 153 Cal.App.4th 659 (2007) 63 Cal.Rptr.3d 537

    2. MERS must first produce a Certificate of Relief from Voidability for the time prior to July 21, 2010, California Revenue & Tax Code 23305.1 and file with this Superior Court Clerk receipt of payment to the California Secretary of State for taxes and penalties, California Corporations Code §2203(c).

    “UMML qualified to transact intrastate business, but failed to pay the necessary fees, penalties and taxes. The trial court correctly dismissed the complaint without prejudice.”
    United Medical Management Ltd. v. Gatto, 49 Cal. App. 4th 1732 – Cal: Court of Appeals, 2nd Appellate

    3. MERS will very likely cite one of these two cases:
    United Medical Management Ltd. v. Gatto 49 Cal.App.4th 1732 (1996),
    or an unpublished case as of 10/18/2010 Perlas v. Mortgage Elec. Registration Systems, Inc., 2010 WL 3079262 * 7

    Both of which are based upon this case:
    “A nonqualified corporation subject to a misdemeanor prosecution and on conviction to a heavy fine for doing business without complying with the law, is permitted to qualify, be restored to full legal competency and have its prior transactions given full effect.” (Tucker v. Cave Springs Min. Corp. (1934) 139 Cal. App. 213, 217 [33 P.2d 871].

    So demand the filing of receipts and that Certificat of Relief from Voidability!
    Get more flaws at

    [email protected]

  23. Cynthia

    So this is what a typical American company does after it acquires a company, whether this company has got its duck in roll or not, whether it is squeaky clean or corrupt to the bone. It fires the company’s mid-level managers and technicians who actually know how the company works, but keeps its top-level managers and their closest yet clueless advisers who only pretend know how the company works.

    No wonder the US is well on its way to becoming a second or even third rate power.

  24. Dannielle Hernandez-Romero

    The top-level managers at Countrywide and Bank of America should be in prison for fraud and mismanagement! The amount of stress and financial uproar which they have caused some of the American people is astonishing!

    Bank of America foreclosed on my home in September of 2010. I am a victim of “robo-signing” in Texas and I’m very grateful for the Texas Attorney General’s current investigation, which started in October of 2010.

    After months of making trial payments and ing my bank, Bank of America foreclosed on my home. Fannie Mae (who bought it from Bank of America) immediately started the eviction process and did not want to speak with me because they stated, “We DO NOT deal with consumers, only lenders!”

    A couple of days after receiving my eviction papers on my door, I thought about “walking away from my home!”. I felt that it was “me” against the “big guys” and it is, but I know that I did everything I was supposed to do – so, why should I be penalized?

    After filing a complaint with the OCC,and ing my state and local representatives – I was assigned an internal advocate within Bank of America in order to get my home back. But, I also received this response, via phone from this internal advocate, “This is the first case where I’m assigned to ‘get’ the home back after foreclosure!”; and on top of this, he is not ‘allowed’ to leave me informational messages or emails. He basically just says on the phone, “This is ‘so and so’, calling from Bank of America!”. This news did not sound very comforting, and why can’t the advocate leave me messages or respond to my emails? This behavior is very suspicious! But, I need to keep fighting to get my home back – this is not fair to my two children, nor to myself!

    So, I’m still fighting to get my home back from Fannie Mae, who bought it from Bank of America and I’m still waiting for my loan modification from Bank of America – once they get it back from Fannie Mae. It has been a challenging year – but I can’t give up!

    Here’s a link to my story, which was featured in our local newspaper:

    For others who are in the same situation – don’t give up! My American Dream has been on “hold” but is hasn’t “gone away”!

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