27 Jan Private Mortgage Modifications Won’t Work if the Bank Won’t Answer the Phone
The mortgage industry is rallying to oppose allowing mortgages to be modified by bankruptcy judges. They like to claim they try to work with homeowners to renegotiate affordable payments to prevent foreclosures.
Let’s ask Congresswoman Maxine Waters (D-CA) how that worked out for her. With ABC News and Nightline watching, Waters tried over a two-hour period to get someone at Bank of America to help her help a constituent explore mortgage modification. You can read the story here. It was less than a glowing sucess.
“The average American trying to negotiate a loan modification will not be able to get it done,” said Waters. “It will be impossible for them to get in touch with the right person, and even if they get in touch with a so-called counselor, they have a cookie cutter kind of direction that they go in.”
The fact that a fairly senior Member of Congress and a member of the majority party in Washington, was unable to get anywhere over a couple hours, had to endure being routed through various mysterious departments and often as not simply being cut off, is not amazing or shocking. It’s simply the normal everyday experience of borrowers trying to deal with these companies.
The story isn’t even a a particularly unique example of the credit industry’s tin-ear this month. You may recall the heat the auto industry executives took for flying private planes to Washington to beg for taxpayer bailouts? Well, Citigroup apparently felt like taunting the car-makers: It is reported to be closing a deal to purchase a brand-new $40-50 million private jet — after getting billions and billions of taxpayer money.
But at least Citigroup has admitted that allowing bankruptcy judges to modify mortgages is the best alternative to the private efforts which have manifestly failed over the last two years. The remainder of the mortgage industry appears to be counting on the brute strength of their, uh, arguments to protect them from bothersome judges. Brute strength in the form of millions and millions of political contributions, as my colleague David Leibowitz has pointed out.
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