Paul Kiel of ProPublica has uncovered multiple cases where homeowners are not getting their trial loan modifications made permanent. That’s not news. What is news is that the reasons the banks are giving for not making the modifications permanent are complete bogus!
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There doesn’t even need to be intent here (although there could be). Companies focus on the things they think are important. During the financial crisis, all the banks were focusing on their cash levels every day, and I’m sure they did a very good job at it. They don’t focus on things they think aren’t important. It seems like JPMorgan Chase and Wells Fargo are not focusing on their loan modification programs, and Citibank is not focusing on delivering on its promotions, just on using those promotions to suck cheap deposits onto their balance sheet. If that ends up helping their bottom line, then so much the better for them.
There's a lot to this. By way of personal anecdote, I refinanced my mortgage with one of these named Big Banks a few years back, and received a nice letter from them at the time confirming the pay-off of my previous loan and stating that they would also notify anyone else who needs to know - as is their legal responsibility. FYI, the entity that needs to know is the registrar of deeds, in the county where you live. They need to get the prior mortgage off of their books before you can do anything with your property, like sell, or even refinance again.
This is the situation I find myself in. That prior mortgage, paid off lo these many years past, was never discharged with the county. I am in the process of refinancing with my local credit union, to get a better rate, a lower monthly payments, and the hell out of the clutches of the robber barons who run these "too big to fail" money sewers.
If you have a friend in real estate, ask her or him how common this is. It aint rare. How did it happen? My guess is some partially educated clerk stuck the papers in a drawer innstead of the USPS, and that was the end of it. You see, this is one more consequence of the profit motive: you have jobs done as cheeply as possible, which means performance quality is sacrificed to the minimum wage.
My new loan officer, the title company, and my lovely wife have been battling the Big Bank at the far end of the alphabet for over six weeks to get this simple paper-work assignment carried out. Big Bank contracts this menial task out to a 3rd part vendor, and states it takes a minimum 20 business days, NO EXCEPTIONS. That tells you everything you know about how much customer service means to them. Meanwhile, we can't close on our refinance.
My first savings account was with a Savings and Loan institution, not a bank. This was way back, long before the 1989 S&L crisis, an early adventure in deregulation, risky lending, executive overcompansation and moral hazard, whose lessons were forgotten in about 17 milliseconds. Since then my dealings with banks have always left me feeling like the dead rabbit on the yellow line. Thus, for simple savings and checking accounts, I abandoned banking for the comparitive warmth and comfort of my friendly credit union many years ago.
This mortgage with Big Bank is among the last vestiges of my dealings with large financial institutions. I still need to re-evaluate my credit card holdings. My plan is to eliminate any dealings with these "too big to fail" institutions. Let's all do that. Then, when they've shrunk to the point that they CAN fail, we can drown them in a bath tub.