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I get a bunch of “insider” type news on a regular basis from my friends in the industry and people that send me tips and notes because of this blog. Some of them are ho-hum, some are too sensational to run with and others are just right. Here are two “just right” news items that have crossed my desk that I wanted to share.
Option One Workouts Soar!
A friend of mine who works in the servicing department of Option One here in Irvine, CA told me that in a “normal” month the workout team handles 70 loan workouts for borrowers looking to avoid foreclosure or delinquency. Last month that same team handled over 700 workouts - a 10-fold increase. Option One is looking to ramp up staffing in its workout and default departments; switching people over from servicing and tax to those teams to handle the workload.
Wholesale Account Executive Fired for Fraud
A wholesale account executive (AE, the sales people that lenders send out to brokerage firms to generate new loan business) was fired last week for an alleged fraud scheme. The scheme worked as follows: the AE would get a list of past clients whose ARM loans were resetting and pulled the old Loan Application (Form 1003) and Borrower’s Authorization from the borrower’s previous loan file.
The AE then gave the 1003 and Borrowers’ Authorizations to a broker who re-opened escrow and got brand new loan approvals for the customers with out even contacting them! The first the borrowers learned of this was when escrowed called them to set up a signing for their new loan! Amazing! Talk about blatant illegal fraud. Can you imagine getting a call from an escrow company saying “Your loan documents are ready to sign” when you’ve never even talked to someone about a new loan?
Scary.
Morgan, my friend called the Countrywide Loss Mitigation Dept, and was told that they approve only 20% of requested short sales.
What % of workouts is approved?
Why is this percentage so low? Because it’s obviously better for them financially to go to foreclosure. Is it better for the servicer or better for the investor?
Any insider insight is greatly needed.
I was told the SDAR had a short sale seminar last week, and told their realtors they need a short sale expert on their team, bec. those guys have access to a proprietary list of insiders at the servicers. The servicers will only talk to the real estate insiders who bought the list. It’s all very confusing.
To date, in all my queries, nobody has ever been able to explain how/why the servicers act as they do. This is troubling, because it is preventing too many reasonable solutions to foreclosure.
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