Singing from our Songbook

Dallas        We spent three hours with representatives from GMAC meeting in our Dallas offices.  We were not happy with much of it, but still it represented a sea change from the last meeting with virtually the same people 6 weeks ago.  They were no longer hiding behind “individual programs for individual problems” as I characterized their step-mod approach with 1 and 2 year band aid fixes.  We were getting closer even if we might not make it in the next several weeks to where we want to be.

    Reading the Wall Street Journal provided a set of footnotes to how much progress is possible when I saw the comments in a story by Steve Bailey, one of the people with whom we have spent hours negotiating with at Countrywide, and Bob Caruso, the national servicing executive at Bank of America, who we have dealt with extensively in the past. With the announced purchase of Countrywide by Bank of America, Bob is now someone we are likely to deal with even more extensively.  There comments on foreclosures were telling since both now seem to be singing at least some songs from the ACORN songbook!

    Some quotes from the Journal of 1/16/08:

    “More often now than ever before we are writing off the loan when borrowers fall behind on home-equity payments," says Bob Caruso, Bank of America Corp’s national servicing executive.  ‘The customer still owes the money, but it is no longer an asset on our books.’  That doesn’t let the borrower of the hook:  The lender keeps the lien in place, however, in the hopes that it will receive some money when the property is sold.”

    “You can make a horrible decision by choosing to foreclose," says Steve Bailey, a senior managing director with Countrywide Financial Corp.  It ‘can be a worse decision than doing nothing.’  Coming up with a plan that will get borrowers back on track is easiest if both the mortgage and home-equity loan are held by the same party.  Countrywide will sometimes ‘whittle down’ the payment on the second mortgage to come up with an amount that the borrower can afford to pay for both mortgages, or even eliminate that payment, Mr. Bailey says.  The company doesn’t publicize such efforts, he adds, because that might encourage ‘people not to make their payment and see what happens.’  In either case, ‘the borrower still owes the principal,’ Mr. Bailey says.”

    Harder and harder for all of these guys not to join hands with us!

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