Mortgage Woes: Servicers Can't Keep Up With Demand
I remember wondering a while back why Countrywide had announced massive layoffs, just after hiring a considerable number of new employees. An analyst joked, “they’re probably in the loss-mitigation department.”
Well it’s not so funny anymore. I’ve been hearing for a few months now that one of the greatest impediments to saving troubled borrowers is sheer manpower. There are just not enough loan servicers to help these people work out their loans and work into more affordable alternatives.Today, Fed Governor Randall Kroszner said as much: Challenges remain because of “constraints on servicing capacity to expedite workouts.”
A neighborhood advocate told me this just the other day. He said that all these lenders are so jammed with calls that by the time they get to the troubled homeowner, the house has already been lost. The industry simply can’t handle the onslaught.
I’m also hearing the same thing from the short-sale market. Banks are more willing to make deals with investors who want to buy distressed loans/homes at a discount, but they too can’t get all the paperwork together fast enough.
So while all the politicians are touting their solutions and all the lenders are claiming they’re on board to save borrowers, the enemy, as always is time and efficiency and the lack of both.
Questions? Comments? RealtyCheck@cnbc.com