The New York Times has a story tonight, “Judges’ Frustration Grows With Mortgage Servicers,” which narrowly speaking, is not bad, but illustrates a frustrating propensity of the budget and time constrained MSM to fail to dig into the meaty issues behind its articles.
The piece is yet another sighting in the Servicers Behaving Badly saga. Earlier installments included Servicers Show Up in Court With No Proof That They Really Own the Mortgage, Services Go Missing in Action When Customers Try to Straighten Out Errors, and Mods? You Must Be Joking.
Today we learn Judges Try to Shame Services:
Bobbi Giguere had no luck in securing a loan modification from her mortgage servicer, Wells Fargo. For months, she had sent the bank the financial documents it requested to process her modification. But each time she called to check on the request, she was told to send her paperwork again….
Judge Randolph J. Haines of the United States Bankruptcy Court [decided] to summon a senior executive from Wells Fargo to appear in Mrs. Giguere’s bankruptcy case….
Mr. Ohayon stated that Mrs. Giguere had repeatedly failed to provide a financial worksheet, a critical document in processing a loan modification.
Under cross-examination by Mrs. Giguere (who had a little assistance from Judge Haines), the bank’s defense withered. From her files, Mrs. Giguere produced a letter from Wells Fargo describing the paperwork that she needed to file for a loan modification. In the witness chair, Mr. Ohayon read the letter.
“Mrs. Giguere is right,” Mr. Ohayon concluded. “The letter did not ask for a financial worksheet.”
While this little tale makes for nice theater, the judge’s action was completely ineffective, and the Times does not score the point strongly enough. Servicers have proven impervious to bad PR and pressure from the Obama administration. A judge making an executive spend a few hours on a court visit he’d need some prep from his general counsel) is not going to make a jot of interest.
It would be much more helpful if the Times shed some light on why mods are not being made. The MSM, including the Times, has occasionally dug into this topic, but the findings of those articles tend not to be integrated into future storied.
Cynics like yours truly think the culprit is the bad incentives, that servicers make money on foreclosures, which the Team Obama payments for mods are grossly inadequate to change behavior. The servicers also appear to be hiding behind incompetence, as in “We can’t find your paperwork.” This is a very easy way to brush off customer and official requests, but begs the question of whether the servicers have serious shortcomings in their record keeping. That isn’t a defense, but would suggest that some of their sins are venal rather than mortal. And if the servicers are not as incompetent as they pretend to be, that suggests a creative lawyer might find a way to have a go at them, for instance, asserting violations of fundamental assumptions in contractual relations, like good faith and fair dealing.
I’d like to see the servicers leashed and collared, but range wars by judges will not have much impact.