Veteran financial services reporter is now writing a column for PROGRESS in Lending. In his column he shares his knowledge and his insights. It might not always be pretty and PROGRESS in Lending might not agree, but there’s no arguing that these are Lew’s Views.

How’s Your Online Messaging?

Purveyors of mortgages spend most of their advertising dollars online, according to a new research report. Lenders spend a whopping 39 percent of their ad budgets online, the extensive 39-page report from Borrell Associates, an advertising firm in Williamsburg, Va., says. The other 61 percent is spread over numerous other media, with none commanding more than a 15 percent share.

Overall, lenders will spend some $10.16 billion this year on advertising, or about 4.4 percent more than they spent in 2012, according to the report.

Of that, $3.97 billion will go toward their online messages, while $1.42 billion (14 percent) will be thrown into cable TV. Also worthy of note is that some $95 million will be spent on broadcast TV, a 40 percent increased from 2012.

Lenders also will end up spending about $790 million in newspapers. That’s a 7.8 percent share of their ad budgets, and an 8.5 percent increase from last year.

That means the mortgage community is contributing to what may be the return of newspapers from the walking dead. While it is certainly too early to call it a trend, newspapers actually gaining market share in 2013, according to Borrell.

Save for a few markets, fat real estate sections in newspapers are probably gone forever, as are the clutter of homes magazines on street corners. But print “is by no means dead,” the company said in its report.

Indeed, real estate-related newspaper advertising has not only stabilized this year, it has actually increased a tad, up by 0.8% from 2012. At the same time, local magazines “are enjoying a sudden resurgence,” up 30.7%.

That’s not to say spending on digital media has faltered. Its up 16.9%, to a total of more than $15 billion, the study found. Fifteen years ago, when digital was in its infancy, it commanded less than 5% of all real estate ad dollars, Now, it holds a commanding 56% share.

But digital is not likely to grow, says the report’s principal author, executive vice president Kip Carsino. “We believe that the digital share of real estate advertising has peaked and that any future growth will be commensurate with overall growth in advertising expenditures.”

Borrell expects agent’s and brokers’ digital ad spending to peak in 2015 at $16.6 billion. After that, digital will be experience its first ever decline – and a sharp one – due largely to a mild cyclical recession in 2016, the report predicted. Than, spending on the digital medium should begin rising again.

The annual report, which sells for $995, examines the underlying trends in the resurgence of the real estate markets and breaks out spending by agents and brokers, developers, rental managers and mortgage providers.

About The Author


If Jobs Was A Builder

Even several years after his death, the name Steve Jobs draws a crowd. To be specific, an overflow crowd at Urban Land Institute’s fall meeting last month in Chicago, where the topic was what kind of bold innovations the legendary Apple founder would be undertaking had he been a residential developer.

“There has been very little true innovation over the last 50 years” in how homes are designed and built, said moderator Beth Callender of Greenhaus, a marketing and branding ad agency in San Diego, who asked the audience to shout out what changes Jobs might champion.

One yelled out something about disposable houses, another spoke about taking building regulations out of the hands of local politicians and allowing them to be written on a more coherent regional or state-wide basis.

“Our industry has largely been stuck” in the middle of the Bell Curve, said panelist Brett Herrington, president of Kukui’ula Development, which is building 1,000-acre master planned community on the southern coast of Kauai in Hawaii. “The biggest thing that’s happened is that housing has gotten bigger at about the same inflation-adjusted price per square foot.”

Consequently, Herrington postulized, Jobs would tinker with how space is used, and design a product salespeople would be proud to show and demonstrate for would-be buyers. “There’s a huge opportunity for the brightest minds in the business to come together and dare each other to do something different,” he said.

Builder-developer Randall Lewis tended to agree, maintaining that the housing sector “doesn’t do a good job building brand loyalty.” Jobs knew his customers better than they knew themselves, Lewis reminded, suggesting that as a builder, Jobs would “enhance the customer experience.”

Houses “should be more than just shelter,” said Lewis, who believes Jobs would have made his houses smarter than the competition. The California builder also thinks the Apple designer would be offering “more great looking houses at more price points” to attract the greatest number of buyers.

Nothing that Jobs married a couple of industries, another participant, Morad Fareed, co-founder of Delos Living, a New York-based real estate development company which is pioneering a new standard for healthy buildings, saw a “natural merger” of housing and wellness.. Builders should integrate medicine into their products to help prevent disease, improve energy levels and lengthen occupants’ life spans, he said.

“Why stop at building just houses?” asked Fareed, whose firm has married science and architecture, reshaping how homes are built to place well-being and personal sustainability at the heart of design and construction decisions.

Herrington, who spent some years at Disney’s award-winning Celebration development in Orlando, said Jobs would have insisted on more intelligent design and more efficient use of space – walls that can pivot out of the way, rooms that can be moved based on the season.

“It’s not about putting more gizmos in houses,” he said, maintaining that “by and large, residential architecture is vary sad.” Jobs’ houses, he said, “wouldn’t look like tacky little places. It would be about groupings, living spaces in the context of the way people live. There wouldn’t be rooms, it would be flexible space, private and shared. ”

Asked what innovations seems inevitable, Lewis suggested that energy would become more important. Energy is “not going to cost less,:” he said. “It’s no longer about what we are doing to our climate, it’s about what our climate is doing to us.”

The California builder also sees the end of hardwire telephone lines, and possibly even the demise of the television set. TV sets “are no longer the center of entertainment” they used to be, he said, suggesting that even flat-screen sets “are on the edge of completely disappearing” because people are relying more and more on laptops and hand-held devices.

In a sort of “Back to the Future” idea, Herrington said the community of the future would have more core-like areas that bring together houses and employment. “Whether its some great revelation or just natural forces,” he offered, “builders will find more ways to bring things back together again the way the used to be.”

About The Author


Old Bankers Never Die …

*Old Bankers Never Die…*
**By Lew Sichelman**

LewS***What is it with the old farts of the mortgage business? They just won’t go away. For every Joe Reppert, who unceremoniously threw in the towel as vice chairman at Core Logic this summer, there are four or five “generians” of one sort or another who refuse to call it quits.

****I count myself among the many who refuse to ride off into the sunset. But I’m a reporter, and I like what I do. And I’m the exception. For every reporter like me, who can remember when Fannie May was only a candy store, there are what seem like dozen of upstarts, many of whom have never bought or sold a house and have no clue what they are writing about.

****But I am talking about people like Herb Tasker, a former chair of the Mortgage Bankers Association, who just keeps rolling along. And folk like John Robbins and David Kittle, two other former MBA chairmen, who just announced a start-up called the Mortgage Collaborative. Along with Gary Acosta and Jim Park, Robbins and Kittle’s new venture is a cooperative designed to empower member to compete more effectively by boosting their collective buying power.

****There’s a story there, and it’s been reported in numerous outlets, including this one. But to me the interesting part is that Robbins is at it again. For crying out loud, the man has founded and operated several national companies over the course of his 42 years in the business. Hasn’t he had enough?

****Apparently not. I know he likes to fish and golf – I’ve joined him on several junkets. But he’d rather work than play.

****I don’t know whether Kittle can swing a nine iron, or even drop a line overboard. But he, too, has been around the bend a few times. And now he’s back, 35 years and still going strong.

****I never did hook up with Robbins at the recent MBA convention in Washington, and chatted only briefly with Kittle. But I did spend sometime with Acosta, who also seems to have nine lives. He is a mortgage broker who has owned and operated several mortgage-related businesses, but his real claim to fame is as co-founder the National Association of Hispanic Real Estate Professionals.

****(Park hasn’t been around as long as his partners, but he is the youngster of the group. Still, he’s no piker. He was a vice president for housing and industry relations at Freddie Mac, a co-founder of New Vista Asset Management, and is a former chair of the Asian Real Estate Association of America.)

****“If there was a Mt. Rushmore for mortgage bankers,” Acosta told me, “John Robbins would be up there.”

****He said guys like JR believe they can still make a contribution – and make a few bucks at the same time. “The market goes through cycles, which create new niches,” he said. “And independent mortgage bankers are more nimble, so they tend to want to fill those niches first.”

****Acosta, too, wants to continue making a contribution, and he said he’ll keep coming back. As long as he and his compatriots can add something to the mix, he said, you can count on them for their knowledge, understanding and friendship. I guess it’s just the natural order.

Financial Literacy

*Financial Literacy*
**By Lew Sichelman**

LewS***It’s incredible how much the American public doesn’t know about the very basics of their own financial well-being. Credit scores are a great example. According to a survey from the Consumer Federation of America, a large swath of otherwise decent, law-abiding citizens don’t know jack about their credit scores. And that’s too bad, because as CFA Director Stephen Brobeck pointed out, that’s going to cost them a boat-load of money.

****“Low credit scores will often cost car buyers more than $5,000 in additional finance charges and cost home purchasers tens of thousands of dollars in additional mortgage loan costs,” Brobeck said. “And low scores are likely to limit consumer access to, and increase the cost of, services such as cell phone service, electric service, and rental housing.”

****A more recent survey by the American Bankers Association found the same thing: Most consumers don’t even know their own score, despite its importance not only in determining whether they can get credit cards, auto loans and mortgages, but also in employment and insurance decisions.

****The survey of 1,000 adults conducted for the ABA by Ipsos Public Affairs, an independent market research firm, found that only 42 percent of consumers know their credit score. Fifty-six percent of respondents indicated they did not know their credit score, and 2 percent did not answer the question.

****In the CFA survey, which was done in conjunction with VantageScore Solutions, respondents were asked a wide-ranging set of questions about scoring. As many as two out of every five answered incorrectly.

****Here’s some of the highlights, or should I say low lights:

****>> 40 percent do not know that credit card issuers and mortgage lenders use credit scores in decisions about credit availability and pricing.

****>> 43 percent believe that personal characteristics such as age and marital status are used in calculating credit scores.

****>> 35 percent don’t know when lenders are required to inform borrowers of the credit score used in their lending decision.

****>> 26 percent do not know key how to raise or even maintain their scores.

****>> 36 percent believe that credit repair agencies are always or usually helpful in correcting credit report errors and improving scores.

****Hey, c’mon people, this is basic stuff. But it’s only basic because you and I deal with it on a daily basis. Credit scores have become part of the mortgage fabric. But ordinary people who buy houses only a few times in their lives don’t know any better.

****They should, though. And that’s why I believe financial literacy courses should be mandatory in high school. People need to know how to balance their checkbooks, and how to deal with credit. Yet, it surprising how few young people are taught those basics at home. It might even be shocking to find how many of their parents can’t perform those simple tasks, either. So it is left to our schools to pick up the slack.

Beware The Schneiderman

*Beware The Schneiderman*
**By Lew Sichelman**

LewS***Who is Eric Schneiderman and why is he out to get us? That may soon be the mantra of mortgage market players, if it isn’t already. And soon, very soon, the name Schneiderman could replace the names Cordray and Frank as the Man from the Dark Side who is hell bent to straighten out this business of making and selling home loans.

****If you haven’t heard of Eric Schneiderman, the Harvard law school graduate who is the highest ranking law enforcement officer in New York, the bet here is that you will. After all, the Empire State’s legal offices have been a virtual launching pad for careers in Washington as, among other posts, regulators, legislators, cabinet secretaries, federal judges – even a Supreme Court justice.

****I don’t have any inside information about New York’s top cop’s future intentions. But my guess is that sooner or later, Schneiderman will be pacing the official halls in Washington sooner or later, in one form or another.

****Why should that concern you? Just the other day, the 65th Attorney General of New York announced that he is suing Wells Fargo in an effort to get the bank to honor its commitments under last year’s landmark National Mortgage Settlement.

****At the same time, he announced that his office had reached an agreement to suspend an enforcement action against Bank of America, which has agreed to implement a robust set of systemic reforms intended to ensure that the standards outlined in the Mortgage Settlement are honored throughout his state. If the reforms are successful, it is anticipated that Bank of America will replicate them nationwide.

****“Too many homeowners in our state are facing unnecessary challenges as they fight to keep their homes,” the NY AG said. “While Bank of America has chosen to work with us to take the steps required to adhere to their commitments, Wells Fargo has taken a different path. (But) both of these cases should send a strong message that the big banks must comply with the legally binding Servicing Standards negotiated in the National Mortgage Settlement, or face the consequences.”

****But Schneiderman is hardly a one-trick pony. Here’s a look at his resume since his election in November 2010 as the Empire State’s 65th Attorney General:

****In his first weeks in office, the NY AG launched a new “Taxpayer Protection Bureau” to root out fraud and return money illegally stolen from New York taxpayers at no additional cost to the state. He also bolstered the Attorney General’s Medicaid Fraud Control Unit, which has since already recovered millions for taxpayers. And as part of his effort to crack down on corruption and restore the public’s trust in government, Schneiderman launched a groundbreaking initiative expanding his office’s authority to investigate public corruption involving taxpayer funds.

****And that was just the start. In year one of his watch, Attorney General Schneiderman filed a legal challenge to the discriminatory Defense of Marriage Act to compel the Uncle Sam to treat all New York marriages equally; sued federal regulators to force a health and environmental impact review of proposed gas drilling in the Delaware River Basin, and challenged the Indian Point nuclear power plant’s practices related to high-level radioactive waste storage, earthquake preparedness and fire safety.

****More recently, he’s gone after the smartphone business in an attempt to curb thefts by encouraging the cell phone industry to adopt technologies to deter the rising epidemic of violent incidents of smartphone theft by drying up the secondary market on which stolen devices are sold.

****But more germane to this audience is the fact that Schneiderman has taken a leading role in the national fight for a comprehensive investigation of misconduct in the mortgage market. He has demanded a fair settlement for home owners, one that holds banks accountable for their role in the foreclosure crisis, provides meaningful relief to owners and investors, and allows a full airing out of the facts to ensure that abuses of this scale never happen again.

****Toward that end, the Attorney General filed suit in June against HSBC Bank USA and HSBC Mortgage Corporation for failing to follow state law related to foreclosure actions and the way the companies placed homeowners at a greater risk of losing their homes.

****Attorney General Schneiderman is committed to bringing similar actions against other mortgage lenders who hold borrowers in the shadow docket in defiance of state law, his office says. So be on guard, now and into the future.

But Will It Fly?

*But Will It Fly?*
**By Lew Sichelman**

LewS***One of the cardinal rules of journalism is to write the story first and the headline will follow. Another is that writers should not write the headline; that’s best left to the editors. But I violated those canons here because I just can’t help thinking America’s Homeowner Alliance is likely to fall flat on its kisser.

****Not because it’s not a noble idea. In fact, any body that wants to speak up for the American homeowner has my vote, though not necessarily my money. But because it has been tried before and it never got off the ground.

****Despite what the AHA says is the “first of its kind” attempt at being a voice for the country’s 75 million homeowners, it’s not. At least twice in my memory – and after 40-plus years of covering the housing and housing finance markets, I have a lot of memory – persons or groups have attempted to organize homeowners a la AARP. And neither one lasted very long.

****I don’t know why they didn’t make it. Perhaps they failed because they were the wrong folks to pull it off. Maybe they were after a quick buck and had no staying power. Or maybe they flunked because it was just the wrong time. Or perhaps it was both the wrong people at the wrong time.

****So now, for at least the third time that I know of, someone is stepping forward in an attempt to save homeowners from damnation – or lead them to the promised land, depending on your point of view. This time, the effort is being led by mortgage market luminary Phil Bracken, a giant of the sector if there ever was one. His creds include the Andrew Woodward Distinguished Service Award, the highest honor that can be bestowed by the Mortgage Banker Association.

****He is being joined by Tino Diaz, former chair of the National Association of Hispanic Real Estate Professionals; Armando Falcon, a former director of the Office of Federal Housing Oversight, the forerunner of the current Federal Housing Finance Agency; and Joe Murin, a former president of Ginnie Mae. Other members of the board aren’t as well known. But for the most part, they come from the housing sector.

****And I suppose that’s one of the things that bothers me. The group is terribly industry top heavy. Good? Bad? Indifferent? I dunno. It just bothers me.

****Certainly, the AHA has some lofty goals. The Alliance intends to serve as the advocacy voice to protect against policies that fail to promote sustainable ownership for all segments of society. That means, among other things, defending the mortgage interest deduction and the low downpayment, 30-year mortgage, protecting home values, and addressing the lack of funding for new home construction.

****I suppose that this is something else that has my antenna wiggling. Because if these objectives sound familiar, they should. The National Association of Realtors, the Mortgage Bankers Association and the National Association of Home Builders all espouse to the very same things. And that’s just the giants among the many trade organizations which have similar stances.

****The million-strong NAR has done a particularly good job of brainwashing the masses into thinking that it speaks for them. But of course, it really doesn’t. Never has, and never will. To be sure, the interests of real estate professionals and homeowners often align. But when they don’t, guess who NAR speaks for first?

****But more than that, I fear the nation’s owners don’t want their own advocacy, or don’t think they need it. At least, not for $20 bucks a pop. AHA also promises retail and reward-based purchasing benefits from more than 1,000 outlets, Sears, Lowes and Home Depot among them. But I fear that won’t be enough. Where’s the slick magazine, the insurance deals, the newsletters and how-to bulletins? It’s going to take more than a press release to attract dues-paying members.

****I don’t know how AARP got its start many years ago. But I have been a card-carrying member for as long as I became a senior in the AARP’s eyes, and I can tell you the $40 it cost me for the first 10 years was some of the best money I have spent. But I just don’t know about this AHA outfit. I can certainly spare an Andrew Jackson every year, but I don’t think I’m ready to part with him. At least not just yet. I’m going to need more persuading first.

Top Of Mind Stuff

*Top of Mind Stuff*
**By Lew Sichelman**

LewS***Paul Muolo, my friend and former colleague at a publication that shall remain nameless, sure stirred up a hornet’s nest when he wrote late last moth that the Federal Housing Finance Agency is contemplating a big change – read that DROP – in Fannie Mae and Freddie Mac’s loan limits. He and others who quickly jumped on the bandwagon have pressed the FHFA about when the big announcement would be coming, and the agency responded that it would do so in due time. But what’s the big deal, here?

****Like clockwork, announcements about changes in the limits – currently $417,000 in most places but $625,500 in high cost markets  – have always come during Thanksgiving week, never before and rarely after. So hold your horses, guys. Unless somebody spills something to Wikileaks, it’s going to be a few more weeks before we know anything for certain.

***** * * *

****I have no issue whatsoever with the roughly $300 million settlement with JPMorgan Chase over force-placed insurance. After all, the big bank has been helping itself to a big share of the ungodly premiums insurers are slapping borrowers who, for one reason or another, don’t carry their own home owners’ policies.

****But I do wonder how much of all that will actually make its way back to the some 1.3 million people who were actually harmed by the practice of forcing borrowers to pay unjustified premiums and then taking a big share of the loot in kickbacks? My bet is, not much. My bet is, the attorneys are in for a big payday, not their clients.

****And if I’m right, isn’t that just as egregious as force-placed insurance? Maybe Shakespeare had it right when he wrote, “The first thing we do is kill all the lawyers.”

***** * * *

****With Halloween just around the corner, you are likely to run across articles or programs about haunted houses and how well they sell – or not. But they are all late to the party.

****I wrote my first piece about the topic in the late 1970s at the Washington Star. And two places I wrote about are still top-of-mind: One was a place in Bowie, Md., where two young men conspired to kill each other’s wives. After one was murdered, but before the other dastardly deed took place, the guys were apprehended.

****The house where the woman was killed was later sold to an investor, who rented it out. But what is still unnerving to this day has to do with the family that rented the place. The wife had the first name as the woman who was killed, and the daughter had the same name as the woman’s child.

****One of the other houses I discussed belonged to Bradford Bishop, the foreign service officer who bludgeoned his family to death with a sledgehammer. After he learned he was being passed over for a promotion, Bishop bought the aforementioned murder weapon, went home to his Bethesda house and hammered his wife, mother and three sleeping children. Bishop, who was trained as a spy and speaks several languages, is still a fugitive.

****Anyway, the buyer of that fateful place had no idea what had gone on there, and his realty agent saw no need to tell him. (Nowadays, the law requires the disclosure of such information). But shortly before closing, a neighbor told him of the murderous events, and he was able to renegotiate the price. Down, of course.

List Mania

*List Mania*
**By Lew Sichelman**

LewS***I don’t know about you, but I am sick and tired of all the “bests” and “worsts” and “mosts” and “leasts.” As in, the hottest housing markets, the slowest housing markets, the best college towns to buy real estate, the top ten cities for engineering innovation.

****Bert Sperling of Sperling’s Best Places once told a group of real estate reporters that he could come up with a list of the “best places” for just about anything. Thus, we have the best places to live, to retire, to work, to visit, to chill, to hyperventilate, to think, not to think, ad infinitum.

****And then we also have the fastest markets from flip to sale. I mean, gimme a break.

****Nope. No such luck. There’s the ten most exciting cities, the top ten markets in which to buy vacation homes and the 25 best places to flip.

****And then there’s the funniest cities (Ha!), the most over-valued, the most under-valued (or is that the least?), and our favorite summer towns.

****Wait, there’s more, as in the most secure largest cities, the most stressed cities, the most popular for the holidays, and the best baseball cities.

****I actually like that last one. But not the best for job growth, the worst for job growth, the healthiest – that’s fiscal health, not physical – and the ten best cities for NASCAR fans.

****Everybody, it seems, is enamored with lists. I haven’t seen the ten worst mortgage regulations yet, but I’m sure its out there – somewhere.

****And while we’re skewering this pig, how about all those indices we’re subjecting to each and every month, month after month after month. I’m tired of those, too.

****Why, everybody has one – or more. There’s Core Logic, Case-Shiller, LPS, the FHFA, the NAHB, Pro Teck, Redfin, etc., etc., etc. (This is not to single out any particular company; it’s  just to name a few. So please, everyone, don’t get your knickers in a wedgie.)

****It’s time to stop all this madness, these mindless veiled attempts to get your name up in lights. And I fault supposed news outlets which publish these lists — one after another after another, even though they hold little or no value — just as much, if not more, than their purveyors.

****Take the monthly catalogue of the housing markets with the fastest appreciation. Even the government publishes them. But they do consumers a disservice, for what’s happening in Bumdale has absolutely, positively nothing to do with what’s Bumberg.

****No, borrowers, buyers and sellers would be much better off knowing what’s going down – or up – in their communities, their neighborhoods, their very own blocks. Yet we continue to tell them that prices are up 11 percent in Bumville when what’s more meaningful is that values have slipped 2 percent on their street because it’s loaded with foreclosures or pig-pen neighbors.

****So, I, for one, say let’s stop this silliness. And the presses. Except for maybe a list of the ten worst offenders.

Mortgage-Related Beefs

*Mortgage-Related Beefs*
**By Lew Sichelman**

LewS***Real estate related beefs have once again topped the list of the most frequent consumer complaints. According to the latest report from the Consumer Federation of America and the North American Consumer Protection Investigators, the dubious Top Ten areas of complaints included home improvement/construction (2), landlord/tenant (8) and household goods (10).

****But more important for this audience, many of the gripes had to do with credit and debt services, which ranked third on the list and had to do not only with billing and fee disputes but also mortgage modifications and mortgage-related fraud, predatory lending, credit repair, debt relief services and illegal or abusive debt collection tactics.

****Moreover, foreclosure issues were among “the worst” complaints reported by the 40 consumer protection agencies from 20 states which took part in the annual survey.

****In some instances, their answers to this question were based on the number of complaints. In other cases, it was the dollar amount involved. And in yet other instances, it was the outrageousness of the situation that drew the consumer watchdogs’ attention.

****But whatever it was, it was ugly, according to members of NACPI, the trade group for consumer protection investigators, both civil and criminal, who work for state, local and federal agencies.

****If there is some good news in the survey, it’s that mortgage and foreclosure scams in and of themselves are no longer a separate category. Now, it is lumped in with credit and debt issues. But as Susan Grant, director of consumer protection at the CFA, pointed out, the poll is not a consumer survey, so it is not necessarily a list of their gripes.

****For what it’s worth, unlike federal agencies, members of the NACPI try to resolve consumers’ issues.

****Among the more interesting types of problems listed by the consumer agencies were mortgage assistance scams perpetrated by individuals who claim to be part of the so-called “sovereign citizenship” movement and, therefore, are not subject to the laws of the United States or its courts.

****This is not a new scam, but it is incestuous. Last year, 500 desperate home owners in Johnson County, Kansas, were bilked out of their money by an outfit which claimed it was not subject to state laws and falsely promised it could not only get their mortgage payments reduced but also save their properties from foreclosure.

****According to the DA’s office, someone from the company “legal department” even provided legal advice he was neither trained nor licensed to dispense.

****In a related issue, another firm misrepresented its ability to challenge the interest rate and status of consumers’ mortgages. Advised to stop making their payments, borrowers were left in an even worse pickle – and poorer because of the upfront fees they paid. And in another case, a third company offered to refinance mortgages and provide clear title, but simply pocketed its fees and walked.

****To address modification scams, consumer affairs agencies are responding in novel ways. In Massachusetts, for example, the Attorney General’s Office created the HomeCorps program, which offers individualized assistance to folks like the single mom who fell three months behind on her house payments when she lost not one, not two but three separate jobs.

****In an attempt to obtain a loan modification, she sent paperwork back and forth, back and forth, back and forth to her mortgage company. But each time, she was told something was missing. After receiving a foreclosure notice and auction date in the mail, she reached out to the Massachusetts authorities for help, and now she has a new loan with more affordable payments. Better yet, she has been able to remain in her house.

****The HomeCorps program has a website and hotline dedicated to providing information and assistance to residents facing foreclosure. The program is staffed by a statewide team of 30 loan modification specialists and support staff, 18 attorneys and 23 community action program advocates.

****To date the agency has achieved $30 million in principal reductions, resolved more than 7,350 cases, prevented 608 foreclosures, helped 1,700 consumers obtain permanent loan modifications, assisted over 145 families resolve legal issues related to foreclosure and worked with more than 200 families to stabilize their housing situations.

Service? What Service?

*Service? What Service?*
**By Lew Sichelman**

LewS***And so, it seems, the lambs have been led to slaughter once again. How can this happen? According to the Special Inspector General for the Troubled Asset Relief Program, it’s because servicers of formerly distressed borrowers aren’t paying enough attention.

****Of course, a lot of this rests on the shoulders of borrowers themselves. But that perhaps one in every four borrowers who have received permanent modifications to their mortgages under the Home Affordable Modification Program found themselves in deep doo-doo all over again is just one more black mark against the entire industry.

****According to SIGTARP, the Treasury Department has lost $814 million in TARP funds paid as incentives for permanent HAMP modifications. That’s roughly 18 percent of the $4.4 billion distributed under the program.

****But another surprising revelation in the report is how much of that $4.4 billion went to servicers. The report says $2.2 billion went to investors – not shocking because they have to be placated if they were going to lose money – and $770 million was paid in home owner incentives. But the rest – $1.5 billion – went to servicers.

****That sounds eerily similar to the class action suits turned out by legal mills in which the plaintiffs receive pennies but the lawyers “earn” millions. I’ve always wondered why servicers had to be paid extra to do the job they are supposed to do in the first place. Yet, under HAMP, they received twice as much as the owners they were supposed to help.

****The report goes on to single out three companies – Ocwen Loan Servicing, J.P. Morgan Chase Bank and Bank of America – as the worst offenders. More than half the TARP funds spent on loans that re-defaulted were serviced by these three outfits. But 91 percent of the total was on loans serviced by just 10 companies, including Wells Fargo Bank, GMAC Mortgage and CitiMortgage.

****Why all this is allowed to occur isn’t totally clear, but it’s mainly because Treasury doesn’t require servicers to ask homeowners why they re-default. However, anecdotal evidence collected by SIGTARP is once again damning – poor service.

****According to borrowers, the very companies which are paid extra to help owners are guilty of miscalculating their payments, messing up the transfer of mortgage ownership, losing paperwork, failing to honor the modification agreement and allowing foreclosure proceedings to proceed even while the loan is in the process of being modified. That last one, by the way, is now prohibited under HAMP guidelines.

****SIGTARP has recommended that servicers be required to develop and implement an early warning system to identify and reach out to borrowers who may be at risk of re-defaulting. By flagging owners who miss one or two payments, the special IG says, servicers can recommend counseling, assistance or other steps to move borrowers back onto the straight and narrow.

****Hey, this isn’t rocket science, or even 11th grade astrology. As SIGTARP points out, borrowers most likely to fail a second time around receive the least possible reduction in their mortgage payments and overall debt, are still underwater on their loans and have subprime credit scores at the time of their loan modifications as well as high overall debt burdens.

****Duh! Servicers should be watching these borrowers extra closely as a matter of course. And they shouldn’t have to be paid extra to do so. Isn’t it a familiar mortgage industry mantra that lenders also are losers when borrowers lose their homes to foreclosure? It’s time for those companies which make millions administering mortgages on behalf of the loans’ owners to back up that claim with something representing the handle for which they are known – service.