ProPublica has released an eBook entitled, "The Great American Foreclosure Story." It is available as a web page, and runs about 16 pages of text. They are well worth reading. Of particular interest is a look at why programs like HAMP have been lackluster successes at best. One excerpt from the entire text is the story of Chris Wyatt, a former employee of Litton Loan Servicing.
Have you ever wondered why your loan modification documents were lost, re-requested, and then lost a second time? Companies like Litton Loan were not receiving the documents. The documents were, in fact, ending up at an outsourcing firm in India. This is because Litton Loan, like other mortgage servicers, was not ramping up its loss mitigation staff. It was ramping up its collections staff.
Per Chris Wyatt, this led to a corporate culture where loan modifications were often denied due to missing documents -- documents that could not be verified because they had been received by a company on a different continent. In Mr. Wyatt's own words:
"They could have addressed the crisis way earlier. Had companies changed their philosophy and said, 'You know what? We're not going to beef up our collections staff; we're going to beef up our loss mitigation staff.' Had they done that and come up with loan modification scenarios that were reasonable and put people into more affordable payments early on, we wouldn't be where we are now."
The drive to maximize profits, as opposed to minimize foreclosures, has left us where we are now. I highly recommend The Great American Foreclosure Story to anyone interested in learning more about the foreclosure crisis, its causes, and its effects.