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A Gathering of Crows, California State Capital, Sacramento, CA May 15,
2012, Legislative Committee of Foreclosure Crises - Bankers and their
Lobbyists Gathered to Murder the Homeowner
Bill of Rights |
A "gathering of crows" -- a muster -- an eerie name for a gang -- a gang of bankster thugs and their lobbyists. A gathering of crows means a murder is about to take place. Crows usually are gathered by something that is dead. Often crows gather to sit in judgment and sometimes kill one another. In this instance they converged to murder the California Homeowner Bill of Rights.
Crows are social animals for whom safety is an issue. A member of the flock will sit aloft a high peak to watch for danger as other members of the flock feed. If danger is spotted the "watchout crow" will sound a loud warning for the feeding crows. When a good food supply is found by one, it verbally informs the others.
On May 15, 2012 during the afternoon session of the California Legislature Conference Committee on SB 900 and AB 278 addressing California's foreclosure crises crows from the signatory banks to the National Mortgage Settlement Agreement, bank and servicing lobbyists, and other related industries gathered outside Room 447 shortly before 1:30 p.m. They were easily recognizable due to their expensive, well-tailored expensive suits and ties and Italian shoes -- but mostly for their smugness and arrogance as more and more of their numbers mustered in the hallway. The crows laughed with one another and bragged that the hearing was going to be a mere formality. I was present in the throng and was mistaken by these banking crows as one of them though I was hardly so well dressed. As I took my place in the line of laughing crows, I pinned my ACCE pin on my jacket. Immediately the watchout crow -- a tall, well-heeled pale skinned, balding white male banker in his early fifties -- spotted danger, paled, and immediately silenced the gathering of crows. Once in the conference room the crows hustled to obtain the best seats in the room and to make certain the watchout crows would be ever vigilant. I sat in row four on the end so I could reserve seats for other foreclosure victims and community leaders affiliated with ACCE, Occupy movements throughout California, PICO, CCISCO, the faith community, and labor organizations. Though surrounded by some of my allies, I felt that I was on the front lines deep within enemy territory. I felt anxious. My heart raced. I was afraid and concerned that a PTSD attack was imminent as this gathering of crows convened with the intent to murder the California Homeowner Bill of Rights.
Crows from the signatory banks spoke for 45 minutes followed by 45 minutes of Questions and Answers and are identified as:
- Mike Malloy, Mortgage Policy and Counterparty Relations Executive, Bank of America
- Stephanie Mudick, Executive Vice President, Head of Consumer & Regulatory Affairs, Mortgage Banking, JP Morgan Chase
- David Moskowitz, General Counsel, Wells Fargo Mortgage
- Bryan Bolton, Senior Vice President, Default Servicing, CitiMortgage
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| Stephanie Mudick, EVP, JPMorgan Chase |
Particularly interesting is the testimony of Ms. Mudick of JP Morgan Chase. She blames foreclosures on homeowners' failure to communicate with Chase -- always the blame game.
May 15, 2012; California Legislative
Conference Committee Hearing on Foreclosure Crises – SB 900 and AB 278;
Afternoon Session 1:00 PM; Room 447,
California State Capital; Sacramento, CA
Testimony of Ms. Stephanie Mudick, Executive Vice President, Head ofConsumer and Regulatory Affairs,, Mortgage Banking J.P. Morgan Chase:
[00:20:00] "Thanks for inviting
me to appear before you today. My name is Stephanie Mudick and I'm executive
vice president and head of consumer regulatory practices and mortgage banking
business at JP Morgan Chase. We greatly value our long standing
partnership with California and we are delighted to be consistent growing a
business in California over the last several years. During this period we've
also been very focused on our mortgage customers growing our array of
foreclosure prevention programs and increasing the number of borrowers who
benefit from loan modifications and other forms of homeowner assistance to
these challenging economic times. I'd I like to review these efforts
and along with the recently announced National
Mortgage Settlement and the proposed legislation related to it that you
are currently considering.
“Chase currently services about 1.2 million loans in California out of about
8 million nationwide. About 7% of our loans are 60 plus days delinquent as of February 29
th
this year, a level lower than the national average of 8% and 55% lower than
three years ago.
”We service loans on behalf of the owner of the loan which sometimes is
Chase itself but more often is someone
else – a government sponsored enterprise such as Fannie Mae or Freddie Mac or government agencies such as the FHA or VA,
securitized trust or other private investor.
“Chase realizes California homeowners
continue to face tough challenges in these difficult economic times. We are committed to working with borrowers to
help keep families in their homes and we offer several foreclosure prevention
programs designed to provide sustainable solutions to troubled borrowers.
“From January 2009 to February 2012 we prevented over 186,000
foreclosures in California or about 2.6 foreclosures
prevented for each 1 completed , a
success rate better than national average.
Our performance over the last
three years has resulted in more than 105 permanent modifications to California
homeowners under various modification
programs including HAMP. During
this same period we completed over 58,000 short sales and refinanced over
186,000 mortgages in California.
“To help struggling borrowers we have added more than 10,000 employees to
our borrower assistance and default operations which is nearly double the staff
we had in 2008. When a borrower fails to
make a payment on his or her loan often within 15 days we start trying to
contact them and we make repeated attempts to contact delinquent
borrowers by letter and my phone to talk about foreclosure prevention options. When a borrower responds to our outreach
efforts, the borrower is assigned to one
of our 3,000 dedicated consumer assistance specialists who serves as the single
point of contact for the borrower throughout the process.
“Recognizing that many borrowers were struggling with the overall process
and were looking to talk face-to-face to us, in early 2009 we began opening a nationwide
network of Chase Homeownership Centers.
We now have 82 Homeownership Centers nationwide, 18 of which are in
California. At the centers we are able
to meet with homeowners face to face and help them work through the
modification process. Since 2009 we have
met with over 62,000 California borrowers at our Homeownership Centers. We appreciate the partnerships we have
created with your district offices and staff to help get out the word regarding
these centers and we hope to do even more going forward to make more progress.
“We’ve also partnered with housing agencies, not-for-profits, and HUD
certified housing counseling groups to host more than 680 local outreach events
in California since January 2009 providing assistance to over 26,000 additional
California customers. By February 2012
the number of California customers 60 or more days delinquent had dropped by
almost one-half to roughly 85,000 .
“Foreclosure is the last alternative.
You’ve (laugh) just heard that
from B of A. And we strongly prefer an
alternative to foreclosure for the borrower’s and our own financial
perspective Keeping borrowers in their
homes is better for communities. It’s
better for home values and therefore it is better for all of us. It’s also better for Chase because if we
foreclose, we lose our servicing income from that loan whereas if we modify it,
we have a performing loan and continue to receive both servicing fees and often
an incentive payment for completing the modification . The decision to
foreclose is always a difficult one but is sometimes unavoidable. We would prefer to work with the
delinquent borrower and do a
modification or another foreclosure alternative like a short sale. We have substantial safeguards in place to
make sure that foreclosures are a last resort
and instituted fairly in appropriate circumstances. A loan gets referred to foreclosure only after we have made substantial attempts
to provide the borrower with foreclosure alternatives. We conduct a special review of each case to
insure the borrower is in fact in default and we’ve complied with our own
pre-referral policies at least 3 times, once before the matter is referred to
foreclosure and at least twice before any sale.
By the time a sale is made we have typically reached out to the borrower
approximately 110 times.
“The landmark settlement signed with 49 states and the federal government
contains national servicing standards, consumer relief obligations, and a
strict reporting and enforcement mechanism via monitor Joe Smith, the North Carolina banking
commissioner Chase’s share of the $25
billion total settlement is approximately $5.3 billion of which Chase paid
about $1.1 billion in cash much of which will be distributed by the attorneys
general for foreclosed customers. We are
well on track to fully implement the settlement. In it we’ve agreed to provide $3.5 billion in
relief to borrowers including first and second lien principal reduction modification
for borrowers in default and over $500 million in refinancing to underwater
borrowers. We’ve committed to provide
almost $2 billion of this consumer relief in the state of California. Under the settlement Chase is offering
refinancing to eligible borrowers who are underwater but current on their loans.
We have already offered a number of re-fis as well as modifications in
California under this settlement and
expect to continue to offer additional mods and re-fis in the coming
months. We are pushing to accomplish as
much of this consumer relief as possible in the first year following the
signing and approval of the documents.
“The settlement has other notable components that will improve the level of service received by
borrowers. Under the settlement the
servicers have agreed to abide by detailed and uniform standards for mortgage
servicing insuring increased fairness,
and transparency. These include additional
disclosures to borrowers in connection with servicing activities including
foreclosure and loss mitigation, additional disclosure associated with a dual
track of foreclosure and loss mitigation.
A pre-foreclosure notice to all borrowers which will include account
information, holder status and all loss mitigation steps taken to date. Standardizing the process for the review and
appeal of loss mitigation denials.
Enhancements in document preparation to address so-called robosigning. A single point of contact for the borrowers
throughout the loss mitigation process.
Enhanced quality control procedures.
Commitments related to training and staffing. Limits on the fees servicers can charge
including the waiver of certain fees while borrower’s loss mitigation
application is being evaluated and myriad others.
“We are well on our way toward full implementation and we’ve already
implemented more than half of the servicing standard requirements. We’re also prepared to implement any changes
resulting from the CFPB;s new servicing standards which are expected to be
finalized by year end.
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| THE MURDER OF CROWS |
“We don’t believe the proposed California legislation is necessary given the
National Mortgage Settlement and its enforcement regime . We think it’s premature to enact state
legislation on servicing standards particularly legislation that extends the
requirements well beyond those negotiated in the National Settlement given that
the federal monitor, Mr. Smith, is just beginning his enforcement and oversight
and given that the CFPB standards are imminent.
We also think it’s critical that there be a consistent set of servicing
standards for the industry and not different rules in one state versus another.
If California or any other state creates a different set of servicing
rules, additional risk is likely to be introduced into the system as a result
of the complexity of the implementation
of different rules which will increase costs to both borrowers and servicers
alike. The California housing market is
now beginning to recover albeit slowly.
We encourage you to let the new consumer relief programs under the
settlement take effect as well as the implementation of the new servicing
standards and enforcement regime before
potentially disrupting the fragile recovery with traditionally familiar and
conflicting requirements. We’re also
concerned that the private right of action included in draft legislation will
likely impair the housing recovery of California. As we’ve seen in other states with long
foreclosure timelines as borrower delinquencies persist, houses often sit
neglected leading to community blight. The currently proposed right of action
language is so broad that it will allow any homeowner who reasonably believes
he or she may have been wronged to go to court creating significantly greater
backlog of cases and extending indefinite the process for resolution. Those servicers who signed the National Mortgage
Settlement are already subject to strict monitoring and enforcement and are
committed to mediating any borrower harm identified under the settlement making
a private right of action unnecessary at best and counterproductive at
most. Finally we believe the proposed right
of action has the potential to materially impact the housing related capital
markets undermining the still fragile recovery of those markets and reduce the
availability of much needed credit to new homeowners. Market investors seek
consistence and predictability and the effects of the private right of action
will inject uncertainty and delay into the already drawn out processes of
foreclosure driving up the cost of credit.”
[00.30.10]
[01:29:44] “The other point that I would like to add
is that the lion’s share of customers
whom we start talking to, that first conversation is always about a
modification – is the lion’s share – the large lion’s share of homeowners will
end up with an alternative to foreclosure.
The lion’s share of customers who end up getting foreclosed upon – and
we recognize that the numbers seem to be very very large although they’re not
that large in the context of the number of those that we actually service in
the state of California – um, typically get foreclosed because they will not engage in any conversation with
us. “ [01:31:00]
[-1:22:10] “I think that we’re all in
agreement that the right model going forward
- frankly several of us started this model a couple of years ago and
have been trying to improve it over time.
The settlement agreement totally enhances it and it is to have that one on one
relationship so that a customer doesn’t have to tell their story the 3
rd
time, the 4
th time, the 5
th time, doesn’t have to get
different advice depending who at the company that they’re speaking with so it
took us a while to get there but I think we would have complete consensus at
the table that it is better for us and better for the customer.” [01:32:41]
[01:39:08] “There are significant
consequences in the agreement for failure to satisfy all the elements of the
credit menu. For example we have close
to a $2 billion obligation to California.
It is our intention and goal to get that done within the first year of
the agreement because we are actually incented to do that but we’ve got a drop
dead date and if we don’t satisfy those obligations by the drop dead date it’s
gonna be, you know, expensive and much more painful than it’s been so …“ [01:38:39]
[02:06:14] “So first I might mention
to do a modification under the rules of HAMP and they’re very, very clear and
specific rules about what you need when
you do a modification, we need to have documentation from a borrower. We need to have certain forms filled in. We need to have income documentation so that
we can do a calculation as to what an
affordable payment would be and so if we don’t have the ability to engage and
have conversations with the borrower , we literally are not able to be in a
position where we can do a mod. So it’s
kinda its basic and simple as that. You
know if we send 25 letters and nobody ever opens up the envelopes and we make 50 calls and no
one ever returns our messages then we
are precluded from doing anything about that loan so and obligated frankly under the terms of
our agreements with our investors and the GSTs to move forward with a
foreclosure.” [Q—they’re throwing away
envelopes and not returning phone calls?]
“That happens more frequently – I know it sounds and I’m looking at your
face, Madame Chair, and I’m thinking she doesn’t believe a word I’m saying but
the fact of the matter is that it may be that people don’t want to open an
envelope from the bank that they’re not paying.
It may be that people don’t want to answer a message from the bank who
they’re not paying but we cannot fix the problem unless we’re able to have a
conversation and so that is I think – each of the servicers who are testifying
here today have made the comment that we’re trying to do a lot of outreach –
you know we can’t even do a short sale or do the less worse alternative without
being able to engage the borrower and so that is a very critical element of , I
think, of, of, of and frankly also what
else happens is we will have conversations with a borrower about a
modification and we never get the
documentation that’s required in order to do the HAMP loan so we will actually engage but for one reason or
another they have trouble producing the information that we need – that’s one
of the reasons why having a single point of contact we hope is going to be very
helpful because in our shop and I’m sure that my industry colleagues have
something similar . Our our customer
assistance specialists are calling
everybody who’s on their docket every 3 days to say I still need your bank
statement in order to put your modification through. I still need the settlement agreement from
your divorce in order to put your modification through. And so the goal of having that relationship
which we talked about a little bit earlier is that, that there is a little bit
more trust and I understand we have some trust – and this is a trust industry –
issues with the population of borrowers who, who believe they have been victims
of, of the crises that they and we all have been living through but, but we’re
hoping that is also going to make a significant difference in the pull-through
rate and the ability to get someone over the finish line in terms of getting a,
a foreclosure alternative – you know a foreclosure prevention . [02:10:48]
View Rebuttal Testimony of California Homeowner & Vietnam War Widow
Other Crows Who Gathered in Sacramento:
Bank/Servicers:
Kevin Gould, California Bankers Association
Jon Ross, California Mortgage Bankers Association
Scott Governar, California Financial Services, Assn.
James Beckwith, President & CEO of Five Star Bank; California Independent Bankers
Other Related Industries:
Ron McDaniel, California Credit Union, CCUL
Bill Hultman, Mortgage Electronic Registration System (MERS)
Stan Wieg, California Association of Realtors
Mike Arnold, California Mortgage Association
The testimony can be viewed in its entirety by going to the following site:
