Loan Modifications and Arizona Oceanfront Homes: Chase

Hitler would have never been able to victimize so many people without recruiting the help of armies of willing accomplices. And my theory is that 99% of those soldiers implementing Hitler’s horrific plan under his command would never have remained any part of the holocaust had they the big picture playing in HD to watch and see the final scene of what actually happened to the victims, especially after getting to know them personally…

Perpetrating crimes against innocent and good people on a large scale requires a double-blind technique. Storm trooper 1, who leads the children down the first corridor, needs to think he or she is helping the children get  out for a breath of fresh air. Storm trooper 2, sending the children into a little locked room, must be lead to believ that he is helping to keep the kids out of harms way. Storm trooper 3 who opens the gas valve, must be lead to believe that he or she is simply fumigating the place to make it safe for people of all ages. And it is by this method of limited access to information, that the innocent are victimized and those you implement the plan can sleep comfortably at night without an iota of guilt disturbing their slumber!

Enter Chase Bank. The very same system in place allows the majority Chase employees to truly believe that they are a part of a plan to help homeowners avoid foreclosure. If it were a sincere plan with a track record of success, however, it would behoove the employer to give the employees the opportunity to see the big picture and proudly enjoy the story of their success: Wouldn’t it be great for company morale to have Harvey (Not a real person just a random name) see what becomes of the foreclosed sub-prime borrowers he helps get into a trial loan modification plan. Why, Harvey would be inspired to work harder, and assure borrowers in duress that they are on the road to a likely win/win resolution to their mortgage problem. With a picture in Harvey’s mind of all the people he helped who went on to acquire a manageable, low interest loan, Harvey would be all-the-more effective in his job of leading people down the “right” corridor and into the “safe” little room! Unless the fate of the people being ‘helped’ turned out to be a scam? Unless the gas valve was not just killing bugs! If Harvey was to be made aware of his part in such a diabolical plan, Harvey would be sleeping poorly each night!

In the infrastructure of Chase Bank, it seems clear that the process and functions of the various departments:  collections, loss mitigation, foreclosure, underwriting, executive resolution all have a commonality with the plan our friend Adolph implemented to enlist the assistance he needed to complete his holocaust: Isolating the worker ants from the reality of the end product Hitler found plenty of people to carry on his tasks of: eugenics programs (including anti-miscegenation legislation, compulsory sterilization of the mentally ill and the mentally deficient, the execution of the institutionalized mentally ill as part of a euthanasia program).

The meticulous avoidance of continuity and follow-through of what happens to the foreclosure victims employees ‘help’ is reminiscent of the obscure fabrication of paper trails of children and adults who were put to death in the gas chambers by the Nazis:

Patients were transferred from their institutions to the killing centres in buses from the operated by teams of SS men wearing white coats to give an air of medical authenticity. To prevent the families and the doctors of the patients tracing them, they were often sent to transit centres in major hospitals where they were supposedly assessed before being moved again to “special treatment” (Sonderbehandlung) centres. (The expression was later widely employed as a euphemism for killing during the extermination of the Jews.) Families were sent letters explaining that owing to wartime regulations it would not be possible to visit relatives in these centres. In fact most of these patients were killed within 24 hours of arriving at the centres, and their bodies cremated. For every person killed, a death certificate was prepared, giving a false but plausible cause of death, and sent to the family along with an urn of ashes (random ashes, since the victims were cremated en masse). The preparation of thousands of falsified death certificates in fact took up most of the working day of the doctors who operated the centres.

Chase Bank’s individual employees in collections, loss mitigation, foreclosure, underwriting, executive resolution and even ‘negotiators’ are moved from departments to new ones and their roster of borrowers are removed after a certain amount of time passes. Borrowers discover that Mr. So-and-so is no longer handling your case, it is now Mrs. Whose-its… The accomplishes so many things that keeps the ultimate fate of the victims invisible from the bulk of employees leading the ‘borrowers’ down the corridors and into the little rooms… All in the sincere interest of helping people!

Ask a Chase employee if they know what percentage of people he or she helped who actually achieved a permanent loan modification, and you’ll likely get an answer like: “I don’t get to follow through on the cases…” But some are successful and some aren’t… But here is a loaded question you won’t be able to get an to:

“How many  (what percentage) of sub-prime mortgage borrowers who are put on trial modification become permanent modified loans?”

Good luck with that answer! Banks are terrified of REOs. REOs are bank-owned properties. After a foreclosure the property is OWNED by the bank, and it becomes VERY costly to the bank. Any plan that involves dangling carrots in front of distressed homeowners to buy time for the bank, will be a worthwhile investment for the bank. These plans includes things tha bank wants to achieve and avoid:

Things the bank wants to avoid:

Expenses to maintain REO property: Taxes, homeowners insurance, landscape maintenance, winterizing homes, leak repairs, liability issues, and numerous expenses that are ongoing while the home remains unsold.

Legal issues where the lender is out of compliance with government regulations in their treatment of borrowers with respect to infringement on borrowers’ rights and truth in lending laws, inequitable treatment of disadvantaged minorities and non-compliance with newer government regulation for lenders participating in current Government Foreclosure Programs.

Things the bank wants to accomplish:

The ideal scenario is to have someone else pay for the upkeep of the property pending foreclosure rather than the bank. In the case of Chase Bank’s acquisition of sub-prime loans from WAMU at a cost of only 3-cents on the dollar, this is an ingenious plan to dangle a carrot before the horse to get the horse to take you wherever you want until the horse drops! The carrot that works the best is the “Proverbial Loan M0dification Carrot”. And the most irresistible strain of this tasty piece of bait is the “trial loan modification”. For homeowners who believed they were weeks away from loading up the family car to look like Jed Clampert and Ellie-Mays Beverly Hillbilly’s family car, getting in t trial loan modification is a dream-come-true. And, it does have its benefits to the homeowner: IT can buy time. But that is the very same benefit if has, to a much greater degree, to the lender!

Sub-prime borrowers who are in ‘trial loan modifications’ will statistically mostly fail to achieve permanent loan modifications. But, the process of trial modifications can eliminate and avoid the costly ordeal of REOs for the bank, and, not only does the bank have reduced expenses, but the homeowners dillegently work to continue to send checks to the bank each month. So even if a borrower has a loan with a principal of lets say $300,000, and the monthly payment is reduced to $1,000 or so from a previous payment of $3,000 or so on a sub-prime mortgage, a bank such as Chase is in a much better financial sittuation than an REO. Especially if you consider that at 3-cents on the dollar that $300,000 loan, Chase bought from WAMU, only cost Chase Bank around $9,000. After just nine months of trial modification payments, Chase owns the property free and clear in a manner of speaking. Of course, there are numerous other expenses for Chase, but the potential for profit is astronomical!

So now back to the system of Chase employees who interface with the borrower to facilitate collection of some monthly payments: Chase employees in the various departments collections (now outsourced and having even less information to provide to answer borrowers’ questions), loss mitigation, foreclosure, underwriting, executive resolution, and the elusive and mysterious NEGOTIATORS. Employing the principles described above, where job duties are periodically shifted, and the roster of borrowers an employee is working with is periodically changed, the worker ants and carry on their tasks of leading borrowers down the ‘right’ corridors and into ‘safe’ little rooms is all down with a respectable degree of sincerity and without guilt. Never allowing borrower/employee relationships to grow to a dangerous level of mutual friendship, compassion and respect, by implementing change on a regular basis, the emplyees never get to see the ultimate fate of the people they beleive they are ‘helping’! If they did see what happens to the sub-prime borrowers they put into trial loan modification programs, they just may feel a little less like Mother Theresa’s assistants and a little more like storm troopers:(

One Response to “Loan Modifications and Arizona Oceanfront Homes: Chase”

  1. Inside every cynical person, there is a disappointed idealist

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