RALEIGH — Few segments of the real estate industry have performed worse in recent years than loan servicers.
As the number of homeowners behind on their mortgages mushroomed in the years after the financial crisis, the loan servicing industry as a whole proved itself to be totally unprepared and ill-equipped for the crisis.
Many homeowners found it nearly impossible to get a real person on the phone. Others were passed around to different representatives, each one giving conflicting advice and asking for the same documentation again and again. And that’s not even mentioning the allegations of robo-signing and other shortcuts taken to speed along the foreclosure process.
This week in Raleigh, Bank of America held a three-day event that promised struggling homeowners something many desperately want: face-to-face counseling.
Homeowners whose loans are being serviced by the bank sat down with specialists, who discussed their situations and possible options for avoiding foreclosure. Their documents were scanned and entered into Bank of America’s network, meaning they could be retrievable by other bank representatives in the future.
Bank of America, of course, is not a company that many would describe as a model servicer. The Charlotte bank has spent billions on costs related to mortgage servicing settlements and other mortgage matters stemming from the financial crisis.
But it’s hardly controversial to say that there should be more events such as the one in Raleigh that ended Wednesday. Roger Braggs II, the bank vice president in charge of the event, said Bank of America has been holding them since 2009, including more than 350 last year.
For homeowners, perhaps the biggest advantage of such events is it helps them wade through the morass of mortgage securitization.
Many homeowners have no idea who owns their mortgage as their loans were at some point bundled with other loans into a mortgage-backed security and sold to investors. The options open to struggling homeowners vary depending on who owns their mortgages, as different investors may be participating in different mortgage modification plans or other types of assistance programs.
Bank of America asks participants in its events to bring full financial documentation, which Braggs said enables a specialist to determine what programs are available and whether the homeowner is eligible. He said the bank is also now being much more proactive in moving ahead with a short sale if a homeowner believes that is his or her best option.
Braggs said the bank can establish what price the investor will accept in a short sale at the beginning of the process instead of waiting until after the property has been put on the market and an offer has been made.
Getting help early
Before this week’s event in Raleigh, Bank of America sent notices to 3,200 homeowners within 75 miles of Raleigh who were at least 60 days delinquent on their mortgages. About 160 had come in for counseling by Wednesday afternoon.
One of them, Pam Gibson, isn’t behind on her mortgage, but she fears she soon could be. Gibson, 59, heard about the event on the radio, and decided she would see whether there was any way to lower the monthly mortgage payments on her Cary home.
A teacher who retired at the end of 2010, Gibson has a fixed budget that has been squeezed by medical expenses from a back injury and increased utility bills and other costs related to one of her daughters moving back home.
“I’m managing, but right now there’s not any wiggle room,” she said.
The Bank of America specialist who met with her said that because her mortgage payments account for more than 31 percent of her take-home pay, she may be eligible to lower the interest rate without paying the usual refinancing and appraisal fees.
Gibson said in the past that Bank of America has not always been good about communicating other changes to her mortgage.
“I haven’t been happy with them at points,” she said, “but this would be a way to put a better taste in my mouth.”