Second guessing mortgage servicers isn't as easy as it looks, according to Michael Olenick, a self-proclaimed data geek who attends foreclosure hearings in Florida.
In an email exchange Tuesday, he said during one foreclosure hearing Tuesday morning, the attorney who was representing the bank that was foreclosing asked for yet another delay to a foreclosure ruling.
It's the fourth one. And Olenick said the borrower, who is actually ready to get out from under this thing, is beginning to think the bank lawyer is representing the borrower's interests.
Here's what Olenick said about it:
"It's the one part I think many in the banking system don't understand: a huge number of borrowers don't want their houses but can't sell them because they're underwater. Most flippers, NINJNA McMansion borrowers, and the rest like them were washed out of the system a long time ago. Now it's mainly people who are either broke or don't want their houses, usually because they have a job that's far away or the kids left."
So why would mortgage servicers drag their feet? Is it the trust? Is it the MIs? Clearly they see it as a better solution, and really, it's hard to say. But at some point it will need to be worked out.
Investors don't get it, because often borrowers are being offered more and more cash for keys, sometimes up to $20,000 for a private loan. Or a nifty rental solution.
"Investors would be surprised to hear some of the stories where mortgage servicer lawyers ask for delay after delay, ignoring offers for short-sales, deeds-in-lieu — whatever — as the cost of the default, that will be borne by the trust, continues to grow. Even when they're able to get a deficiency, it's usually pointless because the borrowers are broke."
But, Olenick says there are plenty of good people in the foreclosure space in Florida. In another case, a lawyer showed up for a hearing and a bank called, but then didn't attend. Not willing to ask for another delay, she filed paperwork to get the foreclosure finalized on behalf of the borrower.
"That's typically also what the bond investors also want: Some may want to avoid write-offs with liquidations but most I talk to just want to be finished with the bubble-era loans," Olenick said.