No Options With Ocwen

Yesterday I wrote about mortgage loan servicer Ocwen stopping all short sale negotiations.

I proposed that Ocwen might be taking a self centered approach by forcing the homeowner into default in order to maximize the fees it can collect.  I lost sleep last night thinking about the far reaching implications involved.

BUSINESS IS WAR!

Or so some say.  This theory most aptly applies to your competitors.   Beating your competition is business 101.  Read Ocwen's Code of Ethics, specifically page 13 if you are in doubt.  I don't agree, but I can understand that.

What about your clients?  Do you treat them like you do your competitors?  Of course not.  Not to debate the concept  in depth here but that's how Ocwen is treating it's clients.

Who are Ocwen's clients?  They have two.  The homeowners that Ocwen services and the Note Holders that Ocwen collects mortgage payments for.  Ocwen has a page for it's Clients: LINK

SCREWING THE HOMEOWNER

You are a homeowner.  You didn't go to Ocwen to get your loan but the payment servicing was sold to them.  You find yourself in trouble and can't make your payments. 

You have options.  We explain 7 of these other options available to everyone of our short sale clients.  Typically one of them would be to sell the property for what you can, which might be less than what you owe.  This is a short sale.  Unfortunately for you, Ocwen has closed that door! 

While a short sale wasn't your only option, it might have been the best.  Chances are ,of the remaining 7 options, the last one might be the only one that works.  That's letting the home go to foreclosure.  That's what Ocwen is forcing you into.

SCREWING THE NOTE HOLDER

The Note Holder has employed the servicing to Ocwen.  It's part of what a servicer does.  They collect payments.   I would think Ocwen would have a fiduciary responsibility to best preserve the value of the portfolio the Note Holder has entrusted them with.

By refusing to entertain any short sale offers,  they are forcing more homeowners into foreclosure.  That process is costly.  To recoup any money the Note Holder will have to sell the property as an REO (bank owned).  Everyone knows that the net loss resulting from an REO is much higher.  That's why you hear that banks don't want your property.  That's also why they'll happily negotiate a short sale.  It's better to take a smaller loss in a short sale now than to take a larger loss later.

OCWEN HAS MOTIVE

I suggested yesterday that Ocwen is taking this course of action because their plans to sell the company fell through.  I proposed that they can collect more in fee income by forcing the home into foreclosure.  The greater loss by the resulting REO will not be Ocwen's.  It all transfers to the Note Holder.

Last night I realized there was more.  When a loan starts to get behind, Ocwen's servicing people will call the homeowner to remind them that they missed their payment.  When it gets severely behind, the loan file is sold to a collection company.  Did you know that Ocwen also runs a collection company?  That's right. The  Ocwen Recovery Group 

From their front page...

To make your loans worth more, it is critical to collect as much of your assets as possible - to recover more! Since 1988, Ocwen has focused on making loans worth more. We started by working on improving the liquidation rate of non-performing assets. We studied high performing collectors and utilized psychologists to determine best practices and then embedded this knowledge into our technology, recruiting and training programs. In 2007, Nationwide Credit, Inc. joined Ocwen, establishing Ocwen as the 5th largest collection agency in the nation. By implementing these best practices into our wholly owned global delivery centers, Ocwen and Nationwide Credit, Inc. have created the only proven "Global Collections Platform".

Is Ocwen's new plan to drive more collection contracts to their other company?  It certainly is a growth industry right now.

Just thinking...

 

Has Stockton Run Out?

Poor Stockton, CA.

We saw 60 Minutes, we read all the news, everyone knows or has heard that Stockton IS the

Foreclosure Capital of the U.S.

Is that because the good people of Stockton all got together and decided to call themselves that? No.

Maybe there was a contest, poll or election? Nope.

It was the media that planted the moniker on the city. I always assumed it was based on raw numbers. Maybe it was. I can't tell.

Yesterday I was working on a project and pulled the entire current list of Notice of Default filings for the entire State of California. It was dated Feb 5th.

As I was compiling numbers I noticed something strange.

Stockton, and it's county (San Joaquin) seemed lower than what I expected to see.

By City: Antioch: 85 Bakersfield: 143 Elk Grove: 63 Fontana: 107 Hayward: 99 Modesto: 149 Oakland: 171 Sacramento: 326 Stockton: 110 Tracy: 50 Vallejo: 63

By County:Alameda: 460 Contra Costa: 339 Orange: 334 Sacramento: 512 San Joaquin: 212 Santa Clara: 174 Sonoma: 273 Stanislaus: 276

If the title wasn't bestowed upon them based on sheer numbers, maybe it was something else.

Was it Per Capita?
Per Capita would make perfect sense. The number of foreclosures per person? Maybe it was per household?

Stockton has an estimated 290,141 people (2006) according to CityData,
while Sacramento sits at 453,781 according to the same site.

Sacramento is slightly less than twice the size of Stockton, yet our state capital had 3 times the number of filings!

I realize this is only a one week sampling. I can pull a new list later today.

Is it just because the media thinks they are the proverbial Red Headed Step Child of the central valley? There is a finite number of homes that can be foreclosed on. That leads me to wonder...

Is Stockton actually running out of homes to foreclose on?

Just thinking.

An excellent explanation

Yesterday, I reported that Zillow featured an article I had written.

Puddles and Pools

The article was an attempt to explain the complex world of Mortgage Backed Securities. Lenders don't just create mortgage rates willy-nilly.

I found this video from CNBC with Steve Liesman explaining in simple terms how the Puddles are combined into larger Pools. This happens to show this as a SubPrime version.

This is more about how those Pools are then divided so that different investors can take "ownership" of different facets of the Pool.

Good Job Steve!

Real Estate "GURU" Caught Skimming

Here's a trail of stories to read dealing with Equity Skimming.

I started at this article in BusinessWeek by Dean Foust about Foreclosure Rescue Scams.

It's a good article and worth the read.

"... in which unscrupulous individuals or groups approach homeowners facing foreclosure and promise to help them save their homes. In many instances, they convince the troubled homeowner--who is desperate to save their homes--to transfer the deed over to them with the promise that the investor will make the mortgage payments going forward, and the previous owner can rent while they try to rebuild their savings and repair their credit."

In the comment section I saw a link that led me to this page:

"The Home Equity Theft Reporter"

"a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it"

Which then led to to an article in The Kansas City Star entitled

"Real estate's market crash ensnares guru"

Of course that grabbed my interest. Just to help decipher the quote below, Smolec was the homeowner, Ledman was the Real Estate Guru, and Sargent the Buyer.

"Smolec was about $35,000 in arrears on her mortgage, and the bank was bearing down. Smolec said she thought she was signing a lease with Ledman that would allow her to stay in the house for two years while she made arrangements to pay off what she owed using a pension that was due her.

Asked whether she understood she was signing away all her rights to her house, Smolec testified, "No, I did not... I didn't understand because I was told differently."

Smolec said Ledman never explained the complex papers she signed.

"He said I was too old and he would take care of me like a grandma," she said.

Instead, Ledman sold the house to real estate agent Susan Sargent for $500,000, said Tom Gottschalk, a former investigator who testified at the court hearing. Gottschalk said that in signing away all her rights, Smolec lost the equity she still held in her house. He said that after expenses, Ledman would make a $130,000 profit.

Sargent said at the hearing that when she told Smolec she was the home's new owner, "She broke down." Sargent said Smolec was never aware until then that her house was sold.

Sargent said because of problems with the deal, she got Ledman to buy the house back. The house was remodeled and sold last year, this time for $600,000."

Please, please - read all three sites and if you are in trouble - DO NOT sign your Deed over to Anyone - Don't allow yourself to be "Smolec'd"

Also Posted at THE FORECLOSURE REPORT

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