Congress Concerned By Loss Mit Training

Members of the U.S. Congress, prodded by the extent of the foreclosure crisis, have started to pay close attention to the hiring and training of loss mitigation staff.

That's particularly true on the House Financial Services Committee, where chairman Barney Frank, D-Mass., and Rep. Maxine Waters, D-Calif., have been holding hearings to examine loan servicing practices.

Rep. Waters in particular has paid close attention to the servicing industry in recent months, and she said at a recent congressional hearing that she doesn't always like what she sees. She said loan servicing practices were "woefully underregulated" during the housing boom years.

"When the crisis hit, it rapidly became clear that the mortgage servicing 'muscle' of the industry had largely atrophied. Nobody was sufficiently staffed up or trained to do the kind of workouts and modifications needed," Rep. Waters said during the hearing.

While the industry has responded to the need for more staffing and better training in the area of doing modifications and other plans to keep borrowers in their homes, she said the efforts have not been as extensive as they should be. Moreover, she said industry-provided data on loan servicing is "incomplete and somewhat opaque."

At field hearings, Rep. Waters said homeowners, housing counselors, legal aid attorneys and local government officials all say they have trouble getting "prompt, reasonable action by mortgage servicers."

Rep. Waters believes that the current situation calls for federal government intervention. But mortgage servicers and the Hope Now alliance report that they've made significant strides in beefing up loss mitigation staffing and training efforts.

Dealing with the surge in delinquency and defaults is especially challenging for mega-servicers like Wells Fargo, which, with a $1.5 trillion home loan portfolio under management, services one in eight home loans in the country.

Mary Coffin, executive vice president for mortgage servicing at Wells Fargo Home Mortgage, said that in 2005, Wells Fargo's team for assisting at-risk borrowers consisted of 200 experts. Today, the company has more than 1,000 employees dedicated to helping at-risk borrowers.

"We monitor our volume of calls daily and shift experienced staff from one department within our company to another," Ms. Coffin said at the hearing.

Another mega-servicer, Bank of America, also has added resources to its home retention staff to aid delinquent or at-risk borrowers.

Michael Gross, managing director for loan administration at Bank of America, said his company has added staff and improved the training provided to loss mitigation employees. Bank of America is in the process of integrating Countrywide Financial Corp., which became part of BoA in July. (For more of his views, see an excerpt of his testimony on page 4).

"Over the past year, the combined home retention staffs have more than doubled, and the company has committed to maintaining no less than 3,900 home retention staff to assist borrowers, for at least one year from the date of the merger," he said, adding that currently Bank of America has 4,700 employees devoted to home retention.

That expansion of loss mitigation staffing and home retention training has shown results, Mr. Gross told the congressional panel. Currently, Bank of America makes an average of 17 attempts per month to contact delinquent borrowers through phone, mail and other means, he said. In the first half of 2008, Bank of America's home retention division saved over 117,000 mortgage customers from foreclosure, he said. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/