A rather nauseating statement from a Government Accountability Office report on foreclosures:
Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices, such as whether foreclosures are completed; however, given the ongoing mortgage crisis, they have recently placed greater emphasis on these areas.
You read that right. Bank regulators in the United States were not even looking at foreclosure practices before the media latched onto the foreclosure fraud outbreak. The Office of the Comptroller of the Currency and the Federal Reserve acknowledged this in hearings two weeks ago, but it's still harrowing to see the degree to which mortgage banking remains totally free of oversight, even after it drove the global economy off a cliff.
The rest of the report is about banks abandoning properties instead of proceeding with a foreclosure sale. Kind of sick-- throw a family out, then just abandon the house altogether, don't even bother to sell it. The GAO says it's not happening too much, but any sane businessperson would make sure that it never happens. A simple loan modification would cut everybody's losses here, but the banks can't be bothered with that. And nobody is bothering the banks about it.
You may recall that there was a tremendous legislative battle earlier this year over the creation of a new Consumer Financial Protection Agency. The bank lobby and regulators at the Fed, the OCC and yes, even the FDIC, all argued that we didn't need it, while essentially everybody else said we did. But the existing regulatory chiefs all made essentially the same argument against the CFPA: We have several regulators who oversee consumer protection, and they're all just great at it. Creating a new agency that focused only on consumer protection would be end up destabilizing the financial system, because regulating consumer protection without looking at bank safety and soundness would jeopardize bank capital levels.
This argument was absurd at the time, most obviously because the existing regulators were simply awful. They totally failed to restrain predatory mortgage lending for nearly a full decade precisely because they considered "safety and soundess" regulation to be their only job. Safety and soundness was construed as "bank profitability"—if a bank had lots of money, it was less likely to fail. In practice, that meant regulators would allow consumer protection violations so long as they made money for the bank. With the mortgage crisis, this consumer protection failure ultimately lead to a safety and soundness catastrophe, but that's not actually very common. Usually predatory lending is very profitable, which is why banks do it.
So what happened after all the top regulators went out in public and repeatedly screamed that we absolutely can't allow them to lose their consumer protection authority? They totally ignored consumer protection regulation. Look at the excuse that bank regulators fed to the GAO (emphasis mine):
Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices.
Translation: Even after consumer protection violations wrecked the largest banks in the country, we still don't look at consumer protection unless it actually hurts a bank's bottom line, right away, right now.
The amazing thing here is that the legal liabilities from these foreclosure abuses once again could be putting bank solvency on the line. Global economy to Elizabeth Warren: Help!
Also, the link above is to a summary of the GAO report. The full report is here.
Manal Mehta, Branch Hill Capital:
DONALD BISENIUS, EXECUTIVE VICE PRESIDENT, FREDDIE MAC: “…every day, every month I wait to start that foreclosure process costs, and costs a lot. If you do back of envelope math, as I suggested in my written statement, it’s $30 to $40 a day. If we have 300,000 loans sitting in foreclosure, that can start to run into the hundreds of millions of dollars a month from those delays. We have to find a way to remove the confusion, because I understand it is a painful process and a confusing process.”
(see page 8)
WITH COMMENTS MADE BY BRIAN MOYNIHAN ON 11/16/2010 AT THE BANK OF AMERICA FINANCIALS CONFERENCE:
: I was wondering if you could comment what the foreclosure moratorium is costing Bank of America, on the increased personnel costs and how long do you think those costs will go on for?
: In terms of the actual, the costs in our mortgage company, we went from about 30,000 people to 50,000 people. The foreclosure piece is actually a small part of that business, the work up to a foreclosure, the collections and modification effort, that’s where all the work goes in. So I think Chuck said at earnings, it’s $10 million, $20 million a month for a couple, for several months, so it’s not a major issue. The cost in the mortgage business, and one of the reasons for our expenses, when you look at them from the outside you say geez, why isn’t more coming out here, is we are continuing to build people to do the modifications and collect the delinquent credit, to work the people, with the customers to help them to try to avoid foreclosure and ultimately foreclose, but the actual cost of that particular redo of the 100,000 affidavits and getting that process exactly right has been relatively modest in the context of people working on it.
The real cost was going from 5,000 to 10,000 to 15,000 to 20,000 people working on the whole delinquent book. And what will happen is over the next three years, you will see that plateau and come back down. If you look at us from a company producing a couple billion, or $70 billion of mortgage credit a quarter and servicing it when delinquencies are more normalized after we get the pig in the snake and delinquency will come down in the front end, that’s a company that needs about 30,000 employees, and we literally have 50,000. So that will take us a few years to complete it.
WITH COMMENTS MADE DURING BAC’S Q3 2010 EARNINGS CALL:
: Okay. And could you just sort of step back from – I mean this foreclosure issue – foreclosure moratorium got blown out basically in the last week or so to a lot of other stuff. The fact that REMICs are not valid, that titles are not being conveyed properly in the REMIC process, et cetera, et cetera. Could you just kind of give us your view of whether this is a big deal, not a big deal, not as big a deal as the press has presented, et cetera?
: Here is what I say, is I think when you’re going through the issue of people losing their home, Nancy, there could be a lot of obstacles put up in front of that process by people who want to keep their homes and people representing them, and we know that. But that’s going on forever, frankly. So I think that on the affidavits that some judges said we want these done right, we went and did them. I’m sure there will be other issues raised. But as we look at the so-called marriage issue is we look at some of the other stuff that’s raised, and I think you’ve seen a lot of people write on this or talk about it. We don’t see the issues that people are worried about, quite frankly. But we’re taking them very seriously. We’re making sure we’re right. But for example, one of the issues was you needed to take title in your own name prior to foreclosure out of marriage, and we’ve done that. That’s been our policy. So there’s nuances in how all those things play out. But I think you are right. I think the best way to think about it is – I don’t think the technical issues are a big deal. The issue of foreclosure is a big of deal, and the issue is we’ve got to get on with it, because it will restore the health in the market. I think the overstatement that this is all messed up, it’s been going on for a while. We’ve been ramping up the people, us and the other servicers. They’re going to – a big volume of transactions have gone through in this last quarter. It will get bigger over the next quarters. But within three or four quarters, we’ll peak and come down the other side in terms of this activity. It will still be elevated. So I think it’s a big issue because people are losing their homes. It’s not a big issue for the kinds of issues in service.
ON THE NUMBER OF LOAN FILES AFFECTED BY THE FORECLOSURE MORATORIUM:
We will move next to site of Nancy Bush with NAB Research, LLC. Your line is open.
: Good morning. A couple of questions here. Brian, could you just clarify where are you on this foreclosure review? I’m reading the slide here, the moratorium that you had on in the judicial state is now off, but I see at the bottom of this slide, you say we’ll not complete a foreclosure sale at this time. So when do we get to that point when you actually start selling foreclosed assets again?
: I think we’ve said – this sort of timed out with the statements that we put out yesterday. I think you should look at those in terms of timing. I thought we said that we’d begin putting affidavits back in the process next week. Then that’s a judicial process. Then the judge looks at the papers and takes you through. Then the non-judicial states will take a few more weeks to complete the review. So it begins next week, but It builds back up. There’s a basically – if you step back from this, there’s 1,000 people working on this. It’s 100,000 some in the judicial state. So it’s not an amount of work that we’re not used to getting done. Then we’ll turn to the non-judicial states in that series. So the actual re-filings I think start next Monday I thought we said.
CONCLUSION:
THE MATH:
100,000 * $30 (LOW END CITED BY FREDDIE EXECUTIVE) = $3,000,000 PER DAY OR $90,000,000 PER MONTH!!
bench craft company rip off
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
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Taiwan's NMA News has taken on the battle between The Simpsons over at Fox Broadcasting and their conservative corporate cousins at Fox News, depicting both of The Simpsons recent attacks on the network as well as Bill O'Reilly's ...
bench craft company rip off
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
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bench craft company rip off
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
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Esta semana en la tarjeta de crédito <b> Noticias </ b> - MoneyBuilder - sentido de lo que <b> ;...</ b> Proporcionado por LowCards.com más de ocho millones de personas abandonan la Tarjeta de Crédito uso Más de ocho millones de consumidores dejaron de usar las tarjetas de crédito durante el año pasado, según un nuevo estudio de TransUnion. El uso de de uso general ...
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bench craft company rip off
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
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Taiwan's NMA News has taken on the battle between The Simpsons over at Fox Broadcasting and their conservative corporate cousins at Fox News, depicting both of The Simpsons recent attacks on the network as well as Bill O'Reilly's ...
bench craft company rip off
A rather nauseating statement from a Government Accountability Office report on foreclosures:
Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices, such as whether foreclosures are completed; however, given the ongoing mortgage crisis, they have recently placed greater emphasis on these areas.
You read that right. Bank regulators in the United States were not even looking at foreclosure practices before the media latched onto the foreclosure fraud outbreak. The Office of the Comptroller of the Currency and the Federal Reserve acknowledged this in hearings two weeks ago, but it's still harrowing to see the degree to which mortgage banking remains totally free of oversight, even after it drove the global economy off a cliff.
The rest of the report is about banks abandoning properties instead of proceeding with a foreclosure sale. Kind of sick-- throw a family out, then just abandon the house altogether, don't even bother to sell it. The GAO says it's not happening too much, but any sane businessperson would make sure that it never happens. A simple loan modification would cut everybody's losses here, but the banks can't be bothered with that. And nobody is bothering the banks about it.
You may recall that there was a tremendous legislative battle earlier this year over the creation of a new Consumer Financial Protection Agency. The bank lobby and regulators at the Fed, the OCC and yes, even the FDIC, all argued that we didn't need it, while essentially everybody else said we did. But the existing regulatory chiefs all made essentially the same argument against the CFPA: We have several regulators who oversee consumer protection, and they're all just great at it. Creating a new agency that focused only on consumer protection would be end up destabilizing the financial system, because regulating consumer protection without looking at bank safety and soundness would jeopardize bank capital levels.
This argument was absurd at the time, most obviously because the existing regulators were simply awful. They totally failed to restrain predatory mortgage lending for nearly a full decade precisely because they considered "safety and soundess" regulation to be their only job. Safety and soundness was construed as "bank profitability"—if a bank had lots of money, it was less likely to fail. In practice, that meant regulators would allow consumer protection violations so long as they made money for the bank. With the mortgage crisis, this consumer protection failure ultimately lead to a safety and soundness catastrophe, but that's not actually very common. Usually predatory lending is very profitable, which is why banks do it.
So what happened after all the top regulators went out in public and repeatedly screamed that we absolutely can't allow them to lose their consumer protection authority? They totally ignored consumer protection regulation. Look at the excuse that bank regulators fed to the GAO (emphasis mine):
Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices.
Translation: Even after consumer protection violations wrecked the largest banks in the country, we still don't look at consumer protection unless it actually hurts a bank's bottom line, right away, right now.
The amazing thing here is that the legal liabilities from these foreclosure abuses once again could be putting bank solvency on the line. Global economy to Elizabeth Warren: Help!
Also, the link above is to a summary of the GAO report. The full report is here.
Manal Mehta, Branch Hill Capital:
DONALD BISENIUS, EXECUTIVE VICE PRESIDENT, FREDDIE MAC: “…every day, every month I wait to start that foreclosure process costs, and costs a lot. If you do back of envelope math, as I suggested in my written statement, it’s $30 to $40 a day. If we have 300,000 loans sitting in foreclosure, that can start to run into the hundreds of millions of dollars a month from those delays. We have to find a way to remove the confusion, because I understand it is a painful process and a confusing process.”
(see page 8)
WITH COMMENTS MADE BY BRIAN MOYNIHAN ON 11/16/2010 AT THE BANK OF AMERICA FINANCIALS CONFERENCE:
: I was wondering if you could comment what the foreclosure moratorium is costing Bank of America, on the increased personnel costs and how long do you think those costs will go on for?
: In terms of the actual, the costs in our mortgage company, we went from about 30,000 people to 50,000 people. The foreclosure piece is actually a small part of that business, the work up to a foreclosure, the collections and modification effort, that’s where all the work goes in. So I think Chuck said at earnings, it’s $10 million, $20 million a month for a couple, for several months, so it’s not a major issue. The cost in the mortgage business, and one of the reasons for our expenses, when you look at them from the outside you say geez, why isn’t more coming out here, is we are continuing to build people to do the modifications and collect the delinquent credit, to work the people, with the customers to help them to try to avoid foreclosure and ultimately foreclose, but the actual cost of that particular redo of the 100,000 affidavits and getting that process exactly right has been relatively modest in the context of people working on it.
The real cost was going from 5,000 to 10,000 to 15,000 to 20,000 people working on the whole delinquent book. And what will happen is over the next three years, you will see that plateau and come back down. If you look at us from a company producing a couple billion, or $70 billion of mortgage credit a quarter and servicing it when delinquencies are more normalized after we get the pig in the snake and delinquency will come down in the front end, that’s a company that needs about 30,000 employees, and we literally have 50,000. So that will take us a few years to complete it.
WITH COMMENTS MADE DURING BAC’S Q3 2010 EARNINGS CALL:
: Okay. And could you just sort of step back from – I mean this foreclosure issue – foreclosure moratorium got blown out basically in the last week or so to a lot of other stuff. The fact that REMICs are not valid, that titles are not being conveyed properly in the REMIC process, et cetera, et cetera. Could you just kind of give us your view of whether this is a big deal, not a big deal, not as big a deal as the press has presented, et cetera?
: Here is what I say, is I think when you’re going through the issue of people losing their home, Nancy, there could be a lot of obstacles put up in front of that process by people who want to keep their homes and people representing them, and we know that. But that’s going on forever, frankly. So I think that on the affidavits that some judges said we want these done right, we went and did them. I’m sure there will be other issues raised. But as we look at the so-called marriage issue is we look at some of the other stuff that’s raised, and I think you’ve seen a lot of people write on this or talk about it. We don’t see the issues that people are worried about, quite frankly. But we’re taking them very seriously. We’re making sure we’re right. But for example, one of the issues was you needed to take title in your own name prior to foreclosure out of marriage, and we’ve done that. That’s been our policy. So there’s nuances in how all those things play out. But I think you are right. I think the best way to think about it is – I don’t think the technical issues are a big deal. The issue of foreclosure is a big of deal, and the issue is we’ve got to get on with it, because it will restore the health in the market. I think the overstatement that this is all messed up, it’s been going on for a while. We’ve been ramping up the people, us and the other servicers. They’re going to – a big volume of transactions have gone through in this last quarter. It will get bigger over the next quarters. But within three or four quarters, we’ll peak and come down the other side in terms of this activity. It will still be elevated. So I think it’s a big issue because people are losing their homes. It’s not a big issue for the kinds of issues in service.
ON THE NUMBER OF LOAN FILES AFFECTED BY THE FORECLOSURE MORATORIUM:
We will move next to site of Nancy Bush with NAB Research, LLC. Your line is open.
: Good morning. A couple of questions here. Brian, could you just clarify where are you on this foreclosure review? I’m reading the slide here, the moratorium that you had on in the judicial state is now off, but I see at the bottom of this slide, you say we’ll not complete a foreclosure sale at this time. So when do we get to that point when you actually start selling foreclosed assets again?
: I think we’ve said – this sort of timed out with the statements that we put out yesterday. I think you should look at those in terms of timing. I thought we said that we’d begin putting affidavits back in the process next week. Then that’s a judicial process. Then the judge looks at the papers and takes you through. Then the non-judicial states will take a few more weeks to complete the review. So it begins next week, but It builds back up. There’s a basically – if you step back from this, there’s 1,000 people working on this. It’s 100,000 some in the judicial state. So it’s not an amount of work that we’re not used to getting done. Then we’ll turn to the non-judicial states in that series. So the actual re-filings I think start next Monday I thought we said.
CONCLUSION:
THE MATH:
100,000 * $30 (LOW END CITED BY FREDDIE EXECUTIVE) = $3,000,000 PER DAY OR $90,000,000 PER MONTH!!
bench craft company rip off
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
NMA <b>News</b> | Simpsons | Simpsons Fox <b>News</b> | Mediaite
Taiwan's NMA News has taken on the battle between The Simpsons over at Fox Broadcasting and their conservative corporate cousins at Fox News, depicting both of The Simpsons recent attacks on the network as well as Bill O'Reilly's ...
bench craft company rip off
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
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This Week in Credit Card <b>News</b> - MoneyBuilder - making sense of <b>...</b>
Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
NMA <b>News</b> | Simpsons | Simpsons Fox <b>News</b> | Mediaite
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bench craft company rip off
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
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Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
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bench craft company rip off
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Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
NMA <b>News</b> | Simpsons | Simpsons Fox <b>News</b> | Mediaite
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bench craft company rip off
Lujiazui Breakfast: <b>News</b> & Views About China Stocks (Dec. 6 <b>...</b>
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bench craft company rip off
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Investors and traders in China's main financial district are talking about the following before the start of trade today: With expectations about inflation and monetary policy becoming clearer, investors are taking cues from overseas ...
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Provided by LowCards.com More Than Eight Million People Drop Out of Credit Card Use More than eight million consumers stopped using credit cards over the past year, according to a new study by TransUnion. The use of general purpose ...
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bench craft company rip off
A rather nauseating statement from a Government Accountability Office report on foreclosures:
Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices, such as whether foreclosures are completed; however, given the ongoing mortgage crisis, they have recently placed greater emphasis on these areas.
You read that right. Bank regulators in the United States were not even looking at foreclosure practices before the media latched onto the foreclosure fraud outbreak. The Office of the Comptroller of the Currency and the Federal Reserve acknowledged this in hearings two weeks ago, but it's still harrowing to see the degree to which mortgage banking remains totally free of oversight, even after it drove the global economy off a cliff.
The rest of the report is about banks abandoning properties instead of proceeding with a foreclosure sale. Kind of sick-- throw a family out, then just abandon the house altogether, don't even bother to sell it. The GAO says it's not happening too much, but any sane businessperson would make sure that it never happens. A simple loan modification would cut everybody's losses here, but the banks can't be bothered with that. And nobody is bothering the banks about it.
You may recall that there was a tremendous legislative battle earlier this year over the creation of a new Consumer Financial Protection Agency. The bank lobby and regulators at the Fed, the OCC and yes, even the FDIC, all argued that we didn't need it, while essentially everybody else said we did. But the existing regulatory chiefs all made essentially the same argument against the CFPA: We have several regulators who oversee consumer protection, and they're all just great at it. Creating a new agency that focused only on consumer protection would be end up destabilizing the financial system, because regulating consumer protection without looking at bank safety and soundness would jeopardize bank capital levels.
This argument was absurd at the time, most obviously because the existing regulators were simply awful. They totally failed to restrain predatory mortgage lending for nearly a full decade precisely because they considered "safety and soundess" regulation to be their only job. Safety and soundness was construed as "bank profitability"—if a bank had lots of money, it was less likely to fail. In practice, that meant regulators would allow consumer protection violations so long as they made money for the bank. With the mortgage crisis, this consumer protection failure ultimately lead to a safety and soundness catastrophe, but that's not actually very common. Usually predatory lending is very profitable, which is why banks do it.
So what happened after all the top regulators went out in public and repeatedly screamed that we absolutely can't allow them to lose their consumer protection authority? They totally ignored consumer protection regulation. Look at the excuse that bank regulators fed to the GAO (emphasis mine):
Because they generally focus on the areas with greatest risk to the institutions they supervise, federal banking regulators had not generally examined servicers’ foreclosure practices.
Translation: Even after consumer protection violations wrecked the largest banks in the country, we still don't look at consumer protection unless it actually hurts a bank's bottom line, right away, right now.
The amazing thing here is that the legal liabilities from these foreclosure abuses once again could be putting bank solvency on the line. Global economy to Elizabeth Warren: Help!
Also, the link above is to a summary of the GAO report. The full report is here.
Manal Mehta, Branch Hill Capital:
DONALD BISENIUS, EXECUTIVE VICE PRESIDENT, FREDDIE MAC: “…every day, every month I wait to start that foreclosure process costs, and costs a lot. If you do back of envelope math, as I suggested in my written statement, it’s $30 to $40 a day. If we have 300,000 loans sitting in foreclosure, that can start to run into the hundreds of millions of dollars a month from those delays. We have to find a way to remove the confusion, because I understand it is a painful process and a confusing process.”
(see page 8)
WITH COMMENTS MADE BY BRIAN MOYNIHAN ON 11/16/2010 AT THE BANK OF AMERICA FINANCIALS CONFERENCE:
: I was wondering if you could comment what the foreclosure moratorium is costing Bank of America, on the increased personnel costs and how long do you think those costs will go on for?
: In terms of the actual, the costs in our mortgage company, we went from about 30,000 people to 50,000 people. The foreclosure piece is actually a small part of that business, the work up to a foreclosure, the collections and modification effort, that’s where all the work goes in. So I think Chuck said at earnings, it’s $10 million, $20 million a month for a couple, for several months, so it’s not a major issue. The cost in the mortgage business, and one of the reasons for our expenses, when you look at them from the outside you say geez, why isn’t more coming out here, is we are continuing to build people to do the modifications and collect the delinquent credit, to work the people, with the customers to help them to try to avoid foreclosure and ultimately foreclose, but the actual cost of that particular redo of the 100,000 affidavits and getting that process exactly right has been relatively modest in the context of people working on it.
The real cost was going from 5,000 to 10,000 to 15,000 to 20,000 people working on the whole delinquent book. And what will happen is over the next three years, you will see that plateau and come back down. If you look at us from a company producing a couple billion, or $70 billion of mortgage credit a quarter and servicing it when delinquencies are more normalized after we get the pig in the snake and delinquency will come down in the front end, that’s a company that needs about 30,000 employees, and we literally have 50,000. So that will take us a few years to complete it.
WITH COMMENTS MADE DURING BAC’S Q3 2010 EARNINGS CALL:
: Okay. And could you just sort of step back from – I mean this foreclosure issue – foreclosure moratorium got blown out basically in the last week or so to a lot of other stuff. The fact that REMICs are not valid, that titles are not being conveyed properly in the REMIC process, et cetera, et cetera. Could you just kind of give us your view of whether this is a big deal, not a big deal, not as big a deal as the press has presented, et cetera?
: Here is what I say, is I think when you’re going through the issue of people losing their home, Nancy, there could be a lot of obstacles put up in front of that process by people who want to keep their homes and people representing them, and we know that. But that’s going on forever, frankly. So I think that on the affidavits that some judges said we want these done right, we went and did them. I’m sure there will be other issues raised. But as we look at the so-called marriage issue is we look at some of the other stuff that’s raised, and I think you’ve seen a lot of people write on this or talk about it. We don’t see the issues that people are worried about, quite frankly. But we’re taking them very seriously. We’re making sure we’re right. But for example, one of the issues was you needed to take title in your own name prior to foreclosure out of marriage, and we’ve done that. That’s been our policy. So there’s nuances in how all those things play out. But I think you are right. I think the best way to think about it is – I don’t think the technical issues are a big deal. The issue of foreclosure is a big of deal, and the issue is we’ve got to get on with it, because it will restore the health in the market. I think the overstatement that this is all messed up, it’s been going on for a while. We’ve been ramping up the people, us and the other servicers. They’re going to – a big volume of transactions have gone through in this last quarter. It will get bigger over the next quarters. But within three or four quarters, we’ll peak and come down the other side in terms of this activity. It will still be elevated. So I think it’s a big issue because people are losing their homes. It’s not a big issue for the kinds of issues in service.
ON THE NUMBER OF LOAN FILES AFFECTED BY THE FORECLOSURE MORATORIUM:
We will move next to site of Nancy Bush with NAB Research, LLC. Your line is open.
: Good morning. A couple of questions here. Brian, could you just clarify where are you on this foreclosure review? I’m reading the slide here, the moratorium that you had on in the judicial state is now off, but I see at the bottom of this slide, you say we’ll not complete a foreclosure sale at this time. So when do we get to that point when you actually start selling foreclosed assets again?
: I think we’ve said – this sort of timed out with the statements that we put out yesterday. I think you should look at those in terms of timing. I thought we said that we’d begin putting affidavits back in the process next week. Then that’s a judicial process. Then the judge looks at the papers and takes you through. Then the non-judicial states will take a few more weeks to complete the review. So it begins next week, but It builds back up. There’s a basically – if you step back from this, there’s 1,000 people working on this. It’s 100,000 some in the judicial state. So it’s not an amount of work that we’re not used to getting done. Then we’ll turn to the non-judicial states in that series. So the actual re-filings I think start next Monday I thought we said.
CONCLUSION:
THE MATH:
100,000 * $30 (LOW END CITED BY FREDDIE EXECUTIVE) = $3,000,000 PER DAY OR $90,000,000 PER MONTH!!
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