Back in the day when I was working in a national mortgage loan servicer's prototypical loss mit department, I flew to the corporate offices to meet with the newly appointed Sr. VP of asset management. Not promoted from within, but 'a hired gun' we were told by the sheepish, VP of asset management. This hired gun had been placed suddenly in charge of the servicing of tens of thousands of under-performing mortgage loans.  The "independent" and expanding portfolio of 7,500 or so loans my previously autonymous specialized team had been assigned now fell under his direct, and sweeping jurisdiction.

We had been working methodically and successfully to resolve and cure many (75%) of the non performing loans... (90 to 150 day delinquent)  by offering creative restructure, forbearances, short sales, etc.   During any given time our team of 7 had a hundred or so loan mods or short sales ready for approval or closing... with another hundred good to go for the following week.  But the new guy didn't waste any time upsetting the applecart.

On his first day he announced himself the new Sheriff in town, and laid down the law. He announced the restructure of the servicing division, and his new policy.  He was rescinding all pending approvals that had not yet closed, and changed the criteria upon which all future workouts (including those in the pipeline) would be based.  Then he decreed all 30 day delinquent accounts would be issued Notices of Default. 

We had done our job and the underperforming portfolios were now performing, and as such, marketable. In retrospect, the new guy was called in (his tenure lasted only 60 days) to identify levels of performance, bundle, giftwrap, market, and sell off a hundred thousand loans.  After 60 days, the existing portfolios were replaced with other, equally underperforming, packages of loans purchased from other lenders via mergers, acquisitions, or outright purchases, and we were in the loss mit business again. 

To the company is was business as usual: creating value.  To the twelve hundred or so homeowners who had believed they would have their loans reinstated, or modified, well they were shocked when served with foreclosure notices after they were promised otherwise... then found themselves having to deal with a new lender... because their loans had been sold or assigned.  

I felt particularly badly for the folks who were to have their shortsales closed, or loan modifications funded on the day after the new Sheriff laid down the new law.

This happens everyday. That's one reason why, some 15 years ago, I realized that distressed homeowners needed a voice, accurate information from which to make informed decisions, and sometimes a little nudge in the right direction.

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