So when the truth came out, it was like being hit with a Brain Taser. That’s how I feel about CitiMortgage and Freddie Mac.
Oh sure, I’ve suspected they were up to no good, just like I suspect my dog is feeding his Senior Canine Diet food to the house mice. But I don’t want to believe it’s true. I wanted to believe my loan modification rejections were based on a mix-up somewhere in the morass of middle-management math calculations.
As I researched this topic, I became utterly stunned by the level of duplicity and deceit going on. At the root of the chicanery is something called the Net Present Value, or NVP.
Your head will start twirling around like Linda Blair in The Exorcist if I try to explain NPV as a numeric equation. But just in case you’re a math whiz and want to see what it looks like, here it is:
OSAMA: “I give up! I’ll tell you anything you want! Just don’t make me calculate the NPV!” NPV is a cloak and dagger, mysterious formula used by lenders to decide whether or not they should give you a loan modification. If it was a clear-cut formula, albeit a complicated one, it might be acceptable. At least then we math-blocked blondes could hire an accountant to input our data and figure out why the banks are declining our loan applications.
But that is not the case. What I do know is that NPV includes a lot more than math. It includes personality profiling. Had I known this, I would have been a lot more circumspect in my dealings with Aisha, my CitiMortgage agent, and her supervisor. These people make INFERENCES about you to decide whether or not you’re a good risk. So when, in a state of total frustration, I told Aisha’s boss, “Why should I sell my house at a loss just to avoid foreclosure? I’d rather walk away from it and let YOU deal with it!”
It was a bluff, because I naively believed the bank didn’t really want to foreclose on my house. I didn’t know that statement was going to end up in my file. It took me back to my kindergarten days, when Miss Kramer wouldn't let me go out for recess until I finished my nutritious (gag) morning snack. Noting my scrawny build and disdain for eating, she said, "Laurie, what on earth do you live on?" "927 Jackson Avenue!" I shot back, giving her my home address as I bolted for the door. To my surprise, Miss Kramer put that in my file to share with my parents at the next parent-teacher conference.
According to Holden Lewis at bankrate.com, loan service providers use the following “guesstimates” to calculate your NPV:
- How many months are likely to pass before you default again. There’s a vote of confidence for you –“Hey, let’s figure this out – if we give her a loan modification and it will reduce her monthly payment by $700, how long do you think she can continue to make her payments? Since she’s a single,middle-aged woman doing freelance work as a web designer, I’ll betcha she’s broke in no time. Put me down for six months in the office pool.”
- How likely the borrower is to catch up on the payments if the loan isn't modified, i.e., the 'self-cure' rate. “Hmmm, her brother is a doctor her sister is retired and living comfortably, I’ll bet she can hit the family members up for some money to pay what she owes and reinstate her loan.”)
- How much the home is worth now. (more than I owe on it) How much the home will be worth a year from now. (even more than I owe on it,according to FHFA) How much it would cost – from legal fees to utilities – to foreclose and take possession of the house. (1-800-CALL SAUL – cheapest foreclosure fees in town!)
- How much the house would fetch in a foreclosure sale. (a lot. I live in a terrific neighborhood)
In my case, CitiMortgage underwriters (whose undisclosed, windowless location is rumored to be in The Town Without Pity) have probably decided there’s a good chance I can catch up on the payments if they refuse to modify my loan, garnering a better interest rate for their investors. They have also figured out my house would fetch a lot more in a foreclosure sale than my loan is worth – again, more money for the Freddie Mac investors if they DON’T modify my loan.
So,unbeknownst to me, I never stood a chance of getting a loan modification. The boys in the back room at CitiMortgage and Freddie Mac had already decided they’d all make more money if I lost my house. Is this what President Obama had in mind when he created the Affordable Homes Program? I think not.
Julia Gordon, senior policy counsel for the Center for Responsible Lending, told the House Financial Services Committee:"Without access to the NPV analysis, homeowners are entirely reliant on the servicer's good faith. Servicers should be required to allow borrowers to review the property valuation used in the NPV calculation, as it is one of the inputs with the greatest effect on the results."
Julia’s plea fell on deaf ears.
Huge lenders like CitiMortgage hire “Big Brother Is Watching” companies to develop complex data analysis engines. That's nerdy geek terminoloogy which means CitiMortgage hires slimy creeps to justify their decisions when they reject a loan modification request.
Here’s how Brent Lippman, CEO of Response Analytics (one of the slimy creeps), had to say about their smoke and mirrors work: "What you do is define groups of different types of borrowers so you can infer behavior from others like them.”
This analysis includes "psychographic factors," including the depth of the desire to stay in the home. For example, Lippman says, if you tell the servicer that you have deep roots in your hometown, with lots of family and friends, and you don't want to be embarrassed by foreclosure, you will be deemed less likely to re-default. Keep that in mind when you prepare your hardship statement. I had no idea writing the hardship statement would be like writing a college essay. I didn’t spend enough time on either one of them.
I tried to be objective and business-like on my statement. I stuck to the facts. I didn’t know I should be sobbing about my best friend in town who fell down, broke his neck, is a quadriplegic now and needs my help.
Oops, I forgot. They tried to foreclose on him too after he became disabled and couldn’t afford his mortgage payments. They forced him to sell his house on a short sale, losing everything he had.
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