Last February, with 6 million homeowners in danger of losing their homes, the mortgage industry was assembled at a luxury hotel in San Diego applauding themselves—literally.
Nine months later, only 1,400 full modification applications had been submitted through the system, said HOPE Now’s president Larry Gilmore. He said the volume would increase as more servicers and counseling organizations sign on. HOPE Now did not respond to requests for more recent numbers.
Staffing up to process modifications “just demolishes the bottom line,” says Duke Olrich, president of DRI Management Systems, a company that makes software for banks and other servicers. “The whole name of the game is to keep employee costs to a minimum if you can.”
Robbie Abalos was 20 years old when he worked in a CitiMortgage call center in Tucson, Ariz., last year, at $10.50 per hour, a typical wage for the job. He had no mortgage experience and says the training was “just kind of a joke.” Abalos was advised not to “bend over backward” for callers, he says, because it cut down on the volume of calls he could handle.
A Citi spokesman said, “We believe our loss mitigation training is quite substantial, including dedicated training for new hires and specialized materials designed to encourage a strong customer focus."
It was common industry practice to tie employees’ pay to keeping calls short. Among the four largest servicers, calls with homeowners average around eight minutes, according to data the companies submitted to Congress last year.
Under Treasury’s original assumptions, servicers could have received upwards of $10 billion in government funds. As it’s turned out, they’ve received $419 million two years into the program. Bank of America subsidiaries have received about $50 million of that, but told Congress in 2010 it would spend an estimated $350 million that year on HAMP-related expenses.