Interviewer: How effective is the mediation? Is it a pretty strong process?
James Logan: I would say it’s not a strong process. At the mediation, the mediator doesn’t have any power to force either party to do anything. Nothing that’s said or presented at a mediation can be used as evidence in any other proceeding. In that respect, it’s not a real powerful but it is powerful on the fact that the mortgage companies have to have somebody available to discuss your case. That alone is a big relief for some people because many times, when you try to call the mortgage company, you just get run through the phone tree and you can never get anybody on the phone and round and round you go. So, just the ability to have somebody to talk to you from the mortgage company is very helpful. In my experience, it’s not going to provide a solution that wasn’t there otherwise but it is going to make the solution that is there much faster.
The Mediation Process Can Facilitate the Acquisition of a Loan Modification
If there’s a loan mod, it’s going to be worked out much faster through the mediation and through the normal process because there’s a deadline. You can talk to somebody directly who’s got the authority to make the decision. So, mediation can be powerful in that respect. On the other hand, if the bank was not going to give you a loan modification, the mediation is not going to force them to give you a loan modification. To get a loan modification, there has to be some reason to it. If you’re on disability and you get $800 a month, then you owe $300,000 on the house, you’re not getting a loan modification despite what anybody might tell you. On the other hand, if you have good income and there’s a reason why you fell behind, that’s not a guarantee that you will get a loan modification but at least, it’s a possibility. So, people have to be realistic about loan modifications.
The Range of Modification in a Loan is at the Bank’s Discretion
Interviewer: Is there a typical range for it to be modified to?
James Logan: I’ve seen this all over the place. Sometimes, they’ll put the back payments on the end, sometimes they’ll wrap them up into a new loan and amortize it or pay it off over 40 years. I’ve seen some equity sharing deals, where if you sell the house within 5 years, you have to give 25 or 50 per cent of whatever profit you make to the bank. If you sell it in 10 years, it goes down to 25 per cent. Again, the banks have a flexibility to do what they want but they also have the flexibility to do nothing, so it’s kind of going hat in hand to the bank and begging and, whatever they offer is what they offer.
In Banks Performing Loans are those that Have Been Paid on Time as Agreed and a Non-Performing is a Loan that’s Not Being Paid
Interviewer: Are you able to comment on any specific lenders you’ve dealt with, are they either good or bad?
James Logan: Ocwen is definitely the best. Their whole business strategy is they bought these loans from other lenders at discount and they want to restructure them and make them into performing loans. In banking world, loans are performing and non-performing. Performing loan is one that’s been paid on time as agreed and a non-performing is a loan that’s not being paid. Banks with too many non-performing loans, they get visits from the government who will shut them down. So banks don’t like any non-performing loans. But what Ocwen does is buy these non-performing loans from other banks and then tries to turn them into performing loans. So, Ocwen is one bank that stands out to. If you have Ocwen as your servicer or a lender, you’ve got a very good chance of getting a loan modification.
People Relate Horror Stories Regarding their Experiences With Bank of America
In Bank of America, the people are just coming with horror stories about dealing with Bank of America. A lot of this is because Bank of America took over Countrywide and Countrywide, you may or may not remember, was one of the biggest lenders of subprime loans. All the crazy loans that were being made and Bank of America ended up with the huge mess. They’re just kind of overwhelmed and buried in all these Countrywide loans. Because they bought Countrywide, they’re struck with them and they’re trying to work their way through it. People tell me the horror stories about dealing with Bank of America.