Home Mortgage Collector Confessor Responds To Your Comments

In response to some of the comments posted on 12 Confessions Of A Home Mortgage Collector, the confessor has sent in a followup letter to answer your questions, and clarify some of his statements.

I have noticed a lot of comments on my Confession from yesterday, and thought I would follow up on some of these.

First of all, anything that I mentioned having to do with bankruptcy was what I learned in investigating bankruptcy laws. I am not a lawyer, I am not in pursuit of a J.D, etc. If you happen to know bankruptcy law I would be interested to learn about it. From experience I have never seen or heard of a mortgage being forgiven by chapter 7. I guess I wouldn’t unless they had called to gloat. I implore anyone to seek legal advice please! Don’t take my word for it at all. I was told that when someone mentions bankruptcy (at all) to stop any collections and cease the call, even if they needed help. That’s the reason I warned against it.

Secondly, it would seem that a majority of people think that I am either a homeowner with a bad experience or a disgruntled employee. I can admit that I was frustrated with Wells Fargo, hence me quitting, but that I did indeed work there. Collections, sixth floor, disaster, escalation, and some loss mitigation (cross trained to help out loss mitigation).

Now I don’t know the site that Stanwell is referring to, but it could not have been my site. In my training class there were 4 people (myself included) that were over the age of twenty. My training class consisted of twenty-some people. Do the math. Out of those 20 or so people me and one other were the only ones with any college experience. Most of the people in that class had graduated high school the summer before. 2 of my 4 supervisors did not have college degrees either. I don’t mean to insinuate that they were not intelligent because of this, it’s just that I would like the biggest investment in my portfolio (the mortgage) to be handled by someone who knows what they are doing and can spell. The last part is no joke: in loan comments there were misspellings that would make E.B. White spin in his grave. One rep wrote “homeowner diseesed as of 05/07.” Really?

Morale is low because, compared to everyone else at my campus, they treated us collectors like crap. The other WFHM collector mentions that time between calls isn’t counted. It was for me. I was a part of a team that blended (because time between calls had been getting extended), which means that in between taking collections calls I was making collections calls. On a typical day I would say that any given “blender” would talk to (not necessarily collect on, though) 100-200 people. A good deal of those were frustrated people that would hang up. I was told that they needed to turn up the speed (how fast the calls come) because I had about 10% down time the day before. There were probably 9 or 10 of us that did this, all the while being paid the same as those of us who didn’t.

As for QA: Wells records all their calls with date and time stamps, however *most of the time* they monitor the calls that they grade live, if it isn’t a busy month. I have no doubt that they monitored a call as late as 9:30. I didn’t mean to insinuate that they NEVER graded anyone after 12pm, they just listen less and less as the day goes on.

Loss mitigation is indeed overwhelmed, but they aren’t doing anything to help themselves out either. I was told on more than one occasion to “just handle the call” when a borrower would call on an active loss mitigation account (which prime inbound collections at my site was told not to handle). I was also given information that I knew to be wrong at least half the time. On a few occasions loss mit reps would place me on hold but forget to hit the mute button, and I would hear them talking about me. This wasn’t common at all, but if it happened to me I would imagine it happened to others.

My supervisors stressed to me that Wells Fargo wants to help your call, so long as it is within the 6-7 minute average handle time. That’s not a lot of time to give customers the individual attention they need. Anything after 6 minutes and I was told “transfer it to customer service.” Customer service was used as the panacea at my site, even though we would frequently transfer calls that had nothing to do with customer service. It wasn’t uncommon to get a call from C/S that had originally gone to collections. It frustrated people, and frustrated people get mad.

There are multiple collections sites. I can tell you that from my experience, Fort Mill, SC is the worst. San Bernardino, CA seemed to be the best of them, and as always there are exceptions on both sides. I can only speak for my site, and the experiences that I had with others. I will say that I had a great experience with a rep in CA. She went totally above what she was expected to do and helped me out a great deal.

There are a few things I forgot to mention in my confession as well:

1. Make sure WFHM is reporting your credit correctly. More than once I found accounts where the credit reporting has been messed up by a representative. They aren’t supposed to touch it, but frequently will. WFHM will dispute it for you, but it seems to be a long road.

2. WFHM’s SCRA (Serviceman’s Credit Relief Act) was changed about a year ago to reflect the new policies that they were putting into place. If you have the SCRA active on your account ask what is covered. From the calls I received it would seem that WF did not communicate this. I believe they changed the way the fees were assessed, interest rate, and ability to make collections calls. I am not 100% sure on that though. If you know more about this, Stanwell, please share. I don’t agree with it, but there wasn’t much I could do. I wasn’t a part of Special Loans.

PREVIOUSLY: 12 Confessions Of A Home Mortgage Collector

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  1. Shinsei says:

    Okay, standard disclaimer here…

    I am not “your” lawyer nor *a* lawyer. Nothing below should be construed as legal advice or opine of case law.

    I work in the default services (read: outsource) industry on the creditors’ side and I’m pretty darn familiar with bankruptcy at this point.

    Mortgages are considered “secured debt” in the context of bankruptcy. This means that the debt is “secured” by some form of real property – a car, a boat, house, etc. Such debts are not eligible for discharge under any chapter of US Bankruptcy Code, to the best of my knowledge.

    In the case of a Chapter 7 filing, generally speaking, there are three things that can happen:

    1. Reaffirm the debt.
    2. Surrender the property.
    3. Trustee sells the property for benefit of the bankruptcy estate.

    Reaffirmation, put simply, is a contract between the creditor and the debtor that more or less acknowledges that the debt exists and that the debtor intends to retain the property and cure any default on the loan prior to discharge. Most lenders that I work with don’t enter into reaffirmation agreements unless the loan is less than 60 days delinquent; some lenders require that the loan be contractually current with no outstanding balances aside from a few late charges or other “soft” fees.

    In the case of a surrender, the debtor is walking away from the loan and intends to allow a foreclosure to occur. This is *extremely* common right now. Many people don’t want the bother and expense of trying to save their house – if they do, they’re in a Chapter 13 case rather than a 7. With the nationwide (US) decline in property values, many mortgages are “upside down”, which is a position of having negative equity — you owe more than the FMV of your house.

    In cases where the trustee sells the property, there is generally a significant amount of equity (usually more than $15-20K) in order to cover the trustee’s fees and costs of sale. When this happens, the trustee hires a realtor to dispose of the property and then uses the proceeds of the sale to pay off other creditors. Any excess funds will be returned to the debtor for use in whatever way they see fit.

    Depending on circumstances, it’s not unheard of for a lien to be stripped. In short, the mortgage debt is removed as a liability from the borrower. Generally speaking, this occurs primarily with 2nd mortgages where there is negative equity; the second lien will be stripped to strengthen the equity position. The other main reason for a lien strip is that the lender committed some grievous error like intentionally continuing a foreclosure after receiving notification of a bankruptcy.

    This is probably a bit lengthy for a comment, so I’ll cull it here. If anyone’s interested, I’d be happy to share more comments on the bankruptcy side of things. Maybe I’ll submit a bankruptcy “primer”, dependent on interest. :)

  2. Lucky225 says:

    OMFG, If San BernarGHETTO is the BEST Collection call center Wells Fargo has,they have seriously failed.

  3. ViperBorg says:

    This is why I hate banks.

    Okay, well, not the ONLY reason, but you get the picture.

  4. jefino says:

    I also am in the mortgage collection business, and i have see quite a few homes discharged as a result of bankruptcy. But then again, i have seen quite a few homes where my company petitioned the judged, got the home out of bankruptcy just to foreclose on it.

  5. I work with distressed homeowners and their lawyers, and we do a lot with bankruptcy. Since this is Federal law, I’m pretty confident that the following applies everywhere in the U.S. (IANAL, though.):

    - A Ch. 7 bankruptcy will not affect your home loan. It is for discharging *unsecured* debts only, and your mortgage is secured by your house. If you do not “reaffirm” your mortgage in a(ny) bankruptcy, it will strip your personal liability for it while the lien on your house remains; but it may also prevent the loan from getting reported on your credit, and make it harder/impossible to deal with the mortgage company afterwards. Ask a (good!) lawyer if you should reaffirm.

    - However, whether you reaffirm or not, your mortgage stays the same. Your mortgage company can agree to modify the terms of your mortgage (with or without a bankruptcy, but it’s something lawyers often talk to them about as part of the bankruptcy), but they don’t have to. Legislation was ALMOST passed recently that would have made it possible for bankruptcy judges to modify mortgages as part of a bankruptcy, but it got knocked down due to pressure from banks. WHAT THIS MEANS is that if you have a high-rate, adjustable, predatory or other stupid mortgage, YOU’RE STUCK WITH IT if you go through bankruptcy.

    - A Ch.13 bankruptcy — which you must qualify for to get, and which costs more and leaves you with more to pay off than a Ch. 7 — has the effect of putting a stay on foreclosure proceedings when it’s filed. So IF you file it BEFORE your home goes to “sheriff’s sale”, the sale will be put on hold while the bankruptcy happens. HOWEVER, it doesn’t do anything for your loan (just like a Ch.7), and once the bankruptcy’s done, you’ll be right back where you were, with all the late payments and everything intact. It drives me NUTS that some lawyers present filing ch. 13 as a “solution” to impending foreclosure, when all it does it put it off for a while!

    The only thing bankruptcy is really good for, regarding mortgages, is if your unsecured debt has gotten so out of control that it’s making it hard for you to make house payments. (And even then, if you have half a brain, you’ll be making the house payment FIRST, so your loan shouldn’t be in trouble anyway.)

    Man, I wish they’d pass something to let judges modify those mortgages, though…that would be huge, and would save tons more houses than any of the “programs” and crap the government has done so far. *sigh*

  6. Me - now with more humidity says:

    Bzzz. Wrong.

    Mortgages do get discharged in Chapter 7 bankruptcy if you do not
    reaffirm. First and second, purchase money and HELOC. In addition,
    Chapter 7 wipes out recourse in recourse states. The overdue property
    taxes become the responsibility of the lender/next purchaser.

    Chapter 7 does discharge secured debt, with the security holder taking back the asset and selling it to recoup what they can.

    • Shinsei says:

      @Me: I have to disagree here. Secured debt is not discharged under any bankruptcy chapter that I’m aware of. A lien (second, generally) can be stripped due to negative equity in a Chapter 13 case as I (and several others) mentioned or in the case of a Chapter 7, the property can be surrendered in full satisfaction of the debt, reaffirmed or not.

      If a reaffirmation isn’t completed (it’s technically not required to retain the property, afaik), it does put things in an interesting position. My understanding is that the debtor is discharged, meaning that they are relieved of any personal liability. At that point, the lender can’t directly come after you, personally, for the money; they can, however, still foreclose on the property with the property itself named as defendant in the foreclosure action (for judicial foreclosure states – I’m not sure how it works in non-judicial or trustee states). I’m not 100% on the credit side of things, but I’m reasonably certain that any foreclosure, default, etc related to the property will still be listed on your credit report.

      I think what many people don’t understand is just how incredibly powerful bankruptcy judges are. Unlike other courts, there is very little oversight over bankruptcy judges. Bankruptcy law exists at the federal level, but as a result of various state laws and standing orders put in place by debtor-friendly judges, bankruptcy matters completely differ from state to state and even sometimes within a state, depending on the district. Rewriting the loan is about the only thing that the judge can’t arbitrarily do at this point.

      • Me - now with more humidity says:

        @Shamanix: And you’re wrong.

        I just went through this. 10 days after I was completely discharged
        – including the first and second mortgage — the lender (WF) realized
        they needed to get the property back. They asked the court for
        permission to foreclose and were granted it. We have offered just to
        sign it over to them.

        The mortgage is on my credit report as discharged in BK.

        Don’t post what you don’t know.

        • Shinsei says:

          @Me:

          You’re welcome to your opinions, however, based on what you’re saying, I’ll refer you to both of my previous comments regarding surrender. What you’ve described in the end is what’s known as a deed in lieu of foreclosure, meaning that you deed the property back to the lender as opposed to making them shell out about $10k to go through the foreclosure process. Lenders love this since it saves them time and money.

          Obviously, I don’t know your exact situation, so it’s possible that you didn’t surrender the property and simply ceased making payments, in which case your lender would file a motion for relief, which is the “asking for permission” part.

          You’d need to consult your attorney (assuming you were represented), but again, my understanding is that you, personally, receive the discharge.

          The debt is not erased as it is with credit cards and other unsecured claims – it still exists, but the lender cannot take direct action against you as an individual. The debt is satisfied through recovery (and subsequent sale) of the property, not through the entry of a discharge order.

          • Me - now with more humidity says:

            @Shamanix: Okay. This is the last time I’m going to explain it. If you need my attorney to explain it to you, you pay his hourly rate until you understand.

            The MORTGAGE was discharged — the LOAN NO LONGER EXISTS. Both the first and the second. I have the paperwork to prove it.

            The lender neglected to have the property severed from the BK proceedings so they could foreclose — until they woke up after the discharge.

            Stop posting out of your ass and do some research (I apologize to the comment police, but Shamanix has no clue what he/she/it is talking about).

            • Consumerist-Moderator-Roz says:

              @Me: You’re providing interesting information, but you’re being a complete ass about it to other commenters and the OP. Start posting comments in a civil fashion or don’t post at all.

  7. My parents did a chapter 7 years ago… my mother was diagnosed with RA out of nowhere, and it takes FOREVER for disability to kick in to help with missing income. So before they started even being late on payments, they got a good lawyer who got their unsecured debt relieved, and they kept their home. They had to hand in their car, but they prevailed and now they are doing well.

    I don’t understand the Chapter 13, either. More expensive overall. But I guess, it’s to stop people from thinking every 7 years they can claim bankruptcy and get a free ride on life. I feel for some people, though. Like my parents, they were faced with an unforeseen misfortune which could of potentially cost them their home, almost paid off. My dad was also able to keep his motorcycle, which had 6 months to go until it was paid off. But, this is why we buy insurance.

  8. noncomjd says:

    “First of all, anything that I mentioned having to do with bankruptcy was what I learned in investigating bankruptcy laws”

    This is like…I’m not a doctor I just play one on tv, but I think you have cancer and are going to die.

    “I am not a lawyer, I am not in pursuit of a J.D, etc. If you happen to know bankruptcy law I would be interested to learn about it. From experience I have never seen or heard of a mortgage being forgiven by chapter 7.”

    Don’t give opinions as fact. You are wrong and you are still trying to push your erroneous opinion. Just about everything EXCEPT taxes, some fines and child support can be extinguished in ch 7 and restructured or extinguished in other Chapters.

    I still doubt your bona fides and/or motivation.

  9. bohemian says:

    The comments about loan handlers being uneducated and largely fresh out of high school staff with a high turnover is pretty accurate across the industry.
    Our current mortgage is handled by an in state bank that handles most federally backed loans in the area.
    I had a lengthy conversation with a girl who didn’t understand how loan calculations worked on a step rate loan after she botched our payment book. She truly had no clue what she was doing, it took hours and hours to get this fixed.
    I have had our escrow botched on at least six occasions and had to point out the errors to the escrow staff who are all fresh out of high school. They were simple math type errors where the left things on or off the loan or charged things twice.

    The only luck I have had finding someone over 25 with any authority and clue was to finally call the agency that facilitated our federally backed loan and told them what was going on. They gave me the name and direct line of a exec who was able to fix things while on the phone.

    I waste a ton of time at least twice a year fixing their mistakes.

  10. scientician says:

    I would like to clarify some of the things brought up in the comments. First, a Ch 13 is a form of bankruptcy where you pay back a portion of your debts over 3 to 5 years. You must have the ability to pay back your debts in order to file a Ch 13. While it is more expensive, there are several benefits.

    Also:
    1. You generally cannot entirely discharge a secured loan and keep the property in either a Ch. 7 or 13. There are some exceptions.

    2. You can surrender any piece of secured property (house, car, furniture) in bankruptcy if you no longer want to pay on that piece of property. The lien holder will then take control (if there is no equity) and sell it for whatever they can get. Whatever you still owe is called a deficiency balance and is now unsecured and treated as such in bankruptcy.

    3. In a Ch. 13 it is possible to “cram down” and piece of secured property that isn’t a house. This means that if you owe more than the property is worth, you only pay back the value of the property at the time you file. There are some new restrictions on this with the new bankruptcy code, but typically you have to wait 910 days from the date of purchase to do this.

    4. In a Ch. 13 you can strip off a second mortgage, HELOC, if the value of your house is less than or equal to the what you owe on the 1st mortgage. Example: your house has a FMV of 150k, you owe 170k on your 1st mortgage and 35k on a HELOC (entirely plausible). In a Ch 13 you may be able to avoid the HELOC. You cannot do this in a Ch 7.

    As always, if you have any questions about this you should contact a local bankruptcy attorney. Although bankruptcy is a federal law, you are still greatly affected by state law.

  11. humphrmi says:

    Yeah that guy definately stepped in it with his advise about bankruptcy. I’m not even a bankruptcy attorney, but I have lots of experience dealing with it (family members) and I saw the BS right away.

    But he does make one good point: once you mention bankruptcy, they stop calling you. They are supposed to. That’s what the law says, they can no longer call you once you file (or tell them you filed, or are going to file) for bankruptcy. The point of the law is to keep creditors from harrassing you while you reorganize your finances. Then if you’re looking for a modified loan and want to reaffirm, your bankruptcy attorney negotiates that with the lender. It does not mean that the lender stops talking to you (or your attorney) to recondition your loan. In fact, they would be stupid not to, since a re-aff is nearly impossible to break after it’s signed. They’re nearly guaranteed payment.

  12. RobinB says:

    Man, I wish they’d pass something to let judges modify those mortgages, though…that would be huge, and would save tons more houses than any of the “programs” and crap the government has done so far. *sigh*

    How many lenders would keep loaning money when a judge could step in and change the terms? The bank where I work sure wouldn’t.

  13. Flame says:

    I worked for a bankruptcy attorney for about a year, while I was going to school.

    Basically, Chapter 7 is where you go to get rid of your debt. Most of what has been said of Chapter 7′s so far is correct. You can get rid of your mortgage, but you have to give up the house. If you are not delinquent, or only slightly, you can probably reaffirm the debt.

    Chapter 13 is also known as a “Wage Earner’s Bankruptcy”. You get to keep all of your stuff, not just what you can exempt under federal/state law. Some states have opted to use State law for their Bankruptcy exemptions, and some still use the Federal. In Idaho, for example, we use State law.

    In a Chapter 13, you take the money that you earn per month, subtract your rent, car payments, living money and other expenses, and whatever is left over is given to the Trustee every month to pay your unsecured creditors with. You make those payments for 5 years typcially. Or, if you can reach a 100% payout, then however long it takes you to pay it off. After the 5 years, whatever is left over, and is dischargeable, is discharged and you don’t have to pay it

    As it regards to house, there should be something like a Homestead Exemption. In Idaho, it’s $100,000. So if you have any equity, it is exempt up to that limit. One interesting thing to note though, it you go through a foreclosure, you lose the equity that you have built up. Basically, you are walking away from the house and get nothing for those years of payments you made.

    A Bankruptcy judge can rewrite some types of contracts. Just not mortgages. In regards to a car loan, however, the Judge will routinely drop your interest rate if it is over a certain percentage. Although, technically, he’s not re-writing it, just refusing to sign off on the reaffirmation agreement if the creditor refused to lower the interest rate. Most of the time, the creditor doesn’t want that car back, and so they will drop the interest.

    @scientician:

    “1. You generally cannot entirely discharge a secured loan and keep the property in either a Ch. 7 or 13. There are some exceptions.”

    One of those exceptions is an imperfected lien. We did a Chapter 14 BK (Bankruptcy) once, where the creditor had failed to file a UCC-1 on a secured loan for some pruchases. We avoided the lien, and the creditor got nothing.

    I do think that Judges should be given limited power to re-write a mortgage. Mostly, I think they should be able to fixt the rate at the rate it is when the debtor files the bankruptcy, but only if the debtor can show that they can pay the mortgage every month.

    This is just a brief overview, and, and, as usual, does not constitute legal advice in any way.

  14. Flame says:

    Oops…that was a Chapter 13, not 14. There is no Chapter 14 bankruptcy…..

  15. Corbin123 says:

    You can discharge your mortgage through chapter 7 filings, but you will then lose the house. I think some people might be getting this confused with a situation in which someone files for bankruptcy and DOESN’T have a mortgage. In that case, you are able to get unsecured loans discharged without losing your house (generally).

    Me is right though, while you will lose the house the mortgage will be completely discharged. This is beneficial to some people because it will stop foreclosure proceedings and will prevent the mortgage holder from trying to collect. It will still leave a BIG black mark on your credit though, and you will have to wait a while until you can get a new mortgage.

  16. Shinsei says:

    From [www.uscourts.gov] :

    The Chapter 7 Discharge

    A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor.

    Emphasis mine. Also:

    Secured creditors may retain some rights to seize property securing an underlying debt even after a discharge is granted.

    So, with that said, I’ll admit that I misspoke slightly. In a case of secured debt, the debt is technically discharged, however, the effect of that discharge is not to wipe out the debt, but to prevent the debtor from being held personally liable for that debt, as I’ve mentioned above.

    Foreclosure is a valid action even following a Chapter 7 discharge as the action is considered (generally) to be against the property, rather than the individual.

    So, we were both right. :)

    • Corbin123 says:

      @Shamanix: That’s actually what I figured, that the argument wasn’t over whether you could technically discharge a loan (which is what ME was arguing) but whether you could discharge the loan and still keep the house (which is what I think you were arguing). So yes, you can get a discharge on the loan, but you won’t be able to keep the house like you would when discharging unsecured loans.

      • Shinsei says:

        @Corbin123: Depending on circumstances, you actually may be able to do both. Reaffirmation agreements are a 100% requirement most of the time. If you obtain your discharge without doing a reaffirmation agreement, but you’re completely current on your mortgage, you can keep the house and get a discharge. It’s fairly rare as I understand it, but I’ve heard of it happening.

        Makes dealing with the lender a bit weird in the future, though.

  17. Hobart007 says:

    In a CH7 BK the creditor loses the right to collect on a debt from a consumer but retains the right to any collateral associated with that debt. I am coming in on the end of this it looks like but I work in loss mitigation for a bank and handle BK/foreclosure/etc. If a debtor does not choose to pay for their collateral we take it. If we need it fast we file a motion for relief from automatic stay and take the property when that is granted. If we can afford to wait then we wait until the BK is discharged and then proceed with foreclosure or repo efforts. BK only protects filers from the debt and collection efforts… the lenders do not lose their right to the collateral.

  18. Me - now with more humidity says:

    I was posting in a civil manner until the last one, granted — the tone of that one I’ll apologize for.

    Here’s the bottom line… The debt no longer exists in my world. Title to the collateral is going back to the lender per our agreement. It’s very simple. Hobart007 has it right.

  19. Shinsei says:

    Yikes, I missed a word!

    Previous comment should actually read:

    Reaffirmation agreements are not a 100% requirement most of the time.