Why a lady and a parrot? It’s not even stippled! What’s with that? Is it just evidence that Rupert Murdoch really is out to dumb down one of the great American media outlets?
It turns out that the story behind the goofy picture (Bank Sorry for Taking Parrot, Mar 11) highlights an operational problem that has arisen as a result of the mortgage crisis. The woman in the picture is Angela Iannelli who is now suing Bank of American because a BofA contractor went into her house while she was out, shut off her utilities, and padlocked the door shut. The parrot was on the other side of the door, and Ms. Iannelli couldn’t reach her bird for a week. The kicker here is that Ms. Iannelli’s house was not in foreclosure. She had missed a payment but was a long way away from giving up on her mortgage. BofA screwed up and accidentally identified the property as in default and vacant. Not too surprisingly, Ms. Iannelli and the parrot are now suing.
Obviously, BofA does not exactly count as a sympathetic defendant. But they and the industry are struggling with an operational problem:
Mortgage lenders have struggled in the past three years to hire and train enough people to deal with the biggest wave of foreclosures since the 1930s. Nearly eight million households, or 15% of those with mortgages, are behind on their payments or in the foreclosure process.
One would think that in this economy, they should be able to line up good help but the whole process hardly sounds like a fun job:
Many borrowers complain they get the runaround when they call their lenders for help, receive contradictory information from different employees and are required to repeatedly fax the same documents.
At the same time, suicide threats from distressed borrowers are so common that one lender, OneWest Bank Group in Pasadena, Calif., had to establish procedures for alerting the police. Lenders’ call-center employees are under heavy pressure. “These people make $14 or $15 an hour, and we ask them to move mountains,” said a OneWest executive at an industry conference last month.
As the Journal notes in a related blog post (BofA and the Parrot: Bird’s Eye View of the Foreclosure Mess):
Banks’ mortgage-lending departments are efficient when it comes to making loans and collecting payments. They’ve honed their employee incentives and procedures over decades. They didn’t spend nearly as much time thinking about how to handle defaults and foreclosures because it was always assumed those would remain the exception, to be handled by an obscure department known as “loss mitigation.”
It seems unacceptable that banks haven’t figures this out yet. We are hardly at the beginning of the mortgage crisis so you would think that banks would be able to manage this better. This is not even a profit issue. This is not running a bad process to adjust existing mortgage. This is reliably identifying the borrowers who are truly in arrears and securing the relevant collateral. Bad mortgages are no longer exceptions; they should be able to do this better.