I just don’t understand why the banks, after two years of this, have not staffed up to a point where they can foreclose more rapidly on these people. I bought the “not enough staff” line last year, but with a high unemployment rate, it seems the banks should come through with some bodies to hammer out these foreclosures. Maybe we need a new thread for that one, though.[/quote]
Forgetting about the charge-offs, it’s also expensive to have a bunch of people in your OREO department. It’s 100% overhead with no profit. I’m not defending it, just explaining.
Also, remember that most of these mortgages are ultimately held by securitization trusts (MBS). (And I’ve explained this all before.) While the servicer gets reimbursed by the trust for certain costs related to disposing of the asset… a lot of the costs prior to foreclosure are not recouped (like all of the extra manpower used to call these deadbeats over and over again). So, servicers are losing their asses because their little 50 bps of servicing fees – which is contractually agreed upon and great when times are good – doesn’t leave anything left over for profit when your costs are going through the roof. So, THEY are reticent to hire more folks even though it isn’t their credit loss – it’s their operating loss.
Also, it’s important to realize that when you hear about BofA (or whatever Big Bank) putting properties on the MLS, you have to distinguish between what they’re holding on their balance sheets and what their serving arm is doing. A lot of folks don’t know there’s a difference and don’t make that distinction.
