Shadow Inventory – The Flood that May Never Come

[davelj]

I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.

[davelj]

[quote=sdduuuude]Seems like there must be some analytical answer to the question – “Why don’t banks ramp up the staff ?”

I mean, if the situation is still “whoever panics first wins” (or loses the least), why don’t they staff up and manage it. Everyone is hurting for work. They could staff up pretty cheap.

Maybe the banks see appreciation in these properties over the next few years, or maybe peterb is right – it isn’t growth, so why fund it ?

[/quote]

This is a good question. And I don’t know the answer.

I suspect, however, that there are two different reasons for the two primary servicing bodies.

For pure servicers (that is, they don’t own the assets – they’re just servicing them), I think they are hesitant to hire more folks because (1) it cuts into their profit margins (to the extent that most are probably losing money at this point) – and recall that before foreclosing, the servicing fees are basically fixed; and (2) they are not confident that if they hire a bunch of folks to help with foreclosures that they will get reimbursed. Prior to foreclosure, the servicer collects a fixed fee. After they foreclose, the servicer can bill these additional expenses back to the securitization trust. But… if they are not sure that they are going to get reimbursed (because the security owners revolt), then they will be hesitant to add more staff. In other words, they’re bleeding and gun shy… and not even sure what the rules are. I’d hate to be a mortgage servicer right now.

For the banks that own the mortgages outright, I think it’s just more of an issue that handling REOs is not a profit center – it’s a cost center. Also, I suspect that some banks are waiting to see if the govt comes up with some new plans to help keep folks in their homes. So, they’re dragging their feet a little hoping that someone throws some of their customers a lifeline.

[davelj]

[quote=sdduuuude]Seems like there must be some analytical answer to the question – “Why don’t banks ramp up the staff ?”

I mean, if the situation is still “whoever panics first wins” (or loses the least), why don’t they staff up and manage it. Everyone is hurting for work. They could staff up pretty cheap.

Maybe the banks see appreciation in these properties over the next few years, or maybe peterb is right – it isn’t growth, so why fund it ?

[/quote]

This is a good question. And I don’t know the answer.

I suspect, however, that there are two different reasons for the two primary servicing bodies.

For pure servicers (that is, they don’t own the assets – they’re just servicing them), I think they are hesitant to hire more folks because (1) it cuts into their profit margins (to the extent that most are probably losing money at this point) – and recall that before foreclosing, the servicing fees are basically fixed; and (2) they are not confident that if they hire a bunch of folks to help with foreclosures that they will get reimbursed. Prior to foreclosure, the servicer collects a fixed fee. After they foreclose, the servicer can bill these additional expenses back to the securitization trust. But… if they are not sure that they are going to get reimbursed (because the security owners revolt), then they will be hesitant to add more staff. In other words, they’re bleeding and gun shy… and not even sure what the rules are. I’d hate to be a mortgage servicer right now.

For the banks that own the mortgages outright, I think it’s just more of an issue that handling REOs is not a profit center – it’s a cost center. Also, I suspect that some banks are waiting to see if the govt comes up with some new plans to help keep folks in their homes. So, they’re dragging their feet a little hoping that someone throws some of their customers a lifeline.

[davelj]

[quote=sdduuuude]Seems like there must be some analytical answer to the question – “Why don’t banks ramp up the staff ?”

I mean, if the situation is still “whoever panics first wins” (or loses the least), why don’t they staff up and manage it. Everyone is hurting for work. They could staff up pretty cheap.

Maybe the banks see appreciation in these properties over the next few years, or maybe peterb is right – it isn’t growth, so why fund it ?

[/quote]

This is a good question. And I don’t know the answer.

I suspect, however, that there are two different reasons for the two primary servicing bodies.

For pure servicers (that is, they don’t own the assets – they’re just servicing them), I think they are hesitant to hire more folks because (1) it cuts into their profit margins (to the extent that most are probably losing money at this point) – and recall that before foreclosing, the servicing fees are basically fixed; and (2) they are not confident that if they hire a bunch of folks to help with foreclosures that they will get reimbursed. Prior to foreclosure, the servicer collects a fixed fee. After they foreclose, the servicer can bill these additional expenses back to the securitization trust. But… if they are not sure that they are going to get reimbursed (because the security owners revolt), then they will be hesitant to add more staff. In other words, they’re bleeding and gun shy… and not even sure what the rules are. I’d hate to be a mortgage servicer right now.

For the banks that own the mortgages outright, I think it’s just more of an issue that handling REOs is not a profit center – it’s a cost center. Also, I suspect that some banks are waiting to see if the govt comes up with some new plans to help keep folks in their homes. So, they’re dragging their feet a little hoping that someone throws some of their customers a lifeline.

[davelj]

[quote=sdduuuude]Seems like there must be some analytical answer to the question – “Why don’t banks ramp up the staff ?”

I mean, if the situation is still “whoever panics first wins” (or loses the least), why don’t they staff up and manage it. Everyone is hurting for work. They could staff up pretty cheap.

Maybe the banks see appreciation in these properties over the next few years, or maybe peterb is right – it isn’t growth, so why fund it ?

[/quote]

This is a good question. And I don’t know the answer.

I suspect, however, that there are two different reasons for the two primary servicing bodies.

For pure servicers (that is, they don’t own the assets – they’re just servicing them), I think they are hesitant to hire more folks because (1) it cuts into their profit margins (to the extent that most are probably losing money at this point) – and recall that before foreclosing, the servicing fees are basically fixed; and (2) they are not confident that if they hire a bunch of folks to help with foreclosures that they will get reimbursed. Prior to foreclosure, the servicer collects a fixed fee. After they foreclose, the servicer can bill these additional expenses back to the securitization trust. But… if they are not sure that they are going to get reimbursed (because the security owners revolt), then they will be hesitant to add more staff. In other words, they’re bleeding and gun shy… and not even sure what the rules are. I’d hate to be a mortgage servicer right now.

For the banks that own the mortgages outright, I think it’s just more of an issue that handling REOs is not a profit center – it’s a cost center. Also, I suspect that some banks are waiting to see if the govt comes up with some new plans to help keep folks in their homes. So, they’re dragging their feet a little hoping that someone throws some of their customers a lifeline.

[davelj]

[quote=sdduuuude]Seems like there must be some analytical answer to the question – “Why don’t banks ramp up the staff ?”

I mean, if the situation is still “whoever panics first wins” (or loses the least), why don’t they staff up and manage it. Everyone is hurting for work. They could staff up pretty cheap.

Maybe the banks see appreciation in these properties over the next few years, or maybe peterb is right – it isn’t growth, so why fund it ?

[/quote]

This is a good question. And I don’t know the answer.

I suspect, however, that there are two different reasons for the two primary servicing bodies.

For pure servicers (that is, they don’t own the assets – they’re just servicing them), I think they are hesitant to hire more folks because (1) it cuts into their profit margins (to the extent that most are probably losing money at this point) – and recall that before foreclosing, the servicing fees are basically fixed; and (2) they are not confident that if they hire a bunch of folks to help with foreclosures that they will get reimbursed. Prior to foreclosure, the servicer collects a fixed fee. After they foreclose, the servicer can bill these additional expenses back to the securitization trust. But… if they are not sure that they are going to get reimbursed (because the security owners revolt), then they will be hesitant to add more staff. In other words, they’re bleeding and gun shy… and not even sure what the rules are. I’d hate to be a mortgage servicer right now.

For the banks that own the mortgages outright, I think it’s just more of an issue that handling REOs is not a profit center – it’s a cost center. Also, I suspect that some banks are waiting to see if the govt comes up with some new plans to help keep folks in their homes. So, they’re dragging their feet a little hoping that someone throws some of their customers a lifeline.

[5yearwaiter]

[quote=davelj]I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.[/quote]

Exactly – no one know what the current happenings is a good idea or end up with much worst?. I never thought past fewer bad implementations would result this much confusion to us. Blame it on ??

[5yearwaiter]

[quote=davelj]I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.[/quote]

Exactly – no one know what the current happenings is a good idea or end up with much worst?. I never thought past fewer bad implementations would result this much confusion to us. Blame it on ??

[5yearwaiter]

[quote=davelj]I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.[/quote]

Exactly – no one know what the current happenings is a good idea or end up with much worst?. I never thought past fewer bad implementations would result this much confusion to us. Blame it on ??

[5yearwaiter]

[quote=davelj]I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.[/quote]

Exactly – no one know what the current happenings is a good idea or end up with much worst?. I never thought past fewer bad implementations would result this much confusion to us. Blame it on ??

[5yearwaiter]

[quote=davelj]I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.[/quote]

Exactly – no one know what the current happenings is a good idea or end up with much worst?. I never thought past fewer bad implementations would result this much confusion to us. Blame it on ??

[briansd1]

[quote=XBoxBoy] The asset holders are probably wealthy, but the ones who owe lots of money are just as likely to be poor or middle class as wealthy.[/quote]

You’re wrong here. Wealthy people owe a lot of money. They got rich thanks to leverage, especially if they did so in just one generation.

Leverage can send rich folks to the poor house just like leverage made them rich.

[briansd1]

[quote=XBoxBoy] The asset holders are probably wealthy, but the ones who owe lots of money are just as likely to be poor or middle class as wealthy.[/quote]

You’re wrong here. Wealthy people owe a lot of money. They got rich thanks to leverage, especially if they did so in just one generation.

Leverage can send rich folks to the poor house just like leverage made them rich.

[briansd1]

[quote=XBoxBoy] The asset holders are probably wealthy, but the ones who owe lots of money are just as likely to be poor or middle class as wealthy.[/quote]

You’re wrong here. Wealthy people owe a lot of money. They got rich thanks to leverage, especially if they did so in just one generation.

Leverage can send rich folks to the poor house just like leverage made them rich.

[briansd1]

[quote=XBoxBoy] The asset holders are probably wealthy, but the ones who owe lots of money are just as likely to be poor or middle class as wealthy.[/quote]

You’re wrong here. Wealthy people owe a lot of money. They got rich thanks to leverage, especially if they did so in just one generation.

Leverage can send rich folks to the poor house just like leverage made them rich.

[Author]

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