On Banks

It's important to note that the following thoughts cannot necessarily be substantiated by facts. These ramblings are my frustrated opinion and personal experiences. They represent a small portion of what is wrong with the loan modification crisis that is unfolding before our eyes.

I got my paperwork today. FedEx overnight. The top reads: "We are pleased to advise you that your loan modification has been approved." What follows is a vulgar display of wasted taxpayer money, greed, corruptness and vile deception.
Two weeks ago, I answered a call from BAC, the company who took my loan over from Bank of America. They told me that I had be "preliminarily approved" for a loan modification. All I had to do was make three on-time "trial payments" and they would modify my loan to a more manageable interest rate. The trial payments were set at $1243. As my former mortgage was over $2600, this was a welcome message. With my two cooking jobs, I could swing $1243. Not by much, but I could do it. And if it meant saving my house, I'd find a way to make it work. So, I told them to go ahead and set me up for auto-debit on the trial payments. Then today the documents came. Their proposal for a "modification"? Taking the total amount outstanding, interest and fees and tacking it on to the principal. Then, they would require that I pay all other fees with a certified check or money order (to the tune of $754). Then, they're going to leave my interest rate exactly where it was (6.25%). "So, let me get this clear: you're leaving my interest rate exactly where it was, and adding all the late fees and back interest onto the principal?"
"Yes" came the reply from the BAC call center associate.
My friends, my old mortgage was $2600, the new payment would be $2700. How does this "modification" help me? The answer is that is doesn't. This modification is a clever misuse of the bail-out money that we all gave to banks like B of A.
How, you ask? Here's how:
So, Uncle Sam gives B of A elevendy million dollars (rough guess). B of A goes out and sign leases, buy buildings, equipment, sign phone contracts, acquires employees to run call centers to talk to people like me. Did they do it with the bail-out money? I can't say. What I can say is that they spent quite a bit of money fielding my phone calls, sending me packages of information and useless letters telling me that my mortgage is late. They payed someone to file all my information, print "modification" documents. FedEx got paid to bring them to me overnight. "Customers need to get their modification documents in a hurry" BAC would probably argue. These documents however, are nothing more than a taunt. They're happy to put me on "trial payments", collect $3,600 over the next three months and then tell everyone that they "modified" my loan. After I can't make the new payments, I'm guessing the foreclosure process will start. But not until they've convinced me to pay these trial payments in full.
The level of deceit and corruption in this story boils my blood. Big Business is again gorging themselves in a fit of self-preservation. Wasting money on inefficient processes that is supposed to go to people about to lose their homes (aka Me). These companies would rather fill a call center with employees, purchase cubicles, chairs, computers, and pay them to collect "trial payments" from mortgage holders instead of actually using the funds to help us out. It's despicable.
As I said before, I can't say that the banks are intentionally trying to inefficiently use the bail-out money, but what I can say as a logical, well-educated person is that these banks benefit by being inefficient. The more calls and time it takes for them to get a modification done, the more money their company has earned. B of A's stock price has doubled over the past year. They're supposed to be absorbing huge losses from taking on all these foreclosed properties. Is something not adding up here?
Go on, get your abacus and do the math with me. They got $45B from the government and now they're paying it all back? Come on... they used the money as a means to grow their business, not to help the people who need it.
Who do you blame? The banks for trying to preserve themselves? Yes.
The government, for just giving money away? Yes.
Why the F didn't we think of something that actually focuses on getting money where it needs to go? I don't know, maybe an incentive-based program where banks get money based on how many modifications they complete... anything other than what is being done would be better.
So, anyone got a room for rent?