subject: It is Not Just Homeowners Who Suffer Due to Foreclosures But the Investors Also [print this page] It is Not Just Homeowners Who Suffer Due to Foreclosures But the Investors Also
It is not just homeowners who suffer due to foreclosures but the investors also. The losses incurred on toxic loans can be sometimes as high as 80% of the principal said Barrent the CEO of Barrent Group. He did not mention the client's of the company but said that talks are on with the investors regarding recouping losses because of slipshod servicing of mortgages.
Among the firms endeavouring to make the banks take back the toxic loans are Fannie Mae as well as Freddie Mac. Last October a group of big investors raised objections regarding the handling of bond deals numbering 115 that had been issued by Countrywide Financial; the latter has been taken over by Bank of America.
The instance of one example can be cited. Senior loan auditor Gayle Hanson for Barret Group combed through loan documents numbering 331 pages. It was part of her work peering into the home-equity credit line amounting to $165,000 of a house in Colorado Spring.
Included in the file were many copies of the mortgage and notes giving details of the efforts that had been made to make contact with the house owner who was delinquent. Hanson found that the borrower had not disclosed a minimum of three mortgages adding up to $520,000 apart from investments in nine properties that were listed on the application for loan.
There was hardly any information in the files in support of the claim by the borrower that his earnings amounted to $13,500 per month in addition to $5,700 that he received as rent from his tenants. Hanson said, "The underwriter didn't do due diligence on this". Barrent refused to identify either the borrower of the lender.
Barrent operates with customers to choose problematic mortgages. The most common fault of the loan files reviewed by 38 employees of the company relates to false statement of incomes. This does not come as a surprise considering the fact that in many loans that have been reviewed the borrowers have not been mandated to document their income.
The borrower of one loan that underwent scrutiny claimed that he was shoe salesman with an income of $35,000 per months. The regional sales manager cited his earnings to be $250,000 per year was actually a clerk of the same firm with an earning of $47,000.
65% of the reviews of Barrent indicate request for loan repurchase. Banks have purchased back nearly 1,100 loans. It means that half of those who have had their loan papers reviewed have recovered about $142 million suffered as losses. The figure does not include those loans whose negotiations are being processed. Barrent gets a fee for each loan generally in proportion to the amount of recovery.
