The devil and the Compact to Help Ohioans to Preserve Ownership

Bill Callahan’s well stated “Now the devil is… where the devil always is” observation on the Governor’s Compact to Help Ohioans to Preserve Ownership offers a key insight to the value of these non-binding measures. The compacts are non-binding, but as Callahan points out

the servicers are committing themselves to report progress to the Commerce Department and otherwise stay engaged with Strickland, Zurz and Dann. Presumably these officials will be checking in regularly with local governments and community agencies, and looking to broker (or jawbone) cooperation where it’s lacking. Will this work? It could. The Compacts establish an agreed-upon set of benchmarks — public expectations, in effect — for good servicer behavior. These benchmarks are definitely a big improvement over the industry’s standard practices to date. The reporting obligation, combined with a strong capacity for public monitoring and feedback (at least here in Cuyahoga County), should create some pressure on the servicers to honor their “nonbinding” commitments. If they don’t, a public record of their failure will be created — a record to support the need for binding action by the State.

I read the Citi compact and agree that the benchmarks are a big improvement over standard practices, but I wonder, given the problem of unemployment, whether early contact and free nonprofit counseling will make any difference at all. I echo Callahan’s observation that the public monitoring of these nonbinding compacts will build a record to support the need for binding action by the state.

Reviewing the compact with my jaded lawyer eyes I see this:

Citi’s specially trained servicing unit will work with borrowers to find solutions short of foreclosures and try to ensure that no borrower loses his or her home.

If a borrower has the desire, ability and intent to make their mortgage payments, Citi will work with them to keep them in their home.

To the extent permissible within existing fiduciary, contractual or other legal obligations and in accordance with prudent mortgage lending and servicing practices Citi will: waive fees and/or penalties; provide fixed rate loan modifications; modify loans based on the homeowners’s ability to repay; forgive some loan principle; or assist homeowners to remove negative information on their credit reports.

But read this:

Citi’s specially trained servicing unit hey we got a 100 million dollar subsidy to pay for counseling and all those out of work lawyers come CHEAP – talk as long as you want will call work with borrowers night and day, especially on holidays and call your neighbors to put notes in your door if you don’t’ answer the phone to find solutions such as charging you a one time fee you can’t afford and add another year or two on the mortgage short of foreclosures and try to ensure that no borrower loses his or her home.

If a borrower is not one of those lazy poor people has the desire, ability and intent to make their mortgage payments, Citi will work with them to keep them in their home.

To the extent that it doesn’t affect our CEO’s huge inflated salary or upset our stockholders permissible within existing fiduciary, contractual or other legal obligations we always have a GOOD reason for not helping you and in accordance with prudent mortgage lending and servicing practices but you know that is not going to happen because we have to take what we can get before your fold Citi will: waive fees and/or penalties; provide fixed rate loan modifications; modify loans based on the homeowners’s ability to repay; forgive some loan principle; or assist homeowners to remove negative information on their credit reports, ha ha just kidding we aren’t going to do this but it makes us look good to say we will try.

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