HSBC ramped up its mortgage modification effort in January, and has adjusted 61,000 mortgages so far this year. Statistics show that a full 20 percent of all adjustable rate mortgages nation-wide are in default and danger of foreclosure. Some are in foreclosure. What impact does 61,000 have? Better yet, why were loans modified? There are two main theories:
If loans were clearly illegal, in violation of HOPA, or the borrower is tenacious and in contact with lawmakers, the loan may be immediately modified. If the borrower tape recorded the loan officer and can prove what they were told, the loan may be immediately modified.
The other theory pertains to layoffs, firings, and reorganization currently taking place at HSBC Finance. Take a lesson from Household International and Bellingham Washington, where Melissa Rutland Drury almost took the blame for Household’s predatory lending. When predatory lending charges were aimed at Household, the company said it was one rogue office that was to blame. After that Household immediately moved to seal court records.
If anything goes wrong at HSBC Finance, HSBC will immediately claim that the employee is no longer with them, one rouge office was to blame, or a district manager was to blame. History never lies. Why are people being demoted and reorganized? It is a hedge against future litigation and a cost saving measure.
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