CHASE estimates 60% of its borrowers.....

Schumpeter Reincarnate Joined: 21 Jan 2008 Posts: 3256

Just wanted to throw this one out there for everyone to comment on.

At a recent meeting the following stat was tossed out by senior mgmt -

It is estimated that up to 60 percent of all borrowers in foreclosure in Chase's portfolio (retail and wholesale) right now actually have the capacity to repay if they wanted to.

So what does everyone think of that stat? And just how in the world can you account for this going forward in your current credit policy? Especially if right now your not actually sure of why this is (as is currently the case with those that make these decisions).

C-4 Joined: 08 Nov 2007 Posts: 1290

thebfgb wrote:

Just wanted to throw this one out there for everyone to comment on.

At a recent meeting the following stat was tossed out by senior mgmt -

It is estimated that up to 60 percent of all borrowers in foreclosure in Chase's portfolio (retail and wholesale) right now actually have the capacity to repay if they wanted to.

So what does everyone think of that stat? And just how in the world can you account for this going forward in your current credit policy? Especially if right now your not actually sure of why this is (as is currently the case with those that make these decisions).

I call bs on that stat. I suppose if I came up with the lending policy that led to massive foreclosure I would be floating that idea passed sr management as well.

I believe the folks that have the ability to pay but are choosing not to represent 1% or less of total foreclosures and the majority of those would probably be in CA and FL.

Cherry Bomb Joined: 26 Jan 2008 Posts: 185

thebfgb wrote:

Just wanted to throw this one out there for everyone to comment on.

At a recent meeting the following stat was tossed out by senior mgmt -

It is estimated that up to 60 percent of all borrowers in foreclosure in Chase's portfolio (retail and wholesale) right now actually have the capacity to repay if they wanted to.

So what does everyone think of that stat? And just how in the world can you account for this going forward in your current credit policy? Especially if right now your not actually sure of why this is (as is currently the case with those that make these decisions).

Was this thrown out as a casual observation? Or was this really based on some review of hard numbers?

Yes, we know there are people using forclosure as a financial planning tool. Yes, we know there are people who think it's acceptable to walk away from a loan, push the loss to the bank, and then rationalize that it's okay because the bank was evil in letting the borrower lie about his/her income. Even so, I'd be shocked if the percent of borrowers who could but do not repay is that high. Maybe not shocked. Maybe disappointed.

Does anyone know more information about the data?

Demolition Man Joined: 13 Dec 2007 Posts: 2388

Let me toss my two cents worth in.

I don't doubt this statistic at all. I sat in more than one closing where the following happened (the brief version)

me: This is the Deed of Trust. This document allows the Lender to place a lien on your property as long as there is still money owed on it. If at any time you fail to make your payments your lender has the legal right to take your home.

customers: I get 3 or 4 months before they take it, right?

me: Excuse me?

customer: I can live there without making a payment for 3 or 4 months before they force me from my home, right?

me: I would have no way to know how long you could live in the home before the foreclosure process would force you to leave. Do you plan on not making payments?

customer: No, just needing to know my options

me: Missing payments is really not an option.

Loan officer: Oh we know he will make the payment. If he gets in trouble we will just refinance him when the rates are lower.

Now tell me... do you really question why we are in this mess?

C-4 Joined: 10 Jan 2008 Posts: 1137

That number is pulled out of the executives @ss. What are they supposed to do admit they lent to people they shouldn't have and ask for a class action?

Demolition Man Joined: 13 Dec 2007 Posts: 2388

HelpWanted wrote:

That number is pulled out of the executives @ss. What are they supposed to do admit they lent to people they shouldn't have and ask for a class action?

LOL Good point. Maybe it is 50/50 then! I know those folks that came to closing bringing less than $5 are piling up in some subdivisions in my area when the attorney comes for a meeting at the community center to explain to them how they were taken advantage of.

C-4 Joined: 10 Dec 2007 Posts: 1128 Location: Texas

thebfgb wrote:

Just wanted to throw this one out there for everyone to comment on.

At a recent meeting the following stat was tossed out by senior mgmt -

It is estimated that up to 60 percent of all borrowers in foreclosure in Chase's portfolio (retail and wholesale) right now actually have the capacity to repay if they wanted to.

So what does everyone think of that stat? And just how in the world can you account for this going forward in your current credit policy? Especially if right now your not actually sure of why this is (as is currently the case with those that make these decisions).

I don't find it hard to believe, and here's why...

It's now basically common knowledge that 1) programs exist to modify rates, loan balances and payments for borrowers who are either upside down on their mortgage or can't afford the payment. Obviously the lender's definition of "can't afford" is quite often much different from the homeowner's definition. And 2) borrowers won't qualify for many of these programs unless they are currently delinquent on their loan....

I heard about 10 minutes of the Dave Ramsey show in my car today on the way to an appointment. A guy called in who was upside down in a loan that was about to adjust in April of 2009. Dave asked him if he'd called his servicer and asked about either a rate or a loan modification. The homeowner said that he had called them, but was told that he did not qualify for any programs because he was not delinquent on his mortgage. The servicer apparently did not elaborate or provide any details. I've heard this same story many times. The servicer precipitates the situation by having a customer service rep that's either misinformed, uninformed or just plain lazy by not "pre-qualifying" the caller for one of these programs ahead of time. And the borrower is too lazy to do the research on the available programs, or avoids doing research because they don't want to discover they may not qualify.

So what do they do? Stop making their payment so they can call back and see if they qualify. It's the only way they can get a straight answer. Of course, many of these people don't have much to lose anyway. They probably already had bad credit when they got approved for their 100% interest only loan in the first place....

I think both the borrowers and servicers are to blame. Perhaps if more servicers had systems in place that would "pre-qualify" borrowers who inquired about modifications BEFORE they went delinquent, then maybe people wouldn't have to go to such drastic measures to see if they can get help....and like it or not, a sizeable percentage will try to work the system whether they need the help or not. BFGB, you could just as easily have said "60% of all the people on welfare are able to work". It sounds like the same statistic, just manifested in a different sector of the economy.

ON THE FLIPSIDE, how many people would end up getting a modification that didn't need it if lenders DID spill the details upfront? And not to mention, the servicing overhead would probably skyrocket if servicers spent time with every single caller.

Maybe an online system would be more appropriate and cost effective.

This is all just my opinion from what little i've heard from people who have inquired about loan modifications, etc. I'm lucky to live in an area where most people don't need help like this, but the ones i've spoken with that have inquired to their servicer have all reported the same story...they were told they have to be delinquent to even see if they qualify, and they were given very few, if any, hard details about the program. That's basically saying "don't make your payment for two months and call us back then".

Schumpeter Reincarnate Joined: 21 Jan 2008 Posts: 3256

To answer ET and KAT's question about authenticity - This stat was given by the top senior executives to the regional managers at a recent meeting of mgmt in Jax, FL. Those who know can vouch that this meeting took place recently. It was given after analysis of the portfolio with regards to credit risk. I'm not making this up. This info was then communicated to not only me, but to several others at the same time - by someone who was in the room at that meeting who was an active participant in the discussion about that stat.

Posted: Sat Sep 06, 2008 1:41 am

I buy that stat, hook, line and sinker

It might even be understated.

Schumpeter Reincarnate Joined: 21 Jan 2008 Posts: 3256

HelpWanted wrote:

That number is pulled out of the executives @ss. What are they supposed to do admit they lent to people they shouldn't have and ask for a class action?

See it never fails. The know-it-alls on this website always have it all figured out and everything is a conspiracy or a lie or a coverup. What a joke.