Miscommunication at heart of foreclosure crisis

A lack of communication from lenders is one of the biggest complaints among defaulting homeowners seeking help, legal and industry experts say.

When a homeowner faces loan default, their problems are exacerbated when they can't get through on the phone to talk with someone or are shuffled among departments.

"When a homeowner gets a foreclosure notice and calls up, they often get layer after layer of what button to press and then music when they're on hold," said Steven Bashaw, a Lisle attorney specializing in foreclosure and real estate matters. "Ask anyone who's done that. They'll be placed on hold and wait, and they'll wait and they'll wait. Then it's five minutes to five o'clock, and they'll say they can't get anyone today, call again tomorrow. I hear that constantly."

Mortgage companies and banks have been under pressure to please shareholders while curbing the defaults. Still the numbers of foreclosures continue to rise.

For example, Bank of America, based in Charlotte, N.C., has expanded in the Chicago area after acquiring LaSalle Bank and says it has an extensive communication policy to keep mortgage customers afloat.

"We want people to keep their homes and later open other accounts with us so we can have that full customer relationship," said Bob Caruso, national servicing executive for Bank of America, which services their own mortgage loans.

The bank said it originated about 350,000 first mortgages worth about $83 billion in 2006. It services about $365 billion and claims to have the lowest foreclosure rate nationwide at .01 percent.

If customers find they're starting to have financial difficulties, they should immediately call and get a payment plan. About 90 percent of those who go on such a plan succeed, Caruso said.

Otherwise, the bank has a specific line of communication it follows. Once a customer is 10 days behind, they'll get a call. Forty-five days later, they'll get a letter. A bank representative will even visit the home to personally talk with the homeowner. If the homeowner is unavailable, they'll leave behind discreet information to contact them.

But after a fourth missed payment, the bank will start foreclosure proceedings in court, Caruso said.

He contends customers can always get through. "Here, go ahead and call our Loss Mitigation Department. You'll get through. They may be busy, but you'll get through."

Banks and mortgage companies don't want the homes back, especially not at 68 cents on the dollar after paying legal fees, taxes and other expenses on the property, said Marve Stockert, executive director of the Illinois Association of Mortgage Professionals in Lombard.

"We're seeing a real problem at mortgage companies because there are so many more foreclosures being filed and they're trying to do this work without enough staff and resources," Stockert said.

Stockert said his organization receives roughly 30 calls a month from consumers regarding different situations with mortgage lenders, including lack of communication. If there are any serious violations of the law, his association reports it to state or federal authorities, depending on the situation and the type of lender, he said.