A “Very False Notion”

Posted April 16th, 2008 by Joe Kaiser

Solving difficult foreclosure problems takes more than a brochure and a phone call . . .

Dear Rob,

I see you’re a big proponent of borrowers and lenders working things out so that foreclosure can be avoided and homes spared from the auction block.

My question to you and anyone in your office . . . have you ever attempted one?

Probably not.

where my money at?

Because if you had, you’d know lenders require the one thing borrowers in foreclosure don’t typically have, money. And do you have any idea how uninformed you sound when you suggest foreclosure can be avoided by simply picking up the phone and talking to the lender?

It doesn’t work like that, Rob, and it never did.

Solving difficult foreclosure problems takes more than a brochure and a phone call . . . it takes someone writing a check for thousands and thousands of dollars.

Patronizing at best

Or, does your office really think loss mitigation departments hand out extensions simply for the asking? This is embarrassing, Rob.

A word of advise . . . unless that HUD certified consultant you recommend also makes loans on the side, suggesting a solution can be found by talking to him is little more than lip-service. In the real world, this isn’t a solution at all.

In fact, it’s downright misleading and offers false hope, a terrible thing to do to people in foreclosure.

Yet another program?

Here are your comments on KUOW Radio about this very subject . . .


The other approach that we can be taking is the one that we are taking which is to set up a a program so that people who are ugh, you know, behind in their payments and maybe about to go into foreclosure or actually are in foreclosure can call and seek some counseling, some advice.

What motivates us to put this program in place is that, ahhh, national studies show that over half of people who go into foreclosure haven’t talked to the lender ahhh, and what we want to do is get the borrower and the lender together to see if a workout might be possible. It won’t be possible in every case, but in many cases it might be . . .— Attorney General Robert M. McKenna
KUOW Radio, March 9, 2008

Emphasis goes on “might be,” because what your lack of experience in this arena doesn’t allow you to realize is that talking to lenders without money in hand is a complete waste of time.

People get to call and seek counseling and advice?

That’s your program?

Good grief.

They don’t want counseling and advice, Rob. They want someone to write the big check that ends foreclosure and saves their home. Anything else is meaningless.

False Notions

Foreclosure rescue-rescue attorney Melissa Huelsman has a completely different view of the lender workout strategy . . .

. . . and the fact of the matter is all of this activity (the new proposed federal legislation) is premised upon the very false notion that lenders and their servicers are actively engaging in loss mitigation right now and are doing workout programs with borrowers when in fact all evidence that we have is to the contrary.

It’s been published in the New York Times and Wall Street Journal in the last few weeks demonstrates that most lenders, not all, but most lenders and most servicers are not actually working with homeowners, they are not doing workouts, and people are going to lose their homes . . . — Attorney Melissa A. Huelsman

How can it be?

I’m told the first rule of logic is that something cannot both exist and not exist at the same time. With that in mind, please explain how . . .

(1) Your office contends foreclosure can often be solved through loss mitigation and encourages homeowners in trouble to contact their lenders and work something out, and

(2) Melissa Huelsman contents the lender workout is nothing more than a false notion that, in reality, happens infrequently if at all, and from her tone, sounds like a waste of time.

These assertions cannot both be accurate. If your office and Ms. Huelsman completely disagree on what is essentially the core “how to stop foreclosure” premise, one of you has to be 100% in error.

Pssst . . . it’s not Melissa.


Do you see the problem, Rob?

You’re suggesting workouts as the way to stop foreclosure, and attorney Melissa Huelsman, someone whose opinion your office values, someone who’s actually in the foreclosure trenches and ought to know, summarizes your approach by saying, “people are going to lose their homes.”

I tend to agree.


You took investors out of play with HB2791, and workouts, if we’re telling the truth here, don’t work out often enough to be considered a viable option.

So now what?


Please tell us you have a Plan B and that this simplistic, uninformed solution isn’t the only thing your office is bringing to the table.

In the arena,

Joe Kaiser

3 Responses to: “A “Very False Notion””

  1. DaveD responds:
    Posted: April 16th, 2008 at 7:36 am

    Let’s put some numbers behind the workout for Rob’s benefit.

    Say the homeowner is eight months out @ $1000/m. Do you think that adds up to $8,000? Only if you are naive.

    There have been lots of stuff going on in the background that accumulate as well. Stuff like lawyer fees (for beginning and advancing the foreclosure process), forced insurance, BPO, property taxes advanced, late fees, recording fees… and the list goes on. It isn’t a stretch to say that will add up to another four thousand or so.

    A typical workout will be proposed to the homeowner this way: “Give us half the twelve thousand now, and the rest you can pay us back at $1000 a month for the next six months. Oh, joy… we have a workout. Maybe Rob is on to something here.

    But do you see a problem or two? Again it comes down to writing checks, doesn’t it? Who is going to write the $6,000 one, anyway? The same guy who doesn’t have two nickels to rub together now? But wait… it gets better. How is the homeowner going to make double payments ($1,000 current payment plus $1,000 workout payment) for the next six months? Who is going to write those checks?

    The lender isn’t going to waive all this out of the goodness of his heart.

    The homeowner can’t borrow it… his credit is shot.

    The homeowner isn’t going to win the lotto.

    Since Rob has broomed the investor out of the arena (the only logical alternative) shouldn’t his office write the check? Because if he doesn’t, then the blood is on his hands. While I’m not in favor of the good citizens of WA coughing up the rescue dough… when you take the market forces out of the market, and put government in the middle of it… you end up with a damaged market as well as a blizzard of brand new problems.

    Rob, getting a workout is duck soup. Reality is, it won’t work out. Too bad all those folks losing their homes won’t know how much you care. Rest assured your legacy will be far more people will lose their home due to your misguided public policy than to any foreclosure investor. After all, four is a number that can be surpassed pretty quickly… like in a few days. Yep, more “fine work” indeed going on down at the AG’s office.

  2. Joe Kaiser responds:
    Posted: April 16th, 2008 at 8:22 am

    Dave, I’ve discovered math only confuses them. Nice post just the same.

  3. Loya responds:
    Posted: April 16th, 2008 at 8:45 pm

    Excellent post, Joe. It is scary that our lives are in the hands of such uninformed gov’t workers. It is sickening to listen to Mckenna spew so much mis-information just to get re-elected………..If he was my atty and gave me legal counsel, I would file a bar complaint so fast and get me a real good malpractice atty…………”we don’t get Mckennafonged again…..no,no!”

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