A Lesson from "Foreclosuregate": The Details Matter Too

What does this have to do with the spreading foreclosure scandal enveloping the mortgage lending industry?

It's this: In their rush to make mad money from home loans, some of the nation's biggest banks forgot that the execution, the mundane gruntwork, the service after the sale matters as much as or more than the sale itself. Because they did, they now stand to lose even more money through invalidated foreclosures on top of their ongoing losses from delinquent loans.

A story in The New York Times documents how large mortgage lenders brought people with no knowledge of the business - at JPMorganChase, these hires were derided as "Burger King kids" - and put them to work servicing a huge volume of loans. Worse still, there weren't even enough of these hires to deal with the volume, and they were backed by inadequate technology.

So when mortgage loans began to go south in droves in the fall of 2008, the lenders found themselves in a bind: too few people without the tools or knowledge they needed processing documents that throw borrowers out of their houses. Rather than invest in training or technology - or even additional hires - the lenders let the situation fester.

The result? Harried workers tossing paperwork into the garbage. Loan servicers signing off on documents sight unseen. And now, a 50-state investigation into foreclosure practices, with one likely outcome being the invalidation of many already completed foreclosures, which in turn should clog our courts even further and provide tons of work for lawyers.

Could all this have been avoided? Sure, if the parties involved had bothered to take the long view, something our financial culture often discourages. Had the banks bothered to either hire people who knew something about mortgages, or give them training after they were hired, they might have not only avoided the current scandal but maybe even have kept some loans from going into default. Good customer service -- which is what even the back-office staff should provide after the sale is closed and the loan on the books -- can make the difference between profit and loss.

The scandal also contains lessons for job-seekers as well. Attention to detail matters every step of the way, from the initial research to the followup after the interviews. Failure to handle the little things properly could mean the difference between getting hired and getting passed over, just as the banks' failure to handle the little things properly could soon mean foreclosed borrowers getting their houses back on a technicality.

By: Sandy Smith