Servicers can serve their own interests

Re: 'Why needless foreclosures happen anyway' (April 21)

Dear Editor:

Jack Guttentag says: "Servicers, in contrast, want to protect their servicing fees, which they receive only from loans in good standing. Their general preference, therefore, is for early intervention."

If only this were true. Per the majority of the pooling and servicing agreements many servicers earn more and can disclose less about their servicing charges once a loan is in default. Bankruptcy courts are leading the way in dealing with the predatory jamming by some servicers and their agents of fees and abusive servicing costs in defaulted loan balances. Additionally, some servicers and/or their corporate owners are inherently conflicted by their junior tranche interests in the loan pools and are further troubled by the conflicting interests of the pool investors, the boss of the servicers, as some of the investors have hedged their bets so that they profit more from the insurance payoff on the loan pools when the default triggers are reached.

April Charney
Jacksonville Area Legal Aid Inc.
Jacksonville, Fla.

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