I have seen this hundreds of times with clients and even on my own home when we were in the modification process in 2009: despite being in the process of some sort of relief sanctioned by the lender, you still get collection and demand letters that seem to be unaware that payments are not, in fact, due in the grace period you are in.
It is very disconcerting. Borrowers have a forbearance letter telling them that their next payment is not due for another 60 or 90 days, and yet the same lender is sending a letter telling them they are behind on their mortgage and demanding payment. The first time this happened to us, we set a land speed record running to the drawer in the home office with the mortgage file just to make sure we weren’t crazy.
We never called the number on the collection letter. We instead called the loss mitigation folks who were in charge of the modification and were told to disregard the collection demand letter. Did they put it in writing? Of course not. I think at some level, financial institutions trade on the implied intimidation of foreclosure and damage to your credit.
It’s also quite evident that lenders are huge monolithic institutions that do not possess much agility. One department doesn’t know what the other department is doing. I’ve reassured clients that at their bank, the people on the 5th floor don’t know what they are doing on the 20th floor. It’s really beyond even that, the folks in New York aren’t privy to the goings on in the Dallas division.
The bottom line of course is that lenders are, outside the IRS, the largest collection agencies in the known universe and they aren’t going to devote any resources to pausing computer-generated correspondence. They do benefit from keeping borrowers on their toes (that translates to always carrying the vague threat of being able to steamroll you), and the last thing they want is a complacent or relaxed borrower.
So, while I often write here about the importance of diligence, being proactive and communicative, and yes, being on your toes, in this case please don’t panic. Remember that you’re dealing with a huge collector, and quality control with borrowers who are in rough circumstances is not their priority.
