The Irish Independent reports that Finance Minister Brian Lenihan is considering a fresh charm offensive of major international financial centres later this year as Ireland looks to safeguard 25,000 jobs in the IFSC and woo new business to the hub.
This follows the minister's well-received roadshow last month of European capitals, including London, Frankfurt, Paris, Milan and Amsterdam, to outline the Government's economic policy and combat misinformation on the state of the country's finances.
The Government's move to overhaul the financial regulatory regime, by merging the functions of the watchdog with the Central Bank, will be the cornerstone of any pitch to lure more institutions to the IFSC.
Government officials have been surprised by the extent to which employment in the IFSC has generally held up, even as many of the foreign-based parents have borne the full brunt of the financial crisis.
The results of the 2009 Finance Dublin Yearbook Annual Employment Survey, published recently, defied fears of a meltdown in the IFSC. The job count fell only 0.6pc to 24,906 over the course of last year.
While employment in IFSC-based banks fell 4pc in 2008, jobs in insurance grew 8pc and the fund administration industry was up marginally. Although a raft of hedge funds have closed down globally amid financial crisis, sources said Dublin continued to attract new fund servicing business as major players here have cut their rates.
Sweeping
IDA Ireland is known to be maintaining close links with the major employing firms in the centre, such as State Street, Citigroup, JP Morgan and BNY Mellon.
Following sweeping management changes over the past year at the helm of financial institutions globally, the thinking now is that government officials must now engage with the new breed of top brass.
"Aside from trying to maintain functions in Dublin, there is a lot of potential business up for grabs as major financial groups go about restructuring over the next 12 to 18 months," said one senior financial industry figure. Firms based in the IFSC contributed €850m to the Exchequer last year by way of corporation tax.
Liam Donlon, chairman of the Federation of International Banks in Ireland (FIBI), said this month that there was a "tremendous opportunity" to further develop the IFSC.
"While we are seriously challenged on many fronts, we have a solid basis on which we can build for further progress," said Mr Donlon. "And the unique selling points that have served us well in the past can continue to do so into the future: namely, our well-educated, skilled and flexible workforce, favourable fiscal regime and our ready access to international markets."
Ireland ranks third behind Luxembourg and Switzerland among 32 European economies for the contribution that financial service makes to the national economy, according to Eurostat.
Some observers said Ireland should be well placed to win business from the other two as their banking secrecy rules come under attack internationally -- most particularly by the US.
The Irish Independent also reports that a Dublin-headquartered subsidiary of Swiss global mining behemoth Xstrata posted a foreign exchange $327m (€232.6m) loss last year, marking a sharp deterioration in performance compared to 2007.
The loss incurred by the company in 2008 comes as Xstrata possibly readies itself for a tempestuous two-year courtship of rival mining giant Anglo American, whose board rejected a £41bn (€48bn) all-share merger approach by Xstrata last Monday. The proposal could generate at least $1bn (€711m) worth of synergies, according to Xstrata, while analysts believe savings of up to $3bn (€2.1bn) could be possible.
Anglo American, which owns the Lisheen zinc and lead mine near Thurles in Co Tipperary, immediately dismissed Xstrata's "merger of equals" offer saying it lacked strategic merit and the proposed terms were "totally unacceptable".
Accounts just filed for Dublin-based Xstrata Capital Ireland, show that of its nearly $327m loss in 2008, $284.5m was realised and $42.2m unrealised. In 2007, the company had posted a foreign exchange gain of over $1bn. Just over $424m of that was realised, and the remainder unrealised.
Xstrata has used the Dublin vehicle to make loans to group companies. The Irish subsidiary's debtors figure stood at $5.2bn in 2007 and by the end of last December had decreased to $190m. The Irish arm also paid dividends of $4.8bn to its parent last year, and over $4.7bn in 2007. Those dividends were primarily paid from prior capital contributions made by the immediate Swiss parent.
The Irish Times reports that the group asked to identify reductions in public expenditure will propose cuts of €5 billion when it reports to Minister for Finance Brian Lenihan this week.
The Special Group on Public Service Numbers and Expenditure Programmes, informally known as An Bord Snip Nua, will make more than 400 recommendations for public sector cutbacks.
It will primarily focus on public pay and pensions, and social welfare.
Several sources centrally involved in the process, who spoke on condition of anonymity, said the cuts would span across all Government departments and State agencies and provide a list of options to the Government on where cutbacks can be applied.
The six-person group, chaired by UCD economist Colm McCarthy, was established late last year.
About €1.5 billion will be cut from the €21 billion social welfare budget, with child benefit and rent supplements being the primary targets. It is understood to recommend reductions of between 20,000 and 30,000 in public sector numbers through natural wastage, as well as the lowering and withdrawal of a large number of allowances currently received by public sector workers.
Minister for Social Affairs Mary Hanafin accepted yesterday that child benefit is likely to be taxed or means-tested from the beginning of next year, leading to savings of some €400 million.
Taoiseach Brian Cowen said the report was the start of a process that will culminate with the budget in December. Speaking at the Irish Derby at the Curragh, he said: “We have a challenging situation and there is no doubt that the Government is determined to do whatever is necessary to get our public finances back into order. That is in all of our interests, even if it involves, in the short-term, decisions which obviously will be difficult but have to be confronted . . .”
While the report will be presented to the Minister this week, it is still unclear whether he will present it to Cabinet next week, or later in July. There is also uncertainty on whether or not it will be published. Several influential figures involved in the process favour the publication of the report, preferably in mid-July, on the grounds that the public will be left in no doubt of the severity of the measures required. One source close to the process emphasised the report was not a stand-alone document, but was contingent on the report of the Commission for Taxation, due to be completed at the end of July.
“Some measures can have a cumulative impact that can adversely impact on one group. The budget has to be considered in the round, and you have to look at the whole tax benefit,” said the source. It was also pointed out that the cuts totalling €5 billion were not necessarily to be achieved within one year. Mr Lenihan has said that he would seek reductions of approximately €4 billion in December’s budget.
The Green Party’s finance spokesman, Dan Boyle, yesterday said the party accepted that dramatic cuts had to be made, but that the party’s attitude would depend on how the Department of Finance proposes to implement the measures.
“We know it’s going to be a very difficult budget,” he said.
The Irish Times also reports that more than half the members of the Irish Exporters Association (IEA) have let staff go over the past year, according to a survey it commissioned.
Members said 70 per cent of their turnover in the last 12 months came from exports and over 40 per cent of turnover came from the EU alone.
Commenting on the survey, IEA chief executive John Whelan said it was vital that the Government gave serious attention to resurrecting Ireland’s export industry which he believes is central to restoring economic growth in Ireland.
While he very much welcomed the €250 million Temporary Employment Subsidy Scheme for exporters as part of the Government’s new national recovery measures, he said guidelines on how to apply for funds must be made available to exporters immediately.
“The main issue at the moment is the speed at which this measure can be introduced.
“There are hundreds of vulnerable companies who right now are deciding whether they can afford to keep staff in work or not.
‘‘Time is not on their side, and any delay in the scheme will be critical for them and their workers.”
The IEA leader stressed that there were two other key issues that needed to be delivered on if Ireland is to have a strong export industry: export credit insurance and competitiveness.
“I am urging the Government to complete its work on the export credit insurance review as soon as possible, and to enter the market with the private sector to ensure Irish exporters are not disadvantaged in their international trade finance requirements.”
On competitiveness, Mr Whelan said exporters were under a lot of pressure from falling consumer demand globally, credit worthiness, currency fluctuations, new regulations and rising costs.
He said that for the past eight years the bulk of new jobs created in Ireland were in domestically trading sectors, with 65 per cent of new jobs being created in the public services and construction arenas.
The Irish Examiner reports that the Government will break with tradition and will not appoint a top Department of Finance mandarin to fill the post of governor of the Irish Central bank when incumbent John Hurley steps down next September.
Mr Hurley, 63, who is also member of the European Central Bank’s Governing Council, will retire from both positions on September 25.
Mr Hurley’s term in office at the Central Bank was due to end in March but he agreed to stay on longer to ensure a steady hand during the financial turmoil that has hit the country hard.
Unusually, the government has not asked President Mary McAleese to appoint a successor. Mr Hurley, a former secretary general at the finance ministry, was appointed Central Bank governor in 2002. He succeeded Maurice O’Connell, who was also top official at the Department of Finance.
Government sources indicated last night that a wide-ranging international search will take place to select the new governor and emphasised that Finance Minister Brian Lenihan will not be following with tradition in selecting the new governor from the ranks of the top officials at the Department of Finance.
The Government plans to reform Ireland’s financial regulatory system after a string of banking scandals that damaged the country’s international reputation and led to the departure of the chief executive of the Financial Regulator Patrick Neary. The new structure will merge the Central Bank and Financial Regulator into the Central Bank of Ireland Commission, chaired by the governor of the Central Bank.
When Mr Hurley was appointed in 2002 he was named on the same day as Mr O’Connell announced his retirement.
Mr Hurley, from Mallow, occupied three secretary general positions prior to moving to the Central Bank. He was secretary general, Public Service Management and development, in the Department of Finance, and secretary general, Department of Health.
Mr Hurley was chairman of the Top Level Appointments Committee which makes recommendations to the Government and to ministers on appointments to secretary general and assistant secretary level posts in government departments. It is not known at this stage, what role, if any, he will have in selecting his successor.
The Financial Times reports that the power struggle over Porsche re-erupted on Sunday when the chairman of the German sports car maker accused Volkswagen of attempting to blackmail it into accepting a reworked merger plan.
Wolfgang Porsche, chairman and largest shareholder of the debt-ridden company, strongly rejected a Monday deadline he claimed Volkswagen had imposed for Porsche to accept VW’s plan to buy half of Porsche’s sports car business as a first step towards a full integration of the two companies.
He said: “Ultimatums do not belong in the 21st century. We won’t be blackmailed.”
VW denied it had issued an ultimatum. Porsche was responding to an article in Der Spiegel, the German news magazine, which said VW was pressing for a tie-up between the two carmakers by the end of June.
The latest in a series of disputes heightens the uncertainty about the future of the once high-flying Porsche, which has been hit badly by the global slowdown and the infighting of its owners.
Feuding family owners, saddled with debt of more than €9bn ($12.6bn) after buying more than 50 per cent of VW’s shares, last month agreed in principle to merge the two carmakers. But Mr Porsche and his cousin Ferdinand Piëch, VW chairman and a large Porsche shareholder, have been at loggerheads over the right path to bail out Porsche.
Mr Porsche is considering a capital increase at the Porsche holding company but Mr Piëch favours a sale of the sports car business to VW to relieve Porsche’s debt burden.
Mr Piëch’s revised plan would have Porsche sell only 49 per cent of the sports car business to VW, as a prelude to a future merger.
In addition, Porsche would sell its options on more than 20 per cent of VW shares to the state of Qatar. The Middle Eastern emirate, which would thus acquire the right to become a big shareholder in Europe’s biggest carmaker.
But Wendelin Wiedeking, Porsche’s chief executive, is opposed to a sale of the car business to VW, which would probably result in him losing his job.
Backed by Mr Porsche, he is in intense negotiations with Qatar about a possible investment of up to €2.5bn in Porsche. The move could be accompanied by a sale of the VW options to Qatar.
People familiar with the negotiations said Qatar and Porsche were haggling over the right price for the option package, with Porsche aiming for up to €3bn.
Arndt Ellinghorst, analyst at Credit Suisse, believes the options to be worth between €2.7bn and €3.4bn.
Porsche suspended its 3½-year-long attempt to take full control of VW earlier this year when it ran out of money. It is struggling to meet interest payments for loans taken out to pay for its attempted takeover of VW amid a sharp fall in demand for luxury cars.
It unsuccessfully applied for a €1.75bn state loan and VW helped out with a €700m loan that expires at the end of September. VW could potentially threaten not to extend this loan.
The FT also reports an economic war has broken out between Switzerland and the rest of the world after the crackdown on Swiss banking secrecy, according to one of Geneva’s leading private bankers.
Yves Mirabaud, a managing partner at Swiss private bank Mirabaud, told the Financial Times that nothing was easier than dodging tax in the US and UK.
In rare public comments, the Swiss private banker said: “There is a feeling in the banking community, and also in the population . . . that we are in an economic war.
There is nothing easier than doing tax evasion in the US. Look at Delaware companies or trusts in the Channel Islands.”
Mr Mirabaud portrayed Switzerland as a country picked on by bigger rivals: “It is more than simply fighting against tax havens. Switzerland is a small country. It is not powerful.”
Swiss private banks have come under pressure after countries, led by the US and Germany, made Switzerland agree to ease its strict bank secrecy laws this year. The situation was exacerbated by the plight of UBS, the world’s largest wealth manager, which is involved in a legal fight with US authorities over alleged assistance in tax evasion.
Mr Mirabaud said that UBS had “behaved poorly” and had not “helped the Swiss financial centre”. He added that discussions on bank secrecy had “cost us all a lot”.
But Mr Mirabaud said the crackdown on bank secrecy had yet to lead to an impact on business, although it could do so in the future as it was unclear how much transparency there would be. “There is a certain uncertainty for our clients,” he said. “They have been asking questions and we don’t have all the answers. But business is good.”
Swiss private banks and politicians are adamant that “fishing expeditions” from foreign countries to find out customers’ names – known as the automatic exchange of information – will not be allowed.
But it is unclear where the line will be drawn on how much evidence of possible tax evasion will be needed for disclosure of customer details to be enforced.
“Privacy is very important for us in Switzerland. Automatic exchange of information is the negation of all this. In this case, we have some common interests with countries like the UK,” Mr Mirabaud said, alluding to offshore centres such as the Isle of Man and the Channel Islands.
Mr Mirabaud said that the past few months had been “an unpleasant time” but that factors such as the quality of staff and the political stability of Switzerland meant the country was still an attractive destination for potential private bank customers.
“We understand that we are in an economic war and we have our own weapons,” he added.
The New York Times reports that President Obamaon Sunday praised the energy bill passed by the House late last week as an “extraordinary first step,” but he spoke out against a provision that would impose trade penalties on countries that do not accept limits on global warming pollution.
“At a time when the economy worldwide is still deep in recession and we’ve seen a significant drop in global trade,” Mr. Obama said, “I think we have to be very careful about sending any protectionist signals out there.”
He added, “I think there may be other ways of doing it than with a tariff approach.”
The passage of the House bill on Friday night was an important, if tentative, victory for the president, becoming the first time either chamber of Congress had approved a mandatory ceiling on the gases linked to global warming.
Mr. Obama, hoping to build momentum in the Senate after the narrow victory in the House, delayed the start of a Sunday golf game to speak to a small group of reporters in the Oval Office.
He acknowledged that the initial targets for reducing emissions of heat-trapping gases set by the House bill were quite modest and would probably not satisfy the governments of other countries or many environmental groups. But he said he hoped to build on those early targets in fashioning a more robust program in the future as part of his administration’s efforts to move the nation from an economy based on fossil fuels toward one built on renewable energy sources.
Mr. Obama predicted that similar energy legislation would face a difficult slog through the Senate and require months of tough negotiations and additional compromises. The horse-trading and vote-buying that helped House leaders secure a 219-to-212 victory will be magnified in the Senate, where several powerful committee leaders are already asserting authority and Democratic moderates hold more power than their counterparts in the House.
Mr. Obama set no timetable for Senate action but exhorted its leadership to take the House bill as a benchmark and “seize the day.”
The president used the interview to put the House vote in the context of his broader efforts to modernize the American economy by shifting to cleaner and more efficient forms of energy.
He said the House bill was a “comprehensive approach” that included a cap-and-trade program to limit heat-trapping gas emissions, incentives for new energy efficiency measures and support for wind and solar energy as well as nuclear power and so-called clean coal technology.
He said that those measures, combined with the administration’s new automobile mileage standards and stimulus spending on research and home weatherization, represented a sea change in American energy policy.
“I think it’s fair to say that over the first six months we’ve seen more action on shifting ourselves away from dependence on foreign oil and fossil fuels than at any time in several decades,” Mr. Obama said.
Mr. Obama linked the energy and health care fights, saying that major revisions in both were necessary because “everybody knows what we’re doing isn’t working.”
“The status quo is unacceptable,” he said.
As he has done in the health care discussions, Mr. Obama refused to deliver definitive judgments on specific provisions of the energy bill, leaving the legislative wrangling to members of Congress. But he said his bottom line for energy and climate change legislation included meaningful reductions in heat-trapping gas emissions, strong incentives for energy efficiency, protections for consumers and businesses against spikes in energy costs, and deficit neutrality.
“If it meets those broad criteria,” he said, “then it’s a bill I want to embrace.”
The House bill contains a provision, inserted in the middle of the night before the vote Friday, that requires the president, starting in 2020, to impose a “border adjustment” — or tariff — on certain goods from countries that do not act to limit their global warming emissions. The president can waive the tariffs only if he receives explicit permission from Congress.
The provision was added to secure the votes of Rust Belt lawmakers who were wavering on the bill because of fears of job losses in heavy industry.
In the floor debate on the bill Friday, one of its authors, Representative Sander M. Levin, Democrat of Michigan, said, “As we act, we can and must ensure that the U.S. energy-intensive industries are not placed at a competitive disadvantage by nations that have not made a similar commitment to reduce greenhouse gases.”
In the interview on Sunday, Mr. Obama said American industries like steel, aluminum, paper and glass had legitimate concerns about competition from developing nations. But he warned that trade sanctions based on the extent to which other countries curbed carbon dioxide emissions might be illegal and counterproductive.
Mr. Obama has sometimes sent mixed signals about his attitude toward free trade. In the Democratic presidential primary, he was fiercely critical of several free trade agreements with China, Caribbean countries and Mexico for failing to include strict enough environmental standards. He argued that the United States should threaten to pull out of the North American Free Trade Agreement to renegotiate protections for the environment as well as workers’ rights.
But as president, Mr. Obama has not made a priority of renegotiating Nafta or other trade agreements. And he has always indicated that though he favors adjusting some rules, he supports the principle of free trade.
In the interview, Mr. Obama had few words of comfort for those who may have taken a political risk by voting for the House climate change bill, and no threats for the 44 House Democrats who defied their leadership to oppose it.
“I think those 44 Democrats are sensitive to the immediate political climate of uncertainty around this issue,” Mr. Obama said. “They’ve got to run every two years, and I completely understand that.”
Many of the Democrats who voted against the legislation represent districts that rely heavily on coal for electricity and manufacturing for jobs.
Mr. Obama said the House bill contained transitional assistance for these regions.
But he expressed scorn for the Republicans who fought the bill in the House. He noted that some of them had predicted political doom for those who voted for it, recalling the 1993 battle over an energy tax that failed and helped Republicans gain control of the House a year later.
Those Republicans “are 16 years behind the times,” he said, comparing their position to that of Republican leaders in the energy and health care debates of the early Clinton years.
“They’re fighting not even the last war,” he said. “They’re fighting three wars ago.”
The NYT also reports that somewhere on earth, there must be a more difficult task than this: persuading American mortgage companies to lower payments for homeowners who can no longer afford their loans. But as Karina Montenegro struggles to accomplish this feat for a troubled borrower, she strains to imagine a more futile pursuit.
Ms. Montenegro, an intern at a local company that seeks loan modifications, dials Washington Mutual to check on the status of an application for a homeowner whose income has plummeted. She endures a Muzak-scored purgatory while on hold. Syrupy-voiced customer service representatives chide her for landing in the wrong department. She learns that the documents her company sent in have simply vanished — for the third time since November.
“I don’t know what happened,” says a customer service officer who identifies himself as Chris. “I don’t know if there was a glitch in the system, whether it was transferred from one call center to the other.”
Think of the documents as being part of a pile massing inside the bank, Chris suggests. “This pile is not going to be moved forward at any point in time.”
Ms. Montenegro and her colleagues suffer these sorts of excruciating exchanges all day long. It is a potent indication of the difficulties afflicting the $75 billion taxpayer-financed program created by the Obama administration in an effort to avoid foreclosure for as many as four million distressed homeowners.
Under the plan, the government offers mortgage companies $1,000 for each loan they agree to modify, then another $1,000 a year for up to three years.
Hanging in the balance is more than the fate of individual homeowners. The administration portrays its mortgage program as a crucial piece of its broader effort to restore vigor to the economy. If the effort fails, foreclosures will continue to surge and home prices will probably keep falling, sowing fresh losses in the financial system and threatening to crimp credit anew for businesses and households.
Yet in the four months since the Treasury Department announced the program, millions of new homeowners have slipped into delinquency and foreclosure. For now, progress is constrained by the limited capacities of mortgage servicing companies, said Michael S. Barr, the assistant Treasury secretary for financial institutions. He offered the first signs of the administration’s impatience with the institutions that control home loans.
“They need to do a much better job on the basic management and operational side of their firms,” Mr. Barr said. “What we’ve been pushing the servicers to do is improve their infrastructure to make sure their call centers are doing a better job. The level of training is not there yet.”
The administration still does not know how many mortgages have been modified under the program. In a recent interview, Mr. Barr estimated the number at “over 50,000,” explaining that precise figures must wait for a soon-to-be-completed tracking system.
By the end of August, the program should produce 20,000 loan modifications a week, he said.
Tom Kelly, a spokesman for JPMorgan Chase, which now owns Washington Mutual, affirmed the administration’s criticism.
“We’ve done a lot,” he said, noting that the bank has added 950 loan counselors since the beginning of the year, bringing the total to 3,500. “But we’ve got a lot more to do.”
Two days in Los Angeles — where a loan modification company allowed a reporter to listen as its agents contacted mortgage servicers provided the firm not be named — starkly illustrated the problems.
The company charges homeowners $3,000, typically upfront, as it seeks to persuade lenders to rewrite loan documents so as to lower monthly payments. The company says it refunds the money when it fails to secure a modification.
For Ms. Montenegro, a college student at the University of Southern California, her summer job makes for fitting symmetry. In high school, she worked as a clerk at a Washington Mutual branch in Downey, Calif., which specialized in mortgages that invited customers to make such tiny payments that their balances increased.
Many homeowners did not understand the terms: Once they owed a lot more than their house was worth, their payments spiked. Now, that day has come, and Ms. Montenegro is working the other side. She calls WaMu, as the bank is known, trying to cut deals.
Among her clients is Vladimir Vishmid, who owes $490,000 on the mortgage for his three-bedroom home in the Sherman Oaks section of Los Angeles. Mr. Vishmid’s income as a self-employed computer engineer has plummeted, making it hard for him to make his $2,542 monthly payments. He is current on his loan, he says, but behind on his car insurance and utilities.
Software on Ms. Montenegro’s computer logs the details of the three applications her company has submitted for Mr. Vishmid. Chris, the WaMu representative, is telling her to send in No. 4.
“Personally, I’d submit a new file,” Chris counsels. “I’m telling you honestly, anything over 30 days is a new submission for us.”
For Ms. Montenegro, “honestly” is one of those words marinated in so much irony that her eyes roll. Two weeks earlier, she called the bank to check on the file and was told it was being reviewed. Now, it has disappeared.
“So, if I wouldn’t have called, we wouldn’t have known?” Ms. Montenegro scolds.
“It would have just sat in the queue and nothing would have happened,” Chris says. “I wish I had a better explanation.”
In the same office, Ms. Montenegro’s colleague, Sean Milotta, has run into a problem on a loan billed by American Home Mortgage Servicing. Though the borrower appears eligible for the Obama administration plan, the company refuses to take an application because the loan is owned by an investor who is unwilling to absorb a loss.
In another office down the hall, Ramin Lavi, 27, has picked up the file of Alice Descovich, who is seeking to shave down the $708,000 she owes on a mortgage serviced by WaMu for her home in Alameda, Calif. As the interest rates reset in coming months, it will become even harder for her to make the payments, which are now $4,400 a month.
A note in the system shows that the bank confirmed receiving documents on April 29 — pay stubs, tax returns, a letter disclosing her hardship, bank statements. Since then, the company has been waiting for WaMu to review the file.
But when Mr. Lavi calls, a representative coolly discloses that the application has been rejected because one document, a proof-of-insurance form, is missing. He must start over.
“The file had been submitted properly, and you didn’t put the pieces together,” Mr. Lavi says, his body quivering with anger. “I’m not going to stand in line again for another six months.”
He demands to speak to a supervisor, but the representative says none is free. He hangs up and redials, hoping to land in a different call center. Eventually, he reaches Chase’s executive offices, where Becky takes over the call.
“We’re not taking cases now,” she says calmly.
“Why was I transferred to you?” Mr. Lavi asks. Becky does not know. He implores her to keep the file open while he faxes in the lone missing document.
“Impossible,” she says, warning of “the sheer amount of papers coming in.”
Another agent, Lee Wasser, props his feet on an adjacent desk chair as he waits on hold for more than 20 minutes to speak with GMAC Mortgage.
His clients, Dean and Nancy Piercy, owe $380,000 on the loan for their home in Shasta Lake, Calif. A logger, Mr. Piercy has lost work hours, making it hard for them keep up with their $2,048 monthly payment — soon set to rise.
Mr. Wasser has already negotiated a solution: GMAC will accept only $270,000 in repayment, allowing the couple to get a fixed rate mortgage from another bank.
But that suddenly is in disarray. The Piercys have been making their payments, but GMAC has been putting their checks aside, holding the money as “loss mitigation fees,” until their application is completed. It has notified credit bureaus that their loan is more than 90 days delinquent, which has lowered their credit score, disqualifying them for the next mortgage.
Mr. Wasser reaches GMAC’s loss mitigation department. He asks for the delinquency to be removed from their status. But that must be handled by a different department: customer service. He is transferred there, where Jessica picks up the call.
“We are not going to amend,” she says, after a strained back and forth. If Mr. Wasser wants it otherwise, he will have to talk to loss mitigation.
“I just talked to them five minutes ago,” he tells Jessica.
“No, you didn’t.”
“Are you accusing me of lying?”
Mr. Wasser asks for Jessica’s employee identification number, but the line goes dead. Jessica has apparently hung up.
