04/18/2012 10:31 am ET Updated Jun 18, 2012

Stories From the Frontline: Please Tell Me I'm in Kansas

As a continuing topic from the post entitled "Stories From the Frontline: Why Is Mortgage Aid, Hater-Aid?" the following is a continued look into the operational innards of mortgage operation centers.

Just who were and are these silent saviors of America's housing universe? Who rectified those mortgage broken consumers and tried to make them whole again? We know the face of the robo-signers. But who are the other mortgage professionals that might be part of the orchestrated delay in fixing the mortgage chaos? America shouts, be fixed already! No one really listens. And if someone is listening, they're too far away to help.

Simply rewind congressional hearings dating between 2008 to 2010, with the CEOs of America's banking elite, juxtaposition against the CEOs of large tobacco companies in 1994 during their moment of truth, and you get a clearer picture of momentary honor. But unlike their infamous CEO counterparts, these banking leaders were honorable enough to admit they contributed to the cesspool of mortgage securitizations that ultimately resulted in trading thin air. The consumers got robbed and the bankers got bonuses.

Another textbook example of capitalism gone wild. And yet another example of the consumer not educating themselves fully on the financial instruments they were being engaged with. In short, the consumer needs to realize that you don't go to a gun fight with a knife.

There is an underclass of mortgage professional far removed from the cameras, senate hearings and politics, that don invisible hazmat suits. This is who they were: Some were and are common loan processers who had Napoleonic complexes and where thrust into positions with a lot of discretion. These where and are, low to mid-level mortgage ops employees who were in single A ball so long, that they longed for a chance to make it to the Big Dance -- and regrettably got it. The "Wal-Marters" as they are sometimes refereed to. They work primarily in mortgage operation centers located in the Midwest, South and sun states, such as Arizona, Florida and Texas -- because it's cheaper there.

Imagine if you will, how the Wal-Marters, who work for the Wall Streeters -- and always will, are then put in a position of power. Almost in public trust, when you realize it was federal TARP money that kept them employed. Ask someone who witnessed this attitudinal disposition first hand, and they would likely say that some took delightful glee in excoriating a loan applicant's qualifications. Applying for a loan modification is a lot like going to a proctologist. While you do it out of economic necessity, it's still a shameful experience to bear all your economic warts. Instead of STDs, you have FTDs (Financially Transmitted Diseases).

The loan modification specialist got the full frontal nudity. You learned not only the loan debt and what's on credit, but an applicant's individual expenses to the cent. To qualify for a loan modification, the bank learns everything about you. But this is a necessary evil. As a personal example, when I started buying new tract homes ten years ago I often used at least 3 mortgage brokers per transaction. This was so, since invariably one or two of them served up broken promises.

As a general rule, I held most mortgage brokers with the utmost contempt, since their business etiquette and social skills were almost Neanderthalic. It was not unusual for me to yell at a mortgage broker at least once a week. Not only was it therapeutic (for me that is), but because I was entitled -- since I was in essence a player-coach in the real estate mortgage business and knew what they were thinking before they knew it. That's why they were Neanderthals.

On one occasion when I considered dropping a loan served up to me, the mortgage broker said to me -- knowing that I was closing escrow soon, the futility of going elsewhere. In short, he said; I've got your social security number, your date of birth, your credit report, where you work, how much you make, that you're single, no dependents, where you live and what you own. There's not much I don't know about you. So why would you go elsewhere? And then he chuckled. Checkmate I thought. In reflection, the mortgage broker had a good point. Who would volunteer for such another invasion of privacy? Ohhh!

In view of the normal loan process described above, the vetting process for a loan modification is even more invasive. Not only are you dropping your pants, you're dropping them multiple times and bending over in various positions; and especially so, given the proclivity of banks to magically re-lose documents. The loan modification methodology consists of a much more detailed analysis of an applicants' wherewithal to repay the mortgage back to the bank. For example, on a credit report, you see only what's "on" the record. But for the loan modification route, the lender wants to know what's "off" the record. As they are entitled to I should add.

I firmly believe that having all the expenses more closely expressed to the true DTI (Debt to Income) ratio is critical. For example, a loan applicant with a 45% DTI, which would usually be the maximum DTI for many loan programs, might have a true DTI of 50% to 60%, and might not otherwise qualify for a loan. What's off the record can be fairly personal, salacious and a delicate matter. And that is the standard the loan modification process requires.

But also listed on the expenses, an applicant would disclose the cost for monthly groceries, gasoline, itemized toiletries, or how much they teethed to their church. Some vindictive, judgmental loan modifiers LMs (or what I referred to as Lone Morons), would laugh about denying someone a loan modification because the applicant refused to lower their monthly teething amount in order to fit within the government mandated DSR (Debt Service Ratio). A debt service ratio is utilized to determine if the loan modification applicant has the ability to make future payments on the reconstructed loan terms. It seemed that the Mormons and Baptists would get it the hardest. God forbid the LM was an atheist.

Next Huffington Post segment. "Stories From the Frontline: Don't Drink the Yellow Kool-Aid."