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Freddie Mac Outsources Servicing To India, Fresh Financial Meltdown Begins

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06/14/2010 10:51 PM
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Freddie Mac Outsources Servicing To India, Fresh Financial Meltdown Begins
Freddie Mac Outsources Servicing To India, Fresh Financial Meltdown Begins

[link to goodsensepolitics.blogspot.com]

For months, top mortgage servicers have been negotiating with Freddie Mac and Fanny Mae for servicing rights to thousands of subprime and delinquent loans. In February, when Obama rolled out his new program with all the fanfare to keep people in their homes, the pilot program sent 5,000 loans to Ocwen Financial.

Problem. Ocwen outsources 80% of their work force to India and South America. It is named one of America's top 100 outsourcing companies. Just one more case of the federal stimulus going overseas, depressing America and redistributing our wealth to third world countries.

Oh, but it gets much worse!!

Two mortgage servicers have an 80% retention rate for HAMP trial period loans: Homeq and Ocwen. Homeq was counting on getting those 5,000 loans for the pilot program. They have a very high rating and their workforce is entirely in the United States. The other servicers are around a 20% rating and outsource much of their work.

To secure their monopoly on the federal financial stimulus and on Freddie/Fannie, so to speak, Ocwen bought Homeq this week. Homeq was owned by a British bank Barcalays. But because of the BCR laws from Congress, which stipulates that about 12 times as much capital must be behind loans serviced by foreign companies as American companies, Homeq was no longer profitable. Ocwen requires billions less capital to operate because their home is Florida. They outsource their workforce to India, however, while Homeq was entirely in the USA! The Federal Government's laws, in an effort to save jobs and prevent losses, has just caused the very thing they were trying to prevent!

Now thousands more Americans will be out of work. About 128,000 loans serviced by Homeq will likely go to India. Fannie/Freddie's many other loans, besides the 5,000 already outsourced, will eventually go to India. The poor quality of service from third world country servicers will cause more shoddy loans. And America's wealth goes to third world countries.

Don't expect to get this kind of explanation in the media.