Thursday, August 25, 2011

Tending to your knitting, Bankers version

American Home Mortgage files suit against Lender Processing Services, a paper pusher for hire. AHM charges that Lender Processing improperly signed mortgage documents in its behalf and triggered millions of dollars of lawsuits as a result. AHM said that it incorrectly processed 30,000 mortgages in all 50 states, causing a failure in the foreclosure[s].
Wow. Talk about farming out the core of your business to the lowest bidder. Mortgage is their middle name. Mortgaging means paying out large amounts of cash in return for the legal right to seize the property if the borrower doesn't pay up. Legal right is slippery and the paper work must be done just so or it doesn't work when you need it.
The suits at AHM were dumb enough to farm out this crucial part of the business to a third party, giving up control of the process to a hired gun. Dumb and Dumber. The key parts of your business ought to be done in house so you can make sure it is done right.
The suits probably laid off a few AHM back office workers and thought they were saving money. But it cost them foreclosure on 30,000 houses, worth $30 billion at a guess. I'm sure AHM is so glad they hired some MBA's to foul things up. Laying off those few back office workers didn't save them $30 billion.

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