Stop Foreclosure Answer

September 2, 2009

You may never have heard of them. I know I never did. However after hearing about them I know that I would like to do business with them.

Who am I talking about? First Federal Bank of California. They are a wholly owned subsidiary of FirstFed Financial Corp. They are federally chartered and have 39 offices in southern California.

What is so great about this bank? Their success in helping their customers, people who have home loans through them, stay in their homes and avert foreclosure.

I was amazed when I read their story.

Through May of this year they had modified the loans of over 2,000 of their customers. The total of these loans was over $1billion. They didn’t wait until the Making Home Affordable Program started. They didn’t wait until the government urged them to take action. They started early.

When the housing crisis started, they were very aggressive in their response. They reached out to every borrower whose mortgage was set to reset and where the payments would increase. They encouraged them to modify their loans if they knew that they were going to have difficulty making the new higher payments. The borrowers did not have to be behind on their monthly payments. Loans were modified before the borrowers could not make the payments. Their chairperson and Chief Executive Officer, Babette Heimbuch, said “As a community bank, we are committed to responding quickly to the needs of our customers. These mortgages are more than loan numbers; they represent people.”

What has their success rate been? It is significantly higher than the success rate for large national lenders. At the end of May, more than half of the borrowers who had their mortgages modified by the large national lenders were behind on their payments again. A little over 80% of the customers at the First Federal Bank of California whose loans were modified were still current on their monthly payments.

Only 29.1% of their customers have fallen behind on their payments after their loans were modified. Nationwide 63.3% of borrowers nationwide had fallen behind.

The First Federal Bank of California has improved their loan modification program as they have gone along. They have seen what works and what does not work. Only 15.6% of customers who had their loans modified during the third quarter of 2008 had fallen behind on their monthly payments. For the national lenders 59.5% of borrowers whose loans were modified during that quarter had fallen behind.

Why has this bank been so successful? I would say that the main reason is that they showed that they genuinely cared for the customers who came to them for loans. They saw the problem developing and knew that they had to reach out. They may not have known the best way to modify loans initially. However, they learned as they went along. They are still learning.

How do you think their customers have reacted to this? I am sure that it has had a tremendous positive impact not only on those whose loans were modified but every customer who have accounts at the bank. I believe that most have looked at the bank and said that they were really fortunate to havefound such a great institution.

As I thought about this more, I kept on thinking about Jimmy Stewart in the movie, “It’s a Wonderful Life.” Isn’t that the way banks are supposed to be? Isn’t that what the First Federal Bank of California? How long will it take the National Lenders to stop looking at how much money they can make and to start focusing on each of their customers especially those who are experiencing financial challenges?

Much Success,

Mark Elkins