A lot of discussion is going around about what banks and are doing with short sales and the "legal liberties" they are taking and its got me fired up. I am sitting here on a beautiful Saturday morning looking out at Pikes Peak from my bedroom window and yet my blood pressure is steadily increasing...so I need to vent.
Here is just some of what is happening:
1) Wells Fargo has a new contract addendum stating an agent has a "fiduciary duty" to the servicer (bank). Read the post here, from "The Short Sale Gouge".
This is putting an agent in grave danger and Wells Fargo has overstepped their legal bounds. I am sure it wont be long before the legal councils for Agents get involved...as they NEED to.
2) Wells Fargo's new short sale approval letters have a clause that says the property cannot be resold for 90 days. Aurora Loan Servicing has one for 120 days, and BoA #10 states 30 days. Read the post here from Paddy Deighan.
Even if the house is not resold in that time period what title company would even insure this for a title policy? I know some are and some are not, but it puts them at risk. Is this is also hindering the ability for a title company to do business in the future by making it impossible to re-insure a property? In many states that's not legal. Also in some states like COLORADO they have new laws for short sales and have stated that a house can be resold after a short sale but the buyer must wait at least 15 days to resell it, without having to notify the short sale lender.
So I ask in this Colorado situation who has the trump card? The state law or an approval letter from the bank? I don't know.
Plus, what is the legal right to place restrictions on an asset after someone purchase it. If I go to a garage sale and buy $1000 painting for $15 is there some legal right that I cant resell it for more a few days later...and how would that be enforced? What about trading in a car. If I trade it in can I put a restriction on the car deal to not sell that car for 90 days....knowing that that is their sole motivation is purchasing it?
3) Bank of America (as the short sale lender) has for a while been REQUIRING the Social Security numbers on the buyers of a property. And they are storing this information in Equator.
Why is this legal? I understand they are doing due diligence and making sure they don't have a relationship to the seller (per BoA), but if buyer has no relationship to BoA and BoAhas no "legal" reason for this information nor to store it why can they do this....and for how long will they keep the SSNs.
4) Lenders have taken out PMI on loans unannounced to the borrower, so the borrower is not a party to the MI policy, but yet the PMI company can pursue the borrower for a deficiency or hold the short sale hostage if the borrower does not sign a note.
And guess what...the PMI companies wont speak to the sellers, their agents or third parties. They can only talk with the bank rep who says its up to the PMI company. We recently had this issue between ALS and a PMI company. Our guess is the PMIcompany and lender had a backdoor agreement of sorts that was not disclosed to the seller.
I realize banks are doing everything in their power to save money and minimize their losses but WTF! That doesn't give them the right to make the laws of the US "flexible".
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