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Taking Buyers Hostage: The Somalian Pirates Who Have Hijacked the Real Estate Industry

"We need to make sure the buyer is qualified before we take the house off the market". Do you think that is real reason banks insist they need to approve your buyer ALL OVER AGAIN?

That would be like the Somalian pirates telling the ship captain they are coming aboard his ship to "inspect his cargo".

"But", says the captain, "I had my cargo inspected, and here is the document to prove it!"

"Oh." says Captain Hook, as he climbs aboard. "Those inspection papers you have? Totally worthless."

John Accornero wrote a short little featured post about this subject that made me want to stand up and cheer.

He was asking the gold standard question that all of us should ask in any situation if we don't want to be real estate agents that suck.

What is best for my client in this situation?

WHOSE SHIP ARE YOU ON ANYWAY?

But when I read the comments, it was apparent the cheering section was really, really small. In fact, I think I was the only one clapping. Almost everyone else that made a comment sided with the bank, not the buyer.

The nearly unanimous conclusion? Banks should be able to do this because, after all, everybody knows preapprovals are WORTHLESS.

Oh, those poor pitiful banks just waiting to be scammed by all those phony preapproval letters. Who cares about what the buyer thinks? Who cares about how this reflects on our industry? By all means, let's protect the banks (who got us into this mess) from all those unqualified borrowers trying to buy their foreclosed house.

Sheesh, is this whole thing ironic or what?

WHERE IS THE LOVE?

I am not going to argue the value of "worthless preapprovals". Been there. Done that. I have already told you what you need to do in this post.

I am here to argue the value of having EMPATHY for your buyers in this situation. Shouldn't it be clear to all of us by now that the public does not believe we place our clients interest first?

Where, oh where is the empathy for the buyer who has bonded with his own mortgage broker, handed over stacks of documents, worked diligently for 6 months get his credit straight and figure out what he can afford to buy?

Yes, it is very clear to your clients the bank wants way more than just affirmation of his financial ability to buy. His first clue was when the mortgage person pounced on him with a sales pitch to use the very bank that wants to sell him the house!

YOUR SHIP IS NEXT

I am not asking for sympathy for the mortgage industry who has been the victim of these pirates banks. But what if the pirates attacked YOUR ship?

So let me put a different frame around this for all the Realtors who brushed the situation off with your "worthless preapproval" comment:

Your buyer client wants to make an offer on a bank owned property. But the bank has a brand new policy, and a brand new department of real estate. There, the bank's own employees try to market the properties for 3 months before they list with an outside agent.

You will need to turn your buyer over to the bank's real estate department before the bank can consider an offer. Why? They need to "make certain" the buyer REALLY wants the house you showed them. Maybe they would rather have one of the houses the bank has decided to sell themselves?

But guess what? If your buyer likes one of the unlisted houses, they will be buying it straight from the bank. Your buyer just got hijacked.

Would you tell your buyer that the REASON lenders need to do this is because they consider everything the real estate agent has done up to this point is "WORTHLESS"?

Think banks would never do this? Think again.

The ocean is full of pirates and the real estate industry is looking the other way.

Written by Janet Guilbault, Mortgage Banker/Broker Based Out of the San Francisco Bay Area

Posted by Janet Guilbault California Mortgage Banker/Broker on 04/21/2009 02:59 PM

Comments (45)

Buyers in the Mortgage / Finance Channel

reos, buyers, foreclosure, real estate loan, mortgage broker, approval strategies

Post is included in group: The Ninety-ninth Percentile
Post is included in group: Realtors®
Post is included in group: Mortgages

45 Comments on Taking Buyers Hostage: The Somalian Pirates Who Have Hijacked the Real Estate Industry

APR

Great post. It can be a brutal world out there. Where are the Navy SEALS when we need them?

Everyone hates the banks these days. They are way to conservative and have no idea how other people do business. I hear little talk about banks getting into real estate these days.

I suppose it depends. I've never been asked to have a buyer reviewed by a short sale lender or a foreclosure bank. However, I make sure that the information that I send with the offer is fully descriptive of my buyers qualification along with a credit approval letter. The contract is sound and my buyer is ready and that's reflected by the contract and supporting documents including income verification, verification of money to close, etc.

However, if you've ever reviewed very many offers, you know why the seller needs to have the buyer qualified by someone they know/trust. When I consult with brokers about offers, about 3 out of every 4 have to be sent back for more information.

The problem isn't with the banks/sellers that want to do their own qualifying. The problem is with the offer and supporting documentation or lack thereof.

Lenn you wrote:

The problem is with the offer and supporting documentation or lack thereof.

The problem is real estate agents that complain preapproval offers are worthless, but won't take the time or make the effort to make certain the preapproval is sound.

You also wrote:

the seller needs to have the buyer qualified by someone they know/trust.

That is not what the seller needs. The seller needs to know what was done to qualify the borrower and get proof that it was done. This statement automatically says if you don't know the person that did the qualification, it is not to be trusted.

This attitude by the Realtor community does not show respect for the buyer's choice of mortgage broker. It makes the mortgage person guilty until proven innocent.

Yeah, I know. You've been burned. Then stop complaining and demand that the person who submitted those "3 out of 4 letters" give you what you want. Stop penalizing the rest of us, for pete's sake.

Oooh! Wow! Ouch! In light of the way Ocwen has been doing business in our market I could very easily see this happen.

I guess its another great reason again to have a buyer broker agreement.

Oh Janet, I'm cheering for you, for sound thinking, and intelligent reasoning. I'm cheering because it's about time we got our heads out of the sand and created solutions that worked rather than capitulate to failed systems. Clap...Clap...Clap! Hope this is featured!

I understand the sentiment. Even now the Michigan market still has agents trying to browbeat buyer agents with addendums after the bed that cut the percentahe the listing agent had posted. They only had the agents stand up to the bank adendum. Banks should be banks, not real estate, not stock brokers, not insurance companies or travel agents. They should disclose their SRP pricing just like mortgage brokers. They shouldn't nbe allowed "univeral default either. They also should not be expecting to control the real estate market by using their own appraisers. Any licensed ppraiser should do. There shouldn't be "declining markets" when they go back only three months. Why do we not want some of these banks to fail? Any poor business SHOULD fail. Executives should not be running a public company and expect the pay of many life times of work per year. Its my rant and hope I didn't offend.

I'm with you, Janet. I personally loath the "all buyers are required to have a pre-approval done by Countrywide (or fill in your choice of banks)." If it's a sound pre-approval, then why? Answer: to get the business, plain and simple.

That one's almost as bad as "buyer MUST use seller's attorney." Well, in NC, my friend, the buyer chooses the closing attorney, so my answer to you is a firm NO to that one, too.

I think your blog lacks taste. Comparing a Real Estate transaction with a Real World tragedy is outrageous to say the least. Grow up in your thinking. I hope you never have to face terrorism. If and when you do you better pray the Navy Seals rescue you. People died. You absolutely make me sick. I may never blog again, I mean it. Your IQ is not up to where it should be to be practicing Real Estate. I’m appalled at all of you that responded to this article (blog) in a positive way. Making fun of other folk’s tragic situations is not a game. You would not have done this, had you ever been in combat or had someone else’s life in your hands. You would be ashamed of your self for thinking so juvenile. I pray for you that you are never in a situation where you are fighting for your life. I try to come on to blogs to educate myself and others. What a disrespect for human life. You definitely should leave Real Estate. Its folks that think like you that have hurt or business. I’m out a here

APR

If we can't "steer" a buyer to a particular lender (Code of Ethics, etc., etc.) then they should not be able to either. A seller (individual) couldn't demand that either. Somehow the deregulation of banks just opened up the door for the foxes to charge right in to the hen house. (Who would have thought? Money and now Power to go with it?...and no boundaries?)

And, regarding the response that came in just before mine, Terrorism and piracy have many forms. Financial piracy is what this country is currently suffering from. The CEO of country Wide stated that he knew what would happen to the industry (his company) when, not if, the market shifted. He added some 20 minutes later, in the same interview, that he had set up another company and had backers, many foreign, who were prepared to step in and "help" all of the institutions that followed his lead (down the toilet) by buying up REO properties for pennies on the dollar in order to help bail out the banks. He intentionally set this up! If that's not a crippling plan for this country, I don't know what is. How many people have been seriously hurt by the practice of irresponsible lending and many reports of predatory lending.

Anyway, I agree about the prequal letters, however, a loan approval letter should be acceptable to the REO holders.

Wow. Way to lay on the bare-bones truth. You've got my wheels turning. And the comment above (2 up), from the person who is so offended is pretty ironic, considering there's no name or personal info. That sure makes it easy to slam your post and make worthless threats.

Janet - YOU'RE SINGING TO THE CHOIR GIRLFRIEND! Like you, I was one of the few who refuted the many on the post you referenced. Among all those who applauded the practice of banks requiring buyers to pre-approve with their "preferred lenders", I attempted to expose the practice for what it is, which is simply banks pilfering other lenders clients, especially Countrywide. I'm so sick of it.

Rest assured, when banks do start going after Realtors (and anyone who thinks they won't are living in LaLa Land), that's when all hell will break loose. Until then, they couldn't give a rat's @$$ about anyone else in the industry.

And folks wonder why I think real estate values have another 20-30% to fall in our market...

Buyer experiences like these certainly don't help.

Between the short sales, foreclosures, financing hoops, ruined credit, etc., it will be a miracle if the banks are not heavily involved in the house rental business pretty soon because they will have nowhere else to turn with their assets.

Lord knows nobody is going to buy a house like it was a lollipop at a convenience store ever again.

I can't wait until a regulatory pipe is shoved so far up the bank's orifice of choice that they start singing a way different tune. Mark my words, regulation of a scale heretofore unknown in the free world is coming to a drive-in near you, ladies and gentlemen. The Securities Act of 1933 is going to look like a rendition of Kumbaya on an episode of Romper Room compared to what we've got in store coming up in the lending and real estate industry.

Then I'll guess we'll see who has the last laugh when the banks start insisting on pre-qualifying people that have already pre-qualified...

And just wait until our friendly congressmen and congresswomen start regulating how the banks can deal with their foreclosed assets. This practice, amongst many others, will be the subject of a Draconian regulatory regime so thick in the lending business that I believe many banks / lenders will ultimately leave the residential mortgage business entirely.

Can anyone even imagine what kinds of new regulatory disclosure forms we will be dealing with locally, state-wide, and nationally in the next year or two? I can't wait to see what the brain surgeons in Congress come up with to make sure the poor homeowner doesn't get fooled again by the real estate slick-willies on Wall Street and Main Street.

Hi Janet!
Thanks for your opinion. We agree. If enough of us start talking about it, something wil get done.

Kieran and Cecelia

You wrote:

Yeah, I know. You've been burned. Then stop complaining and demand that the person who submitted those "3 out of 4 letters" give you what you want. Stop penalizing the rest of us, for pete's sake.

Au contraire, I have not been burned. It's the foreclosing banks and short sale third parties, not to mention the thousands of home sellers that have been burned by worthless "pre-approval" letters who are asking for their own sources to qualiy the buyers making an offer.

This is very interesting. In fact, you've just inspired a post. Thanks.

So true Lenn. I recently received a "Pre-Approval Certificate" along with an offer on my listing. Beautifully done, on high quality, parchment-like paper, fancy border and all. Basically the wording was the buyer is pre-approved ( yes, pre-approved) subject ONLY to credit review, verification of employment, verification of income, yada, yada, ........

Know this folks. Last Feb. one of my Realtors introduced me to a couple who had just been told they did not qualify to buy a Countrywide foreclosure. Last month that veteran got a better deal, closed on his new home (not a Countrywide foreclosure) and is tickled pink. Who lost out on that deal?

The banks with these practices are losing deals because there is no such thing as a sure deal anymore. I firmly believe the business will continue to go to those who can deliver the goods (as in close the loans)!

Although I deplore the practice of "back up prequals" I say bring it on. The selling banks are only setting themselves up to either look bad or lose business.

To the lenders out there I will say- educate your customers about the effect additional inquiries can have and refuse to allow the selling bank to pull a new report. I know many of them will say "within 30 days it's not supposed to count" and if you truly believe that you lack the experience to know otherwise.

Gerry Suarez, Jr.

Your FHA Loan Pro!

AMEN Gary! I have a client who I've been working with for a couple of months and during that time, he has had his credit pulled three times by CW for making offers on CW properties. BTW: on those CW properties, I ran my client through CW's CLUES system and got them approved but the CW reps wouldn't accept their approval.

Last week, my client wanted to make another offer on another CW property but when he found out that he had to have his credit pulled again by the same CW rep as one he made previously, he blew a gasket and said no more and walked away from the property.

This is a very motivated buyer who is making very aggressive and competitive offers (more than list price) on every property he's bidding on, one day he's going to get one of his offers accepted and rest assured, it won't be on a CW property. However, if he's not in escrow soon, I will have to pull his credit again because the report I have is soon to expire. It will be interesting to see how much his score might go down because of all the recent inquiries.

Thanks to Donne for bringing up a great point that I did not. Buyers here is California must try multiple times to buy one of these houses. Everyone in my office has 15-20 files of people we have preapproved, but are out slinging offers trying to get a house in a multiple bid situation.

Imagine the credit report after you the credit is run that many times! It will not be pretty. Oh, but what about the right hand knowing what the left hand is doing?

Remember, this is a foreclosure dept in a bank.

To the person who will never blog again as a result of reading this post (comment # 9)

The use of an analogy is not "making fun" of the situation. It is also not showing any disrespect.

I agree you should not be involved in the blogging community if you anonomously sling insults and believe that the mere mention of a tragic news event somehow translates into the writer making light of the situation.

Lenn: The banks have not been "burned" by preapproval letters that were worthless. The banks were "burned" by the fact the lending standards were too loose.

Gerry: Interesting point. What if the bank says no, you are not qualified, but the buyer has a loan committment from another bank.

You think the selling bank would not sell them the property?

I am so disgusted with the housing industry right now. NO ONE is standing up for the home buyer. And by that I mean, the National Association of Realtors who seems to be silent, our state Associations who also are rolling over for whatever the banks dictate to us. We have reams of forms signed by buyers when they only one that counts is the one that says the banks are responsible for nothing now or ever; yet also have the option of asking the buyer to jump through a dozen absurd hoops for whatever reason they dream up. If an ordinary seller attempted to do what these banks are doing, they would be inviting a law suite. What if as an industry, we REFUSED to have our buyers prequalified by CW or WellsFargo, etc. because it is a conflict of interest and damaging to the buyer's credit. Don't we have real estate attorneys who can back us up on a united course of action? It seems we are falling way short in our efforts and abilities to step up to our fiduciary responsibilites to our buyers. It is my very profound belief that the lenders and banks have created a false market by: Listing too many properties with too few Realtors who cannot service them properly, listing them way under market to create a false multiple-bid situation, not answering short sales offers in a timely fashion, creating an atmosphere where buyers are making multiple offers on several properties in the hopes of getting one, putting properties on the market that are not just fix-ups, but with serious system defects creating mutiple transactions which fall through. I don't believe the real estate prices ever had to drop this low. They have done so in response to a manipulative seller. And that seller these days is either a bank or lender. By the way, I think the pirate metaphor is quite appropriate. Note to whoever was 'offended' by it - a metaphor is the application of word or phrase to an object or concept it does not literally denote in order to suggest a comparison (Random House Webster's Dictionary). To add to your metaphor, it feels like as an industry, we have invited the pirates on board, given them the keys and stand quietly by as we await our new orders by our new captain.

Rae Pappas
West USA Realty, Arizona

Rae, great comments and I must say I agree with you.

Janet, the buyer I'm referring to did have a prequal from another lender and gave up the fight when Countrywide refused to sell them their home. Yes these banks can and do refuse to sell to some of these buyers, and I'm happy to go elsewhere and close them on another deal.

Gerry Suarez, Jr.

Your FHA Loan Pro!

Janet,

To the person who isnt going to blog again..I say....get a profile! Your post has some merit and holds alot more WATER when we know who we are talking with! Obviously, your opinion matters, and you have a very strong one! Whether I agree or disagree, it doesnt matter! I just wish we knew who you were! I would guess you have a military attachement of some sort, or some kind of history with an issue...For that...I would probably agree !!! I just dont know for sure!

Janet- because you didnt respond to my last comments on another blog, I have to re-state it here again...I have NOT been burned on transactions such as this...but it sure sounds like YOU HAVE...so geezz..it is a little hard for me to relate. Your blog however, has spurned me to ASK one of the Realtors I am working with RIGHT NOW ON A BANK OWNED property...to make sure they dont contact the borrower or that they dont give out the borrowers social security # etc....For that..I truly thank you for the blog!

I do disagree again though on two quick subjects..and I do not want to go back n forth on this with you again..as apparently, we will agree to disagree.

1. Your idea of a prequal, pre-approval, and loan committment is QUITE different from mine. I read your blog, and completely disagree with you on that subject! in your entire blog you describe a loan committment...so let's please be clear...IF YOUR BANK OWNED properties in your area are asking for LOAN committments and not pre-approvals, that is one thing...However, we are only being asked HERE for pre-approval letters! If it is LOAN committment they want...I can do that subject to appraisal etc...but again..I HAVE not had the problems you have...so am not sure if this is a National or Regional issue.

2. I think you need to DEFINE the word BANK today! Many mortgage companies, servicers etc...are NOT ACTUAL banks! Some are...but many are not! Countrywide for example, just became a bank less than 8 years ago!!! THey became Countrywide Bank FSB. Prior to that, most of their transactions financially were handled by Bank of America! hence, the connection! how do I know you ask? Well, I was a brank manager for CW retail for 4 years! Argghhh Keep in mind, the average consumer, or even lender or Realtor thinks a bank is a bank...Someone who has savings accounts, checking, ira's etc....and people ..oh, that care! :) Many servicers that are holding REO's or bank owned properties (which has really become a slang term), have NEVER been a bank. Many of them in the past like SAXON, OCWEN, and a few other HIDEOUS lenders...have bought & sold mortgages...and that is all they do! Just think it would be great for you, or someone like Gerry Suarez to do a blog on this subject, and reblog each other so everyone KNOWS what we are talking about!

Just my suggestion!

Thank you again...and I appreciated your blog today!

Darin

Darin: I think your second suggestion is excellent. It is confusing! Maybe you should write this post?

Regarding # 1: Lender sellers don't care if it is a committment or an approval. They want to get all the buyer's info before they will accept the offer.

Actually, Darin, I have not lost a single one of my buyers so I would not say I have been "burned". I feel strongly about this because it is a very negative experience for a buyer to have jump through this hoop.

When I edited this post, which is sort of long, I took out several paragraphs describing how my buyers feel when they have to submit their info all over again. Resentful, mad, upset, all at a time when they are already stressed from making the offer.

I have had transactions delayed while my buyers are hounded by the mortgage people from CW who confuse (they try like the dickens to make them believe there is something better about doing it with them)

That situation only makes our entire industry look like a bunch of schmucks.

Rae:

Thank you for your very thoughtful and meaningful comment. I had not sewn all of the pieces together like you did. You may have inspired another post!

You really did get the idea behind what I was trying to communicate. I remain flabergasted that no one is sticking up for buyers who seem to be going through a meat grinder these days just to buy a house.

Charles (Comment 13)

I believe you are correct. We are about to enter into regulation hell. It is hard to imagine it could be any more regulated than it already is. But it will be.

Hey I resent that, I didn't side with the banks! I sided with the fact that the foreclosing lender is trying to hijack/pirate away the buyer to his bank! Why else would they do this? They could really care less, but since they've got a live buyer (which is slightly hard to come by) let's try and see if they qualify. I have just started to see this happen in my area and haven't had anything happen YET. BUT ..... this is what usually builders do with pre-approved buyers. If you use 'our' lender then we will give you a fireplace, stainless appliances, 2 points off on the rate and a free application fee! Does that sound OK with you Mr. Buyer? Mr. Buyer says - ok, you've put me between a rock and hard place - I do want the home and I do want the cheapest financing. Good bye loan from the LO that took the time to do the pre-approval and worked hard to get the deal done.

Why can't realtors put themselves in the LO's position here?

Lyn: I wanted to actually put some of those comments in the post, but every time I do that I am accused of taking them out of context.

Thank you for seeing it the way you do. I am well aware that a few people saw this my way. But I confess, I was appalled at how many real estate agent stood by the bank on this issue.

Do real estate agents always "side" with sellers? Funny thing, BUYERS will always need agents. SELLERS may end up listing on the Internet someday.

You would think Realtors would want to stand up for borrowers. They will get it the first time it hits them in the wallet.

Janet, I guess it depends on the situation. This week I am saying that the pre approval I was given for a buyer buying my seller's house wasn't worth the paper it was written on. It's making me re-think things. Next week it will be my buyer and probably a different situation.

Janet - Great detailed post! Thanks for sharing and all the best.

APR

Thanks. I just ran into the same frustration today. The REO seller wants my clients FICO scores as part of the offer. Naturally, my client finds this very intrusive. And very pointedly, why whould anyone put themselves through the latex-gloved inspection of your credit if they weren't serious and couldn't get the loan in the first place.

Even if we don't agree with the practice of the buyer being required to preapprove with the banks preferred lender, what do you suggest we do? If the buyer wants the property and there are other offers, there is simply no choice. My clients are preapproved before making any offers and if required will get a second preapproval from the 'preferred lender". To date, not one of them has jumped ship and left their original lender. In the end, it is the buyer's choice where the get their loan.

Robert - I would say "bite me" to whoever ASKD YOU for the buyers FICO scores! :) LOL That is ridiculous!

Jenny, great comments! I TOTALLY agree! It is probably a MOOT POINT, not MUTE like some people say...as long as you do a good job as a mortgage professional at building value into your sales presentation! I never have lost a deal in this manner ever...but, as I said to Janet, I am glad she did this blog! I HAD NO IDEA this was an issue anywhere in the country!

Janet - I have a deal pending right now, and becuz of this blog, called the REALTOR and asked them if anyone had asked HIM for any of this, and he laughed! He said...NO...and he wouldnt give it out anyway! However, one thing to note, I GAVE the deal, pre-approved, USDA to the REALTOR, he did not bring them to me! So, that might be why! Who knows today!

In general, I think it is kinda stupid that we as lenders continue to expect REALTORS to waltz deals into our office...without some kind of reciprocation from us! I only work with 5 Realtors...that's it! ONE, is the SEO/REO specialist...and he gets ALL THOSE types of deals! Again, I have NEVER had these issues...so it is a challenge for me to relate...HOWEVER< i love learning!

Thanks!

Darin

Janet - While many people may have the luxury of telling some REO LA or some "preferred LO" to "BITE ME" when asked for their clients personal information, you and I both know that if we did that to some REO LA or "preferred LO", our clients wouldn't have a chance in the world of making an offer on the property. Nevermind, getting the offer presented to the bank or even accepted, our clients wouldn't even be allowed to submit an offer.

Whenever presented with this deplorable situation, I just try and handle it as professionally as possible. My clients will typically always ask me to handle it and many times, I am able to provide the "preferred LO" whatever it is they ask for. If I don't, my clients won't be able to make an offer.

Sometimes, the "preferred LO" will refuse to speak with me. On those occassions, I have been extremely grateful that my clients do one of two things: a) walk away from the property (starting to happen more often these days) or b) talk to the "preferred LO" but make it very clear they are not going to use them and will stick up for me when the "preferred LO" starts bashing me.

Unfortunately, not one of my clients has ever had their offer accepted when it has been an REO property that had a "preferred LO". I can't help but wonder if it's because the "preferred LO" had some influence in rating the pre-approvals they performed and rated the ones that already had established relationships with another LO lower than other prospective buyers who didn't already have an established relationship with another LO.

Luckily, many of my clients do end up finding other properties that don't require they get pre-approved with a "preferred LO" and those end up being the properties that they eventually buy. The stats are too blatant not to recognize. I just wish I could prove that CW and other "preferred lenders" are really operating this way.

You said:

I can't help but wonder if it's because the "preferred LO" had some influence in rating the pre-approvals they performed and rated the ones that already had established relationships with another LO lower than other prospective buyers who didn't

Wow Donne, I never thought about that as an issue. But of course they would prefer to accept the offer of someone who financed with them.

It reminds me of how a car dealers would refuse to sell a car unless the buyer financed with the dealership. It happened often to me because we were an "independent" leasing company, and the clients were doing their financing through us, not the dealership.

I guess it is more appropriate to say that the HOUSE or CAR is held hostage until the BUYER agrees to finance there. Whatever, there is something very wrong with this, you know?

It would absolutley infuriate the borrowers, and sometimes they did just walk away. But....often they just gave in.

Hijacked.

APR

Wow what a great post and thread. There are huge problems with this as you and others have pointed out. This ought to be an issue that is brought up. I think NAR would be better off dealing with this issue than those stupid ads they are running currently.

How is the NAMB on stepping up on this issue?

My original thoughts on the post are I think good real estate agents understand the issue and the bad ones take the other side. Real estate agents have "sign crossing" to offer some sort of protection. If that provision was eliminated the you would see agents quake and they might better appreciate the life of a mortgage broker.

APR

I've had clients tell me, if that stipulation is in the MLS notes, don't even show them the house. Yes, that means I have to stay on top of all the 'other' homes that come up, so my client can get there first, but that is my job, after all!

Joetta: That is good news. Some buyers refuse to play the game. Hooray!

APR

Donne,

I am confused...are you a Realtor as well as a Lender?

If you are only a Lender, why would YOU be dealing with this anyway? You stated:

"you and I both know that if we did that to some REO LA or "preferred LO", our clients wouldn't have a chance in the world of making an offer on the property."

Now, by NO MEANS am I Countrywide's biggest fan...at all actually...but right on their website, it has information on how to handle a short sale with their company, or any other type of offer and what is required. Nowhere does it say that you as a Realtor, nor the Lender that the buyer has chosen, has to provide a social security # to them, nor does it say anything about them pulling a credit bureau on the buyer. As far as an offer goes, in my 20+ years, I have had Realtors tell me offers are declined, accepted, or countered. I have NEVER had one REFUSED to be looked at or reviewed by a Seller, whether that Seller is a Bank, Mortgage lender, or actual person..Even TRUSTS look at them and decline them. I would LOVE to see any documentation that you or anyone could provide proving that a LENDER refused to "look at" an offer because the buyer wouldnt provide their social security #, of have their credit bureau pulled by the Lender selling the property. This is grounds for a law suit for sure!

Also, I never said I WOULD SAY bite me to anyone..That was a figure of speech.

I merely stated that 'in our area' this does not happen. Realtors around here would LAUGH at this situation, and they would NEVER divulge this information ..nor would we as a lender, as this is completely against the United States Privacy Act. Any violation of this nature is grounds for a suit, as well as grounds for the Realtor and Lender alike to lose their license. I would merely suggest that if this comes up again, to have the "preferred lender" put it into writing as to why and what they need! Then, you have it! If they wont, keep going up the line till they do! In years past, we as lenders would be concerned that we would "interfere" too much in this process, and screw up the sale for the buyer or Realtor. Today, there are so many houses...this has changed the complexion of this matter..and I would then merely tell them to find another house! I have a GREAT STORY Donne, I am going to blog about, and when I do...i will send you the link! It is ALL ABOUT CW!!! You will like it! and, best of all...IT IS TRUE!!!

I dont know how they do things out where you live, but here, we allow Realtors to do their job, and I personally stay out of their way...they are trained professionals. In return, the Realtors we work with stay out of our way with the Financing! Honestly, if you asked 1000 Realtors if they preferred it this way..ill bet you a high percentage would say yes!

Janet, again...thank you VERY MUCH for this blog. I truly did not know by any means, this was such a HUGE problem. Again, as I stated before...If the Lender has developed and built trust with the BUYER, I dont see where the problem lies, unless of course the LENDER hasnt done it...then they only have themselves to blame when they lose the deal! If the METHODS of the OTHER lender are what are in question, that is another story..and needs to be dealt with legally, and directly with upper management!

Take care, and thanks!

D

PS: Donne, Janet and others...when you put in your response...REO LA, and even "preferred lender", WE KNOW what this mean, but many readers dont! ...just an observation.

Thank you..D

APR

Darin,

I'm a Mortgage Loan Originator for a Mortgage Broker. While it may be unusual for LO's in your area to speak with REO listing agents, around here (SoCA) it is not. Furthermore, regardless of whatever CW has posted on it's website about what it wants the consumer to believe about the way that they operate, it is in no way a guarantee on how the LO's from their retail branches operate when acting as a "preferred lender" for local REO listing agents for CW REO properties.

Based on your comment, you appear to be rather naïve about how CW retail LO's are conducting themselves when dealing with prospective buyers who are interested in making an offer on their REO properties. Around here, if a prospective buyer wishes to make an offer on a CW REO listing that has a designated CW "preferred LO", they must pre-approve with the CW "preferred lender" or their offer will not be received by REO listing agent. By that I mean, they can have their Buyer's Agent write up a purchase offer and submit it to the REO listing agent but the REO listing will not receive the offer. PERIOD!

Moreover, as despicable as this all sounds and as much as I wish that it were illegal, it is not, at least not in CA. I assure you, I have made umpteen calls to the local CA DRE office as well as the local RESPA office regarding this exact issue and all the various scenarios I and my clients have been subjected to and they continually confirm and verify that CW is operating within the boundaries of the law and their rights.

While this does not happen in your area (good for you - you're lucky) it is happening in other parts of the country. So to sit there discounting it as if it's not happening is patronizing. While a 1000 Realtors in your area may say that they don't interfere with the financing process (once again, good for you - you're lucky), that is not always the case, especially when dealing with CW REO's. CW REO listing agents are some of the worst agents to work with (as if any REO agent isn't an absolute nightmare to work with).

Furthermore, to insinuate that the only reason an LO would lose a client to this unethical practice is because they hadn't established a trusted relationship with the client is not only arrogant but once again, naïve. Personally, I've never lost a client to this practice but I know others who have and it wasn't because they didn't have a good relationship with the client. Lastly, your comment about going to upper management to deal with this issue? SERIOUSLY?

GROW UP! Who do you think is condoning this behavior and practice?

Hello Janet,

Just a quick followup.

I found this so hard to believe that this is going on..I made some calls. I would NEVER EVER EVER defend CW, but having worked for them for 5 years...thought I MIGHT give them the benefit of the doubt.

CW REO Department phone # HAS to go thru Customer service apparently. 800-669-6607. I would suggest your readers call and complain to them if this is going on...a large enough # , and I am sure they will get the message.

However, I DID CALL Bank of America REO, and spoke to Jerry Nagowski Phone# 716-635-2376

He LAUGHED at me when I asked him if they have "their own" loan officer either look at, be required to approve or look at, or review any customers for financing. Said he was part of Bank of Amercia LEGACY and it is not, nor has it ever been their policy to require ANYTHING even remotely close to this. In addition, he said there is nothing anywhere within the REO department that states they have to pull credit on a borrower before an Offer to Purchase will be considered. He not only laughed at this as well, but when on to say there is nothing legal about requiring something like that. Jerry went on to say they do not have ANY time for this as busy as they are....and he personally doesnt care WHERE they get their financing, as long as it is approved.

Lastly, he made it very clear that none of this is Bank of America's policy, but that he could not speak for CW, as that dept has not quite made the full conversion over to Bank of America yet.

So, there you have it. Important thing here is that MOVING FORWARD, this will not be an issue with CW, as CW is no longer. That makes this issue MOOT with CW.

As far as other lenders, the only one brought up in the BLOG was CW...so that is the only one I addressed.

Thank you.

Darin

Darin: I think it is clear from the comments you have made that you

Find this situation hard to believe (because it does not exist where you operate, because it has never happened to you)
Feel the need to prove that this situation does not exist (by calling B of A to prove your point, and going to Countrywide's website to investigage short sales)
Believe a loan officer only has herself to blame if they lose a client this way (because LO should have, after all, been able to develop trust in the relationship)

I am wondering how much of your passion for this topic is directed by a genuine interest in the topic? Or simply a genuine interest in discrediting what I have to say?

I do not delete comments from my posts. Even comments like yours that on the surface appear to be friendly and engaging, but underneath are something completely different.

Hi Janet,

I respect that. I am sorry that you feel that way. Even in the short time that you and I have bantered, or spoken back n forth, and we have disagreed or I have drastically disagreed with you....I have grown to appreciate your comments and even enjoy your blog. That is clear by the comments I made about it.

I completely again, disagree with you on this. Not on the subject matter, but on your perception of it.

I feel no need to discredit anyone, and it was never YOU i was referring to anyway. While I do believe yes, that it happens in other areas, I dont believe it is as widespread as anyone should be led to believe. I am sorry that you took that away from my comments. I think that there is a large difference between discrediting someone or something, and getting the facts.

I re-read everything I said, and I am very flattering to you and your blog. I had no other intention.

If you have trouble with CW and other retail locations in California, no, that does NOT surprise me...as most lawsuits in the Mortgage business over the past 20 years either started in California, or in Ohio, or on the East Coast. Ie: Fleet Mortgage's Lawsuit from the Mid 90's that started with escrow holdback issues. Sheer NUMBERS of people and the physical size of the State accomplish that all on its own. Hence, even Calyx Point, one of the biggest software makers in the mortgage origination business has seperate forms for California alone. As I said before twice, I didn't realize this was even an issue, until YOUR blog brought it to light.

Again, sorry if you felt I was trying to discredit what you were saying. I dont personally attack ANYONE in a blog or public forum. I can tell you are upset but remain professional. I respect that.

I never HAD a passion for this subject, UNTIL i read your blog. Now, sadly, your comments, and especially your friend Donne, have taken that out of me.

Keep bloggin, and good luck to you Janet.

Darin

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