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Useless Pieces In The Transaction (Wholesaler, Flipper, "Loss Mitigator")

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Real Estate Technology with Content, coding, marketing, host.

Someone reading this post will think it's about them. If it is you then do something right for once go turn yourself in and get out of the business of hurting sellers, buyers and my industry you piece of trash.

Short Sales Loss MitigatorToday I received a call from a friend and broker who is representing a buyer in a short sale transaction. He called me because I have been on the lender and trainer side of short sales longer than the vast majority of so called "short sales experts" have known the terms. Because I am a HUD Direct Endorsement lender for FHA loans and a Fannie Mae direct seller I know the difference between guidelines and lender overlays. The latter are designed to protect the middle men and often enhance the guidelines for underwriting government and agency loans. So his question was whether or not his buyer was being denied because of a real guideline or something only that lender does.

Since the initial question was about seasoning on title and flipping the answer was very simple - 90 days required from purchase to sale date. In other words the useless piece of the puzzle, the "wholesaler", would need to be on title as recorded in the deeds and records office, for 91 days prior to the clear to close on the sale. I offered some ideas that would help his client take possession of the property prior to the consummation of the sale which included a bona fide lease purchase but when I began to question more specifically some big bright burning flashing red flags started popping up.

First I asked how long the "wholesaler" had been on title. When I found out he has not yet closed and this is a short sale I asked how he got into the mix. The broker indicated the guy is a "Loss Mitigator". Oh, so he works for the lender? No, he's just some guy who owns a loss mitigation service and is wholesale flipping the home from the owner to the purchaser. Oh, a scum sucker!

I have written about "Loss Mitigators" before and I'm going to kick some teeth with my next statement but swallow them and like it if it's you. "LOSS" MITIGATORS WHO DON'T WORK FOR THE LENDER ARE USELESS, COSTLY AND UNWELCOME PIECES OF THE TRANSACTION. I have heard the FTC is investigating you and I'll be happy to provide them with all the case study and education they need to get you out of my industry and far away from real estate.

Naturally I wondered how the "Loss Mitigator" got involved and was very VERY intrigued to learn the listing agent had told the buyer's agent (my broker friend) he would have to deal directly with this "Loss Mitigator".

ORLY?

So the LISTING AGENT cannot deal with the BUYER'S AGENT and the BUYER'S AGENT has to deal with this "Loss Mitigator" who is NOT an employee of the lender?

Interesting. So just who is this so-called "Loss Mitigator" who is not an attorney, is not a real estate agent and does not work for the lender?

After a few more questions and answer I discovered the preferred title agent for the seller had been changed to the preferred title agent for the "Loss Mitigator" who shares and office with the new title agent.

This is probably the best of all: The buyer's agent sent the contract to the seller's agent and the contract came back with the home owner's name lined through and the LLC (company name) of the "Loss Mitigation" dude written in.

My advice? Call the Real Estate Commission, call the bank holding the note on the property and run! I also added to have the buyer contact the seller directly and ask who this "Loss Mitigator" is and what the exact negotiated sales price is. The contract the buyer currently has is probably useless since the "Loss Mitigation" Company (and I sure hate using that term because it's as bogus a use of the terms as they come) signed as the seller. I'm sure Wells Fargo would be very happy to know about this case since they are the ones who allegedly hold the security instrument.

Scumballs, bottom feeders, leaches, parasites, and crooks - I can smell you 864 miles away and you need to get out of this industry. You are in part to blame for the condition of the industry today. You prey on people with your fancy titles that don't mean squat and in fact are INTENDED only to confound the innocent and those who are already facing financial devastation. YOU ARE ON MY RADAR and there are thousands like me who remain silent.

There is a right way to profit from real estate and the success to be enjoyed even in this market can be huge. This is the way thugs, crooks and cheats do it. I don't care WHO you are: If you don't work for a bank, if you are not BUYING homes and adding value before flipping them, if you don't have a LICENSE to represent buyers and sellers, then YOU are an unwelcome turd in the punchbowl.

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I started writing on Active Rain in 2006 when I was representing the mortgage industry. I am no longer in that industry and many of the older posts contain outdated information. Please do not contact me for LENDING or MORTGAGE questions but rather contact a licensed mortgage professional from your area. I have always been in marketing and branding and that is still what I do. Thanks for reading!

Comments(35)

Stephen Kappre
KW Hometown - Mantua, NJ
Helping You Home

Barb - That is one of the best comments I have read in months!

Nov 13, 2009 12:05 PM
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Wow...this sounds like you need a huge graphic to connect all the dots, what a mess.

Nov 13, 2009 12:53 PM
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

Gosh Ken, How do you really feel? To act as a middle man and bring no value to a transaction, only personal gain, is reprehensible.

Nov 13, 2009 12:55 PM
Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239
Real Estate One - Commerce, MI
Michigan homes for sale ~ yesmyrealtor@gmail.com

I have "investors" as they call them in michigan.  They are just blood suckers trying to make a buck.  Usually they just screw the deal up.  I run from those deals

Nov 13, 2009 01:34 PM
Damon Gettier
Damon Gettier & Associates, REALTORS- Roanoke Va Short Sale Expert - Roanoke, VA
Broker/Owner ABRM, GRI, CDPE

This sounds too convoluted to be true. I hope I don't ever have to deal with this crap.

Nov 13, 2009 02:20 PM
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

I'm glad to know that the "calming tea" is working for you. 

Nov 13, 2009 02:37 PM
Aaron Vaughn 830-358-0455
Conifer Builders LLC - Canyon Lake, TX

Loss mitigation services serve a purpose and deserve to be paid. But I have been part of a transaction where the LM was trying to get the Buyer, the listing agent and me, the buyers agent, to pay his $2000 since the bank refused. I thought that was rich, and advised my clients to bail! They did, thankfully.

Nov 13, 2009 02:44 PM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Patricia - that looks exactly like a lot of your comments on many other posts.

Melissa - he was only calling the schmuck what he was called by the listing agent. His verbiage changed by the end of our conversation.

Greg - I'll tell the "Loss Mitigator" how I feel if he wants to call me - 678-439-8683 24/7

Joe - the only wholesalers in the real estate business are the people who sell building materials to the builders or land to the developers. Everyone else is just in the food chain.

John - I'm siding with the Federal Trade Commission on this topic for sure!

Christianne - that's going to be the normale response. Shine a little light and the cockroaches scatter.

Barb - why anyone can be a Loss Mitigator! I remember an ad that used to be here on Active Rain where anyone could become a "certified loss mitigator" just by taking a class and paying, if I recall, only $1999.

Charles - there are caveats but any lender who funds one deserves to have their TARP yanked!

Chris - hey! Great idea!

Tigard - I love profit. I detest scammers and theives.

Russ - investors are okay. It's the ones who "mitigate loss" to their selves by never putting their ass on the line I'm out to get.

Satar, Satar, Satar - "There is no difference between an investor who profits in a short sale than there is a real estate agent who earns a commission." Unless that investor has taken the time to do what you have done and get licensed or put some skin in the game wrong. Wrong on multiple levels not the least of which is liability, licensing, insurance against errors and omissions and a litany of hoops jumped through by the agent. ANYBODY can be a "real estate investor" including a murderer, theif, terrorist or child molestor.

I have trained investors by the hundreds including at the Real Estate Investor's Institute at Emory University in Atlanta. Investors are too often the Wild West version of real estate. I am one and over 2000 of my clients are, too, so please don't think for a second I don't know what I am talking about. Even the worst of real estate agents at least has a covering and provides a layer of protection. These people I'm writing about aren't investors - they are scum. If you want to sell real estate get a license or get out of the mix. If you want to be an investor put some liability into the game.

I know this - I won't fund a deal where an unlicensed person is getting compensated solely based on having their name on a piece of paper and neither will most other real lenders. Sure, a person can cheat and probably get away with it. Anyone can kiss goats and pigs, too. But that doesn't make them a farmer.

Nov 13, 2009 02:44 PM
Bill Nazur
First Lending Solutions - Riverside, CA

Ken

It drives me nuts when you can't send a clear message about how you feel.

I hope that the next time you crucify one of these scum, you tell them how you REALLY feel.....

This was classic.....I swear some of these people make your blood boil.

Nov 13, 2009 02:55 PM
Debe Maxwell, CRS
Savvy + Company (704) 491-3310 - Charlotte, NC
The RIGHT CHARLOTTE REALTOR!

HI Ken!  All I can add is RIGHT ON!  Amen Brother!  The VERY next call this guy needed to make was to the REC--do not pass go, ...

GREAT post--I love it when you tell it like it is!

Nov 13, 2009 03:43 PM
J. Philip Faranda
Howard Hanna Rand Realty - Yorktown Heights, NY
Associate Broker / Office Manager

I get calls from these people all the time because I list short sales. They want to negotiate directly with the bank themselves (OH REALLY) and promise that they are cash buyers. sight unseen. Give me a break.

Nov 13, 2009 04:18 PM
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

There are a couple of "short sale servicing" companies in my area, and our broker has made his policy firm: Don't even think of using them.

What you described is ugly. Very very ugly.

 

Nov 13, 2009 08:59 PM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

Ken – I read a post the other day encouraging a writer to put “her big girl panties on …” No one would ever need to tell you to put your big boy pants on …Wow … tell it like it is … an unwelcomed turd in the punchbowl indeed! I would like to see those scum suckers locked up in jail eating their own #$#@%$#% for lunch!

Nov 14, 2009 12:18 AM
Robert Savage
Bakersfield Property Solutions - Bakersfield, CA
Bakersfield Short Sales, Property Management, Cash

I too have been on both sides of the coint, both as agent and investor. There are certainly situations where it would benefit a lender to have a flipper step in, especially when the house is in disrepair and won't qualify for FHA. But the "loss mitigator" you described can only profit by deceiving the lender. I don't like the 90 day rule but I can understand why someone thougth it was necessary. Most of the short sales we are doing now require the parties to agree that there is no prior or subsequent transfer of title. Sometimes this is written into the acceptance letter and the onus is on the title company to enforce it but there have been some instances where the parties to the transaction had to sign off as well.

Nov 14, 2009 01:20 AM
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Ken, this is gaming the system and there are going to be people who go to jail for doing this. I am also uneasy about title companies who are negotiating short sales but have no appropriate license to do so. It could be interpreted as unlicensed practice of law.

Nov 14, 2009 03:13 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Ken - I don't know the details of this particular transaction. However, investor short sale flips can be done legally and ethically. There are good investors out there as well as bad ones. The same goes with Real estate agents. Having a license doesn't change anything. By reading some books and passing tests doesn't make someone a better person.

 

Nov 14, 2009 03:20 AM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Bill - I know I have an issue with my inability to communicate openly. I'm working on it.

Debe - hear hear!

J.P. - that's what they are taught in seminars and books. I know, they regurgitate it in my classes.

Kris - if they are not licensed attorneys, licensed agents or an employee of the lender your broker is advising the correct position.

Robert - I have long been known as "The Real Estate Investment Lender" in Georgia and I have taught real estate investment classes, workshops and bootcamps for many years so I understand the desire to earn as much as possible with as little liability as possible. And anyone who wants to put cash or credit on the line AND improve the value is welcome. It's when anyone, I don't care what they call their self, who has NO BUSINESS IN THE MIX, expects to get paid even one penny much less $10k to $60k for absolutely nothing I strongly object and will not fund the deal. I will also tell the note holding lender by communicating directly with the real Loss Mitigation Department. I believe in profit and I don't have a problem with flipping but we - no real lender - is going to let a property be sold for tens of thousand more than was paid for it 90 days previously unless a reasonable increase in value because of improvements can be demonstrated.

Frank/Sharon - it's the lack of willingness to take any responsibility for failure in the transaction that makes these unlicensed rogues not welcome.

Satar - I agree a license doesn't make a person more able to perform but it does offer protection under the law not offered when these rogues get involved. So licensing DOES change something. What I am saying is these people who call themselves "Loss Mitigators" who operate outside of regulations, do not add any value to the transaction and who refuse to take any responsibility in the process of the transaction are not welcomed. They don't want to put their ass on the line but they want to eat up thousands of dollars and take no responsibility when they screw up.

Nov 14, 2009 06:33 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Ken - They still can be sued by anyone in the transaction. So they still have liability. They can be brought up on charges of fraud (or whatever), so they still can face criminal prosecution.

"What I am saying is these people who call themselves "Loss Mitigators" who operate outside of regulations, do not add any value to the transaction and who refuse to take any responsibility in the process of the transaction are not welcomed."

I totally agree with you (minus the 'refuse to take responsibility' as some agents do this as well). In my short sale system, I have eliminated the investor because they provide nothing to my short sales. However, if you are a new agent or one who has no idea about short sales, they might be able to add some value to your transaction.

"They don't want to put their ass on the line but they want to eat up thousands of dollars and take no responsibility when they screw up."

The same can be said of us agents. With all the disclosures we have our clients sign, we basically have to commit fraud before we get punished for screwing up.

Nov 14, 2009 03:05 PM
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

Satar - we agree on almost everything except I am diametrically opposed to "Loss Mitigators" in ANY situation. They always add a cost to the mix that should never be there, the do NOT have the liability of an agent or investor who puts their license or cash on the line (suing people costs money, reporting someone to a government agency is much more affordable). You are defending them and I am opposed to them. In the case I quoted no lender will fund it anyway because the seller can NOT be a third party - the seller MUST be the current home owner. This guy lined through the owner's name and wrote his company name in her place.

Nov 15, 2009 04:00 AM
Susie Blackmon
Ocala, FL
Ocala, Horses, Western Wear, Horse Farms, Marketing

They are like cockroaches.

Nov 17, 2009 10:49 PM