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Short Sale Conspiracy? OneWest Bank, IndyMac and the FDIC

By Brian Anderson

Mortgage and Lending with Peachtree SEO

February 18, 2010 02:46 AM

Let me preface this BLOG post with the following:

I'm not involved in short sales or loan modifications

When an investor client sent this to me, I almost cancelled the video right after it started to move on and do something else. I'm glad I listed to the whole thing. If you are a homeowner involved in a short sale or loan modification, or are a professional working in the industry -- you have to spend 5 minutes and listen to this video. This will blow your mind!

http://www.thinkbigworksmall.com/mypage/archive/1/29027

The net of this whole video -- OneWest, who took over the failed IndyMac loans, has an incentive to NOT do loan modifications for customers but instead to force short sales. They are making $50-100k or more with their insurance from the FDIC when they do a short sale, and then....get this.....

they then hit the financially devasted mortgage customer with a 1099-C !!!

This video blew me away, and I think you will agree that it is a disgusting example of how average homeowners are being victimized by large banks with sweet heart deals with the FDIC.

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C. Lloyd McKenzie

Living Albuquerque - Albuquerque, NM

Living Albuquerque

Brian,

It almost seems like the bamking system is a criminal enterprise

Feb 18, 2010 03:13 PM

Brian Anderson

Peachtree SEO - Peachtree City, GA

SEO and Social Media Marketin

Lloyd - I've seen alot of stuff, but this one, wow! After making a 100K+ profit on the short sale, they then hit the owner with a 1099C. I agree - criminal!

Feb 19, 2010 07:08 AM

Anonymous

kristin

Beware: Indy Mac & One West Bank would rather homes foreclose then sell them to you:

In this recent economic downturn, banks were lucky to get bail out money for the government (ok, from US tax payers!) We all know that businesses are around to make money, but the golden rule (we hope) is to always do what is best for the customer; or at least try to do the right thing and practice ethical business, right?

After deciding to buy our first home, we got a loan, and found a house. The home has been listed as an "approved short sale for over 6 months;" So, approved means the bank already said they will sell a house for an approved amount. With this said, we made an offer (that the bank already approved for another couple 6 months prior, for 255k- however that couples loan fell through.) Negotiations went back a forth for a week, then they said they needed to send another bank employee out to double check the value of the home. We thought fine, but it wasn't. In the time they said they sent someone out to do a BPO, they took 5 1/2 weeks to get back and tell us they now want 269k for the home. Let me ask, how can a home that sat for over 6 months go up in value 14k?

Well, come to find out in the 6 months that the house sat, the bank merged with a new one, who is now backed by FDIC. This means- if homes foreclose, the bank doesn't have to pay fees, and can actually MAKE money! During the sale of Indy Mac to One West Bank, a huge deal was made with the treasury; this in turn is almost pushing banks to let homes foreclose versus sell. Doesn't this skewing of numbers (and the economy overall) need to be stopped?

The bank who approved the home to sell at 255k originally, said that in the time it sat before we made an offer, random fees stared to accumulate because it was "about to go into foreclosure"-mind you it has not yet! (And if a home has offers it can't go into foreclosure!) So, Indy Mac decided to raise the price to 269k to make their money on fees they let accrue, although we made an offer 5 1/2 weeks prior to all the fees accumulating! Indy Mac's lack of communication in letting the house possibly foreclose, along with laziness of not getting to a file (or purposely letting it sit and collect dust) they are now trying to get WAY to much for this home. The woman at Indie Mack who has our file mentioned the home will be listed at 244k and auctioned at that price after it forecloses - she said they want it to foreclose! The bank employee admitted on the phone that the bank needs to do what is best for them! They don't want to pay fees associates with the short sale they took on, they don't want to do the right thing and sell a home that has been vacant for over a year. Once the home forecloses & goes to auction there is no way someone will pay 244k cash for this home. What they will do with all the homes they are PUPOSLEY letting foreclose, is be first on the steps at the courthouse bid on the home- and buy it. Then, they will try and sell it as a regular sale. This long and crazy process is so unethical it makes me nauseous- not to mention what it's doing to relaters out there. Realtors are trying to sell homes, and then the bank decides no- we'd rather is foreclose! What was the point is bailing out these banks- they are not returning the favor to help people have homes in a timely matter- they are playing games, and it needs to stop. The government needs to know how disastrous of a decision it was to make a deal with this bank, and how they are screwing people left and right out of homeownership.

Why is there no law against banks doing this to people? Why would a bank act so horrible? Some honest, hard working people are tying to come in and take the house off their hands, and buy it, they just won't budge.

My husband is a US ARMY Veteran as well, he served the county in honor and we now have a VA loan. We are tying to buy a home- but are being denied by this wretched bank who doesn't care- they are wanting to make money, even though government just bailed them out - they are greedy and want more and more.

There is not incentive to sell a home for some banks-they would rather NOT help stimulate the economy and sell homes, but rather let them foreclose to get insurance money. It's a disgrace & horrible business practice. So beware and STAY AWAY FROM INDYMAC & ONE WEST BANK- they have very bad Karma heading their way. This entire situation is truly a disgrace.

Apr 12, 2010 05:57 AM

Broker Patty Da Silva Da Silva

Green Realty Properties® - 954-667-7253 - Cooper City, FL

Top Listing Broker

Brian,

You seem to believe that the issuance of a 1099-C is an option on the part of the creditor; that is just not so.

When a creditor writes off/cancels a debt - they must issue a 1099C* - that is the IRS rule and it is not an option for the creditor. Tax consequences are dictated by the IRS and not the creditor and just because a creditor issues a 1099-C does not mean the seller has to pay taxes on the canceled amount - there are exceptions that should be observed.

On primary residence, the seller will receive a 1099C (C = Cancellation of Debt) but Congress passed a law on December 2007 that will absolve that 1099C amount (up to 2 Million Dollars) on the short sale seller of a primary residence. The seller does not have to pay income taxes on the difference between the acquisition costs of the home and the short sale amount...

Be aware that on refinanced mortgages where the seller took equity out of the home. They seller is responsible to pay taxes on the amount that he/she took out if it was not put back into the home on repairs/remodeling.

On investment properties the law mentioned above does not apply and the seller will be issued a 1099C and will have to pay ordinary income tax based on his/her tax rate on the difference between the loan amount and what the home sold for.

There is something called "insolvency", IRS form 982, that might help offset some of the "gains".

I always recommend that my sellers consult with a CPA or a Tax Attorney to examine their particular situation as I am NOT an attorney or CPA and the above is my opinion and not meant to be legal or tax advice.

*Instructions for Debtor

If a Federal Government agency, certain agencies connected with the Federal Government, financial institution, credit union, or an organization having a significant trade or business of lending money (such as a finance or credit card company) cancels or forgives a debt you owe of $600 or more, this form must be provided to you. Generally, if you are an individual, you must include all canceled amounts, even if less than $600, on the “Other income” line of Form 1040. If you are a corporation, partnership, or other entity, report the canceled debt on your tax return. See the tax return instructions.

However, some canceled debts are not includible, or fully includible, in your income, such as certain student loans, certain debts reduced by the seller after purchase, qualified farm debt, qualified real property business debt, qualified principal residence debt, or debts canceled in bankruptcy. See Pub. 4681. Do not report a canceled debt as income if you did not deduct it but would have been able to do so on your tax return if you had paid it. Also, do not include canceled debts in your income to the extent you were insolvent immediately before the cancellation of the debt. If you exclude a canceled debt from your income, file Form 982.

*http://www.irs.gov/pub/irs-pdf/f1099c.pdf

Nov 23, 2010 04:00 AM