Great question Bob.  In my opinion, there is more incentive to foreclose rather than accept a short sale.  By simply foreclosing, the lender does not have to deal with any "what ifs", that go along with a short sale (i.e. Buyer canceling last minute, not obtaining financing, etc.).  Also, with short sales comes negotiating, which also involves hiring more staff, dealing with emotional buyers/sellers, and agents, etc.

Remember that the FDIC loss share agreement compensates the lenders for a foreclosure in the same exact manner as a short sale.  Believe it or not, the agreement even covers the costs to foreclose (i.e., taxes, utilities, legal fees, maintenance, etc.).  So, at the end of the day, if the lender makes just as much money on a foreclosure as a short sale, why not just foreclose?  

I'd like to thank EVERYONE for their comments thus far on all of the blogs I've written regarding OneWest and the FDIC.  It appears that the story might be starting to "grow legs", and many in America are now aware of it.  I am working diligently to get the information to someone who can get the specifics into "mainstream media", but, as you can imagine, it's been very difficult.  I'm learning that the very same people that make the decisions in Washington are the same people that have control of what gets reported in the media (and yes, this includes Fox News)  If nothing else, this has been a HUGE eye-opener for me.

To give you a little background, I'm definitely not a "Political Activist".  I simply ran across a client that needed help, and stumbled across this whole loss share agreement thing.  At the end of the day, it helped my client avoid foreclosure, and for that, I'm very happy.

This particular deal is a microcosm of the "back-room deals" being cut in Washington, and I can only hope that if nothing else, it forces people like you and me to simply ask questions of the people in Washington that are not only making the rules, but also ignoring the results that come of these decisions.  

Like I've told many friends, family, and acquaintances, I think this deal is an "unintended consequence" of the FDIC, but it still needs to be brought to the attention of all of us that are in "survival mode" right now (and, more importantly, the clients we serve).  The FDIC cannot go back and change the deals they have cut with their existing clients.  My goal is to keep them from cutting anymore of these deals, as they will only hamper an already defunct real estate market.  By the way, the FDIC closed two banks this past Friday, and both of them had loss share agreements in place as part of their "deal".

The point of my blogs on loss share agreements is this:  The only way we are going to get out of this mess is by letting the market dictate sales.  As long as the FDIC (or any other government entity for that matter) tries to interfere with the real estate market, we are all in for a very very long haul.  As long as the FDIC rewards lenders for foreclosing with financial incentives, true capitalism dies.

If there is one thing to take from my blogs, remember this...  Make your clients very aware of the fact that lenders/banks DO NOT CARE about them.  They are only interested in one thing, and that is making money, regardless of your client's financial/personal situation

There is not enough room in this blog to share stories of absolute cold-heartedness from lenders that I have received in recent weeks regarding our present situation.  Suffice it to say, we are all up against "people" that are pre-programmed, in order to keep getting their weekly paychecks.  The only way to fight this attitude is through spreading the word, and making the public aware of it.

Keep spreading the word, and keep fighting the fight.  We may not win, but we will all go down swinging.