FROM Felix Salmon of Reuters: I'm a longstanding fan of American Homeowner Preservation, which has found a clever way of keeping underwater homeowners in their homes while minimizing the loss to their lenders. Even the red-in-tooth-and-claw capitalists at Goldman Sachs can understand that. But not, it seems, the idiots at ING Direct:
ING Direct, the Dutch bank and internet-based mortgage lender, has objected to American Homeowner Preservation's program to keep families in their homes, and ING will no longer consider AHP short sales. "ING DIRECT will also be adding your company to our exclusionary list as your company strictly finds investors to keep sellers in their home, while the bank takes a significant loss. This is against ING DIRECT's short sale policies and guidelines, and as such you will no longer be able to work on this short sale file or any future ING DIRECT accounts," Adam Agostinelli of ING Direct Retail Asset Management advised in an email to AHP.
If you cut out the excess verbiage, this basically boils down to "you try to keep homeowners in their homes, so we're not going to deal with you". Most companies would recognize this, and determine that if their short-sale policies barred sales to AHP, then they should change those policies as fast as possible. Not ING, which has come to the inhumane and self-defeating conclusion that the policies must always come first, even if they make no sense.
ING does allow short sales, of course, where the house is sold, often to an investor, in satisfaction of the loan. If ING were rational, it would want to get as much money as possible out of such a short sale, and therefore make the house as attractive as possible to as many potential buyers as possible. Instead, it is going out of its way to exclude the one set of buyers which actively wants to buy houses in short-sale situations: AHP-backed investors who intend to lease the home back to the current owners.
This is vindictiveness, plain and simple. ING might get more money if it played ball with AHP, but the homeowner wouldn't suffer as much. Clearly, if ING is going to take "a significant loss", then it needs an element of suffering on the part of the borrower - it's a modern-day Shylock, demanding a pound of flesh which can do it no good whatsoever. ING gets no extra money if the homeowner is evicted as part of the short-sale proceedings. To the contrary, it will probably get less, since AHP makes its offers at full market price and doesn't need to worry about the owners trashing the place when they're forced out of their home.
READ MORE: http://blogs.reuters.com/felix-salmon/2010/12/29/vindictive-servicer-of-the-day-ing-direct/?cp=1
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