Investors/Servicers - Are you Kidding Me? You Want me to Default On My Loan?

By
Real Estate Broker/Owner with Heart Realty Group, Inc.. IL-471.002355

Subtitle:

Live Free for at least 6 Months before allowing a Short Sale?

Disclosure:  Although names are not being named this article is a direct result of a current pending transaction with a major bank and is not a work of fiction. 

Common sense has gone out the window in the banking industry.  While most industries would love the following scenario only in banking is this seen as a negative. 

A performing asset in this case, a mortgage loan, stays current despite the homeowners unemployment, use of savings to continue paying payment, securing a new job paying less, starting a side business to supplement the lower paying job with less medical coverage and finally realizing that the stress and lack of medical care was seriously impairing the homeowner's health,  they decided to sell the home.  They had tried previously but were not successful.

After 45 days on the market a solid offer came in and a short sale package was submitted a few days later.  The bank knew the loan was current from the very beginning and yet made no mention that it would be an issue.  Approximately a month and half into the short sale process the attorney is informed by the assigned negotiator that the file was closed due to the "loan being current!"

After telling the Realtor the bad news, the Realtor took decisive action and with leverage was able to get the file reopened and supposedly reviewed again.  Despite the negotiator indicating that she had put in her recommendation for a short sale, since it was apparent that there was an actual hardship, the file was rejected by the investor because no hardship existed, there would be too much overage after the short sale and the loan had not defaulted.

So, let me repeat this again....you want the homeowner to default, live rent free in the home until it gets seriously behind not just a "technical" default so that you can have a non-performing loan then do a short sale???  You are kidding me, right?  

I mean you are the number guys...you crunch numbers for a living and by my estimation if you take the current offer you will be ahead of the game since you will not have to pay additional legal fees to file the acceleration paperwork, send out summons, hire foreclosure attorney, keep paying the servicer, pay back property taxes, etc.

Oh, and hopefully get a new offer several months down the line as prices continue to drop in my area and more short sales are on the market compared to the 6 already in this subdivision.

Wow...no wonder my numbers don't add up - I use common sense and you use???

For the last 5 years I have been negotiating short sales and thought I had seen it all.  I was floored by this and have requested an escalation.  I have to shake my head in disgust at the banking industry and those that work for it. 

The lack of transparency in the short sale process from the banks side is getting better with systems like Equator but with other banks their process seems to involve delays, deceit and blackmail.  Realtors and attorneys representing sellers abide by whatever rules the servicer put up and in the background they play games, while they delay and continue to rack up servicing fees.

There is no way for those that represent the homeowners to know if a package is really presented to the investor we have to take the word of a negotiator that most of the time hides behind email (if we are lucky), policy (that they only disclose when they feel like but can't show in "black or white" because they are "proprietary") and layers of hoops that makes us feel like we belong in the circus.

We allow them to cut our commissions despite the fact that we are the ones that bring in the buyers to get them to get rid of a non-performing asset albeit at a loss but better than getting much less as an REO.  We allow them to hold the homeowner's hostage by agreeing to their pound of flesh in the form of promissory notes and up front cash contributions.

Doing business is always a gamble and when their gamble was paying off they did everything they could to get more business.  Now that the tide has turned and their high rolling crap game has come to an end they have resorted to the loan shark tactics...what is next?  Cutting us at the knees (reduced commission), asking for our 1st born child (promissory notes - paying for something you don't own), holding us hostage (short sale process)!

Is the moral of this story to homeowners not to make their mortgage payments when they have a life issue such as loss of job, divorce, medical, reduction in income? Remember this is America and eventually those that are treated unfairly will take action...it's just a matter of how and when.

 

Posted by

Evelyn Santiago

Managing Broker - 630-251-0059

Heart Realty Group, Inc.

We are Passionate About Real Estate!

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Rainmaker
1,396,250
Vickie Nagy
Vickie Nagy, Broker Associate Realty ONE Group BMC Associates | BRE#01363932 - San Ramon, CA
Top Rated Real Estate Agents in Dublin on Xfinity

I just wish that there was some 'higher power' to appeal such obviously stupid decisions. This sounds like it could become a classroom text example of bank stupidity.

Jul 02, 2011 06:45 AM #1
Rainmaker
276,343
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!

Vickie:

I totally agree!  The only higher power is public opinion.  Unless NAR uses what power they have to get the banks to play fair we are held hostage by them and their tactics.

Jul 02, 2011 06:48 AM #2
Rainer
178,206
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

Wow what a mess! I really feel for this homeowner here he is trying to do everything at all possible to keep up with his obligation and running himself into the ground in the process. And then the bank is trying to keep him there. You have to wonder if the higher ups know the situation or if this is the result of just some lower management flunky. You will have to let us know how this goes.

Jul 02, 2011 06:53 AM #3
Rainmaker
171,912
Bruce Parker
RE/MAX Best - Highland Park, NJ

the banks are getting a free ride by hiding what they are doing in the short sale process. Obama is now the humble servant of big banking. Remember- Re-elect no one

Jul 02, 2011 06:59 AM #4
Rainmaker
276,343
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!

Rosalie:

The stories I could tell but until this plays out I have to be a professional and not name names.  As a ex-corporate solider the "gatekeeper" of a CEO holds more power than the actual CEO - the administrative assistant has the power to put someone on the schedule, make sure the message gets there, the email is presented and other actions that can make someone's career...been there and really know the game - so yes, sometimes its the lowest person on the rung that makes decisions based on their current mood, caseload or the fact that a kid in grammer school by your 1st name stole their boyfriend...you just never know why some of things that happen during a short sale happen. 

All we can do is work the system that is in place and do the best we can for our homeowner or buyer.  Thanks for the comment.

Jul 02, 2011 07:02 AM #5
Rainmaker
276,343
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!

Unfortunately we don't have the option of not electing anyone - we need to do grassroots work and find someone without those types of affiliations - now that is a challenge that is similar to doing a short sale. 

Politics not withstanding pushing for transparency with what we have is our current choice but until we push our own association to pull up their pants and use the power of our extra $40 bucks, we will be still in a begger's position - begging the bank to accept a short sale that makes more sense than a foreclosure.

Jul 02, 2011 07:06 AM #6
Rainmaker
1,251,351
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
your real estate writer

I think you hit the nail on the head when you mentioned the fees to the servicers. The longer they can keep that house "on the books" the more they get paid.

Who cares if both the homeowner and the investor lose money?

Jul 02, 2011 05:11 PM #7
Rainmaker
276,343
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!

Marte:

Exactly my thoughts on this and I did tell them that.  It should be interesting to see if the escalation fax number negotiator gave me will get any results.  The games they play are pretty pathetic.  What a way to run a business.

Jul 03, 2011 03:44 AM #8
Rainer
217,900
Kimberley Kelly, SFR, HAFA, GREEN
HK Lane, Christie's International Affiliate, 760-285-3578 - La Quinta, CA
I do Real Estate like I played polo-to WIN!

Hi Evelyn:  I too, have been working Short Sales here in the Palm Springs, Calif. area for about the same length of time as you..5 years.  NOTHING amazes me anymore.  I know that Lenders "say" they will do a Short Sale when the Seller is current, but I have not encountered this.  The problem as you found is that you have now lost valuable time.  Look..if the Lender thinks for ONE SECOND that they can get anther mortgage payment out of your Sellers, they will NOT look at a SHort Sale.  I never counsel my clients to miss payments, I simply supply them with paperwork to read and tell them to call their Lenders and they always figure it out.

My best was a couple weeks ago..B of A Short Sale with two loans.  Both approved.  Approval letters with Escrow..all monies transferred.  On MOnday (COE was Friday), the closer called, "Investor insists they want another $10,000"  What???  Just FYI..those approval letters can be changed right up until the actual time of recording..Banksters-all of them!

Jul 05, 2011 02:10 PM #9
Rainmaker
276,343
Evelyn Santiago, Managing Broker Heart Realty Group, Inc.
Heart Realty Group, Inc.. - Oswego, IL
Passionate About Real Estate & Our Clients!

Kimberley:

Thanks for sharing your story.  We continued to be held hostage by the servicers/banksters while they get government subsidies and MI refunds.  They took calculated risks like anyone else yet are doing everything they continue to make it extremely difficult for the average homeowner to put this behind them.  It does not seem we have any advocates in our own association or in the govenment to stop the continued abuse.

Jul 06, 2011 04:01 AM #10
Rainmaker
591,965
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

I think if there isn't some sort of default they cannot collect on the PMI/MIP. So, short sale one that is "current"= no insurance. Short sale one that is behind = insurance money/bail out.

Could be wrong. Feel free to correct me, but that is the only thing that really makes sense in these situations.

Jul 11, 2011 09:39 AM #11
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Rainmaker
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Evelyn Santiago, Managing Broker Heart Realty Group, Inc.

Passionate About Real Estate & Our Clients!
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