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64 Comments on Im fired up - Why the heck are the LAWS of the U.S. exempt for short sale lenders
As a title Company, we will not sign these letters as requested. There is too much liability for us and we have no idea what the intentions of the buyer are and it is illegal in the state of Colorado for themn to limit our future business. So far it has not delayed any closings.
I think the banks are gearing up for future short sales and defaults. Meaning they are putting legal paperwork in place that will allow them more rights to pursue and sue homeowners who, in years to come, may short sell the homes they are currently obtaining loans for.
....just my thought on those sneaky, unethical big banks.
Great points here & I've thought of all of them myself. I can understand the CYA aspects but when does it border on paranoia or other things? Gathering buyers social security numbers for????? Why??? and how long? Where are those civil liberties attorney's out there?
Even though it might be wrong/unethical/illegal you better have that addendum on that WF contract. What if you don't?
Good Stuff! I have the exact situation as #4 happening right now. BofA is the servicer. Fannie holds the note on the first. LPMI was placed on the 2nd without borrower knowledge or involvement after the fact. Both loans are purchase money which in CA means non recourse. LPMI has demanded 20% of the note balance, fannie pays max of $6k... LPMI wants $$$ from the seller $13,400. Fannie won't allow it. Fannie also stated multiple times that the LPMI has no right to dictate terms or stop a short sale. You know the story if you do Short Sales. Run around... I've sent file info to a local RE Attorney to see what he thinks.
Banks ARE getting more aggressive with bending rules to fit their pocket books. With congress looking at Debt Ceiling Issue, the banks are going more rouge each day. WHERE IS NAR???... Sounds like I need to put an attorney on retainer for self protection!! ;-)
I think this is a really dangerous argument.
If you really press the argument...that there are only two parties, the Buyer and Seller, and try to use that to squeeze out the bank...it seems like they have a simple counterargument:
Fine, there are only two parties, the Seller and Buyer. The Seller, by virtue of the mortgage, has assigned some of those rights to the Bank.
You know have a listing agreement executed by someone who doesn't have the actual or apparent authority to fully execute the transaction. It's slightly better than having it signed by the Seller's 17 year old kid, but not much.
Until the rest of us start creating a good enough stink; and people STOP doing business with these TBTF lenders they will continue to hold us hostage. Politicians, lobbyists, huge corporations are all intertwined in the 'good old boys club' to do whatever they want and to hell with the little people. We need a revolution!
I HATE BANKS!
A lot of what the banks are doing behind the scenes is illegal at best unless the borrower previously agreed to it. Personally, I try to avoid short sales and pursue better deals if at all possible. The short sales I do get, I delegate to a 3rd party to handle the negotiations.
@ #53 - Above your Pay Grade: No idea what you are saying with your counter argument.
@ EVERYONE - Does anyone know of a class action or anyone seeking legal remedy to something similar to Karl's point #4? I would think that NAR would be aware and doing something on this front. Thanks!
I think you're right, and I like the idea of changing any wording on any bank generated documents that puts us in a position to have a fiduciary responsibility to anyone or any institution other than the seller. Having a fiduciary relationship with 2 parties the same transaction whom have conflicting goals is ludicrous.
Many banks that sell mortgages have their own appraisers, and those that don't usually have a list of approved appraisers. Let them hire the appraisers to do property valuations. That's their primary function. Appraisers can do drive-by appraisals too. Same thing as a BPO essentially. But it costs more than a BPO... because BPO's should cost more too!
I wouldn't suggest doing BPO's for lenders without having your attorney's blessing, because it could put your license at risk.
I commented on you link post. Here I will defend the bank on one other issue - the PMI. How they handle things maybe ineffiecent and rude and perhaps they could do it better but it is legal.
Let me give you an example form another perspective. I have a car and I insure the car. You hit me and are clearly at fault. I go to my own carrier to pay for the damage. They have a right to persue you for what they pay out- I assign my rights under the liability laws to them. It is called subrogation - it happens all the time.
It sounds to me like that is what the banks are doing with the PMI companies.
This is why we didn't want banks in real estate in the first place! I'm so sick of them twisting the situation around to benefit their deep pockets. Are they losing money - you bet. But in a lot of situations, they have screwed over the homeowner to their benefit. Thanks for posting!
Karl: I LOVE your rant! You present great information! But, alas, for the most part, you are preaching to the choir. What I want to know is, when are informed agents (like the ones on this thread) going to start educatiing their less informed colleagues (the ones who still believe that buying short sales for resale is somehow "fraud?"). The answer to the economic crisis does not lie in avoiding short sales, but in embracing them fiercely, and in supporting the real estate investors and third party negotiators who have the education and cojones to get these deals done.
I must say that I have avoided short sales as much as possible. I am actually torn by the fact that I can't help a person/family in trouble because the banks screw around so much that it is not worth the frustration most of the time. I will go through the process with a client (buyer) but only after they are well aware of what may happen.
Are there any laws at all Karl that they bank adhere to? Take the bank addendams that come back from them on an REO offer. We can't even counter out of those items we don't like. We accept it or don't get to move forward with the offer. It's crazy!
DeeDee, the banks should be adhering to the laws of the states the properties are in regarding real estate. The concept of a bank being party to the contract or the agent having a fiduciary responsibility to the bank in a short sale is wrong, but its also a fuzzy area to some. In Colorado Banks were trying to do this years ago and the Attorney General shot them down (about having representation from the listing agent).
It is crazy and I think NAR will have issues in the future if the banks are having agents sign contractual agreements that the banks and listing agents have a fiduciary connection, on short sales.
REOs are different, they are the legal seller so they can do what ever they want...within the laws of that state.
Lots of issues in one post. So many problems with this. There will be many issues in the days to come from all of these.
Christine, thanks for your comments. As an attorney and a fellow negotiator would love your perspective.
I sure can't wait for the market to be done with short sales. I had one recently where the owner put the property in a trust (unmistakingly assuming she was delaying her foreclosure by doing so) and when the buyer went to buy the house the underwritter considered the property a flip and the transaction in the end did close but it was 9 month before it happened.
I agree with you...it's all a bunch of craziness, and the bank's get away with a lot that other entities would not. However, on the B of A requiring SSN's in Equator thing, that's a sham. I haven't entered in a correct SSN yet, and I've closed dozens of files through Equator. I don't think it's any of their business, and they don't check it against anything.