Short Sale Showdown

Real Estate Agent with Weichert Realtors 0225104373

Just in case you forgot, my fellow Realtors, homesellers, buyers, bankers and investors, April 5th is rapidly approaching, and you didn't forget about the new short sale guidelines that take effect, did you?

It seems that it would be difficult to forget, with all the lamestream media attention, however something that isn't being reported as much, is the growing rift between the holders of primary mortgages, and secondary lien holders.

Oh, that's been going on for awhile, you say.  Yes, but now the phrase CLASS ACTION SUIT, is being used to describe the emotions of those that have taken a bath versus those who have taken a bail-out.

  • Only a handful of banks own a majority of these subservient liens, according to Inside Mortgage Finance.  (And take a wild guess at who they are.) There is currently $840,000,000,000 in outstanding HELOC and secondary lien debt. 
  1. Bank of America- $144 billion
  2. Wells Fargo- $124 billion
  3. J.P. Morgan Chase-$118 billion
  4. Citigroup-$53 billion

Now keep in mind, these large financial institutions have said they will abide by the new Home Affordable Foreclosure Alternative Program, which is designed to speed up the short sale process regarding home sales, and provide those institutions financial incentives as well.

I don't doubt for a minute, that the banks will take our money.  (They have already proven to be  quite adept at that.) 

The question is wheather the big banks will actually follow-through  on their end of the guidelines.  Remember, a lot of the primary mortgages were pooled, given a high certification, and sold off to investors. Meanwhile, the banks own the paper on most of the secondary liens, a good bit that are now worthless.

In addition, they have contingencies. 

  1. The local market conditions.
  2. Timing of pending foreclosure action.
  3. Potential Loss
  4. Borrower Motivation

This is really the last gasp for large scale lenders to redeem their public persona. With both cival and criminal cases involving Fraud, RESPA violations, the Fair Housing Act, and obstruction of justice, they are rapidly wearing out their welcome.

So I ask you, will the new short sale guidelines actully be implemented by the banks, or is this just another charade to ward off lawsuits? 

Johnny Yankoviak


Posted by

Johnny Yankoviak

Weichert Realtors

7900 Sudley Road

Manassas, Va 20109

an equal housing opportunity

Comments (3)

Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

Ah, Johnny, such deep thoughts. These issues you raise are like politics. It seems we're mere bystanders watching to see the outcome.

Mar 27, 2010 06:57 AM
Kevin Vitali
EXIT Realty Beatrice Associates - Middleton, MA
Helping Massachusetts Home Buyers and Home Sellers

I don't know how the banks can abide by these new rules.... if they can't approve a short sale in 6 months(BOA) how can they approve one in less than 30 days? 

Also in the governments ultimate wisdom, making the homeowners go through the loan modification process puts a burden on the banks and the homeowners... right now I see so few modifications bieng approved.

Mar 28, 2010 01:12 AM
John Culdesac
Weichert Realtors - Manassas, VA

You both make great points.

It seems like the parties involved are saying one thing, and doing another.  Almost, as if they are having a party, and expecting us Realtors to clean up work afterwards. 

This could get ugly,

Johnny Yankoviak

Mar 28, 2010 05:20 AM