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.
- Bank of America- $144 billion
- Wells Fargo- $124 billion
- J.P. Morgan Chase-$118 billion
- 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.
- The local market conditions.
- Timing of pending foreclosure action.
- Potential Loss
- 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?