Another Unneccessary Foreclosure

By
Real Estate Agent with NextGEN Real Estate Corporation

We are a Los Angeles real estate company that specializes in assisting distressed homeowners with short selling their homes. Today, we lost a home to the bank needlessly. We have represented the homeowner for 9 months, held broker open and open houses. Due to our hard work and marketing efforts, we found a well qualified and ready buyer. So what went wrong? You tell us, as we are suspicious of this credit union’s actions.

Western Federal Credit Union claims to be the holder of the first lien on the property and had issued a payout amount north of $1,200,000. Upon further research and investigation, there were a few questions regarding the servicing of the loan and the actual payoff amount. Chain of title reflected total lien of approximately $650,000. The servicer had mentioned that a corporate advance was made but at no time was a Notice of Default ever filed against the property. With what appeared to be very questionable servicing practices, we decided to obtain legal help with the matter.

The following items were requested by us and the attorney:

  • Copy of the Note and Rider
  • Copy of all the recorded Deed of Trust or Mortgage
  • Copy of the assignments (if any)
  • Copy of the Loan Modification (if any)
  • Copy of payment history
  • Any NOD or NOS filings
  • All notes regarding client communication
  • Origination paperwork (1003, credit, appraisal and final HUD-1)

This request initially went unanswered by the servicer, then they responded by saying that the requested items were mailed to the borrower (never received), then they went on to say that the borrower had cancelled their listing contract with us and that we didn’t have authorization to speak with the lender (not true and immediately sent an updated letter of authorization). Even with all of this, NextGEN still tried to work in good faith with the servicer to structure a true Win/Win with the investor.

Western’s own internal valuation of the property placed a value of $880,000 on the home. An agent from another realty office brought us a buyer willing to pay $810,000. We had it in escrow for $810,000 for nine months. When we found out that Western’s internal valuation was placed at $880,000, we had further discussions with the selling agent and got the buyers to up their purchase price to $860,000. You would think the short pay lender would accept this amount knowing that if the property went through foreclosure and if the lender took back the property as an REO, that their loss would well exceed the $20,000 difference.

Well today I’m sorry to say the lender decided to foreclose on the property and set the minimum opening bid at $1,217,893 knowing that no one was going to purchase this property at that price.

I believe that this transaction was an inside job to defraud the borrower and the credit unions investors. Chances are someone working for the credit union will probably purchase the property for under $800,000, then reach back out to our buyer in hopes to make a quick illegal profit and not have to pay our hard earn commissions.

Turns out I was right. We got a call, from the buyers we had worked hard to find, telling us that the lender sold it to them for the very same price they had offered when we were handling the short sale.

I've contacted C.A.R. but there seems to be no protection for realtors from spurious banking practices like those detailed above. The lender foreclosed under very shady conditions, stole our buyer and has stolen our commission.

If you have any similar horror stories with this lender or other banks engaged in the same practices, please reach out to. I would be interested in hearing your stories and getting your opinions.

Comments (2)

Myers Jackson
Auctioneer, Texas Flip N Move - Grapevine, TX
America's Auctioneer

Attention to details are so important, not the first time but every time, 

Jun 01, 2011 12:27 PM
Tamara Schuster
Naperville Glen Ellyn Lisle Plainfield Wheaton Illinois - Naperville, IL
Realtor Broker - Naperville

That is an amazing story. It seems they did this to save on the commission? Unfair to your sellers and their credit rating.

Jun 01, 2011 12:29 PM