IndyMac Bank: How shortsightedly stupid!

By
Services for Real Estate Pros with S.P.O.C.H. a 501c3 Charitable NP

A preforeclosure short sale application was submitted more than a month ago.  Several follow-up calls indicated a loss mit rep would be assigned within 30 days from the lender's receipt of a completed application. The application was missing, I was told, an order from the bankruptcy court judge. 

I had to FAX the lender a copy of the bankruptcy court  judge's order lifting the automatic stay of relief.  No big deal. Just another hoop to jump through.

Bear in mind the seller has no personal responsibility to pay the debt.  The debt was discharged in bankruptcy. The sellers simply want to sell the home to avoid having the lender force a Sheriff's Sale. 

The market value offer is solid.  Its an as-is sale, with no contingencies other than for a mortgage loan which has been preapproved.

Indymac Bank told me I would have to submit a $300 application fee for the short sale request to be considered. 

"But" I countered, " You stand to lose $30,000 if this goes to Sheriff's Sale.  The sellers have no liability. They could walk and leave you holding the bag.  They really have nothing to gain by going through the ordeal of selling.  They could simply stay for another 6 months, live 'rent free' and wait for an eviction order...."

"Sorry, but that is our policy.  We choose not to save $30,000 by considering a proactive short sale unless we get a $300 application fee.  Have a nice day."

This is the 'lending community bending over backwards to help resolve the mortgage meltdown problem?" 

I wonder what Indymac's shareholders will think?  Credit rating agency Fitch Ratings said Thursday it cut IndyMac Bancorp Inc.'s issuer default rating to junk status due to continued weakness in the mortgage lending market.

 I am drafting my letter to Indy's Chairman of the Board, David Loeb.  David Loeb, by the way, was the co-founder of Countrywide....and we all know where Countrywide is today. (subject of federal investigations for illegal loan servicing tactics, making false statements to a Fed  Bankruptcy Judge, and will either be absorbed by Bank of America... or will declare bankruptcy.)

 I think it will be the March column for The Gazette which carries my monthly real estate column. My working title, Good Policy or Short Sighted Stupidity?

An Ethical Approach to Short Sales

Fight Foreclosure!

 

 

 

 

 

Comments (21)

Stella Barbour
NoVa Brokers LLC - Vienna, VA
Principal Broker, Serving Virginia and Maryland
David - I have not encountered the $300 yet.  But I just picked up 3 new listings that have Indy as the lien holder.  I will have to see what happens.  Thanks for the heads up with your issues on this subject.  Good luck and I hope it works out for you.
Jan 28, 2008 01:43 PM
Sal Poliandro - Helping People Win
RE/MAX Properties - Ridgewood, NJ
Broker Associate
Thanks for posting. $40,000 loss and still need your $300. Go figure.
Jan 28, 2008 04:00 PM
Anonymous
Eric Howard

Greetings.  I have been trying to communicate with IndyMac Bank.  The talks have been ongoing for over a year.  Each rep states that someone will contact me shortly.  They have seen the hardship letter, appraisal and financial info  The response from this bank is we are very busy and we will get in touch with you soon.  It appears they were caught with their pants down and cannot handle the amount of foreclosures.  There is a reason the stock (IMB) went from over $40 to under $10.

Is there anybody out there that has completed a short sale or Deed in lieu with this bank?

 

Jan 30, 2008 12:30 PM
#4
The Keutla Team
Keller Williams - Auburn, WA

Totally absurd!!  I have not had them ask about 300.00 yet, but if they did I'm sure that there would be a way around it!

The Keutla Team

Jan 31, 2008 04:45 AM
Clark Garrison
Taylor 1 INC - Atlanta, GA
"Loan Modifications"
I too have had to deal with IndyMac on their totally absurd $300.00 Fee. The only way i've gotten around it in the past is to call corporate office and complain until i become a pain in the you know what. However, i'm in the process of collecting as many names as I can on a petition against IndyMac and this particular practice. I'm going to send this petition to their board, corporate office and to Clark Howard (in Atlanta). This is vastly taking advantage of clients who are already dying a slow death. If the public (as a whole) new they were doing this i'm sure the outrage would take effect. After all, if this was such a Great Idea surely other lenders would have jumped on board by now!?
Jan 31, 2008 10:06 AM
Anonymous
John Freudenberg

I just got off the phone with IndyMac.  These are the facts as explained to me:

1)  From the point of the receipt of a short sale package IndyMac can take anywhere from 60-90 days to render a decision

    a)  That decision could include a counteroffer (no time frame was given for how long it would take the bank to respond to a buyer's counteroffer)

2)  IndyMac basis their decision on fair market value

    a)  Basing their decision on the "fair market value" as determined by an appraiser essentially means that if you list your house for $30,000 less than what you owe and only get one serious offer after 3 months, IndyMac will use the subjective and utterly useless determination of "fair market value" (determined by an appraiser) and will reject the offer.  The problem with this is that you've already determined the "fair market value" by listing your home on the "fair market" for 90 days and the "fair market" has determined that it is worth exactly $30,000 less than what you owe, as evidenced by the offer.

    b)  Further, basing a decision on "fair market value" also means that they will not take individual circumstances into account.  For instance if their determination of "fair market value" is $25,000 above your best offer, they would rather foreclose and pay a lawyer, broker and possibly a contractor anywhere from $30,000 to $50,000 to do so, even though you've lost your job and don't have the ability to pay and will surely be foreclosed upon.  By accepting the short sale offer they'd only lose $25,000 instead of the potential $50,000 that it typically costs a bank to foreclose, repair, hold and sell that property.

3)  Their IS a $300 application fee for SOME loans but not all
    a) Whether or not there is a fee depends upon the investors who buy the loans.
    b) I can't think of anything more absurd than charging a homeowner $300 who can't afford the mortgage payment.  I would tell IndyMac that if they were going to attempt to charge $300 I would just let the house foreclose and live "rent free" for 6 months until the sheriff comes by to ask me to leave.

4)  I am a licensed real estate broker in the state of NC and (though I'm not a lawyer and not offering any legal or financial advice) I will tell you that from what I've read a short sale damages your credit score equally (or nearly equally) as a foreclosure.  Further, from what I've been told by the bank, NC is a non-deficiency judgement state meaning that the bank cannot legally pursue you for the amount of money that they don't recover through the foreclosure process (I don't know if this applies to investment properties).

I hope this helps!

Mar 06, 2008 03:55 AM
#7
Matthew Heavener
ERA Heavener Realty Co. - Jacksonville, FL
Thanks for the information.
Mar 07, 2008 06:23 AM
Yvette Sloan
Yvette Sloan, Broker - Hidden Valley Lake, CA
"Clients First"

 I am listings a home right now that has a first and second with IndyMac Bank.  I have had listed for over 6 months, no offer until now.  I received an all cash offer very low.  We sent in all the papers including 3rd party authorization.  It has been almost 2 weeks received call from seller and he tells me has has to pay $300 and send in all the papers and we are looking at another 30 days before we hear.

This is truly ridiculous when we have so many forecosures right now.  I will probably loose the buyer. 

Mar 20, 2008 05:09 PM
DAWN COX
Weichert, Realtors - Wayne, NJ
Broker-Salesperson, REALTOR, ABR, SRES, RELO, e-PR
Thanks for sharing your experiences. This market is a nightmare right now, plain and simple.
Mar 21, 2008 03:03 AM
Anonymous
Eric

I am usually a big fan of David's but I don't understand the complaint on this.  Complaining about a fee is very shortsighted I think.

It costs these servicers a ton of money to deal with SS and they are flooded with ridiculous lowball offers from every newbie who bought a course.  It really is amazing that they have done all this work for free up til now.  Banks/lenders have a long history of charging fees to offset costs.  But also they want the fee to discourage alot of investors from making offers.  They know that the ones who are discouraged by a little fee are not the ones who were going to buy the property anyway for a good price. 

If you are a serious buyer/investor who has done their homework on a property and understand what percentages a lender will require from a short sale then you will pay this relatively tiny fee to make much more on the deal.  If you are someone who will refuse to pay a $300 fee on a deal that could make you $20,000 you are not smart.

I am a SS investor who is angry that my deals now take twice as much work as they did 2 years ago because LM's are overwhelmed with lowball offers and incomplete packages from newbies.  I'll gladly pay the fee and I'll expect faster decisions and in the end I'll make more money.

Mar 30, 2008 05:24 PM
#11
David Petrovich
S.P.O.C.H. a 501c3 Charitable NP - Oakhurst, NJ

The fee is charged to the homeowner and acts as a de-incentive to loss mitigation.  If a foreclosing lender asked to consider a preforeclosure short sale workout feels it is necessary to impose a fee... the fee should be charged to the speculative investor.

 

Mar 31, 2008 12:05 AM
Anonymous
Anonymous

First off, the fee of $300 is sent to the current homeowner in there package of financial things that they need to get back to Indymac bank before the offer that they have received will be looked at. It does not say that the fee should be charged to the investor.  I think it would be one thing if by paying the $300 you would get a quick response. I have been told it can take up to 30 days.  With what is happening in my location you can't keep a buyer on the fence for 30 days. 

 Another questions what if you get 2 offers do you charge each buyer $150 each.  This is another way for the banks to say "Its bonus time". 

Yvette Sloan

Mar 31, 2008 02:52 AM
#13
David Petrovich
S.P.O.C.H. a 501c3 Charitable NP - Oakhurst, NJ

There is a mention to the homeowners a fee of $300 may be applicable. In my 20+ years, I've never run across any lender imposing a fee on the mortgagor before, or as a condition of workout consideration.

Why not reward the distressed borrower for being proactive instead of penalizing them? 

 

Mar 31, 2008 02:58 AM
Anonymous
Angela Morrison

That backward approach to helping homeowners blew up in their faces. But who services the loans these days?  I have a seller who also has IndyMac and we still can't figure out where to send paperwork. Help please.

Oct 05, 2008 06:49 AM
#16
Anonymous
Anonymous

IndymacFed.  Use Certified, RRR Mail.  Send the application to the last address on the lender's correspondence... and it will get to where it needs to go.

Oct 05, 2008 07:40 AM
#17
Keith Manson
First Weber Group/short sale/cdpe/gri - Muskego, WI

The problem as I see it, is that the managment has created rules for their employees to implement and not willing to give them latitude in making decisions that make sense.  Their playing a numbers game and not looking at the bottom line.  Postponing losses may be a stragegy or not sure how to explain and justify to their investor?

Oct 07, 2008 01:20 PM
Anonymous
CD in MI

I have not heard anything about the $300 fee from Indymac (other than on the blog).  I'm wondering if they've suspended the practice or if I'll get hit up for it later?

I have been waiting for the BPO to "show up" for almost 6 weeks now and they've "lost" my paperwork twice already.  The real kicker was when I was asked to re-fax the purchase offer because my paperwork was "all the way at the other end of the hall" and it would be easier to just re-fax it!!!  Before I had patience and tried to play the game because I know it's a bureacracy but now I know they're just screwing around.  The real example of their stupidity lies in the fact that they're just creating bigger losses for themselves.

Oct 24, 2008 02:11 AM
#19
Anonymous
mark

my wife and i just sold our house through short sale with indysmac bank,they didnt even mention a fee for any thing,i told them we are just going to mail the keys to them because they didnt even care what we were going through.this is the worst bank to have to deal with,they had my wife crying every time she talked to them and me pissed off,finally i just started acting just like them,that seemed to get the ball rolling.these people are DICKS so just be a DICK back at them it might just get through to them.im glad we sold our house,the bank is taking a big loss and our credit will stay good and we can buy another house in a year if we want to,i doubt it though.yes indymac bank is terrible they would rather take a loss than help the home owner.and we were there for 12 years.

Feb 23, 2009 04:15 PM
#20
Anonymous
ImWatchingU

Please keep in mind that Indymac is now defunk.  It was sold to OneWest who got a sweetheart deal from the FDIC.  Yes, the FDIC.  Under this deal, OneWest has NO risk of loss and they are looking at a guaranteed 25-30% ROI on all loans.  This is NOT a joke as can be seen in court records.

You can see more about this here:

http://dailybail.com/home/how-the-fdic-is-killing-short-sales-the-story-of-onewest-ind.html

Guess who the investors are behind OneWest?  George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).  

 Bottom line, if you are with Indymac/OneWest....sorry.  If not, do NOT bother with these assets.  Realtors should boycott and/or filter out assets held by these companies since you will not be treated in a fair manner.  You will only waste your own time and the time of your potential clients.

Feb 11, 2010 12:11 AM
#21
Carol Zingone
Berkshire Hathaway Home Services Florida Network Realty - Jacksonville Beach, FL
Global Realtor in Jax Beach, FL - ABR, CRS, CIPS

Fascinating - I just heard a local story from a friend of mine who had a short sale seller, lender was IndyMac, only one loan, and they managed to get from contract to close in 7 weeks, and that includes 3 counter offers from the bank - now i didn't ask about the $300 fee, I was just amazed any short sale could close so fast!

Jul 18, 2010 01:45 AM