Special offer

OUCH! Downey Savings won't approve short sales

By
Real Estate Agent with Alain Pinel BRE 01367196

Venting...

After weeks of waiting for word from Downey Savings for approval for a short sale, I got my answer yesterday.

Private investor

Downey Savings won't approve any short sales. The only way they would approve a short sale is if they received the full payoff --- which, in that case, won't be a short sale.

I made it crystal clear that my sellers are in no position to pay off the full amount owed or sell at price they owed and still pay commissions out of their pocket. And that if they can't sell, then the only remaining avenue is a foreclosure and/or bankruptcy.

Foreclosure is the Downey Savings' only solution

The asset manager from Downey Savings confirmed that regardless of how hard I try to sell the property, unless the Downey is paid the whole amount, they would rather foreclose in November.

So this might as well be an REO in waiting. 

Is Downey Savings the next IndyMac? Some bloggers seem to think so.  Mr Mortgage says, "Downey Savings is widely rumored to be the next ‘IndyMac' due to their heavy Pay Option ARM exposure." See his blog here headlined "Downey Savings Paid Borkers up to $50K Commission on Each Loan!"

Time and effort wasted

Time and again, lenders refuse to speak to the authorized representative unless the package is complete --- i.e., letter of authorization, pre-HUD statement, copy of the offer, hardship letter, financial statement of assets/liabilities, copies of 2 most recent pay stubs/income tax returns/bank statements, report on marketing activity, copy of listing agreement.

So I spent a lot of time preparing the house, marketing it for sale, getting a buyer, preparing a complete package to send off for the lender's review.

But now, they're telling me Downey Savings won't approve the short sale? Couldn't they have told me that from the very begining when I made contact to tell them I am authorized to talk with them about the loan before I started marketing the property?

AAARRRGGGGH!

Comments (7)

Anonymous
Anonymous

After that much time and effort I am sure the Board of Directors would be happy to hear those comments. I would fire off the entire offer and put together a packet and FedEx it o the President and follow up the next morning with his secretary. I would also include a note that says how pleased the Board Members would be if they heard that type of attitude.

 

Aug 15, 2008 11:18 PM
#1
Joseph Alfe
Short Sale Processing Inc. - Chicago, IL

Always, ask up front if the lender will accept a short sale.  Don't assume it.  Downey is a portfolio lender, which means that they hold their own paper, and have it insured.  They won't accept a short sale, because they drive to foreclosure, take the loss, then get a 100% payout from their insurance.  Some other lenders are technically servicers, and may not be authorized to accept losses by their investors, such as Ocwen.

 

BTW, the info about Downey paying mortgage brokers 50K commissions is totally bogus.  Downy limited their premium payouts on Option ARMS to 1.5%, so the Taj Mahal may have generated a 50K commission, but the average broker got 1% or less.

http://short_sale_expert.activerain.com/

Aug 16, 2008 05:05 PM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Hi, Joseph

I may have been dealing with someone who is uncaring. Because before I sent the package, I called Downey to speak to the Asset Manager. But she didn't even want to talk to me unless I had everything put together, including an offer. She could have told me at that time that they are not doing any short sales, period!

In a separate blog, I mentioned trying to get help from Mortgage Resolution Services, but they confirmed a short sale with Downey Savings is not doable.

Another Rainer asked the question about what we are doing with our short sale files. Nothing!

So onward, soldiers....we live to fight another day.

Aug 16, 2008 06:15 PM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Update: I called Downey Savings again to see if there is a change in policy.

Nope. Still no short sale.

They won't accept deed in lieu of foreclosure either if there's a second loan.

The end is....foreclosure.

Sep 15, 2008 04:21 PM
sunny sengar

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Dec 12, 2010 09:06 PM