if only banks did this much due diligence up front - Posted by Sean

Real Estate Investing Real Estate Financing
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Posted by Penny on June 21, 2007 at 13:58:04:

No offense taken. I do office/retail commercial not residential, so I probably deal with different departments than you do.

Good business relationships have helped me a lot, so I tend to start there. Since I can only control my own actions, I try to understand what would make me the ideal customer in their eyes without compromising my principles & goals.

You raise a good point that one does run into organizations/people that you just decide it isn’t worth doing business with.

So thank you for alerting others on this forum of potential headaches with this company. It will be interesting to see whether this new policy helps them or hurts them over time and whether they change it anytime soon.

In the meantime, you sound like a pretty savvy investor and probably have lots of other great deals worth pursuing without unnecessary headaches.

Best of luck to you!

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if only banks did this much due diligence up front - Posted by Sean

Posted by Sean on June 19, 2007 at 13:46:48:

Just so you guys are aware, if you haven’t been seeing this already. (I didn’t see any posts on this in the Archives)

Countrywide in my area (Pittsburgh, PA) is now demanding that any offer on an REO be pre approved with source of funds from COUNTRYWIDE themselves before they will even look at any offer.

So, basically they want to look at all your finances, before they will even look at your offer. Even if you have no intention of borrowing money from them, or at all… you must go through their review to get an SOF from them in order for them to review your offer. They will not accept a source of funds from any other source, other than their own lending division to look at an offer on their REOs.

I can’t imagine this is legal, but who’s going to go throught he expense of suing them? Maybe a class action thing could get some atty willing to do it for the bulk of the settlement?

Anyway, no skin off my back, I’ll just let their homes sit and rot, (another record year of foreclosures, and they are pulling this stuff… ahh… gotta love it ) as I suspect most others will as well… if they had bothered doing half of this much dilligence before writing bad loans in the first place, they wouldn’t be sittin on properties worth maybe 40-50 in perfect condition, that are beat up and they loaned over 140k on… but hey, what are you going to do?

3

Lemons into Lemonaide? - Posted by John Corey

Posted by John Corey on June 20, 2007 at 05:05:38:

I can understand why the lender wants to know you have the cash
before they deal. Using one of their own offices keeps the format
standard and lets them control the process enough so they can not be
fooled by bogus letters.

Think of it this way. It should bounce out some investors who lack the
funds and are largely blowing smoke.

CW might also get a few more clients so they get to turn a bad
situation into something better.

My wife deals in some commodities. Proof Of Funds (POF) is a pretty
standard process and requires real verification that the funds are
liquid.

I am no fan of CW but their change is not that odd when you think
about the lender’s need to spend time on real offers. Think about how
many folks have read a book or taken a seminar but are largely
clueless in how to get a deal down.

If the result turns out to be that the folks with real access to cash get
better priced deals then I am all for CW streamlining their process.

John Corey

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Countrywide - not a good company - Posted by Rich-CA

Posted by Rich-CA on June 19, 2007 at 23:02:48:

I was asked for this by Wells Fargo. My mortgage broker, who originates Wells Fargo loans as well as others sent in his pre-qual letter anyway, and they accepted it after a phone conversation where he explained that since they allow him to prequal for their loans on lending, that an REO is not any different. Fortunately, he maintains his network of contacts with the different lenders in such a way they will work with him when he needs it.

Personally, I loathe Countrywide, and so am not surprised about their customer hostile attitude. I had on payment I missed because they did not send me a bill. two weeks after the grace period I got a call, not from their customer service, but from their collections department. The had not only failed to send me a bill (they had sent the previous one, then missed two, followed by another the showed up), but did not have the decency to call from a regular customer service rep.

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Re: if only banks did this much due diligence - Posted by Chris WFL

Posted by Chris WFL on June 19, 2007 at 20:03:26:

Just got this from a local reo listing sent to me.

Foreclosure! This Old Florida style home is located on a quiet dead-end street close to Cortez Rd. Being sold As-Is. Lender owned property. All offers accepted will be on condition of Buyers obtaining a Pre-Qualification letter from their local Countrywide Home Loans Branch. Buyer(s) to get free appraisal and credit reports if purchase is financed by Countrywide.

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Good post Sean - Posted by acw

Posted by acw on June 19, 2007 at 14:05:08:

Yep…screw um.

I don’t know if its illegal though…???

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Re: Lemons into Lemonaide? - Posted by Sean

Posted by Sean on June 20, 2007 at 08:30:39:

Its not a matter of having the cash, its the matter that I’m not going to submit my finances to a lender I have no intention of using.

You ask for SOF and I send you a bank statement, or whatever that’s my SOF… take it or leave it. I’m not going to wait lord knows how long for folks I don’t know and bring me no benefit to parse through my finances before my offer can even be reviewed.

Like I said, record foreclosures in my market, a declining market with more than enough housing stock… While the rest of the country was booming here we were still setting foreclosure records and the numbers are still growing.

Banks are big enough pains to deal with when purchasing REO’s to begin with, the NEVER are ready to close on time, ever at least 1 in 4 to 1 in 3 wind up with title issues they missed during the initial foreclosure, etc etc etc…

Last thing I need or will tolerate is more interacting with banks beyond what I absolutely have to have when buying an REO.

I show up with an all cash offer, no contingencies and a 30 day close, I’m not going let you much with it by having to deal with another department that has no impetous to get the job done or any reason to be looking at my finances.

CW will just have their homes sit longer or sell for even less due to it… which is fine by me… anything that pressures prices even further down on foreclosures I’ve got no problem with…I just will enjoy the benefit of it without dealing with CW.

However I don’t think bringing in another bank department and another step is “streamlining”.

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Re: Lemons into Lemonaide? - Posted by ken in sc

Posted by ken in sc on June 21, 2007 at 09:34:44:

What if all the investors in your area felt like you, refusing to do what CW wants and thus not bidding on their REO’s? And what if you were the only one willing to do what they want, submit to qualifying through them (whether using their financing or not)? What if you wound up getting a contact at CW who, after a deal or so, would qualify you quickly? What if you wound up getting a deal a month, just because you were willing to do what it takes?

Just a thought.

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Honey vs Vinegar - Posted by Penny

Posted by Penny on June 20, 2007 at 11:45:17:

Yikes! It sounds like you have had some very frustrating experiences.

Something to consider (and you don’t have to answer to us) - has your frustration inadvertently caused your actions or attitude toward the bank to be perceived to be as big of a pain to them as their actions to you? What actions could you take that would make dealing with you to be an easy, no brainer type activity? Besides a financial statement, what kind of warm fuzzies can you provide that give them confidence that the transaction will close?

It sounds like there is a trade off between some potentially good investment deals versus dealing with an organization of marginal aggregate competency. The optimist in me thinks that they can’t all be morons, so there has to be someone competent that you could establish a relationship with.

Unless you have some success history with a particular institution, John raises a valid point that companies want to focus their time on the transactions most likely to be successful. While perhaps not the best business model to emulate, having some hoops to jump through creates somewhat of a natural selection process to identify those transactions.

Best of luck!

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Re: Lemons into Lemonaide? - Posted by Sean

Posted by Sean on June 21, 2007 at 13:26:49:

What if I just said, I only want to do business with people I want to business with and want to do business with me and let others who don’t know any better jump through hoops and do more work than they need too???

If I was desperate for a deal, I’d probably sing a different tune, but being as there has NEVER been a shortage of them here, I’ll let someone else endure the extra hassles.

Me, I enjoy minimizing my effort, and maximizing my results… which CW’s process provides neither. You are welcome to buy their REOs… more power to you.

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seminarland platitudes… - Posted by Sean

Posted by Sean on June 21, 2007 at 09:15:35:

Nice seminar land platitudes, but very little usefulness in the real world.

Over 60% of my purchases are REO’s, I am not speaking out of turn, or out of place.

Getting to “know” someone at a big bank REO department is a laughable recommendation. It looks great in the manuals they’ll charge you hundreds of dollars for, good theory, worthless practical. Turn over in REO division of banks is more common that it is in debt collection companies… Its either a short term stop for someone up and comer looking to move up… or peter principle discovery on their way down.

Small local banks, yes, personal relationships can be useful. To give such advice regarding a company like Countrywide shows some pretty large ignorance. Likelihood of the same person still being in the department 3-6 months from now is next to nill.

I am sorry, I know this comes across rudely, but based on your comments I just see books study, and little practicle application.

Here are the facts about REO’s, 1 in 3 to 1 in 4 will have a title problem because the bank screwed up the foreclosure… take it to the bank (pun intended). The bank will pressure you as the buyer into all sorts of commitments and demand penalties when not met… Yet most often deals do not close on time because they cannot get their acts together.

Have you ever actually tried to deal with a bank on a foreclosure? If you had, you would not tritely think that getting another department involved in the transaction is going to streamline anything. Without the pre-approval process it takes at least 1-2 weeks on average to get an answer from a bank on a foreclosure offer, so guess how long that prequalifying is going to add to this? It’s flat out foolishness, and I honestly question the legality of it.

Like I said its no skin of my back, I’ve seen so much stupidity out of banks and mortgage companies that nothing suprises me about them anymore. I just won’t deal with CW anymore, and as their properties sit and rot, which they by and large will, I’ll just buy the other ones out there, and enjoy the price depression that their policy will put on the market, without dealing with them.

You are willing to have your finances pilfered through by someone who you have no intention of using as a lender, or a business partner, you go right ahead. Me, I have better things to do with my time, than “pre-qualify” for bank loans I have no intention of using.

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Re: Lemons into Lemonaide? - Posted by ken in sc

Posted by ken in sc on June 22, 2007 at 05:26:41:

Kudos to you for living in an area and being good enough to always have plenty of deals so that you don’t need to do the work involved in dealing with CW. Hopefully others who are not so fortunate can benefit from what I said. Many who come to this site are looking to increase their business and I find that when one does what others are unwilling to, one can often benefit by it. Many investors may not feel that giving financial info that they have to give anyway to their normal lender is not that much of a hassle. But if your business is running strong without the hassle of dealing with CW, then I can see where you would not be inclined to do so.