Short-sale lender SCAM - Posted by Jerry in Illinois

Real Estate Investing Real Estate Law
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Posted by luke-NC on August 25, 2005 at 10:53:22:

With them servicing the loan, it means they have to go back to the investor backing the loan for any short sale approval.

If it has PMI, i’d call up the PMI company and start talking to them immediately. Tell them you’re trying a short sale and can’t get anywhere with the lender.
They’ll take it from there.

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Short-sale lender SCAM - Posted by Jerry in Illinois

Posted by Jerry in Illinois on August 24, 2005 at 12:26:54:

I’ve been doing this successfully for years and NEVER have I run into anything so sickening. On a pre-foreclosure, I prepared my typically-complete and professionally-assembled short-sale package of 79 pages. It had a cover letter, table of contents, numbered pages and everything I could possibly do to make the foreclosure rep’s job easier.

  1. It’s obvious that they never read the information I sent, but asked me to resend selected items piecemeal. 2. They told me that my first contract for $214K was unacceptable and to raise it to $230K. 3. After I complied, they then said I needed to raise it again, so I sent them one for $238K. 4. They then insisted on $253K. I told them that I would then not be able to do the rehab myself and to guarantee the lender a certain closing, but I would try to scalp a few thou by flipping it, and did send them a HUD-1 for $253K. 5. They came back with a demand for $279K. I told them that the $253K was the end and not a penny more.

They now have me waiting days for a final answer, the auction is scheduled in three weeks and my title company needs this much lead time to promise me a closing date in time to do this.

I’ve scheduled appointments for rehabbers to see it soon, but don’t want to tarnish my reputation by having them waste their time and efforts if I can’t be sure of delivering. I don’t know whether to keep the appointments in case the lender says yes. It’s a dilemma I’ve never encountered before. Any thoughts?

Thanks in advance,
Jerry in Illinois

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Re: Short-sale lender SCAM - Posted by rm

Posted by rm on August 24, 2005 at 16:52:00:

You’ve been too compliant from the start.

Too late now, but I try to avoid agreeing to anything verbally. You need to be using the higher authority principle, just like they do. “Joe, I’m not sure I can do that. I’ll have to check with So-and-So. Why don’t you fax me that and I’ll see if I can push it through.”

You might try, while you’re waiting, to inform them of some new development that will force you to LOWER your offer.

As of now, maybe the property’s been damaged in some way since your original offer? A new leak of some kind?

Generally, on a reinspection, you can find something else wrong with the property, and pay less than you had agreed to.

Surely you’ve bought properties that deteriorated between the contract and the closing date. Well, this one probably has, too. It’s up to you to find a compelling, and worsening by the day.

Also, as an aside… SEVENTY-NINE PAGES?!?

I wouldn’t read it either. You know, the FC reps DO have more than just one deal on their desk! With FC’s at record levels in many states, they’ve got even more work to do now than before.

You’ve been doing this for longer than I have, but I’ve whittled it all the way down to just the essentials for my packages, and I’m closing just over 2/3’s of my deals… and obviously working a lot less.

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Re: Short-sale lender SCAM - Posted by ken

Posted by ken on August 24, 2005 at 14:14:37:

You need to transfer the pressure to them. Call them and tell them to accept by close of business friday or no deal

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Re: Short-sale lender SCAM - Posted by lukeNC

Posted by lukeNC on August 24, 2005 at 12:39:11:

whats the market value here?

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Re: Short-sale lender SCAM - Posted by Jerry in Illinois

Posted by Jerry in Illinois on August 24, 2005 at 18:21:05:

You’ve given me some good thoughts. Thanks.

In my own defense, the 79 pages includes the four tax returns from the two borrowers and other related garbage. I send what is required, so I expect that they’ll examine it. Thanks again,
Jerry in Illinois

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Re: Short-sale lender SCAM - Posted by Jerry in Illinois

Posted by Jerry in Illinois on August 25, 2005 at 17:53:55:

I agree with your thinking. I called them Wednesday and told them by Thursday morning or there’s no deal. They didn’t even call.

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Re: Short-sale lender SCAM - Posted by Jerry in Illinois

Posted by Jerry in Illinois on August 24, 2005 at 14:10:22:

This property is near impossible to comp, since it’s a hybrid freak. After-repaired value is a really tough one. Could be as low as $350K and as much as $400K. It’s on a gorgeous wooded lot, has some nice amenities, but small bedrooms. The kicker is that it needs a good $35K+ in rehab.

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Re: Short-sale lender SCAM - Posted by rm

Posted by rm on August 24, 2005 at 20:25:36:

I can’t STAND to send those long faxes, because too often, you get some crazy error message 1/2 way through, or a paper jam, or some such.

So, I usually just ask… “Do you really NEED the tax returns? They can’t seem to find it.”

And, 100% of the time, they say fine. If it’s convenient for me, I’ll sometimes send a W-2 or 1099. IF.

It doesn’t take much to demonstrate hardship, and frankly, last year’s taxes don’t have a danmed thing to do with today’s inability to pay. They can spend a lot of time fooling around with needless paper, or they can face the facts and bite the bullet.

I’m finding that less is more.

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Re: Short-sale lender SCAM - Posted by lukeNC

Posted by lukeNC on August 24, 2005 at 15:04:05:

OK…
3 questions…

who are you talking with at the lender, which department?

is this loan held by them or are they servicing it?

Is there PMI involved…hopefully yes…

I’ve found that talking directly to the PMI company is by far the best way to get a “short sale” done, even though I don’t really like these…

let me know…

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Re: Short-sale lender SCAM - Posted by Jerry in Illinois

Posted by Jerry in Illinois on August 24, 2005 at 22:59:26:

What you say is true. You know it and I know it. However, when Harvey the new rep gets his guidelines, he’s not about to let you pass “GO” before you jump through the prescribed hoops. I didn’t/wouldn’t fax that volume of materials. I overnighted them on June 29th. Then the rep couldn’t find it for a couple of weeks, refusing my offer to resend it. Then, the rep was no longer with the company and I had a new rep. Then the new rep passed me along to a third rep, who’s been playing the game with me. I will NEVER go near another deal with this lender and will advise anyone I encounter to do the same.

Meanwhile, I’ve set up appointments with several rehabbers to show the property in a few days. I’m inclined to bite the bullet and cancel the appointments, lest my reputation be tarnished for future deals. The part of me that doesn’t want to let go is thinking: maybe I can get the foreclosure rep to fax me a commitment letter with their final figure, if they can/will come up with one. At least I might be able to show the property in good conscience and if the bids don’t exceed my commitment, I can just let them all know. I’m very conflicted and disturbed with this whole mess.
Jerry in Illinois

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Re: Short-sale lender SCAM - Posted by Jerry in Illinois

Posted by Jerry in Illinois on August 24, 2005 at 18:30:55:

To answer your questions,

  1. The Loss Mitigation Department, I hope. The rep signs things, “Loan Resolution Consultant”.
  2. I don’t know how to determine if they’re servicing it or they bought it from the original lender. We all see loans made by company A, the borrower tells us that later on, they started sending their payments to company B, and now, it’s company C. 3. You’ve stumped me with the PMI. I know that I’m showing my ignorance, but this gives me a chance to learn. In my experience, PMI is private mortgage insurance. Please enlighten me.

Thanks for any feedback,
Jerry in Illinois

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Re: Short-sale lender SCAM - Posted by rm

Posted by rm on August 24, 2005 at 16:41:05:

Is there PMI involved…hopefully yes…

I’ve found that talking directly to the PMI company is by far the best way to get a “short sale” done, even though I don’t really like these…//

Nice tip!

I’ve had good success with PMI deals before, but I always found that they were the ones who were blamed for any counter-offers at a higher price.

Maybe they were just used as scapegoats?

Anyway, I’m guessing you just asked the FC rep for their contact info… yes?

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Re: Short-sale lender SCAM - Posted by rm

Posted by rm on August 25, 2005 at 13:03:27:

Every deal I’ve ever “forced” to close has turned out to be a disaster.

There’s a part of me that wants to close everything I get my hands on, because I want to keep my commitments. However, when I let that urge spin out of control, I’m always sorry I pushed past the breaking point.

If you feel like you’re forcing this thing to happen, maybe you should walk…

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Re: Short-sale lender SCAM - Posted by rm

Posted by rm on August 24, 2005 at 20:34:16:

I don’t know how to determine if they’re servicing it or they bought it from the original lender.//

You simply ask them.

You’ve stumped me with the PMI.//

Again, just ask the LRC. And yes, PMI = private mtg ins. If PMI is in place, and given certain conditions, the PMI company will help to assuage the lender’s loss.

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re - Posted by luke-NC

Posted by luke-NC on August 26, 2005 at 13:04:43:

dont ever go by what the guy at the lender is saying, unless you have a good relationship with them…

Yep, just ask is there PMI, if yes, whats the name and contact #…thats it.

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Re: Short-sale lender SCAM - Posted by Jerry in Illinois

Posted by Jerry in Illinois on August 24, 2005 at 23:03:19:

I don’t know how I’ve gotten as many deals as I have without encountering the elements you bring up. I’ve got alot more to learn than I thought. What is the significance to me of them servicing the loan rather than having bought it from another lender? Also, what headway can I make if the loan has PMI? I really need enlightenment on these items, because they’ve never come up before.
Send me a bill for tuition.
Jerry in Illinois