And, We Wonder Why We Have a Banking Crisis???

Janeese Jackson — Tue, 06 Oct 2009 21:57:51 +0000

After this posting, I might have to rename my site from “Portland Real Estate Update” to “Portland Real Estate Rant”! But, my recent short sale experience should make us all “mad as hell and we’re not going to take it any more”!!! So, here’s my current short-sale story. Due to the unfortunate circumstances of a job loss, my client had to sell her home. After researching the market, we realized that we would be forced to negotiate with the 1st and 2nd lenders to accept less than was owed on the home. In other words, we would “sell short”. We began the long and arduous process of collecting the stacks of information needed by the lenders to review in order for them to agree to sell short. We also began the marketing process to find that sweet spot in the pricing continuum and the buyer willing and able to purchase. On a good day, it takes a VERY patient buyer to want to play that “waiting game” (with no definitive closing date and no assurance of the eventual acceptance of their offer). Plus, the buyer makes an offer and during the wait there is the opportunity for other competing offers to be submitted and to be outbid! So, the buyer attrition rate is HUGE! Buyers continue to look for houses while waiting for an answer, ANY ANSWER, from the lenders and will often eventually just tire of the suspense and withdraw. Well, in my current short sale case, the buyers patiently waiting and really wanted the house. The 1st lender agreed to the short sale and offered the Freddie Mac “standard for the industry” (which is 10% of the amount owed) to the 2nd lender (who actually has no power in the transaction other than the ability to say no). US Bank holds the 2nd mortgage in the amount of $25,000, thus the 1st lender was offering them $2,500. US Bank said “they would disapprove the sale unless they received $5000″. Provident Bank, the first lender, said “their hands were tied as Freddie Mac (the secondary market banks) only allow 10%”. The Real Estate companies involved were willing to contribute via their commissions, even the buyers were willing to come to closing with the extra $2,500 and neither bank would budge. I can almost forgive Provident as Freddie Mac does control the buying of packaged loans on the secondary market, but US Bank IS the problem!! Not to mention my associate (who helps me with the short-sale process) last phone conversation involved the US Bank loss mitigation rep saying that the only answer was for someone to mail them $2,500. If money is exchanged in a real estate transaction, isn’t it “mortgage fraud” if it’s done outside of escrow and not acknowledged on the final HUD-1 statement? This stubborn nonsense will force Provident to go through a costly foreclosure process and US Bank will get nothing!! But, they don’t care. My seller will now have a foreclosure on her record, the buyers don’t get the home they wanted and several real estate agents worked for months for nothing. What kind of “kinder, gentler, wiser, more diligent” banking system is this????

Portland Real Estate Update by Janeese Jackson » banks

And, We Wonder Why We Have a Banking Crisis???