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Another tree to cut down. Most of us already submit a Short Sale addendum when we start a Short Sale. This is just a way to cover their own butts. We have too much paperwork as it is to account for. Also Bank of America is not so trusting of clients as they are requiring Sellers to sign a 4506T for tax purposes. They say it is to verify sellers tax records. I am not feeling to secure asking my clients to sign this form. It may just be a way to get some money back from the sellers down the road as this form requires sellers to give complete access to all financial records to the Bank. THe bank needs to just accept the 2 years tax records required already to be given with a Short Sale application.
I think this is very sneaky.
These banks are so incompetent they can’t hit themselves in the butt with both hands.
They don’t have to worry about getting into trouble because their “buddies” in the government will bail them out.
Yet the people that are directly affected by their GREED get to sit at the kitchen table and cry while waiting to be foreclosed on.
I, and many others, are sick of their arrogance.
You eventually reap what you sow.
Nice interview Robert.
Good to see BofA recognizes that legitimate investors add value to a distressed transaction. Also good to see that the banks feels agents have done their expected due diligence by having their buyers and sellers sign the addendum.
A typical flop goes like this: The agent finds a buyer at a market price, and the agent holds this buyer back. Maybe this buyer evens signs a contract. The agent doesn’t tell the bank about this buyer and instead convinces the bank to accept a sale at a lower price to the agent’s buddy. Later on the same day the sale to the buddy closes, they close the sale at a higher price to the buyer that was held back, only the contract shows a different seller.
Why does the bank care if the buyer rents the home back to the sellers? Would they rather have them live on the street. What’s the difference who lives there? The Bank already strips all sense of dignity from the sellers by constantly asking them to fill out the same paperwork over and over again. In most cases when the owner has had a health issue the bank is violating HIPAA Laws by asking for proof and insisting the homeowner discribe their medical hardship. Also, What’s the difference if the sellers can afford to pay the mortgage or not. THE BANKS/INVESTORS (your pension fund, etc) ARE NOT GETTING THEIR MONEY!
I’ve done several short sales were the seller could afford the mortgage but decided that it was a bad investment. Big Business does it! Go after them later. Instead, the bank leaves the home sitting there becoming an eye sore for the neighbors and lowering everybody’s property values. In most cases that bank has many of the loans of the properties that they are causing to decline.
There isn’t anythig that we know that the banks don’t already know. They purposely make it difficult to get a short sale through. The only reason that there has been any improvement in the systems is due to competition from other service companies expiditing their system.
I hope any new administration will streamline this. The money is gone. It’s the lack of circulation of money that is killing the ecomony.
I think the banks should spend more time trying to keep the owners in their homes and quit the strung out trial payments to only end up telling them they don’t qualify or change their trial payment during the process. BAC and BofA are the worst. They lie and they also loose faxes you send them. What happened to 3 trial payments and Then modify? Most of folks trying to keep their homes end up making trial payments for more than a year and then they find out that they are not qualified for some made up reason or because they have raised the trial payment. I am sure if someone who should be overseeing these Modifications found out that these banks are just stringing the owners along to make more money in their servicing the heads would roll. As soon as you ask for a modification, their (the servicing bank) insurance kicks in so they are triple dipping the system. The investors are having more fees to pay as well, so why would the banks want to modify? They are making more money while you are making trial payments. This is a rip off to the owners who are trying to stay in their home and raise their children with a roof over their heads. HAMP says that they should lower the interest rate to 2% first, then amoratize the payments over 40 years to lower the payment. Then last, they can also cut some of the principal balance. Why dont they just do that and let the owners stay in the home. The owners that want to stay in the home and love their homes but came into some finacial hardship are the only ones that will actually pay what they owe on that loan. So why doesnt the bank leave them in thehome and just work out a payment plan that will work for the owners that are trying to keep their homes? They wont. Like I said they are getting insurance money and extra fees from the investor and trial payment fees from where ever you can imagine. While you are being strung along with trial payments your credit report is showing missed payments completely. so they report you 30,60,90 days late and if you have been making trial payments for say 16 months, you are now showing arrears of the whole original payment plus all the late payment fees, and now you show thousands of dollars in arrears and they still have you in “review” This is BS. Someone needs to make these servicers Modify the loan after the 3 payments or at least 6 payments. I am speaking from experience while I have been making trial payments for 14 months and come to find out i am denied for not making my trial payments. What a Joke! So I have to prove to them I have made all my trial payments in an appeal, while I am threatened with foreclosure and the embarrasing results in my community. I heard the fax machines were actually hooked up to shredding machines. I don’t know if this is true but when i asked my bank (BAC) how many mods they have actually done, i couldnt get an answer from them. I have to live not knowing if I am going to get the mod. or get foreclosed on in the next few months. Oh, Have you heard of the trial period turning into expired? That was a new one. Once I heard that they told me they could only accept my full payment. Wow, Thanks alot BofA and BAC. Keep ripping off Americans trying to do what is told of them to only tell them “we lost your stuff” or “we didnt recieve the fax”. No wonder owners are frustrated and just walk away. Not me. I’ve done everything I was supposed to do and i proved it. Now what?
[...] Addendum Aims at Fraud, BofA Says June 14, 2011 by Robert Freedman · 3 Comments Filed under: Breaking News, Mortgage [...]
I think it’s another example of a well intended policy with unintended consequences. I simply don’t think it will prevent anything but hinder agents trying to put legitimate deals together. Just my 2-Cents )
I understand the need to reduce and eliminate fraud but I’m not certain adding more time and more hurdles to the short sale process is going to help the housing market nor is it going to help with the shadow inventory that is still a major issue to be dealt with.
I think Bank of America is to concerned about blaming others for Fraud, when the Fraud is more Internal than External.
Their Lending Policy of the Past is why we are here, they were more concerned with Lending more than the True value of homes and now looking back they are trying to blame that on the Hard working American who needs to be treated with a little more Respect than what is happening now.
Bank of America says that they respect the job the Realtors do?! Are you kidding me? Then stop cutting our commission.
This form that they are making the new buyers sign is not a new one if you have done short sales before. Most banks that I have worked with DO make the buyers sign this to prevent situations such as helping out a family member etc. I think the banks have wised up to the fraud that can go on out there. I am glad that they make the new buyers sign it. The realtor have to sign it as well in most cases.
I was told by my Attorney this is a Deed Restriction and can not be held up in court since its not required as part of the DEED just escrow.
I am a real estate professional and have done large number of short-sales in the past 5 years. I have always practiced legitimate transactions and followed the code of ethics to the T. I have many issues with the policies and forms in place.
Point1: As licenced real estate professionals (agents and brokers) why should we be held responsible and put our licenses on the line in a transaction that we are not part of. We are only facilitators of the transactions, yet we are held responsible for someone else’s actions who is part of the transaction. (Buyer and Seller) So why are we forced to sign such addendum allowing possible future lawsuits?
Point2: Why is there a strict policy in place, keeping the original homeowner from renting the property back either from the bank or a buyer who has purchased the property? These distressed homeowners have to provide a roof over their family’s head and have to rent elsewhere (another foreclosed/shortsale property bought by another buyer)! Why not the subject property?
Point3: Banks are willing to give tenants of foreclosed properties cash for keys to vacate the property or stay in the house until REO listing (Bank Owned Property) is sold. Why can’t they extend the courtesy to the original homeowner? Why not offer all of them moving expenses across the board as part of the short-sale settlement?
Point4: There should be a law passed by the government, once the lender (servicer or investor) accepts a short-sale and a settlement, they automatically waive any deficiency rights. Upon short-sale transaction closing, the homeowner does not have to worry about any future collections or lawsuits! This policy should be applied to all lien holders, junior mortgages, Mortgage Insurers, and any asset management companies (or entities) representing the lenders in a short-sale transaction.
Everything David Sunlin says makes sense. Too bad that BofA and BAC are such a mess that they can’t stop doing to homeowners, like Lou Derr, what they are doing. I have heard this same lament from owner after owner. Owners are trying to grab onto any kind of hope to keep their homes so they all agree to the modification only to find out a year or more later that they have been more screwed by the bank. When they finally give up and agree to the short sale, the agents and their team have to jump through fire hoops backwards and this process can take another year (or TWO) to complete. Seriously? In all this time the bank still can’t get their act together?
I think that Mr. Sunlin is just reiterating common sense he hears from all of us in the trenches and it sounds good in the press but the broken processes keep going on and on. It seems like whenever there is a change is just gets worse for everyone but the bank. Oh how we ALL hate short sales!
@Becky, it depends on which state your in and if it is added to the deed. We are getting deed rstrictions imposed left and right in Phoenix.
Wow, whats with all the negative remarks against banks here. They are just trying to loose a little money as possible. Fraud prevention is a good thing!
Well, after reading all this now i feel better i am not the only one that thinks that many of the paperwork they ask is senseless, and their regulations stupid as not letting the people rent the house back, among the flipping and many more. this comment really made me laugh “We think they’ve earned every penny of that commission and we’re not trying to interfere with that” that is hilarious either he has never been inside the office where they handle the process or he thinks agents do not read this type of articles!!! i have handle over 50 short sales with them currently have 25 with offers and 70% are reducing my commission. about Freddie Mac this is what i have to say………………….. _______________………………………
Sad thing is that the banks who are acting like they are in this to help the sellers out won’t let them rent back or pay a lower payment but will let the new purchaser buy for “sometimes hundreds of thousands” Now I get the great call on one that I have worked for all 3 parties, buyer, seller and the bank that because I am the only agent involved that now they want to cut the commission since there is no other agent involved, oh wait did I mention also negotiating the 2nd lien holder !! Not sure what the banks think will be accomplished with thier new tactics but doen’t look good to me from my point…
Most lenders are requiring this addendum. Some even require it to be notarized as a requirement prior to approving the short sale.
What I find interesting is BoA being the source for short sale information. BoA has the worst industry reputation particularly as it relates to short Sales transactions. Ask any agent around the country.
[...] Short-Sale Addendum Aims at Fraud, BofA Says [...]
What about fraud prevention from banks? It would be good too.
I know a guy who agree with a modification with Bank of America. He always was paying whatever the bank said… He was relocated so he ask a realtor to list “his” property for rent. Surprise!!!…Bank of America is the owner since 5 months ago.
How could be that an owner got a modification was paying and at the same time the bank foreclose it. How we could call this?
Cannot believe what I am reading from my Realtor members. You evidently do not understand the secondary market where the investors are. Why should they not expect to get their money back that they loaned at an agreed rate. I have NEVER seen a buyer be forced to sign a contract or note and mortgage. If you remember from real estate school a “CONTRACT” has 5 elements. 1. competant parties (maybe there’s the problem) 2. an offer that is accepted (i.e. banks will lend buyers money at an agreed amount rate and repayment promise) 3. consideration, 4. mutual assent (an agreement as to the terms) 5. for a legal purpose.
If you loan me $500.00 would you want me to tell you I am having a tough time and I can only pay you back $350.00 I hardly think so.
To me, B of A is not applying the “Golden Rule” so well. It has no virtue at all, what- soever. I have been driven nut with all their common, kinds of schemes they have pulled on my clients. They approved my clients’ short sale and demanded $7K with it every time. They do this with their “big brother”, the foreclosure team always attacks on home owners’ back at this point.. That was happened to my clients a lot. Currently I have one short sale that going on for the last 3 years, and still not be able to COE. I started this listing when it has a small amount of shorted fund to close, after payoff a good amount to the 2nd. We had a good offer at that time but they didn’t want to approve it. They probably been busy, making the big plans with their “big brother”. They dragged it to where the missing payments and late charges added on to the first loan and leave almost nothing to the 2ND, except the ” $6k”. They have dragged to a point where the 2nd lender not want to settle for $6k. B of A holds the first.. (it’s a big 2nd) Now they ready to carry out their big plan with their “big brother”. They actually sent the foreclosure team to the home with their “big stick”- put the Foreclosure Notice on the door and confronted my client’s roommate with a bunch of questions.
I started this with the original short sale.They pulled all kinds of games with me just to buy time so they can have the “cake” all to themselves, within among of their “big brother” as I could feel it. They have not approved the original short sale, instead they advised me that I should put this property into HAFA Program and I did. I have completed the file on 7/12/2011, and the program representative told me to standby for an appraiser ‘s call. I have been alert since that day on and nobody has call me for an appointment for an appraisal done. Instead I see a Foreclosure Notice on the door within the same week that I was supposed to be called by an appraiser. Are they sneaky lender with HAFA fund? They will ” rip what they have sow”.
They’re not only pretended helping home owners who still have the option toward loan modification, but they also wanted to pump short sale files into a pit that nobody would know. “what be bounded on earth will be bounded on heaven” They have dig a pit they will fall into it first. I will be ready to confront them in court for my client’s behalf. The thing is-how do we do this? They have funds to do whatever they wanted to. They have been pumped with stimulative funds. What the wasted with any government stimulate programs, pumped to them directly, indirectly, we, the tax payers have contributed so they can run and keep a fraudulence foreclosure team next to their face and be ready to attack on home owners by frauds. .
( ” Richard Murphy says:June 20, 2011 at 12:47 pm
I think Bank of America is to concerned about blaming others for Fraud, when the Fraud is more Internal than External”.)
[...] about a short-sale contract addendum that lenders were requiring of borrowers to curb fraud, so we talked with David Sunlin, Bank of America senior vice president and operations executive for short sales, [...]
[...] Short-Sale Addendum Aims at Fraud, BofA Says Interview with David Sunlin of Bank of America [...]
One issue that was raised by the Freddie Mac Rep – involves BANK FRAUD by the banks but no one’s really talking about it or doing anything….. the 2nd liens DEMANDING MORE than the 1st lien will give them. I have written instructions from PNC Bank, GMAC, WELLS FARGO and B of A all who were in second position telling me to “pay them off of the HUD” or they will close the file.
Then there’s the issue of disclosure – this one REALLY gets me going. The negotiators at the banks are taught – yes it’s poilicy – to LIE to us regarding the BPO values if they will tell you at all. They inflate the values that the BPO agents reported and tell you that their “internal review” came in higher!!! I was told by a loss mitigator at WELLS that this is done because they know that if they tell you they “want more” – realtors who need paydays will go out and find it for them even if it has to come out of their own pockets.
FRAUD??? Please…… if it ain’t the pot calling the kettle black.
There is absolutely nothing and I mean NOTHING wrong with purchasing and reselling a property. Why the bank gets to decide, as a beneficiary and not a PRINCIPAL of the deal – how long I have to hold an asset I purchase… is beyond me. They make a business decision based on the numbers and if they end up with remorse over the fact that money was left on the table, they want to cry fraud.
Does a property with clear title that isn’t distressed command a higher sales price than one that requires 3rd party approval and could take 6 months to a year to close? ABSOLUTELY. If the banks (all of them) would pull their heads out long enough they will realize that THIS SINGLE FACT is the reason there is any opportunity for investors to profit. If the timeframe were shorter, if they guaranteed to sell at x% “below” market value to move the property, more and more market value offers would hit the table and close. Just a thought.
As a realestate agent with REMAX it is frustrating to deal with BAC short sales. I have recently submitted a fair market value offer to purchase on a property that looks a cemetery and yet BAC has refused a $375,000 offer when the house is only appraised for $415,000. The negotiators at BAC are incompetent
I don’t have a problem with the short sale addendum ,my issue is with the bank including the agent on the signatory lines..They want the agents signature notorized and want the agents to indemnify the bank and investor for ANY and ALL loss from any neglect or missrepresentation made in the affidavit including, but not limited to,claim, cost,damage and /or expense of any kind or character whatsoever including attorney fees. THIS IS A HUGE LIABILITY TO THE BROKER. First of all 99% of us do it right for the1% who don’t the banks are demanding that we take part in the signature portion for one more party to go after. A Realtor should not have to indemnify a bank. Talk about liability, NAR should be all over this RIGHT NOW.
I have to touch on the issue that I am hearing so much about lately and that is investor short sale fraud. FREDDIE MAC!! YOU ARE A BULLY! Really?? You have no room to point fingers at fraud especially at investors who are making a fraction of what you’ve been making from your government handouts and lavishing in large bonuses. Those short sale investors you speak of are necessary to get our housing market back to where we need it to be. They understand the workings of the short sales where the realtors typically don’t have the education that the short sale investor has because they want to make sure their time and energy results in a profit. They sometimes work diligently for up to 2 years or more on a lengthy difficult short sale where any other buyer would have walked after 3 months. Even the same day transactions are good for everyone involved. If the bank did their BPO or appraisal correctly and approved the short sale investor’s offer, they should be happy. The short sale investor’s buyer is happy to pay a retail price because they didn’t have to wait the long grueling process of the short sale and can typically close in 30 days as they hoped. The investor facilitated the short sale negotiations that can, at times, be the biggest headache and can be quite complex with multiple liens involved. Why can’t they get paid? Where is the fraud? There is NO PROOF anywhere that this is fraud. The only example anyone can provide is the Connecticut incident and that was truly short sale fraud because they had the C buyer before they submitted the B buyer offer to the bank. Yes, there are unscrupulous people out there and they come in all different forms and with many different titles. DO NOT GIVE SHORT SALE INVESTORS A BAD NAME just because you have to find someone to point fingers at for this mess that the banks have put us in.
[...] The affidavit that Freddie Mac requires servicers to obtain in short sales has been changed at NAR’s request to reduce what was seen as an unreasonable amount of liability risk to practitioners. Freddie Mac requires the affidavit to reduce illegal flipping and collusion between buyers and sellers but NAR members said the language held them liable for situations over which they had no control. (See a past blog post.) [...]
It does not really matter what the bank do to prevent short sale fraud. It is a waste of time. Better yet , the bank should just reduce the principal to the current market value and give affordable interest for life. Too much paperwork to sign is just a waste of time. Nothing is being done anyway to prosecute the perpetrators especially those short sale sellers(borrowers) who short sale their house to a relative or friend with a prearrangement that short sale seller (borrower) could stay at the house and buy back the house at later date. Could you blame them? In the meantime the short sellers (borrowers) get to stay at their house and pay monthly payment for a lower price and the short sale buyer gets the benefit of claiming the interest on his/her income tax. Banks have no adequate man power to police every short sale. It is a win for the short sale seller(borrower) and short sale buyer.
A NEW ORG THAT WILL REALLY HELP AGAINST THE BANKS .. THE CFPB ..THE CONSUMER FINANCE PROTECTION BUREAU.. ..MY PRAYERS ARE WITH YOU
The services looks out for the investors , uncle Sam looks out for the banks . Who looks out for the consumer borrower in default ,that’s a victim of the banks and regulators crashing the economy ? Where Does the Buck Stop ? If the Gov. And the banks would have done the right thing and not perpetuated fraud schemes to make money . The economy would not be in this shape right now . So the answer is let’s minimize our loses , cover our behinds and screw the working man that was left in the dust. Not allowing sellers to rent back their homes from investors should be illegal. After the pillaging done to tax payers and borrowers and naive institutions that’s the least the can do to redeem themselves . Shame on the system everyone should call their congressman and get this off the radar . It’s like a final thumb in the eye .
I have sucessfully negotiated and closed well over 100 short sales and have worked with all of the major banks as well as many of the smaller ones. I have also worked on the bank’s ‘side’ of the table. Many of you are correct about the person you are speaking to (servicer) refusing great offers, but they are only reading a ‘script’ from the investors on the loan. They have a formula that includes the bank’s ‘loss’ (as if that matters to the true value), and what to do IF a ‘full’ offer is received (ask for more). However…it is more often the MI Company that causes a short sale to fall apart, it’s the MI Companys that ‘demand’ that the homeowners pay a ‘note’ for approval…not the servicer. Actually, the servicer doesn’t want to have the property sold at all…they lose a paying ‘customer’ that way, all they do is relay the offer to the investor/MI company for a reply. There are SOME parameters where the servicer (that you are talking to) can ‘see’ that an offer will fall into an acceptable range and might tell you that it is ‘accepted’ pending management approval. Don’t take that an an approval – it isn’t, it just means that the minimum requirements were met and that person doesn’t have to do anymore…at the moment.
Know WHO owns the loan…is it the lender you are talking to, or does it belong to an investor (Fannie, Freddie, or private?). If the loan is ‘owned’ by the lender you are calling, you can usually get a reply and negotiate a settlement. If it’s owned by someone else, the servicer will have to ‘run the offer’ past the investor before you will hear back from them, and they will only do that if the offer meets pre-set criteria. If the investor’s criteria is old, or way out of line, the servicer probably won’t make the effort to get the investor’s demands updated…and that is WHY some great offers are denied. I hoped this helped someone understanding the short sale mentality of the servicer/investor/MI company. Good Luck.
I,ve been doing BPO,S. My broker says I must have the checks sent to her . Then she will pay me. Is this the rule.Thank you Arline
Why are they cutting agents commission if the buyer is related to the listing agent?
If the listing agent is not a business partner in the entity the investor is buying with?
The addendum stated that they want to prevent agents from buying short sales themselves ? Why not? If the agent is also an investor or if the agent is related to an investor. The agent did the job, marketed the property.
Auction.com accepted a bid as a back up offer, then turned around and suspended the agent. It is not up to them, this should be clearer. The way the addendum is written, does not clearly explain what a business relationship is!
If I am selling my house and I have a listing agent selling my house, I will still pay her commission if he buys the house himself. If it is good for me why is it not good for auction.com?
Can someone shed some light on that? Any attorney’s here?
This is going too far, how dare they cut an agent commission?
It is unfair.
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