Has anybody else come across the scenario of a loan originally serviced by Countrywide, then taken over by Bank of America backed by Freddie Mac where it eventually came down to just a flat denial and the home was taken back by Freddie Mac to just be listed for a Lower Price then the submitted short sale proposal? (Sorry for the rambling sentence..)

Scenario 1 = Worked with Countrywide / Bank of America forever (about 8 months)... finally get an answer / counter and the sellers agree to it. $135,000 purchase price + $10,000 cash contribution (bribe to waive any future rights for a deficiency judgment) from the sellers. Everything seems great and then all of a sudden... a letter comes back saying the "investor" denied it. Property foreclosed on and then put back up for sale for $136,000 a month later. Sales price is actually $134,900. Obviously a loss to the "Investor" over what they could have gotten all the way back in March.

Scenario 2 = Worked with Countrywide / Bank of America for about 5 months.... Listed for $235,000, get a good solid buyer for $235,000. "Investor" comes back and wants $245,000 which buyers take and we approve their "counter". Two weeks later a letter gets sent over stating the "Investor" denied the short sale and it's sent to foreclosure. Two months later the property is put back up for sale for $242,000 and has now been sitting there available for sale going on 1 month and counting.

Both had three things in common -- Originally serviced by Countrywide, Now Bank of America and backed by Freddie Mac. Great sales prices on the numbers... solid buyers. Both sellers on the above properties were investors that had lost their tenants and absolutely no way they would have qualified for those loans today.

So... my mind is ticking as to why these are the only two this year that have been flat out denied and I have not been able to close that I thought was a great deal for the "investors". I pull up the tax records of Las Vegas homes owned by the good ole Federal Home Loan Mortgage Corp. (approx. 1,139 in Las Vegas right now) and start searching through the histories of them on the Las Vegas MLS.

Out of the first 15 that I go through... I come across 4 of them that also appear to have gone through the exact same situation. (The rest of them never even attempted to do a short sale.)

Previously listed as a short sale that went into Contingent Upon Lenders Short Sale Approval, Foreclosed on months later, Withdrawn and then put back up for sale as an REO. For the same or lower price months later!

I obviously do not know the details of the other short sale proposals but the similarities are pointing to a trend here.

Is Bank of America just racking up service fees to Freddie Mac with no intention of actually getting short sales approved on these particular loans knowing that Freddie has a blank check from the U.S. Taxpayer?

Anybody else seeing this?

Thanks!

Tags: America, Bank, Freddie, Mac, of

Views: 101

Replies to This Discussion

I have personally always maintained that BofA intentionally stretches out the short sale process, makes multiple counter offers even when buyers have accepted prior counters, the whole enchalada.... strictly as an additional source of revenue. BofA (and other servicers) are paid whether or not the loan performs, servicers assess late charges and other fees, inspection fees, BPO fees, legal fees, all of it is paid to the servicer before the investor is finally paid. It's a racket. Bank of America remains at the top of the list for this sort of exploitation.
PS - it's not just FreddieMac loans.
Thanks Wendy... the Servicer Fee side business is more then obvious with B of A...

What's getting me riled up on this is the fact that Freddie Mac basically has a blank check from the U.S. Taxpayer and it appears that B of A is exploiting this. I'm seeing examples where short sales were foreclosed on and put back on the market for less. Loss of money not even calculating the Time Value of Money from receiving proceeds months, months later from when they could have accepted the short sale...

If other investors want to continue getting serviced up the you know what... whatever. But something subsidized by the U.S. Taxpayer should be a different story.
Maybe a year ago when I had to touch a freddie mac deal, I learned of a couple of things: Freddie Mac is for homeowners - the guy moves out, rents the place, nope, done. Freddie Mac will not entertain a short sale if it is not a homeowner (anymore) no matter what the loss. Now, doesn't that sound like the gov't that we know and love? No matter how much the taxpayer will lose, they will do the "right thing" and screw over everyone. So, that is principle 1 for freddie.

2. even if you can absolutely prove that you never got a notice requesting documentation (and I know of a case where the proof was irrefutable), if you miss a deadline to give the docs, Freddie Mac will never ever ever entertain doing a short sale for that property/owner again. Done.

I do get freddie mac from time to time in equator - I really don't see enough to have anything to say about them - I get fannie mae far more and what happens there is, therefore, easier to track - and it is all over the map, of course.

I would love to have the stats on every property that BofA takes back instead of allowing to short sale. I've had too many that were excellent deals for the investor and just blown out of the water. I am sure that the graphs look real ugly from the tax payer standpoint (Oh, and take these graphs and add in - because I'm sure the gov't wouldn't - all the money lost while the property sat before REO sale.. taxes, insurance, whoever handles the account, etc.). However, in Obama's quest to clean up the financial world, he explicitly exempted Fannie and Freddie. (Ergo, what the heck is the point???) Hmmm..

A common problem that I run into when a realtor, seller, buyer call me is that they expect BofA (freddie, fannie?) to be logical, rational and human. Nope. Don't care. It is their little world and real world facts are generally irrelevant. They are all nicely paid to do what they do....
Countrywide and Bank of America both serviced loans owned by Freddie. The investor calls the shots. If they figure the cost of a short sale is more than that of a foreclosure, they will foreclose.
@ Joe -- Thanks for the excellent response. Glad to see somebody else gets what is going on.

joe beauchamp said:
Maybe a year ago when I had to touch a freddie mac deal, I learned of a couple of things: Freddie Mac is for homeowners - the guy moves out, rents the place, nope, done. Freddie Mac will not entertain a short sale if it is not a homeowner (anymore) no matter what the loss. Now, doesn't that sound like the gov't that we know and love? No matter how much the taxpayer will lose, they will do the "right thing" and screw over everyone. So, that is principle 1 for freddie.

2. even if you can absolutely prove that you never got a notice requesting documentation (and I know of a case where the proof was irrefutable), if you miss a deadline to give the docs, Freddie Mac will never ever ever entertain doing a short sale for that property/owner again. Done.

I do get freddie mac from time to time in equator - I really don't see enough to have anything to say about them - I get fannie mae far more and what happens there is, therefore, easier to track - and it is all over the map, of course.

I would love to have the stats on every property that BofA takes back instead of allowing to short sale. I've had too many that were excellent deals for the investor and just blown out of the water. I am sure that the graphs look real ugly from the tax payer standpoint (Oh, and take these graphs and add in - because I'm sure the gov't wouldn't - all the money lost while the property sat before REO sale.. taxes, insurance, whoever handles the account, etc.). However, in Obama's quest to clean up the financial world, he explicitly exempted Fannie and Freddie. (Ergo, what the heck is the point???) Hmmm..

A common problem that I run into when a realtor, seller, buyer call me is that they expect BofA (freddie, fannie?) to be logical, rational and human. Nope. Don't care. It is their little world and real world facts are generally irrelevant. They are all nicely paid to do what they do....
@ Jerry... In scenario 1 the "investor" knew there was no shot that the property was worth more then $135,000... therefore asking for the additional $10,000 cash contribution from the seller. I've closed two other short sales in that neighborhood and working on two more.. I know exactly what the appraisals are coming in at and so did the "investor". So.. not sure how an investor could figure out that a $145,000 payoff is "higher" then a $134,900 payoff 4 months later.

Scenario 2 -- Property could have possibly appraised for $245,000 and the buyers agreed to meet the "investors" request for an additional $10,000 added to the original agreed upon price. This could have been closed over two months ago.. instead.. now the "investor" is still sitting on a property listed for $243,500. Monthly association dues are north of $400 a month plus taxes, insurance, servicer fees, etc...

So what you are saying is we have somebody with a blank check courtesy of the U.S. Taxpayer that can't determine the higher payoffs?

Jerry A. Ringo said:
Countrywide and Bank of America both serviced loans owned by Freddie. The investor calls the shots. If they figure the cost of a short sale is more than that of a foreclosure, they will foreclose.
Case in Point:

Fannie, Freddie and FHA REO Inventory Increases 13% in 2010 Q2.

I can think of a few reasons why... ;)
I find it hard to believe that more agents have not come across this situation where Freddie Mac just flat out denied a good short sale and put the property back up for sale for less.

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