Nationstar grabs the auction business from Auction.com with Homesearch.com
This will be halted pretty soon by regulators (if they are doing their job), as they should easily observe that this creates adverse incentive for Nationstar to interfere with the economic recovery, now that they have figured out a way to make 5% on every short sale that it forces into this captive settlement service. In addition to this being the most lucrative affiliated business arrangement without disclosure to flout RESPA, it also circumvents the listing broker/seller relationship, and sidelines the actual owner of the home--who in many cases is victimized again by a lender who shouldn't have made a predatory loan in the first place.
In conversations, Homesearch/Nationstar employees now refer to Nationstar as the "Seller," in blatant disregard for the most basic tenants of contract law, which establish that an owner is the Seller, and a lender is simply a lien holder.
Nationstar missed the opportunity to have this "offer-validation" tool be effective when they allowed Auction.com to sack this service with a whopping 5% "Buyer Premium," which effectively prevents this from being a market-leveling program. After all, if a competing bidder gets punished with a 5% payment which provides no value, it does nothing to search out the real value that might come from exposure to a third party channel for offers. Make no mistake, this is about servicer revenue, not about validating short sale offers.
Offers "procured" through these unknown channels always come from the Realtor community initially. Home buyers don't know or care about the existence of these unnecessary auction sites, because there is already a centralized marketplace for real estate that is one of the most well-known marketplaces in the country.
In spite of this, Auction.com and Homesearch trot out statistics to their investors that make it look like they are responsible for all of the offers that come through their channels. Nationstar ships out a required signpost rider that advertises the Realtor's listing as an "Exclusive Listing" by homesearch.com, even though they don't even possess a valid listing agreement in the first place--exclusive or otherwise.
If a Buyer places a good-faith offer on a short sale, they have the privilege of waiting for months for Nationstar to get around to it, and then they get to have their offer publicly flouted for johnny-come-lately bids. If none appear, Auction.com or Homesearch Seller and Buyer agreements allow them to make "house bids," by employees of the site, which drive up the price up beyond the market forces that determine actual value. This corrupts the appraisals that follow these transactions, since the appraiser is unaware that the auction results were tainted by bids that did not represent actual Buyers.
If Auction.com/Homesearch are unable to get a bid that nets them a 5% overbid, often they will re-run auction after auction, unconcerned about the delays and additional losses they impose on their investors, in the quest for the largest unearned settlement service that exists in the real estate business.
When we share these facts with Buyers in the short sales we represent, they are understandably unwilling to participate in this sham. Alternately, we have advised them to decide whether they would like to increase their bid after the results of the auction are determined. If the winning bid is rigged with a house bid, it will be cancelled anyway, but they won't be bidding against a phantom shill. If there is a higher bid placed on the auction site, and the Buyer wishes to provide a bid that is higher than the price paid by an auction bidder, the servicer would be ill-advised to refuse it, since they have a fiduciary responsibility to their investor to accept the offer best for their client, not just the one that has the best outcome for Nationstar/Homesearch.
If the regulators allow this to happen, short sales will simply result in greater losses to investors than they already do, and selling them will become 5% more expensive, without any value consideration added. Talk to your congressman/regulator broker about whether Nationstar should be allowed to compete in this dirty business in the first place. In any case, we shouldn't be advising our Buyers to compete against fake bids there.
Replies to This Discussion
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Permalink Reply by ElizabethWeintraub00697006LyonRE on
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I suspect that the reason Home Search uses "seller" to describe Nationstar is because some of those auction properties are indeed bank-owned and Nationstar is the seller.
I do see a reason for buyers to participate in Home Search if for no other reason than if they don't, and there are no bids, like a situation that just happened to me, they start over. If the buyer had submitted a bid, even $1,000, we would have received approval with a bid within a week. With no bids, Nationstar is starting the short sale from scratch. We've waited 2 months already for the auction, and now that the funny business is over, we're still back to square one.
BTW, telling buyers not to bid online is like telling little old ladies not to pick up pennies in the street; they can't help themselves.
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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I rarely represent Buyers but when I do, if a property is going to be involved in one of the on-line auctions, I continue to present properties that fit their criteria and are not subject to this nonsense. By servicing our buyers with properties that do not steal their money, our clients are better off.
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Permalink Reply by Sean Ryan on
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In this post, I am speaking about Nationstar/Homesearch transactions that are short sales. Even during these transactions, Nationstar/Homesearch refers to the lender as the Seller, even though they are just a lien holder.
If Homesearch doesn't get a bidder that is subject to the buyer's premium (the original Buyer is exempt) they will often rerun the auction until they do, so it isn't necessarily the case that they will end the process and approve it if an offer is received. I am not advocating that new Buyers avoid the auctions, that is up to them. I am merely pointing out that the original (selected) offer is probably ill-advised to bid against itself based on the fact that there is no way to be sure that Nationstar is not placing fake bids against the original Buyer to bid the property up above market value. The fine print of their disclosures (just like Auction.com's) state that they engage in this practice. -
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Permalink Reply by Yalda Alawi on
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After 5 months of negotiating and jumping through hoops with Nationstar, they have 'soft declined' our offer and are now making our buyer going through this Homesearch BS. I have all parties ready to participate (as if we really have an option) but I am curious how long will this take now?
So we get it all set up by next week and the 'auction/bid' begins. Once the buyer submits the offer, and it gets 'accepted' (I doubt we will have another buyer, especially one higher than the one we have in hand have been working with for over 5 months), then what? Will it be approved and set to close that quick?
Or am I just going to face another hellish short sale (my last one for sure! - 6 years of this stuff is not worth it anymore)
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Permalink Reply by Stephanie Hart CA 310-930-2342 on
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How is this going for you? Any update?
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Permalink Reply by Nicole Espinosa on
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In Texas homesearch is not big at all, it seems like they jumped ship from auction.com because of the lawsuits ect. I looked online at the website and they have only a handful of properties in the entire state of texas, which tells me that this is all new and they are trying to see what they can get away with, just like auction.com.
I have a file right now that the BPO came back 5k lower than our offer and it was disclosed to us the price. Then we got a message in equator saying our offer was to low. When i called the negotiator asking what happened they said that the BPOS can be influenced so when they come back they "enhance" the value and then that is their new value. Yes he really said that , a BPO that THEY ordered not me.
So now they are forcing my client through the homesearch program!! Complete fraud. Even when my offer is a lot higher than THEIR Value they still are trying to make up something so it goes through this program..
Has anyone been successful in getting the homeowners out of this new program?
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How is this going for you? Any update?
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Permalink Reply by Jason Childs on
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We have a short sale with a buyer who was getting ready to do their appraisal when Nationstar told us the offer was at value. They then told us we had to run it through the auction. They wont start the auction until Feb 6th and it has to run 21 days. This is complete BS. The seller and buyer want to move forward, but we are being held hostage by the auction. The logic police need to raid these lenders and slap them upside the head. We had a similar experience with Ocwen last year where they stalled the sale for 8 months. If anyone knows a way to bypass this auction I would love to know how so we can sell this home. The second mortgage company approved it and their approval is going to expire while we wait for these geniuses. Sorry for the crazy upset rant but sometimes these banks need a reality check.
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How is this going for you? Any update?
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Permalink Reply by Brenda Houghton on
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I suggest filing a CFPB complaint for every Nationstar short sale that mucks with the actual value of the property and creates a danger of foreclosure for the seller. Been there, done that, closed it - no auction.
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