Posted by Wendy Rulnick on December 27, 2009 at 6:00am
A homeowner recently emailed me quite concerned about a letter she received from Aurora Loan Services. She had a second mortgage with them for $29,700 at 12% interest. She had never been late with her payments and was not selling as a short sale. The Aurora letter stated she could pay her loan off now at about one-third what was owed, and would have no further obligation on the note!Dear Customer:Aurora Loan Services, as a servicer of your loan, has been authorized by the owner of your second mortgage to offer an opportunity to pay off your loan at a reduced amount.Upon receipt of the reduced payoff funds in the amount of $10,400, your loan will be considered paid in full. Aurora Loan Services will report your account paid in full to the applicable credit reporting agencies and send the necessary documentation to release the second lien from the public records.If you elect tp participate in this special payoff offer, Aurora Loan Services will file an IRS 1099-C Form for the amount of debt forgiveness.Please be advised that certified funds (in the form of a cashier's check or money order) must be received by Aurora Loan Services no later than the close of business on January 29, 2010. If the funds are not received by this date, the offer made in this letter will be rescinded and considered null and void.Certified payoff proceeds must be made payable to and remitted directly to Aurora Loan Services. If you have any questions, please contact one of our representatives by calling 866-459-3059Is this offer for real? Apparently so, as the borrower called Aurora Loan Services and confirmed it. They said they were doing it "to help people" and their phones were "ringing off the hook". And what a deal - even with tax consequences, it seems to make sense to pay $10,400 and save almost $20,000 in cancelled debt and interest payments! I advised the borrower to consult with an attorney, as she questioned sending in a cashiers check with only the letter to prove her mortgage would be paid in full.Why is Aurora really doing this? Perhaps the investor on this loan is looking for some quick capital to cover losses? If you have any similar experiences with Auorora Loan Services, report it here.It's Wendy!Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.Destin FL Real EstateDestin Short Sales & Pre Foreclosure Help.Read Wendy's Destin Real Estate BlogCall toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204Email Wendy: itswendy@rulnickrealty.comWendy is a short sale and pre-foreclosure specialist and has been featured in "Kiplinger Personal Finance Magazine" and "Florida Realtor Magazine". Call Wendy Rulnick, Broker/Owner,to list and sell your home or condo on the Emerald Coast of Florida in Walton, Okaloosa and Santa Rosa County- Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field.
I wonder what the "criteria" is for a borrower to be chosen into this offer?
Questions?? 1) How long has this Aurora been the servicer of the loan? 2) Wonder who the investor is? and 3) What is the criteria used to determine who receives this offer from Aurora?
From the letter, it sounds like Aurora won't send a short payoff amount, that is already negotiated with the investor, until they receive funds from the borrower, right? Therefore, Aurora is basically using the clients money to accept the offer from the investor.
I think this Aurora, who has probably been the servicer on the loan for quite some time, went to the investor and sold them on this concept. I dont believe it was the other way around.
Written all over this, I see SHORT SALE WHOLESALING.
Whatha think?
Hey Wendy and Bryant,
I'm working right now with Aurora Loan serviving on a puppy transaction, anyway
I believe that the answer for this is because the new owner(s) I don't know if it is a hetch fund or not or it is really aurora loan serviving the owner of the 2nd mortgages bought many 2nds as cents from a dollar and still with that they are still earning some profit, maybe they are doing that, that's something that Servicer Z or Lender X was doing as a new owner of many loans or servicer, but I knew that was a Hetch Fund involved on that, they wanted to refinance and giving to their actual customers a great discount if they refinanced their home, for instance Lender X had many loans on their hands and those loans were bought for cents of a dollar, now how they did profit? easy ! if the actual borrowers owed for instance $180,000 on a home and this new lender X had this new loan for $130,000.00 they offered to the same borrowers to refinance with an authorized broker or any lenders they wanted and they will give a discount in their pay off instead to be $ 180,000 what was the actual pay off could be $160,000, so actually for the actual borrower will have a discount of $ 20,000 in his/her pay off just to refinance and the lender x will have a profit , everything depended of the negotiator and what was agreed , still they were profiting $ 30,000
does it make sense? that's an example that I think that they're doing or maybe not, but that could be the possibility ! :)
Wendy, Smart move by this investor. With a 12% foreclosure rate in Florida it makes sense to settle out these accounts now. They can then lend the money back out where they are in a better equity position.
Wendy, I wish I have same letter come to the mail. I will throw a big party. Too good to be true. I would take advantage of this offer unless I have no equity on the house.
Kent - Seems so to me, too... Something serious must be going on with the investor. The borrower said their tax implications might be $2700, but still- that probably would be eaten up by interest payments... The other question for the borrower is- do they have the $10,000 now? I wish someone would call me up and make me the offer, too!
Seem like a good deal for the borrower as long as they consult with their tax advisor first.
Aurora may be in immediate need of cash and therefore the supposed offer "to help people"; even those people who've never missed a payment or been late.
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Questions?? 1) How long has this Aurora been the servicer of the loan? 2) Wonder who the investor is? and 3) What is the criteria used to determine who receives this offer from Aurora?
From the letter, it sounds like Aurora won't send a short payoff amount, that is already negotiated with the investor, until they receive funds from the borrower, right? Therefore, Aurora is basically using the clients money to accept the offer from the investor.
I think this Aurora, who has probably been the servicer on the loan for quite some time, went to the investor and sold them on this concept. I dont believe it was the other way around.
Written all over this, I see SHORT SALE WHOLESALING.
Whatha think?
I'm working right now with Aurora Loan serviving on a puppy transaction, anyway
I believe that the answer for this is because the new owner(s) I don't know if it is a hetch fund or not or it is really aurora loan serviving the owner of the 2nd mortgages bought many 2nds as cents from a dollar and still with that they are still earning some profit, maybe they are doing that, that's something that Servicer Z or Lender X was doing as a new owner of many loans or servicer, but I knew that was a Hetch Fund involved on that, they wanted to refinance and giving to their actual customers a great discount if they refinanced their home, for instance Lender X had many loans on their hands and those loans were bought for cents of a dollar, now how they did profit? easy ! if the actual borrowers owed for instance $180,000 on a home and this new lender X had this new loan for $130,000.00 they offered to the same borrowers to refinance with an authorized broker or any lenders they wanted and they will give a discount in their pay off instead to be $ 180,000 what was the actual pay off could be $160,000, so actually for the actual borrower will have a discount of $ 20,000 in his/her pay off just to refinance and the lender x will have a profit , everything depended of the negotiator and what was agreed , still they were profiting $ 30,000
does it make sense? that's an example that I think that they're doing or maybe not, but that could be the possibility ! :)
Aurora may be in immediate need of cash and therefore the supposed offer "to help people"; even those people who've never missed a payment or been late.
Any other thoughs?