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  Janet Nation October 28, 2010 at 4:05pm

  You win some and you lose some, I feel your pain.
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  Mike Love October 28, 2010 at 3:44pm

  Funny, I had the same negotiator and he dealt with the situation in the same way. I did not get it. Isn't his job to mitigate loss. I told him he was asking $20,000 than what the property is worth. I did my own BPO which justified my point and he made it seem like it was so irrelevant. If nothing else all he had to do was look at DOM. It is becoming more prevalent for negotiators to say if we don't get what we want, LET IT FORECLOSE!!!!! Don't they get paid to make deals work toward a win-win-win situation.
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  Steve Early October 9, 2010 at 3:40am

  Hi Randall:
  
  We run into this a LOT and the only way we have been successful in fighting a bad BPO is to provide more recently sold comps that show they are wrong. The results are seldom in our favor, however. This isn't just a Citi problem. With us it has happened with Bank of America, GMAC, Wells Fargo ... you get the picture.
  
  I learned from a Bank of America insider that loans may be individual instruments, but they were often sold off in blocks. Each block of loans, as I understand it, may have stipulations associated with it that grant the servicer of the loan no discretion when it comes to negotiating out a short sale. Others provide the servicer with the ability to use their discretion within certain guidelines.
  
  {turn conjecture on}
  I believe that some of these blocks that provide the servicer with no discretion to negotiate are either insured or have credit default swaps (CDS) covering them - insurance which isn't really insurance, but has the same effect. When a lender comes back with an insane value, it may be an indication that they are locked in on that figure. The servicer has essentially been instructed to get a certain amount or let it foreclose. If they accept your offer that is $30,000 lower, they "lose" $30,000 plus any commissions and closing costs that get factored into the deal.
  
  If they let the property go to auction, now the mortgage has just gone bad and the insurance policy or CDS kicks in. It is my belief that this allows them to break even or earn a profit regardless of what the property sells for at auction.
  {turn conjecture off}
  
  We actually received an email through the lender's negotiator this week from the investor which said (I'm paraphrasing) "We don't agree with the BPO it's too low. We believe the value of this property is $192,000 and are countering the offer at that price." The counter is $32,000 higher than the SERVICER's counter-offer!!
  
  This happens too often for it to be a dumb mistake. These banks are just not that stupid that they would foreclose on a property, and watch it go to auction for $20-30,000 less than they could have gotten on a short sale. They HAVE to be making money by foreclosing, and the only mechanisms I can think of for them to do that are insurance policies or a CDS. I am betting on the CDS because it is a lightly regulated instrument which has virtually no reporting requirements.
  
  Now that I've demoralized you, I'll go back to the original question: when we have gotten some downward movement, it was always because we were able to supply additional comps that showed they were out of their minds.
  
  Good luck!
  Steve