There were a lot of questions and comments on the featured post- Is Your Loan Modification Or Short Sale Being Turned Down? - that I wrote last week. That post was reblogged 36 times and it keeps on going. Important information needs to be spread- education is key. The more that we get important information out to agents and consumers, the more empowered we will all be during these next few years of doing short sales.
When the lender who is the servicer; also known as the asset management company blames the investor you can take it to the next level, call their bluff- so to speak.
Let me give you a case in point. This one is one that happens often. Please bear in mind this won't work with every servicer. I preface this post that this has to do with Florida state which is a deficiency and judicial state.
- The loan was originated with Indymac. There is only one loan on this property.
- Indymac is no longer a viable lender.
- One West Bank is handling Indymac files.
- One West Bank is called the Asset Management Company or Servicer. Either terminology is commonly used.
- FDIC owns the note on this file. FDIC is called the investor. Of course, there are shareholders.
- Our Seller is an attorney.
- The negotiator from One West Bank processes the file quickly.
- The buyers- Husband is an agent and wife is an appraiser. Purchase price accepted by One West Bank= $480,000 and no reduction in commission.
- The negotiator is excited that she has her approval in for the property and quickly emails us the demand letter.
We always forward our demand letters on to our sellers and allow the sellers to decide what their next step will be, consult with their attorney, etc.
We have a clause in our short sale addendum that our attorney drafted for us to protect our seller in the even they can not perform by the terms demanded by their lender. It is our sellers' walk clause.
Our seller informs us that he will not close without the deficiency removed. One West Bank has left their pursuing deficiency in the demand letter according to Florida State Law. In Florida, a deficiency may be pursued up to 5 years from the date of the closing.
Nestor contacts the negotiator to let her know not to get so excited so fast. The terms are not agreeable to our seller. One West Bank ( Indymac) must remove the deficiency clause and allow our sellers to be free and clear of any future judgments or deficiencies.
The negotiator says, "We can not do that because it is a Florida state law that mandates that we have the deficiency in the demand letter." Excuse me? The Florida law has nothing to do with whether you remove the deficiency or not. You are using the Florida law as your scape goat so that you don't have to remove the deficiency paragraph. We are not that stupid. You can negotiate even when the law says you can pursue the deficiency. The law does not state that you as the creditor HAVE to pursue it.
Nestor tells her that she must get this waived. She says it will take her about a week to see if her supervisors will allow her to remove this paragraph. The answer she brings back is that the investor will not allow One West Bank to remove the deficiency!
Now, if you read my post about, Is Your Loan Modification or Short Sale Being Turned Down? you know that the sevicer; One West Bank is blaming the investor who is the note owner for not releasing the deficiency.
Why would they be blaming the investor? Because of the PSA agreement being so vague in dealing with protecting the investor's best interests. If the investor wants to seek a deficiency later on and finds out that the servicer released it- they could sue the servicer for the loss on his investment. It has nothing to do with the investor themselves, it has to do with the servicer's fear of the unknown and the PSA being so unclear in this regard.
So what to do?
You go direct to the investor. We knew this to be FDIC. So Nestor starts his research into who all the players are in the FDIC, procures all of their email addresses and phone numbers. Then he proceeds on to start calling and emailing. Nestor has the patience of Job when it comes to this sort of research and calling. Not me, that is why we make a good team.
He gets clear to the top of FDIC and speaks to a decision maker there. At the same time he is also still insisting with the negotiator that she must release the deficiency clause and she is sticking to her guns, she is not budging and says her hands are tied by her managers.
FDIC is shocked that we can not get this deficiency removed based on the hardship of our clients, the sellers and the great offer price on the property. FDIC states this is NOT their policy and they have NOT insisted upon this. Nestor gives them the file, the case, the names, etc.
As Nestor is working through the maze and connecting the dots within 2 weeks we get an email from the negotiator that suddenly One West Bank's policy has changed and that she now has the authority to remove the deficiency clause from the demand letter.
This proves the point that this was a policy based in fear of the servicers and not the policy of the investor.
We closed on the property 2 weeks later and our seller has no deficiency and is free and clear of any future consequences to his short sale decision. Needless to say, the seller being an attorney was amazed at our tenacity and the way that Nestor did not let go and give up. Never give up.
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Short Sale Strategies- When The Lender Blames The Investor- Case In Point-was first published on South- Florida-Luxury-Living.com.
Copyright © 2009 By Katerina Gasset, All Rights Reserved.*Short Sale Strategies- When The Lender Blames The Investor- Case In Point*