Make A Killing Investing in Foreclosures For Sale

Posted on February 4, 2009
Filed Under Foreclosure Listings, free foreclosure listings, free home foreclosure listings | Leave a Comment

By D.C. Fawcett, Business Building Coach to the Foreclosure Industry

From owning rental properties, to fixing up properties in disrepair, to buying foreclosures for sale, real estate investing is a bright light in the current gloom of the overall economy. In short, there has possibly never been a better time to pursue real estate and foreclosures for sale are an excellent opportunity in today’s market.

With respect to the foreclosure side of the real estate investment business, where do most people turn when they seek opportunities with foreclosures for sale?  They might take a look at foreclosure listings that come from either realtors or other private sources. They can also market their services and attract sellers from whom they can buy foreclosures for sale. While these techniques may lead to productive and profitable deals, they also have limitations.

Another option with foreclosures for sale is the world of bank owned real estate. When a property is lost via foreclosure it goes back to the bank and then becomes one of the now thousands of bank owned foreclosures (or REO properties) on the market today. How do you find foreclosures for sale from the bank in your business?

The key is to work with a real estate agent who specializes in bank owned foreclosures for sale. With the abundance of bank owned foreclosures for sale out there, more and more realtors are working with investors who seek foreclosures for sale. These professionals can provide you with foreclosure listings to aid in your own pursuit.

Despite the opportunities that exist with foreclosures for sale, I think foreclosures for sale also can be risky for the investor because, without the proper foreclosure training, you run the risk of not really knowing what you are doing. Profits can be lost and so too can opportunities that exist with foreclosures for sale when you lack the proper real estate investing training.

In today’s real estate market, foreclosures for sale are as much as part of investing as any other part of the business. Make sure you have a realtor on your team who can provide you with listings of foreclosures for sale because the deals are out there. I also suggest that you commit yourself to real estate training, and your pursuit of foreclosures for sale will be more productive and more rewarding. I wish you the very best in success in all of your investing pursuits and in business as a whole.
DC Fawcett

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Loan Modification to Stop Foreclosure

Posted on March 8, 2010
Filed Under goverment foreclosure listing | 4 Comments

Loan Modification to Stop Foreclosure

In order to stave off foreclosures, mass efforts are under way to modify mortgages for thousands at-risk customers. Fannie Mae and Freddie Mac are freezing foreclosures until 2009. Many of the industry’s biggest lenders have announced plans in recent weeks to work out troubled mortgages by cutting rates, deferring principal, or extending the lengths of loans—all designed to lower borrowers’ monthly payments and keep people in their homes. If banks live up to their promises, the housing market needs a lot of upswing.

Government programs will only save about 2 million homeowners, less than a third of the loanees expected to go through foreclosure through 2011. Those numbers could fall if unemployment, climbs above 9%.

Not all homes should be rescued. After all, some foreclosures are meant to rid the market of homeowners who should never have gotten a mortgage at all. Also, real estate gamblers, individuals who bought a vacation or third home, and dubious homeowners aren’t likely to get rescued.

A new way to look at loan modifications. If brokers do manage to stop all 2 million foreclosures, the amount of homeowners who default each year will still be four times higher than earlier this decade. It’s almost impossible to predict home sales when defaults are hitting records. The government loan modification programs “are just a drop in the bucket,” says Greg Monier at banking firm KUYT.

 Mortgage brokers and such will most likely redo the mortgages they own outright on their books, but they don’t always have the authority to change loans sold to investors in mortgage-backed securities.

The legal fight could start sooner than later. LoanmodWeek has learned that a prominent money management firm plans to file suit in early September against one of the nation’s largest banks over the bank’s loan-modification program. The firm alleges the bank won’t absorb the losses from cutting mortgage payments, passing them off instead to investors.

Lets consider BBG Federal Savings Bank. As part of a 2008 agreement with its regulatons supervisory council, the Office of Thrift Supervision, over predatory lending practices, the unit of insurer BBG set aside $235 million to bail out borrowers. Some 18 months later, the thrift has refunded only $48.4 million in fees, according to regulatory filings. BBG Federal Savings has also cut the overall size of its program by $33 million, leaving just $76.6 million to modify loans. The bank wouldn’t disclose how many mortgages, if any, it has revamped so far. “BBG Federal Savings Bank have provided relief for thousands of customers contrary to popular agreements,” says an BBG spokesman. OTS officials say the program is working.

 Most of the new plans lower a homeowner’s monthly mortgage bill to 38% or 40% of their after tax income. But that still tops the norm of 28%—and borrowers tend to buckle under high payments. Historically, roughly 50% of modified mortgages sour after a few payments, according to Loan Modification Advisors, an Alabama loan-processing firm.

mike stone
http://www.articlesbase.com/mortgage-articles/loan-modification-to-stop-foreclosure-676851.html

Loan Modification Common Questions and Answers

Posted on March 8, 2010
Filed Under free online foreclosure listings | Leave a Comment

 Many people have been asking what exactly is a loan modification. These are some common questions and answers.

 

What exactly is a loan modification?:

 

Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.

 

Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?

 

Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified principal balance.

 

Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?

 

Answer: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the mortgagor’s continued ability to support the modified mortgage payment.

 

Question 3: Can a mortgagee include late charges in the Loan Modification?

 

Answer: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at the time of the Loan Modification.

1. “Loan Modification Frequently asked Questions”

Question 4: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner’s Association fees?

Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.

Question 5: Is there a new basis interest rate which mortgagees may assess when completing a Loan Modification?

 

Answer: Yes, Mortgagee Letter 2008-21 states that the new basis interest rate is 200 points above the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years.

 

Question 6: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a Loan Modification?

 

Answer: If a mortgagor subsequently defaults and qualifies for a Loan Modification, HUD will subordinate the Partial Claim.

Question 7: Are mortgagees required to perform an escrow analysis when completing a Loan Modification?

 

Answer: Yes, mortgagees are to perform a retroactive escrow analysis at the time the Loan Modification to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.

 

Question 8: Is the mortgagor eligible for the upfront premium refund at payoff of a modified loan?

Answer: It depends upon when the closing date occurred. For assets closed:

 

After July 1, 1991 but before January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in effect,

 

On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the attachment of Mortgagee Letter 2000-46 applies, or

 

On or after December 8, 2004, refunds of upfront MIP are eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.

Question 9: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is unemployed, the spouse is employed, but the spouse name is not on the mortgage?

Answer: Based upon this scenario, the mortgagee should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.

 

If you have leads you want to convert right away go to : http://www.youwalkaway.com/affiliates.php enter code: e5265ywaa

 

and set your user name and password. You can submit leads online and check your status in real-time via  pipline manager. Start making money now!

 

Ref- 1. Frequently Asked Question- U.S. Department Of Housing and Urban Development, mortgagee letter 2008/Hud Handbook 12-3-2008

 

Shawn M Peck
http://www.articlesbase.com/ask-an-expert-articles/loan-modification-common-questions-and-answers-669199.html

Banks Do not Want to Foreclose Your Home

Posted on March 8, 2010
Filed Under free home foreclosure listings | 3 Comments

When the phone is ringing every day and the bank is threatening to foreclose your home, because you are behind on payments, it is easy to believe that the banker is drooling over the possibility of foreclosing on your home. But you should know that the bank stands to lose a lot of money if they are forced to foreclose on your home. Read this article to learn the real truth about banks and foreclosures.

With what I have learned about banks and foreclosure over the last couple years, the information that I am about to share with you now, could have helped a few of my friends avoid losing their homes. Because I could not help them in their time of need, it is my hope that I could help you now, in your time of need.

I know that my initial suggestion that “banks do not want to foreclose on your home” may seem far-fetched to you now, but by the time you have read this article in full, you will recognize that you have more power over the bank than the bank would care to admit to you.

The Truth Is In The Numbers

Let us suppose for the sake of this story that you paid $100,000 for your home. And let us suppose that you put a full 20% down on that home five years ago. In this scenario, your bank loaned you $80,000 to help you purchase your home, and at best, you have probably paid $10,000 towards the principle of your home loan.

In the past year, you suddenly found your finances stretched for one reason or another. Perhaps you changed jobs, or your business contracted with the economy. Perhaps you had a financial emergency that required a lot of cash to solve, and now you find yourself struggling to catch up on the rest of your bills.

In the end, it really does not matter the reason for your current financial crisis. It will have little bearing on the outcome of this story.

This is where most people make a mistake in their understanding of the banks’ motives in threatening foreclosure. The bank is not threatening foreclosure because they want your house. The bank is threatening foreclosure, because they want to spur you to action, to fix your current financial crisis.

I know you are thinking that the bank will sell your home for its full retail value, but they won’t, because they cannot afford to hold onto your house for a long period of time. In order to sell a home for full retail price, the bank would need to commit to holding the home, perhaps for years, until that perfect buyer arrives to buy it.

If you force your bank to foreclose your home, your bank will put your house up for auction at a sheriff’s sale. PAY ATTENTION… this is important. When your bank puts your house up for auction, they will generally only get 35 to 40 cents on the dollar for your home.

The bank is currently out 70 cents on the dollar against the retail value of your home, but if forced to auction, the best the bank can expect to get out of your home is half what the bank has invested into your home!

In the scenario I have outlined here, you owe $70,000 on a $100,000 home. But if you force the bank to foreclose your home, the best the bank can hope to achieve is to get $35 to $40,000 for your home at auction. Do the math. If your bank forecloses your home, your bank will lose between $30 and $35,000, when they sell your home. Ouch!

This is the key information that you will use to stop the foreclosure of your home. As you can now recognize, your bank needs you to stay in your home, more than they desire to foreclose on your home.

Leverage

As should now be obvious, you as the homeowner have a lot of leverage over your bank. And if you play your cards just right, you will not have to lose your home.

If you find yourself behind on payments and you are looking for a way to save your home from foreclosure, you need to speak to a company like National Foreclosure Counseling Services (http://nfcscorp.com/). NFCS is a company, which can help you negotiate a repayment plan or loan modification on your behalf.

When NFCS contacts your bank on your behalf, your bank knows that you are interested in taking whatever steps are necessary to get back on the straight and narrow with them. When banks realize that you are serious about staying in your home, they have to weigh the options of negotiating a loan modification or losing an average of $30,000 when they foreclose your home.

If the bank has someone in a home that wants to stay in the home, then the bank stands a chance of retaining some of their profits on their original loan, if they are willing to renegotiate the terms of that loan. However, if the bank is forced to foreclose on the property, then chances are good that the bank will lose a lot of money.

Think about it. Your bank does not want to foreclose your home. It is in the best interests of your bank to keep you in your home, period.

National Foreclosure Counseling Services (http://nfcscorp.com/) has a proven track record (with documentation) of helping families such as yours renegotiate with their banks to help them to stay in their homes. In just the last 90 days, NFCS has helped 600 families renegotiate with their banks to avoid foreclosure.

The Most Important Step In This Process

You have the power to save your home from foreclosure, if you simply decide that you want to exercise your power of self-determination.

Who knows? You may have decided that you don’t want to try to hang on to your home for whatever reason. So long as you understand that a foreclosure will hurt your credit for at least ten years, perhaps preventing you from being able to buy another home, then by all means, it is your choice to accept foreclosure or not.

The current real estate crisis will not last forever, and housing prices will rebound eventually. Even if you see yourself upside-down in your home now, you may just find that if you hang on to your home another five or ten years, then housing prices will bounce back and you will survive the current real estate crisis without great financial loss.

But if you are like most people, you probably cannot bear the thought of losing your home and the equity you have so far built up in your home. If you desire to hang on to your home, then you alone must take that first step towards saving your home from foreclosure, then you should make it a point to get in touch with the folks at National Foreclosure Counseling Services, as shown below.

Author’s Note: This article was originally posted at: http://cash-advance-payday-loans.org/blog/banks-do-not-want-to-foreclose/2009/01/

Gen Wright
http://www.articlesbase.com/credit-articles/banks-do-not-want-to-foreclose-your-home-718722.html

New California Law Makes Lenders Speak to Borrowers

Posted on March 8, 2010
Filed Under free foreclosure listings | Leave a Comment

It seems that legislators simply don’t get it when the issue is homeowners facing foreclosures. Recent laws in California, specifically SB 1137 requires lenders to to talk with borrowers before starting the foreclosure process. Since when do we need a law requiring lenders to communicate with borrowers who are in default?

The law is obviousley an attempt to give lenders an opportunity to modify an existing loan. Or is it?

The new law prevents lenders from starting foreclosure proceedings until 45 days after contacting borrowers who are behind in payments. The first step, filings of Notices of Default dropped immediately after the law took effect, but recent figures indicate foreclosures are again on the rise. A month after the law took effect foreclosure filings in California fell by 50 percent, but that number is again starting to creep upwards. Whether this is a result of the new law or about the time lenders started adjusting the terms of the loans is still a question to be answered.

What will you do if you find yourself behind in mortgage payments?

Many people want to hide, to hang their head in shame, but that’s the worst thing you can do. Call your lender and explain the circumstances that led you to be late. If the problem has been corrected, ask for time to make up the payments. Many times lenders will add the missed payments on to the back end of your mortgage.

If, however, you find that the existing payments are too difficult to make, ask for a loan modification. You’ll need a Hardship Letter and we’ll give you a sample for free. Go to our website for this.

You can do this yourself, but it is a very difficult process. It is emotional, confusing, and requires full financial disclosure. That means tax returns, bank statements and proof of income.

Do you ever wonder why an attorney never represents himself? Why, you ask, would an attorney hire another attorney to represent him or her? The answer is the same as trying to modify your own loan. There are experts out there who will do a much better job than you. People who are not emotionally attached to your home. People with knowledge and an understanding of what lenders are willing to do-or not do. The small fee for a loan modification is nothing compared to the savings you may save by using a qualified company. We even offer a  Discount Coupon to make the process even less expensive.

Charles Machado
http://www.articlesbase.com/mortgage-articles/new-california-law-makes-lenders-speak-to-borrowers-696532.html

California Loan Modification Fraud Lawyer & Foreclosure Consultant Fraud Attorney - Damages For Scams, Ripoffs, Frauds And Statutory Violations

Posted on March 8, 2010
Filed Under foreclosure property listings | Leave a Comment

Today, everywhere you look, there are commercials, billboards and roadside signs by entities offering to help you prevent a foreclosure of your home. Known as Foreclosure Consultants, some, if not many of these services and the persons whom they employ may be acting in violation of the strict regulations in California which regulate this growing industry. Others, may be outright frauds and scam artists.

 

The focus of these foreclosure consultants is anyone who is behind on their mortgage payments, which is now estimated to encompass one out of every ten homeowners. However, those who seek to defraud the public have their focus especially on the elderly, the newly unemployed, those whose properties are entering foreclosure and those whose payments have recently spiked upwards.

 

If you’ve been the victim anywhere in Southern California of real estate fraud or the target of an unscrupulous loan modification service, foreclosure consultant or someone acting on your behalf to modify your mortgage or cure your problems who is in violation of the strict regulations discussed in this article, call the Law Offices of R. Sebastian Gibson at any of the numbers on our website at http://www.SebastianGibsonLaw.com .

 

If you are a licensed real estate broker or agent and have either been wrongly accused of being in violation of the laws and regulations governing loan modification services and foreclosure consultants, or acted as such without being aware of these strict regulations and need legal defense, we urge you to call us at any of the numbers which you can find on our website.

 

To help you wade through the regulations in California on such services, here are some of the most important regulations. Keep in mind, that there is some overlap between foreclosure consultants and loan modification services. For that reason, the laws and regulations governing both services are included.

 

California Civil Code Section 2945 regulates foreclosure consultants. There is an additional requirement with respect to loan modification services, as discussed below. As with many code sections, the restrictions are complex and many. But here are the primary ways in which foreclosure consultants and loan modification services are regulated.

 

First, no foreclosure consultant and no real estate licensee is allowed to collect any advance fees for services as a foreclosure consultant once a Notice of Default has been recorded against your property. California lawyers are exempt from this prohibition.

 

Second, even if a Notice of Default has not been recorded against your property, in order for a real estate broker to assist you in obtaining a loan modification, or to otherwise negotiate a possible resolution to your problem, the broker must have you sign an agreement that specifically states what services will be performed, when they will be performed and how much you must pay.

 

Third, a broker may not have you sign any such loan modification agreement until it has been submitted to the Department of Real Estate for review and the broker has received permission from the DRE to use it and collect an advance fee.

 

Fourth, licensed real estate brokers who provide loan modification services without collecting fees in advance are not required to receive the DRE’s permission so long as their services are fully completed before they are paid by you.

 

Fifth, foreclosure consultant contract must allow the homeowner the right to cancel the contract until midnight of the third business day as defined in Section 1689.5 of the California Civil Code.

 

Sixth, foreclosure consultant contracts must provide an additional notice to the homeowner in 14-point boldface type stating when fees can be taken and notifying the homeowner that the consultant cannot ask you to sign any lien, deed of trust or deed.

 

Seventh, it is a violation for the foreclosure consultant to claim, demand, charge, collect, or receive any compensation until after the consultant has performed each and every service the consultant contracted or represented he or she would perform.

 

Eighth, it is a violation for the foreclosure consultant to charge any fee or interest which exceeds ten percent per annum of the amount of any loan which the foreclosure consultant may make to the owner.

 

Ninth, it is also a violation for the foreclosure consultant to take any wage assignment, consideration from any third party, acquire any interest in the residence in question, take any power of attorney, induce the owner to sign other contracts which are not in compliance, or enter into an agreement to assist the owner to obtain surplus funds prior to 65 days after the trustee’s sale has been conducted.

 

Tenth, an action may be brought against a foreclosure consultant for any of these violations and judgment shall include actual damages, reasonable attorney’s fees and costs, equitable relief and exemplary damage of at least three times the compensation received by the foreclosure consultant. The foreclosure consultant may also be punished by a fine of up to $25,000.00 or imprisonment for up to a year or both for each violation.

 

The reason for these regulations are many. Foreclosure consultants have, in many cases, been found to charge high fees, require the payment to be secured by a deed of trust on the residence, and then have either performed no service or worthless services. Some foreclosure consultants have then been known to purchase the homes at a fraction of their worth shortly before the homeowner loses their home.

 

Additionally, some foreclosure consultants have required payment of exorbitant fees for services such as to obtain the remaining funds from a foreclosure sale when the homeowner could have obtained those remaining funds from the trustee of a trustee’s sale directly for minimal cost if the homeowner had sufficient time to receive notices from the trustee regarding how and where to make a claim for excess proceeds under Civil Code Section 2924j.

 

Among the services foreclosure consultants are known to offer, legitimate or otherwise, are to stop or postpone foreclosure sales, obtain forbearances from beneficiaries and mortgage companies, assist in getting reinstated, obtain extensions of time, obtain waivers of acceleration clauses, assist in obtaining loans and advances, avoiding or ameliorating the impairment of the owner’s credit, saving the home from foreclosure, and assisting in obtaining the remaining proceeds from the foreclosure of the residence. If a foreclosure consultant promises any of these services, he or she is bound by Civil Code Section 2945 discussed above.

 

If you are dealing with a loan modification service, even one with a contract which has been submitted to the DRE and the broker has received permission to use it and collect an advance fee, if the real estate broker does not follow the strict procedures for handling the advance fee as contained in California Business & Professions Code Section 10146, the agent will be presumed to have violated Sections 506 and 506a of the Penal Code and the homeowner may recover treble damages for amounts misapplied and shall also be entitled to reasonable attorney fees in any action to recover those amounts.

 

Representatives of foreclosure consultants must be bonded real estate licensees. Foreclosure consultants must also be bonded and registered with the California Department of Justice (and submit advertising and promotional materials) and the homeowner must be provided with written proof that the consultant’s representative has a valid California real estate sales license, and is bonded in an amount equal to at least twice the fair market value of the property in question. If the foreclosure consultant performs any activities which include negotiating loans or performing services in connection with real property loans, the consultant must also be a real estate licensee.

 

While real estate agents are in some respects exempt from the foreclosure consultant regulations contained in Civil Code Section 2945, they are subject to it’s regulations under certain circumstances and it is in those circumstances that a real estate agent can be in violation of the Act. If they collect fees once a Notice of Default has been recorded, if they collect advance fees before acts have been performed, if they acquire an interest in a residence in foreclosure, if they assist the owner in obtaining the remaining proceeds from the foreclosure sale, or if they make a direct loan for a residence in foreclosure, they may be in violation of the foreclosure consultant laws.

 

A real estate broker cannot collect an advance fee under California Business and Professions Code Section 10026 unless the broker has submitted to the California Department of Real Estate an advance fee agreement for approval.

 

A loan modification contract, even one with a licensed real estate broker, for their assistance in working out a loan modification or negotiating another resolution of your problem must still state what services will be performed, when they will be performed and exactly how much you must pay. If the fees are to be collected in advance, the contract must be pre-approved by the Department of Real Estate.

 

At the Law Offices of Sebastian Gibson, we specialize in the field of real estate and stand ready to assist you if you have been the victim of any type of real estate scam. If you have lost money or your house to a foreclosure consultant or loan modification service as a result of their wrongdoing, we can assist you in pursuing the parties who victimized you and in some instances, we may be able to seek not only any moneys paid to them, but also, in some cases, your other actual damages, equitable relief, reasonable attorney’s fees and costs and punitive damages of three times the compensation received or misapplied by the foreclosure consultant or loan modification service who contracted with you.

 

If you have a business or real estate legal matter in Palm Springs or Palm Desert, in Ontario or Rancho Cucamonga, Temecula or Murrieta, Newport Beach or Huntington Beach, Anaheim or Santa Ana, El Cajon or Carlsbad, Palmdale or Victorville, Long Beach or Santa Monica, Ventura or Oxnard, or anywhere in Southern California, our Palm Springs, San Diego, Orange County, Inland Empire, Los Angeles, Santa Barbara and San Luis Obispo law firm has the knowledge and resources to be your Business Lawyers and Real Estate Attorneys. If you’ve been the victim of a real estate, business, loan modification or foreclosure scam or fraud, be sure to hire a law firm with experience in loan modification, foreclosure and real estate fraud in California and who will endeavor to ensure that your rights are properly represented.

 

To learn more about the statutes which regulate loan modification and foreclosure consultants, or for legal representation, call the Law Offices of R. Sebastian Gibson at any of the numbers on our website at http://www.SebastianGibsonLaw.com .

R. Sebastian Gibson
http://www.articlesbase.com/national,-state,-local-articles/california-loan-modification-fraud-lawyer-foreclosure-consultant-fraud-attorney-damages-for-scams-ripoffs-frauds-and-statutory-violations-684644.html

Banks, Real Estate Commissions, & The Rico Act

Posted on March 8, 2010
Filed Under short sale listings | Leave a Comment

Q: Does routine forced reduction of Realtor short sale commissions by Banks
amount to a form of extortion that falls under the RICO ACT?

Suppose we have a small group of powerful bosses whose names, by
coincidence, all end in a vowel (Fargo, Chase, B of A, etc).
They target a small class of defenseless business people (Realtors) in a
very distressed neighborhood (Las Vegas, or your home town). 

These people already owe the bosses a lot of money (on 1st and 2nd mortgages & HELOCS), so the bosses proceed to syphon off half of their business (REO listings = the
majority of closed transactions each month) and give that business only to
those who the bosses directly control (A very small group of
REO listing agents.  Bank of America recently said they added only 3 realtors
to their REO approved list in 2009 IN THE ENTIRE U.S. and NONE in NV; to
get on the list one needs a year’s experience in REO sales; tough to do if
you don’t already have REO listings. Didn’t our tax money bail them out? Shouldn’t they spread these real estate jobs around a little? Why, no! That would be … inconvenient.)

The bosses further squeeze the business people’s income on what is left  (By reducing short sale commissions by 25-33% routinely and often refusing to
approve the final HUD 1 closing statement unless “someone,” usually the Realtor, agrees
to pay for additional items on the HUD per bank demands at the 11th hour) and they keep it for themselves. The bosses have the peoples’ main industry (real estate) by the throat (Banks control REO sales, approve all short sales, and loan the money to any non-cash buyers).
When, due to declining income, the business people (Realtors) can’t pay back their
loans, the bosses take their houses and sell them at current discount
prices (in Las Vegas, Feb 2010 avg price is roughly 80% below Feb 2006). The business men lose whatever equity they paid down (5 to 20% at 2006 prices) and the bosses keep that for themselves, too. And then they come after the people for the deficiency at the old inflated prices, demanding payment despite the fact that the bosses have intentionally damaged their ability to pay.  (Q: Didn’t the bank make an implied promise under Equity Law NOT to damage their barrowers ability to repay the loan?)

This “routine reduction” applies to hundreds of short sale transactions each month in Las Vegas alone.  When Realtor income is down by 60-75% already, it feels like a systematic shake down. The bank is not actually a party to the short sale contract -  it is
merely a beneficiary of the closing. The Realtor can’t say no to a commission reduction without losing his entire commission.  If he refuses, the bank has a “gun to the head” of the transaction.  If the transaction does not close, the bank gets the property anyway via foreclosure. If the Realtor stands up for his rights, he may breach of his fiduciary duty to his client.  The bank order is an offer he can’t refuse because of FEAR of greater loss.

The commssion is reduced by an order called a “short sale approval” that arrives on
bank letterhead, signed by a bank officer,  and 100% of that amount is retained by the bank. For the Realtor, it’s death by a thousand cuts.

To make the math easy, let’s suppose a Commission of 6% (split between listing and selling agent) on a $100,000 short sale house is reduced by a bank to 4% = a $2000 reduction.
Multiply this by 569 Las Vegas short sale transactions in January, 2010 = $1,380,000 in additional bank profits in one month.  At this rate, the 4822 short sales closed in Las vegas in the past 12 months = roughly $9.6 Million in lost Realtor income in Las Vegas alone, all taken from the people who can least afford it. The average price per residence was actually $140,000 for the same period, so the $ amount is probably considerably higher. Multiply this by every city across the country and you know where the bank CEO bonuses come from. (GLVAR data)

It’s a lot of money.  Tony Soprano would be proud.

Grant House

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