I have more than one million dollars in potential short sale transactions sitting on my desk. The combined total of the deals, if we could get the banks to accept them, would net the assorted banks $1 million dollars on total principal balances of around $1.6 million dollars.
I represent a few hundred homeowners who are in foreclosure and who want nothing more to negotiate a fair and reasonable modification with the lenders.
But the banks are not accepting even the most reasonable short sale offers and they are refusing to offer deserving homeowners modification of their mortgage, much less anything reasonable .
My experience is not unique. Every professional or consumer reports the same frustration and always we find ourselves asking….
“what do the banks want….they’re not going to get anything better than this short sale or modification
….what gives?”
As the article from today’s Wall Street Journal reports, (full article here) what gives is the federal government. What gives is tax payer dollars. What gives is more massive handouts to the very institutions that caused all the problems we find ourselves in. More specifically, JPMorgan, Washington Mutual and the other major banks are set to get massive tax rebates…
J.P. Morgan in Talks for $1.4 Billion; Stimulus Gives $12 Billion to 250 Firms
So there’s the answer to the question, “why don’t the banks want to deal?” Rather than get dribs and drabs of short sales and modifications from homeowners, they can show losses related to those homeowner debts then get those “losses” offset in the form of bajillion dollars in tax rebates from the endless supply of “free” money being handed out by the federal government.
So now we know at least part of the reason….like the details of the problems that led to the crash…we’ll find out more later, but the simple explanation is the fat cat bankers and the federal policy makers are handing out much bigger checks than the measly little short sale closing checks they’d get or the mortgage payments from borrowers……
Yep. Clearly the gov’t is NOT helping.
It is tantamount to trying to get a drug user off of heroin, but the government has a program next door that gives out free heroin to drug users.
Matt – The real problem is the securitization of loans. The indentures generally do not allow the Trustee to modify loans. I used to do these financings for student loans, and we solved that problem by allowing the Trustee to put back to the lender a defaulted loan – the lender could replace with either cash or a similar loan. Of course, we also required that the original notes be kept by the Trustee in a separate cage in its vault, something that the geniuses that designed stated income home loan securitization also ignored.
–Mike
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