In fact, most of the time, they are not the owner. As an example, 80% of all loans that Bank of America handles are not owned by Bank of America.
The largest owners of US mortgages are two companies that some would allege are owned by Uncle Sam. They are Fannie Mae and Freddie Mac. They own an estimated 55-60% of all US Mortgages.
Another estimated 10-15% are insured by Uncle Sam as well, thru the FHA and VA loan guarantee programs. Another estimated 10-15% are owned by Wall Street Firms, Pension Funds, and other entities.
That means the company you mail your check to every month is essentially a hired gun.
They are paid to collect payments, handle accounting and escrows, collect on delinquent accounts, and act as the front person for the owner of the loan.
They forward the money received to the lender, minus a small fee to themselves. This small fee on thousands of mortgages means they are paid very well.
In fact, the business is so profitable that IBM Computers opened a subsidiary loan servicing company.
Now that I have laid the groundwork, let me explain how the loan servicing companies have worked against the loan owners best interest.
Acting as a servicer puts them close to the legal equivalent of a trustee. This means they can do whatever they want to, right?
No. Let me explain. See, a trustee has a fiduciary duty to whoever they represent. They are required to act in their client’s best interest.
If they do not do this, then they can be legally liable for any loss their loan owner incurs as a result of the trustee’s negligence. Just as real estate agents are required to act in their client’s best interest, loan servicers are also required to act in their client’s best interest.
Let’s say an agent listed a house and double sided it to a buyer for 200k. A 225k offer came in earlier, but the agent never presented it to the seller. Do you think the seller would be angry?
Of course they would be. Now, let’s say that you managed an apartment community. You only had a leasing person on site one day a week. You did this to save money.
As a result the apartment complex only leased half of their apartments for the next year. You caused them to lose half of their year’s rents. Would that apartment manager be unhappy?
You bet they would be. The loan servicers are doing the same thing.
Here are a few examples of them breaching their fiduciary duty to their clients.
Example #1: Not giving buyers an answer on a short sale within a reasonable time period. Loan servicers should help their investors recoup as much money as possible from short sales.
Example #2: Turning down loan mods that amortize at a higher value than what is netted on a short sale or thru REO. Let me explain in a little more detail.
A homeowner had a reduction in income and can’t afford his original mortgage payment. The borrower has a stable income and agrees to pay $1,000 a month for the next 30 years. $1,000 a month for 30 years, at a 6.5% interest rate will repay a $158,210 mortgage.
The loan servicer turns down the loan mod and forecloses. The house sells for $125,000 as an REO and the servicer nets $115,000. Did the loan owner lose money?
I think most people would agree that they did. Obviously there are other factors involved, but I think they would have done better if they had approved the homeowner’s offer.
Example #3: Not listing foreclosed properties quickly enough. I have witnessed several examples of banks foreclosing on a house and then taking 6 months to a year to put it up for sale.
As an example, there was a house foreclosed on September 9th, 2011. It was finally listed for sale 7 months later, in May 2012. Say what you want, but waiting 7 months to put a property on the market is pathetic.
If the mortgage holder had been an individual, do you think they would have listed the house a little faster than 7 months? Thinking about a short sale? Learn more about Chicago Short Sales at www.ShortSaleSuperMan.com
I can help you short sale your property and get back on your feet. Send me an e-mail at email@example.com. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (312) 953-6725
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Thinking about a loan modification? Our Chicago loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.
Thanks for reading this, Phillip Buoscio.
Phillip is a Real Estate Agent at Better Living Realty – Buoscio Brokerage, Inc.. Chicago Short Sales Realtor:
Phone: (312) 953-6725. firstname.lastname@example.org.
Phil Buoscio specializes in loan modifications and short sales in Chicago Illinois. Chicago Loan Modification Help. Chicago Short Sales. Chicago Short Sale Realtor. Chicago IL Short Sales. Chicago Realtor.
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Phillip Buoscio, Better Living Realty – Buoscio Brokerage, Inc., and the Stop Foreclosure Institute are not affiliated in any way, shape, or form with the government. Our services have not been reviewed or endorse by the government or your lender. Most lenders willingly work with agents on short sales. Why?
Because most short sales are beneficial to a lender. If you accept our offer to help you on a short sale, your lender may not agree to a short sale or to modify your loan. We do offer a loan modification kit.
However, the likelihood of negotiating a modification is like everything else in life. It takes work and persistence to convince your lender to modify your loan. No matter what you or we do, your lender may not approve a loan modification.
We do not recommend that you stop paying your mortgage, because this will cause damage to your credit and could cause you to lose your home. Because we know avoiding foreclosure is so important to any homeowner, we recommend that you speak with the appropriate legal or tax advisor before making any decision.
This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing.
You have the option to reject a short sale or loan modification from your lender if it does not meet your approval. If you decide not to go thru with the short sale, then you do not have to pay us our fee. We normally make a real estate sales commission for helping you on a short sale.
The views expressed here are Phillip’s personal views and do not reflect the views of Better Living Realty – Buoscio Brokerage, Inc..
This information on Specific Examples of Lenders Not Doing Their Job On Chicago Short Sales is provided as a courtesy to our viewers to help them make informed decisions.