Alpharetta GA – Shocking Fact: Most banks don’t own the loans they are handling. In fact, one of the “Big Four US Banks” only owns around 20% of the loans they hold. They are handling the other 80% as a servicer. The actual owner might be Fannie Mae, Freddie Mac, a Wall Street Trust, or a pension fund. A servicer acts as a trustee for the actual investor. They collect the payments and handle the “Lender” Functions. They then forward the money to the owner of the loan each month.
The lenders get paid the same amount of money whether they do a good job or not. Are they motivated to do a good job with your loan modification application? Many people experience long waits trying to get their loan mods accepted. This might be why.
Let’s say you managed an apartment community. You only returned calls from prospective tenants one day during the week. The other days you went fishing. As a result, half of the apartments were empty. Would you really be representing the owner of this property properly?
Would the owner miss out on tenants who could rent an apartment? Would that apartment manager be unhappy? You bet they would be. The same problem is happening with loan modifications and short sales. The lenders don’t have enough staff in place to handle loan mod and short sale applications. As a result, they are foreclosing on properties when they really should be reducing the payment.
Most people don’t realize that this is happening. Here are a few examples of lenders breaching their fiduciary duty to their clients.
Example #1: Turning down loan mods that amortize at a higher value than what is netted on a short sale or thru REO. Let me explain a little better. A servicer negotiates a loan mod with a borrower with a new monthly payment of $1,000. 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 servicer turns down the loan mod and forecloses. The house sells for $125,000 as an REO and the servicer nets $115,000. Did their investor lose money? I think most people would agree they did. Obviously there are other factors involved, but I think on an actuarial basis they will do better with the mod.
Example #2: Not giving buyers and answer on a short sale within one week. Servicers should help their investors recoup as much money as possible from short sales. To do this, they should order 3 BPOs and then list the property. They should then drop the price 5% a month. When a buyer steps up to the plate, that buyer should get an answer on their offer within 5 business days.
Example #3: Not listing REO properties quickly enough. I have witnessed several examples of banks foreclosing on a house and then taking 6 months to a year to list it for sale. As an example, I have seen houses sit empty for over a year before being listed for sale. Say what you want, but waiting 5 months is pathetic. If the mortgage holder had been a wealthy individual who lived in town, do you think they would have listed the house a little faster?
Thanks for reading this, Roland Lorans.
Roland is a real estate agent at Better Home and Gardens Real Estate Hetro Brokers.
Phone: (770) 866-2561.
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Roland Lorans specializes in loan modification assistance and short sales in Alpharetta Georgia . Alpharetta Loan Modification Help, Alpharetta Short Sales.