All Forum Posts by: Tim Silvers

To top off my anger and frustration over those who insist upon protecting these banks from the short sale flip crowd, here's one of many tales of woe over a homeowner who was downright defrauded by Wells Fargo while a lawsuit is pending. The REAL CRIMINALS HERE ARE THE THE BANKS. And these morons who support them are just as bad. They care less about the borrower, so, I say, if a bank is alledgedly "gouged" on a short sale, the more the better. They deserve it. They should be ransacked, the execs put away for life, then shut down for good.

http://www.lvrj.com/business/modification-and-misery-91350184.html

Here we go again. The SS flip niche takes even more pummeling; there seems to be a recent cascade of an increasingly negative court of opinion mainly emanating from the realtor and lender-backed community.

Their m.o. is obvious: SS investors are seen as competition and a threat to their business, so it behooves them to denegrate this niche. Someone needs to settle the score once and for all and declare the distinction between the true scamsters that purposely fail to disclose to all parties and those that follow ethics and transaction disclosure to a T - and the fact that ethical investors are actually assisting banks and borrowers - not defrauding them!.

Here are the scathing few that have recently reared their ugly heads:

http://activerain.com/blogsview/1550906/are-you-involved-in-short-sale-fraud-here-are-the-warning-signs-

http://activerain.com/blogsview/1560067/short-sale-scams-grumpy-old-man-s-view

http://activerain.com/blogsview/1565362/short-sales-changes-
An excerpt from the last one especially is troublesome:

"Short sale flips do not work without the systematic manipulation of the valuation process, it's that simple. I think the FBI calls that mortgage fraud. With HAFA comes significantly more federal participation in the short sale process, and I don't think the feds are going to take kindly to short sale profiteering."

Where do you draw the line between skillful justified negotiation to buy wholesale and sell just below retail and "manipulation" which this article considers fraud? Are SS flippers' days numbered?

Yet another "fascist" anti-flip, pro-lender banter about how anyone buying below market value is engaging in fraud. I guess every business in the world is guilty now.

http://www.mortgageorb.com/e107_plugins/content/content.php?content.5606

Although my thread has turned solely into a discussion on the HAMP program, I wanted to address my other original concern about realtor ethics and short sales. Here is someone else that agrees with how ridiculous some of the realtor community has been toward flips:

http://www.walletpop.com/blog/2010/04/01/national-association-of-realtors-strange-advice-on-short-sale-e/

Does anyone have a clear picture how the HAFA 90-day hold will affect those of us doing double closings and using transactional funding?
http://realestateresult.com/short-sale-rules-will-impact-buyers-starting-april-2010/

And here's yet another anti-flip piece I came across:
http://www.realtor.org/rmolaw_and_ethics/articles/2010/1004_law_shortsalesethics

"4. Selling to a flipper. Unless the investor in a flip is prepared to add substantial value by fixing up a property, don’t participate in a flip. Short sale flips benefit only the investor, who’s clipping off money that could go to an already bleeding lender."
This is just plain anti-trust and totally biased, as my answer lies in the fine print at the bottom of the article; it is no wonder, having been written by an anti-investor, pro-lender. Just plain wrong.

Like we don't already face enough obstacles!

With what option?

On the topic of advance fees, would you pay an attorney in advance on a loan mod when there's no guarantee or do it yourself and only use an attorney if need be? Just curious.

Yes, I did recall something like what you've suggested being done by certain lenders. Sort of like an equity share with the lender contingent on future restoration of equity. I like the "reward" incentive to the homeowner for keeping current. Unfortunately, trying to get the bureaucrats at large to do anything logical that may actually "cure" our crisis is nearly impossible - at least before the next big wave of foreclosures.

As the wise man sayeth: The only way to get something done is to do it yourself!

That's why I think the note reduction idea is the best one I've seen yet - at least in theory - or until I see first hand results.

The only part I don't like is the advance fee issue if your properties are outside California.

According to how this program works - it sounds like the panacea to all ills for anyone who's underwater - homeowners and investors alike, not to mention that it would basically render ALL forms of debt re-negotiation such as loan mods and short sales obsolete, as well as preventing further foreclosures and REOs. It sounds like something the government should have done in the first place: automatically reduce, or in this case, replace all negative equity to that of just under current market value (basically, marking to market) so long as the borrower can still find a way to make good on the new note.

Supposedly, a $5 billion dollar hedge fund is the investor that negotiates a deal with the lender's asset management dept. (not loss mitigation) for a bulk purchase of the owner's note (along with dozens of other owners who hold notes at the same lender) at a deep discount of the properties' current market value for say - 60%. That investor then turns around and re-writes the notes at anywhere from 90-95% LTV based on today's appraised value to the owner/borrower at prime + 3-4%, fully amortized. So, the investor makes a nice spread of 30-35% and the owner gets to keep his property with a loan that is justified and affordable - and most importantly - restores the owner's equity position from negative to positive.

I wonder if the hedge fund is the same one that is touted to invest in the bulk REO deals that are being pitched by various fee-based REO guru sites on the web. The similarity seems more than a coincidence when I first heard about this.

In any case, it sounds great thus far, doesn't it? At least in theory.

When I asked a couple of these firms how many deals they've closed thus far, I either got an vague reply - or that because it's so new (barely a few months old), no one has completed a deal. I was told, however, that one of the actual note investors had successfully closed someone's loan but have yet to confirm it.

Here's a link to just one of many independent agents and firms now starting to offer these programs. Click the arrow on the video to listen an in-depth pitch on the program:

http://lowermymortgagebalance.com/

Another interesting issue:

On a side note, the firms soliciting this program are charging an advance "processing" and "administrative" fee of nearly $4,000 per loan, however, NOT in California. This leads me to think that California's recent Senate Bill 94 (which prohibits charging upfront fees on any type of loan modification or foreclosure abatement program) might have had an impact, BUT, this type of service is NOT considered either a loan modification or anything to do with stopping a foreclosure, according to my State's mortgage division. It is simply the purchase and subsequent secondary market sale of a note which does not fall within the definition of either. Still it is strange that they are only compensated on the back end (once the deal closes) for those with loans in which the property(s) is/are in California - which seems like they are, in fact, doing so directly because of SB94.

I would love to hear from others that are familiar with this program - or just your commentary. I would love to believe this has or can work!

Hmm - I wonder why some of the flippers were saying then they bought off the MLS.

In any case, if getting them before they hit the MLS is the key, then how is that done when, again, most agents are just listing them as soon as they get them?

A good example is that I have a friend who is the appointed agent for all the Countrywide (now BofA) inventory. He told me that even the guys coming in to bid on bulk purchases offering to unload their entire REO portfolio prior to them hitting the MLS are getting turned down flat because the lender wants to release only so many units at a time and all at full retail or over. No room for a spread.

Don't mean to be negative, however, I cannot seem to find agents that have any product other than for the buy-and- hold passive income crowd.

A few agents did say that I'd be better off going in other states with less demand.

I just don't know how you guys are doing REO flips successfully.

If someone could give me a real life example and walk me through the steps from start to finish, perhaps I could see where I'm not seeing a better method.

It seems that any deal in which the lender is running all his REO inventory thru an agent is pretty much going to be at retail no matter what.

Maybe that wasn't the case a year ago?