Fairfax VA – Shocking Fact: Most banks don’t own the loans they are handling. In fact, one of the top four banks in the nation only owns about 20 percent of the loans they hold.
The true owner of the other 80 percent is Fannie Mae, Freddie Mac, a Wall Street Trust or a pension fund. These entities are known as a servicer and they act as a trustee for an actual investor. They handle all of the lender functions and collect payments. Then they send that money on to the loan’s owner each month.
The lender is going to get paid the same amount of money regardless of whether they do a good job. Thus, why would they be motivated to do a good job with your loan modification application? No wonder it takes people so long to get their loan modifications accepted!
The truth is, these lenders don’t have sufficient staff to handle loan modifications and short sale applications. Consequently, 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 through REO. Here’s how this works. A servicer negotiates a loan modification with a borrower to that the new monthly payment is $1,000. The borrower agrees to pay that $1,000 a month for the next $30,000. Assuming an interest rate of 6.5 percent, that 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. I think most people would agree that the investor loses money in this situation. 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 an answer on a Fairfax VA 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. Then they should drop the price by 5 percent a month. When a buyer steps forward, they should get an answer within 5 business days.
Example #3: Not listing REO properties quickly enough. I have seen plenty of cases in which a bank will foreclose on a Fairfax VA home and then wait anywhere from 6 months to a year to list it for sale. That’s ridiculous. 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,
Thierry is a Real Estate Agent at RE/MAX Premier, and Host of Talk Radio’s, ‘Inside Real Estate’
Phone: (703) 322-0600.
Thierry is an advocate for Homeowners in Distress. Thierry has made it his personal mission to help as many people as possible avoid foreclosure and keep their home.
Thierry Roche specializes in loan modifications and short sales in Fairfax Virginia. Fairfax Loan Modification Help. Fairfax Short Sales. Fairfax Short Sale Realtor. Fairfax County Short Sale Realtor. Fairfax VA Short Sales. Fairfax Realtor.
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