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Why?

I’m befuddled!   Did you have the opportunity to view the video released yesterday regarding the sweetheart deal between One West Bank and the government?  If not, you need to watch the video, it will AMAZE you.  The link follows at the end of this article.

Here’s the gist of the 5 minute video:

  • When IndyMac was shut down, their notes were sold to One West Bank.   One West bought the first mortgages for 70 cents on the remaining principal balance due on the note.
  • The government guaranteed One West that they would receive 80-95% of the FACE VALUE of each note (regardless as the whether the transaction sells as a short sale or foreclosure sale).

On the face, this arrangement appears harmless, right?

WRONG!!

Let’s create a hypothetical example and analyze this arrangement.

Assume that a homeowner has a mortgage/note originated by IndyMac and it has a remaining balance of $400,000.   One West Bank purchased this note for $280,000 (70%).   Let’s assume that the property goes under a short sale contract and the net amount that One West is scheduled to receive is a NET of $220,000.   In this case, One West would receive an ADDITIONAL 80% of the difference between the FACE VALUE and the net from the Government.  For those of you reading this without a calculator, this additional amount adds up to $144,000.  Once you add this amount to the net proceeds of the short sale, the bank ends up netting a total of $364,000.

WHAT?

The bank is receiving $364,000 on a $280,000 investment in just 24 months?  That’s a profit of $84,000 — partially from taxpayer dollars!

The sad part of this “deal” is that their short sale facilitation process is not streamlined, remains cumbersome and is inefficient.  It seems to me that if they are profiting from all these short sales (and foreclosures too) then they should have a program in place making the process more efficient for all parties involved.

Oops, there I go again;  what incentive does the bank have to streamline the process?  After all, they will be compensated 80-95% for the deficiencies in the long run by the government regardless as to whether the property is sold by the consumer or sold via foreclosure.  Correct me if I’m wrong, but, it appears that they have a “built-in” 10-25% profit cushion from the onset?

Are you outraged?   I am!  Shame on you One West Bank.  Shame on you Uncle Sam.

Here’s a link to the video that you have to see:  http://www.thinkbigworksmall.com/mypage/archive/1/29027

If you would like to learn more about the short sale process, please contact Rick Schuster at Home Guardian Title, Inc.  561-893-0077.  Rick’s team of professionals have processed over 350 consumer short sale requests in the past 30 months and have a very impressive success rate.

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