This is the End

Today at around 1 pm. in a conference room in White Plains, NY, this drawn out fight came to a successful conclusion. We now own the house, in beautiful Park Hill, Yonkers, NY.

Barney Frank's letter to Bank of America and three other large banks

I'm honestly not that much of a Barney Frank fan, but I love his recent letter to the CEO of Bank of America and to the three other biggest bank CEOS, scolding them for being greedy when it comes to second liens that are involved in short sales.

Yes, only an obsessed man deeply involved in a short sale would really pay attention to something like this. But I have personally confronted the avaricious posturing of a major institution that is a second lien holder.

In my case, it happened to be GMAC, not on the list of the Big Four. It was GMAC that wouldn't accept BofA's $3000 offer for release of second lien, and it was GMAC that is squeezing a fairly substantial additional sum out of my coffers -- because they can. And GMAC is one of the sickest financial institutions and a major beneficiary of federal bailouts -- to date, not paid back.

It's a good thing that short sales are getting more attention now that we're getting close to the kick in of the HAFA rules in eary April. Why there was even a front page article in the NYT this morning on this aspect of the mortgage mess that has seemed way too esoteric for the general audience.

As to my own quest, which is supposed to end later this week, today was a day of minor progress. A hopeful initial negotiation with a potentially lethal parasitic lien holder. A scramble to obtain a totally unnecessary document that's being demanded by the title insurance company. But the end is nigh, and chances are decent there's going to be happy ending.

Bank of America, Brian T. Moynihan, and another collection agency

The end is in sight -- but there is a sickening and outrageous final twist that threatens to undo it all.

Bank of America's credit card department had promised that they would reach a reasonable settlement on a credit card debt owed by the owner of the short sale house. But I needed to get the other liens discharged first.

After two months of diligently and successfully negotiating to have the liens discharged, we go back to Bank of America's credit card department with the documents from the other lien holders. And we are told, callously and with no explanation, that the debt "has been placed with an outside agency."

What that means is that they have included this credit card debt in a bundle of loans that they've turned over to a highly disreputable debt collector, one of the sleazy, fly-by-night "law firms" that do the dirty work for supposedly legitimate (taxpayer-supported) institutions such as Bank of America.

This is a devastating setback. I had come to place my trust in Bank of America, because they at least have a mechanism in place that allows consumers to bring problems to a team of customer service reps who work in "the office of the chairman and chief executive." I've been working with one of those reps, and have come to trust him.

But when this crisis hit yesterday, he was nowhere to be found. It seemed that no one with a conscience or a brain was on call.

I still have faith that this will be resolved. I dashed off a letter to Brian T. Moynihan, president and CEO, both via email and Fed Ex. I'm hoping that Monday will bring better news.


Here is the open letter to Moynihan, with some details omitted:

Brian Moynihan
Chief Executive Officer
Bank of America
100 N. Tryon Street
Mail Code NC-1-007-18-01
Charlotte, NC 28255 March 5, 2010

Dear Mr. Moynihan:

I am writing to call your attention to a serious breakdown in the management oversight at Bank of America, a breakdown that involves one division of the company working against another.

This issue is detrimental to the interests of your shareholders -- and in addition, is a troubling example of how financial institutions can engage in socially irresponsible practices that promote home foreclosures.

In this case, the foreclosure that is being forced will result in a loss of revenue to the bank and to the underlying investor in the loan. Unfortunately, this is the second time I've written to you about this matter. After I first contacted you on January 7, the matter was taken up by the customer service team in the office of the CEO, and appeared to be on the route to be equitably resolved. Today I learned that these efforts to resolve the matter have been undone.

The situation, specifically, is this:

-- I have a contract to buy a house that is destined to be foreclosed. Bank of America is the servicer of the first mortgage. The short sale is at appraised market, and Bank of America has approved the short sale.
-- A division of Bank of America, FIA Card Services, has placed a lien on the house for an unpaid balance by the current owner.
-- In order to close on the house, I have requested a lien discharge from FIA Card Services. After I first contacted you, a representative of FIA, and a representative from the executive offices, stated to me and my attorney that if we were able to obtain lien discharges from the other lien holders on the property, that Bank of America would release the lien or at the very least accept the same terms offered to the other lien holders. We have obtained lien discharges from the IRS, NY State, Allpoints Capital and GMAC (servicer of the second mortgage). However, when we contacted the credit card division yesterday, we were told that the debt has been placed "with an outside agency."
-- We had taken it on good faith that Bank of America would honor the agreement made by the credit card division and others at BofA, and we have invested a good deal of our resources to satisfy the bank's requirements for a discharge of the lien. It appears that the bank has abrogated that agreement.

It is widely acknowledged that foreclosures promote neighborhood deterioration and further destroy home values. It is national policy to work to prevent foreclosure, and I'm sure it is the publicly stated position of the Bank of America that foreclosure should be averted if possible. I hope you will help me resolve this matter in a way that will best serve both your shareholders and the public interest.

I have written to you in hope that your office can intervene constructively in the case. I would prefer to resolve this by working cooperatively with Bank of America, rather than to escalate my grievance.

Just Coasting, But Time Relentlessly Marches On

We are getting close, but nothing is happening.

Where it stands now? Waiting to hear from Bank of America if their investor, Capital One, is willing to meet the unreasonable demands of second mortgage servicer GMAC, representing their investor Deutsche Bank.

I don't even remember if I've ever blogged about this before.

But apparently it's pretty typical in a short sale for there to be more than one mortgage on a property, the first mortgage, and then, usually, a second mortgage or home equity line of credit (HELOC).

Now GMAC/DB should really just sign off and say: OK, we lose, Bank of America gets all the dough. After all, GMAC/DB would get bupkis in a foreclosure. Not to mention the fact that GMAC got billions from the government and DB participated in the AIG bailout, and we're in a national emergency, and it's not supposed to be business as usual, and that any patriotic banker is now supposed to be actually trying to avoid precipitating foreclosures.

Dream on.

But instead, it seems, that GMAC and BofA are playing chicken, and I'm the worm caught in between. GMAC will only take $X. BofA only offered $Y. GMAC counters with $Z. Now BofA has to see if CapOne will take $Z. And that's been another week of waiting.

GMAC should probably be burned at the stake for trying to extract $Z. There are some federal guidelines about this (see HAFA below), which clearly state that second lien holders are only entitled to $3,000.

Well let me tell you, $Z > $3,0000.

And I'm the schmo here. Because when GMAC wants $Z and BofA is only willing to offer $Y, guess who's going to make up the difference.

But I promise, I'm going to hire a blues band and have a party in my basement on the day I move in.

An Open Letter to Rich Fairbank, CEO Capital One

Mr. Richard D. Fairbank
President & CEO
Capital One Financial Corp
1680 Capital One Drive
McLean, VA 22102

Mr. Fairbank:

I am writing to call your attention to a position being taken on behalf of Capital One that could lead to a completely avoidable home foreclosure, a transaction that would not be in the best interests of your shareholders or the financial entities you represent with this mortgage. In this matter, Capital One is being represented by Bank of America as the investor in a first mortgage on a home that is involved in a short sale transaction with Bank of America.

There is no equity in the home and the owners have fallen deeply into financial ruin. Unfortunately, GMAC (as representative of Deutsche Bank and mortgage investors) holds a second mortgage on the property. GMAC is asking for a share of the short sale proceeds in exchange for releasing the lien. I'm caught in the middle, and don't feel I am in a strong position to mediate a fair settlement between two huge financial institutions.

The situation is this:-- I have a contract to buy a house that is destined to be foreclosed. Bank of America is the servicer of the first mortgage. GMAC is servicing a HELOC on the property, which they say is a loan owned by Deutsche Bank.

Unfortunately, GMAC will not accept BofA's offer to settle their lien. Both the first and the second mortgage were originated on the same day as part of the same refinancing in 2005 through now defunct Greenpoint. I contacted Seth Waugh, head of DB in the US, and there was a fast and constructive response. At the direction of his office, GMAC reduced its payoff demand. There's an indication that through the intervention of his office, further compromise is possible.

I have no opinion as to the merit of GMAC's claim -- all I know is that given the current national climate, I would hope that Bank of America and Capitol One could find a way to reach a compromise agreement on this short sale.

Capital One would certainly suffer a much larger loss if there is a foreclosure. In addition to the BofA first mortgage lien, there are liens from the IRS and NY State. Both tax authorities have indicated that they are willing to discharge the lien for a short sale.

It is widely acknowledged that foreclosures promote neighborhood deterioration and further destroy home values. It is national policy to work to prevent foreclosure, and I'm sure it is the publicly stated position of Capital One that foreclosure should be averted if possible.

I hope you will help me resolve this matter in a way that will best serve both your shareholders and the public interest.

I have written to you in hope that your office can intervene constructively in the case. I would prefer to resolve this by working cooperatively with the financial institutions involved in this matter, rather than to escalate my grievance and bringing it to the attention of my congressmen, Senators, and regulatory officials at the Federal Reserve and Treasury Dept.

An open letter to Seth Waugh, Deutsche Bank

Seth Waugh
Deutsche Bank AG
60 Wall Street
NEW YORK, NY 10005
USA

Mr. Waugh:

I am writing to call your attention to a position being taken on behalf of Deutsche Bank that represents a troubling example of how financial institutions can engage in socially irresponsible practices that promote home foreclosures. In this matter, DB is being represented by GMAC as the investor in a second mortgage on a home that is involved in a short sale transaction with Bank of America.

There is no equity in the home and the owners have fallen deeply into financial ruin. Yet GMAC is obstructing the short sale by demanding an unreasonable payment for releasing the lien. GMAC will act as a spoiler -- forcing a foreclosure that will in not in any way benefit Deutsche Bank or its shareholders, because Deutsche Bank will recover nothing in the foreclosure.

[I then go into the gory details....from which I will spare you, dear reader]

It is widely acknowledged that foreclosures promote neighborhood deterioration and further destroy home values. It is national policy to work to prevent foreclosure, and I'm sure it is the publicly stated position of Deutsche Bank that foreclosure should be averted if possible. The Treasury Dept. has formulated rules governing short sales, to take effect in a couple of months, that stipulate a $3,000 standard payoff to the second mortgage holder in short sales.

I hope you will help me resolve this matter in a way that will best serve both your shareholders and the public interest. I have filed authorizations from the homeowner and the credit card holder that give the bank permission to discussion this matter.

[more gory details]

I have written to you in hope that your office can intervene constructively in the case. I would prefer to resolve this by working cooperatively with Deutsche Bank, rather than to escalate my grievance and bringing it to the attention of my congressmen, Senators, and regulatory officials at the Federal Reserve and Treasury Dept.

And now, Deutsche Bank, GMAC, FIA and truth, justice, the American way at the IRS

Keep this in mind: if you get involved in a complicated short sale, it's like taking on a second full time job. It's frustrating, draining and infuriating. At least mine has been...

And now, for the news.

Today, slogging through the battlefield mud. Finally managed to move forward at GMAC, progressing from the document packager to the negotiator. But the initial contact was not promising.

GMAC holds the second lien -- for about $200K. BofA, the short sale bank, has offered $3,000 for the discharge of the lien. Sounds paltry, but GMAC would collect nothing in the event of a foreclosure. There's a lot of conflicting information out there about what second lien holders will take in a short sale --some postings indicate that $3K is the norm, others indicate that it's not. Doesn't look like I'm getting lucky -- GMAC doesn't seem to be in the $3K camp.

GMAC has been extremely difficult to deal with. Their system is overloaded: when you send a fax, and call in to see if it's received, they can't confirm if it has or not, and they tell you it takes five business days for a fax to be "entered into the system." I have been trying to reach someone there since January 4.

However, a call to the GMAC executive customer relations number this morning finally accelerated the process (800-627-0128) . I found out that the document assembler we had been talking to had decided that somtehing was missing from the HUD1, so he wasn't forwarding the package. Never let us know, so it was just sitting there. But the call to the executive offices proved effective, and by this afternoon I was talking with my negotiator.

The negotiator was somewhat nasty, brusque, to the point. GMAC would never accept the $3000K. Doesn't matter if it will cause a foreclosure. The reason for the rejection? The "investor" in the mortgage would never accept that amount. The ultimate pass the buck strategy in our post sub prime crazy world. And who is the investor? Deutsche Bank.

So another obstacle presents itself. I'm trying to figure out how to overcome it. Stay tuned.

Calling GMAC, POAs, and Bank of America Credit Cards

When I first entered into an agreement to buy a short sale home, I had no idea. No idea whatsoever. It's now about seven months later. The saga continues. Deepens. Twists. And I'm way to deep to stop now.

I can't tell you this story here, now, in narrative chronological form.

I will take one from the book of how to stay sane, and deal only with what's in front of me, now, today.

GMAC. They hold a $200,000 second lien, HELOC on The Property. GMAC handles short sales the way GM designed cars. There is a four to five business day wait for them to enter faxes into their system! Their loan modification department has odd business hours -- they don't open until 12 noon on some days! Today, Thursday, when they are supposed to open at 8 a.m., all I could get when I called was a recording listing these hours. This is insanity.

Bank of America Credit Cards. The Owner of the Property owed money ($62,000)to a credit card company called FIA, which was part of MBNA, which was bought by Bank of America. This is another lien that must be released in order for the deal to go through (one of many -- more about that in another post). When we started this ghastly business, FIA was being represented by a sleazy, monstrous debt collection company call Mann Bracken/Axiant. Google them. Complaints, law suits up the wazoo. We were negotiating with them. Then, one day, we call, and we're told -- guess what? Mann Bracken has declared bankruptcy. Hallelujah I tought to myself. Bank of America will be easier to deal with. After all, they are the ones who have agreed to the short sale on The Property. Why would they kill the deal?

WRONG. The Bank of America credit card operation has proven to be almost as bad as Mann Bracken. Talk to their representative and you hear not absolutely one trace of concern about causing an unnecessary foreclosure. Bank of America credit cards has absolutely no chance whatsoever of collecting a single dime on their lien, yet they seem to be quite willing to spitefully refuse to discharge the lien.

And, oh yes, Powers of Attorney. You need them to talk to people on the phone. Every company wants a different authorization or Power of Attorney. There is a new New York state statue for POAs. The NY State Dept. of Finance, however, has its own form....yikes!

Do I sound bitter? Am I a crackpot? I don't know at this point.

But it sure feels good to vent.

ADDENDUM:

An Open Letter to Brian T. Moynihan, President, Bank of America

Brian T. Moynihan
Chief Executive Officer
Bank of America
100 N. Tryon Street.
Mail Code NC-1-007-18-01
Charlotte, NC 28255
January 7, 2010
Dear Mr. Moynihan:

I am writing to call your attention to a serious breakdown in the management oversight at Bank of America, a breakdown that involves one division of the company working against another.

This issue is detrimental to the interests of your shareholders -- and in addition, is a troubling example of how financial institutions can engage in socially irresponsible practices that promote home foreclosures. In this case, the foreclosure that is being forced will result in a
loss of revenue to the bank and to the underlying investor in the loan.

[gory details ommitted]

It is widely acknowledged that foreclosures promote neighborhood deterioration and further destroy home values. It is national policy to work to prevent foreclosure, and I'm sure it is the publicly stated position of the Bank of America that foreclosure should be averted if possible.

I hope you will help me resolve this matter in a way that will best serve both your shareholders and the public interest. I have filed authorizations from the homeowner and the credit card holder that give the bank permission to discussion this matter.

[gory details ommitted]

I have written to you in hope that your office can intervene constructively in the case. I would prefer to resolve this by working cooperatively with Bank of America, rather than to escalate
my grievance and bringing it to the attention of my congressmen, Senators, and regulatory officials at the Federal Reserve and Treasury Dept. I will not be willing to standby and experience a huge loss of my resources and to witness a shocking return to business as usual
and anti-consumer practices at an institution that has received a massive government bailout.