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 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.