Renovation on the short sale house has begun, and already I've learned a painful lesson.
The house is in Park Hill, Yonkers, NY, on a cliff overlooking the city, the Hudson River, and the Palisdades beyond. The nine months that it took to close the deal included several months of very cold winter. The heat and electricity were off. In early November, I had asked the sellers, via the realtor, to drain the pipes and winterize the house. The realtor got back to me and said that they told her that they had drained the pipes, although the realtor noticed that there was water in the toilet. The realtor responded by sending another note to the sellers, explaining the details of winterizing, and never got a response. She never followed up about the lack of a response, or reminded me of the importance of winterizing (something that's probably taught in realtor 101).
Well it turns out that they didn't drain the pipes. Not from the cold water. Not from the radiators.
So over the winter, the pipes froze and burst at many points, mostly at elbow joints. About five or six beautiful old cast iron radiators cracked.
So it took my contractor an entire week of turning on the water, finding a leak, repairing the leak, and repeating the process, to restore the houses plumbing system.
I haven't gotten the bill for this yet. And I'm not looking forward to it.
The moral of the story? Don't trust the seller of your short sale house to do anything that involves maintaining the house. And also don't trust your realtor, particularly if your realtor happens to be representing both buyer and seller in the deal. It's up to you to make sure everything that's supposed to happen, happens.
Showing posts with label short sale. Show all posts
Showing posts with label short sale. Show all posts
Friday, March 26, 2010
Saturday, March 13, 2010
Short Sales: A Brave New World
Just because my deal got done, doesn't mean I'm going to stop this blog! I still have a few things I need to say.
First off: if you're thinking about a short sale, forget everything you ever knew about buying a house. It's not business as usual. These are new rules. And you'll be making up some of your own as you go along.
Maybe my experience is different than what other folks are seeing. I'm sure in places like California, Arizona, Florida and Nevada, epicenters of the subprime crisis, things may be a bit different than they are here in the Northeast. The volume of foreclosures and short sales is higher, so maybe buyers, realtors, lawyers and title companies have developed fairly standardized procedures.
In my case, there was no standard, because very few of the participants in the deal had ever done a short sale. Not my lawyer(s). Not my broker. Not the title company. My lawyer had never even heard of a short sale the first time I asked him to represent me (that was OK, he did a pretty good job despite).
What I learned, principle No. 1, is that it is up to the buyer to make it happen.
The seller doesn't have much to gain. They avoid foreclosure, and to some very limited extent minimize damage to their credit rating. In my case, the sellers were pretty nice people. They just didn't want to see a house they cared about in a neighborhood they care about get abandoned, boarded up and left to rot while the bank dithered. But still, they pretty much left it up to me -- and I don't blame them.
The realtor. The realtor has a lot to gain -- a commission. In my case, the short sale bank shaved the commission down from 5.5 percent to 4 percent. It's still a pretty good pay day. But it doesn't seem to be enough of an incentive to light much of a fire under a relators. Realtors are wired to do what they do: show houses, place adds, negotiate. Maybe there are some hard charging realtors in subprime ground zero who take the lead on short sales, but around here that was not in evidence. I suppose that the volume of real estate deals in the local market is high enough so that realtors don't have to invest too much time in short sale deals -- if they fall apart, the commissions are coming in from the conventional deals.
Next time: the lawyer.
First off: if you're thinking about a short sale, forget everything you ever knew about buying a house. It's not business as usual. These are new rules. And you'll be making up some of your own as you go along.
Maybe my experience is different than what other folks are seeing. I'm sure in places like California, Arizona, Florida and Nevada, epicenters of the subprime crisis, things may be a bit different than they are here in the Northeast. The volume of foreclosures and short sales is higher, so maybe buyers, realtors, lawyers and title companies have developed fairly standardized procedures.
In my case, there was no standard, because very few of the participants in the deal had ever done a short sale. Not my lawyer(s). Not my broker. Not the title company. My lawyer had never even heard of a short sale the first time I asked him to represent me (that was OK, he did a pretty good job despite).
What I learned, principle No. 1, is that it is up to the buyer to make it happen.
The seller doesn't have much to gain. They avoid foreclosure, and to some very limited extent minimize damage to their credit rating. In my case, the sellers were pretty nice people. They just didn't want to see a house they cared about in a neighborhood they care about get abandoned, boarded up and left to rot while the bank dithered. But still, they pretty much left it up to me -- and I don't blame them.
The realtor. The realtor has a lot to gain -- a commission. In my case, the short sale bank shaved the commission down from 5.5 percent to 4 percent. It's still a pretty good pay day. But it doesn't seem to be enough of an incentive to light much of a fire under a relators. Realtors are wired to do what they do: show houses, place adds, negotiate. Maybe there are some hard charging realtors in subprime ground zero who take the lead on short sales, but around here that was not in evidence. I suppose that the volume of real estate deals in the local market is high enough so that realtors don't have to invest too much time in short sale deals -- if they fall apart, the commissions are coming in from the conventional deals.
Next time: the lawyer.
Friday, March 12, 2010
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.
Saturday, January 23, 2010
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.
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.
Monday, January 11, 2010
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.
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.
Thursday, January 7, 2010
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.
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.
Subscribe to:
Posts (Atom)
Posts
