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The largest owners of US mortgages are two companies that some would allege are owned by Uncle Sam. They are Fannie Mae and Freddie Mac. They own an estimated 55-60% of all US Mortgages.
Another estimated 10-15% are insured by Uncle Sam as well, thru the FHA and VA loan guarantee programs. Another estimated 10-15% are owned by Wall Street Firms, Pension Funds, and other entities.
That means the company you mail your check to every month is essentially a hired gun. They are paid to collect payments, handle accounting and escrows, collect on delinquent accounts, and act as the front person for the owner of the loan.
They forward the money received to the lender, minus a small fee to themselves. This small fee on thousands of mortgages means they are paid very well. In fact, the business is so profitable that IBM Computers opened a subsidiary loan servicing company.
Now that I have laid the groundwork, let me explain how the loan servicing companies have worked against the loan owners best interest.
Acting as a servicer puts them close to the legal equivalent of a trustee. This means they can do whatever they want to, right?
No. Let me explain. See, a trustee has a fiduciary duty to whoever they represent. They are required to act in their client’s best interest.
If they do not do this, then they can be legally liable for any loss their loan owner incurs as a result of the trustee’s negligence. Just as real estate agents are required to act in their client’s best interest, loan servicers are also required to act in their client’s best interest.
Let’s say an agent listed a house and double sided it to a buyer for 200k. A 225k offer came in earlier, but the agent never presented it to the seller. Do you think the seller would be angry? Of course they would be.
Or, let’s say you managed an apartment community. You only had a leasing person on site one day a week. You did this to save money. As a result the apartment complex only leased half of their apartments for the next year.
You caused them to lose half of their year’s rents. Would that apartment manager be unhappy? You bet they would be. The loan servicers are doing the same thing.
Here are a few examples of them breaching their fiduciary duty to their clients.
Example #1: Not giving buyers an answer on a short sale within a reasonable time period. Loan servicers should help their investors recoup as much money as possible from short sales.
Example #2: Turning down loan mods that amortize at a higher value than what is netted on a short sale or thru REO. Let me explain in a little more detail.
A homeowner had a reduction in income and can’t afford his original mortgage payment. The borrower has a stable income and agrees to pay $1,000 a month for the next 30 years. $1,000 a month for 30 years, at a 6.5% interest rate will repay a $158,210 mortgage.
The loan servicer turns down the loan mod and forecloses. The house sells for $125,000 as an REO and the servicer nets $115,000. Did the loan owner lose money?
I think most people would agree that they did. Obviously there are other factors involved, but I think they would have done better if they had approved the homeowner’s offer.
Example #3: Not listing foreclosed properties quickly enough. I have witnessed several examples of banks foreclosing on a house and then taking 6 months to a year to put it up for sale.
As an example, there was a house foreclosed on September 9th, 2009. It was finally listed for sale 7 months later, in May 2010.
Say what you want, but waiting 7 months to put a property on the market is pathetic. If the mortgage holder had been an individual, do you think they would have listed the house a little faster than 7 months?
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at firstname.lastname@example.org. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail. If you prefer, then you can call me at 805-208-0823.
Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.
Thinking about a loan modification? Our Ventura County Loan Modification Kit has the instructions you will need to get a loan modification approved with your lender. Click here to request a copy.
Thanks for reading this,
Chris B Johnson Realtor
Chris is a Real Estate Agent at Prudential California Realty.
Phone: 805-208-0823. email@example.com.
Certified HAFA Specialist, Certified Short Sale Specialist
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Chris B Johnson Realtor provides Home Affordable Foreclosure Alternative Loan Modification and short sales help, Moorpark Loan Modification Help, Thousand Oaks Loan Modification Help, Westlake Village Loan Modification Help , Newbury Park Loan Modification Help, Camarillo Loan Modification Help, Santa Rosa Valley Loan Modification Help, Somis Loan Modification Help, Lake Sherwood Loan Modification Help, and Simi Valley Loan Modification Help, Moorpark short sales , Thousand Oaks short sales, Westlake Village short sales, Newbury Park short sales , Camarillo short sales, Santa Rosa Valley short sales, Somis short sales, Lake Sherwood short sales, and Simi Valley short sales. Moorpark Short Sale Realtor, Moorpark Short Sale Realtors, Short Sale Realtor. Ventura County CA Short Sales. Ventura County Realtor, Certified HAFA Specialist, Moorpark Short Sale Realtor, Thousand Oaks Short Sale Realtor, Westlake Village Short Sale Realtor, Newbury Park Short Sale Realtor, Camarillo Short Sale Realtor, Simi Valley Short Sale Realtor, Moorpark CA Short Sales, Thousand Oaks CA Short Sales, Westlake Village CA Short Sales, Newbury Park CA Short Sales, Camarillo CA Short Sales, Simi Valley CA Short Sales, Ventura County Foreclosure Help, Moorpark Foreclosure Help, Certified Home Affordable Foreclosure Alternative Specialist, HAFA, HAMP. You can find The Stop Foreclosure Institute of Ventura County at 587 W. Los Angeles Avenue, Moorpark, CA. 93021 Chris B Johnson specializes in loan modification assistance and short sales in Ventura County California. Ventura County Loan Modification Help, Ventura County short sales. Ventura County Short Sale Realtor Short Sale Realtor. Ventura County CA Short Sales. Ventura County Realtor.
Copyright 2010 SFI Marketing Institute, LLC. All Rights Reserved. This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing. The views expressed here are Johnson's personal views and do not reflect the views of Prudential California Realty. This information on Ventura County Short Sales: A Few Examples of Loan Servicers Not Doing Their Job is provided as a courtesy to our viewers to help them make informed decisions.