I Wonder If Other Lenders are Looking At This as a Potential Loss Recovery Center
I had an interesting instant message chat yesterday with a lawyer friend who has been approached by a major lender.
Seems this lender is looking for local resources to follow-up on short sales after the closing. They want to make sure the “value” everyone agreed to at the short sale closing was really the “value” at that time.
In other words, they are looking for situations where a short sale was negotiated and closed and then the property flipped for a higher value. They are looking for situations where the contract rights were sold and this lender was not notified of the assignment and the assignment fee.
For flippers this should cause a rapid closure of the sphincter muscle. For most legitimate investors who fully and factually disclosed the details of the deal and their real involvement there is nothing to worry about.
And, it would appear lenders are within their rights to do this.
But, what would be their recourse?
Well, if the “investor” influenced the BPO in any way but at the same time intended to flip the property at a higher value OR receive an assignment fee for their position in the contract, then the “value” was higher than what was disclosed to the lender during the short sale process.
According to my lawyer friend, at least this one lender thinks they could pursue fraud actions in a civil venue.
I don’t know, but this one lender seems to be “lawyering up” and willing to pay a hefty contingency fee if they are willing to take the cases.
It just gets more and more interesting.
That’s just stupid. I am free to sell any asset I own at whatever price I can negotiate. If the lender is too dumb to know the real value during the short sale its not my fault. This will not be successful but maybe it will scare away the posers like you.
I see you are back.
Alright, let’s see.
Will this affect me in any way? Uh, no.
Will I continue to pursue short sales? Uh, yes.
But, by all means, why not share with us the details of one your deals? You know, one where you helped convince a lender the value was $X while at the same time convincing your buyer it was worth more than that.
That is the exact situation they claim to be targeting.
So, are you up to it?
Tim you made a great point by pointing out that you still were going to do short sales in a market like this proves that you are a true real estate investor. You found opportunities where other see them to be bad investments. Very good.
For a very good resource on real estate short sales visit http://www.realestateinvestor.com
Thanks, Donny.
The fact is this will not affect anyone but flippers and speculators and maybe not even them if they add real value to explain the spread. While I am not actively pursuing residential because of the market I am looking at some short sales as opportunities arise. Since, I tend to buy and hold there is no issue for me even if lenders do this on a very widespread basis and are successful.
However, if I were trying to flip or assign contracts on short sales, I’d probably be pretty worried now about any past deals I did.
Ha ha, very funny “Tim” like I am going to give away any of my secrets on a backwater blog like this. I doubt they would be smart enough to figure out when I sell or how much I make when I sell. Since it is an assignment fee selling my position in an agreement it is just me selling personal property to someone else. There isn’t a damn thing the lender can do.
Real Investor,
Do you always wake up in a foul mood and maintain it through the day/night?
Or, do you just have the unfortunate flaw of being arrogant?
For your sake, lighten up!
I wake up every day in a great mood because I and my students make more money before breakfast than most of you poser investors make in a year. I am not arrogant just unbelievably successfull.