I don’t engage in lender bashing. Facebook and the blogosphere are full of people talking about how dumb lenders are. You’ll never find me saying that.
My party line is “lenders are simply under intense pressure from many different places – investors, insurance companies, government regulators, and their own PR agenda – that often the end result just doesn’t make sense to us.”
I’ve always taught – don’t try to understand a bank – you’ll go nuts.
However, in a week when banks are bending over backwards to push a marketing agenda of how seriously they are taking short sales and how they are aggressively pursuing foreclosure alternatives – I just have to share:
Here is an actual email exchange between one of my short sale negotiators and a lender’s loss mitigation representative regarding a proposed short sale offer:
Lender: I will tell you that the minimum net to <BANK> needs to be $51,500. This amount does not include jr liens, commission, closing costs etc. Thank you,
Negotiator: There is unit next door for sale for $49k. It has had no offers. How can we get that number with this unit next door?
Lender: Please be advised that this is NOT based off the value. The value is only used as a reference. The file will remain closed until an offer that meets this criteria is received. Thank you,
Negotiator: What is it based off if not the value? The homes are not worth that much so how can we get you an offer for that amount?
Lender: There are buyers that are willing to pay more than the current market value.
Oh, silly me. . . I get it! First, the bank sets a demand NOT based on the value of the property but rather establishes criteria based on the assumption that there are people in this market who will pay more than what the property is currently worth?!
A skilled short sale negotiator’s job is to breakthrough this silliness which we see all the time. I’m not going to call lenders dumb, but they are often good for a solid laugh.
I have another one to share tomorrow.
4 Comments
LOL…. it’s the “Greater Fool” theory…
The bank was foolish enough to lend to these people in the first place, so now they have to find someone ‘more foolish’ then they were to dump it on. They hope to find a greater fool than themselves.
Sadly, I don’t think they will…
Nick
At this point I’m beginning to think that MOST of these representatives in loss mitigation – regardless of what lender it is – have a turn-over rate that’s ridiculous. Some of these representatives are not “qualified” to have a conversation on WHY they can’t accept less than $51.5k. They’re not trained to “be” the investor for a 10-minute phone conversation. They have a script and that’s all they can do is read from it, unfortunately. And I, too, have caught myself saying that such-and-such lender is “dumb” or “negligent” because, despite what I just said above, THAT representative is an employee for that lender and she/he is a direct representation of how that lenders works with you as the negotiator.
Yes, this would be funny if it hadn’t happened to my last three luxury short sale deals. The banks involved all are demanding above fair market value, with similar explanations as to how they are arriving at their “valuations”.
Patient me … I even waited more than 7 months to be “amused” by their obvious desire to make me laugh before I left.
the silliness is just part of the process – you just have to learn to deal with it and not let it throw you off – my guys deal with this everyday – I just laughed when I saw it in writing