The “BBI” (or Ben’s Bank Index) is a reflection of the subjective opinion of our Negotiating Team – our favorite and our least favorite lenders/servicers of the month.
As I update the BBI moving into Fall 2010 – much has changed! Banks who just a few months ago were at the bottom, are now at the top and banks who were at the top have fallen to the bottom – evidence that, while the BBI may be helpful (or just entertaining) in the moment, all of this stuff changes and I wouldn’t discriminate too much for or against any lender because by the time your deal gets the light of day, everything may change. However, in the Fall 2010 . . .
EMC stands at the top of my negotiator’s favorites! Their letters are clean with no anti-flipping or other anti-investor provisions. They turn approvals around relatively quickly and they are fair to deal with according to my negotiators.
Citimortgage remains near the top of the list. My negotiators call Citi “fine, slow, and fair” – we consistently get good deals from them, they are well organized, and overall fair. Recently, they have been very generous in giving extensions – it seems like if there is a shred of hope that a deal will close outside of a foreclosure, Citi wants it to happen.
Also mentioned in the list of “not that bad” – American Home Mortgage and . . . yes, shocker . . . Bank of America maintains near the top this month! Don’t get me wrong, they are still relatively hostile to investors and their letters come with the infamous 30 day no-flip language; however, their Equator system is actually working well and accomplishing what they wanted – deals are moving quickly. If it is a fair deal to the bank, we’re getting it approved in record time. We’ve long since figured out the Equator system and we understand how to work the system for fast results. The negotiators continue to like working with Equator!
Now to the middle of the pack – the “they are okay” pile: Chase is fair and not investor hostile. However, you’ve got to have everything together all at once upon submittal – if you give us everything we need up front, it’s going to go relatively smoothly and quickly. If you’re sending in things piecemeal, they’ll close the file out and we have to start all over. So for the organized among us – we like Chase. GMAC has also moved into Equator. We’re finding their staff is struggling a little to get used to it (one anecdote – a GMAC negotiator emailed us to asked us to resend an email through Equator so he could reply to our email, but that he wasn’t allowed to email us directly – catch the humor?) My negotiators applaud BB&T for being professional and honest and doing what they say they will do.
And now to the bottom of the bunch - the “we don’t like you” pile . . .
Last year’s favorite has become this Fall’s most hated – Wachovia and Wells Fargo – they’re on an “anti-investor” kick. Their letters come with anti-flipping language and closings require a “no flip” affidavit. We can still get good deals from them, but we have to deal with the “no flip” nature of these transactions. We have had several brutal battles with Wachovia over 2nd mortgages. They are not rolling over or taking the traditional 10 cents on the dollar – they’re pushing hard. Again, doesn’t mean we haven’t had success – just heads up that they’re fighting hard. Personally, one of my recent deals had a Wachovia second – we were able to negotiate a full satisfaction and a 65% discount – I was able to do the deal successfully and make a nice profit – less than what I thought when I first looked at the deal and saw that big second, but still a successful deal! Wachovia has also been painfully slow to deal with.
Speaking of slow… nothing has sped up over at “Snail Trust” or “Snorora”. SunTrust actually belongs a little higher up on our list because we are getting great deals done with them, but it just takes forever! (NOTE: some SunTrust letters come with language that appears to be problematic for investors; however, we have successfully been able to address this.) The negotiators feel like there is one little lady sitting in a room stacked with files. Aurora, in addition to being SLOW – has also taken to reading the Addendum that are attached to most Short Sale offers – finding the sentence that says “buyer is an investor” and denying the deal early on because of this.
Ocwen “remains a mess!” and according to the negotiators, will not delay foreclosure sale dates. Unlike Chase, Ocwen seems bent on getting whatever it can to foreclosure as quickly as possible.
The new leader at the bottom of the pack is HSBC who has taken to reading every line of our addendum and denying deals based on our disclosure that a real estate investor is involved.
This is a serious development. For several years we have been making full disclosure to the lenders that as an investor buyer we intend to flip the property. We took some comfort in the practicality that lenders were not reading the contracts. That is no longer the case and we are seeing more and more lenders reading the fine print of your disclosures and denying deals saying “purchaser is an investor – we don’t allow flips”.
Let’s put aside for a minute whether or not this makes any sense for the bank. We could go on for hours about my opinion that investor flips actually return higher dollars to the lender’s bottom line, that we add value where others don’t, that a short sale listing is damaged wholesale goods that only an investor can handle . . . and on and on. That’s a separate conversation. For our purposes in the BBI of Fall 2010 – bottom line – a few banks are reading the addenda and denying deals because of it.
Here’s what I’m doing.
- I MUST continue to disclose that I am an investor and that I intend to flip the property.
- If the bank denies my deal because of that disclosure, I can go one of two ways:
- First, I can be grateful that my disclosures triggered a response from the bank NOW rather than LATER, that I won’t waste months on the deal and end up with an issue later, say thank you and move on! OR
- Second, I can look at the individual facts of the particular situation and decide to go forward on a “no flip” type deal. I had a bank ding my disclosure this week. I looked at the deal and decided, there is still a lot of opportunity here – I might buy and hold it myself? There are enough possibilities that I resubmitted the offer without the flip disclosure. Now, I’ve been told not to flip and I won’t – but remember, flipping is just one of the possible exit strategies. One I won’t be using on this particular deal.
- Finally, I remind myself that the “early reading banks” are a minority of the lenders. Most lenders are not reading the disclosures and if they are, they don’t care. So just because a couple banks are, I’m not spending time whining or complaining or throwing in the towel – that’s what broke quitters do . . .
My final thought for our Fall 2010 BBI – is that yes, these deals are becoming increasingly complicated. There are more hoops and traps than ever. That’s why I believe partnering is the only way to move forward in today’s environment. Submit your deals under “Partner for Profit” so you can get the highest level of deal support and shared ownership attention possible. Don’t try to run off and do these deals by yourself. And remember, the more traps and hoops scare away the seminar grads and home study course buyers, the more and better deals there are for you and me.
NOTE: The BBI is compiled by the Negotiation Team of The Short Sale Service. The index is completely subjective and represents merely the opinions of our negotiators.
Our general advice is to no worry too much about who the lender is – keep your focus on bringing in the deals and let us worry about the banks. Yes, some banks are more difficult than others, but that’s your professional negotiator’s problem, not yours.
Most “banks” are merely servicers for other investors and just because you may have had a bad experience with a bank once, does not mean that you will have the same experience with that bank again.
However, given the breadth of experience we have, we can certainly identify trends and the purpose of the BBI is to give you the benefit of that knowledge.
