Massachusetts Loss Mitigation GONE WRONG!
Loss Mitigation – most people don’t know really what this term means, but for those who work in Short Sales or in the default department of a bank it’s as familiar as morning coffee.
I haven’t posted much this year. We were busy getting our Realtor website for Massachusetts Loss Mitigation up and running. Nick and I are sometimes two ships passing in the night and between work, family and our speaking engagements, it’s hard to get my thoughts wrapped around writing a post. Today is different. I felt compelled to share a letter from one of my homeowners. Some days we go on autopilot negotiating short sales in Massachusetts. Our team has a very intense approach to these sales. Not everything is a slam dunk, but for the most part, we are getting short sales approved month after month. Interestingly the battle hasn’t changed much since 2008, which is sad.
I guess the #1 thing that would prevent your property from selling short would have to be not coming to an agreement on the value. That was probably the case in 2008 and is still the case in 2017. We have not progressed on this issue. The system for valuation of property is still flawed. The worst part is even when it’s not flawed, it makes no sense. For example, I had a Wells Fargo loan we were negotiating on a property in Exeter, New Hampshire I believe. This was a few years back but the offer on the property from what I can recall was under $100,000. The counter from the bank was over $200,000. How did this happen you might ask? Well, I had to make a lot of noise. I called Freddie Mac who was the investor of the loan. I really do like the people at Freddie Mac. They haven’t become robots like their Fannie Mae counterparts. They are also normally VERY realistic when it comes to determining value. Anyways, after calls to Freddie, and Wells and almost 30 days wasted, it was determined the value that everyone was using at Wells was from an old outside, exterior assessment from two years prior. Thankfully, we all realized the error, but not before the homeowner had gotten so stressed from the process they ended up filing bankruptcy to end the sale. (We still negotiate short sales after bankruptcy in Massachusetts and New Hampshire, but this homeowner had had enough) Unfortunately, Wells and Freddie lost out at that point, as it was too late.
My post today is in part because my seller in Western, Massachusetts has had enough. I’m at a loss. Out of frustration last weekend he wrote to Maura Healy (our Attorney General), Elizabeth Warren (one of the Senator’s in Massachusetts who has fought the big banks), Richard Cordray (Director of the Consumer Protection Finance Bureau), Lloyd Bankfien (the INVESTOR of his mortgage at Goldman Sachs and their CEO) and Saul Sauders, the CEO of Shellpoint his servicer.
What was his COMPLAINT?
He is selling his Massachusetts Short Sale, in the western part of the state and the servicer (Shellpoint)
valued the property at $37,000 (This was for an for an EXTERIOR REPORT) and a month later at $38,000 (For an INTERIOR REPORT) – The buyer’s offer price was $52,500. This seems like a win win for Shellpoint, the investor (Goldman Sachs by way of MTGLQ, LP investors) and my homeowner.
The crux? Shellpoint countered $75,000 in July of 2017 and then $80,000 in August. His question in this, and mine is Why? Why would a servicer counter a borrower more than double the amount of the valuation? Keep in mind when you and I buy a property, and we need a mortgage, what is the first thing the bank does? They order an appraisal. That dictates the value and how much of a loan I can take out. Why is it when someone NEEDS a home valuation for loss mitigation purposes, all bets are off? This poor man will be FORCED into foreclosure because Goldman Sachs is willing to LOSE money. Do you know what a bank or investor gets when a property is foreclosed upon that doesn’t have mortgage insurance? NOTHING. Unless a third party buyer comes forward to pay towards the loss, they truly get nothing. Why would you take NOTHING, when you could have SOMETHING for the sale? We are getting Shellpoint and Goldman the value of the property. Why would you counter to a point no one would pay?
Interestingly I called Goldman, and I also emailed the CEO, no response. We faxed and my borrower emailed them and, no response. We emailed the CEO of Shellpoint, no response, so my homeowner wrote the following to the following people:
UPDATE: Maura Healy responded immediately saying a representative would contact him. So far that hasn’t happened.
Dear Elizabeth Warren, Richard Cordray, Maura Healey, Lloyd Blankfein, and Saul Saunders
I’m writing today over concerns I’ve had with Shellpoint who is the servicer of the property I own at XXXXXXXXXXXXX (redacted for privacy) Massachusetts. This property has been in foreclosure and a sale was stopped in order for a loss mitigation review (Short Sale) –
May 1st this year, a short sale package was sent to Shellpoint for review. On May 22nd we were told the auction would be postponed until June to try to review the short sale package. At this point we were very satisfied.
On 5/30 we spoke to Jesse in Loss Mitigation at Shellpoint and were told Shellpoint needed to NET $45,000. At this point we went back to the buyer and countered to get Shellpoint that amount. The buyer agreed to increase his offer to net that amount to Shellpoint. On 6/12 we escalated a title issue to Shellpoint which we never heard back from. The estates show a multitude of predeceased children and how all their heirs conveyed their interest to the property. Somewhere there is a title policy tied to the Countrywide mortgage and there is an attorney-agent already that has issued a policy. To date NO ONE from Shellpoint has responded about this issue.
We submitted an increased offer of $52,500 to Shellpoint with a HUD and this was able to NET Shellpoint the $45,000. We waited.
On 6/14 We spoke to Sandra Martinez who said SHELLPOINT MADE A MISTAKE AND THE COUNTER OFFER WAS $75,000. That is quite a costly mistake. We had asked if an interior valuation was ordered as the house is in shambles. The foundation is sinking and cracked. It needs thousands of dollars of renovations. We were told it was not and we escalated again.
On 6/15 we sent an email to Jack Navarro, Saul Saunders, Tuongvy Hoang and Escalations regarding this crazy counter offer. Not one person got back to us. We followed up again on 6/16 and nothing. In the meantime we were calling into Shellpoint as well, and then sent a third email on 6/20. On 6/21 we received the Exterior appraisal and a letter from Wendall Hayes at Shellpoint, letting us know the investor of the loan, and stating that they needed to NET $75,000, and it didn’t matter what the assessment ($37,000) came in at for the property. He included the assessment which I have a copy of.
On 6/26 we spoke to Shamarion Trevino who said that Shellpoint would now order an interior appraisal.
This gave us some hope, but it was also very confusing. If the exterior report came in at $37,000 and the counter offer was $75,000 NET then what would happen when an interior valuation was done? It would surely be less money, and maybe they would finally review my house for what the value truly was.
On 6/29 we reached out to Shamarion again to ask WHY an exterior assessment would be countered SO HIGH if that wasn’t what the value truly was. We did not hear back from her.
On 7/10 we were sent the INTERIOR appraisal. This showed the property was worth $38,000.
In July the file was submitted to the investor for approval. We thought this was good news. We had to get a new proof of funds from the buyer, but that was the only hold up. On 7/26 and 7/26 we followed up with Shamarion to see where the file was at. On 7/26 Shamarion indicated the value had been sent to their client for review.
My understanding of this is it went to MTGLQ Investors, LP for them to look at based on the above.
We called in weekly and finally on 8/14 had an update that the INVESTOR countered at $80,000.
This makes zero sense. Why would the counter be $4000 more? Yes the interior was $1000 higher, but not $4000.
I do not know the workings of Goldman Sachs, which I understand owns MTGLQ Investors, LP, but do they actually review their investments? In what world would something with two independent valuations stating the property worth UNDER $40,000 be countered double the amount? How does this help their investors?
If this property were to foreclose, it would be a complete loss. They could never put it on the market to get $80,000 unless they were going to put thousands into it.
On 8/15 we reached out to Lloyd Blankfein, and didn’t have a response. We called Goldman Sachs and left a message. We also reached out to Shamarion at Shellpoint and Wendall Hayes on 8/17 – no one responded. We reached out again on 8/21 to them and also reached out to Lloyd again. So far NO ONE has responded to this. My last attempt was on 8/22.
When a property owner buys a home, an appraisal is done, and the loan is typically capped at the appraisal amount. I cannot buy a home that was appraised at $300,000 and buy it for $400,000 just because the seller wants that amount, so why should the reverse be any different? What are the laws regarding loss mitigation valuations? If a property value is $38,000, why would a lender counter over double that amount? That would immediately put the buyer at risk.
There is a HUGE issue here. I’m going to be forced into foreclosure. Why would a servicer and investor even ORDER a valuation if they weren’t going to accept an offer from a buyer within a threshold of that amount? How is this good for anyone? It’s not good for me the homeowner, it’s not good for Goldman Sach’s investors, and realistically the only entity I see it good for is Shellpoint because they have wasted months and months and I’m sure they get paid monthly to service the loan. So the longer this loan is on the books, the more money they must make. This ENTIRE PROCESS IS ABSURD!
I would like someone to respond at this point and explain to me why I’ll be forced to foreclosure for a property valued at $38,000, which everyone knows is the value and yet the servicer is demanding $80,000. There must be some regulation of valuations for people exploring loss mitigation efforts. It seems to me just about everyone loses out here. I would like it if someone would contact myself or my third party contact (Listed below) I would appreciate it.
Sincerely (XXXXX homeowner in Massachusetts – protected for Privacy)
home in Massachusetts
Shellpoint Loan #
Third Party Negotiation Contact:
Short Sale Mitigation
To date 9/6 – no one has responded but Maura Healy. Unfortunately, her rep never contacted the homeowner
On the internet this is published here:
Goldman Sachs Group, Inc., its current subsidiaries and affiliates, including MTGLQ Investors, LP and Goldman Sachs Mortgage Company (GSMC), recently reached a comprehensive agreement with the Department of Justice (DOJ) and others that primarily addresses actions and practices related to the marketing, structuring, arrangement, underwriting, issuance and sale of residential mortgage backed securities (RMBS). Goldman Sachs is committed to helping homeowners who are struggling to make their home loan payments. If you are having trouble making your home loan payments, you may qualify for additional relief through special limited programs offered under this agreement. Please contact Shellpoint Mortgage Servicing for additional information about loan modification or settlement options available as part of this Agreement.
The CFPB did respond. It was a complete joke. I’m fairly certain they didn’t read my homeowner’s complaint because if they had, they would have seen some glaring errors. I’m attaching Shellpoint’s response which I just received. Shellpoint contends they are going of a May valuation. This must have been an external evaluation. That valuation showed the property value at $166,000, however the July valuation shows it’s worth $37,000 and the August valuation shows it’s worth $38,000. Do you see why this is still a HUGE issue in loss mitigation?
I don’t think even Shellpoint reviewed the information.
Unfortunately, this poor gentleman will end up in foreclosure because NO ONE is paying attention.