Lenders are NOT doing Loan Modifications
because THEY DON'T PAY ENOUGH
Banks are turning down loan modifications, because they are making more money with short sales and foreclosures.
(The Government set it up that way in the FDIC Loss Sharing Agreement)
The videos below will give you the numbers showing how a lender can typically make over $100,000 on a short sale.
They end up making more than they bought the loan for, from the FDIC
Loan Modifications are Difficult
Millions are attempting to save their homes through loan modification.
Forebearance Plans are Easy, but short-lived
Right now, it's very easy to get a 3 month "temporary plan".
Call the bank and 10 minutes later you have a temporary reduction in your payment for 3 months.
But you normall won't get a permanent modification that really works!
Less than 5% get permanent modifications.
Why Won't Lenders Do Loan Mods?
Lenders don't make nearly as much money with Loan Mods, but make much more money in Foreclosures or Short Sales.
Most people, with legitimate hardships that propely fill out all the paperwork so the loan modifications will avoid foreclosure, are denied the Loan Modification and their home is sold in Foreclosure.
YOU MUST SEE THE VIDEOS BELOW
The news is coming out on the "Sweetheart Deals" with the FDIC and some banks.
We have a short 2 part video for you below.
You won't believe the deal this lender has right now. Watch the Videos below for details.
A lender make more money on a foreclosure or a short sale because of "Shared Loss Agreements".
You, me, every taxpayer funds the incentive for lenders to avoid loan modifications because they are paid large sums of money for foreclosures or short sales.
How it Works?
It can start with a bank failure.
One of the biggest culprits in the loan modification mess is OneWest Bank. Have you heard of them?
Extremely difficult lender to deal with if you need a loan modification.
Here is the short history of OneWest:
July 2008: IndyMac Bank fails
March 2009: OneWest Bank is created to purchase assets of IndyMac
OneWest was set up by several billionaire private investors with the purpose of acquiring IndyMacs assets at a big discount.
Here are the 3 key points about the purchase
1. Purchased first mortgages at 70% of balance.
2. Purchased Home Equity Loans at 58% of balance.
3. In the event of foreclosure or short sale, FDIC would cover 80-95% of losses, using the original loan amount AND NOT the amount OneWest paid for the loan
The last point is the key.
It provides the new bank with insurance above the price they paid for the loans.
That's outrageous!
They can choose:
1. Loan Modification for a financial loss....OR
2. Short Sale or Foreclose for a large profit.
Original Loan Amount: $485,200 with IndyMac
OneWest Paid: $334,600 for the loan.
Short Sale Purchase: $241,000
With just the above numvers, it looks like a $93,000 loss for the lender?
But not after implementing the "Shared Loss Agreement" with the FDIC.
When OneWest purchased the loan, they had this agreement with FDIC to protect their investment. A real sweetheart of a deal!
The Original Loan was for $485,000.
If you subtract the short sale purchase price of $241,000, the "Shared Loss Agreement" calculates a 'loss' of $244,000 for the new bank OneWest.
So the FDIC pays OneWest 80% of the $244,000 loss. In this case, a check for $195,360.
IN SUM: $195,360 plus the short sale purchase price of $241K gives OneWest $436,360, when they only paid $334,600, which gives them a net profit of $101,000 on the short sale.
Read that again, the lender made a 30% 6 figure profit on the short sale. That's quite an investment. No wonder these guys are billionaires.
TIME INVOLVED: Just 6 months. OneWest bought the loan for $334,600 and 6 months later they got $436,360.
OneWest Paid 55% - 70% of Loan Amount:
(From FDIC Indymac Sale Agreement)
e.g. OneWest bought $300,000 Loans (60 days+ delinquent) for $165k from FDIC.
If they short sale them at $150k, FDIC pays them $108k extra = $258k total.
(That's $93,000 Pure Profit within about 6 months)
Think about that...why in the world would this bank accept a loan modification? Answer: They rarely do!
OneWest is a true hardball player when dealing with loan modifications. We hear it every week. This deal explains why.
They make a lot more when they turn down loan modifications.
SUMMARY: There are currently over 50 lenders with "Shared Loss Agreements" with the FDIC that give the lenders financial incentives to reject loan modifications in favor of foreclosures and short sales.
LESSON: Be prepared for the flood gates of foreclosures and short sales to continue. It's all about the money.
And the money goes to the lenders who reject loan modifications.
Lenders are making much more money on short sale and foreclosures, so why bother with loan modifications?
140 total failures. More than the past 10+ years combined! What happens to the assets of these failed banks? It may scare you after you watch the videos.
Looking to buy OneWest Stock?
"You've got arguably five or six of the greatest private investors ever behind this purchase -- right there you should take notice," says Andre Peschong, a partner with Bridgewater Capital, "These are not traditional private equity investors, these are opportunists."
The typical buyout strategy involves a cheap deal, high leverage, a quick restructuring and an exit bearing a high return on capital within a couple of years. As an added bonus these deals use taxpayer incentives as a crutch that dramatically limits risk.
There were lots of people hoping to make money on the wave of bank failures. "A lot of private equity groups I spoke to were chomping at the bit to get in there and buy banks about a year ago," says Kevin Mulvaney, a professor at Babson College who teaches a series of M&A and has a background in commercial banking. "They were hungry animals in the forest, so to speak."
With this sweet deal with the FDIC, it would be easy money, so you might ask: "How can I get some of this stock?"
Sorry, OneWest is still privately held. It will be a couple of more years before you can get in on this game. And at that time expect to pay a much higher price and not have the advantage of millions of short sales & foreclosures. Lenders are not doing Loan Modification because they don't pay.
Banks are turning down loan modifications, because they are making more money with short sales. This video will give you a real life example of a lender making over $100,000 on a short sale.
We suggest:
1) get a Forensic Loan Audit to Find How the Lender Violated the Law.
2) get a Non Profit to suggest Short Sale to a Buyer you Know.
3) consider hiring a Lawyer to prepare and file a complaint.
Call Jim at (562) 867-3230 or
(at )
,
for a FREE Evaluation for your Situation.
Relevant Books:
Structured Finance and Collateralized Debt Obligations:
New Developments in Cash and Synthetic Securitization
Just Published late 2008
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