Posted by John Corey on June 18, 2007 at 04:02:37:
It does not matter what you believe,
It could be true that more money would be made by the note holder if
they agreed a short position. That may not be how they have set up
their process. The risk of a screw up is too great so they go with what
they know will work even if some of the time they recover less.
These are large firms with lots of deals to manage. Efficiency in process
is not always the most profitable when you look at individual deals.
They make up for the lack of profits (reduced losses) in individual deals
by servicing more loans and having a lower cost of funding than the
small operators.
In the situation you refer, DB is acting as loan servicing agent only. Acting on behalf of a 3rd party, as Trustee. They are in an administrative, not an equity position.
…exactly…they don’t care about short sales or doing a workout as a trustee. They just hire the law firm and let it rip. They get paid whether there is an offer and compromise or not.
IN short…they rarely act in the best interest of their Clients.
Unfortunately, most of us small pe-ons out here trying to make a buck think that what is in the best interest of these mega companies is to stop and deal with us… Not so, as they see it. Many times there are so many moving parts in these jumbo money machines that a default amounts to a few cents on some statement. If they sell it to you for a short sale, the outcome to them is the same… So at least understand the game, and know that there are reasons why they don’t simply drop to their knees and worship the fact that you have a short sale offer…
The Trustee (and the legal counsel) are often doing their job with defaulted mortgages. Their job is to get unencumbered title back to the client ASAP. These companies have all been stroked 6 ways to Sunday by folks who are trying to buy the property at 50 cents on the dollar. Don’t get me wrong, I am not saying not to present the offer and make the attempt to buy the properties, but at least understand that the Trustee is too busy to worry about your offer, and the Lender doesn’t want to hear it anyway.