Aug 10
29
Questionable practices by banks on second liens?
Are The Banks Breaking The Law?
Diana Olick of CNBC has exposed an alleged practice by banks to recoup second mortgages by demanding cash, off the HUD settlement statements, from either real estate agents or the buyers in short sales. Olick says she has personally heard a recording of a phone conversation between a short sale real estate agent and a second lien lender, during which the second lien lender clearly asked for cash outside of the settlement and threatened to kill the deal without it.
“AGENT: Well yes, I don’t want to lose my license, go to jail, I mean, I have to sign… LENDER: You’re not going to lose your license – we have plenty of realtors who do this, who actually understand how this whole process goes – and they realize that OK, if I want to get this done, this will take place.”
When asked about the practice, these are the replies from three of the biggest banks: JP Morgan Chase simply answered, “No Comment”, Bank of America denied the practice, and Citi ‘s reply was interesting: “We work very hard to help distressed homeowners find solutions for their financial challenges. In our attempt to amicably resolve the debt, we will generally negotiate a reduced settlement with the homeowner in order to release a second lien. Unlike some lenders who refuse to reduce the payoffs on second liens, we choose to reduce the payoff amounts in some situations to assist the borrower. We do not provide instructions to settlement agents on how to fill out the settlement statement or any other closing documents, and we certainly do not require settlement agents or any other parties to violate applicable laws.”
