Peter J. Pike

I too believe that it is time for lenders to come to grips with the reality of the current situation. My theory is that it is due to the severity and speed with which everything occured that "house cleaning" is in order, rather than some conspiracy. A big part of the problem with short sales has been the number of "low ball" offers that have been clogging the system. There are only so many people who are trained to be able to review a file and determine whether it is in the lender's best interest to accept a short sale, or go forward with a foreclosure. They can only review so many files each day. Countrywide appears to be leading the pack, with trying to get its house in order. Based upon what I have seen and heard over the last couple of weeks (this is pure speculation), I think that Countrywide is implementing a scoring system on short sale offers. They are assigning scores to various aspects of an offer, then, based upon the the score, the offer is either rejected outright, or it goes to a negotiator. Their scoring seems to be based upon a generic "value" of the property. They can look back a couple of years, to find out what the property appraised for, when the loan was made. Based upon past history trends, they can then determine how much that local market, as a whole has fallen since the time of the appraisal, and assign their initial "value" to the property. Looking at the offer to value ratio, the offer to loan outstanding ratio, time the property has been on the market and whether it is a cash offer or financed, they then can decide whether this is an offer to spend their time on. Other banks, such as Wachovia, have avoided this problem altogether by deciding that they will not (other than in states where they cannot obtain a deficiency judgment) release the seller from their obligations under the Note. This makes short sales a lot easier to vet. You don't have to look at the Seller's financial situation to determine whether there is a reasonable expectation of getting the deficiency that they promised to pay. For this reason, I have advised my clients who are seeking to do a short sale (which is in the best interests of everyone involved, the lenders included, since their costs of foreclosure, managing and selling an REO will usually far exceed the loss they will take on a short sale), involving a Wachovia loan not to bother. The time and effort in putting together a package for them (they want all financial disclosures from the Seller, even though it does not play into their decision), knowing that they will not work with someone who truly has no way to pay back even a part of the deficiency, means that it is not worth my time, nor the Sellers, to try to help Wachovia. Hopefully, all lenders will wake up, realize that the problems they are facing are very real, and can be overcome in a very real way. Everyone involved has to work together to make things happen (isn't that the theory behind real estate - a Seller wants to sell, a Buyer whats to buy and a Lender wants to make loans - everyone has to work together to see it all happen). A step in the right direction would be for all lenders to have an initial vetting process (and allow real estate professionals to know what those standards are, so that they can reject offers that will obviously not make it throught the first round of review); a process to determine whether to allow the Seller relief from all or part of the deficiency (and again, allowing real estate professionals to know those standards, so that they can properly explain to Sellers what their potential liability will be after the short sale); and a method of communication about each file to allow all to know what is happening. I know it sounds easy on paper, and I would be glad to explain it to any lender who wants to get through this mess.

Having defended a client (and friend) in a similar lawsuit, I can only say that "testing companies" like the NFHA are in business to find housing discrimination, whether it exists or not. They bullied my client, trying to get him to "settle" their claim, and when he refused, they sued. They also put out press releases making it look like they were guilty, before any of the true facts came out. At the end of the trial (it took almost a year to get to trial), a jury found my client not guilty. However, because of the stress and financial pressures put on him by the allegations (he lost a lot of customers because of the negative publicity), his wife left him and he lost his business. There was no retraction from the testing company, no apology. Rather, they went to the papers and made it sound like the jury just did not understand the case! What they failed to understand was that my client was not a racist and that he did not engage in steering. During settlement negotiations, the attorney for the testing company (who also was on the board of directors, and had set up the company - conflict of interest?) told me point blank that the realtors can never win, because no matter what they do, they will be guilty of discrimination! Please don't get the idea that I am in favor of steering or other forms of discrimination in housing. I am just against a business that makes its money off of legally blackmailing innocent people.

I too, agree wholeheartedly with this assessment. As an attorney whose practice is concentrated in real estate law, I recently gave a lectures to local agents that was supposed to be about short sales. It quickly turned into a group discussion about how the NAR settlement would affect local agents. At first, most of the people were either "sitting on the fence" or livid that "their information was being given out". However, when I pointed out that their arguments against change was just the sounding of their own death knell (remember the speech in Other People's Money, when Danny DeVito explained that even the company that made the best buggy whips in the world ultimately went out of business because they refused to change with the times). I believe that when we were done, the consensus was that Real estate professionals must learn to "embrace change" and the new opportunities being offered by the Internet and the ease of obtaining information. Your expertise in the local marketplace, ability to negotiate on behalf of your clients, and knowledge about the entire process (how many people buy more than four or five houses in their lifetime?) are the services that you bring to the table, that cannot be duplicated through information gleaned on-line.