Monday, February 01, 2010

Another Piece of Evidence to Support the 'Evil Banks' Argument

Wow. This is pretty ugly. Caught on tape, here is a conversation between a real estate agent trying to facilitate a short-sale, where there are two lenders on the property.

Bank one is going to accept partial payoff, meaning they will not recover 100% of the loan out on the property. But they do get 100% of the proceeds of the sale.

Bank two doesn't get a dime. Therefore, they have zero incentive to approve the sale, and in fact, they have an incentive not to - it helps them avoid digesting the loss on their current balance sheet.

So how do these deals get done? Well one way, as in this recording, is for the 2nd lender to bribe the real estate agent and demand that they pay them privately. Which is a violation of federal real estate settlement practice laws.

In a good showing for real estate agents, this one is clearly aware of and concerned about the conflict and the related ethical issues. Listen to how the bank administrator tries to bully them into complying.

Not pretty. Watch for more of this to bubble up to the surface and hit the news. There's a lot of murmuring about this practice going on right now.

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