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Big Banks Accused of Short Sale Fraud - CNBC

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posted on Jan, 20 2010 @ 01:04 PM
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www.cnbc.com...

If this isn't a sign of desperation for the state of our banking system, I don't know what is.





"When we confront the lenders and tell them that this request is illegal and a violation of RESPA, they tell us it's been cleared through legal and they don't care. Do it anyway," charges Gentry.


JP Morgan Chase simply answered, "No Comment," when I relayed the charge to their media representative.

Bank of America denied the practice to CNBC in a written statement:

"Bank of America enforces a policy that all disbursements are documented on the settlement statement for short sales. When we are servicing a first mortgage with a second lien held by another investor, if the second lien holder asks for off-HUD payments, we will not approve the transaction (if we have knowledge of it). It is also against Bank of America’s policy to accept off-HUD payments on its second liens."

Citi 's reply was a bit more complicated:

“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."

"When we confront the lenders and tell them that this request is illegal and a violation of RESPA, they tell us it's been cleared through legal and they don't care. Do it anyway," charges Gentry.




posted on Jan, 20 2010 @ 01:05 PM
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And this poor woman should probably be put in the witness protection program now.



Most agents wouldn't go on the record with me, for fear of retribution by the banks with whom they have to work every day. But one agent, Kayte Gentry, of Keller Williams Integrity First Realty, was brave enough to blow the whistle.



posted on Jan, 20 2010 @ 01:13 PM
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They should post a photo copy of a cancelled cashiers check by BofA or Citi



"They are pretty clear and pretty upfront about the fact that if the first lender knows they are getting paid, the first lender will kill the short sale," says Brandt. "So these second lenders are asking for the payments off the closing documents, off the HUD statement, usually in a cashiers check prior to closing. Once they receive that payment, they will allow the short sale to go through, which according to RESPA laws and the lawyers that we have spoken to on the topic is not legal."



posted on Jan, 20 2010 @ 09:58 PM
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I wonder if this affected the banking stocks much. Bank of America announced earnings today and CNBC didn't mention this story again. Which is wimpy in my opinion.



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