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Old 05-31-2008, 08:20 AM
 
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Olecapt, I'm assuming when you write "CW," you are referring to the mortgage holder, Countrywide? If that assumption is correct, why does the morgage company have a fiduciary responsibility to get fair market for their client? I was under the impression they have no responsibility once their client defaults and all they are left to do is cover their butts? And then I have to ask, how can fair market be determined if the area has been racked with many distress sales? Are those low price sales just kicked out of the averaging bucket? In my state, everything is averaged together and the seller who is not in distress eventually gets just as hurt because with the distress's factored in, the average list and sell price is lower all around. Our repo's are done through a sheriff's sale process with no one allowed in prior to the sale and their asking and selling price is phenomally lower than the typical market price.
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Old 05-31-2008, 09:38 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 38,127,294 times
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Quote:
Originally Posted by jjameson922 View Post
Olecapt, I'm assuming when you write "CW," you are referring to the mortgage holder, Countrywide? If that assumption is correct, why does the morgage company have a fiduciary responsibility to get fair market for their client? I was under the impression they have no responsibility once their client defaults and all they are left to do is cover their butts? And then I have to ask, how can fair market be determined if the area has been racked with many distress sales? Are those low price sales just kicked out of the averaging bucket? In my state, everything is averaged together and the seller who is not in distress eventually gets just as hurt because with the distress's factored in, the average list and sell price is lower all around. Our repo's are done through a sheriff's sale process with no one allowed in prior to the sale and their asking and selling price is phenomally lower than the typical market price.
Countrywide...the CW as you supposed...does not have a duty to the mortgagee...they have one to the mortgagor. They are a hired gun for those who actually own the mortgage. Which may be bits and pieces of many secuirities since we have gone to securitizing the mortgage business.

They service the mortgage which may well involve foreclosing on, seizing, and then selling the asset involved. They have a fiduciary duty to get the best value for the actual holders of that mortgage.

The actual impact is quite diverse. Some neighborhoods are basically wiped out. They end up so far underwater that there is no way out. The process feeds on itself. One sale lowers the price of the next sale and the value plummets in a death spiral.

But other neighborhoods have little damage. The average resident has lived there more than five years and is still way above water even though values have come down. It may be very hard to sell. The obvious excessive value available in the hard hit areas pulls cash away from the stable ones.

If one can afford it the home involved in starting this thread is almost ideal. Particularly if you can afford to live in it for a year or two. We now have a home in the low five hundreds in the middle of a small neighborhood of 800K to 1.2 million. And it is as nice as many of the lower end homes.

So what is going to happen? The other homes all going to come down 30% or so? I doubt that very much. The buyer of this home is going to sit on it and after a while it is going to be up there with the rest. The value in the neighborhood is far too real to be dragged down by one or even two examples.

But what is CW excuse? They get paid for not letting this happen.
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Old 06-01-2008, 07:49 AM
 
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But Olecapt, loan holders write off loans quite often or settle for the best they can get in some cases. Is your point in this particular situation that they could be asking so much more for this property than they are and get it? And further, since most things I have seen for sale in repo deals end up getting up bid to the point they are not that fantastic of a deal for the buyer at the end, hasn't CW ended up fulfilling it's fiduciary responsiblity by the time the selling process is complete?
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Old 06-01-2008, 08:27 AM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 38,127,294 times
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Quote:
Originally Posted by jjameson922 View Post
But Olecapt, loan holders write off loans quite often or settle for the best they can get in some cases. Is your point in this particular situation that they could be asking so much more for this property than they are and get it? And further, since most things I have seen for sale in repo deals end up getting up bid to the point they are not that fantastic of a deal for the buyer at the end, hasn't CW ended up fulfilling it's fiduciary responsiblity by the time the selling process is complete?
In the last two days we looked at 20 homes below 140K in the North and NW. That is basically every 3/2 there was in the area and price range. We have made an offer on four and expect we will get at least one. Two offers are around list. One is a few percent below and one is 5 percent below. I will post the outcome. I do expect all four of these will be gone by mid-week unless the lender is slow.

Lenders are of course going to take a loss on these mortgages. The amount is the queston. CW has a fiduciary duty to minimize that loss. CW would argue that pricing low gets the home off the books quickly saving carrying costs. The question is how low? If CW gave them away everything would sell in an hour. But the mortgage holders get nothing. Is selling in a day or a week worth $100K or more? I doubt that very much.

It is a question of balance.
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