Foreclosure in 94583>Question Details

The Hagley G…, Real Estate Pro in Pleasanton, CA

Lender wanting upfront fee to process short sale?

Asked by The Hagley Group, Pleasanton, CA Sun Nov 18, 2007

I had a lender, Indy Mac, hit me up for a $300 upfront processing fee in order to even look at a short sale package that I submitted on behalf of my seller. Anyone else have this happen? Ethically, it bothers me......is this even legal?

Help the community by answering this question:

Answers

16
BEST ANSWER
Indymac is the only lender that I know that charges the $300 to look at the file. Yes i have heard they charge it. I really don't know if it's legal but is a consumer to do when they are at their mercy. They usually don't care who pays for it... they just ask for that amount when you submit the package. It is non-refundable. I have worked with over 30 banks and none of them asked for any fee. Also, be aware that Indymac will take about 60-90 days to get back to you. You are in for a long haul...
Web Reference: http://www.sumnerrealty.com
0 votes Thank Flag Link Sun Nov 18, 2007
"I just had a short-sale with Indy Mac and they never brought this up. They lost 4 of our "hardship packages" but other than that they were typical big bank--4 digit extension, different person to talk to each time, took their sweet time!"

THEY ARE SOMEWHAT A NEW BANK STRUCTURED THROUGH WASHINGTON — A seven member investor group (billionaire George Soros and Dell Inc. founder Michael Dell) agreed to purchase. Indy Mac Bank is one of the largest casualties of all time and tied to the housing bust. Estimated at near $14 billion. Indy Mac, which specialized in loans made with little down payment or proof of assets. That’s hard to believe as regulators let it go unchecked. Bank was seized by the government in July after a run on the bank as the U.S. housing market collapsed. The Federal Deposit Insurance Corp. statements showed a holding company and private equity firm Dune Capital Management, agreed to buy Indy Mac.

The ability for Indy Mac bank to raise capital and mange losses will necessitate avoidance of short sales and modifications. You go through "He.ll to get a file approved, then receive an offer then get a sign off by another person who will lose the file (yeah yeah ) and then MAYBE ! Fannie AND FHLMC YES MAYBE. TOXIC SUP PRIE LOANS . . . NO WAY! THEY MUST FORECLOSE

Hey, I normally want to hear your feedback but ....Nope - the shorts and mods argument is not in the cards!
0 votes Thank Flag Link Sat Feb 21, 2009
$300 is pretty cheap compared to what a realtor would charge to have someone look at a property. Why can't a bank charge the same upfront fee you charge as a realtor when the bank does more for an individaul than you do. Unethical or illegal? A realtor is asking that question? WOW
0 votes Thank Flag Link Fri Jun 13, 2008
Yes, I process Short sales myself and at least 4 files that have crossed my desk were Indy Mac. I was hit up for the $300 as well now that doesnt seem ethical to me at all according to the research and data that i have collected about upfront fees. My company charges an upfront fee but we don't act as agents we are a third party service and we have spoken to DRE representatives on numerous occassions about our fee to double check, and it was said to be legal. Indy Mac charging fees upfront thats a question i definately have to ask the DRE as well.
0 votes Thank Flag Link Fri May 30, 2008
Cindi-
ok, so it's pretty clear that Indy Mac is on of the few that asks for upfront money to review a file. I want to add just another comment that is critical with respect to short sales and foreclosures.

Make sure your clients always confer with a CPA or tax specialist as there are many times that phantom taxes do not need to be paid. There are some very specific rules and regulations as to when taxes will be owed and when they can be avoided. So, get a Pro to help you out.
Web Reference: http://www.apr.com/dougm
0 votes Thank Flag Link Mon Dec 3, 2007
Cindi,
I would hang up and get another person on the line.
I've never gotten anyone from indy who's asked me for any money.
As someome whoteaches a seminar on short sales I'll be looking out for that in the future.
I would certainly ask to speak to the supervisor next time that happens.
These 1st level loss mitigators are just followinmg orders.
You can work around certain situations.
0 votes Thank Flag Link Thu Nov 29, 2007
Cindi,

This has not been the norm in my experiences in short sales. However, they can pretty much make the rules. Playing hardball with the lenders has worked well for me. I would suggest asking for this persons supervisor and not give up. Let them know they stand to lose a lot more than $300 if they dont LOOK at your offer. I had a short sale rejected yesterday and didnt give up. When I spoke to that representatives supervisor and explained why they should take my offer because of termite issues, fed income tax liens and other issues they would have to take care of etc.. they realized they would be better off taking the offer I had than taking the property back. Bottom line is dont give up! Good luck and have tons of patience!
Web Reference: http://saffordsells.com
0 votes Thank Flag Link Thu Nov 29, 2007
I was doing a short sale through homecomings financial and they wanted attorney fees up front and a mortgage payment. Totaling over 3k..... That's crazy, the seller's backed out and the bank took their house.
0 votes Thank Flag Link Thu Nov 29, 2007
This is new to me, too, and I appreciate hearing about it so I'll be prepared if it comes up! I hope the other lenders don't adopt this practice!
0 votes Thank Flag Link Wed Nov 21, 2007
Thanks for sharing that information. -- I hope you refuse to pay it yourself out of your pocket.

Now that I know about this practice I will advise prospective short buyers and sellers that they as principles may have to pay such a fee to get their offer considered. -- Should help convince a few of the buyers to look at motivated seller listings instead.
0 votes Thank Flag Link Sun Nov 18, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
I just had a short-sale with Indy Mac and they never brought this up. They lost 4 of our "hardship packages" but other than that they were typical big bank--4 digit extension, different person to talk to each time, took their sweet time!
0 votes Thank Flag Link Sun Nov 18, 2007
Wow Cindi, That's a new one on me! I'm surprised, but from the responses below, I guess it has been encountered by others in the past. Go figure! I guess these lenders can be their own Judge and Jury and do whatever they want!

Has anyone heard of other lenders doing this practice?

Patti Phillips
0 votes Thank Flag Link Sun Nov 18, 2007
They asked me for the fee.
Web Reference: http://www.cindihagley.com
0 votes Thank Flag Link Sun Nov 18, 2007
The Hagley G…, Real Estate Pro in Pleasanton, CA
MVP'08
Contact
Cindy, did they ask you personally for this fee or did they ask for it from the seller?
Web Reference: http://www.sumnerrealty.com
0 votes Thank Flag Link Sun Nov 18, 2007
I'm sure it's legal. And lenders tend to be a law unto themselves anyway. What is the betting that this will catch on seeing as there are so many short sales about?
0 votes Thank Flag Link Sun Nov 18, 2007
Nope. It sounds pretty odd. Will they refund it if the ss is denied?
0 votes Thank Flag Link Sun Nov 18, 2007
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer