Lender Insanity…We Couldn’t Make This Up If We Tried

Westcoe Realtors, Riverside, California…We often refer to the bizarre world of real estate, but sometimes even we are simply left shaking our heads at the insanity that surrounds us daily.

Here’s the scenario:  One of our agents sells a home to a client in 2007.  This client also has a rental home at that time that she bought new directly from a builder prior to working with us.  It’s been rented out, all is well, and life is good.  Fast forward to today’s market, and this client is now having trouble making her rental payment due to a series of bad tenants (Note: Westcoe does not do property management and we are not involved with the rental), life changes, financial issues, etc.  Unfortunately, not an uncommon experience in today’s financial climate.  However, what happens next is uncommon even for today’s low standards of lender behavior.

Our client contacts the rental lender to see if there is any sort of loan modification program that she can qualify for, implement, etc….and she is told by the loan representative…”Nope, we are not offering any sort of loan help at this time.  Our suggestion is for you to stop making the payments on the loan, keep collecting the rent, and eventually we will foreclose on the home.  It could take up to 1 year, so look at all the rent you can keep.”

No Dorothy, it appears we are not in Kansas anymore.  Can you believe this?  What’s even worse is that this is from one of the big banks that took billions in TARP money from the Feds…and while some of the TARP banks have paid their borrowed money back, this bank is not one of them (We are only withholding the name of the bank because we cannot verify this conversation in writing…but our client is very intelligent and knows what she heard).  Is it any wonder Americans are disgusted with many of our illustrious financial institutions?

So what is our client going to do?  She asked us that and we had to refer her to an attorney and an accountant, as there are serious enough legal and tax consequences that Westcoe will take a pass on this one…unlike the idiot lender rep.  Like we said, we couldn’t make this stuff up if we tried.

Take care, and email us with any questions or comments you may have about this crazy world of real estate.