I have a hard time believing that institutional holders of second liens would systematically shake down brokers or short sale buyers. Just seems too blatantly illegal–and too easy to get caught. And why risk losing your job (and criminal penalties) if you are a W-2 employee in the residential workout department of some has-been lender in receivership.

I can believe this could happen in situations where the holder of the 2nd or 3rd is a private investor or hard money lender.

***
I nearly fell off my chair laughing.
I’ve been in the short sale investing business since before this mess all came crashing down – and I can tell you that while this went on BEFORE the melt down it was nothing like it is now.

I will list for you here banks that have demanded an outside of escrow payoff in excess of 5K in the last year from me or the sellers of the home:
Citi
B of A, Countrywide etal
IndyMac/OneWest
Wells Fargo
Chase

I am trying to decide if the standard now is the extra cash – as it happens so often it is well close to 50% of the time.

Get a CLUE! Why WOULDN”T they demand extra money when they have the power to kill the deal and there is NO ONE TO REPORT THEM TO. What are you going to do? Call your congressman? The SEC? There is NO ONE regulating ANY of this in case you had not noticed…

I have had to spend $$ for attorneys to represent homeowners in order to get the lenders to drop “Cash Contributions” from homeowners for short sales when the homeowner was out of work, with a child in hospital! There is NOTHING they will not try – and usually get – because no one has any way to stop them.

Swiller is dead on – the banks MUST be regulated – not buried in BS paperwork requirements that make it impossible to own banks but actually REGULATED and overseen so that they are not allowed to speculate with other people’s money and markets – we need all the old regs back that were stripped out and then some form of State Banks like North Dakota has – look into it they are the only state that is NOT in financial meltdown because their State bank is owned by the PUBLIC and not a private debt sucking bank… pretty amazing story.

As for prices going UP? Forget about it! If they do at all it will be short lived and only part of more manipulation – prices still need to reflect economic reality of the community where they are – and they still don’t and now that there are no liar loans to buy the overinflated houses with the prices, will, eventually have to conform to the local income ratios – and we are still LOSING jobs not gaining them, so that is not exactly a forecast for increased prices.

The only real question is how long the banks and govt can keep fiddling and keep them over inflated by that fiddling… and my guess is not forever no matter what they THINK they can do…

In “real” terms, prices WILL return to their 1996-97 valuations, though not necessarily 1996-97 prices, due to unpredictable inflation. This decline may or may not come about from the current Alt-A, liar loan fiasco, but it WILL come once the generational dump occurs in say 7 to 15 years. The Baby Boomer generation, whether they like or not, HAVE TO be able to sell their their houses to the generation behind them, which is, unfortunately, significantly smaller and undoubtedly much poorer, if employed at all. The math is undeniable.

My god, just when I thought Schadenfreude didn’t come in Super-Size portions, you come along and start sharing the cornucopia of good news about short sale corruption, second lien holder angst, a massive pent up SFH pricing correction and Alt-A and Option Arm recasts. Man, I feel like I could just collapse from the massive rush of joy to my brain.

I got a flyer from an OC realtor just yesterday saying that 2010 is going to be a good year for the OC housing market.

Not if you end up in jail.