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« SHOCK: Collapse of the euro is 'inevitable': Bailing out Greece is futile, says French banking chief | Main | George Carlin: You Have No Rights »
Friday
Feb122010

How The FDIC Is Killing Short Sales: The Story Of OneWest, IndyMac & Taxpayer Funded Sweetheart Deals (VIDEO)

Listen to the deal OneWest Bank got from the FDIC to take over failed and seized Indymac.  Don't forget who is fundng the FDIC these days -- taxpayers.  Sheila's been out of capital for months, so the bill comes to all of us now.  An absolute don't miss clip.  Then do your best to spread it elsewhere.

The IndyMac Slap In Our Face  >>

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Background reading:

 

Is The FDIC Killing Short Sales?

As some of you already know, I blogged recently about being interviewed recently by our local NBC news affiliate.  To read the blog, click here.  Basically, IndyMac Bank (now OneWest Bank), is holding one of my clients hostage, demanding a $75k promissory note, or they will proceed to foreclosure.  For the life of me, I couldn't figure out why they were doing this.  The BPO came in at the contract price of $275k, with a net to IndyMac of $241k.  What advantage could there possibly be for them to proceed to foreclosure?

Yesterday, I figured it out.  You see, IndyMac was taken over by the FDIC and sold to OneWest Bank in March/2009.  Guess who the investors are behind OneWest?  George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).  

Now, listen to the deal they got from the FDIC....

Basically, they purchased all current residential mortgages at 70% of par value (70% of the outstanding loan amounts).  They purchased all current HELOCS at 58% of Par Value!!!

Next, in order to "sweeten the pot", the FDIC stepped in and guaranteed the following:  For any residential mortgages where OneWest experiences a loss, the FDIC will step in and cover anywhere from 80%-95% of the loss.  The loss is calculated using the ORIGINAL LOAN BALANCE, not the amount that OneWest paid for the loan.  Let's use my clients situation as an example:

Loan Amount is $478,000, plus 6 months of missed payments, for a grand total of $485,200

OneWest pays $334,600 for the loan

We have an all cash offer of $241,000, net to OneWest.

So, let's do the math, shall we?  The net loss, according to the FDIC formula is the ORIGINAL LOAN AMOUNT minus the amount of the offer.  In this case, $485,200-$241,000, or $244,200.  Next, the FDIC, according to their Loss Share Agreement, writes a check to OneWest for 80% of the so-called "net loss".  So, in this case, OneWest gets a check from Uncle Sam for $195,360 (.80 X $244,200).

Add the $195,360 to the sales price of $241,000, and you get a grand total of $436,360.  Remember, OneWest paid $334,600 for the loan.  So, OneWest puts $101,760 in their pocket, thanks to the FDIC.  Folks, that is over $100k of our hard-earned tax dollars!

So, you ask...Why does this program hurt short sales?  Because, our brilliant government offers this SAME PROGRAM FOR FORECLOSURES!  The only difference is, the government picks up 80% of the tab on all of the extra costs associated with a foreclosure (BPO's, upkeep, utilities/maintenance, legal fees, etc.)

So, If I'm OneWest, why would I want to waste my time negotiating through a Short Sale, when I can make the same amount of money (if not more) by just letting it go to foreclosure?  And we wonder why nobody can get a Loan Modification?  Why would OneWest approve a loan modification for this guy, when they can foreclose and make over $100k?  And, to add injury to insult, they have held this loan for 6 months!  Not a bad ROI, huh?

What infuriates me the most is that in my particular case mentioned above, they have the guts to hold my client hostage for a $75k promissory note, after they are already making more than $100k on the sale!!! This is his primary residence, 1st Position loan, and OneWest has NO RECOURSE!  Imagine if they could make $100k, then get a deficiency judgement!  Talk about making some big bucks!

Can you say "GREED"?

The scary thing is that over 50 banks have Shared Loss Agreements in place with the FDIC.  Some of them include:  Bank of America (go figure), CitiMortgage, Wells Fargo, etc.  

This entire agreement between the FDIC and OneWest can be found here, on the FDIC website.  It's all there, for the world to see!  They have it all layed out.  All of the formulas, worksheets, etc.  

Now, it's up to us to bring it to the attention of our elected officials and the media.  Enough is Enough!

UPDATE 9/18/09:  I JUST READ AN AWESOME ARTICLE ON THIS, THAT GOES INTO WAY MORE DETAIL THAN MY BLOG ABOVE.  TAKE THE TIME TO READ IT WHEN YOU GET A CHANCE! CLICK HERE TO READ IT.

Wait, it gets better...The FDIC just announced that it needs to start borrowing money from the U.S. Treasure in order to replenish it's deposit insurance fund (the same fund being used to pay all of these banks in the Loss Share Agreements).  Go Figure!  Click Here to read it.

Robert G. Hertzog

Phoenix Real Estate Consultant

www.phxshortsalehelp.com

 

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Reader Comments (10)

Feb 10, 2010 at 4:14 PM | Registered CommenterDailyBail
EXCELLENT vid DB. Thanks for finding & posting.
Feb 10, 2010 at 8:12 PM | Unregistered CommenterRecoverylessRecovery
It is real simple. Please contact your friends as Realtors, Mortgage Brokers, and potential buyers. Let them know that in most cases the deal will not go through. Even if it does, it comes with a price of our taxes. Do they want to waste their own time and that of their clients?

Boycott Indymac/OneWest for this appaulling deal. Boycotte Citibank for blanket raising credit cards to 29.99%. We live in a free market society (for now). Do your business elsewhere!

ImWatchingU
Feb 11, 2010 at 9:27 AM | Unregistered CommenterImWatchingU
"WoW" DB, you sure hit the jack pot on this one. Makes ya wonder if were gona make it till Nov. 2 so we can hand out the first round of Pink Slips................

I know Bruce is one of the guys traped in this mess. Hes spending $$$ to save $$$ and his home. ThAre is no end to this crap.

How do you get time to sleep covering all this shit.....? Sad part is that all of big goverment knows whats going on and the people are getting it in the Ass, and BO tells the people hes working on our side to protect us from the Beast.

When hes the "Talking Head Beast", and the people have no voice or hope to save them selfs. But thats the way the IMF planed it to work out back in 1970.

How close to the One Hour Melt Down do you think we are......? I feel less than 2 years from now. Everything is starting to pick up speed with the Perfict Storm closing in on us.


& Al Gores "Climate Change" sure Stomped on them Ol Boys. 2 more storms are still comming. One by Monday and again next weekend. AG better yell "Unckle Quick" and fess up it was one big lie. Hes loseing friends faster than BO right now.
Feb 11, 2010 at 4:22 PM | Unregistered CommenterTexas Dar
As if we can believe those behind the curtain, here is FDIC response to video.
Looks like it struck a nerve . . .
http://www.fdic.gov/news/news/press/2010/onewest_lossshare.html
Feb 13, 2010 at 4:51 PM | Unregistered CommenterMichel Delving
The video itself has become unaccessible last time I checked. Looks like BIg Brother LEANED ON YOUTUBE a little.

Or maybe a LOT?
Feb 15, 2010 at 12:33 AM | Unregistered CommenterRecoverylessRecovery
Hey, this story is gaining traction!
The end of this video at 4.33 has been modified to address press release posted by the FDIC on 2.12.10
http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1129107
Charges in Web Video Bring Unusual Rebuttal From F.D.I.C.
http://www.nytimes.com/2010/02/15/business/15fdic.html?dbk
F.D.I.C. Pushes Back at Charges in YouTube Video - February 15, 2010, 10:58 am
http://dealbook.blogs.nytimes.com/2010/02/15/f-d-i-c-pushes-back-at-charges-in-youtube-video/
Feb 15, 2010 at 3:22 PM | Unregistered CommenterMichel Delving
My name is Bob Hertzog, and I wrote the original blog "Is the FDIC Killing OneWest IndyMac Short Sales" in September/2009, on which this video was predicated. To read what actually happened in our case, without all of the "drama", please feel free to visit the original blog at the following link:

http://activerain.com/blogsview/1243528/is-the-fdic-killing-indymac-onewest-bank-short-sales-

There is definitely more to this story. Stay tuned.

Bob
Feb 16, 2010 at 11:04 PM | Unregistered CommenterBob Hertzog
Anytime George Soro's is involved, its a crooked deal.
Feb 18, 2010 at 3:45 AM | Unregistered CommenterSlick
The FDIC is like everything else the government does "Ponzi scheme", includes social Security and Medicare.
Aug 17, 2010 at 11:46 PM | Unregistered CommenterJB

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