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Exclusive: Sweetheart Mortgage Deals for Billionaires that will Make Your Blood Boil
Bob Hertzog
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The American people are being defrauded again. And by the very same people who
screwed us the first time.

I know. I've seen how it's happening first hand. I've seen how billionaires have made their
billions off of bankrupt American families -- in a scheme that would make George Ponzi
blush. These countrymen of ours are picking at the carcass of the American taxpayer, and
they're doing it with the help of the federal regulators in Washington.

Here's how it works: it all started with a phone call I received in early May/2009. The
caller sounded troubled, as so many are these days. He told me he had spent several days
researching his options.

He owed $478,000 on his first mortgage with OneWest Bank, and $30,000 on his second
mortgage with Bank of America. He and his wife were separating, and headed for
divorce. He had not been able to find employment for over a year, and he had depleted all
of his savings and retirement funds in order to continue making the mortgage payment
over the past year. His soon-to-be ex-wife had recently had her hours cut by 50 percent,
and they were having a hard time putting food on the table, much less making a $2,600
per month mortgage payment. For all intents and purposes, he was at the end of his rope.

He stumbled across our website where we specialize in distressed properties –

www.foreclosureuturn.com – learned what his options were and decided to proceed with
a short sale. The reasons for his decision were twofold. He wanted to salvage his credit as
best he could, and he didn’t just want to “walk away” from his mortgage without at least
trying to sell his home for market value. He, like so many other Americans, wanted to do
“the right thing.”

Fast forward two months. We received an all-cash, no contingencies offer that would net
thefirst mortgagor (OneWest Bank) $241,000. OneWest conducted a Broker’s Price
Opinion (similar to an appraisal), and it came back at $275,000 (same as the price on the
contract). Life was good, we thought. Then the fun began.

OneWest sent us a letter, approving the short sale, but under one condition: The Seller
had to commit to a $75,000 promissory note, or they would proceed to foreclosure. For
the life of me, I couldn’t figure out why they were doing this. Arizona has an anti-
deficiency statute in place, which protected my client from ever having a judgment filed
against him for the loss OneWest would incur. They had my client’s last two years’ tax
returns, his last two months’ bank statements, etc. At the time, he had less than $2,000 to
his name. Why are they doing this? I was so infuriated by their response that I decided to
send the story to all of the news outlets in the Phoenix market. The next day, the local
NBC affiliate interviewed us on the case. During a break between interviews, the reporter
told me, “Bob, there is more to this story. There must be a reason they are doing this.”
Boy was he right!

I spent the next two to three days poring over articles and blogs on the Internet regarding
OneWest Bank. Finally, I stumbled across a Wall Street Journal article that described a
new program that the FDIC had put in place in order to “sweeten the pot” for the
investors that were purchasing the banks they had shuttered. This new phenomenon,
called a “shared-loss agreement,” literally made my jaw drop.

You see, Indymac Bank was taken over by the FDIC and sold to OneWest Bank in
March/2009. OneWest was funded by none other than George Soros (billionaire),
Michael Dell (billionaire), Steve Mnuchin (former Goldman Sachs Executive), and John
Paulson (hedge-fund billionaire). Now, listen to the deal they won from the FDIC:

Basically, they purchased all current residential mortgages at 70 percent of par value (70
percent of the outstanding loan amounts). They purchased all Home Equity Lines of
Credit (HELOC’s) at 58 percent 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 percent 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 client’s actual situation as an example:

Loan amount is $478,000, plus 5 months of missed payments, for a grand total of
$485,200.

OneWest paid $334,600 for the loan when they purchased IndyMac from the FDIC.

We have an all-cash, no contingencies offer to OneWest, with a Net of $241,000 (after

closing costs, commissions, etc.)

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 shared-loss agreement, writes
a check to OneWest for 80 percent of the so-called “net loss.” So, in this case, OneWest
gets a check from the FDIC for $195,360 (.80 x $244,200).

Add the $195,360 (via the FDIC) to the net 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 $100,000 of our hard-
earned tax dollars for only one transaction! Now, the FDIC will tell you that they are not
funded by taxpayer dollars but by charging premiums to the lenders. My response to their
argument is this: When the banks pay higher premiums to the FDIC to cover these
“sweetheart deals,” they simply increase the fees that we all pay everyday to the banks.
Also, as most of you know, the FDIC has been considering tapping into their $500 billion
“credit card” that they have in place with the U.S. Treasury. Folks, the taxpayers ARE
paying for these deals, just like we have all paid for the bailouts.

So, you ask, “How does this program hurt loan modifications and short sales?” Because,
our brilliant government offers this SAME PROGRAM FOR FORECLOSURES! The
only difference is that the FDIC picks up 80 percent of the tab on all of the extra costs
associated with a foreclosure (BPOs, 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 insult to injury, they have held this loan for six months! Not a
bad ROI (return on investment), 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 $75,000 promissory note, after they are already
making more than $100,000 for the sale! Can you say “GREED?”

Now, here is the best part of the story. Upon learning about the OneWest shared-loss
agreement with the FDIC, I sent letters to Sens. John McCain and Jon Kyl, CCing the
CEO of OneWest, explaining the shared-loss agreement, as well as including the FDIC
worksheets, with the actual numbers in this case, showing them that OneWest was
making over $100,000 on this deal, thanks to the FDIC. Within 24 hours, I received a
response from the PR firm representing OneWest, telling me that OneWest would
dismiss the promissory note requirement, and the short sale was approved. We closed
escrow three weeks later. My client not only avoided a $75,000 commitment, but also
salvaged his credit by short-selling his home, versus handing it back to OneWest via
foreclosure.

The scary thing is that over 50 banks have shared-loss agreements in place with the
FDIC. Who knows how much the FDIC has spent on this program since its inception?

The entire agreement between the FDIC and OneWest can be found here.

It’s all there, for the world to see. They have all of the formulas, worksheets, etc., all laid
out.
Now, fast forward to Monday, February 8th. I received several e-mails from friends and
acquaintances, asking me if I had seen a video that had been posted that sounded eerily
familiar to my case.

The gentlemen from “Think Big Work Small Daily Show” found my blog and decided to
put together a video, describing the shared-loss agreement that OneWest has in place.
They used the actual numbers from my case. To make a long story short, the video went
“viral” and by Thursday, February 11th, the video had over 500,000 views, according to
the owners of the site.

On Friday, February 12th, the FDIC struck back, coming out with an official press
release, regarding the video, which denied any wrongdoing.

As you could imagine, many in the blogosphere used the press release to discredit the
video. There were lots of “I told you so’s.” Heck, we all know that when the FDIC says
something, it must be true. Right? Ummm, I don’t think so.

Soon after the release, zerohedge.com released a response, which in part said this:

Sorry FDIC, but not only did your press release not refute the video's claims in the least,
but you just dug yourself an even deeper grave as every aspiring blogger and
investigative reporter will now do everything in their power to find comparable examples
of blatant "slap in the face" fraud expecting you to retort to any and all allegations,
ensuring 15 minutes of fame for all implicated.

Regardless of whether the video (or my blog for that matter) may have left out some of
the details, as the FDIC claims, there is one thing that I still cannot seem to understand:

Since writing my blog in September/2009 on my case with OneWest, I have received

numerous calls from Realtors, lawyers, bankers, and homeowners throughout the country.
In at least three cases right here in Arizona, I have had three separate Realtors call me,
asking for advice on how to handle their similar predicaments. In all three cases, I
suggested they do what I did. Write to McCain and Kyl, and copy the CEO of OneWest,
Terry Laughlin. In all three cases, OneWest capitulated, dismissing their promissory note
requirement and approving the short sale, no questions asked. In all three cases, the
Realtors were able to help salvage their client’s credit by avoiding foreclosure.

So, my question to the FDIC and OneWest is, if this story is so “blatantly false” as you
claim it to be, why does OneWest change its tune when they are reminded of their greed?

If you or someone you know is facing a difficult loan modification or short sale situation,
please refer them to this story. Or, feel free to have them visit my website at
www.foreclosureuturn.com. The site does a great job of explaining all of the available
alternatives to foreclosure.
FamilySecurityMatters.org Contributing Editor Bob Hertzog is the founder of Summit
Land Consultants, and co-founder of Summit Home Consultants in Phoenix, Arizona. His
website is www.foreclosureuturn.com.

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Right on, Bob! The nation should hold the FDIC's feet to the fire on this association with
OneWest and ALL the other banks that got the same sweetheart deal. Deny all you want
to, FDIC! We are not deceived by your "unusual" response. And I, personally, don't
believe one syllable of it.

posted by: Leslie Sease

Monday, February 15, 2010 at 09:51 AM

I am bringing this to your attention to let you know what is happening at Indy Mac/One
west Bank. On April 20, 2009 I submit documents for consideration for a loan
modification and was advice that the process would take up to 60 days for review.
I started to call to follow up with Indy Mac/One west Bank on June 11, 2009 and spoke
Michelle and the phone call drape. I tried again and I got Monica who transfers over to
Cindy who advises me that the entire document was received and the file is being
reviewed and I should try to make a payment. I call on June 30, 2009 and spoke with
Elizabeth 96Q who also advise me that the file is still in review and they will get in touch
once a decision has been made. I call back on July 13, 2009 and spoke with Yari CH6
who told that the file is still been reviewed. I call on July 28, 2009 and spoke with Sofia
73T also told me the file is still been reviewed. I call on August 18, 2009 and spoke with
Patrice O95 who advise me that a letter was sent out in April asking for the financial
which I told her that it was sent with the original documents and I have been following
and the file and no one had ever told that document was needed, infect I was told that
everything is in the file. She advises me to up date it and send it in again. I did so and call
back on August 25, 2009 and spoke with Sara that I refax all the documents included the
bank statement of pay check and tax returns, I was also advise that since you don’t
have pay stud I should send a profit and loss statement which was done. I call back on the
August 27, 2009 and spoke with Keisha 74P who told me that all the documents was
received included the profit and loss statement, we went over the financial statement and
was advise that because there is a rental income for it to be counted as income they will
need to see copy of the lease, I told her I will have it by Monday. I call on August 31
after I fax the rental agreement and spoke with Alicia JI4087 and was told that the file
will be reviewed and it would take 24 to 48 hours for the lease to be in their system. I call
on September 1, 2009 to follow up if the lease is in the system and I spoke with a Todd
842 who advise me that the investor stop doing modification on these loan, I ask him
when did this occur and I was told since April, I ask why didn’t any one told me this
when I call on may occasion and he could give me an answer. I ask about what the FDIC
stated and I was told it is up to the investor, I ask about the president program and I was
told the investors is not doing any modification.
I loss my job on December 22, 2009 and I was bless to find a job in March and exhaust
my saving paying property tax and property insurance and was trying to get caught up
and was having it hard so I apply for a modification and was lead to believe that
everything is fine only to find out it is not.
Please help me, I do not want to lost my home I am doing my best. I was told by Todd
842 at Indy Mac/One west I could to do a short sale that is one of my option. I have also
spoke with a Mr. Michael Bekes and he told me because of the investors the loan is pool
with the Onewest bank they are not doing any modification and the only thing they can
offer is a short sale, which do not make any sense. I do not want to sell my home, please
help I don’t know what to do next.

posted by: Carol Russell

Monday, February 15, 2010 at 06:50 PM

Hi Carol, I'm sorry to hear about your situation. Unfortunately, there are thousands of
stories just like yours in regards to not only Onewest/IndyMac, but many other lenders as
well. I'm not sure what state you are in, but feel free to contact me tomorrow and I would
happy to put you in touch with someone in your community that can help you out. Please
feel free to email me at bob@summitland.com, and we can get in contact.

posted by: Bob Hertzog

Monday, February 15, 2010 at 07:14 PM

I did the short sale in spring of 2019 and the divorce. I have been advising others since
Once the banks are confronted wwith the truth they back down. But most people do not
know about the heist.

posted by: DAVID JOHNS

Monday, February 15, 2010 at 09:39 PM

Bob, if OneWest - or any other purported note holder for that matter - is willing to walk
away from a promissory/deficiency note scheme like this so readily when questioned,
why not go one step further and ask for production of the original note per Article 3 UCC
if for no other reason than to make sure that you are negotiating with an entity that has
legal standing to enter into such contractual arrangements?

posted by: Mike Dillon

Monday, February 15, 2010 at 10:10 PM

David: Great point, and it explains exactly why I chose to write this blog. I felt that it was
necessary to "get the word out" and let people know that there is a way to beat them at
their own game. You said it best... Confront them with the truth, and they back down.
Scary thought, isn't it? Actually, I think if you "REMIND them with the truth, they back
down". They already know how sweet the deal is. They just need to be reminded of it.

Mike: Great Point! Lately, I've read several cases where the borrower asked for the lender
to produce the original note, and they cannot do it. Hopefully, many more will throw this
back at them in the future.

Thanks for the insight folks, and spread the word!

posted by: Bob Hertzog

Monday, February 15, 2010 at 10:45 PM

I have some interesting resources for further knowledge:

Greece implements plan to make cash

transactions illegal
Reuters - In a predictable move, Greece plans
to outlaw all cash transactions above 1,500
euros between natural persons and businesses,
or between businesses, will not be considered
legal if it is done in cash. Transactions
will have to be done through debit or credit
cards.

The new law will take effect on January 1 of

next year.

How long before the U.S. proposes the same?

---
The fall of the empire - chilling documentary.
http://www.youtube.com/watch?v=F8LPNRI_6T8&feature=player_embedded

Chilling documentary film about obama, the bankers control and coming dangers to
freedom...and on 2nd hour on the climate and carbon tax...
It seems to me like in coming 5-10 or 15 years a world could evolve where the carbon
"Environment" police walks into your home, charges you for the pleasure and takes your
home away for illegal occupancy, due to your environmental crimes and heavy debt (they
can fine people for years back) you won't be able to afford to pay... It all sounds so crazy,
like a made up conspiracy, but it looks like it is reality.

posted by: Eileen

Tuesday, February 16, 2010 at 07:36 AM

'Shared loss' is a sharia compliant requirement.

posted by: Mae Eye
Wednesday, February 17, 2010 at 12:15 AM

Do not delay. Go immediately to the reports of the Offices of the Inspectors General of
the OTS and FDIC and you will see the zaniest responses ever to the 2nd largest bank
failure: the personnel was new, they were untrained, they had large caseloads. What these
reports DON'T tell you is WHY, after the FDIC knowingly allowed IndyMac into a death
spiral, Congress allowed it to backdate a key deposit and continue collecting $91 million
in new funds - which the FDIC knew were "doomed" to only 50% coverage. And where
is that $270 million in cash deposits? the FDIC refuses to say. Perhaps it was used to
underwrite the expenses of this "under-the -radar" deal. Go READ!
www.fdic.gov/reports09/09-006EV.pdf AND Department of the Treasury, OIG-09-032.
“Safety and Soundness" Material Loss Review of IndyMac Bank, FSB, February 26,
2009, http://www.ustreas.gov/inspector-general/audit-Reports/2009/oig09032.pdf

posted by: fran quittel

Wednesday, February 17, 2010 at 08:48 PM

Bob, I'm a short sale specialist, so your article really piqued my interest. I'd like to send
your article in its entirety to my clients as an alert. Do I have permission to do that?
(about 500 total). I will include the title, your name and the source information.

posted by: Maurice Sikes

Tuesday, February 23, 2010 at 02:06 PM

Feel free to share it with whomever you like Maurice, and thanks for asking!

posted by: Bob Hertzog

Tuesday, February 23, 2010 at 07:54 PM

Compare Mortgages</a<

posted by: crist

Friday, October 22, 2010 at 03:26 PM

Compare Mortgages

posted by: crist

Friday, October 22, 2010 at 03:28 PM

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