With “will” there is a way

A client came to us and asked if we could help her with her short sale. There where two loans on the property. PNC Bank had the first mortgage and National City had the second mortgage. (keep in mind PNC owns National City) Susan had been attempting to close a sale for over 7 months. The first offer was clean and for $152,000. She worked tirelessly for 5 months only to find that National City would not approve the deal without a signed deficiency form stating that they could seek a deficiency on any loss of the sale.

The deal failed and the buyers went elsewhere. Susan kept working and found another offer, this time for significantly less. The second offer was for $135,000 and soon Susan found herself in the same situation with the bank. Not comfortable signing the deficiency form again, she called us for help.

After thoroughly researching the file and going through all of the documents already submitted to the bank, we came up with a strategy. I won’t bore you with all the details and time spent, because it would be a volume of text. I will instead outline the result.

#1 The original negotiator working for Susan for many months had never spoken the appropriate negotiator in charge of making decisions. We got to the right person in the first 3 days.

#2. We wrote a detailed letter to Freddie Mac, and the office of Housing and Urban Development (HUD). In this case once HUD and Freddie Mac were informed about the fact that PNC and National Citi are really the same firm, and should not be able to negotiate against itself, as this is a conflict if interest, the file was immediately escalated for legal reasons. The potential liability for PNC as a result of stalling the first offer for $152,000 was significant and resulted in a personal phone call from Freddie Mac’s lead counsel letting us know that he was now involved.

The Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac (NYSE: FRE), is a government sponsored enterprise (GSE) of the United States federal government. The Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) of 1991 revised and standardized the regulation of both Fannie Mae and Freddie Mac. Prior to this act, Freddie Mac was owned by the Federal Home Loan Bank System and governed by the Federal Home Loan Bank Board, which was reorganized into the Office of Thrift Supervision by the Act. The Act severed Freddie Mac’s ties to the Federal Home Loan Bank System, created an 18-member board of directors, and subjected it to HUD oversight.

In mid July 2008 there was widespread speculation that the US government would move to provide Freddie Mac with additional guarantees of capital, because of widespread instability in the financial markets and public perceptions of looming insolvency. On Sunday July 13 The Secretary of the Treasury announced that the US government would seek legal permission to invest in Freddie Mac, which it later obtained as part of a Congressional housing bill. In addition, the Federal Reserve offered Freddie access to its emergency borrowing facility, the Discount Window (a resource traditionally reserved for banks). While, many are calling this move tantamount to a bailout, the Treasury has not yet invested in Freddie Mac.


Pittsburgh Trust and Savings Company which was founded in Pittsburgh, PA changed its name to First National Bank of Pittsburgh in 1863 after it became the first bank to receive a national charter as part of that years National Banking Act. By 1959, after a series of mergers, the bank had evolved into the Pittsburgh National Corporation. In 1982, Pittsburgh National Corporation and Provident National Corporation merged under the new entity named PNC Financial Corporation. Between 1991 and 1996 PNC purchased over ten smaller banks and financial institutions that broadened its market base from Kentucky to the Greater New York Metro area. In 2005 PNC acquired Washington, D.C. Based Riggs National Corporation. In 2006, PNC announced that it would be acquiring Maryland-based Mercantile Bankshares in 2007. On June 7, 2007, PNC announced the acquisition of Yardville National Bancorp, a small commercial bank centered in central New Jersey and eastern Pennsylvania. On July 19, 2007, PNC announced the acquisition of Sterling Financial Corporation, a commercial and consumer bank with accounts and branches in central Pennsylvania, northeastern Maryland and Delaware. These mergers made PNC the 8th largest bank by deposits in the United States.

If you on anyone you know has questions about Loan Re-structuring or Short Sales, please give us the opportunity to understand your situation. You may have more options than you think.


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