A team of Arizona-based agents specializing in short sales has ruffled feathers in the lending industry by posting videos that they hoped would expose ways in which decisions by lenders can derail short-sale transactions.
The agents — Kevin Kauffman and Fred Weaver, who do business as Group 46:10 — say they agreed to pull several videos in which they discussed their dealings with JPMorgan Chase when their franchise, Keller Williams Realty, was threatened with a lawsuit.
Kauffman said it’s his understanding, based on communications with Keller Williams management, that Chase was also threatening to pull its real estate-owned (REO) listings from Keller Williams if the videos in question were not removed. A Chase spokesman declined to comment on the allegation that Chase threatened to pull its REO business from Keller Williams.
He said U.S. Bank apparently stopped working with Keller Williams agents around the country on short-sale transactions for one week, allegedly in retaliation for another Group 46:10 video that discussed the bank. Kauffman said he pulled that video too, after hearing from Keller Williams management and short-sale agents around the country about the alleged boycott. U.S. Bank did not respond to a request for comment.
In a statement, Keller Williams acknowledged requesting that Kauffman and Weaver remove videos mentioning Chase that were embedded on a website they host for agents, ShortSalePowerHour.com.
"In order to protect all of our agents, their businesses and their livelihoods, we did respectfully request that Kevin and Fred remove the videos. They agreed," said Mary Tennant, Keller Williams’ president and chief operating officer, in a statement.
"While we absolutely believe in the rights of each person to express their opinions, we are always mindful that that each of us is part of the large and connected Keller Williams family," Tennant said. "We know that Keller Williams Realty associates will continue to service both Chase Bank and U.S. Bank REO properties at the highest levels."
Kauffman, who’s based in Tempe, Ariz., said he remains committed to Keller Williams and admires its business model.
"I love this company, I truly believe in everything Gary Keller set out to do, and I don’t want to go anywhere," he said.
But Kauffman also said he was disappointed in how the franchise handled the incident.
What’s most troubling, he said, is that while the videos may have rubbed some Chase employees the wrong way, they were fact-based discussions about specific transactions that were made in the spirit of addressing perceived shortcomings in banks’ handling of short sales.
Kauffman said that much of the team’s success — Group 46:10 has closed 350 short-sale transactions in the last 2 1/2 years, he said — stems from its willingness to go up the chain of command when lower-level employees reject deals for reasons that don’t seem to make sense.
One of the videos that was removed, for example, detailed an exchange with Douglas Whittemore, senior vice president for securitized liquidations at JPMorgan Chase. As Kauffman tells it, Whittemore acknowledged that a short-sale offer Group 46:10 was trying to get Chase to approve would cost the bank less than foreclosing on the property.
In the video, "We quoted (Whittemore) as saying, ‘Yes, it’s mitigating loss, but not to my satisfaction,’ " Kauffman recalled. A Chase spokesman who was told of Kauffman’s version of the exchange with Whittemore said the bank would not comment.
The video, he said, then went on to question what it would require to satisfy Whittemore, and whether Chase was acting in its own best interests and the interests of investors whose loans it services.
Bank of America, on the other hand, "has embraced us, asking our opinion and feedback on the things they’ve done," he said. While Bank of America and other loan servicers have gotten better at handling short sales in recent months, he singled out Chase as becoming harder to deal with, in his opinion.
"Our delivery is very brash, if you will," Kauffman said. "I can understand people not liking the delivery, but it’s truthful information."
Keller Williams "had an opportunity to stand up to (Chase) and protect their agents," Kauffman said, and claimed that the company "probably did more harm than good." He said Keller Williams agreed with Chase’s demands that the short-sale team refrain from posting videos mentioning Chase and Chase employees by name.
After Kauffman and Weaver had pulled several videos identified by Chase and Keller Williams, they received an e-mail from Keller Williams’ general counsel, Julie Lane, relaying Chase’s concerns about another video that mentioned the bank and its employees.
Lane said Keller Williams was "dismayed" to have learned from Chase that despite "our numerous requests," Kauffman and Weaver had continued to post videos referencing Chase and specific company employees.
"While Chase has continued to act in a professional and cordial basis to resolve these issues, (company representatives) did indicate this morning that they are within hours of filing a lawsuit, which would be an expensive proposition for all concerned," Lane told the short-sale team.
Kauffman said the status of the videos in question, which were hosted on YouTube, has been changed to "private," meaning they can no longer be viewed online by the general public.
Although Kauffman and Weaver provide short-sale training to agents at seminars they conduct around the country, their videos have a relatively small audience. Only a few of the more than 200 videos they’ve posted on YouTube have more than 300 views, with an average of about 220 views for each video.
The team uses the ShortSalePowerHour.com site to market their $946 "Short Sale CRUSH IT!" package to agents. The "CRUSH IT!" package details their short-sale workflow process and provides forms, five hours of video, and a month of group coaching calls.
The incident has generated publicity, including an Aug. 19 post on the AgentGenius blog site by broker Russell Shaw that accuses Chase of having a "Bully and Threats Division."
Back to work
Kauffman says the team continues to negotiate short sales with Chase and U.S. Bank on behalf of clients.
The pair have even posted a new video, in which they sit on the sidewalk leaning against a Chase branch office, warning homeowners who are considering a short sale not to keep money in a checking or savings account with the same bank that holds their mortgage.
In the video, Kauffman describes being approached by clients who claim banks have taken money directly out of their checking or savings accounts when they missed payments on other debts.
Throughout the video, Kauffman and Weaver refrain from mentioning Chase by name, but point at a large Chase logo above their heads.
Weaver urges viewers to leave a comment if they know of banks engaging in such practices. He did not respond to requests for comment for this story.
Banks routinely obtain a "right of offset" in agreements with depositors, which allows them to take money from one account to settle a debt in another account with the same bank.
And although it’s not unusual for banks to exercise that right when borrowers miss payments on credit cards and auto loans, several U.S. Housing and Urban Development Department-approved housing counselors contacted by Inman News said they hadn’t heard of banks taking such actions against delinquent homeowners.
"I have never heard of a bank doing this," said Elroy, Ariz.-based housing counselor Amy Evans of Community Action Human Resources Agency. "I have advised clients, however, that if the bank is not working with you to prevent the foreclosure, you should take your money out and close the account simply on principal."
But Rosemary Ybarra, lead foreclosure intervention counselor, Neighborhood Housing Services of Phoenix, said she was aware of instances in which banks have exercised their right of offset against delinquent mortgage borrowers.
Although Ybarra could not say how common the practice is, when clients seeking loan modifications are unable to cure their loans, "we let them know that the servicers will exercise their right (of offset), and that if they have an account open with them, to liquidate it."