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The federal government in recent years has attempted to help “underwater” homeowners owing more than their homes are worth through a series of programs under the “Home Affordable” banner. However, many in the real estate and mortgage industry, along with homeowners trapped in above-market rate loans with balances totaling tens or hundreds of thousands of dollars more than their current property values, report that assistance has been hard to come by.

George Kenner, a Realtor from East County, has decided to fight back, posting a YouTube video accusing PNC Bank of failing to follow guidelines for the Home Affordable Foreclosure Alternatives (HAFA) program in which it claims to participate. Under the plan, borrowers able to demonstrate financial distress are allowed to sell their houses “short,” with banks accepting a reduced payoff due to a seller being unable to raise enough to fully satisfy the loan balances due to the depressed market. A seller is allowed to retain $3,000 from the sale to cover moving expenses, with all of the rest of the money after transaction costs are deducted going to the banks – any down payment the seller made when purchasing the home, as well as any equity they’d hoped to build by making monthly payments, is forfeit.

Under HAFA guidelines, a junior lender (one who made a loan on a property that is not in the first position of priority), is obligated to accept a payoff of 6% of the loan’s unpaid balance, up to a maximum $6,000. This is usually considered a windfall, as if a property were to go to foreclosure 100% of any proceeds raised would go to the first lender, leaving those in second or third position with nothing at all.

PNC, Kenner alleges, was willing to allow his seller to participate in HAFA, but would not accept the federally mandated payoff for a second lender after Bank of America, the first lender in this case, accepted his seller’s HAFA application.

“PNC Bank, processing HAFA transactions themselves, knows the rules. They know that $6,000 is all they can be offered, yet that wasn’t enough for them,” says Kenner. In order to close the transaction for his sellers, he says he volunteered to forfeit the commission he was scheduled to make for arranging the sale, essentially performing his job for free.

“What was the intent here?” continues Kenner. “Were you trying to force a foreclosure on my community? That’s the way I feel. That’s what I’m trying to protect my community from.”

Had PNC blocked the short sale, foreclosure would have been the likely result, Kenner says. The end result would have been further damage to his clients’ credit, a property that would have likely sat vacant and possibly fallen into disrepair while waiting to be sold. Studies conducted throughout the real estate bust cycle indicate that foreclosed properties often sell for even less than short sale properties, further depressing the value of a neighborhood as a whole.

PNC Financial received nearly $7.6 billion in funding through former President George W. Bush’s Troubled Asset Relief Program in 2008. Within hours, the company announced plans to buy longtime rival National City Bank, which had previously operated in San Diego under the Accubanc moniker.

Though the company has not had a significant local presence in the last few years, Kenner says PNC has recently begun reaching out to local real estate agents, soliciting their loan referrals.

Kenner's video, posted for a week and making a direct plea to PNC President James E. Rohr for intervention or justification of his bank's policies, has amassed nearly 3,000 views.

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