Bank Of America Webinar Regarding Their Short Sale Policy

Click OnThe Bank Of America Image To Watch The Webinar!

Current Short Sale Statistics From SVP With Bank of America

I just spent 3 hours listening and asking questions PERSONALLY with Matt Vernon, National Executive in charge of servicing (Short Sales) here in Las Vegas.

From his mouth to my ears, his “take charge” attitude with his entire national team is PRO-ACTIVE and they are VERY interested in helping realtor partners succeed in helping homeowners gracefully extract themselves from under water properties.

B of A actually NEEDS realtors on BOTH ends of the process…meaning, the short sale effort AND assisting them on the origination end. That’s why it’s considered a “partnership”.

Makes sense to me.

He also revealed some interesting statistics that are worth passing on…

In June, 2010 B of A originated 65,000 short sale requests.

They (B of A) holds (services) only 12.5% of its entire servicing portfolio…the balance is owned by 500 other investors…

B of a services 15 million customers…3.5M more than it’s closest competitor.

Currently there are 3,000 Short Sale negotiators nationwide servicing the workload. The end of 2010 will see a total of 4000 short sale negotiators.

At one time, the “rumor” of each negotiators case load hovering between 500-1,000… is TRUE.

Currently, files per negotiator hover at 127 per negotiator.

Strategic defaults will not be considered for approvals per internal and external servicing policies.

What’s THE scariest homeowner comment about “Short Sales”?

“We’ve submitted our paperwork to our lender so we can get a loan modification!”

OK.

Seriously?

That’s EVERY homeowner’s song of salvation. Unfortunately, sung by a tone deaf homeowner without a band.

What that means is regardless of WHAT information you hear about Loan Mods…ITS ALL CRAP! TOTALLY FALSE and MISLEADING.

It’s the lenders ploy at falsely appeasing an unsophisticated consumer.

Think about it…GOOGLE the term “Loan Modification” and find the sites that track the actual progress and PERMANENT success of loan mods…go ahead…I’ll wait…

OK. So by now you should be FULLY aware that a loan mod is the lenders BEST OPTION at stalling the homeowner from hiring an attorney.

Know this: Loan Modification departments and legal departments of nearly ALL lenders NEVER COMMUNICATE! They’re not in the same building, city, zip code or state!

While you are living your life believing salvation via a loan mod is coming, the legal department is filing a notice of trustee sale because you’ve ALREADY RECEIVED A NOTICE OF DEFAULT;which is why you even were permitted to apply for a loan mod…

Federal guidelines (HAFA) REQUIRE the lender to “process” a loan mod AND a short sale attempt BEFORE they are permitted to foreclose.

BUT wait! There’s more!

Remember I wrote the two departments NEVER communicate?

“Left hand doesn’t know what the right hand is doing?”

All of a sudden (And trust me on this one. I lost one EXACTLY this way very early on in this game.) you receive a knock on your door.

You answer it.

It’s a man or woman in a constable uniform.

Yup.

It’s THE constable.

Why?

They’re here to help you take whatever you can grab, evict you and change the locks.

Don’t want to go? Think you’ve “Got Rights?”

Not anymore you don’t.

He’ll call more constables and the police and then WILL PHYSICALLY REMOVE YOU AND YOUR FAMILY FROM THE HOUSE…Which is NO LONGER YOURS as it was sold at auction right from under both YOU AND YOUR LENDER!

Listen and listen good.

If you don’t retain an experienced real estate broker with a shark of an attorney to represent you so you can exit gracefully and at least get some relocation cash, YOU ARE UP THAT PROVERBIAL CREEK!

Don’t take my word for it…

The property I will use as an example?

Here’s its address: 247 Summit Vista, Henderson, NV

Check out its history. You’ll see it was listed, then foreclosed. Without ANYONE, EVEN the real estate broker (not me) who owned it, knowing it.

Concerned?

You better be. Because if you don’t advocate for yourself, who will?

Is that the constable I see driving up your street?

Housing’s New Nightmare – Posted On CNN Money

As I pointed out over a year ago, (See August 26, 2010 video post) and now reinforced by CNN, this is the story we’ve to deal with…meaning, the short sale is truly here to stay as lenders bound by bailout funds are also bound by HAFA guidelines…

***
In another ominous sign for the economy, the number of people falling behind on their mortgages for the first time is on the rise.

This grim statistic is only the latest bad news for the reeling economy. Home sales are in free fall, initial jobless claims remain high and the gross domestic product slowed to a near halt in the second quarter, government reports issued this week showed.

The increase in short-term delinquencies is leaving some experts wondering whether a new round of foreclosures is on the horizon, even as the current wave begins to ebb.

Some 3.51% of borrowers were 30 days late in their loan payments in the second quarter, up from 3.31% at the end of last year, according to new data from the Mortgage Bankers Association. The shift is a stark reversal from the steady decline in short-term delinquencies during 2009.

The blame lies in the sputtering labor market, experts say. More people are losing their jobs, as evidenced in the steady rise in initial unemployment claims, and this is prompting them to default on their mortgages.

“You can’t expect a recovery in the housing market in the absence of a recovery in the jobs market,” said Jay Brinkmann, the association’s chief economist. “It takes a paycheck to make a mortgage payment.”

That recovery is not expected anytime soon. Economists are predicting the U.S. economy will shed 120,000 jobs in August, according to Briefing.com. Few are willing to bet that the private sector will ramp up hiring in coming months.

Short-term delinquencies, meanwhile, will likely continue rising, said Anthony Sanders, a real estate finance professor at George Mason University. And they will turn into a new wave of foreclosures unless the borrowers can land a job.

“This is all negative news for the housing market,” he said.

HOA’S Can And ARE Foreclosing On Henderson Homes!

Homeowners struggling to pay their mortgages are letting homeowners associations fees slide, and now HOAs are fighting back and foreclosing. Tom Skiba, of the Community Associations Institute; Bill Davis, an attorney; and CNBC’s Diana Olick discusses this trend.

BREAKING NEWS: Home Buyer Tax Credit Closing Extension..PASSES | Home Buyer Tax Credit, Close By Sept 30

Breaking News…The allowed time to CLOSE a transaction where the buyer is using the home buyer tax credit has been moved FROM the end of June…extended to Sept 30th 2010!

NATIONAL ASSOCIATION OF REALTORS must receive out collective gratitude for playing a part to make this happen.

WASHINGTON — Homebuyers would get an extra three months to complete their purchases and qualify for a generous tax credit under a bill overwhelmingly passed by the House on Tuesday.

Under current law, homebuyers who signed purchase agreements by April 30 have until Wednesday to close on the sale to qualify for tax credits of up to $8,000. The bill would give buyers until Sept. 30 to complete their purchases.

The extended deadline only applies to people who signed purchase agreements by April 30. The National Association of Realtors estimates that about 180,000 homebuyers who already signed purchase agreements are likely to miss the Wednesday deadline.

“We owe this to the people who have essentially followed the rules who are caught by a closing date,” said Rep. Sander Levin, D-Mich., chairman of the House Ways and Means Committee.

The bill passed 409-5. It now goes to the Senate, where Senate Majority Leader Harry Reid, D-Nev., has sponsored a similar measure.

The popular tax credit has helped to stabilize the nation’s slumping housing market. More than 2.6 million taxpayers claimed the tax credit through April — claiming $18.7 billion — according to the Internal Revenue Service.

The Realtors group says the tax credit has generated 1 million new home sales that wouldn’t have happened otherwise.

The tax credit for first-time homebuyers was part of President Barack Obama’s economic recovery package enacted last year. In November, Congress extended the credit and expanded it to longtime owners who bought new homes. First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500.

The Realtors group has been pushing hard in Congress for the extension. Mortgage lenders, the trade group says, have been swamped with borrowers trying to get approved by the end of the month.

Delays with mortgage lending and appraisal companies have meant that home sales are taking far longer to complete this year.

“A lot of lenders weren’t able to handle the influx of loans that came with the tax credit,” said Lucien Salvant, a spokesman for the National Association of Realtors.

There have been particularly long delays for buyers of so-called short sales — ones in which banks agree to accept less than the total mortgage amount. In Las Vegas, for example, short sales made up nearly a third of all sales last month.

Many banks “just don’t have the process to the point where they can do it in a reasonable amount of time,” said Jack Woodcock, a real estate agent in Las Vegas. Extending the tax credit deadline, he said, would be a welcome relief to those borrowers, many of whom “made their decision based upon that tax credit.”

Source: Associated Press writer Alan Zibel contributed to this report.

Fannie Mae Cracks Down On Strategic Defaults

Fannie Mae is cracking down on Walk-Aways….or…are they?

So, lets flush this out and get to the bottom line…

A default is considered strategic when homeowners have the capacity to pay, yet choose to walk away from their mortgage. The trigger, researchers say, is negative equity: When the value of a home is less than what the lender is owed on it, borrowers are more likely to strategically default.

Note: Check this out, article and video: Double Dip In Housing Values, Banks Aggressively Foreclosing and Approving Short Sales.

About 11.3 million homeowners with a mortgage, or 24 percent, owe more on their mortgage than the home is worth, according to real estate research firm CoreLogic. Another 2.3 million have less than 5 percent equity in their homes. All told, about 29 percent of all homeowners with a mortgage are either underwater or very close to it. The firm estimates that the typical underwater homeowner won’t return to positive equity until late 2015 or early 2016.

Lets look at that estimated date of return of positive equity…

Joe homeowner bought his house in 05 for $500,000. Over the last 2-3 years the home has depreciated by 50%…now its worth $250,000. Joe bought the home in 05 with virtually no money down, interest only…and still owes almost the same amount he borrowed back in 05. Joe is underwater by $250,000. Joe’s situation is now considered normal for literally millions of Americans.

Now, for Joe’s home to be worth what he owes ($500,000) it will have to RE-appreciate by the lost 50%….and according to Corelogic that will take 5-6 years.

No way. That will never happen.

What would that rate of appreciation per year have to be? Well over 10% per year! Realistically, Joe homeowner won’t be even in his home until 2020 or possibly, never. Never is a realistic possibility in many parts of the US.

Oh..and one last thing…did you know that 19,000,000 homes in the US are VACANT?

And Fannie Mae, an arm of the federal government and a big part of the Obama administration’s housing policy, wants to make sure that if struggling families walk away, they suffer for it.

A ‘Walk-Away’ is just that….c-ya…wouldn’t wanna be ya.

No attempt at a loan mod, no attempt at a short sale. Agents, put your marketing hats on. What this policy change means for agents is that the decision to do a short sale (or DIL) is without question their best option. “Mr. Homeowner, if you simply walk-away do you realize that Fannie (and soon Freddie) can and may go after you for their loss…..”?

Under HAFA and the new Fannie/ Freddie version of HAFA…no deficiency judgments! HAFA clueless? No worries, watch the exclusive FREE National Association of Realtors and Harris Real Estate University HAFA training videos.

Homeowners who strategically default or did not work “in good faith” to avert foreclosure through other means will be ineligible for new Fannie Mae-backed mortgages for seven years. The firm said it will also pursue homeowners in court, seeking so-called “deficiency judgments” to recoup outstanding debt by seizing borrowers’ other assets. Thirty-nine states do not limit the ability of lenders to recover what they’re owed.

“In good faith”…translated: Short Sale, Deed In Lieu of a Foreclosure, Loan Modification. Agents, tell ALL of your clients to fully document their attempts to work “in good faith” with their lender/ servicer. Save phone logs, letters, emails..everything. That way, when the time comes for them to buy another home there will be no question that they complied with this new Fannie policy.

Fannie Mae said that next month the firm “will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.”

“Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting,” Terence Edwards, Fannie’s executive vice president for credit portfolio management, said in a statement.

Strategic defaults among homeowners have been on the rise. More than a million homeowners went that route last year, nearly double the amount in 2008 and more than four times the level in 2007, according to a recent analysis by the credit reporting company Experian and Oliver Wyman, a management consulting firm.

And..homeowners acting in THEIR own best interest…acting strategically will only continue to increase. Its estimated that up to 75% of ALL loan modifications will FAIL. What effect will all of these failed loan mods have on homeowners behavior?

A study by a team of academics from the University of Chicago and Northwestern University estimated that nearly a third of home mortgage defaults in March were strategic. The deeper underwater homeowners are, the more likely they are to walk away from their mortgage, the researchers noted.

Agents, did you catch that….nearly 1/3 of all March 2010 defaults…were strategic! Read this: Double Dip In Housing, Real Estate Crash 2.0.

Earlier this month, the House of Representatives passed a bill barring strategic defaulters from obtaining home mortgages backed by the Federal Housing Administration. The agency guarantees nearly one in four new mortgages.

“I can’t help but notice that every group now frantically calling for tough penalties for homeowners who walk away was virulently opposed to judicial modification of mortgages in bankruptcy,” Rep. Brad Miller, a North Carolina Democrat, told the Huffington Post.

Bank of America and Citigroup, the nation’s largest and third-largest banks by assets, respectively, support changing existing law to give federal judges the power to modify mortgages in bankruptcy, otherwise known as “cramdown.” Proponents argue that if homeowners were able to modify their mortgages in bankruptcy, the number of strategic defaults would substantially decrease, if not nosedive.

About 3 million homes will receive foreclosure notices this year, real estate research firm RealtyTrac estimates. More than 1 million will be repossessed by lenders, adding to the nearly 2.2 million homes that lenders took over from 2007 to 2009.

Fannie Mae and its sister firm Freddie Mac guarantee nearly three out of every four new mortgages, according to leading industry publication Inside Mortgage Finance. The two firms control about $5.5 trillion in home mortgages, according to their federal regulator. That’s nearly half of all outstanding mortgage debt in the U.S. Their share of the mortgage market is nearly double what it was 20 years ago.

Note: Many agents don’t understand the relationship between the servicer and the investor. The servicer is the bank…Chase, BoA, Wells etc. The investor..who actually OWNS the mortgage loan is…75% of the time…Fannie Mae or Freddie Mac. Every reason to believe that by years end that number will rise to closer to 90%.

Because Fannie controls such a large portion of new mortgage issuance, the freezing out of homeowners for seven years could prove devastating.

Yeah, won’t happen. For housing to (ever) fully rebound we need MORE buyers…not fewer. At the end of the day, how exactly will this new policy be enforced.  Remember, a borrower has to work “in good faith” to avoid the wrath of this new policy. Who determines what “in good faith” means. We are assuming it means to attempt a mod, a short sale or do a deed in lieu. Does this mean that the servicers will need to store all short sale, loan mod files..for 7 years?

Brent T. White, a law professor at the University of Arizona, recently wrote in an academic paper that most homeowners can recover from a foreclosure within two years. In fact, defaulting on a mortgage is not as bad as most people think, White notes.

“Lenders are unlikely to pursue a deficiency judgment even in recourse states because it is economically inefficient to do so; there is no tax liability on ‘forgiven portions’ of home mortgages under current federal tax law in effect until 2012; defaulting on one’s mortgage does not mean that one’s other credit lines will be revoked; and most people can expect to recover from the negative impact of foreclosure on their credit score within two years (and, meanwhile, two years of poor credit need not seriously impact one’s life),” he writes.

There is a “huge financial upside” for seriously underwater homeowners to strategically default on their mortgages, White said.

While it’s still taboo among most homeowners, it’s common behavior among corporations.

In December, Morgan Stanley, the nation’s sixth-biggest bank by assets, walked away from five San Francisco office buildings the $820-billion firm purchased as part of a landmark $2.43-billion deal near the height of the real estate boom. A group led by Tishman Speyer Properties gave up a 56-building apartment complex in Manhattan in January after defaulting on some $4.4 billion in debt. A spokesman for the California Public Employees’ Retirement System, the nation’s biggest municipal pension fund and one of several investors in the venture, told the Huffington Post that they “basically walked away from it.”

Fannie was effectively nationalized in September 2008. Taxpayers own 79.9 percent of Fannie and Freddie. The Obama administration announced on Christmas Eve that it would provide unlimited financial assistance to the firms, disregarding what was a $400 billion cap on taxpayer bailouts. Their debt is backed by the U.S. government.

The two firms, facing growing losses on sour mortgages in perhaps a worsening housing market, have already taken $145 billion from taxpayers. Fannie Mae is responsible for $83.6 billion of that bailout.

Freddie Mac did not say it would take a similar position on strategic defaulters.

Fact is, everything has changed. Homeowners are taking measures and acting in a way never seen before. Read this post, Housing: Its different this time.

“Such so-called strategic defaults, once rare, are now common enough to jeopardize the already-weak housing and mortgage markets,” wrote economists Celia Chen and Cristian deRitis of Moody’s Economy.com in an April 13 note. “If the trend continues, strategic defaults could both accelerate the pace of home foreclosures and also make it harder for new borrowers to obtain mortgages. Both factors would in turn worsen the decline in house prices.”

Well, that may be true. But, as we reported yesterday…the 33% hose dive in new home sales has nothing to do with strategic defaults…clearly, there are more factors pushing housing into a double dip than homeowners doing strategic defaults. New Home Sales Nose Dive 33%, Worst Home Sales Since 1981.

JPMorgan Chase, the nation’s second-largest bank by assets with more than $2.1 trillion, warned investors last month that underwater homeowners may not continue to make their payments even when they’re able to, according to a May 10 filing with the Securities and Exchange Commission.

A top executive at Freddie Mac posted a note on the firm’s website pleading with homeowners to not intentionally walk away from their homes.

“Knowing the costs and factoring in the time horizon, some borrowers have made the calculation that it is better to purposely default on the mortgage. While I understand how that might well be a good decision for certain borrowers, that doesn’t make it good social policy,” Freddie Executive Vice President Don Bisenius argued in a May 3 note.

Agents, strategic defaulting movement has gone viral. Meaning, its now excepted and perceived as being financially prudent. Its your job to show the homeowner why they want to NOT do a strategic default that results in a walk-away but, a strategic short sale.

The firm warned investors and analysts about the risk of increased strategic defaults in March 2008. Referring to it as “ruthlessness,” Dick Syron, Freddie’s former chairman and CEO, said the firm was “seeing an increase in ruthlessness” that had “the potential for changing consumer behavior.”

Imagine that…lenders, banks and servicers are calling folks who do strategic defaults (remember, strategic short sale) “ruthless”. Is it just me or does that sound a tad…ironic.

Fannie Mae said Wednesday that borrowers who have “extenuating circumstances may be eligible for new loan in a shorter timeframe” than the seven-year period it’s warning about.

WHAT? So, they are already planning on changing their new policy? So it appears that this policy is only valid for those who don’t make a “good faith” effort…and have “extenuating circumstances”. Imagine being the poor Fannie Mae employee who has to make that call?

Republicans in the House recently tried to rein in the twin mortgage giants. Rep. Darrell Issa, the top Republican on the House Committee on Oversight and Government Reform, attempted Wednesday to amend the financial reform bill under consideration by the House and Senate to mandate that the federal government appoint an inspector general to oversee Fannie and Freddie. The mortgage behemoths’ federal regulator has been operating without an independent watchdog looking over it and Fannie and Freddie since 2008.

Republicans have also tried to amend the bill to subject Fannie and Freddie to the Freedom of Information Act so members of the public can keep tabs on the firms by compelling the disclosure of documents and records.

Both efforts were thwarted by House Financial Services Committee Chairman Barney Frank (D-Mass.), who ruled that they were not “germane” to the legislation under consideration.

Emails sent after normal business hours to spokesmen for the White House and Treasury Department requesting comment were not returned.

This Is What A Bank of America HAFA Short Sale Letter Looks Like

Click the link below and you will be able to SEE WITH YOUR OWN EYES what is transpiring with the new HAFA guidelines and how you can avoid a foreclosure AND a future DEFICIENCY JUDGMENT.

Call our toll free 24 hour recorded short sale hotline to learn how to also apply for your $3,000 for relocating after closing your short sale.

866.876.3905, Ext. 200

HAFA__Short_Sale_Letter_from_Bank_of_America

The Number ONE question you NEED to ask the agent handling your Wachovia short sale so you DON’T receive a Deficiency Judgment is…

“What wording should my satisfaction of mortgage contain so I will not be liable for a deficiency judgment?”

Understand this: A mortgage is merely evidence of a loan being in place and is not the actual loan itself.

 A “mortgage” used as a single term is actually made up of two parts:

1.            A promissory note, aka,  “a promise to pay back the borrowed money.”

2.            A mortgage (document) that secures that note (debt) against that asset or real property.

Legally these cannot be grouped together simply because one wants to. A payment is based on a promissory note.

Once the proper release has been signed by an officer of the lender or servicer and recorded, regardless of what your short sale approval documents disclose, you cannot be pursued for a deficiency judgment.  You cannot collect on something that has been ”paid in full”. Get it?

What is the number ONE “secret to not having a deficiency judgment filed against you now, or in the future? “GET THE SALE DONE!”

Why? Because, a deficiency judgment can ONLY be placed by a judge!

To learn more about how to protect yourself when selling your home in today’s “short sale” environment, you MUST grab a free copy of my new eBook, “Should I Short Sale My Home?” by calling

866.876.3905, Ext. 200

In conclusion, please understand – I am not an attorney nor am I giving legal advice. You are always advised to consult a competent real estate attorney to inquire of your legal rights.

Can B of A File A Deficiency Judgment Against Me After My Henderson Short Sale?

There is no such thing as a deficiency on a short sale. 

Frogiveness of Debt and a deficiency are two separate and distinct situations and the terms do not mean the same thing whatsoever and the distinction is VERY..VERY..important.

A short sale is a negotiated settlement, short payoff on a mortgage. PAYOFF. When a short sale is completed, the bank issues a SATISFACTION of the mortgage AND RELEASES the borrower from all obligation. Once a Satisfaction of Mortgage is filed and the Release of Mortgage is obtained, there is NOTHING from which a deficiency JUDGMENT can be obtained. The mortgage has been SATISFIED and the Borrower RELEASED.

To learn more, get my FREE eBook, “Should I Shor Sale My Home?” by calling:

866.876.3905, Ext. 200