Archive for May, 2010
May
31
Posted under
News,
Short Sales Why would a lender (AKA investor/service/insurer) approve a short sale payoff?
The short answer (pardon the pun) is because they are not in the business of owning property. Nor are they in the business of holding onto non-performing assets. Let’s look at the ramifications and benefits for a lender to approve short sales:
How the assets are performing: Delinquent and non-performing loans place a huge burden on mortgage
lenders. For all delinquent and non-performing loans lenders must set aside funds in reserve to deal with
potential losses. These funds can’t be put to work generating new loan fees until the bad loans are resolved.
A successful short sale enables the lender put more money to work. When an asset is performing, the lender is
allowed to lend 7-9 times its value and collect interest on that amount. When it’s not performing, they can’t loan
money against the asset (because it’s no longer considered an asset). The real numbers? Mutiply $1 billion of
loans outstanding by the 7-9 times factor and you see the damage a non-performing asset can have on a lender!
Obviously, getting a toxic asset off the books through a short sale frees up the lender’s ability to generate
income through their primary business- lending money.
Asset Repair & Management Expenses: If a lender acquires a property through foreclosure, the property will be
repaired and managed until it is resold. It’s expensive to repair properties that are often vandalized by the
former owners, and more expensive still to manage a portfolio of real property assets (aka homes) spread
throughout the US. Property maintenance, utilities, repairs and administration are all costs the lender would
prefer to avoid. A short sale eliminates most of these costs.
Keeping Uncle Sam Happy: Mortgage lenders have come under pressure from the Obama Administration to
work with borrowers to resolve their mortgage hardships. The Home Affordable Refinance Program and the
Home Affordable Modification Program are but two examples of the comprehensive Making Home Affordable
strategy initiated by the Federal government in the past year. The sands continue to shift constantly and swiftly
in the pre-foreclosure desert. No matter, the government provided billions of dollars to failing banks and they
expect to see non-performing assets begin to disappear from the books.
A final note: Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the secondary
mortgage market, and Wall Street is watching their performance. Lenders need to sell these loan portfolios in
order to put the funds back to work. This is done by lending the money which results in income generated
through interest and loan fees. If mortgages perform poorly after they are sold it could impact the lender’s
ability to sell their loans on the secondary market. A successful short sale gets the loan payoff resolved quickly
which enables the lender to more effectively sell on the secondary market…aka “Wall Street”.
Lear more by getting a FREE copy of my eBook,
“Should I Short Sale My Home?”
by calling our 24 hour toll free recorded hotline at:
866.876.3905, Ext. 200
May
28
Posted under
Short Sales Negotiating a deficiency is at once the most critical and frequently overlooked aspect of completing a short sale. Why? It helps to understand the relationship of the parties involved. To state the obvious, lenders pay Realtors when a home sells. Therefore, Realtors have a financial incentive to close as quickly as possible. That being the case, who ensures that the sellers are relieved from any loan deficiencies?
Negotiating a deficiency is at once the most critical and frequently overlooked aspect of completing a short sale. Why? It helps to understand the relationship of the parties involved. To state the obvious, lenders pay Realtors when a home sells. Therefore, Realtors have a financial incentive to close as quickly as possible. That being the case, who ensures that the sellers are relieved from any loan deficiencies?
Considering the settlement of a deficiency requires legal analysis and specific language, it’s no wonder this all-important part of the negotiation is bypassed regularly when anyone but an attorney is handling the negotiation. As a Realtor, I DO NOT render a legal opinion or give advice on terms and settlement language. My clients need qualified legal interpretation and a written analysis of their closing documents. Anything less spells A-M-A-T-E-U-R…
With a short sale, the lender has three possible waysto handle the deficiency balance, which is the portion of the mortgage debt not covered by the sale of the home:
1. The lender can attempt to collect the deficiency balance from the seller after the sale of the property has closed.
2. The lender may require the seller to sign an unsecured promissory note for the deficiency balance as a condition of agreeing to the short sale. If the new note is for less than the balance of the original debt, the difference would be considered canceled, or forgiven, debt.
3. The lender may agree to cancel the entire deficiency balance
There’s almost nothing more important to the seller than the release of both the property lien and the underlying personal debt secured by the note. Otherwise, the lender may not forgive the personal debt and begin collection activity. It should also be noted that Federal loan forgiveness law does not grant all sellers loan forgiveness and does not relieve sellers from taxes levied in certain states.
For more information onhow we help you avoid all such issues,
call today and get your free copy of my eBook,
“Should I Short Sale My Home?”
866.876.3905, Ext. 200
May
26
Posted under
Short Sales At this time, Fannie Mae and Freddie Mac are not participating in this program. To see if your mortgage is owned or guaranteed by them, simply call the toll-free numbers below or use their online lookup tools.
Fannie Mae
1.800.7FANNIE (8am to 8pm EST)
www.fanniemae.com/loanlookup
Freddie Mac
1.800.FREDDIE (8am to 8pm EST)
www.freddiemac.com/mymortgage
If your loan is with Fannie Mae or Freddie Mac, you may still qualify for other foreclosure alternatives. Call one of our home retention specialists at 1.800.846.2222 to explore your options.
You are living in the home as your primary residence*
The amount you owe on your first mortgage for your property is equal to or less than:
* $729,750 for 1 unit
* $934,200 for 2 units
* $1,129,250 for 3 units
* $1,403,400 for 4 units
You owe more on your home than it’s worth,
Your current mortgage was taken out on or before January 1, 2009.
Your payment on your first mortgage (including principal, interest, taxes, floor and hazard insurance, and homeowners association dues, if applicable) is more than 31% of your current gross income before taxes and deductions
You are experiencing a hardship (such as a job loss, divorce or medical emergency) and are unable to afford your current home loan.
Program at a glance:
Step 1: Call us to request a HAFA short sale and update us on your current financial situation. We’ll review your information and check your eligibility for a Home Affordable Modification or any other home retention program that would enable you to stay in your home.
Step 2: If you don’t qualify for a modification and want to sell your home, we’ll work to gain approval of your first mortgage HAFA short sale request. If you have a second mortgage with another lender, you will have to ask them for approval. Within approximately 30 to 60 calendar days, you’ll receive a Short Sale Agreement with the acceptable offer price.
Step 3: You will be given time to market and sell your home — typically 120 calendar days. You are required to work with a licensed real estate professional.
Step 4: Once you receive an offer, you have 3 calendar days to submit a Request for Approval of a Short Sale document as well as the offer letter. We’ll get back to you with a decision on the offer within 10 business days.
Step 5: If the offer is accepted, your house is sold and your mortgage and any other loans against the home are settled from the proceeds of the sale.
For more information, call our 24 hour toll free recorded hotline to get a copy of my FREE eBook,
“Should I Short Sale My Home?”
866.876.3905, Ext. 200
May
24
Posted under
Short Sales What is this?
It’s our premier program which enables you to take advantage of our network of experienced real estate attorneys to negotiate and close your short sale—at no cost to you! What do you get for that?
1. A bona fide, experienced real estate attorney who specializes in negotiating short sales with lenders
2. If necessary, a forensic loan document inspection designed to uncover RESPA, TILA and other violations
3. Substantially more leverage that comes from the threat or initiation of litigation
4. A detailed financial cost/benefit analysis, submitted to the lender, that illustrates a short sale is a substantially less expensive alternative to the lender than foreclosure
5. High likelihood of negotiating reduction or elimination of the deficiency
6. A much faster response from the lender due to escalation resulting from legal representation
7. Identification of important or damaging legal issues at the earliest possible opportunity (deficiency judgments, tax implications, fraud, etc.)
8. Minimized damage to credit and the ability to borrow in a fraction of the time vs. foreclosure
When you take advantage of the Short Sale Accelerator Program, you’re tapping into a wellspring of legal resources designed to protect distressed homeowners seeking loan modifications, and/or stopping or preventing foreclosure. The program also allows you to take advantage of expert short sale and short pay refinance representation, and to generally combat the predatory lending practices of lenders and loan servicing companies.
Call our 24 hour toll free recorded hotline and get your FREE copy of my eBook,
“Should I Short Sale My Home?”
866.876.3905, Ext. 200
As a client, you will also receive a FREE attorney consultation to asses your situation.
May
21
Posted under
Short Sales For homeowners, the probability of foreclosure can be financially and emotionally devastating. More than 50% of homeowners in distress never talk to anyone. They also don’t open mail from lenders. They do what’s in our human nature—they hide and hope the problem goes away. Homeowners who proceed without guidance of any kind are headed for disaster. These homeowners NEED QUALIFIED, EXPERIENCED help to move forward with their lives.
The best course of action for a homeowner in distress is to speak with a well-informed, real estate professional who has the resources and capabilities to come up with a solution. For many homeowners, this person may be the last chance they have at avoiding foreclosure. Things to look for in a qualified professional:
1. Someone who is a true market specialist
2. Someone with visibility as a “problem solver”
3. Someone who has the knowledge, resources and time to complete short sales
4. Someone who will happily help your family and friends withtheir own short sale
One thing I can say for sure about short sales is that they help to maintain a community. If there’s truly a case for Loss Mitigation, it’s for the benefit of the neighborhood and the goodwill of its residents. As the foreclosure crisis reached epidemic proportions in the fall of 2008, entire communities were abandoned by homeowners. As a consequence, crime and vandalism spiked, swimming pools turned green and grass turned brown. Upset homeowners — showing a human a mix of depression, bitterness and anger — stripped homes of their belongings and filled toilets with cement.
That anger is understandable.
The solution for you to close this chapter of your life and open the door to a new one begins by getting your
FREE copy of my eBook,
“Should I Short Sale My Home?”
Call our 24 hour toll free recorded hotline to get yours today!
866.876.3905, Ext. 200
May
19
Posted under
Short Sales The Federal Government is incentivizing lenders (paying them with taxpayer dollars) to speed up the short sale
process in an attempt to get the property sold before the bank must repossess it. Dubbed the Foreclosure
Alternative Program (FAP), the property must be listed and entered into a bona fide contract (Arm’s Length
Transaction). If the property doesn’t sell within the average market time for that community, then a Deed-in-
Lieu of foreclosure will be issued.
So how’s it working? The FAP was officially unveiled in May; and as of publication date, the promised
standardized Short Sale Agreement and Offer Acceptance Letter haven’t been issued by the Feds. Brokers and
agents alike are anxiously awaiting these updates.
Another pilot program is actually working. Wachovia, under the former company name of World Savings,
promises to process short sales in 30 days. The pilot program is being conducted in parts of California.
Here’s how it works:
1. Listing Agent emails purchase contract and HUD-1 to local field office
2. Internal BPO and AV (automated value) generated within 72 hours
3. Approval/denial of the short made within 5 business days
4.Conditional approvals sent out within 7-10 business days
5. Wachovia promises to pay junior lien holders 10% of their balance to settle
6. You can’t even get a refinance loan completed in that amount of time these days!
Learn more by getting a copy of my FREE eBook
“Should I Short Sale My Home?”
by calling our 24 hour toll free recorded hotline:
866.876.3905, Ext. 200
May
17
Posted under
News If you’re a student of history, there’s a lesson to be learned when it comes to newly designed governmentprograms instituted to solve the ills of a boom-to-bust monetary policy and housing cycles: Once a governmentprogram is enacted, it rarely goes away. Social Security is the 800-pound gorilla that comes to mind. Medicareis another. These government programs start out with good intentions but usually wind up as a noose aroundthe neck of taxpayers, as policymakers create more layers of bureaucracy to deal with the issues they created in the first place.
Take the Social Security Act of 1935. President Franklin Delano Roosevelt created the first wave of entitlement programs as part of the New Deal, which was designed to ward off the ills of the Great Depression. But the Great Depression was actually spawned by a decade of Great Greed. You know it as the Roaring 20s (1920s).
Everyone was prosperous.
The Great Depression began with the stock market crash of 1929 and ended in 1941 with America’s entry in World War II. In actuality, what prolonged the Great Depression was a glut of government programs–FDR’s New Deal–combined with high unemployment (25% nationally) and declining spending (consumer confidence). Some economists argue that we’re in similar times with a twist. Federal Reserve Chairman Ben Bernanke is a self-avowed student of the Great Depression, and his contention is that the economic contraction from 1929-1941 could have been avoided by artificially stimulating the “money supply.” And that’s exactly what Bernanke is doing today.
The Federal Government is printing money as if we are playing a Monopoly game in an attempt to stimulate consumer confidence (spending), the collapsed housing market (buying and selling) and the banks so they’re liquid enough to lend again (unfreezing the credit markets).
Only time will tell if it’s going to work. The Obama Administration has directed banks to somehow stop foreclosures, so banks are allowing borrowers to stay in homes without making payments. However, that’s also causing a huge “shadow inventory” of homes that will eventually go to foreclosure and become REO listings.
Lenders are now also being instructed to attempt to modify the loans of homeowners who can qualify to stay in the home if the rate/terms are altered. Lenders are also agreeing to more and more principal reductions.
Meantime, lenders (through the conduit of Fannie Mae and Freddie Mac) are also offering high loan-to-value refinance programs for borrowers with good credit who can prove income.
And ultimately, how will all this “printing of the dollar” affect the economy in the years ahead? Most economists agree it will cause tremendous inflation similar to President Jimmy Carter’s era (1977-1981). Many of us still have memories of 12-14% interest rates on 30-year mortgages! So be prepared for this distressed real estate market to be in the public mind for some time. Traditional real estate as we knew it may not return for another 5-10 years.
So, if you find yourself in this dilemma, please help yourself to a free copy of my eBook,
“Should I Short Sale My Home?”
By calling our 24 hour toll free recorded hotline at:
866.876.3905, Ext. 200
AND, as a client of mine, I will provide you a FREE consultation with one of our
experienced short sale real estate attorneys!
AND in addition to that, I will set you up to have your entire attorney process COVERED
at NO COST TO YOU!
All you gotta do is call!
866.876.3905, Ext. 200
May
14
Posted under
Short Sales Just knowing the players in the transaction is half the battle.
At the top of the food chain in the Investor section are mortgage insurers, foreign investors and hedge funds.
Frequent objectors to short sales include tax lien holders (income, estate or corporate franchise tax—
as opposed to real property taxes which have priority even when unrecorded) and mechanic’s lien holders.
It is also possible for junior lien holders to prevent the short sale. If the lender required mortgage insurance
on the loan, the insurer will likely also be party to negotiations as they may be asked to pay out a claim to
offset the lender’s loss in the short sale. The wide array of parties, parameters and processes involved in
a short sale make it a relatively complex and highly specialized type of real estate transaction.
That’s why short sale deals have a high failure rate and often do not close in time to save homeowners
from foreclosure when they are not handled by a knowledgeable and experienced professional.
Begin with the most current and legally accurate information.
Call our 24 hour recorded hotline and request your FREE copy of my new eBook,
“Should I Short Sale My Home?”
866.876.3905, Ext. 200
Plus, as a client of mine, I will GIVE YOU a free consultation with an experienced short
sale attorney…AND I have prenegotiated for your legal representation to be no cost to
you as well.
Call today!
May
13
Posted under
Short Sales The Short Sale Grinder
We are not going to lie to you and say short sales are easy. In fact, they are anything but easy. It’s a dynamic process with a lot of moving parts and the lenders keep changing the rules. (Think about a football game. Now, suppose the referee could change the out-of-bounds markers in the middle of the play? It sounds ridiculous, but that’s what lenders are essentially doing to their borrowers on a daily basis.)
At the end of the day, however, there is a process.
But there’s also a way to cut to the front of the line, slash through the bureaucracy, and redefine the process. Would you like to know how? We’ll get to that; but before we do, it’s important to understand the steps.
Beware of the short sale “systems” that promise a way to package, process and close a short sale in only 4 hours of actual work time! Believe that and we’ve got some beachfront property in Nebraska to sell you.
It ain’t gonna happen that way.
Ah, the bank, the lender, the insurance company holding the Private Mortgage Insurance (PMI), the foreigninvestor who actually controls the Note … the things they don’t tell you about a short sale! Not a day goes by at my office without a new tale of utterly illogical banking behavior. If I had a dollar every time I hear a fellow Realtor throw their hands up in disbelief and exclaim “What the *#%& is the bank thinking?
Why did they do THAT to my short sale?” The simple answer is—“Because they can!” However, it’s a bit more complex than that. It’s true that many of the lender’s decisions seem to defy logic, and it’s important to understand why. The government, huge financial institutions, international investors, and an army of mid-level managers collectively contribute to the chaos. There are so many parties involved—the rules change every day… every hour… every minute.
The best way to learn about the short sale process is to GET EDUCATED then FIND A HIRED GUN to negotiate for you.
Get my FREE eBook,
“Should I Short Sale My Home?”
by calling our toll free 24 hour recorded hotline at:
866.876.3905, Ext. 200
Call Now!