Foreclosure - Lending Help for Short Sales » Lending Help for Short Sales

A National Perspective: Distressed Properties

Aug 252009

A study of the top 26 foreclosure markets revealed that foreclosure inventories are equal to 77 percent of MLS listings. In “bubble markets” with volatile prices, foreclosure inventories represent up to 89% of listings. Looking at the same 26 markets its estimated that foreclosure inventories alone represent between a 14.4 and 34.7-month supply of housing. The National Association of Realtors estimates that foreclosure and short sales represented 45 percent of existing-home transactions during the fourth quarter. As a result of the current economic climate, all indications are that its going to take a long time for this discounted inventory to clear, even with foreclosures representing a growing percentage of transactions.

Scoring Foreclosure Property Deals: Short sales are a new trend

As foreclosure inventory continues to grow, banks are becoming more and more interested in pursuing short sales. The largest banks and thrifts are substantially increasing their short sale activity. From Q3 2008 to Q4 2008 short sale transactions were up 61 percent. We are seeing short-sale property discounts ranging from 10 percent to 20 percent. Clearly, lenders want to recover as much of the mortgage amount as possible, but selling at a discount in this range typically still saves them money versus letting the home fall into foreclosure.
Insights from the Mortgage Bankers National Servicing Show

It was clear at the show that most servicers are expecting a significant influx of REOs in Q2 and Q3 as moratoriums begin to lift. With the large inventory levels, asset managers are applauding REO agents that are using any differentiating approach toward actively marketing their REO listings. We are seeing that loan modifications programs are rapidly expanding. Banks are proactively looking at their default portfolios and segregating loans into those that qualify for a loan modification, those that are likely candidates for short sale and those where foreclosure appears to be the only course of action for recovery. With this new shift, asset managers are expanding their business by getting into the business of processing short sales. We expect that this will bring new efficiency to the short sale process and likely a reduction in the typical length of time it takes to close these transactions.”

Short Sales Process Only Gets Harder

Press, Short Sales No Responses »

Aug 252009

The North County Times did an article about the difficulty of doing Short Sales. It reinforces the idea that you need an expert on your side. You wouldn’t go to court without an experienced attorney. Why would you go to your lender without an experienced short sale specialist?

Short sales have always been more complicated and taken longer than other sales because lenders usually verify financial hardship and determine what is an acceptable amount to lose on the property. In many cases, a second lender has loaned $50,000 to $100,000 on a property and is being asked to settle for $10,000 or less. Some lenders also demand that the borrower repay a portion of the remaining balance over several years after the deal closes.

But agents say short sales have grown more complicated than ever, because of their sheer number, because of the prevalence of second loans, and because several large lenders have recently merged with others. Agents have complained that it’s possible to call a lender three times in a week and get three different people responsible for the same property.

Beer said the situation may have eased in the last couple of months as lenders develop standards for approving short sales. The second loan is often paid off at 5 cents on the dollar, a low percentage that is nonetheless fair because such lenders get nothing in the event of a foreclosure, Beer said.

Agents have said pressure from federal and state governments has helped to discourage outright foreclosure, thus gumming up real estate markets. But Beer said such pressure and the smaller losses that result from short sales are also incentive to move them along.

I agree short sales have grown more complicated than ever…and Beer said the situation has eased in the last couple of months.

I don’t agree that there has been much easing because the banks are so overwhelmed. Most second lenders will not even consider releasing the lien for less than 10% of their outstanding balance. Bank of America is now requesting the sellers provide a small cash contribution at closing or sign a promissory note as part of a morale obligation.
Click here for the rest of the article

The 5 Don’ts

Short Sales No Responses »

Aug 222009

Five Things You Should Never Do If You Fall Behind On Your Mortgage

Number One:
Absolutely DO NOT ever deed your property to a third party without absolute confirmation your loan has been paid off!

If you deed your property to a third party, that party then controls the property. The new owner can rent the property (and keep the rent), attempt to sell the property to make a profit, move into the property or use the property in other ways. What the new owner might not do is make mortgage payments, and that could become a big problem for you.

Just because you no longer own the property does not mean you are no longer responsible for the mortgage loan obligations. The lender made the loan to you. And until it is paid off you will be primarily responsible for the mortgage obligation. If you give up control of the property and the new owner does not pay on the loan, the damage to your credit could be catastrophic.

Note: if you believe this option is best for you, please consult with an attorney – not the buyer’s attorney – before completing the transaction.

Number Two:
DO NOT sell your home at a huge discount.

Unless the actual foreclosure sale is less than 45 days away, you have time to explore options. Take a day or two and make a few phone calls. As a general rule, if someone is pushing you hard to get you to sell your property to them, it’s probably because the deal they are proposing is very favorable – to them.
If you have equity in your home, it belongs to you. Let’s see if we can get it to you.

For a Free, no obligation assessment, just click here to submit a request. You do not need to even give us your name. No one will call you on the phone unless you specifically request it.

Number Three:
DO NOT authorize a prospective buyer to deal directly with your lender.

The buyer has one goal and one goal only, and that is to negotiate a low, probably very low, price with your lender. The buyer will ask your lender to accept a discounted payoff. The negotiations could go on over an extended period of time, and if the transaction does not work out the buyer may elect not to buy your property. It could leave you with very little time to resolve the situation and avoid foreclosure. Further, you have no control over the information that goes to your lender or the accuracy thereof. It is entirely possible that the buyer could handle the negotiation and presentation of information in a way that makes it very difficult for you to resolve your loan situation later.

If, however, you believe that your best option is to allow the buyer to work directly with your lender, make certain you consult with a real estate professional and/or an attorney before signing a contract. If you are going to do a Short Sale get representation from a real professional. It costs you nothing – the lender pays the fees. Someone should be looking out for you.

We can help, and it costs you nothing. We have fought for homeowners like you many times – and won. The lender wins also. They do not want to take your property through foreclosure. That’s why they will negotiate to get the deal done.

Number Four:
DO NOT DO NOTHING.

A surprising number of people just accept what they see as the inevitable, and let foreclosure run its course. Don’t let it happen – the damage to your credit will follow you for years.

Take a little time to explore potential options. You do not want a foreclosure on your credit record. It will hamper your ability to get a consumer loan or a car loan for at least a few years, and it will be very difficult to obtain another mortgage for a very long time.

Also, in some cases, doing nothing and letting the property go to foreclosure leaves you open to the lender coming back to you AFTER the foreclosure in an attempt to collect. When a lender agrees to and completes a short sale, we work to have them release any future rights to pursue a deficiency.

Number Five:
DO NOT pay upfront fees!

Never pay any upfront fees to a company offering to negotiate a short sale on your behalf! All of our fees are always paid by the lender, when the deal closes. We have confidence in our ability to close the transaction and will never ask you for any fees.

Not only do we disagree with the practice, it is illegal… Depending on the circumstances, short sale consulting may run afoul of, among other things, licensing laws and the federal Real Estate Settlement Procedures Act (RESPA). (Resource: California Association of Realtors (CAR) legal department)
Avoid any company that is asking for money upfront. There have been many cases of people paying upfront costs (sometimes in the thousands) and the company/person then “disappearing” or not providing the service(s) promised. No company should ask for money upfront when the service has not been provided. We get paid by the bank, when the deal closes!

If a company representing you feels confident they will close the deal, they won’t be asking for that money.

Support Home Owners 4 Hope

Press No Responses »

Aug 032009

All of us that are working with banks day to day are seeing banks become less interested in helping Home Owners who find themselves underwater on their loans. Banks would rather see good people lose their house and go into foreclosure than provide Meaning Loan Modification

This is a highly charged issue affecting 1 in 10 homeowners or more nationwide. That adds up to over 10 million hard working, tax paying owners who would really prefer not to be kicked out of their homes due to conditions well beyond their control so that banks can continue to pad their bottom line at our expense.

Dave Van Waldick is driving an effort to create enough public awareness and media attention to get the major banks and government to sit up and take notice.

He is asking for two very simple things:
1) Banks and the government should create immediate procedures that provide meaningful homeowner Loan Modifications in a reasonable timeframe like 90 days or less.
2) Restore homeowners mortgage related credit to zero lates and re-run credit scores immediately to improve their ability to get normal credit or buy a home.

The first public forum discussion to be held on Friday August 10 in front of Chase/WAMU in downtown San Diego.

click here for more information from HomeOwners4Hop.org

Short Sales Offer Solution to Foreclosure Crisis – Part 1

Portfolio, Press, Short Sales, Trends No Responses »

Jun 162009

By Annalisa Burgos, FrontDoor.com | Published: 6/15/2009

Despite its name, a short sale is by no means a “short” process. But unlike what you may have heard, getting a short sale approved by your lender is not as hard as you may think — if your real estate agent knows what they’re doing.

In order to orchestrate a successful short sale, you need a master negotiator, says Troy Huerta, short sale division leader at Coldwell Banker Residential Brokerage in San Diego. “Many agents forgot how to negotiate. There was no negotiating in the past. You would list a home at a ridiculous price and someone would pay it.”

Those days are long gone. Home values are falling. Unemployment is at 9.4 percent. And according to RealtyTrac, there were more than 321,000 foreclosure filings in May, 18 percent higher than a year earlier. That’s expected to get worse.

But there’s a way to help ease this flood of foreclosures, Huerta says. Do more short sales.

In the past, lenders have been reluctant to do short sales. And why would they? They stand to lose a LOT of money. But the reality today is that if a lender doesn’t do a short sale, it may get stuck with a property that is harder to sell or will sell for less than it could have gotten. (A buyer is more willing to buy a short sale in good condition than a bank-owned foreclosure that needs a lot of work.) Not to mention the cost of pursuing the foreclosure process.

Even Fannie Mae felt short sales could help reduce foreclosures. It launched a pilot program pre-approving short sales for homeowners in Phoenix and Orlando.

Now, lenders should be more motivated than ever to get these deals done — as part of President Obama’s economic stimulus plan, the federal government will pay lenders up to $1,000 for each completed short sale or accepted deed-in-lieu of foreclosure.

In Huerta’s market — San Diego — about 70 percent of the properties for sale are short sales, 20 percent are bank-owned or REOs, and 10 percent are traditional sales.

On average, only a third of short sale deals actually close. In other words, the failure rate for the average agent doing a short sale is a whopping 66 percent, Huerta says.

The problem? “About 80 percent never counteroffer,” Huerta explains. “The bank will tell them no and the agent stops there. But that’s their job to say no.”

Negotiating a short sale is essentially loss mitigation, Huerta says. The property is priced based on two to three broker price opinions (an agent’s estimate of its current market value), which is less than what the seller owes. Interested buyers tend to start with a lowball offer and lenders want to recoup as much as they can, so it’s the agent’s job to negotiate a price that satisfies both parties. If the seller took out a piggyback loan or a home equity loan, multiple lenders are involved. And with the barage of short sale applications lenders get, you can see why the process can take as long as six months to a year.

But short sale experts who have extensive contacts within the mortgage industry and experience with these complex deals can close them quickly. Huerta and his team, for instance, work with lenders throughout the country, like Countrywide and Washington Mutual, and can get these deals done in 60-90 days, boasting a 90 percent success rate.

More info here

California Foreclosure Prevention Act – Helps Short Sales

Laws, Short Sales No Responses »

Jun 162009

The California Foreclosure Prevention Act, or Assembly Bill X2 7, which Governor Arnold Schwarzenegger signed in February, is meant to push banks and loan servicers into lowering mortgage payments of homeowners in financial trouble.

It may also motivate banks and loan servicers to negotiate short sales because of the pushing back of foreclosure. This is because some borrowers simply cannot afford the cost of the house they are in (even with a loan modification that would bring the lender’s recovery in line with what it would recover through foreclosure) or are so under water that they are not willing to make the payments even on a modified mortgage.

Even though Mathew Padilla from the OC Register says:

And the bill says it does not require a servicer to violate contracts for “investor-owned loans.” The most troubled loans are generally those investment banks packaged and sold, and if the servicing contract says foreclosure is preferable to a loan modification, nothing in the law stops foreclosure.

The law also says it does not require a bank to “provide a modification to a borrower who is not willing or able to pay under the modification.” I am not sure what “able to pay” means if the target debt-to-income ratio is 38 percent? Maybe if borrowers have to make other hefty payments — on cars, credit cards etc. — then they are out of luck.

We are seeing better response for Short Selling from lenders than in the past.

Distressed Properties – So Far in 2009

Short Sales, Trends No Responses »

Apr 262009

Scoring Foreclosure Property Deals: Short sales are a new trend

As foreclosure inventory continues to grow, banks are becoming more and more interested in pursuing short sales. The largest banks and thrifts are substantially increasing their short sale activity. From Q3 2008 to Q4 2008 short sale transactions were up 61 percent. Short-sale property discounts ranging from 10 percent to 20 percent. Clearly, lenders want to recover as much of the mortgage amount as possible, but selling at a discount in this range typically still saves them money versus letting the home fall into foreclosure.

Insights from the Mortgage Bankers National Servicing Show

Lending Help for Short Sales