Category Archives: Short Sale Department

New guidelines should streamline short sales

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Area brokers and real estate agents will tell you that more short sales – an 11th-hour effort for homeowners to avoid foreclosure – are being executed this year.

The strategy in the past had been mired by communication breakdowns, prompting many a would-be buyer and Realtor to bemoan there is nothing “short” about a short sale.

So this week’s announcement by the Federal Housing Finance Agency directing Fannie Mae and Freddie Mac to streamline the short-sale process can only help.

The efforts will come in stages, with the first phase taking place in June.

Among the new guidelines is that mortgage servicers review and respond to requests for short sales within 30 days from receipt of a short-sale offer.

Slow responses from lenders, poor communication with a lender rep, and repeated requests for documentation were common gripes cited by agents in a California Association of Realtors’ survey of short sales released last year.

Other things servicers have been ordered to do under the new guidelines are provide weekly updates to the borrower if the short sale offer is still under review after 30 days; and make and communicate final decisions to the borrower within 60 days of receipt of the offer.

The new streamline rules would also apply for deeds-in-lieu and deeds-for-lease.

 

 

 

Source: David Benda’s Blog http://blogs.redding.com/dbenda/archives/2012/04/new-guidelines.html

Important HAFA Program Changes

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The federal government’s flagship HAFA short sale program continues to evolve in hopes of more effectively addressing the needs of distressed homeowners for whom continued ownership is not longer a realistic option.  The most recent Supplemental Directive 12-02 was released on March 9, 2012; loan servicers are instructed to implement program changes effective immediately.  They include:

  •  There are no longer any occupancy requirements for HAFA eligibility.
    Previously, HAFA required that the property be occupied as the borrower’s primary residence at some point within the prior 12 months.
  • The amount a servicer may authorize the settlement agent to pay from gross proceeds to subordinate mortgage holder(s) in exchange for a lien release and full release of borrower liability is increased from $6,000 to $8,500.
  • Borrower relocation incentives will be limited to HAFA short sales or Deed-in-Lieu transactions where the property is occupied by a borrower or a tenant at the time of the Short Sale Agreement or DIL Agreement and who will be required to vacate the property as a condition of the sale or DIL.
  • Borrowers may now elect to remain current on the loan during the term of the Short Sale Agreement or DIL Agreement.
  • Credit bureau reporting of HAFA transactions are amended as follows:
    • If the real estate is sold for less than the full balance owed and the deficiency balance is forgiven, report the following Base Segment fields as specified:  Account Status Code = 13 (Paid or closed account/zero balance) or 65 (Account paid in full/a foreclosure was started), as applicable.
  • The deadline for HAFA has been extended. A borrower now has until December 31, 2013 to submit a Short Sale Agreement or a written request for a consideration for a Short Sale Agreement to be eligible for HAFA.

The stated intention of the program updates is to expand the availability of HAFA’s benefits to more struggling homeowners.  Certainly, the increase in the amount of gross proceeds available to settle junior liens should help.  This has been an area of particular concern, most especially in California where the implementation in 2011 of SB 457 barred
lien holders from reserving collection rights following short sales or, alternatively, from conditioning short sale approval from additional seller contributions.  Of course, as with all previous program changes, the proof will be in the pudding.  Stay tuned….

 

 

 

 

Source: http://www.brianaripley.com/2012/03/26/important-hafa-program-changes-announced/

 

The Most Important Short Sale Do’s and Don’ts

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Do educate yourself. This is THE most important thing you can do.  Short sales can be complicated. You need every bit of information you can get when you jump into the short sale process.

Don’t wait until it’s too late. If you drag your feet and hide from the fact that you’ve stopped making mortgage payments, it will cost your credit rating and it will put any chances of a short sale in risk.

Do be diligent. There have been very closable short sales that fail because the homeowners either stop responding to their agents, stop returning paperwork, stop returning phone calls, stop caring, etc. It can be a difficult process, but at the end of it you will be free of the mortgage, the upside-down house and your financial future will have a better foundation.

Don’t stop taking care of your home. Yes, you will be moving, but if you stop mowing the lawn or keeping the place tidy, that unkemptness will discourage any potential buyers.

Do keep paying your HOA dues! Any unpaid HOA dues will need to be settled either before or at the close of a short sale escrow. Sometimes the buyer or the first lien mortgage bank will contribute to these outstanding bills, but not every time. And Home Owner Associations will send your defaulted HOA bill to a collection lawyer who will slap you and your property with their own outrageous charges.

Don’t rent your home out. In these economic times there are unsavory renters, many of them lost their own homes, that don’t mind giving you the first month’s rent and a security deposit, only to never pay you another payment. You lose the house to foreclosure, but they live rent free for the foreseeable future.

Do your homework when choosing a real estate agent or broker when you go to list your house for a short sale. The wrong short sale agent can ruin your chances of avoiding foreclosure.  Short sales require diligence, confidence and an unmatched work ethic. Find that short sale REALTOR that knows her stuff, knows how to work and knows exactly what the banks want to approve your short sale.

Don’t think that you need a real estate agent that knows your neighborhood to short sale your home. In a short sale transaction, it’s about the short sale negotiation and working relationship with your lender(s), not that your home’s location is special compared to the listing around the corner. Out-of-area agents easily price properties using a Comparative Market Analysis (CMA). In fact, banks regularly pay agents and real estate brokers a minimal fee, usually $50 or $75, to price out-of-area properties for them. Your local neighborhood real estate agent may not be the right person. You need a tough and knowledgeable short sale specialist.

Do expect to move soon, or not for months. When your home receives an offer that is just the start for your short sale transaction. But the bank could decide to approve your short sale right away, which means you may only have 30 to 45 days to relocate. But, the approval process could take up to three to six months! Don’t move prematurely. It makes no sense to pay rent while your home sits empty. Communicate with your agent and keep updated on where the short sale process is.

Don’t stop paying your water bills, sewer bills or trash bills! Any unpaid bills may slow down or stop the short sale process.

Do consult your tax man or even a tax attorney when considering a short sale. Even the best short sale agents are not legally allowed to advise on tax implications of your particular situation, and the best short sale real estate agents don’t. A tax accountant CPA or real estate attorney has a better understanding and the legal right to advise you on such matters.

Don’t think that you must have a real estate attorney to execute your short sale. Most times these lawyers don’t understand real estate or the short sale process as well as an experienced short sale agent does. In fact, many if not most of these lawyers offering short sales require an upfront fee to process your short sale.  real estate agents and brokers only collect commissions from the proceeds of the sale, which comes out of the bank’s pocket, not yours.

Do let your real estate agent put a yard sign in the yard. Yard signs tell buyers trolling streets looking at neighborhoods and houses that yours is a possible candidate.

Don’t make viewing appointments unavailable and hard on buyers and their agents. The more potential buyers that see your home the better chance of short selling it and avoiding foreclosure. Make that home as available to buyers as possible!

Do yourself a favor and remember that millions of Americans are going though their own short sale, or unfortunate foreclosure. This economy is dreadful, and many are experiencing financial hardships and your particular situation is nothing to be ashamed of.

Don’t apply for a home equity line of credit or any other type of credit. If you own other properties that have equity, refrain from pulling money out of any of them during a short sale approval. Your bank and any of your bank’s back-end investors will dig deep into your credit history and find this activity. This kind of action says you are just out for your own financial bottom line, and yes, they will take offense to that.

Do a quick pick up of toys, laundry and any other items lying around when a buyer’s showing appointment is scheduled. Buyers will criticize your messiness like your mother-in-law, and worse, it could affect their offer which in turn could affect your short sale!

Don’t make the mistake of thinking a foreclosure is not much worse than a short sale. It is. A foreclosure will decimate your credit; it will keep you from owning another home for years and it will be a part of your financial incompetence far more than you hope it won’t.

Do keep your hardship letter short and sweet. Explain your situation as-matter-of-factly as possible. Then your bank will look at your finances, tax filings and other documents to verify and support your story. But DO NOT include in your hardship that you bought your home for more than it’s worth. The bank does not care your home is underwater. The bank is losing money too.

Don’t strip the house of its fixtures or other potentially valuable assets. Taking the pool system, or the ceiling fans or the beloved touch-action faucets will degrade your home’s marketability, and for what? A few hundred bucks will not make the financial blow of foreclosure any softer.

Do all your paperwork and return to your real estate agent in a timely matter.  Short sales can die if the proper paperwork is not supplied. It’s a silly way to screw your short sale, but it happens all the time.

Don’t use a short sale negotiating company. They will charge you large upfront fees that they don’t have to return to you even if they do not complete the short sale. And these companies aren’t held up to the same Department of Real Estate code of ethics that real estate agents and REALTORs are. In fact, some banks will not work with them!

Do call and communicate with your bank(s) and let them know you are attempting a short sale. They have thousands of mortgages defaulting, and if they don’t know you are pursuing a short sale, your property may automatically be classified as a pre-foreclosure. Not keeping your mortgage holder informed of the status of your short sale can help expedite your house to foreclosure which will not help your short sale.

Don’t violate the bank’s At Arm’s Length requirement for the short sale. The Arm’s length agreement required from the short sale lender prevents you from “renting the house back”. To avoid any fraud or risk that can result in the bank coming back at you for the balance of your loan. Do it by the book and follow the rules. The risk is not worth it.

Do know that credit card companies may decide to pull your credit due to foreclosure. When a foreclosure shows up on your credit, it says that you are in financial distress and your credit risk increases dramatically.

Don’t think you can’t short sale if you own other properties. This is a common mistake many multiple property owners make. A bank will more than consider a short sale even if you own two or more homes.

Do clean the home and property when you move out. Remove any trash, debris and take or dispose of any of your personal property. The condition of the property before transfer can have a negative effect on the buyer and their desire to own the home, and give them a reason to back out. Cleanliness is next to Godliness, and Sold Short Sales!

Don’t assume the information about short sales you read on the internet is always correct. There are many real estate professionals, and many not-so-professional individuals, giving advice regarding short sales. Some do not have a clue how to handle a short sale, let alone give advice on the subject. Your best bet is to call and talk to any prospective short sale experts. Get a feel of their knowledge base and real estate confidence, and above all else only hire a real estate short sale agent with experience.

DO CALL 360 Realty for more information.  We are Short Sale Experts! 1-800-399-9659

 

 

 

Source:  Garrigus Real Estate Blog

Incredible Investment Opportunity in Santa Monica! SHORT SALE! $1,295,000

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For Sale: 7BR/6BA Multi-FSanta Monica in Santa Monica, CA, $1,295,000

1044 Grant St.   Santa Monica, CA 90405

Just Listed $1,295,000 – SHORT SALE!

Triplex 3,754 Sq. Ft – Recently Updated

Great Investment or Owner-Occupied Opportunity! Private, Beautifully updated, modern retreat in the Sunset Park area of Santa Monica. This Custom designed, 2 story triplex features ebony stained hardwood floors, high-end updated kitchen, custom baths, and fireplace. Also has a large private patio and roof deck..perfect for entertaining! 2 additional units are both 2 stories with 2 bedrooms and 2 bathrooms including private entries, garden, fireplaces, and washer/dryer in each. The garage is currently rented at $600/month. Plenty of Parking!! This is a must see!! No rent control – great opportunity! Location is central to many restaurants, 3rd street promenade, Abbot Kinney, and more! Very Motivated Seller. Please do not disturb occupants!!

Please contact Rob Moradzadeh at (800)399-9659 Ext. 310 For More Information!

Please Do NOT Disturb Occupants!!

Foreclosure plague slowing: Filings fall 8% – Short Sales Great Alternative

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Foreclosures fell month-over-month but are still up nearly 20% compared with a year ago. Plus, Las Vegas wasn’t the worst-hit city in November.

By Les Christie, CNNMoney.com
Last Updated: December 10, 2009: 7:18 AM ET

NEW YORK (CNNMoney.com) — Foreclosure filings fell by 8% in November, making it the fourth consecutive month of improvement in the housing market.

There were 306,627 filings last month, according to RealtyTrac, an online marketer of foreclosed properties. That decline follows a 3% drop in October, 4% in September and 1% in August.

“Loan modifications and other foreclosure prevention efforts, along with the recently extended and expanded homebuyer tax credit, are keeping a lid on the most visible symptoms of the nation’s ailing housing market — foreclosures and home value depreciation,” RealtyTrac CEO James Saccacio said in a prepared statement.

However, while there are signs of improvement, the industry has yet to turn around: Foreclosure filings were still a lofty 18% above November 2008′s levels.

“This is providing a welcome respite for the real estate industry, but a full recovery will only come when unemployment recedes to normal, healthy levels and when availability of credit reaches a more rational balance between the extremes of the past few years,” Saccacio said.

Additionally, RealtyTrac spokesman Rick Sharga isn’t convinced the decline is a natural outgrowth of improved market conditions.

“I really don’t believe we’re looking at a trend that suggests the problem is going away,” he said. “Much of the drop was artificially induced.”

He attributes the stabilization to mandatory mediation programs that some states have introduced. For example, in Nevada, where filings have declined for three months in a row, lenders are required to go through mediation with borrowers before moving forward with foreclosure documents. In many cases, Sharga said, these programs just delay the inevitable.

But there has been some real help for turning the foreclosure tide. One factor has been a firming up of home prices. The S&P/Case-Shiller Home Price Index has reported five consecutive months of improved prices through September.

As a result of this mild upswing in prices, fewer homeowners owe more than what their homes are worth, a status known as being underwater. Zillow, the online appraisal service, reported recently that the proportion of underwater homeowners dropped to 21% at the end of September from 23% at the end of June.

Home sellers have also grown more confident. The real estate Web sites Trulia and ZipRealty both reported that fewer home sellers are slashing their listing prices. Trulia said that 22% of homes currently on the market as of Dec. 1, 2009 had gone through at least one price cut, the lowest level since Trulia started tracking price reductions in April 2009.

ZipRealty said the average home in 27 markets it covers was discounted $23,953 in November, a 3% smaller discount than prevailed a month earlier.

Even with gain, there’s still pain

All those positive signs do not mean that there’s no foreclosure pain. RealtyTrac reported 76,701 homes were repossessed during the month, only a tad down from the 77,077 lost in October. For the year, there have been a total of 777,630 properties taken back by banks.

The “sand states” — Nevada, Florida, California and Arizona — continued to amass the largest numbers of foreclosure filings with Nevada the hardest hit state of all. One of every 119 households had a filing in November, nearly four times the national average of one for every 417.

Florida had one for every 165 households, California one for every 180, and Arizona one for every 186.

There was a bit of surprise among the worst hit cities. Las Vegas dropped out of the top spot it has occupied for the past four months. A 33% decline in filings to one for every 102 housing units put it in fifth place. Instead, Merced, Calif., took over the top spot with one filing for every 83 homes. Following Merced was Stockton, Calif., one for every 85; nearby Modesto, one for every 87; and Cape Coral, Fla., one for every 96. To top of page