Living in Contra Costa County

It’s always my goal to help you stay ahead of the game. Hey… you already are ahead of the game—brave enough to stare short sales in the face and take short sale listings.

Here’s the skinny on some of the interesting stuff currently going on in the distressed property arena: 

Top Short Sale Articles for the New Year Do you feel that you can absolutely never get enough of short sales? Do you love talking about them and reading about them? Here’s a comprehensive list of some ‘must read’ articles. 

2012 Is the Year  Yes, 2012 will be the year of the short sale. Read this article to find out why. If you are not actively marketing for short sale listings, then you had better start today.

Short Sale Agents Can Be Your Best Friends  And you thought that people liked you for your good looks and your wonderful personality. Think again. Short sale agents are an excellent source of referrals to lenders (and vice versa).

There’s lots going on in the distressed property arena. And, if you are actively working with ‘distressed’ borrowers, it’s important to keep up with all of the changes in the industry. Sometimes that’s hard, which is why I’ve provided you with a weekly recap right here.

 

Melissa Zavala 
BROKER/REALTOR® ● DRE #01324959

BROADPOINT PROPERTIES, INC. 
760.839.3838

Search San Diego County Homes For Sale | Search Riverside County Homes For Sale
       Southern California Short Sale Support | Short Sale Expeditor Negotiation Services

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In Mike Coopers post on the 'Short Sale of Convenience' he touches on what I believe to be an important but controversial subject, strategic default (ending in either short sale or foreclosure).  I was most surprised by the vast majority of comments concluding that anyone that can afford their mortgage payment on an underwater home should 'do the right thing', stay in the home and honor the commitment.  Perhaps my views are in the minority, but the arguments against strategic default are based on perceptions of the legal, moral and ethical issues of what still appears to be a poorly understood subject.

Is it OK to 'Walk Away'?

Is it ok to walk away (short sale or foreclosure)? ie; deliberately default on an underwater home without a financial hardship?  While some would argue that owning a grossly underwater home is a hardship, and I would agree, I am referring to an owner/borrowers that can afford the home at the existing mortgage payment.

I used to feel that borrowers had the legal and ethical responsibility to honor the debt.  It was your choice to buy a home and borrow the money, you made the commitment to others, you received the benefit and therefore you have the legal, moral and ethical responsibility to repay.  Actually, I still feel this way under normal circumstances.  I believe there are moral and ethical implications of a promise to repay a debt.

That said, however, I believe that the circumstances of the current mortgage crisis were not legal, moral or ethical to begin with.  After a great deal of research about the causes of the mortgage meltdown, I have come to the conclusion that qualified borrowers that purchased during the boom were victims of massive abuses by investment banks in the mortgage and real estate markets.  Trillions of dollars were lent to unqualified borrowers because the debt could be packaged and sold as a triple A security to investors worldwide.  The reason lending standards were lowered so drastically was to create more debt.  It didn't have to be repaid, just last long enough so it could be quickly packaged and sold to unsuspecting investors.  In fact, some of these same investment banks would then purchase Credit Default Swaps from AIG FP and profit again upon the failure of the security they had just sold as the ultimate in safety.  Pension and retirement funds, as well as private investors around the world having faith in the US ratings agencies and stability of the US mortgage and housing markets, purchased trillions of dollars in subprime Mortgage Backed Securities and Collateralized Debt Obligations (CDO's).  They were lead to believe that these were investment grade securities backed by the relatively stable US housing market.  With T-Bills paying 1%, investors were desperately searching for investments with higher yields that could outpace inflation.  

Wall St. Magic: Turning Subprime Loans into a Triple A Security

Wall St. had discovered a modern alchemy by putting a veil around subprime loans and getting them rated Triple A.  Lead could truly be sold as gold.  However, they needed more lead, so the bar to qualify for a loan was lowered drastically.  As a result of these 'fog a mirror' lending standards, genuine, qualified borrowers were forced to compete for homes with borrowers that would never be able to repay loans.  With an abundance of money in the mortgage market and a mushrooming population of artificial homebuyers, prices naturally skyrocketed.  It was a false and unsustainable housing economy.

The more conservative among us would argue that Federal policies on affordable housing pressured banks into making bad loans as the source of the problem.  There were clearly pressures and expectations by bank regulators to promote certain, more speculative categories of loans.  In my opinion, while this compounded the problem, it was more of a plausible distraction to the greater abuse by investment banks.  The governments involvement made the increased availability of mortgage credit less suspicious and the rapid expansion of the housing market a credible event.

Regardless of whether you prefer to blame Wall St. or Washington for lending to people that could never repay, the housing collapse was not a result of responsible borrowers that simply bought a home at the wrong time.  It was deliberate fraud and reckless abuse of a treasured American institution.  Our industry, and in fact our entire economy, will take many years to recover from the damage that has been created.  Many, homeowners will not recover financially in their lifetimes.  The SEC complaint for Fraud against former Fannie Mae and Freddie Mac executives is hopefully just the beginning.  I believe there should and will be more civil complaints as well as criminal indictments.

So, what should we expect as legally, morally and ethically appropriate from a homeowner that purchased a home under legally, morally and ethically corrupt circumstances?

Sacramento has thousands of families still trying to do the 'right thing' in homes that are $100k to $200k underwater.  In my opinion, these owners need to do the math and really understand the financial impact of their decision to stay or leave.  It is a decision with serious consequences... a choice between bad and worse.

For instance, an Elk Grove homeowner that bought a home in 2006 for $500,000 that is now worth less than $300,000 and still owes about $450,000 will be financially worse off by about $400k to $500k over a twenty year horizon if they choose to 'do the right thing' by traditional standards.  This amount of money will change the character of their lives, their children’s education and their retirement.  Is it reasonable to expect millions of Americans to sacrifice to this degree when the creation of the debt was under questionable circumstances?  I think it's time to reevaluate what 'the right thing' to do is.

It's Time To Examine What Really Happened

I'm surprised so many in the real estate and financial services industries are so indignant about homeowners walking away.  How much remorse and contrition should we expect from a homeowner that has been robbed because they had faith in the American Dream of home ownership and the financial and government institutions that make it possible?  We played a role in this fiasco.  I think we owe the clients we serve a better understanding of what happened and help them face a bitter financial reality.    In my opinion, this wasn't done by the homeowner; rather this was done TO the homeowner... and the taxpayer, and millions of investors all of whom simply had too much faith in the system.

For anyone unfamiliar with the underlying causes of the mortgage and housing situation, I would recommend "All The Devils Are Here", "The End of Wall St.", "The Big Short" and the documentary "Inside Job".

While I am not trying to release anyone from their role in the housing collapse, including Realtors, Mortgage Brokers and the homeowner, I would say any homeowner that has stuck it out this long, overpaying for housing this many years, has demonstrated a more than reasonable commitment to honor the debt.  In the final analysis, it’s time for us all to look deeper into the root cause and hold the real culprits accountable.

 

Bill Joyce

Broker

DRE #01419060

www.SacramentoBill.com

www.Sacramento-Home-Search.com

www.BetterHomeLessMoney.com

 

 

 

 

I have had some pretty good luck dealing with Bank of America on some short sale transactions, but I have also had some pretty bad experiences with them.  I'm not sure which is the "real" Bank of America, but many people I have spoken with seem not to have much good to say.

It's too bad that they have such a terrible reputation, even if it is well-earned, because they have the lion's share of the home loans in this country, and it can be a nightmare dealing with them when you see their bad side.

I had clients whose home was foreclosed on and sold while they were negotiating for a short sale and had been assured by the bank that the foreclosure sale had been postponed to allow them to continue to process the short sale.  They got short sale approval, but when escrow tried to close the sale, they found that it had already been sold in foreclosure, and there was no way to reverse the sale.  The bank's response was that they were sorry but it wasn't their fault and that sometimes "things happen" and there was nothing that could be done.

They had to move out of their home immediately, which they were not properly prepared to do, since they had not anticipated a move.  In fact, they had originally been told that they qualified for a loan modification, and then told that they didn't after all, and the lower payments they had agreed to accept didn't apply after all, and that they needed to make up the difference or face foreclosure.

Of course, they came to me after all of this had taken place, and by that time I couldn't do much for them.  They are now renting and trying to establish "perfect" credit, so that in a couple of years they will be able to buy again.

It is difficult to decide if my clients' situation was worse than this other case (not mine) that I saw on TV.  These folks at least got an apology and a promise to do something to "make things right" - although no one yet knows what the bank's definition of that will be.

Check out this video!

 

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Susan Neal                                                                                                "Happy clients make me happy"

Broker/Realtor

Century 21 Noel David Realty

Fair Oaks CA

(916) 705-8951

 

If you have ever received a short sale approval letter, you know doubt have had a happy feeling like almost no other. The process of negotiating a short sale, keeping the buyer and seller content, and managing all of the details at the bank make the receipt of the approval letter feel like a multi-million dollar win on a scratch ticket.

Unfortunately, the receipt of the approval letter doesn’t mean that the deal is ‘home free.’ There is still a traditional escrow period—complete with an appraisal, an inspection, and even perhaps the obtaining of a loan. Sadly, the transaction could still fall through—even after short sale approval has been obtained.

There are many last minute hurdles to closing a short sale. Two such hurdles involve property appraisals and liens.

Property Appraisals.  Sometimes after the short sale approval letter is obtained, the buyer learns that his (or her) loan appraisal is for an amount lower than the purchase price. If this happens to you, don’t give up hope. Submit a copy of the complete appraisal to the short sale lender for review. Often times, a revised approval at the appraised value is just around the corner.

New Liens. New Liens against the property or the individual often appear during the transaction period. HOA liens are commonplace in the state of California, for example. If a new lien appears and needs to be satisfied in full before closing, ask the bank to contribute to the lien. You can also ask other parties to the transaction if they would be willing to help and satisfy the lien.

The bottom line is (as you have probably heard before) “It ain’t over ‘til it’s over.” What this means is that with a little bit of tenacity and sticktuitiveness, the short sale will result in successful closing.

(photo credit)

 

Melissa Zavala 
BROKER/REALTOR® ● DRE #01324959

BROADPOINT PROPERTIES, INC. 
760.839.3838

Search San Diego County Homes For Sale | Search Riverside County Homes For Sale
       Southern California Short Sale Support | Short Sale Expeditor Negotiation Services

If you enjoyed this post, why not connect with me in these other communities?

    

 

 

8 of the Most Common Forms and Documents Required for a Short Sale

You’ve decided to sell your house and learned that you owe your lender more than the house is really worth.  What do you do next?  You could walk away from the property, but there is another option and it’s the best thing you could do to save your house from foreclosure and minimize the negative impact on your credit.   A short sale your, but first you’d want to know what exactly a short sale is.

A short sale is a commonly used alternative to a foreclosure.  If you can no longer afford to make your mortgage payments and your home is worth less than you owe, a short sale may allow you to sell your home to pay off the mortgage.  In a short sale, the lender agrees to accept an amount less than what is owed on the loan based on a showing of financial hardship.

Below are 8 of the most common forms and documents required for a short sale. 

Authorization to Release Information Form:  This form is signed by the homeowner authorizing the agent to discuss the loan with the lender. 

Hardship Letter:  A letter to your lender that explains the circumstances behind your inability to pay your monthly home loan payments. 

Listing Agent:  A licensed Real Estate Agent who is knowledgeable, experienced and skilled in facilitating short sale and who works with a homeowner to list the property for sale, market the property, and solicit offers to buy the property.

Financial Worksheet:  A document that the lender uses to assess your financial situation.  You must include your monthly income and monthly expenses in order for the bank to determine if your expenses are greater than your income and that you do not have any assets that can be liquidated to pay the mortgage or make up back payments.

Listing Agreement:  In order for a property to be considered for a short sale, the lender will require that the house be listed with a real estate agent.  The listing agreement gives the broker the right to represent the owner and bring a buyer directly or through another brokerage.

Copies of Tax Returns:  The lender will require copies of the homeowner’s last 2 years tax returns for all borrowers. 

Copies of All Banks Statements:  The lender will require copies of the homeowner’s last 2 months bank statements for all borrowers.

Copies of Pay Statements:   The lender will require copies of the homeowner’s last 2 pay statements for all borrowers.

 

If you are considering a short sale because your home is worth less than you owe on the loan or you are having difficulties in paying your mortgage, a short sale is one way to settle you mortgage debt.  Your next step is to gather 8 of the most common forms and documents required for a short sale that’s listed above and contact me at Denise@DeniseDimares.com.

 

Denise Dimares, Realtor, Certified Default Resolution Specialist

The Agent who Informs, Inspires, Empowers and Transforms lives.

www.DeniseDimares.com

 

 

 

 

 

 

 

 

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5 Reasons Why the Short Sale Seller Still Cares About the Price


There is something about a short sale that makes some buyers think that the short sale seller is somewhat of a non-entity, a mere speed bump in front of their negotiations with the bank.  But, that is not truly the case, the short sale seller is still the record owner and has their own concerns when considering the amount offered for their home.  A short sale is not simply a foreclosure with a twist.  

Nonetheless, I’ve heard the following statements time and time again from potential short sale buyers:

• “This is where we want to start with the bank”  
• “We want the bank to counter us, not the seller”
• “They should just be happy to avoid foreclosure!”
• “Why does the seller even care, it’s a short sale!”

Here are 5 reasons why the short sale seller may still care about the price:

1) Potential tax liability.  The goal of the short sale is to obtain debt 

forgiveness from the bank; however, short sale buyers should consider that debt forgiveness may have negative tax consequences for the short sale seller.  As a result a short sale seller may still care about the price, because often the higher the price, the less tax liability they face.  Many short sale sellers will be able to avoid tax liability, but certainly not all will -- this is especially the case where the property was an investment and the seller is still solvent.

2)  They have an opinion.  Most people have an opinion about the value of their home.  It is usually their largest investment and will probably be yours.  Many short sale sellers could afford to keep their home if they purchased it at today’s prices and they have watched the market descend.  They aren’t always thrilled that their home is selling for what they view as “peanuts.”  Sellers who have maintained and improved their home tend to have a strong opinion about its value -- even if it is a short sale.

3)  Neighbors.  Yes, people care about their neighbor’s property values.  Especially short sale sellers.  These are not the folks who back a U-haul up to their home in the middle of the night and leave their former neighbors with a foreclosure to contend with.  They tend to care.  Many times short sale sellers are thinking about their neighbors who are trying to sell or refinance and they don’t want their financial distress to negatively affect their neighbors.  

4) The Bank.  Short sale sellers know that even if they don’t have an

opinion about the value of their home, the bank will. Submitting a low offer that is not likely to be accepted by the bank does little to improve their situation.  Banks use Broker Price Opinions and appraisals to value short sale properties.  If the comparative sales are 20% higher than your offer -- negotiations with the bank could be long, drawn out, and ultimately unsuccessful.

5) An Experienced Short Sale Agent.  Hopefully,the seller has done

their homework.  And, that includes hiring an experienced short sale agent to handle their short sale.  If their agent has advised them well, a short sale seller has listed their home at a price that will likely attract a potential buyer AND lead to short sale approval from their bank.  An experienced short sale agent already has an idea of what the bank will take and knows that accepting an unrealistic offer will often elongate the short sale process for the seller.

If you want to have your offer accepted and presented to the bank, it must be accepted by the short sale seller first.  And, there are still many reasons why the seller may care about the price.

Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent. She is a Certified Distressed Property Expert (CDPE) and Certified HAFA Specialist (CHS) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.

Copyright© 2011 Tni LeBlanc *5 Reasons Why the Short Sale Seller Still Cares About the Price*

Is Bank of America Still Terrible at Short Sales?

I would have to reluctantly say no.  Bank of America is no longer terrible at short sales.  This coming year will mark four years since my first Bank of America short sale, and as critical as I am of Bank of America, I must admit they they have improved.  That first short sale took 8.5 months and at least 3 buyers to complete, and most of the time we were lost in a wilderness of bureaucracy.  The market was still rapidly declining, so by the time they approved the short sale, the property did not appraise.  Thankfully, the property was unique enough to the last and final buyer that they didn’t just move on.  And, it didn’t hurt that the buyers were also using Bank of America for their loan.  The loan officer did help in escalating the file as there was at the time no clear cut and effective method for escalating a file.

 

I think Bank of America has improved their processing time and in general they are becoming more accountable.  Two improvements in particular stand out 1) They now use Equator. Equator is a secure online platform that allows you to upload documents and communicate directly with Bank of America about your short sale files. 2) The BofA Twitter Team.  @BofA_Help on Twitter has proved to be a fantastic resource when ridiculous issues crop up on files.  After you’ve exhausted the traditional channels to no avail, the Twitter Team can help you push that short sale off the tracks before the oncoming train arrives.

 

In my experience, Bank of America currently takes about 5 – 10 weeks processing short sale files.  What is frustrating is that often they are capable of having approvals in 5 – 6 weeks, and there seems to be no rhyme or reason as to why one file takes 5 weeks and another 10 weeks.  Often they get into a really great rhythm, and then they decide to tweak something in their internal processes, and if you happen to initiate a short sale at that time you end up being a 10 week file instead of a 5 week file.  In my experience, currently most of the delays happen up front in their efforts to qualify every borrower repeatedly for HAFA or the Bank of America Cooperative Short Sale program, or because of a delay getting an appraisal ordered on the property.  In addition, they often outsource their HAFA files and BofA Cooperative Short Sale files to outside entities which include UTLS, AMS Servicing, and REDC and getting a file back to BofA in Equator once it has been sent out can be difficult and time consuming.

 

Bank of America still has a ways to go.  I don’t particularly care for the fact that they constantly tout their real estate agent website as a resource for short sales, but last time I looked I couldn’t even find any standard forms for a short sale on that site.   And of course their new “introductory calls” are also annoying — on a recent one I told the rep that I would call her back if I ran into a problem down the road and she informed me that it was only a one time call and I couldn’t call her again.  Kind of like when you go into a store and look for a salesperson to help you and can’t find one, but if you look like you don’t need any help, five different people offer you assistance.  So, although they have improved, a certain amount of it is just showmanship.  As a person that values substance over show — I find that part of it annoying, but the part that actually works — such as the Twitter Team, I like.

 

Before deciding whether to short sell your Santa Maria home, it is essential that you obtain legal and tax advice, and consult with an experienced local short sale agent. If you are considering a short sale of your Santa Maria, Orcutt, or Nipomo home and would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.

 

Tni LeBlanc is an independent Real Estate Broker, Attorney, and Short Sale Agent.She is a Certified Distressed Property Expert (CDPE) and Certified HAFA Specialist (CHS) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

* Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement.

Copyright© 2011 Tni LeBlanc *Is Bank of America Still Terrible at Short Sales?*

This San Jose short sale agent is doing a happy dance after learning that Bank of America is making Home Affordable Foreclosure Alternative (HAFA) process improvements intended to reduce “cycle time” and improve customer service.  Amen – I am all for that! Now, let's see if Bank of America will deliver!

Effective December 1, 2011, when a homeowner is HAFA eligible, and an offer is submitted with the request for a short sale, Bank of America will no longer halt work on the file while waiting to contact the homeowner.  Homeowners are no longer required to call short sale customer care to confirm their desire to participate in a HAFA short sale. 

San Jose short sale agents can now indicate homeowners’ HAFA interest by uploading the required documents to Equator.  This must be done within the 14 days allowed under the HAFA program guidelines. The short sale will continue to move forward during the 14 days. If Bank of America does not receive the required HAFA documents within the 14 day timeframe, the file will be processed as a regular short sale.

The 14 day period begins the day the HAFA letter is mailed to the homeowner. What does this mean to homeowners and San Jose short sale agents? It means that there is actually less than 14 days to submit the required documents when we factor in the time it takes for the letter to be delivered, and in some cases, for the homeowner to open it.  Many homeowners simply stop opening correspondence from their lender. That's a topic for another blog. 

Prior to this change, Bank of America outsourced the processing of all HAFA short sales to their vendor partners.  With this new process change, only short sales without an offer will be outsourced to vendor partners. 

Effective today, Bank of America will process all HAFA short sales that are submitted with an offer. 

I prefer to work directly with Bank of America.  Working with vendor partners on HAFA short sales has been a real pain.  The vendors are highly incompetent; file escalations are ignored; and the time to process a file takes entirely too long!

While some say working short sales with Bank of America is also a real pain (I happen to be one who says that) I know escalation works with Bank of America. The fact is short sale agents should not have to escalate files if the processors are doing their jobs. Truth is we know the short sale process is in need of improvement; customer service needs improvement; and agents deserve a better experience.

Working with lenders and servicers processing short sales is like working on a hamster wheel every day. Short sale agents make their calls to lenders; spin their wheels on hold for an indefinite period of time before the call drops off; and we start the process all over again.  Short sale agents not only need experience, we need a lot ot stamina and patience.  Only the strong survive!

What does this mean to homeowners? 

Hire an experienced agent who knows and understands the HAFA program and the process!

Call 800-972-1822 today for a free, no-obligation consulation.

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Kathleen Daniels, Broker Associate, Short Sale Agent, Certified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE), Certified Short Sale Negotiator (CSSN), and REO Default Certified Professional (RDCPro), serving San Jose and surrounding San Jose Communities.

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