Saturday, December 11, 2010

What Happened to the Government’s Short Sales Program?.

by Nick Timiraos Reprinted from the WSJ November 29, 2010

In April, the Obama administration formally rolled out a new program, called Home Affordable Foreclosure Alternatives, that was designed to spur more short sales, where banks allow homeowners to sell their homes for less than the mortgage debt outstanding.

Like other foreclosure-prevention initiatives, this one appears to be off to a slow start — just 342 sales have been completed through September.

HAFA was designed as a cousin to the Obama administration’s Home Affordable Modification Program, HAMP, whose woes have been well documented. HAFA works like this: Servicers are supposed to consider short sales for borrowers who aren’t able to receive a HAMP modification. Because some 700,000 HAMP applicants have been ejected from that program, there’s a potentially large pool of borrowers who might be evaluated for HAFA.

Initially announced in May 2009, HAFA was also designed to help reduce wait times by streamlining the short sale process through standardized documents and approaches for short sales. Under the program, the government offers incentive payments to mortgage-servicing companies, investors and even the borrowers that accept a short sale under prescribed guidelines.

For example, second-lien mortgages receive 6% of the unpaid loan balance in a short sale, up to a maximum of $6,000, but they must agree to relinquish all claims against a borrower. (Our story on Saturday illustrated why seconds pose problems in short sales.) The program also provides $3,000 in “move-out assistance” to borrowers.

Many real-estate agents say banks have largely ignored the program and that they are applying it unevenly. “Banks are initiating the HAFA transaction and then after three weeks they say, ‘Naw, sorry, you didn’t qualify,’” says Greg Markov, a Phoenix real-estate agent. “That three weeks is a huge pain. You wasted all this time.”

Industry officials, meanwhile, say that HAFA has been hindered by extensive documentation requirements and restrictive qualification guidelines. A homeowner that’s already relocated isn’t HAFA eligible, for example, and neither are borrowers that apply within 60 days of a foreclosure date.

The program is also voluntary, which may limit participation from second-lien holders and mortgage insurance companies that see a financial reason to avoid a short sale that requires them to forgo the opportunity to seek deficiencies against borrowers.

“It looks good on paper, but you can’t make anyone participate,” says Kevin Kauffman, a Phoenix real-estate agent who says he’s closed 150 short sales but has yet to complete one through HAFA.

Still, the Treasury and other supporters say they’re optimistic that results will pick up. Because short sales take several months to close, it’s perhaps unrealistic to expect huge numbers of deals that would close within five months. Moreover, Fannie Mae and Freddie Mac didn’t issue their own participation rules until August.

“It does take a little bit of time to see results on these,” says Dave Sunlin, Bank of America’s senior vice president for short sales and bank-owned property sales. “The concept on paper is there.”

Wednesday, October 6, 2010

Upfront fees for delinquent loan scenarios: Short Sales, modifications...

If you are contacted by parties offering to assist you in getting out of the hole, saving you from foreclosure, minimizing the effect on your credit, saving your home, modifying your loan (whatever!) and they merely need a small fee to get the ball rolling......... Go immediately to the Bank, take out the cash, rush home and flush it down the commode because that's what these scammers are asking you to do.

It is illegal in the State of California to charge an up-front fee for these types of services. In fact, no reputable, licensed Real Estate Agent or Realtor would ask you for a fee. Providing these services is done in the normal course of business and if it results in the sale of your property, the Bank will compensate the agent or Realtor for their services, if applicable.

So if you need help, call a Realtor (which is a real estate agent recognized by the National Association of Realtors and is held to a higher code of ethics). You might even log onto

Monday, August 30, 2010

Here's a means of preventing a short sale.....maybe

FHA Refis for Underwater Borrowers

FHA has launched a refinancing program to assist homeowners who owe more on their mortgages than their home is worth. Beginning Sept. 7, the agency will offer qualified non-FHA borrowers the opportunity to refinance with an FHA-insured mortgage on their primary residence. Borrowers must be current on their existing mortgage, qualify under FHA underwriting requirements, and have a credit score of at least 500. The first lien holder must agree to write off at least 10 percent of the remaining amount owed under the mortgage, bringing the combined loan-to-value ratio of all mortgages to no more than 115 percent. The LTV for the new FHA mortgage may not exceed 97.75 percent. The Treasury Department will provide incentives to second lien holders who agree to forgive all or part of their liens. Read more from HUD.

Keep the faith!

Thursday, August 26, 2010

I have questions..... where can I get answers ????

If you have questions, you can also log onto or if you 'd like some independent counseling, please read the following article from the New Your Times...

SINCE foreclosures started to rise sharply in 2007, struggling borrowers have been offered a lot of help online. Some is well-meaning, but some is simply a scam in the form of expensive “debt relief” services that may be offered free elsewhere.

This month Fannie Mae, the government-sponsored entity that helps set lending standards for most mortgages, started a Web site,, that has elements setting it apart from most of those aiming to prevent foreclosure. Everything on the site is available in Spanish or English, for example, which helps to reach the large number of Hispanic borrowers who mortgage executives and analysts said were the targets of subprime lenders in 2005 and 2006.

In some areas of the site, a guide offers videotaped explanations of what users might accomplish in that section. For instance, in a section titled “Take Action,” the spokeswoman advises among other things that “you can’t get help until you contact your mortgage company,” while explaining how to get started.

To encourage borrowers to take that step, the site includes video testimonials from people who have experienced similar issues. A section on forbearance, for instance, features a video from an owner who qualified for such help, and one from a housing counselor about the process.

Some analysts said the new site went further than previous efforts to help those at risk of foreclosure. “Frankly, I like it,” said Brad Strothkamp, an analyst for Forrester Research. “There’s a clear need for this type of information, especially from a source that is not looking to sell a service or a product.”

In each section of the site, borrowers are offered numbers of mortgage companies and loan counselors, along with calculators to determine if they qualify for help. Borrowers can send those calculations via e-mail to themselves and others, an important feature, said Jeffery Hayward, senior vice president of the National Servicing Organization of Fannie Mae. “That way, if you call the counselor,” he said, “you can both have that information, so you can have a much more meaningful conversation.”

Not everything on the site is geared toward avoiding foreclosure. Some sections on “graceful exits,” like short sales or deeds-in-lieu of foreclosure, guide those whose financial situations are so dire that they cannot reasonably hope to stay in their homes.

Many borrowers have complained about their mortgage companies’ failure to respond to inquiries until foreclosure is the only option. Mr. Hayward said the Web site’s features could help borrowers avoid that situation.

“If you have as much information as you can get off this site,” he said, “you have more confidence to keep calling because you know what you’re talking about.”

Another new online option for borrowers is Hope LoanPort, which allows struggling owners and housing counselors to submit financial documents to mortgage companies and track the status of their efforts to avoid foreclosure.

Brad Dwin, a spokesman for Hope Now, the consortium of mortgage companies that created Hope LoanPort, said each of the nation’s major mortgage companies had agreed to join. At inception late last year, six mortgage firms and six housing counseling agencies had joined.

Now, 12 mortgage companies and 250 counseling agencies are accessible to borrowers in 48 states. Wells Fargo, the latest of the major lenders to join, is likely to start participating in next two months, Mr. Dwin said.

After Bank of America began using the system in June, Mr. Dwin said, Hope LoanPort experienced a sharp increase in borrowers being served.

Mr. Dwin said the new Fannie Mae initiative, KnowYourOptions, could speed the process of helping borrowers. “It’s all part of the larger effort to find ways to reach out to homeowners and give them more tools to get their applications submitted, without missing paperwork,” he said.

The New York Times By BOB TEDESCHI-August, 2010 A version of this article appeared in print on August 22, 2010, on page RE10 of the New York edition.

Friday, August 20, 2010

Distress Homes Multiply on Market, but Buyers Find No Easy Sales

The following is a reproduction of an article posted today that confirms that Short Sale Lenders are doing their best to extract the highest value from the property they are being asked to forgive debt against. While there are discounts built into the price, BPO's (Broker Pricing Opinion Letters) and/or Appraisals are ordered by said Lenders to ensure this. This verification of price or 'Valuation' is done early on in the Short Sale process after a contract is received and submitted to Lender for approval of terms.....

Distress Homes Multiply on Market, but Buyers Find No Easy Sales
By David Bracken

RISMEDIA, August 20, 2010--(MCT)--When Josh and Amanda Brandt began looking for their first house this year, they wanted what every buyer wants.

"What we really wanted was a good deal," Josh Brandt said.

The first house they found was in Fuquay-Varina, N.C. It was a short-sale, meaning the owner was trying to sell it for less than the amount owed to the bank. After the Brandts submitted a low-ball offer of $120,000, the owner of the house asked them to increase their offer to $129,000.

They did. Then they kept house-hunting because their real estate agent, Millicent Williams of Century 21 Vicki Berry Realty, warned them that they needed a back-up plan in case the bank rejected their offer or simply took too long to get back to them.

Three weeks later, just as the Brandts were about to close on a brand-new house in Angier, N.C., the bank accepted their offer.

"We got pretty lucky," said Josh Brandt, 24.

Among the byproducts of the housing bust has been a dramatic rise in the number of distressed homes on the market. Many buyers assume these properties are can't-miss deals, but the reality is that purchasing a distressed property is often fraught with uncertainty and risk.

The numbers of foreclosures and short-sales have increased as the act of losing one's home has lost the stigma it once carried.

"Foreclosures are actually getting artificially inflated to a point because people are willing to walk away," said Mike Golden, broker in charge with Century 21 Vicki Berry Realty. "Especially by people who don't have any equity because they bought in and got 100 percent financing."

Buying a house out of foreclosure or in a short-sale is not for everyone. Most of the homes will require some work, but unlike with a normal sale, negotiating repairs is often not an option, said Jeanna Reeves, a Re/Max United agent in Raleigh who has offered foreclosure tours for buyers in the past.

"They are sold as is," Reeves said.

Earlier this year, Reeves took one of her clients, Meg Lavoie, to look at a townhouse in North Raleigh that Fannie Mae had foreclosed on in February.

Lavoie is hoping to buy a foreclosed property that she can turn into a rental.

The North Raleigh townhouse had ratty carpeting, and it was clear the previous owner had owned a dog. Lavoie wasn't impressed.

"I don't want a big hole that I'm throwing money in," she said. "I don't know. It just doesn't speak to me."

Lavoie is in no hurry to buy, which makes a foreclosure or a short-sale a good fit.

Any buyer putting an offer on a house being sold as a short-sale should be willing to wait at least two months without knowing whether the bank will accept the offer, said Dave Jezierski, a real estate agent with Homes in the Triangle.

Jezierski said it's crucial that the agent listing the property is familiar with short-sales and knows what he or she is doing, otherwise the process can drag out even longer.

As for the perception that a buyer will be able to get a property for a huge discount in a short sale, Jezierski said that's largely not true.

When a bank agrees to sell a house in a short sale, it usually does its own appraisal.

Jezierski said the bank isn't likely to accept an offer that is significantly below what the appraisal says the house is worth.

"Unless the house is just pretty well trashed, it's going to be within 5 percent of market value," Jezierski said.

(c) 2010, The News & Observer (Raleigh, N.C.).
Distributed by McClatchy-Tribune Information Services.

Friday, August 13, 2010

Banks Keep an Eye Out for Short-Sales Fraud

Short-sale fraud totals $310 million annually and the average amount of fraud is $41,000 per transaction, according to real estate research firm CoreLogic’s 2010 short-sale research study.

"The best way to mitigate fraud risk and unnecessary loss is through a collaborative effort where lenders collectively share pre-closing and post-closing information,” says Craig Forcardi, senior research director, consumer lending at The Tower Group.

CoreLogic concluded:

The number of short sales in the market has more than tripled since 2008, with the estimated annual volume at 400,000.
Over half (55.8 percent) of all short sales occur in just four states (California, Florida, Texas, and Arizona).
Approximately 4 percent of short sales have a subsequent resale within 18 months.
Investor-driven short sales are not inherently bad. Investors provide the industry with necessary liquidity.
Short sale transactions may be deemed risky to the lender when either the second sale amount is vastly higher than the short sale amount, and/or the two sale transactions are executed within a very short window of time.
Approximately one in every 53 (1.9 percent) short-sale transactions was part of an egregious flip and therefore deemed risky.

Source: CoreLogic (08/10/10)

Keep the faith........ ShortSaleSully

Thursday, August 12, 2010

There may be hope to avoid a short sale situation .........

FHA launches refi program for underwater borrowers

The Federal Housing Administration (FHA) last week provided details on its “FHA Short Refinance” program that will enable lenders to provide additional refinancing options to underwater homeowners. Beginning Sept. 7, the FHA is offering eligible underwater non-FHA borrowers the opportunity to qualify for a new FHA-insured mortgage.

Participation in FHA's refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score greater than or equal to 500. The property must be the homeowner's primary residence and the borrower's existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance, bringing that borrower's combined loan-to-value ratio to no greater than 115 percent.

Additionally, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.

Read more and good luck to you... Short Sale Sully

Keep the faith...


"Buy and Bail" could land you in jail

Real estate professionals call it “buy and bail,” acquiring a new house before one's credit rating is ruined by walking away from the old house because it’s “underwater,” or worth less than the mortgage. This is an attempt to escape payments on a home whose value will not recover in the immediate future while securing a new property, typically at a lower price with a much more affordable loan, based on current rates.

The practice, which constitutes fraud if borrowers make fradulent statements or give fraudlent information when completing loan applications, appears to be continuing even after Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, beefed up standards to prevent it, according to brokers such as Collier and Meg Burns, senior associate director for congressional affairs and communications at the Federal Housing Finance Agency. Whether driven by greed or desperation, the persistency of "buy and bail" underscores the lingering impact of the worst housing crash since the Great Depression.

Full story is available here:

Keep the faith ...


Tuesday, August 10, 2010

Finding a buyer for your Short Sale

A low price isn't the only important factor any longer in a marketplace with so many other Short Sales and Bank-owned properties. If you want to market your property properly, you must stick to the basics. The goal is to sell it quickly for the highest price possible that will satisfy the Lender to release you from the debt burden...while investing as little as possible in renovations. With a limited budget and a little effort, you can greatly increase your home's appeal by focusing on what prospective buyers can see on their first visit.

Tip #1: Refresh the exterior
First impressions count when it comes to selling a home. Most buyers won’t even leave their car if they don’t find the exterior appealing. The best ways to improve your home’s exterior include:
-Repairing and/or replacing trims, shutters, gutters, shingles, mailboxes, window screens, walkways and the driveway.
-Painting siding, trim and shutters and lamp and mailbox posts.
-Pressure washing vinyl siding, roofs, walkways and the driveway.
-Washing windows.

Tip #2: Spruce up the lawn and landscape
Home buyers associate the condition of your lawn and landscaping with the condition of your home’s interior. By improving the outside, you affect buyers’ impression of the entire property. The best ways to enhance the yard include:
-Mowing and edging the lawn.
-Seeding, fertilizing and weeding the lawn.
-Keeping up with regular lawn maintenance by frequent watering.
-Trimming and/or removing overgrown trees, shrubs and hedges.
-Weeding and mulching plant beds.
-Planting colorful seasonal flowers in existing plant beds.
-Removing trash, especially along fences and underneath hedges.
-Sweeping and weeding the street curb along your property.

Tip #3: Create an inviting entrance
The front door to your home should invite buyers to enter. The best ways to improve your entry include:
-Painting the front door in a glossy, cheerful color that complements the exterior.
-Cleaning, polishing and/or replacing the door knocker, locks and handles.
-Repairing and/or replacing the screen door, the doorbell, porch lights and house numbers.
-Placing a new welcome mat and a group of seasonal potted plants and flowers by the entry.

Tip #4: Reduce clutter and furniture
A buyer cannot envision living in your home without seeing it. A home filled with clutter or even too much furniture distracts buyers from seeing how they can utilize the space your home offers. If you have limited storage space, you may want to consider renting a temporary storage unit to place items you wish to keep. The best ways to declutter your home include:
-Holding a garage sale to prepare for your move, getting rid of unnecessary items.
-Removing clutter such as books, magazines, toys, tools, supplies and unused items from counter tops, open shelves, storage closets, the garage and basements.
-Storing out-of-season clothing and shoes out of sight to make bedroom closets seem roomier.
-Removing any visibly damaged furniture.
-Organizing bookshelves, closets, cabinets and pantries. Buyers will inspect everything.
-Putting away your personal photographs, unless they showcase the home. Let buyers see themselves in your home.
-De-personalize rooms as much as you can.

Tip #5: Clean, clean, clean
The cleanliness of your home also influences a buyer's perception of its condition. The appearance of the kitchen and bathrooms will play a considerable role in a buyer's decision process, so pay particular attention to these areas. The best ways to improve these areas include:
-Cleaning windows, fixtures, hardware, ceiling fans, vent covers and appliances.
-Cleaning carpets, area rugs and draperies.
-Cleaning inside the refrigerator, the stove and all cabinets.
-Removing stains from carpets, floors, counters, sinks, baths, tile, walls and grout.
-Eliminating house odors, especially if you have pets.
-Considering air fresheners or potpourri.

Tip #6: Make minor repairs
The small stuff does count, especially with first-time home buyers. Without dismissing the importance of repairing major items such as a leaky roof or plumbing, you do not need to spend money on replacing these items. Instead, focus on the minor repairs that will make your home visually appealing. The best ways to improve your home include:
-Repairing ceilings and wall cracks.
-Repairing faucets, banisters, handrails, cabinets, drawers, doors, floors and tile.
-Caulking and grouting tubs, showers, sinks and tile.
-Adding fresh paint to ceilings, walls, trim, doors and cabinets.
-Tightening door handles, drawer pulls, light switches and electrical plates.
-Lubricating door hinges and locks.

Tip #7: Showcase the kitchen
The heart of any home is the kitchen. If you are going to spend any money on renovations, this is the one area where you will see the greatest return. Even with a modest budget, focusing on a few key areas can make a great difference in getting the asking price for your property. The best ways to showcase the kitchen include:
-Replacing cabinet doors and hardware.
-Installing under-cabinet lighting.
-Replacing light fixtures.
-Replacing outdated shelving with pantry and cabinet organizers to maximize space.
-Baking cookies or cupcakes for a showing, to create a homey smell.

Tip #8: Stage furniture
Furniture placement can enhance the space of your home while giving buyers an idea of how to best utilize the space with their own belongings. Take some time to rethink how different areas in your house could be used. Some ideas to think about include:
-Moving couches and chairs away from walls in your sitting and family rooms to create cozy conversational groups.
-Creating a reading corner in the master bedroom.
-Clearing an empty room to set up a reading space.
-Turning an awkward space into a home office.
-Setting the dining room table with your best china.
-Set wine glasses in front of the fireplace or next to a Jacuzzi tub.

Tip #9: Light up the house
Create a sense of openness and cheerfulness in your home through its lighting. To improve the lighting try:
-Opening shades and drapes to let the sunshine warm and brighten rooms.
-Installing brighter light bulbs in rooms that tend to be dark.
-Adding additional lamps for ambient lighting.
-Turning on all the lights for a showing.

Tip #10: Add fresh touches
You can easily add color and style to your home by adding fresh touches throughout. Some ideas to consider include:
-Placing fresh floral arrangements in the entry and master bedroom.
-Placing bowls of bright-colored fruit in the family room and the kitchen.
-Filling an empty corner with a potted leafy plant.
-Setting new hand soap in the bathrooms.
-Displaying fresh towels near sinks.

These tips were provided by Lowe's through Rismedia August 10, 2010

Keep the faith ...


Saturday, July 24, 2010

California Foreclosures Drop to 3-Year Low

The number of home owners in California entering foreclosure in the second quarter dropped to a three-year low, according to research firm MDA DataQuick.

Default notices, the first step in the foreclosure process, fell 43.8 percent in the second quarter compared to the same period last year.

Analysts say the decline is due to banks pushing loan-modification programs and short sales. Also, fewer homes are underwater thanks to a recovery in home prices, so a smaller number of home owners are walking away.

Ironically, regions of the state where homes are cheapest are most likely to see the highest number of default notices. According to DataQuick, neighborhoods with a median sales price of less than $300,000 experienced 10.6 default notices for every 1,000 homes, while neighborhoods with prices above $800,000 accounted for 2.9 notices for every 1,000 homes.

Source: Los Angeles Times, Alejandro Lazo (07/22/2010)

Keep the faith...


Tuesday, July 20, 2010

What is a Short Sale?

This past April the government began to offer financial incentives to Lenders to push short sales through a program called Home Affordable Foreclosure Alternatives ‘HAFA’. The program is designed to stimulate home sales. The program imposes specific requirements on the Lenders/Servicers participating in HAMP that in order to continue they must participate in HAFA. (To find your servicer you can check this link: ). Other requirements can include requiring certain debt forgiveness, an abbreviated time frame to respond to short sale offers, and provides government payments to homeowners (for moving and/or relocation expenses), servicers, and lien holders.

What is a Short Sale?

A short sale is a pre-foreclosure residential real estate transaction wherein the owner of the mortgage (Investor or Lien holder ‘Lender’) agrees to allow the home owner to sell their property for less than … or short of … the outstanding balance owed on the mortgage loan, and agrees to release the property from the mortgage clearing the title for the Buyer.

Homeowners who are in default or behind on their payments desire to sell their homes "short" to avoid a foreclosure action and to reduce the hit to their credit or reduction to their credit score as a result of a foreclosure. Because of the "shortage", the transaction may involve "debt forgiveness" by the Lender (This could involve a taxable event at Federal and/or State levels which is why you are advised to seek both legal and tax counsel). Lenders would prefer a short sale compared to a foreclosure as they generally garner approximately 12% higher net than if they are required to foreclose plus with foreclosure there is potential for increased costs and risks for the Lender in terms of carrying costs…. eviction, property maintenance, insurance, taxes, homeowners association dues, municipal fees, and the like -- or a loan modification, with the associated lack of certainty; in addition, a short sale gets the non-performing mortgage loan asset off of the Lender’s financial books.

Now that you know what a ‘Short Sale’ is, we will investigate who can assist you.

Stay tuned and keep the faith…..


Friday, July 2, 2010

Before you decide on a Short Sale, have you tried ...

refinancing and/or modifiying your loan with your existing Lender???

There are programs available to assist those experiencing issues paying their current monthly payment: H.A.R.P. – Home Affordable Refinance Program and H.A.M.P. – Home Affordable Modification Program. Information is available at If you're experiencing problems and wish to protect your investment/remain in your home, you should investigate the Home Affordable Refinance Program. Log on to check your eligibility or seek counseling. If you do not qualify for H.A.R.P., investigate a loan modification” Loan Mod” under H.A.M.P. by going to the same website. For many years, Loan Mods have been a great tool for borrowers down on their luck. They couldn’t pay the monthly payment and it was usually due to some economic hardship-lost job, illness, etc. The Loan Mod was the safety valve to keep the American Dream alive – a roof over your head you could call your own. Loan Mods have come to the forefront to help many more borrowers suffering in our economic slump. Their situation is different as they realize that they owe much more than their property is worth. Over 85% of borrowers who apply don’t get a modification approved and for a myriad of reasons: They make too much money or have too many assets, they don’t really have a hardship, just spending/credit problems, they fear reprisals for erroneous information given when they originally applied for the loan, they just don’t like doing paperwork of any kind, they lose faith and just don’t follow up on the process, they fail to make the payments agreed to in the trial phase, they decide to give up as no one will help them and it’s better to live free until someone knocks on the door or have simply walked away and mailed in the keys. These folks have given up on retaining their home and are done with the headaches for now; however, Uncle Sam, the State taxing authority and the credit companies are not going to make anything any easier (Some exemptions may apply). Walking away could just exacerbate the problem. You should speak to legal/tax counsel and you might consider speaking to a Real Estate Agent because if a loan modification doesn’t work for you, the next alternative is the Short Sale. Stay tuned and....... Keep the Faith!