Distressed Homeowners Beware!

In our weekly e-mail blast from the California Association of Realtors, we were brought up to date on yet another way that distressed homeowners are being taken advantage of.  Apparently there are companies out there who will take your money under the guise of helping you “renegotiate” your loan with your lender.  After they take your money, the service that they provide you with is questionable.   According to CAR’s report, the California Department of Real Estate reported only 10 complaints last July about these companies.  This year they have 750.  If you are about to give one of these types of services your business, you may want to check this list and if they are on it, ask them why.

This is not to say that all companies of this type are illegal or unethical.  If the DRE has reviewed the company and has approved of them, they perform a useful function and until they prove themselves differently, are reputable.  Ask them if they have a license from the Department of Real Estate and if you have a question, be sure to contact the Department of Real Estate.  You can find them here.  And while you are at it, look at that handsome devil up there in the left hand corner.  Looks like he may have been a movie star, huh?

Short Sale Help from Obama’s Administration

Here is welcome news from CAR:

Obama Administration Announces Financial Incentives and Uniform Process for Short Sales

 The NATIONAL ASSOCIATION OF REALTORS® (NAR) today announced that the Obama Administration has added new incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP), part of  the administration’s Making Home Affordable plan.

 Loan servicers may consider short sales or deeds-in-lieu of foreclosure for borrowers who do not qualify to have their loans modified on a permanent basis under the Making Home Affordable Loan Modification Program.   

• Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program, but don’t qualify for a modification or do not successfully complete the three-month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.

 

• Incentives include: $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; $1,500 for borrowers/homeowners to help with relocation expenses; and up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).

 

• The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.

 

• Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.

 

• In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.

 

• The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.

 

• Servicers may not charge fees to borrowers/homeowners for participating in the FAP.

 

• The program is in effect through 2012.

 

• Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).

Short Sale Information updated

A week or so ago I attended another Short Sale Seminar put on by Coldwell Banker.  The location was down the hill at the Placer County Board of Realtors and Kathy Mehringer of Coldwell Banker NRT was our teacher.  She brought us up to date on all of the requirements that the bank will want and need to see if they are to approve a short sale.  Coldwell Banker has put together a template to try to help all of us Coldwell Banker agents remain consistent in our offer presentation to the banks, thus making it easier on the person processing the offer.  We are hopeful that this will move the process along.  Kathy also has published, in PDF form, a Q & A on the short sale.  Be sure to read up here if you want to understand the pitfalls, advantages and logistics behind the Short Sale.  Thank you Kathy.  Kathy’s Frequently Asked Questions – Short Sales  This mechanism is here to stay for awhile as we all look for ways to buy and sell real estate.

Short Sale 101, Some Advice

On my weekly update from California Realtors Association (CAR) I found this interesting article which orginated with the San Francisco Chronicle.  After dealing with a few short sales and buyers who were agressive and persisitent, I think that this is a good read for both buyers and sellers in this situaiton.  On the subject of what kind of effect a “short sale” may have on your credit as opposed to a foreclosure, I would caution anyone in this situaiton to TALK TO YOUR ACCOUNTANT or ATTORNEY. 

“Be persistent during ordeal of short sale.  Approximately one in five homeowners is “underwater” – meaning they owe more on their mortgage than their home is currently worth. For borrowers in default or at risk of defaulting, selling their house for less than is owed, often termed a short sale, may be the only option. However, short sale offers must be accepted by the bank that owns the mortgage, and can take as long as a few months before an offer is accepted.

MAKING SENSE OF THE STORY FOR CONSUMERS 

Some home buyers are submitting unrealistically low offers on bank-owned properties, hoping to purchase a home at a bargain price. Low offers often use valuable time and resources that could be dedicated toward more favorable offers more likely to garner bank approval. It is vital that home buyers work closely with their REALTORS® to submit appropriate offers, especially when dealing with a short sale property.

 Theoretically, short sales should be a win-win for the bank and the homeowner. Although the bank does not receive the full payment on the mortgage, it also does not incur the costs of foreclosure and/or eviction, if necessary. Many homeowners also prefer short sales because it does less damage to their credit score than a foreclosure. However, many real estate experts say that the majority of banks are reluctant to approve short sales, and often let properties go into foreclosure, even when there are reasonable offers on the property. In addition to considering the price, most lenders also take into consideration whether the homeowner can demonstrate financial hardship. If the homeowner is capable of making payments, many lenders will try to work out a loan modification, rather than a short sale.

 Short sales often are more time intensive than traditional transactions and often require additional paperwork. Due to the large number of short sale offers, many take as long as a few months to receive approval. If information or required forms are missing or incomplete, the bank may set the offer aside, which could delay the process and cause the property to go into foreclosure. To expedite the process, it is important that sellers work closely with their REALTOR® to provide all of the necessary paperwork. “

To read the full story, please click here

California Association of Realtors update 11/20/08

This week’s most current take on  Foreclosures statewide (California) was forwarded to me from the CAR website.  Here it is — read it and weep. . . .

FORECLOSURE FILINGS UP 25 PERCENT FROM YEAR AGO
Foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 279,561 U.S. properties in October, a 5 percent increase compared with the previous month and a 25 percent increase compared with October 2007, according to recent report from RealtyTrac®. One in every 452 U.S. housing units received a foreclosure filing in October, according to the report.

“We’ve seen sharp declines in new foreclosure filings after legislation mandating delays to the foreclosure process was signed into law in several states — most notably in California, where overall foreclosure activity was down by double-digit percentage points for the second straight month in October, and where default filings were 44 percent below October 2007 levels,” said James J. Saccacio, chief executive officer of RealtyTrac. “Despite this, October marks the 34th consecutive month where U.S. foreclosure activity has increased compared to the prior year.”

California foreclosure activity in October decreased 18 percent from the previous month, but the state still posted the highest number of properties with foreclosure filings for the month — 56,954. That total was down from a peak of more than 100,000 in August, but represented a 13 percent increase compared with October 2007.

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