New Short Sale Changes Change The Direction Real Estate.

 

Well where do I begin today? There are many changes taking place with Short Sales that have me concerned about the direction real estate is heading. Especially as it relates to Short Sales.

 

Concern #1:

 

It seems like the bulk of Short Sales are now with entities other than banks. Such as Nationstar Mortgage, Ocwen and Greentree. These 3 companies are taking over the servicing of many toxic mortgages. Why does this matter? The fact that they are not banks means they do NOT fall under the control of the OCC and the Federal Reserve. Less oversight means these servicers can try and make their own rules.

 

Here are some of the “requirements” from Nationstar Mortgage.

 

  1. Buyers of Short Sales who need financing must pre-qualify through Nationstar. If they use Nationstar financing NS will allow the short seller to pay 3% in closing costs for the buyer. If they don’t use NS......no closing costs assistance.

  2. Agents have to send in a full blown BPO and a complete title search as part of the short sale initiation process. Title Searches cost money. They expect the agent or seller to pay for this even though there may not even be a contract on the property.

  3. Auction.com. Nationstar is requiring some of their Short Sellers to use Auction.com. If they don’t the short sale will not move forward. Here’s a great discussion on the issues Auction.com creates.

    1. Snippet: “Even though we have a legal, binding contract on the property, NS is requiring the seller to put the home on auctions.com for 2 weeks before they will consider a shortsale. If the seller does not comply, we are told his only option is foreclosure. We have been told that if there is an offer for less than the current contract amount, the current buyer is still in the winner's position. BUT if a new buyer offers MORE than the current contract amount, that offer will supersede.”

 

Concern #2:

 

Servicers and Investors handling Short Sales as they do their REOs. The obvious issue is that they are not the owner of the property as they are with an REO. Basically they are trying to control our listing agreements, list price, marketing and contracts.

 

Examples:

 

  1. Requiring the Seller to use and pay for a negotiator for the LENDER!!

  2. Requiring the Seller to auction their property.

  3. Requiring the agent to hold open houses.

  4. Dictating list price.

 

Concern #3

 

This is the big one. Fannie Mae and Freddie Mac manipulating the Real Estate market.

 

Examples:

 

    • The buyer is prohibited from selling the property for any sales price for a period of 30 days from the date of the deed.
    • After a 30 day period, and until 90 days from the date of the deed the buyer is further prohibited from selling the property for a sales price greater than 120% of the short sale price. Note: The above restrictions will run with the land and are not personal to the grantee.
  • Offering properties for sale with no appraisal requirement through Homepath and Homesteps.


2013 is going to be a very interesting year. Are you ready for it?

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Comment by Victoria Frieberg on March 13, 2013 at 3:01am

Timely article, as I am waiting for the decision from Fannie on a valuation dispute with Nationstar as servicer.  Fannie emailed yesterday that the ns has the decision, contact them..no response yet.  So, where do we go with the information you have posted?  The press, our representatives?  Is there enough documentation to actually make a case to the media?  I know that the Arizona press picked up on the inflated values issue..but would love to see Fox or CNN shine the spotlight on another governmental not so transparent bait and shift..get people excited about a short sale and new beginning, just to speed them to foreclosure.

 

Comment by Tni LeBlanc (805) 878-9879 on March 9, 2013 at 7:00am

Hi Bryant,


Thank you so much for writing this great summary.  Yes, all these things are happening!  It is getting very interesting (and treacherous IMO). There are a lot of changes in short sales in 2013.  The real estate agent community has been/is being encouraged and readied to deal with short sales as we are told that REO will not be the way of the near future.  And now the games have begun!


You hit the nail on the head, about the importance of the fact that these entities are not regulated by the OCC.  And unless they are regulated by a state that takes debt collection activity seriously, where does that leave real estate consumers?  The changes put into place are very REO like if you ask me.  Maybe they believe they can conduct short sales as simply "REO Lite," or "REOs with less risk."   At least it seems that way.  

I've already experienced a Nationstar file where they insisted that each buyer be pre qualified by them.  Each buyer pushed back on that and refused.  I couldn't sell it until I had a cash buyer who could side step that requirement.  Did they get the highest offer for the investor?  Absolutely not -- they got the only buyer who could stand the stench of their mandatory pre-qual, and avoid it with a bank statement.

Of course, Nationstar pulls the same move on their REO inventory, and they tie closing concessions to using them for the loan.  Great now you are limiting the pool of buyers to those who don't need concessions (which eliminates many low down payment buyers who need concessions and who also tend to bid higher) unless they agree to use Nationstar.    I've also experienced another short sale where the servicing agent simply ignored an offer until they received one that agreed to use them as a lender.  Where is the outcry from investors on this?  Hello! -- the fox is watching the hen house.

IMO -- they are not interested in getting the best offer -- they are interested in getting the offer that best suits them.  When real estate agents do this, what is it called?  When a servicer does this -- it's called business?  The fact that we as taxpayers are paying for these losses in more ways than one is a mere detail to them -- but I believe it is relevant.  They are trying to guarantee their continued existence at our expense.  Is this what business has come to in America, government support and guarantee while forcing consumers to use you and zero intervention from regulating authorities?  If so, wow what a free market we have here!  And what a "successful business" they are building!


I just had a file service released to Ocwen last night.  I'm prepared for a wild ride.


Thanks for keeping us up to date.

Tni

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