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.
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.
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.
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.
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:
Requiring the Seller to use and pay for a negotiator for the LENDER!!
Requiring the Seller to auction their property.
Requiring the agent to hold open houses.
Dictating list price.
Concern #3
This is the big one. Fannie Mae and Freddie Mac manipulating the Real Estate market.
Examples:
Placing restrictions on the resale of the purchased property.
Title Transfer requirement change: (Fannie and Freddie)
- 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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Comments
Hello Bryant Tutas where did you escalate/dispute your value? I do not see it anywhere on the www.homepath.com page I have Nationstar short sale that was approved for $390,000 and when I expected a counter for $320ish my submission was/is $301K. Thank you, Vianey Ojeda (909) 294-7265 or info@thehanovergrp.com
Nationstar says the Fannie Mae dispute valuation does not change their counter..they are holding at the higher price...wonderful
Hi Bryant,
Let's hope this auction.com issue goes away very soon. I just read this article on another forum: http://www.bloomberg.com/news/2013-03-08/nationstar-ordered-to-stop... Looks like at least one big investor is unhappy with how Nationstar is handling its files, and they were sued over it. They really seem to be handling to the benefit of Nationstar when it comes to this forced pre approvals and forced auction.com business. What about the investor, the distressed borrower, and what about the real estate consumer?
I tweeted about this auction.com issue. It's a very important issue for distressed homeowners.
Tni
just called in to NS again, as Fannie said to reach out to the servicer for response. Negotiator is not in, but the customer service says there is a new note on the file that says 'no change to original valuation'. waiting for confirmation before telling buyer and seller that they can kiss this one goodbye..and assuming the delayed sheriffs sale will be taken off remission immediately...crossing fingers that I am wrong.
Excellent work Bryant on the SSED escalation!
Nationstar indicated that it has practices and controls in place to ensure accurate foreclosure action affidavits. Nationstar has also indicated that it is proactive in complying with certain changes that mortgage servicers (that are subject to oversight by federal regulators) agreed on that have become industry standard in recent years. Nationstar, however, is not directly subject to oversight by those regulators. But by assuming subservicing arrangement of entities that are subject to those regulators, Nationstar is contractually obligated to comply. As a nonbank entity, Nationstar will be subject to regulation by the "Bureau of Consumer Financial Protection," which was established by Congress through the Dodd-Frank Wall Street Reform And Consumer Protection Act.
http://www.standardandpoors.com/ratings/articles/en/us/?articleType...
Let's be sure to use "auction.com" in these comments so we get their attention with some google juice.
Tni. My gut tells me the issue with auction.com is going away very soon. Take all the control from the agent yet place all of the liability on them. Agents should not fall for this stuff. Be firm.
Unfortunately unless things change there will be sellers not able to find an experienced short sale agent to assist them. they will be left taking what they can get and will get screwed.
Hi Victoria. I just had success disputing value through the homepath escalation. Took 5 days. Check it out:
Thank you for contacting the Short Sale Escalation Department (SSED) at Fannie Mae. Your value dispute is complete and has resulted in a reduction in our As-Is Value from $330,000.00 to $305,000.00. The servicer has submitted your offer to FNMA. Please reach out to your servicer for additional information regarding this Short Sale.END
They had started at $389,000!!!
Bryant- Thanks for the great post! One of your points hit home based on something I saw yesterday:
You wrote "Inflating retail values while simultaneously selling bulk properties at HUGE discounts to institutional investors. "
I happened to check if a home we couldn't short sale had gone back to Chase yet. We couldn't come to short sale terms even though there was a net of $110,000 with a sale price at value set by comps. We went through 2 buyers and 6 months. Deed-in-lieu was unsuccessful (don't know reason as seller pursued it) BUT I just noticed tax records show it transferred to a LLC at foreclosure for $80,000! There was an auction a few months ago. I don't even understand how it sold less than the amount of the note which was around $140,000 much less why it didn't become a REO and openly marketed. I checked the MLS, and it was never listed. I would have been able to bring them a buyer for it to net $105,000 if they remarketed.
Freddie Mac.
It leaves a bad taste. Seller did everything properly, and I had even appealed to Freddie with no luck.
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