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I received this article through the Florida Association of Realtors(r) newsletter today. It will interesting to see  how this plays out.

A lawsuit alleges Countrywide Financial Corp. and two of its former executives misled institutional investors who were stuck with huge losses from mortgage-related investments that they say were portrayed as low-risk.

The lawsuit was filed Monday in New York State Supreme Court by investors who bought hundreds of millions of dollars in Countrywide’s mortgage-backed securities from 2005 to 2007, before the housing market went bust. The list of a dozen plaintiffs includes New York Life Insurance Co., TIAA-CREF Life Insurance Co. and Dexia Holdings Inc. READ THE REST OF THE ARTICLE

I have a short sale selling homeowner who finds himself an involuntary guest of the state.  Looks like he may be there for the foreseeable future, likely to be years not months.  He has a conventional FNMA mortgage (and a second mortgage), both with First Franklin.

I anticipate and can handle the logistic complications of getting docs signed, etc. but wonder if anyone has had a similar experience with a locked up-seller.  What, if any, impact would that key fact have on the short sale approval criteria?

Any thoughts?

Glendale, CA Real Estate – Jennifer Escobar a Realtor at Qwest Real Estate recently received a question from Luis.

Here is Luis’s Question.

“I am working on a loan modification on my home. I just don’t want to be upside down and want a fair interest rate. Why should I pay on a mortgage that is twice as much as my home is worth, plus the interest on that mortgage? It just doesn’t make sense.

How can I get a loan modification with a fair interest rate where I am repaying what my home is worth today? Thank for your help, Luis.”

Here was my answer.

"You are asking for something that most lenders don’t like to do. Lenders don’t like principal reductions. Here is why!

Principal reductions usually have to be written down right away on their financial books. If you owe them $300,000 and they reduce your loan principal to $150,000, then they immediately have to reduce the company’s earnings by $150,000 for that fiscal year.

If they do that on enough loans, then it hurts the CEO’s ability to get a bonus. He may even risk losing his job. I don’t offer much sympathy to CEOs, but that’s how it works.

Here is what lenders like to do instead. They will reduce your interest rate to 2% for 5 years. After that, the interest rate will go back to the original level.

That way the write off will be much smaller than $150,000. It might be a $30,000 write off. That makes a much smaller difference on the CEO’s bonus for the year.

It’s also one of the reasons that most loan mod programs don’t work. The banks aren’t willing to be realistic.

It’s also why I think a short sale is the best principal reduction plan. You get to erase the bad debt. Rent a home for 2-3 years and then buy a new one at today’s market level."

Thanks for reading this, Jennifer Escobar.

Jennifer is a Real Estate Agent at Qwest Real Estate.

My BLOG: www.Glendale-ShortSales.com

Glendale Short Sale Specialists | Burbank Short Sale Specialists | Granada Hills Short Sale Specialists | North Hollywood Short Sale Specialists | Van Nuys Short Sale Specialists | North Hills Short Sale Specialists

Hello,

New to this site but so glad that I found it.  I only have a 1st with them and have an agent who is going to do an auction for us to get an offer asap to get it into LBPS.  My question is anyone out there who has dealt with them and how to go about getting it done quicker rather than having it sit there for 4 or 5 or 6 mths?  I know I am in the same boat as millions of other but I also know I can do things to improve my results.  Anyone out there know of great people to work with there or phone numbers other than the generic one they give you?  Also, are they really quick to star the foreclosure process like I have heard other bloggers say out there?  

Thanks so much

 Birmingham MI Short sale tip #59, "What do you mean I still owe money?"Mike Sher (248) 644-4700 x242 Max Broock Realtors Certified Distress Property Expert

Often Short Sale sellers are told that in a Short Sale you will not have to pay the bank back any money.  Some times that is true and sometimes it is not.  Remember when you got the loan you signed both a mortgage and a note.  The MORTGAGE is a lien on the home so if you default on the note, the bank has the right to seize the home as collateral.  While the NOTE; is a promise to pay the full amount of the loan no matter what. 

A Short Sale is when the lender releases the lien/mortgage and the borrower/seller then can sell the home for less than the note value.  BUT, your lender does not always release the amount owed. The borrower might have to sign a promissory note or renegotiate the terms of the deficiency post short sale closing.

Many borrowers/sellers are unaware of the fact that they might still be on the hook for the remainder of the loan until the day of closing or worse months after.  The borrowers/sellers post closing obligation is often determined by his/her future collectability and whether MI (Mortgage Insurance) chooses to be difficult.  Collectability is determined by factors like age, income, credit, employment and future income potential.  If the bank thinks the borrower is doing a short sale by choice and less by economic necessity, that borrower should expect to contribute in some way or this short sale is DIA.  As for the loans with MI, you should expect a fight from them no matter what the borrowers reasons are for the Short Sale.

Many borrowers/sellers become angry and decided to give up once they are aware of their need to contribute to the short sale.   They stop making payments and force the bank to foreclose on the home in hopes that doing so would hurt the bank. Sadly that is not true and the fact that CITI bank had record profits in 2010 shows that banks are just fine.   Plus in MICHIGAN it is important to understand that in Foreclosure the borrower will often owe more money and do great damage to their credit then if they completed the short sale.  That is why a Short Sale is often the better route even if you owe some money post closing then a MICHIGAN foreclosure.  My next blog will be on the ramifications of Foreclosure.  And like always seek legal and financial advice from an attorney and/or CPA before acting.

Mike Sher, Associate Broker,Max Broock/ Real Estate One, 248 644-4700 x242  ***Please be advised that Mike Sher, Katherine Green and Max Broock Realtors are not attorneys nor tax professionals. Our correspondence should NOT BE interpreted as that of the advice of legal counsel or tax professionals. We recommend seeking the advice of a tax and or legal professional with matters pertaining to Short Sales and other related questions.   ***

The other day an agent asked if she could have my “flight plan” to do a short sale. Per Wikipedia, a flight plan is a pilot’s outline of how he will get to his destination, including departure and arrival points, estimated time, alternate airports in case of bad weather, type of flight, etc.  This agent was sure I had such a document for short sales.  She had never had a short sale listing before, and was looking for a checklist.

Well, guess what? There is no “flight plan” that fits every short sale.  Sure, I can tell you the basic steps, but the number of variables would throw that plan off in a heartbeat. You might be trying for Wyoming, but end up in Oregon!  Here are some examples:

1.   The Seller – Every seller’s situation is different. Bankruptcy? Multiple liens? No hardship? Your approach will change for each circumstance.

2.   The Contract – What is  the  best way to write one to get approval?

3.   The Package – Many short sale lenders have their own forms and different requirements.  Do you know what they are?

4.   The HUD -   Each lender or mortgage type has unique stipulations as to what will be approved on the settlement statement. 

5.    The Lenders – What will the senior lien pay the junior lien, and what will the junior lien accept?

6.    Other Liens – How do you handle tax liens, judgments and association liens?

7.    Cash Contributions and Promissory Notes – When do they come into play?

8.    The Deficiency Judgment– Do you know what it is and if your seller can avoid it?

These are just a few examples of the variables involved in getting a short sale approved.  There are hundreds more.  So what do you do, if you’ve never done a short sale before?    One place to start is www.ShortSaleSuperstars.com– you’ll find over 5000 agents sharing information about daily short sale situations, problem solving, tips and tricks.

And  for some SERIOUS SHORT SALE TRAINING – watch for the upcoming short sale webinar from me andBroker Bryant.  We'll  be covering not only basics, but in-depth negotiating skills, deal-saving strategies and special short sale situations.  So be your own pilot to short sale success, and learn, know and grow!

Wendy Rulnick and Bryant Tutas
www.ShortSaleSuperStars.com

Copyright © 2011 REGrow, LLC | All Rights Reserved 

Just an FYI.  I faxed an LOA into the two numbers listed at the beginning of the Citi section 866-989-2088/2089 and when I called in they have no record and say that is not the fax number.

The SS dept gave me the fax number of 866-641-4350 as the best fax number for LOA and ALL other SS documents.

According to the Distressed Property Institute, more than 80 percent of distressed homeowners who go into foreclosure have never contacted their lender or a real estate professional for help. That’s a staggering number when help and relief are available.



Without fail, our phone rings off the hook near the end of every month from desperate homeowners looking for help. After checking the local foreclosure lists, we often find that the house is already scheduled for foreclosure the following week. At that point, it’s nearly impossible to get a Short Sale in place to stop it.

An important thing to understand about Short Sales is that the process is anything but “short.” The only thing “short” about a Short Sale is the payoff to the lender. The sooner the homeowner contacts someone for help, the more time is available to work the Short Sales process.

We encourage homeowners across the United States to get educated on the options available should they become financially distressed. Short Sales are a great tool, providing relief to all parties.

Just remember to choose a REALTOR® with a proven Short Sale track record to negotiate on your behalf. Making the right choice can mean the world of difference to your financial future.



Based on "Avoiding Foreclosure - The Field Guide to Short Sales" © 2010 - Tom Branch and Gina Branch

Hi folks. Last year I had a closing for one of my Orlando Short Sale listings. This particular lender required all parties, including the agents, to sign an Arms Length Transaction Notice. This notice basically states.....well here it is. Read it for yourself.

Of course as an experienced Orlando Short Sale Agent and negotiator I explained this notice to the Seller not only at time of listing but also when it was received and before it was signed. It wasn't an issue as the Sellers were moving anyway and they certainly didn't know the Buyer. All parties agreed to the Arms Length Transaction Notice and signed it. Shortly thereafter the transaction closed and all was well.

Recently, and several months after closing, I was driving around and bumped into the Sellers. They were standing in the front yard of their old house. The one we did the Short Sale on!!

I pulled over to say "Hi" only to find out that they did not move and had signed a lease with the Buyer. I guess this all went down after closing. YIKES!!!

So what do we do now? Will the lender find out? Can I be held liable for an act I wasn't aware of? Can the Short Sale be rescinded?

I need an agent that handles the Sacramento and/or Roseville area in California.

My Niece and her Fiance are moving there and will be in the area this weekend.
They are looking for a House or townhouse with 2 or more bedrooms.

If you are interested, please let me know ASAP.

Thanks

PS-I apologize if I posted this in the incorrect area, I wasn't sure.

It's one thing to list a short sale and then hand it off to a negotiation company.  It's another to handle it yourself, keep your Seller and also Buyer's agent updated weekly, and then follow it through to a successful CLOSE!  I can do that for you!

To view my current listings and their status for the first quarter of 2011, please visit my website..

Short Sale First Quarter Status..

Thanks to Short Sale Superstars for many helpful exchanges between myself and other Short Sale Agents..we help each other to keep updated on Lender Rule changes and to get answers to difficult Short Sale situations.

Homebuyer Tax Relief Bill Passes Legislature on last day of 2010 Session MAR-supported legislation to allow foreclosed properties to retain their principal residence exemption for a period of up to 3 years has passed both the House and Senate, and is expected to be signed by the Governor in the coming days.

Senate Bill 77 provides for much needed Principal Residence status and tax relief to purchasers of bank-owned properties after the May 1st filing deadline.

This legislation has become particularly important since foreclosures, which are non-principal residences, have flooded Michigans real estate market in recent years. The current situation prices buyers out of homes by forcing them to qualify for a mortgage at the higher tax rate.

Those buyers looking to purchase foreclosed properties are consequently stuck with a significant tax burden for the remainder of the year despite making that new purchase their principal residence.

This bill would alleviate that burden by allowing a buyer to immediately make a foreclosed property their principal residence.

The MAR Public Policy staff met with legislators on this bill until the very last hours of the 2010 session to express the importance of making this tax-friendly legislation a priority.

We are pleased that legislators on both sides of the aisle supported the passage of this bill, which gives homebuyers significant tax relief when purchasing a foreclosed property.

Senate Bill 77 was vetoed by Governor Granholm on December 21st.

Newly elected Governor Rick Snyder needs to make sure this is done.