Jacksonville Florida Short Sales, Pre-Foreclosures and Foreclosures

BOA Update To Short Sale Backup Contract Submission Guidelines

BOA sent out an e-mail today to its short sale agents advising us of a new policy regarding replacement contracts when a contract falls out and needs to be replaced with a new one.

Text from e-mail copied and pasted below....

8-Day Window to Submit Backup Offer 

Based on agent feedback and to reduce overall cycle times, we are making a change to the short sale process. If it becomes necessary to submit a backup offer during a short sale, you now have a reduced window for making the submission. Instead of 14 days, backup offers must now be submitted within eight calendar days after the initial offer becomes invalid.  

When a backup offer becomes necessary:  

• Contact your short sale specialist immediately.
• Let the specialist know if you have a backup offer to submit.  

Within eight calendar days, resubmit the listing data, submit the short sale offer, and upload the offer documents and supporting documents.  Any backup offer will require analysis and investor approval, regardless how similar it may be to the previous offer.   

If no backup offer is available:  

• The short sale will be closed in Equator by your short sale specialist.
• You should return to marketing the property.
• You may initiate a new short sale in Equator when you receive a new offer on the property. 

 

 

Jacksonville Real Estate and Jacksonville Short Sales: Higher Credit Score Requirements? Higher Down Payment Requirements? Will This Really Prevent a Future Housing Meltdown.

I find the constant chatter about the need to increase the credit score requirements and down payment requirements to prevent a future meltdown in the US and the Jacksonville real estate market  small thinking.  Really???  Do you think it's that simple?

Subprime?

Sure subprime was part of it.  Based on my observations, this is where it started in the Jacksonville real estate market.  That was the first round of Jacksonville foreclosures and Jacksonville short sales that we saw back in 2007/2008.    But it was a small part of it.

When Banks Cutoff Lending The Crash Began...

We argue that this has not been the main problem we have been seeing for the past couple of years.  High credit scores did not make sellers a low credit risk during the current housing meltdown.  High down payments did not make sellers a low credit risk during the current housing meltdown.  The US and Jacksonville housing market statistics, for anyone who wants to delve in and pay attention, shows that it simply is not about higher down payments and higher credit scores.

Can You Please Open Your Eyes and Look at the Big Picture?

Many people who have lost their homes through foreclosure or filed bankruptcy had higher credit scores and higher down payments than current requirements or what has been discussed.  Do you realize the game the banks were playing with butchering and selling off mortages?  Creating funds to buy the funds?  Tampering with ratings on the securities?  Creating a secondary market that kind of never really existed but was a carefully orchestrated illusion?

When a person's home equity erodes, so does his confidence.  When a person loses his or her job, it doesn't matter how much of a down payment they put in or how high their credit score is. 

Is the Equity Created By Your Higher Down payment Still There?

Does no one who is blaming it on credit scores and down payments realize that the higher down payments people made were quickly eaten up with the rapid erosion of Jacksonville real estate values?  What difference did it make when someone put down a high down payment for their Jacksonville home purchase?  We would argue, not much difference at all, if any.

We have been working Jacksonville short sales for years.  What we are seeing is not people who had low credit scores or a low down payment.  We are seeing hardworking people who had their world turned upside down when their income decreased significantly and they could no longer pay their bills.

What about the person with a 750 credit score that put 20% down? 

They are not immune to what is going on right now!  Do you really think they still have that 20% equity?  They are underwater too.  Do you think the 750 credit score will guarantee that they keep their job?

You really think higher down payments or higher credit scores are going to significantly change anything?  We think not.  It all comes down to the economy.  Do people have jobs?  Do they have security?  Please stop with the simplistic views and judgmental language.  Do you really think anyone wants to be in that position?

Jacksonville Short Sales - Sellers Are Not at Fault!

We see such horrible situations in Jacksonville short sales.  We do not blame anybody who is in the situation where they now have to short sale their home.  They did not crash the housing market.  Today's seller who can no longer keep their home has no choice but to sell it today for what the market can bear.  For what banks will give buyers a loan for which is all based on what houses are selling for today. 

It's so much more complicated than a credit score and a down payment.  By increasing the criteria now, we are just going to see the Jacksonville real estate market, and other markets across the country continue to decrease since it will further limit the pool of available buyers.

Jacksonville Short Sales : Will The Seller Continue to Market the Property After The Contract And Submit Other Offers to the Bank?

Jacksonville short sale buyers and Jacksonville short sale sellers have to have one characteristic in common...patience. 

We strongly believe that both the buyers and sellers of Jacksonville short sales need to understand going in what could possibly happen down the road.  This advance understanding can help you work through issues that arise later.  And issues do usually come up on Jacksonville short sales...it's just the nature of the transaction.

What happens after you get the Jacksonville short sale under contract?  If you are using the standard contract addendum for the Jacksonville real estate market with no modifications the seller may continue to market the home after the home is under contract.  If you are a hopeful buyer under contract on a Jacksonville short sale what does this mean to you?

Once the current Jacksonville short sale is under contract the listing has to be put in a contingent or pending status in the Jacksonville MLS system.  This means it will no longer show up as fully active in the MLS.  This, by itself, will eliminate many buyers.  It will show up either as Active-Contingent or Pending.  The listing agent can specify that back-up contracts are being taken. 

What happens if the seller of a Jacksonville short sale gets another offer after they are under contract?

The language in the Jacksonville short sale addendum states that if the seller receives subsequent offers and intends to submit it to the bank or banks then they have to let the buyer know within 24 hours of receipt of that Jacksonville short sale offer that they intend to submit to the lienholder/ bank.  At that point the buyer, who is under contract on the Jacksonville short sale has five days after delivery of the notice to terminate, in writing, the Jacksonville short sale contract.  If they do not terminate, the buyer understands that the seller can submit the second offer for consideration by the lienholder(s) / bank(s).

As a buyer, unless the issue is tackled in advance, you can wait patiently on that Jacksonville short sale approval then have another buyer come and outbid you later in the process and end up with the property.  There are ways to potentially eliminate this risk.  However, as the buyer of a Jacksonville short sale you need to understand that this is in there.

Read what you are signing.  Understand what you are signing.  Consult an attorney with any questions about what you are signing.  Be educated.  (...and this is not legal advice...consult a real estate attorney! )

Wells Fargo Short Sale Approval of Atlantic Beach House in Jacksonville Florida Area

We just got a short sale approval letter today for a great house within walking distance from the beach in the Jacksonville Florida area.

The seller experienced a dramatic change in circumstances after they purchased the home a couple of years ago.  This made it impossible to continue to make the mortgage payments.  They contacted us because they knew we were Jacksonville area short sale specialists with a proven track record.

We love Wells Fargo short sales and this was no exception.  We got our approval within 5 weeks of initial short sale submission of a complete and detailed package.

The seller is bringing no money to closing and Wells Fargo is waiving deficiency rights.

Let us know if you need our help too!

Bank of America HELOC Approval for a Jacksonville Short Sale!

We just received an approval for a Jacksonville short sale from Bank of America as the second lienholder.  This particular loan was a HELOC which almost always means a particularly hard transaction these days.  HELOCs are known for demanding cash at closing from the seller at an amount higher than most first lienholders will contribute.  Often these demands are much higher than the seller, who is facing a hardhip, can even consider paying.

The basic theory is this...many lenders look as HELOC loans as "play money."  From our experience working Jacksonville short sales with HELOCs as the second, an assumption is often made by the banks that the money was spent on vacations and "fun" stuff.  As a result, there is more of a "punish the borrower" attitude that we have seen. 

In this case we were able to obtain a  Bank of America HELOC NO CASH CONTRIBUTION REQUIRED AT CLOSING approval for the Jacksonville short sale!  Bank of America's approval indicated that they were willing to take only $3,000 to release the lien and allow the short sale to proceed.

Bank of America (BOA) Oakleaf Plantation Short Sale Approval and Closing in Record Time!

We love helping sellers avoid foreclosure through short sales.  We are  Jacksonville short sale specialists that know how to get approvals.  When this seller of an Oakleaf Plantation townhouse came to us, the situation seemed bleak...however, knowing our abilities and refusal to give up we took the listing hoping to make this one more seller that didn't have to endure the horrible process of foreclosure.

At the time we took this listing our last BOA / Fannie Mae approval had taken 6 months to get.  BOA was known to be slow and many buyer agents would not even take their buyers to BOA short sales anymore.

When this contract came in, Equator had recently been implemented for Bank of America short sales.  Many agents still do not like Equator, we LOVE it!!!  We are very strong in technology and welcome any technological improvements that arrive on the scene.  If you know how to use it, Equator is a wonderful tool that can greatly speed up your BOA short sale approvals.

Here is the timeline for this Oakleaf Plantation short sale approval (BOA/Fannie) and closing:

• 6/08/10 Short sale initiated in Equator
• 6/23/10 Counteroffer from BOA negotiator. BPO came in too high, the contract was countered much higher than the Oakleaf Plantation townhome was worth. We submitted the buyer's appraisal along with our own comps, countered the Bank of America counteroffer and persuaded the negotiator to take the buyer's appraisal. The BOA negotiator revised and countered again allowing the home to be sold at the buyer's appraised price (Buyer had a FHA appraisal).
• 06/29/10 Negotiator was satisfied and sent the deal to the investor, in this case Fannie Mae.
• 7/09/10 The contract was accepted by Fannie Mae and BOA generated an approval letter....only 31 calendar days after the short sale was initiated in Equator.
• 7/15/10 We closed the Oakleaf Plantation townhouse that was a Bank of America Short Sale only a month and a half after going under contract!

Summary of the numbers involved in the Oakleaf Plantation / BOA Short Sale: 

• List Price - $75,000
• Sales Price- $75.000
• Amount paid for townhouse in 2005- $166,100
• Amount owed on loan- $153,000 approximate
• Net Proceeds to Bank of America/ Fannie Mae in Short Sale - $64,149
• Past Due HOA dues paid by BOA/ Fannie Mae - $3,880
• Required Seller Contribution - $0

See the Bank of America Approval Letter for this Jacksonville short sale here.

Have a loan serviced or owned by BOA, underwater and need to sell?  We can help (and if we can't we'll tell you upfront!)

Saxon Short Sale Approval on Walden Chase Home In Ponte Vedra Beach Florida

This Saxon short sale approval was on a wonderful home in Walden Chase in the Jacksonville Florida area.

Saxon issued this Jacksonville short sale approval on a Freddie Mac loan in only 2 days after we went under contract with this buyer!!!  But that's not the whole story (if only it had been that easy!).  This home had been under contract previously with another buyer.  We had explained the Jacksonville short sale process to the prior agent at length.  We had gotten assurances from her that she was not taking the buyers to other homes to look.  We had been highly suspicious because we figured out she was "cancelling" another short sale contract to buy this Jacksonville short sale listing.  We spent time explaining to this agent that the Jacksonville short sale contract is a binding contract with a CONTINGENCY for lienholder short sale approval.  She promised she understood and that her buyers were committed to this property.

One day when we called her to update her, we found out that they had put down a contract on a neighboring Walden Chase home at some point and that this home was now their number two???  To make a long story short, this agent had gotten her buyer into two legally binding contracts for a short sale (maybe more?).  Had both approvals come in at the same time, her buyer could have been left having to purchase both homes or having to forfeit her binder deposit for the home they chose not to buy.  We ended up with a short sale approval, but no short sale buyer!  This could have forced the seller into foreclosure, but we worked hard to make sure this didn't happen.

Luckily in the 11th (maybe 11th and 3/4) hour we were able to pull in a buyer for the same price and same terms as our prior approval.

We were able to submit the new deal to Saxon / Freddie Mac for approval and got our short sale approval letter issued two days later!

Details of Approval on this Walden Chase short sale:

• Original Purchase Price of this Walden Chase home - $343,000
• Loan Balance of first lien at time of Jacksonville short sale - $272,000 approximate
• Short Sale approval sales price - $220,000
• Payoff to Saxon / Freddie Mac - $198,961 (roughly 70% of loan balance)

 

To See a Sample of an approval letter for Jacksonville short sales from Saxon mortgage:

Jacksonville short sales - Saxon approval letter Walden Chase 

Jacksonville Short Sales and Deficiency Balances

This is not legal advice.  If you intend to take it as such, please quit reading now and consult an attorney directly.  We are not one!  Our dialog is strictly from a real estate transaction basis and is not legal advice.  We advise all of our short sale sellers to contact an attorney for specific legal advice.

There has been a lot of confusion recently on the deficiency balance issue when there is a Jacksonville short sale. If you have a foreclosure, Florida is a deficiency state, also called a recourse state.  This means that the lienholder(s) can pursue you for the deficiency balance (difference between what they recover and what is owed on the loan after all of the foreclosure costs are added)  This is unlike some other states that will not allow a deficiency after a foreclosure.  Florida foreclosure law can be found here.  This is also where you find details on a deficiency judgment in foreclosure. It is when you short sale that a lot of confusion comes in.  A very general definition that we sometimes hear of a short sale is "when the bank agrees to forgive the loan balance and lets you sell the home for what it is worth."  This makes us cringe.  This is NOT an accurate definition.  The bank is agreeing to a lien release.  What happens to the "balance" is a different story. Banks are not very forgiving these days.  It actually seems like the more they have gotten in taxpayer money, the less forgiving they have become. The truth is just because you complete a Jacksonville short sale does NOT mean there will not be a deficiency judgment down the road.

The players involved in a foreclosure or short sale are (simplified):

• The servicer. This is who you send your money to every month. (They can actually make MORE money when your loan is in default than when it's not.

• The noteholder. This is who has physical possession (supposedly) of your note. It can be VERY hard to get accurate information about who this is. Crazy enough, many servicers will refuse to tell a borrower who they actually owe the money to. Sometimes, we would argue, it's because they aren't even sure themselves.

• The PMI or MI company (mortgage insurance). Think you don't have this? Well you may be incorrect! Many people who put 20% down on their first mortgage are finding out that they do, in fact, have PMI!  We are starting to see this a lot.  Borrower puts 20% down to avoid PMI only to find out during the short sale negotiations with the lender that there is PMI because they are making a cash or note demand.

The short of it is that any one of these parties can decide you owe them money still....and then go after it.

The reasons to still do a Jacksonville short sale anyway even if a lender does not waive their right to later pursue you for a deficiency?

Faster Credit Recovery.  Current Fannie Mae guidelines allow you to purchase a home faster, sometimes years faster, if you complete a short sale instead of a foreclosure. FHA guidelines also allow you to purchase again years sooner if you sold your home in a short sale instead of having a foreclosure on your record. Many sellers tell us, "We don't care about that, we never want to own a home again."  I would be willing to bet that you will change your mind down the road.

You Control the Deficiency.  Once the home is foreclosed on you have no control whatsoever of the contract price or terms. The simple fact is that REOs / Foreclosures are almost, without exception, priced under Fair Market Value. This can translate to big $$$. For example, on one home we followed, the bank failed to act on a short sale (the home was only around $10,000 short of full payoff), the home was sold for $50,000 less once they foreclosed on the same home. Even though the bank FAILED TO TAKE THE SHORT SALE for $50,000 more they can still go after the seller for their own decision to underprice the home for $50k. This defies common sense...but it is happening. In a successful short sale you know roughly what the deficiency is that they may later pursue. In a foreclosure, you do not know how low they will eventually sell the home for, nor what outrageous expenses they will tack on to the bill to arrive at the deficiency.

There is a Chance That the Deficiency Can Be Waived. This varies greatly by bank or investor (whether you are in the HUD PFS program or HAFA) and seems to be in a constant state of change.  This may or may not ultimately happen.  But you can try to negotiate this when you are involved in a short sale.  This is not something you negotiate in a foreclosure.

You Maintain Your Dignity. Foreclosure is an emotional black hole. It is something that many people never get over.   In a short sale you feel like you are somewhat in control as opposed to a foreclosure where everything is out of your control.

Whether to short sale your home or not is a personal decision.  You have to weigh the costs and benefits to you and decide.  Regardless, you should be aware going in that a deficiency IS possible.  We work with both buyers and sellers of Jacksonville short sales and can help you determine if a Jacksonville short sale may be right for you.

The Big Bankruptcy Lie...."You Don't Care What Happens to Your House...You Are Filing Bankruptcy."

I  am not a lawyer.  This post is not in any way, shape or form legal advice. Do not even attempt to use it as legal advice.   It's simply not.  It's a post intended to share information that I have discovered quite recently regarding bankruptcy and how this does not make your home "not your problem."  If you are in this situation I suggest you consult COMPETENT legal counsel.  Most bankruptcy attorneys do not understand foreclosure law.  Most foreclosure attorneys do not understand bankruptcy law.  Be sure you are talking to someone who specializes in the particular topic area.

Working with Jacksonville short sales as much as we do we have run across this misrepresentation quite often.

We always have an escape clause for our short sale sellers.  If you have your home listed for sale with us and have gotten a loan modification or have decided to file for bankruptcy instead, we have always let our sellers out without any penalty.  We truly want what is best for homeowners in trouble out there.  If a  Jacksonville short sale is what is best for your situation, we are happy to help you...if it's not, then we truly wish you the best.

We have let several sellers out of  listing agreements over the past few years because they were filing bankruptcy and their bankruptcy attorney told them they "might as well quit trying to short sale" because they were filing bankruptcy.  The bankruptcy attorney had explained to them that the house simply did not matter to them anymore because once they filed for bankruptcy  the home would become the bank's problem.

We have even seen a bankruptcy attorney talk a seller out of going to closing on a Jacksonville short sale with full approval at the last minute because he convinced her that she would be better off forgoing the short sale and filing bankruptcy instead.

THE ACT OF FILING FOR BANKRUPTCY DOES NOT TRANSFER LEGAL TITLE OUT OF YOUR NAME.

Some other event besides the bankruptcy itself has to occur before legal title to your home will be transferred to the bank.  Even if you file Chapter 7 and you included the home choosing to "surrender" the home in your bankruptcy, did you know the house still belongs to you after the bankruptcy discharge? The act of filing bankruptcy can eliminate the debt owed on the note.  That is it.  Your Florida home purchase also had a second component in addition to the note...the mortgage.  The mortgage is the instrument that secured the debt and allows the bank to foreclose.  The bankruptcy does not wipe out the mortgage, nor does a transfer from the borrower to the bank magically occur.  This has to be done as part of a separate action.

Until legal title transfers to the bank you still own the property even if you have had your debts discharged in a bankruptcy.  

• Had your HOA dues discharged and think you are off the hook? We have been told by a bankruptcy attorney that we recently spoke to about this issue that you are responsible for all HOA dues after the date of filing.
• Have dead grass? If they HOA decides to fine you, you will owe this.
• Weeds in the yard? HOA fines assessed to you after the date of filing as long as the legal title still bears your name are yours.  It doesn't matter if you were discharged and had agreed as a part of the bankruptcy filing to surrender your home.

Does this mean that you are liable for the $9,000 insurance policy they put on your home too?  Does this mean that if someone is walking across your yard and has a horrible accident that you are financially liable?  Does this mean that the bank can come after you to reimburse them for the taxes that they have paid on the property that were accrued AFTER the date of filing?  Is there any limit on your liability?

Are the Banks in a Hurry To Take Possession of Your Home?

You know in Florida we've started seeing the banks drag their feet on actually taking the home back even after obtaining a judgment of foreclosure.  Many times they will get the foreclosure judgment then fail to take the home back.  They do not want it back on their books.  They do not want to be liable for all of the expenses of the home.  The banks are usually in no hurry to take back a home these days.  What if you still have legal title to your Jacksonville home 6 months after your bankruptcy filing?  What if you still have it 8 months after?  What if you still have it a year after?  Two years?  What kind of financial damage will you incur?

Unless you somehow sign the deed over, the bank will have to continue and complete the foreclosure process to get back title to your home.

Think that by filing bankruptcy you are avoiding having a foreclosure on your credit report? 

Think again.  Foreclosures will prevent you from buying again for years longer  than a bankruptcy or a short sale.  Many people think that by filing the bankruptcy they avoid the foreclosure on their credit report.  However, details are now emerging from people who have been through it that are learning that this is not the case.  The foreclosure still seems to be showing up on your credit report.

Current Fannie underwriting guidelines regarding the waiting periods before you can buy again:

• Bankruptcy- 2-4 years depending on circumstances (4 unless extenuating circumstances, then 2)
• Foreclosure(non-extenuating circumstances) 5-7 years FROM COMPLETION DATE (!!!) OF THE FORECLOSURE (NOT THE BANKRUPTCY)  depending on downpayment, credit score and occupancy.
• Foreclosure(extenuating circumstances) 3-7 years FROM COMPLETION DATE (!!!) depending on downpayment, credit score and occupancy.
• Short Sale / Preforeclosure Sale/ Deed-in-lieu (extenuating circumstances) -Just updated by Fannie 5/10!!! 2 years with 10% down.
• Short Sale / Preforeclosure Sale/ Deed-in-lieu (non-extenuating circumstances) - Just updated by Fannie 5/10!!! 2 years with 20% down.

Please educate yourself before you let a bankruptcy attorney tell you all of your problems will be over if you just file.  If a bankruptcy attorney tells you that it is a bad idea for you to try to complete a Jacksonville short sale, please get a second option.  Please evaluate your options to transfer title back to the bank in less harmful ways than through a foreclosure.  Please protect yourself!

If you are interested in talking to us about a Jacksonville short sale, let us know.  We can give you a good, honest evaluation and even refer you to a Jacksonville short sale attorney and a foreclosure defense attorney as well to get legal advice.  Our Jacksonville short sale consultation request can be found here.  If we can not help you, we'll tell you that and try to point you in the direction of someone who can. 

Attorneys Now Have to Tell the Truth in Foreclosure Filings (and they are not happy about it)...What a Novel Idea. What Will This Mean to Jacksonville Foreclosures and Short Sales?

We've been working with Jacksonville short sales long enough for this news to come as both a shock...and not.  The shock comes from disbelief that this wasn't always a requirement. The Florida Supreme Court has issued a new mandate for Florida foreclosure filings.  It will be interesting to see if this changes anything now that someone is actually liable for knowingly filing fraudulent documents and statements in foreclosure cases.  We are not attorneys...we are just short sale specialists that try to help Jacksonville homeowners sell their home through a Jacksonville short sale.  We have seen so much and are not happy about the way foreclosures have been occurring.

In a nutshell, attorneys filing Florida foreclosure lawsuits have to tell the truth now or potentially get in trouble for lying.

Now, that may seem like an odd statement to someone who hasn't seen or read about some of the questionable things going on in Jacksonville foreclosure cases and foreclosure cases throughout the state of Florida.  But stick with me here...

The Florida Supreme Court has now mandated that those involved with filing Florida foreclosure cases now have to swear, under penalty of perjury, that the allegations and paperwork in a foreclosure case is all....wait for this....TRUE.  If you want to do a little heavy reading, this is a link to the document skip to page 13 if you just want to read this part.

Now if you are like me, you are wondering...ummmm...why haven't they always had to tell the truth?  But the foreclosure mills who file the majority of the foreclosure cases in Jacksonville and throughout the rest of Florida have been up in arms about this, with many foreclosures continuing to be filed without this.  Why are they fighting this requirement to swear under penalty of perjury that the facts alleged are true to the best of their knowledge and belief?  Here is a summary of their filings opposing this rule to the task force and the response by the task force to their briefs.

Isn't the writing on the wall?  Wouldn't your conclusion be that they KNOW that many (most???) of the cases they have been filing are questionable if not downright fraudulent?  Why would they react negatively to something that seems intuitive.  They SHOULD swear under penalty of perjury that what they are filing is true to the best of their knowledge.  So now they are going to be responsible, to some degree, for what they file.

Most Florida foreclosure cases seemed to be filed now with "lost note" affidavits.

  The lender filing the foreclosure is saying that they have simply lost the note or destroyed it so they can't produce the note and prove that they have it. Some filings say that they don't even have a copy of the note, much less the original.   Okay, so what's the problem?  Many times they don't really have it!  This begs the question...does someone else have it?  Did they ever have it?  Who is this money really owed to?

Florida Legal Services group outlines some of these practices in a letter that was sent to the Supreme Court of Florida Task Force on Residential Mortgage Foreclosure Cases.  You can read that letter here.

The Florida Bankers Association says that yes the notes were destroyed because it's "safer, more efficient and less expensive."

The Florida Bankers Association, in their protest to this new rule, admitted in their filing opposing the Task Forces recommendation of the Supreme Court rule that many of these documents were intentionally destroyed ("the physical document was intentionally eliminated") because they were "converted to electronic files almost immediately after the loan is closed."  They go on to explain that "individual loans, as electronic data, are compiled into portfolios which are transferred to the secondary market, frequently as mortgage-backed securities."  So tell me this.  How EASY is it to modify, or duplicate, or sell off yet retain an electronic document?  Why very easy, of course.  The reasons they quote for doing this is it is "safer, more efficient, and less expensive than maintaining the originals in hard copy."  How is this safer?  Anyone with a computer and the right software can alter an electronic document.  If they have destroyed the note, they can lift a signature off of the mortgage (the mortgage is publicly available to anyone sitting in their living room with internet access) and put it on the supposed note then claim that it is the note.  So many possibilities exist if the note only exists electronically.  An original, on the other hand, can be examined.  The signature can be verified.  It is tangible and provable.  Much harder to alter or counterfeit. 

And so I draw my parallel and other commentary....

Isn't this like me going to the bank, swearing to the teller that Bob, who has a certain bank account number, gave me a check for $1,000.  I lost the check or accidentally threw it away, but since Bob gave me the check...I'm still entitled to the money!  So they'd better give it to me.  Would THAT ever work?  Wait, I can fill out an affidavit swearing that I really did have the check and I'm the rightful owner of that check...I can show you my Quicken account where I recorded that I received it, I can show you he has sent me other checks in the past that I have cashed and you gave me the money for.   In a million years I would never walk out of that bank with the $1,000.  But what if I can show you my iPhone where I have an electronic record of this check.  I can show you my picture of this original check that I have since thrown away or destroyed.  I mean, WHY KEEP THE CHECK WHEN I HAVE A PICTURE OF IT ON MY iPHONE?  I keep all of the pictures of my checks on my iPhone...I can prove that.  I can show you my accounting records.  They still won't give me the money.  But the same bank can take your HOUSE using this procedure.

Note and mortgage not PROPERLY endorsed and assigned?  DON'T WORRY!  They will just PAY SOMEONE TO DO THAT!  (Notice we just did away with the word properly?  Who needs THAT?)

Sometimes the bank will "find" the note but it's not endorsed.  Supposed assignments have not been recorded.  But that's okay...they have a solution for that...they have companies whose job it is to handle all of the endorsements/ assignments on the mortgage and note to show that this is the entity that legally entitled to foreclose.  Don't believe me?  Look here!  Here is one Reuter's article on one such company.  Here is a summary of the Florida AGs investigation of this same company.  Mortgage never assigned, note never endorsed?  NO problem.  There's a Florida judge for that.  Mortgage assigned and recorded years after being put into a securitized trust?  No problem, there's a Florida judge for that too!  Mortgage assigned as an afterthought when they are already well into the foreclosure process?  Why don't be alarmed...don't you know there's a Florida judge for that?  Notice I'm not mentioning the note...ummm...oh yeah...the note...well we can't find it...Surprise, surprise, there IS a Florida judge for that!

Another parallel...that $1,000 check again...

This is like you giving me a check  for $1,000 that Bob gave Mary.  It's made out to Mary, but Mary gave it to Sue.  Sue gave it to Jack.  Jack gave it to John.  John gave it to you.  You gave it to me.  Okay, so can I take Bob's check to Mary to the bank and get $1,000 with it?  Of course not!!!!  But if I was a bank, and this were a note on a house,  I could just send it to a company who could magically sign for Mary, Sue, Jack, John and you making this check all of the sudden cashable. 

This is not fiction.  They are taking people's homes this way.

So why have banks and other lienholders been getting away with this in Jacksonville foreclosures?  I can't get money from someone else's bank account with a "lost check" affidavit...how can they take someone's HOUSE with a lost note affidavit?  Not sure, but they've been doing it.  Many Jacksonville foreclosures, and foreclosures around the state have been completed in this manner. 

Can someone please jump on this and run with it?  Please?  Can the real story be told?

Why aren't more people angry about this?  Why isn't the press outraged?  The sad fact is most people don't care until it happens to them or someone they love.  Well guess what?  You should care!  It's wrecking your community and your property value.  And if you run into unfortunate circumstances down the road, you may find it impossible to sell your own home because of everyone who this has happened to in the past.

Myths and Realities: What Every Jacksonville Short Sale Buyer Needs to Know...(But Doesn't Even Know They Need to Know Because How Could They?) Buyers and Short Sales 4-1-1.

There are things that every buyer considering buying a Jacksonville short sale needs to know.  Unfortunately, they don't know, because they never asked.  They never asked because how in the world would they ever know they NEEDED to ask?  We encounter this regularly when we are working with our Jacksonville short sale listings.  So many times situations arise that are very typical.  We can address many of these issues up front before a buyer ever undertakes the purchase of a Jacksonville short sale.

This is some handy stuff you need to know if you are thinking about buying a short sale.  It is not too late to read this if you are buying one, however, you may have to adjust a few expectations....

Myths and Reality surrounding Jacksonville short sales:

Myth #1)  Short Sales are short. 

Nope.  Wrong.  Next?

Myth #2)  We gave the bank ____  days (30 days, 45, 60 days, 90 days, fill in the blank) to respond to our Jacksonville short sale offer.  We will find out by then whether our short sale has been approved and whether or not we'll get the house.

The real estate contract is between you and the seller.  You and the seller agreed on that many days for a short sale contingency.  Right, wrong or dumb...it is irrelevent to the bank what number is on that line.  It will neither speed them up or slow them down.  They don't care.

Myth #3)  We wrote a closing date of ________ into the sales contract.  We plan on closing on that date not a minute sooner (or later).

Another misconception.  That date is put into the sales contract because it is the date that the buyer and seller agree that they are willing to close the Jacksonville short sale by.  Remember, this real estate sales contract is between the buyer and the seller.  The bank is NOT A PARTY TO YOUR REAL ESTATE SALES CONTRACT.  However, (!!!) the closing can not and will not take place without the bank approving and releasing the lien.  If they don't say the home can be sold short, it can not.  Bottom line.  They will create their own terms and conditions regardless of what is in the sales contract.  A short sale buyer needs to be aware of this from the beginning to prevent any problems later (ie the buyers not understanding that they don't get to call the shots)...like it or not...the seller's lienholder is the "Official Boss of All Things Short Sale".  If you are a buyer and not willing to accept the changes that the seller's lienholder will likely mandate in the future...DON'T EVEN PUT DOWN A CONTRACT.  Understand the likely changes from the beginning and just be ready when they finally wave their "magic approval wand."

Myth #4)  The bank is taking so long, well we'll just threaten to walk!  That will teach them a lesson.

Umm....wrong again.  They simply don't care.  Do you know how many times they hear this?  Do you know every time they hear this, they don't care even more?  The bank negotiators are simply employees.  It's not their money.  It's not their house.  The way they see it, it's not their problem.  "Walk" they say.  "We have plenty more where that came from."  They have 432 other files on their desk.  There's nothing they would like more than to get one more off of their desk without any work on their part.  Experienced short sale specialists know this.  If you are not willing to wait on the house, do not put down a contract.  If you are really not willing to wait more than 30 or 60 or 90 days for an answer...seriously...don't wait one day.  Go buy something else instead.  Remember...putting in an offer on a short sale should not be done if you are not patient and willing to accept and comply with the demands of the bank.  This may mean you might wait six months for an answer then they give you thirty days to close. 

Myth #5)  The seller agreed to pay for the _________  (survey, tax service fee, repairs, recarpeting the ceiling, etc, fill in the blank) so the bank can't just change that.

Yes they can and they probably will.  Do you have to "comply"?  Nope, not if it is different from what was in the sale contract.  Do you have to comply if you WANT THE HOUSE?  Yes.  So accept it now.  Don't get mad, just know it's coming.  No this isn't your fault, but it isn't the seller's fault either.  It just is.  As I mentioned, if you are not willing to wait and then to inevitably bend on getting everything that was previously agreed on...don't put in a contract on a home that requires lienholder approval.  (ie don't try to buy a Jacksonville short sale)

Myth #6)  If the listing agent was doing their job we would have approval by now.  We will just harass them so they can harass the bank negotiator and speed this thing up.

BIG misconception.  First, if you are harassing the listing agent they can not be working the short sale files because they are babysitting you.  Any good short sale specialist can tell you the process varies greatly from bank to bank and can even widely vary from negotiator to negotiator within the same bank.  Where a good negotiator at Bank A might yield you an approval in two months....a poor one might take four months.  Every good short sale specialist can also tell you that harassing the bank negotiator is never the best course of action.  While we don't hesitate to call the bank customer service department or short sale department as often as necessary even if that ends up being multiple times a day for some reason...we also will NOT call the negotiator frequently without a good reason.  The surest, fastest way to have your short sale file denied is to tick off the negotiator.  You don't do it.  The negotiator has enough to do without fielding "are we there yet" calls all day from a hundred agents.  Remember, we want them to do their job...not be distracted from it.  Communicating with the negotiator is a fine art.  The particularly problematic part is you never know how much communication is too much for that particular negotiator unless you really blow it...then you know beyond a shadow of a doubt that it was too much.  That comes in the form of a negotiator "love letter" that brings you a short sale denial.  (Ask us how we know...we only make the same mistake once. )

Special note:  No, I do not really believe that there is an "Official Boss of All Things Short Sale" nor do I believe that there really is a "magic approval wand" (but if there was, don't think I wouldn't go to the ends of the earth to find it) nor do I ever recommend carpeting the ceiling...much less recarpeting it...   I'm simply being facetious...or am I....  :-)

Working With Agents Who Understand Jacksonville Short Sales and the Short Sale Process.

We have quite a few agents in the Jacksonville Real Estate market now that have a working understanding (even a superb understanding) of the Jacksonville short sale process.  Unfortunately, there are far more who are not knowledgeable about this difficult, complex transaction type.

Jacksonville short sales are almost nothing like a normal resale.  Once the market turned and the need for short sales started emerging we went right away in search of detailed education on this complex issue.  We learned the nuts and bolts of the short sale deal from those who had been closing this type of intricate deal for years due to the location of their real estate market (a state where sales were usually flat or very, very low appreciation).

Over the next couple of years we saw different designations start to emerge.  Then we were very excited when other agents seemed to be getting training to work these deals correctly.

Whether you are a buyer or seller of Jacksonville real estate it is very important that you are working with someone who is knowledgeable in short sales if you plan to look at any short sales at all.  (And if you are not looking at short sales, you should seriously consider that option if you want to get a great deal in the Jacksonville real estate market.)

Case in point....this is a real life example (and we have many) of what can happen when the buyer's agent doesn't thoroughly understand the short sale process.

• Closing date agreed to in the contract. This is the desire of the buyer to close on this date.
• Language added in the sale contract specifies that if the seller's lienholder requires a different closing date, that the buyer will close on the deal by the date required by the seller's lienholder as a condition of the approval.
• Explanation given to the buyer's agent on this issue, explaining that the seller's lienholder will sometimes require an earlier closing and that it may even be as early as 30 days after our approval. An exact quote given when the contract was returned with the change regarding the potential moving of the closing date was "The seller is okay with the closing 45 days after approval but we also wanted to make note that if the lienholder requires closing within 30 days (which is very common) that the buyer will be willing to close in 30 days instead of the 45 mentioned in the short sale addendum. You really never know with these banks."
• Everything submitted to the seller's lienholder with the date specified in the contract including the contract, all correspondence and the preliminary HUD-1.  Negotiatior comes back and says that she is only giving us 45 days and we have to move the date to the new date as a condition of the approval.  Otherwise no approval will be issued for the short sale.
• Approval letter was issued. Lienholder required a closing earlier than the one specified in the contract as a condition of approval. Date was, coincidentally, 45 days out which is what is specified in the short sale addendum as the number of days from lienholder approval to closing (in a different place than where the specific closing date was listed. )
• Buyer's agent comes back and tells us that they will not close on that date, that they will not close until the date they agreed to in the contract and we'd better get it changed (Argument being they are just following the contract). Totally ignoring the fact that they agreed in the contract to move up the closing if a different deadline was imposed by the seller's lienholder even after this was pointed out.

This is an example of the real life problems that emerge when the agents for the buyer do not understand the short sale process.  A very important role for a buyer's agent is to explain, in detail, to the buyers before having the contract signed what the process entails.  This can not be done with the buyer's agent does not understand the process.  Buyer education is crucial.  Can an uneducated buyer successfully complete a short sale, sure...but the odds are far less. 

The lack of buyer education when purchasing a short sale is the primary reason that such a small number is quoted for successful short sales.  I often see the ratio of successful short sales overall quoted in the 20% to 30% range.  Our short sale  success rate is far higher than this.  Part of the equation for us has always been that we are willing and able to spend as much time as necessary to educate the buyer's agent on the other side about the process so the buyer can be properly educated from the beginnng.  This can avoid many problems (like the one summarized above).  However, if the buyer is not educated, despite sharing information with the buyer's agent...you just have to scratch your head and wonder why you are having problems like this when you clearly explained the issue at the point that it was just a short sale offer...not a contract.

I have a great deal of appreciation and respect for my fellow agents who have either taken the time (and money!) to educate themselves about the Jacksonville short sale process.  I also respect and appreciate those agents who will openly admit that they do not know and are willing to learn.  I also respect those that refuse to touch a short sell buyer or short sale seller because they do not understand short sales and do not want to.  It's the ones in the middle that cause nightmares and really can create a set of circumstances that can force a seller who has done everything right into a situation where they have lost their buyer and do not have time to get another buyer before a foreclosure sale.

If you are in a situation to either sell a Jacksonville short sale property or buy a Jacksonville short sale property, get an agent who knows and understands the process of short sales.  If it is us, great.  If it is someone else, that's great too.  Just make sure the education and knowledge is there.  Selling Jacksonville short sales is not the same transaction type that most agents are used to, and comfortable with, and different rules definitely do apply.

New Bartram Springs Short Sale Listing! A Great Home for Sale in Bartram Springs in Mandarin!

UPDATE:  This great home went under contract only three weeks after we listed this Bartram Springs short sale.  The home had multiple offers that were submitted.  If you have a home in Bartram Springs that you need to sell, call us if you would like to talk about your short sale options.  We are an experienced team that specializes in  Jacksonville short sales and we can give you an honest evaluation of your options and how much your home may be worth.  If you owe more than your home is worth and can't afford to keep it anymore, you may be able to sell your home for less than what you owe and have the bank pay all of your closing costs!!!

Bartram Springs is a beautiful development in the Mandarin area of Jacksonville, Florida.  This development is only a few years old and has excellent amenities including a beautiful amenity center.

Because of the time Bartram Springs was built, this is a Jacksonville subdivision that is currently presenting excellent opportunities for buyers.  Bartram Springs Short Sales and Bartram Springs foreclosures are both available to buyers who are willing to jump in and act fast.  Our listings in Bartram Springs never last long and the reason why is evident once you visit a few homes in this community.  The homes are built with modern features and conveniences that buyers crave at the prices they can afford.

Our new listing is on Millhopper Road.  It is a roomy four bedroom, two bath home with just over 2,400 square feet (square footage taken from the Duval County tax record).  This beautiful home sits on a large, wooded preserve lot.  The home has a three car garage, PERFECT for your extra storage needs.

In addition to the four bedrooms, this home has an office that provides an option for extra space.  The master suite is spacious.  The home has walk-in closets, ceramic tile, decorator touches and more!  Tall ceilings make the home even more spacious.

The kitchen has plenty of tall cabinets and a breakfast nook is located just off of the kitchen and family room making it a great gathering area that is perfect for entertaining.

The home is attractively priced at $200,000 and definitely won't last long.  Call us, your Bartram Springs real estate specialists, today to see this home, and other fabulous homes in Bartram Springs that are for sale.

For Jacksonville home buyers interested in Bartram Springs real estate, click here for other fabulous Bartram Springs short sale listings.  For everything that is available for sale in Bartram Springs, you can click here to search the listings that are in the Jacksonville MLS for Bartram Springs.

Jacksonville Short Sale Closing: Bartram Springs Short Sale and Bank of America Short Sale Approval Letter

We just closed on a Bartram Springs short sale today.  The bank agreed to release the lien and allow the Jacksonville short sale to take place at a loss to them of approximately $100,000!!!  The seller did not have to bring a dime to the closing table.

The sellers were extremely happy and relieved that they were able to sell their home when they owed far more than their home was worth.

If you have a home in Bartram Springs that you can no longer afford, there are options other than foreclosure!  When you short sale your Bartram Springs home, you are able to sell for less than what your home is worth and avoid the devastation of foreclosure.  In addition, your credit can recover faster with a short sale than with a foreclosure and you can buy a new home faster with today's underwriting guidelines.

Click here to see the approval letter on this Bartram Springs Short Sale issued by Bank of America:  Bartram Springs Short Sale approval letter - Bank of America Short Sale Approval Letter

Bartram Springs short sale approval with Bank of America

We just received another Jacksonville short sale approval! 

• Borrower status: They were already far into the foreclosure process and a judgment of default had already been entered when we started helping them with their Bartram Springs short sale listing.
• Amount paid for the home in Bartram Springs: $255,000 in 2007.
• Contract price: $181,000 (price approved by Bank of America with no counteroffers being made.)
• Bank accepted payoff amount: approx 70% of payoff balance
• Seller contribution required: $$$ None $$$
• Promissory Note required by BOA: $$$ None $$$
• Amount of closing costs paid by seller: $$$ None $$$, everything paid by bank
• Mortgage Servicer: Bank of America
• Noteholder: Fannie Mae
• Days on Jacksonville real estate market before first offer: ONE
• Number of offers received on the Bartram Springs home: 3
• How this seller found us: We were contacted by a fellow Jacksonville real estate agent who was a family member. She did not have an expertise in Jacksonville short sales and knew that she should refer them to someone who did.

Our Jacksonville real estate team is helping this couple get out from under their home that they can no longer afford when their only remaining option was foreclosure.  They had experienced a severe income reduction after purchasing the home.  Although a foreclosure default judgment had already been issued against them prior to us listing the property, we were able to postpone the Duval County foreclosure sale and help them get a Jacksonville short sale approval for the fair market value of the price. 

The Bartram Springs seller will now be able to get out without bringing any money to the table.  This will help them get back on their feet and begin to recover financially.  In addition, this will save them from having a foreclosure on their credit report, something that would have followed them for years.  With current loan underwriting guidelines you can purchase another home faster with a short sale on your record.  That is because when you short sale this is recorded on your credit report as some variation of "settled for less than amount owed" instead of the incredibly damaging foreclosure notation.

A Florida Foreclosure Story involving Suntrust Mortgage and an Unknown Noteholder...A Tangled Web and Failure to Mitigate Loss.

“Oh what a tangled web we weave, When first we practice to deceive”--Sir Walter Scott

When you got a mortgage did you believe the company who you signed a mortgage note to was the one you were going to owe the money to?  I think that most Floridians, and most Americans did.  Did you ever anticipate that because of the original noteholder selling off your note that was signed with your mortgage paperwork you would be unwittingly placed in a situation that would become impossible to get out of?  Did it ever occur to you that your loan might be split into a million little pieces and sold to a lot of people.  This is a real story of one seller's experience with their mortgage and a bank's refusal to work with the seller to mitigate their losses.

This is a story about a homeowner who did not buy more than they could afford.  However, six months after their purchase the seller experienced a dramatic decrease in income.  Caught up in circumstances they couldn't escape from they tried to downsize their expenses.  They worked as hard as they could to replace the income, but could not find a way to replace the income.  Because the economy had taken a nosedive as had Florida real estate...they could not even sell assets for what they owed on them.  They desperately wanted to reduce their expenses and stay current on everything, and they were able to for a little while...but their hole got deeper and deeper.  As they desperately tried to reduce their expenses...they found that they were less and less able to because of the devastating drop in real estate values caused by other foreclosures.

They appealed to Suntrust mortgage for a loan modification. 

After treading water for a couple of years and working 80 hours a week, they slipped underwater.  They could not do it anymore.  They were, figuratively speaking, at the end of the line.

Suntrust repeatedly told them that they could NOT help them until they went late on their mortgage.  Yes.  They were told repeatedly by Suntrust customer service to quit making their payments so they could get a modification.

Once they stopped paying, for months they were told that they made too little money for a modification. 

Once their income increased slightly a modification was quickly given on the second mortgage.  However, this modification did not reduce the amount that they owed every month...it simply switched them to a lower interest rate and took it from an adjustable interest rate to a fixed rate.  They signed the modification because they felt certain that the first would be modified as well.  Their income had picked up some, although not to the levels it had been when they purchased the home.  They started paying on the second mortgage again.  They had no reason to believe that Suntrust would not modify their second.

The foreclosure paperwork came.  Suntrust had filed a lis pendens and started the process of foreclosure on the first mortgage.  Pregnant with their fourth child, they became fearful that their small kids were going to end up homeless.  They started calling Suntrust more often.  Suntrust was just sitting on their file.  They had been told months prior that it had been assigned to the negotiator, but they were not allowed to speak with the negotiator, nor would the negotiator call them back despite repeated messages being sent.  Months had rolled by with no resolution on the first mortgage after being told by Suntrust to quit making the payments, and doing everything Suntrust asked for the modification, and the lawsuit came.

In the foreclosure lawsuit, Suntrust represented to the court in St Johns County that they owned the note.  Suntrust also represented to the court that they lost the note but were trying to get a copy of it.  Suntrust represented to the court that they had NOT transferred the note.

A Qualified Written Request (QWR) was sent to Suntrust for both mortgages to try to figure out what had transpired since the note was signed.  Suntrust, although required by law to respond,  failed to respond and provide this information.

Months passed with Suntrust continuing to claim that they owned the note.  The owners continued to call Suntrust to check on the status of their loan modification.  At some point Suntrust mentioned that it was taking so long because they were having to take it to Wells Fargo.  That was news to these owners...especially since Suntrust was continuing to represent to the court that they owned the note and had not transferred it.

Suntrust was apparently lying to the court about their ownership of the note that they could not find.

Eventually a court filing had what appeared to be a copy of the note.  Coincidentally it was only endorsed one time TO SUNTRUST (even though the note was issued to them in the beginning.) Not to a third party.  Furthermore the endorsement appeared to be an endorsement of a copy instead of the original note due to the difference in the quality of the print.

A year after making their last payment the sellers, in desperation to find a normal life again for their kids, filed for bankruptcy knowing that was the only option left to get out of the hole.  They were told by the bankruptcy attorney that they would only have 30-60 days to vacate the home. 

Tearfully they packed up their four kids and left the house for the last time.  The little ones did not understand why they were leaving their house that they loved.  The kids' rooms had been painted and decorated in their kids favorite colors.  They had been marking their kids height on the laundry room door with dates since they had moved their family into this home.  This was where they regularly came to see just how big the little ones had gotten.  These memories and mementos of the first years of their children had been left forever, unable to go with them.  As is common in this type of situation, toys and books had to stay behind that could not fit on the moving truck.  Images of lives torn apart remain.

This was supposed to be their "live in forever" home.  But life happened and their hopes and dreams were torn away.

After the bankruptcy, the owners were dismayed to discover that in their latest document filing, Suntrust stated that they were the servicer (not that they were the owner).  

The true identity of the owner of the note remains secret.  The whereabouts of the note are still unknown.  Suntrust continues to press forward with the foreclosure although they are not the owner of the note, as they repeatedly represented to the court, and no one knows where the note is.  The person with the note has the right to collect.  It is probable that the note was sold off in a pool of securities so there could be thousands of owners of pieces of the note.  But this information has been hidden from the owners, and the court system.

This is probably why a modification never happened that would have allowed this family to stay in their home.  It appears that Suntrust has not complied with the law.  Suntrust appears to have lied to the court.  A judge will probably still sign off on the foreclosure despite all of this.

When this home is eventually sold, either through a REO or a short sale, for 50% of the purchase price of the home...who wins?  Not the note holder.  The loan could have been modified and they could have still recouped their money.  Not the owner.  They would have loved to keep their family in their home but could not get a modification or a straight story on who even had the note.  The emotional devastation they have experienced will be with them for the rest of their lives.  Not the children who were uprooted from their lives and friends.  Not the neighbors.  They will experience further erosion to their home values because of this home which will likely be sold below fair market value. 

The buyer will win.  They will get a beautiful home at a rock-bottom price.  The servicer, Suntrust, may win.  They were, after all, able to:

• Write the loan and make money on the front end.
• Sell the loan and possibly make money.
• They probably had insurance policie(s) on the loan, so someone may be collecting premiums.  Not sure if that is Suntrust or the mysterious noteholder or both.
• If they are allowed to handle the property after it goes back to the bank they will make more money on that end as they manage the REO process.

The fact is that, in this volatile real estate market, foreclosure rarely makes good financial sense for the person who owns the note.  So why is this outcome so common?  Why isn't there more mitigation of their losses going on?

What if a year, or more, ago the note had been modified.  This seller resumed making payments on the home at a level they could afford with their reduced income that occurred after the purchase of the home.  A modification would still have net the noteholder FAR more money than they will eventually get and saved the expense of foreclosure.

The house still sits empty six months later and is still in the name of the owners although they do not legally owe any money for the home.  Upon questioning the bankruptcy attorney, they were told that bankruptcy code says that HOA dues incurred after the bankruptcy is filed still has to be paid by the owners.  All along they were told by the bankruptcy attorney that they didn't "care" what happened to the home.  Now they see many reasons that they should care.  They have decided to try to short sale the home.

Unfortunately, this is not an isolated story.  This is not the only bank that does this in the regular course of business these days.  Foreclosure is utter, complete devastation in the lives of many. 

Do not be so quick to blame.  These sellers, like most we see in this situation, could NOT sell their home for what was owed on it or they could have quickly gotten out of this situation and it would not have led to financial and emotional ruin.  In a normal real estate market this would not have ended up at this point.  The sellers would have sold their home and downsized to something more affordable for their new income. 

These sellers purchased a home they could afford during a better time of their lives and could not have anticipated the permanent reduction of income they experienced.  When your neighbor forecloses...it still has huge consequences on you.  Believe it!  As the value of homes decrease, it raises your chances of stepping into the exact same shoes of this seller.  All it takes is one unexpected event and your world can crash around you and pull you down, down until there is no escape.

Served with a Lis Pendens or Foreclosure lawsuit on your Jacksonville real estate? Please don't just do nothing!

I am not an attorney and I am not giving legal advice.  I AM giving you real estate advice to seek legal advice. 

Our team does help a lot of people in this type of situation with a short sale.  We help by helping homeowners sell their home for less than they owe on their home. 

You have to be careful.  There are many out there who are trying to feed off of people in an unfortunate situation with their home.

When you are served your initial reaction is probably to crawl into a hole and hide.  Most people we have talked to have frozen up and failed to do anything.  Please don't do this!

You have a few options.  Please explore them, research them and do what is right for you.

Here are a few of the options you can explore:

• CALL A REAL ESTATE ATTORNEY WHO SPECIALIZES IN FIGHTING JACKSONVILLE FORECLOSURES.  That is the first option.  Many of these attorneys give free initial consultations.  The key is to talk to someone who specializes in this. You will get an entirely different answer if you talk to a bankruptcy attorney vs. a foreclosure defense attorney.

• Try to get a loan modification with your lender.  Once there is a lawsuit in progress and the lender is suing you for foreclosure, it is a good idea to have a foreclosure defense attorney involved.  The bank will not stop the foreclosure just because you are trying to get a modification.

• BE AWARE there are people out there who will try to get you to sign over title to your house to them and will make you promises about what they are going to do for you.  Do not fall victim to this scam.

• Consider selling your home in a Jacksonville short sale.  Talk to a real estate professional who knows how to do a Jacksonville short sale correctly.  This is a very complex real estate transaction.  It is not easy and should not be trusted to just anyone.  The bank will not stop the foreclosure process just because you are attempting to short sale your Jacksonville property.  That is another reason that speed and expertise is crucial! Be aware that depending on the bank involved or the number of mortgages and other liens your situation can be far more complicated than average.

Understand how have a foreclosure vs. a short sale on your credit report will matter to you in the years to come.  While they stay on your credit report for a specific amount of time, current lending standards make recovering from a short sale easier and faster than recovering from a foreclosure.  If someone tells you it doesn't matter to you, seek alternate advice because there is definitely a difference.  Do your own research, educate yourself.

Whatever you do, don't just do nothing. 

Strategic Defaults. Would You Walk Away From Your Jacksonville Real Estate?

The topic of strategic defaults has become a widely talked about idea. A strategic default is when you walk away from your real estate by giving your home back to the bank. 

I wanted to cover this because it has become widely talked about.  I'm neither condoning or condemning it.  I will never advise or encourage someone to do this nor will I be judgmental of someone who has. 

If you are considering this you should seek competent legal advice and financial advice, I am giving neither.  You should never make the decision based solely on advice from a real estate agent who advises you to do this so they can attempt to short sale your property.

Why would anyone make the decision to strategically default on their mortgage obligation? 

Well, what if it makes sound financial sense?

For example:

John purchased a home at the height of the market in 2006.  He paid $500,000 for his home.  (No he did not buy more than he could afford and was not stretching beyond his means, so lay that popular misconception aside.)  Today his home is worth around $250,000 because of a few recent Jacksonville distressed property sales in that area.  Once foreclosures start to hit neighborhoods the values begin to rapidly deteriorate since the practice is to under price Jacksonville foreclosures.

John still has a good job, he is not in eminent danger of being late on his home.  In short, he can afford to keep his home.  John also realizes that it might take years for his home to recover in value.  What happens if he loses his job in five years and needs to sell his house?  He doubts that he will be able to.  What about 7 years down the road?  Ten? What if he needs to downsize to retire and can not sell his home.  Will he be able to maintain his payments at that point?  Will his value have recovered so he can sell?   John realizes that if he walks away now, he could begin to recover financially as opposed to waiting for years for the ball to drop.  John starts to seriously consider turning in the keys as part of a financial strategy to move forward rather than stay in a hole that can possibly cause future financial ruin.

To make matters more interesting, due to the drop in commercial real estate values...developers, businesses and even BANKS have begun to make strategic default decisions on commercial property!  This practice is not usually judged harshly by the public, so why the double standard?  Why are so many willing to accept this practice in business as being a sound financial decision?  Why aren't homeowners entitled to make similar financial decisions?  Business decisions for the future of their family's welfare?

I'll say it again.  Banks made the decision to loan the money...the homeowners did not loan the money to themselves.  Banks knew the web that had been built through mortgage securitization...the homeowner could not even begin to grasp the tangled web that they were flying into.  The banks knew the decisions they were making were less than prudent...yet it allowed them to make a profit.  So they did it for as long as they could get away with it. 

The little homeowners (think fly in a web)? They just wanted a home for their family.  They didn't know, or care, about the complexities of the house of cards that the banks had carefully built.  They had no idea that once it was stacked to a certain height that house of cards would begin to crumble.

If this is something you are considering please seek competent legal and financial advice and understand the future ramifications of this decision.  And remember, no one can predict the future.  No one can know that today's decisions will appear to be sound a few years down the road.

Second Lienholders and the Short Sale. A Big and Enduring Problem for Jacksonville Short Sales.

What are second lienholders doing?

Just when first lienholders had gotten very good about agreeing to give them 1,000-5,000 at closing without a big hassle, the second lienholders changed the game. 

The fact that the first  lienholder is willing to give the second lienholder a token amount although they will not be entitled to anything at closing?

That isn't good enough for many second lienholders today.  They want more.

The biggest challenge we see in our Jacksonville short sales is the demands of a second lienholder.

Many times they are sneaky!  We have seen second lienholders change the demand amount daily.  Sometimes they will give you a number, then when you find a way to make it happen the number changes.  It is not unusual for them to refuse to put it in writing.  They are even known to suggest payments off HUD when the first disallows them getting a large cash payment.  The tricks seem to be endless when it comes to seconds these days.

We have seen sellers end up with a foreclosure or bankruptcy because of the second lienholder not being willing to take a small amount that the first lienholder agreed to give.  THIS SHOULD NEVER HAPPEN.

In my most recent case USAA is demanding 75% of the balance of the second note at closing.  This is when they are only underwater around $50,000 and the first lienholder is underwater $100,000.   We will challenge this number and try to arrive at a workable solution for the seller and both lienholders.  Without doubt, this 75% demand is only workable for one of the three parties.

• So what are second lienholders up to?
• Do they have insurance that will pay them more upon a foreclosure than if they accept a small short sale payoff? 
• Are they really just making decisions that appear to be this poor?
• Do the investors and shareholders of these banks and loans prefer to make 3,000 on a bad loan...or NOTHING at foreclosure? 
• Are they really MAKING MONEY at foreclosure although they are not receiving any of the proceeds? 

The real estate business is hard.  Short sales are hard.  But we chose to do them as Jacksonville short sale specialists because we see that as a place where we can really make the difference in the lives of people that desperately need help. 

Jacksonville Home Sellers...The Real Estate Market Doesn't Care That You Need a Certain Amount for Your Home (Although We Wish it Did!!!)

One thing you can always count on when you consult us on selling your Jacksonville home is the truth.  We will be honest about the value of your home even though it may hurt both you and us.  That is because the truth just "is" and anything other than that will be found out.

This topic has been on my mind for a couple of weeks but I wanted to talk about it in the right way so I've been thinking it over.  It's a sensitive topic but crucial to understand.  If you bought your Jacksonville home when it was worth more than it is now this is likely something that causes you a lot of anxiety, lost sleep and even pain.  We understand!  This is amplified when you reach a point where you can no longer maintain payments on the home that has dropped significantly in value.  Sometimes this is caused by job loss or income reduction.  Sometimes it's caused by other life events that can make a homeowner need to downsize their monthly obligations.  It's a hard situation to handle emotionally and financially...no matter what the cause.

Last summer we had an unfortunate Jacksonville home seller contact us about short selling their home.  We had great sympathy for this seller as we do all sellers in this position.  We ran comps of their home and determined that the price should start in the low 200s.  Because we had recently sold other homes around it, we also knew that there was an appraisal problem in the area.  So we were not confident it would even appraise at $200,000.  Because so few homes had sold recently in the area and there was an oversupply on the market some recent foreclosures had moved the price down dramatically in the area.

It is very rare that we do not have a Jacksonville short sale under contract in the first month on the market.  That is because we know how to price homes at market value that should be the next home in the neighborhood or area to sell.  Homeowners that are no longer making mortgage payments do not have time to waste while their home languishes on the market.

At the same time we will not underprice your home because that is not doing anyone any good either.  The bank will not approve your underpriced Jacksonville short sale!  The contract price has to be "right" for both the seller's lienholder and the buyer's bank for the deal to come together.

We took this listing then almost immediately heard from the seller that they were pursing "other marketing options."  We wished them the best and terminated all work on the home.  I didn't think anything else about it, but ran across this same home recently while I was searching for a buyer.

They had found another agent who listed the home at around $500,000.  We don't know what transpired to list the home at this price.  We don't know if the seller was led to believe that we were nuts and the home was really worth far more than we told the seller.  We only know we would not have listed the home for such an outrageous amount since it was more than double the market value. We will not take a listing that is not priced at a level that we can successfully sell it at.  The home has been on the market for around two and a half months now and the price has already been dropped by $200,000.  Our guess is that it needs to drop by another $100,000 at this point to even get a contract on the home.

Who does this help?  Not the unfortunate seller (very nice person, I might add!) who may or may not believe their home could be sold at this high price and has had to endure significant price drops from the initial list price in a short period of time.  The seller  is also headed closer to foreclosure every day if they are not making mortgage payments.  The agent who is spinning their wheels did not gain anything by overpricing the listing.  

If you are in the position where you can no longer maintain payments on your home and need to downsize your monthly payments we have to ask, "Do you want to "list" your Jacksonville real estate or do you want to "sell" your Jacksonville real estate?" We are Jacksonville short sale specialists.   Call us if you want to sell.

Where does it stop? The bank created (and fueled) housing mess. A simplified explanation of the short sale and foreclosure cycle in the Jacksonville real estate market.

• Banks taking people's houses in Jacksonville...then selling them for less than they would have made in a short sale when there was a ratified short sale contract with a ready, willing and able buyer?  Yes.

• Banks putting foreclosures on the market well below what others have sold for?  Yes.

• Banks putting foreclosures on the market well below what the competition is listed for sale at?  Yes.

• Banks making decisions clearly not in the best interest of their investors?  Yes.
  

Where did this fiasco all start?  Banks.  In the past couple of years it has come out that they gave all kinds of loans that never should have been given. (and we're not just talking about subprime which got much of the blame) Why?  Because the banks had no intention of ever keeping the loans.  They knew they were going to sell them and would not be holding the bag if and when the defaults started.  It was never about them making good loans or bad loans...it was simply about making money.

Why did we experience dramatic increases, then decreases, in the value of our homes?  The artificial appreciation caused by the banks giving loans when loans should not have been given, all because they were going to make a quick buck by originating and flipping the loan.  Had this money not been available due to relatively new practice of securitization...prices could never have run up like they did.

Once foreclosures started, the market tanked further with each and every foreclosure.  This led to sellers being unable to sell their homes if they lost their job, or had other life changing events, or even just needed to decrease their monthly expenses.

We are seeing the banks put new foreclosures on the market below fair market value.  Constantly.

This insanity leads to further deterioration in home values. 

The next listing that comes on the market will have to be priced even lower, since the comps were brought lower by a new foreclosure.  No buyer is willing to overpay in this market.  Even if the seller could get a contract for higher, it is likely it would fall out because the appraisal (ordered by the buyer's bank) will not come in at the contract price and the buyer's bank will simply not lend the money for the purchase.   This causes the market value to go down and down and down.  So when the next guy (or gal) loses a job the price they can sell their home for is even lower and the chances that they will have to sell their home through a short sale (or face eventual foreclosure) will increase. 

And so the cycle goes...

The cycle was started by the banks.

The cycle is being fueled by the banks.

The cycle can only be broken by the banks.

At the same time the banks who created this disaster for homeowners everywhere are being bailed out. Many homeowners are losing everything.  And these are NOT irresponsible homeowners.  Bailout funds and loss sharing agreements have empowered the banks to make more poor decisions.  The homeowners continue to be trapped in the insanity of the institutions that have been labeled as too big too fail, but are really just too big to function with any degree of reason.

"There are no other offers on the property so the short sale should go really fast." The sign of an inexperienced Jacksonville short sale agent.

One of our buyers called on a for sale sign she saw while driving around in a Northwest St Johns County neighborhood that she liked.  Our awesome buyer called us very excited after talking to the agent about her listing.  The other agent had told her that there were no other offers on the property so the process should go fast.

We are experienced in Jacksonville short sales and this made no sense.  Being very curious, I started jumping into the public records to research the situation.  After ten minutes I knew that this short sale would be anything but fast, if it was successful at all.

The lien holder is a lender that is notorious for sitting on files for months and months and then sitting on them a little longer.  This particular lender sometimes still does not have a file assigned to a negotiator six months after submission.  This particular buyer needed to be in a property within a a month making a short sale property a very poor option.

Thankfully, the buyer ended up finding other homes that they liked far better that actually met their needs better.  This helped avoid a situation in which we would have had to discredit the other agent...something that we feel like we should never have to do and definitely never want to do.

If you are going to be involved in Jacksonville short sales (either as a buyer or seller) please work with an agent who specializes in short sales and has completed them for both buyers and sellers.  We have heard from many buyers and sellers who have been made highly unrealistic promises.  I do not think that anyone is setting out to intentionally deceive them.  I think that very few people in the real estate industry currently have really good working knowledge of short sales and how to successfully complete them. 

We feel strongly that buyers and seller should have reasonable expectations from the beginning.  This translates into much greater odds of a successful short sale closing in the Jacksonville real estate market.  "Fast" is not a word that frequently describes short sales. 

Getting a Great Deal on a Condo or HOA foreclosure sale? Not so fast!!!

So we've been following a new trend for the past few months.  HOAs and Condo Associations in the Jacksonville real estate market have been moving to foreclose on properties for past due association fees.  Most homeowners are clueless, never suspecting that they can actually DO that.  We have seen several short sale sellers who are in the midst of a HOA foreclosure.  In our business we have seen that more often than not, homeowners quit paying their HOA or Condo Association dues before they quit paying their lender.  They figure that the association is the lesser of the evils.  Well...maybe not.

We have been watching these properties enter the foreclosure funnel and waited to see what happens when they start to emerge on the other side.

We got a call this week from a distraught homeowner.  They had purchased a home for a great deal from a HOA that had foreclosed.  They got a great deal on the property and all was well...until....well the lender still has a legal right to the property that was mortgaged.

Speaking with this unfortunate homeowner, we found out that the bank is now moving to foreclose on their new Jacksonville home.  The bank will not even talk to them since they were not a party to the loan. 

We would have loved to help them with a short sale of this Jacksonville property...but with the bank not cooperating with the current owner...there is nothing we can do to sell their property without having the original homeowner, who has already been foreclosed on, request that the bank talk to us and them.  Even if the current owner is able to track down the previous owner...the likelihood of them cooperating is probably slim to none since they have already been foreclosed on and moved on.

We asked this owner if they had title insurance.  They apparently had been told that you couldn't get title insurance on a foreclosed property.  Not true. However, we are not sure why this buyer was not made aware, during this process, that the bank still had to be paid.  It is apparent that they believed that they owned the home free and clear and got a great deal!

We feel for this Jacksonville homeowner, but all we can do to help is suggest that they contact a competent and knowledgeable real estate attorney regarding this situation.  Buyers of foreclosures should be working with a competent Jacksonville real estate agent to buy their property.  We also suggest a competent closing attorney be used to close the deal.

This is just another nasty part of the fallout of the current real estate market.  Buyer beware!

Foreclosure Sales Scheduled for Duval County for October 2009

As of September 30, 2009 there were 817 foreclosure sales scheduled in Duval County through the Duval County Clerk of Courts office.

To put the magnitude of that number in perspective, during the month of September there were only 724 Duval County real estate sales recorded in the MLS (non-condo).  There were only 1,041 (non-condo) real estate sales that took place in the whole Jacksonville real estate market overall.

You Have To Disclose Everything On Your Financials...A Talk About Jacksonville Short Sales

If you are underwater on your mortgage, but need to sell your home, you may be looking to short sale your property.  The hardest part, for the homeowner, in the short sale process is usually filling out the financial statement and gathering necessary paperwork for the file.  This takes a lot of emotional energy for the borrower who will be applying to short sale their property.  This forces you to look at your complete picture and summarize it on a couple sheets of paper.

A good Jacksonville short sale specialist will prequalify you for your short sale and explain what you should realistically expect based on your financials. 

The banks need to see how much you are spending every month.  Depending on your negotiator, sometimes they will study your bank statements and look for "discretionary spending" and ask for that amount in the form of a note.  For example, a trip to Starbucks every morning for coffee and a donut adds up.  They might see that as real money you can give to the bank for the next ten years instead of your favorite barista. Or they may not care.   Sometimes they will decide you have to bring money to the table for your short sale closing.  Or sometimes they won't.  Sometimes they will just downright turn down your short sale because they think you are trying to hide something...this is the situation you don't want to be in...ever.

You absolutely have to fully and accurately describe your financial situation to the bank. 

Do not ever attempt to hide anything.  You have to paint a full financial picture on your financial statement that is submitted to the bank in your loss mitigation package, even if it is not favorable to your case.  This, unfortunately, is not what some homeowners want to hear, but it has to be said.

If you have money to bring to the table...you need to expect them to ask if you want to short sale your property.

Part of our job is to go through the financial data you submit (we have finance and accounting degrees with audit and tax backgrounds) and look for holes in the information before it is submitted.  We can not submit anything to the bank that we know is not complete or true.  This also speeds up the process on the bank end because we don't later have to waste weeks getting supplemental information to your negotiator once they ask for it.

Your Jacksonville short sale has the best chance of being approved if you are 100% honest and forthcoming about your financial situation and why you can no longer pay for your home.

FHA Short Sale Preforeclosure Sale Rules - Mortgagee Letter 2008-43

I like to follow my web traffic and see what they are coming to my blog to learn more about.  It seems a very frequent search I get is people (and even banks!!!)  looking for the HUD rules for the FHA Preforeclosure Sale program.  Because of this I wanted to address the FHA Preforeclosure guidelines here again and give a little more information.

Click here to download the Mortgagee Letter 08-43-- FHA  Preforeclosure Sale Program guidelines these short sale guidelines can also be found directly on the HUD website Loss Mitigation Policy & Guidance page along with other useful information about selling your home short when it has an FHA loan.

A couple of the important things to take note of:

1. You need to get the process started at the time, or before, the time you list the property with a real estate agent who is a short sale specialist.  You really should hire someone who is familiar with the FHA Preforeclosure Program process.
   
2. This new process gets you an approved price at the beginning so you know what the lender will accept.  This, hopefully, will allow you to get a contract on your home for what you know the lender will accept and will make it easier to get a contract since the buyer will not have the usual uncertainty of a short sale.  The net required proceeds actually went UP with the issuance of these new guidelines.  It used to be 82%.  Now it starts at 88% with the floor being at 84%.
   
3. On the downside. if the lienholder's appraisal comes in unrealistically high, it can become very hard to find a buyer since the bank is dealing with a less than accurate value.  Since the appraisal is good for six months, according to the guidelines, this can be devastating.  Trying to convince the bank to reappraise can be very hard.
   
4. Keep in mind...the marketing periods outlined below concerning the net proceeds required...begin from the time you get your approval to participate from the lender...not from the time you apply or put your home on the market.
5. The rules of allowable closing cost amounts and details are not the same for a FHA short sale seller and a buyer who may be purchasing with an FHA loan. 
   

Below is an excerpt from the Preforeclosure Sale letter that addresses the biggest questions sellers, and short sale agents seem to have.  It deals with the net sale proceeds percentages, allowable closing costs, closing costs not allowed and the time frame:

Net Sale Proceeds – Regardless of the property’s sale price, a mortgagee may not approve a PFS contract if the net sale proceeds fall below the minimum allowable thresholds stated herein.  HUD has established guidelines for varying minimum net sales proceeds based on the length of time a property has been competitively marketed for sale.

• For the first 30 days of marketing, mortgagees may only approve offers that will result in minimum net sale proceeds of 88% of the “as-is” appraised FMV.
• During the next 30 days of marketing, mortgagees may only approve offers that will result in minimum net sale proceeds of 86% of the “as-is” appraised FMV.
• For the duration of the PFS marketing period, mortgagees may only approve offers that will result in minimum net sale proceeds of 84% of the “as-is” appraised FMV.

Mortgagees have the discretion to deny or delay sales where an offer may meet or exceed the 84%, if it is presumed that continued marketing would likely produce a higher sale amount.  However, the mortgagee is still limited to 4 to 6 months after the date of the mortgagor’s approval to participate in the PFS Program. Allowable Settlement Costs – The term “Net Sale Proceeds” is defined as the sales price minus closing/settlement costs (i.e., reasonable and customary costs per jurisdiction that are deducted at settlement).  Allowable settlement costs include:

• Sales commission consistent with the prevailing rate but, not to exceed 6%;
• Real estate taxes prorated to the date of closing;
• Local/state transfer tax stamps and other closing costs customarily paid by the seller including the seller’s costs for a title search and owner’s title insurance;
• Consideration payable to seller of $750 or $1,000 (i.e., if such consideration is not used to discharge junior liens);
• Up to $2,500 to be used for the discharge of junior liens if closing occurs within 90 days.  Within 90 days, the first $1,000 represents the mortgagor’s consideration and the additional $1,500 represents FHA’s consideration for a total of $2,500.  If settlement occurs after 90 days, the first $750 represents the mortgagor’s consideration and the additional $1,500 represents FHA’s consideration for a total of $2,250;
• Outstanding partial claim amount. This entire amount must be paid when calculating the net sales proceeds.  The seller, buyer, or other interested party may contribute the difference if the net sales proceeds’ amount falls below the allowable threshold; and
• Up to 1% of the buyer’s first mortgage amount if the sale includes FHA financing.

Unacceptable Settlement Costs – The following costs may not be included in the net sales proceeds calculation, however, the seller may use their consideration of $750 or $1,000 for these settlement costs.

• Repair reimbursements or allowances;
• Home Warranty fees;
• Discount points or loan fees for non FHA-financing; and
• Lender’s Title Insurance fee.

Duration of the Pre-Foreclosure Sale Period Unless an extension has been approved by NSC, mortgagees have 4 months from the date of the mortgagor’s approval to participate in the PFS Program. Mortgagees have a pre-approved extension of 2 additional months to complete the PFS if one of the following exists: The mortgagee is in the Tier 1 category under the Department’s Tier Ranking System (TRS); or There is a signed Contract of Sale, but settlement has not occurred by the end of the fourth month following the date of the mortgagor’s approval to participate in the PFS Program. Mortgagees are reminded that, on a monthly basis, they must review a property’s marketing status with the mortgagor and/or real estate broker.

The guidelines also only give a lender five business days after receipt of a sales contract on a property that has been accepted into the FHA Preforeclosure Sale program to respond to the executed contract.  (Note: This confirms that they do not want "offers" but contracts.) While this is the new criteria, so far I have not seen a lender keep to the five day time frame.  Hopefully this will improve as they become accustomed to the new process.

IndyMac, OneWest Bank, Taxpayers and the FDIC. Looking Into the Deal Between OneWest and The FDIC and Applying Math To The Resulting Shared Loss Agreement.

First I'd like to say that I'm at the beginning of my research into this whole world of shared-loss agreements.  I am not an attorney.  I am a short sale specialist trying to be the best short sale specialist that I can be. But I have so many questions these days about what is going on behind the scenes.  Many things have stopped making sense in the world of short sales and foreclosures over the past few months. 

I have spent quite a bit of time looking on the FDIC website and pulling documents regarding this issue.  I've also read a lot of commentary and articles for or against shared-loss agreements.  The shared loss agreement that is the subject of this post is, by no means, an isolated agreement.  The shared-loss agreements also seem to have a pretty sizable group of fans.  But should they?

Recently I've been reading posts by other agents involved in short sales with Indymac where approvals were withheld that should have been no-brainers.  While I have had great luck with my Indymac / One West Bank short sales...it seems that increasingly others are not.  

I talked to one agent who had a sales contract at fair market value in to OneWest bank twelve days before the foreclosure sale.  OneWest told her they couldn't act on anything they received less than 15 days before the foreclosure sale. That property went to foreclosure sale this week.   In the past I've had IndyMac/OneWest foreclosure sales delayed a day or two before the scheduled sale date. 

Last week I had my first OneWest bank short sale denial (for my buyer so another agent was processing the short sale with the lender, not me.) in which OneWest was demanding far more than what the home was worth.   I  decided to look into the deal between OneWest bank and the FDIC myself...and see what the agreement was with the shared loss loans and how this might contribute, if at all.

I never expected to find what I found.  I kept hearing that there was a loss share arrangement with the FDIC in which the FDIC was covering 80% of the losses.  In truth, I heard it back when the whole thing was going on, but for some reason it didn't seem to concern me then.  The 80% loss share agreement between OneWest bank and the FDIC is just the tip of the iceberg.

All of the information I got directly off of the FDIC website.  The pictures you see are screenshots of the actual agreement from the FDIC site.  There you can find the Shared-Loss Agreement the Master Purchase Agreement AND the Loan Sale Agreement for the deal between the FDIC and OneWest bank.

Sales/Purchase Price of Loans from FDIC to OneWest Bank

Paragraph 2.02 from the Loan Sale Agreement:

Schedule 2.02 from the Loan Sale Agreement:

So, if I'm understanding this correctly, the amount paid by OneWest for the loans from the failed Indymac was anywhere between 37.75 cents on the dollar (for 60+ day late HELOCS) to 70 cents on the dollar (for current whole loans). 

Homeowners?  How would you like to buy your loan back at this type of discount?

Shared-Loss Agreement between the FDIC as receiver for Indymac and OneWest Bank

First, the definitions in the agreement for foreclosure loss, short sale loss, stated threshold  and loan sale loss:

 Calculation of Foreclosure Loss Summary (Shared-Loss Agreement Exhibit 2a):

LOAN PRINCIPAL BALANCE after last paid installment

Adjusted for:  Accrued Interest, Attorney's Fees, Foreclosure Costs, Property Protection Costs, Maintenance and Repairs, Tax and insurance advances, Appraisal fees, Broker Price Opinion Fees, Inspections, Other

Equals:  Gross Balance Recoverable by Purchaser (OWB)

Less:  Net Proceeds from Foreclosure Sale (adjusted for insurance proceeds (if any), taxes and insurance escrow account balance (if positive) and any other credits)

Equals:  Loss Amount

Loss Amount to be multiplied by either 80% or 95% for amount that the FDIC owes OneWest Bank.

Calculation of Short Sale Loss Summary (Shared-Loss Agreement Exhibit 2c):

LOAN UNPAID PRINCIPAL BALANCE

Adjusted for:  Accrued Interest, Attorneys' Fees, Tax and insurance advances, 3rd party fees due

Equals:  Gross balance recoverable by Purchaser (OWB)

Less:  Amount Accepted in Short-Sale

Equals:  Short Sale Loss

Short Sale Loss to be multiplied by either 80% or 95% depending on whether losses have exceeded the threshold for losses.

Loss Share Reimbursement Percentage

• For the first 30% of losses the  reimbursement percentage is 80/20 (FDIC reimbursing 80% of the losses)
• For the remainder of losses the reimbursement percentage is 95/5 (FDIC reimbursing 95% of the losses)

Simplified Sample Calculation applying the information in the purchase agreement and shared-loss agreement:

• Amount owed on note  $500,000
• Short Sale Net Proceeds $290,000
• Note 30 days past due at purchase date

Amount paid for the note calculation:

$500,000 x 60% =  300,000  Amount paid upon purchase/transfer of the note

Loss Recovery Amount Calculation:

$500,000  Amount due on note

- 290,000  Short Sale or Foreclosure Proceeds

$210,000  Short Sale or Foreclosure Loss

       80%  Receiver Loss Share Percentage

$168,000  Amount due to OWB by FDIC

Putting it all together:

$290,000  Short Sale or Foreclosure Proceeds

  168,000   Proceeds from FDIC for Loss Share

$458,000   Proceeds received by OWB

(300,000)  Amount OneWest Bank paid for the loan

$158,000   PROFIT by OneWest Bank on SHORT SALE or FORECLOSURE LOSS

OneWest Bank has to cover the first 20% of the losses?  Really?  Is that what this is called?

Let's see what happens after the Loss Share Percentage hits 95%:

$210,000   N/C               Short Sale Loss

       80%    95%              Receiver Loss Share Percentage

$168,000     $199,500  Amount due to OWB by FDIC  

This increases the profit by OneWest Bank on the SHORT SALE LOSS to $189,500 on a loan they only paid $300,000 for?

Please say it isn't so!  Please tell me I have misunderstood or miscalculated something. If my math is wrong, I want to know.

This is coming out of the pocket of the FDIC and into the pockets of a Billionaire investment group (George Soros, Michael Dell, JC Flowers, John Paulson, etc are reportedly a few of the investors behind OneWest).

But this is only ONE shared-loss agreement....of many....

How did this happen? 

WHY is the FDIC making decisions like this?   Here is the FDIC's explanation of Shared-Loss Agreements from their website.  I really think they believe they are doing the right thing.  But is it just a vicious cycle that is growing bigger and bigger?

How many other agreements like this exist, where after applying the discount the loans were purchased at, the covering of the top 20% of losses appears to be a sham?

The supposed good news for the people who have loans with these failed institutions is that the FDIC is asking the institutions that entered into loss share agreements with the FDIC to consider temporarily reducing the payments of those who are unemployed or underemployed.  Really???  Isn't that like me leaving my house overnight, placing the car keys in the hands of my teenaged son, giving him a hundred bucks and asking him to please consider staying at the house all night by himself?

OneWest bank just announced a second quarter profit of a meager $182 MILLION. 

...and now the FDIC is running out of money and is proposing that banks prepay their premium for the next three years to replenish the fund.  Well the big banks can handle it (and if not, won't they just get more bailout funds?), but what about the smaller banks? 

Will this lead to the FDIC shutting down more regional and local banks and placing them in the hands of investor groups or other larger banks with more costly loss share agreements that will continue to deplete the fund?

And what happens when the FDIC well runs dry?  Another bailout?

What would happen if homeowners/borrowers had the first right of refusal to purchase their own loan back at a discount before it was sold to another party at the same discount?  

Is this type of agreement interfering with the short sale process?  I think it has to be.

Why Have Jacksonville Short Sales Been Getting Harder? Why Are Banks Leaving Real Money On The Table To Foreclose?

This is a disturbing trend that has gotten far worse this year.

It is getting increasingly difficult to get short sales through when there is a first and second mortgage.  What is going on?

The second lienholders, who will usually get nothing in a foreclosure, have often started demanding more funds in a short sale transaction.  It was quite common to give just $1k-$5k to the second lienholder for a while.  This was because the second lienholder, who realized they would not get anything in a foreclosure sale, would take it to cut their losses. 

Now second lienholders are playing unbelievable games.

We have one right now where the second lienholder (M&I Bank) will not take the $3k we've structured the deal for them to get.  But it gets better.  They refuse to give us any kind of letter or written documentation about what they will accept.  They have changed the number multiple times!  Every time we think we have found a way to get the deal to the number the negotiator has thrown out....the target changes. The negotiator is careful not to give the number they will accept in e-mail.  He calls and gives a verbal agreement number.  This is truly a seller with a profound hardship, the first lienholder has started foreclosure proceedings, and there will be nothing left for the second lienholder in a foreclosure sale because the first lien exceeds today's fair market value of the property.

So why would a bank refuse to act on a solution that gets them some money back, as opposed to none which is their only other option?

We've seen recently a "too big to fail" bank, Chase, (second lienholder) reject another contract where the first lienholder was getting totally paid off (just barely) and they were getting around $35,000.  The seller was filing bankruptcy if this did not happen. Once the deal was structured to get Chase $35,000...Chase raised the approval amount to $40,000.   Chase killed the deal because if they were taking a hit, the first lienholder was too.  What??????  In a foreclosure there won't be anything left for Chase at the end.  Why would they walk away from $35,000 just because the first lienholder won't take a hit too?  

Just heard another story where first lienholder approved a deal giving $3,000 to GMAC, the second lienholder.  GMAC said forget it...they would not even consider sending it to the investor unless they got at least 20% of the balance owed.  How about this GMAC?  You will not get anything in a foreclosure sale.  There won't be anything left!

These stories are rampant now.

What is really going on????  I used to think it was because banks were just making stupid financial decision.  Now I'm convinced it's something more sinister.  Would banks really be making stupid financial decisions like that if there weren't big things at play behind the scenes?

• How does credit default insurance play into this? 
• How does Wall Street (and investors) play into this?
• How do mortgage backed securities play into this? 
• How do servicer contracts play into this? 
• Do servicers make more money when homes foreclose instead of short sale?
• How does the resale of the mortgage note play into this? 
• How do PMI companies play into this?  
• How are Credit Default Swaps tied in?
• How are taxpayer bailout funds playing into this?
• How is the the myth of "too big to fail" playing into this scenario? 

Why isn't anyone looking into this????

You have homeowners with hardship situations that are being foreclosed on every day because the bank makes more money by foreclosing even though short sales or loan modifications should be far better deals financially!  So what is happening behind the scene that is causing banks to make these seemingly stupid decisions?

In the current environment we should be having greater success with short sales...not encountering new obstacles.  Foreclosure is an offense with a punishment that lasts for years and years.  Moreover, it doesn't just punish the unfortunate homeowner who fell upon hard times...it punishes all of the neighbors and community as a whole.  Foreclosure further drives down the values which will inevitably lead to a greater number of foreclosures in the future since it will make it impossible for more people to get out of their homes when they need to.  When so many should be preventable...why are they still happening?

We are starting to get more and more calls from agents across the country who read our blog and are encountering a lot of the same types of issues.  Please keep them coming.  We need to get the real stories out there.

If you are in our area and facing this type of situation, call us if you would like an honest evaluation of what we think about your situation.  We will let you know upfront what we expect.  And please remember, no one can promise you success in foreclosure prevention through a short sale.  That being said, the chances are great in most situations if the short sale is handled correctly.

Short Sale Closing on Jacksonville Beach Condo-Indymac (One West Bank) and Freddie Mac With Delinquent Condo Dues Paid!

We had another Jacksonville short sale closing yesterday and helped another Jacksonville seller avoid foreclosure.

We had listed the property originally and the sellers decided to go for a loan modification instead.  We withdrew the home from the market.  Indymac, which is now One West Bank, proceeded towards foreclosure and obtained a foreclosure judgment in Duval County while their negotiator was sitting on the loss mitigation file.

Once the sellers were within a couple weeks of the foreclosure sale they contacted us for a last ditch effort to try to accomplish a short sale and avoid foreclosure.  They were told that Indymac would NOT cancel or delay the foreclosure sale for a potential loan modification.  The sellers were told by Indymac the only way they would cancel the sale was if they had a short sale contract.

We put the home back on the market and quickly got an offer.  The sellers and buyers came to terms on the short sale and everyone signed off on the contract.  We sent in a complete financial package along with a property package.  Around two days before the foreclosure sale we got Indymac to cancel the sale.  Indymac won't cancel until the sale date is looming.

On this file it took us a long time to even get a negotiator...much longer than on our other Indymac experiences.  Turns out that we got a brand new negotiator who had been someone's assistant and was newly promoted.  The file had been assigned to one of the negotiators  she had previously assisted, and she carried it with her to her new position.

Once the BPO came back we were shocked!  Our contract was for $180,000 for an oceanfront condo complex in Jacksonville Beach.  The negotiator came back and told us we needed to redo the contract for $255,000!!!  This was clearly a  faulty BPO done by a real estate agent who either did not understand the area or erroneously reported the value hoping that if the short sale failed, they would pick up the REO (foreclosure) listing for the lender.

We immediately kicked it into high gear.  I researched for hours and obtained as much comparable data as I could on prior sales.  I investigated the competition to see how everything compared and then I prepared a formal detailed challenge to the BPO.  The BPO was clearly and inarguably WRONG and we had to prove that to the negotiator at the bank or the short sale would die.  We knew there would be no way to get a contract on the property that high.

Roughly ten days later we got great news!  The new BPO had come in at only $165,000.  Then, to our astonishment, the negotiator insisted that we reduce our contract price to $165,000.  This was $90,000 less than her first mandate to increase the contract price.  The lender was requiring no seller contribution for the short sale.  Freddie was also agreeing to pay the condo association lien and all past due condo association dues.

So after a couple of months of hard work and waiting...we were progressing towards closing.  We breezed through inspections.

Then we got some crazy news a couple of weeks ago.  The 2 bedroom/2 bathroom townhouse style condo had only appraised for $130,000!!!  This appraisal was just as erroneous as the first BPO (that came in almost DOUBLE this appraisal) was.  The lienholder, Freddie Mac (and American taxpayers), would have been harmed greatly had we pushed the appraised price and tried to obtain a new approval for the unrealistically low price.

Our sellers decided to hold their ground on the price and not return to Indymac /One West Bank/ Freddie to try to lower the price.  We were getting a large number of calls on the condo still with people questioning the status.  We had a couple of cash buyers who were waiting to hear of a contract fallout so they could purchase the home for the $165,000 amount, which is what our approval was for.

On Monday of this week we got word that the buyer had found someone to lend him the money to make up the appraisal difference and purchase the condo.  The buyer's bank sanctioned this deal with the additional cash input.

By Wednesday we closed.  The buyer got a fabulous deal on a great condo in an oceanfront complex.  The seller was able to complete their Jacksonville Beach short sale and very narrowly avoided a foreclosure.

Jacksonville short sales are not easy transactions.  They require far more work and strategy than a normal Jacksonville real estate transaction.  Be sure your real estate professional knows how to complete a short sale before listing your Jacksonville short sale.  All short sales will not be successful, however, a knowledgeable, experienced agent greatly increases your odds of success. 

Buyers Making Multiple Offers On Multiple Jacksonville Short Sales...Don't Let This Happen To Your Jacksonville Short Sale.

Part of the listing agent's job, when listing a Jacksonville short sale, is to properly prequalify the buyer of your house.

This process is even more important in a short sale than in a regular resale because time lost could cause you to lose your home.  There is no way to be positive that a buyer will still be there by the time the bank gives an answer on your contract, but there are ways to minimize the occurrences of buyers simply walking away.

We got an offer on one of our short sales last week and, as usual, made a call to the agent to determine the quality of the buyer. 

We were shocked to hear that this particular buyer has five or more offers out on different properties.  They wanted to make a lot of offers then buy whichever one got approved by the seller's bank first.  The offer did not even have a short sale addendum, nor did it contain any notation about the contract being contingent on the approval of the seller's lienholder.

The tragic part of this is that the various sellers have probably taken their homes off of the market believing that they have a buyer when they do not.  As a result that seller is losing valuable time that should be spent looking for a legitimate short sale buyer. 

This should not be happening.  It is very harmful to sellers and we have seen it lead directly to foreclosure.  While there is a chance that any short sale will not get approval, the risks to the seller are much greater than the risk to the buyer.  The chances of a successful short sale are high if the short sale is handled correctly by an experienced Jacksonville short sale specialist.  If the buyer doesn't have time to wait on a short sale approval (and possibly have to start over if approval doesn't come)  then they should not be buying a short sale...period.  (An exception would be an FHA when the "Approval to Participate" has already been issued.)

We were able to "save" our seller from this buyer and fortunately got another contract on the property.  Our "real" buyer wants the property.  The buyer understands the time frame,  put down a binder up front, started all time frames,  and is going to stick around because they have a reasonable expectation.

Whether you are buying or selling, it is increasingly important to use an agent who is a short sale specialist and will be personally handling your file.  We handle all of our own files personally and do not turn them over to a third party and rely on someone else for short sale approvals.

Have You Used Up Your Savings Trying to Keep Your Head Above Water? Owners of Jacksonville Real Estate Who Have Done This May Find a Love Letter From The IRS in Their Mailbox Sometime In the Future.

We've talked to them, we know they are out there.  Many Jacksonville homeowners in the recent past have used up all of their savings trying to stay afloat on their mortgage (and other debt obligations).  Many homeowners have also borrowed money from one source or another to keep their mortgage current.  Many homeowners have found their mortgage payments skyrocket to a level that they never anticipated due to teaser rates and ARM adjustments.

Well according to an article published in the Wall Street Journal on Tuesday, article can be found here, these homeowners could be flagged for audit by the IRS in the future if they are deemed to have a mortgage interest deduction that is too high for their reported income. 

A Few Things We Wish All of the Jacksonville Short Sale Sellers Understood About Short Sales

I was talking to an old friend yesterday in the DC area and it really drove home how little many sellers understand about short sales.  This friend has just gone through a divorce and her ex-husbands name is not on the loan so he left her with the house (that has his name on the title) which she can't afford by herself.  Besides her story being heartbreaking on a personal level, I was surprised about how little she had been told about short sales when agreeing to list her home with an area agent.

When I was talking to her and mentioned "deficiency judgment" she asked what a deficiency judgment is.  This led me to wonder how many sellers don't understand the whole picture and what short sales involve.

Here are a few things that we wish all of the sellers of Jacksonville short sales knew:

1. The bank is NOT obligated to work with you.  We have to build a "case" to convince them why they should.  You should also be aware that even if everything is perfect with your file and your sales contract is at fair market value you may still be denied (although this is unlikely).
2. Your bank may not waive deficiency rights.  Even if the bank approves the sale and allows the lien release THEY MAY NOT WAIVE THEIR DEFICIENCY RIGHTS.   Many banks are reserving the right to later demand payment for the difference between the net proceeds on the short sale and the amount that you owed them.
3. Many times the bank, servicer, or insurance company involved will ask you to sign a note for the balance or some portion of the balance owed on the loan if they allow the short sale closing to take place.
4. You need to expect to receive a 1099 tax form at the beginning of the following year for the "amount forgiven."  If you are prepared in advance this will not scare you to death when you get this form saying that the amount "forgiven" was income to you.  Click here for a handy page on the IRS website that helps with this topic.
5. Your agent really DOES matter.  Successfully closing a Jacksonville short sale requires a knowledgeable agent who is a trained short sale specialist.  It is possible that your short sale could close even without someone who knows the system, we've seen it happen, but your odds go down dramatically.
6. A short sale WILL hurt your credit.  However, history shows that it hurts your credit far less than a foreclosure and is easier to recover from.  Fannie Mae current underwriting guidelines allow the seller to purchase two years after a short sale.  Guidelines surrounding a foreclosure now dictate a 5-7 year waiting period up from the previous 4 years (which makes no sense to me!!!).  Here is where you can find this information directly on the Fannie Mae website.

These are some of the most common issues that we think many sellers may not understand about Jacksonville short sales.  There are pitfalls and risks involved in short sales.  We believe that a Jacksonville short sale should only be considered as a next-to-last last resort with the last resort being foreclosure.   We encourage homeowners to try to get a modification first, if at all possible, since it is far better to be able to stay in your home rather than sell it if you can make that work. 

Florida Considering Requiring Mandatory Mediation on Foreclosures. The President and CEO of The Florida Bankers Association Said WHAT???

The residential foreclosure task force of the Florida Supreme Court has recently recommended that all foreclosure cases involving primary residences in the state be mediated.  This could be great news for Florida homeowners who have fallen behind as well as those who have not since the value of everyone's home is directly affected by foreclosures. 

In the current economic climate and housing market...all it takes is one event to shift a homeowner from always paying on time, to no longer being able to pay.  We've seen it over and over with our work on Jacksonville short sales.  The loss of a job, a medical emergency and other unexpected events can launch a homeowner into the abyss that results in the eventual loss of their home. 

This is not just happening to people who were "irresponsible" or "bought more than they could afford."  It doesn't matter how responsible you were in the purchase if you find yourself in a situation where you have to sell and your home has fallen dramatically in value.

Here is the Wall Street Journal, Associated Press article from August 17, 2009 that caught my attention: 

Florida Court Wants Mandatory Mediation on Foreclosures

Now here is the problem.  Mr. Sanchez who is the President and CEO of the Florida Bankers Association is not telling the truth.  I do not know if he knows he's not telling the truth or not.  His statements could be made in good faith.  Banks in general are not telling you the truth.  Banks are working with homeowners only as an exception...not the rule.

Here is an excerpt from the Wall Street Journal article referenced above:

Alex Sanchez, president and CEO of the Florida Bankers Association, said expediting vacant and abandoned property cases is a good idea, but he predicted mandatory mediation for homesteads would cause more delays."

Mr. Sanchez said he cannot speak for other lenders but that banks are in constant touch with borrowers and file foreclosure cases only as a last resort. "

We work with our customers to try to keep them in their homes," Mr. Sanchez said.

Requiring mediation in those cases would just delay the inevitable, he said.

"What if that person then defaults on that mediated deal?" Mr. Sanchez asked."

• Mandatory mediation for homesteads WOULD cause more delays.  Hopefully Mr. Sanchez is correct on this one.  Since banks "file foreclosure cases only as a last resort" and "work with our customers to try to keep them in their homes" according to Mr. Sanchez, they should be okay with this...after all the bank is concerned about the homeowners...right?  So what's the rush?

• Banks are NOT in constant contact with borrowers.  Borrowers who have fallen late can attest to that.  But their story is not being told.

• Banks do NOT File Foreclosure cases only as a last resort.  Working with short sales it is a constant struggle to stay on top of what is happening with the foreclosure case.  Bank negotiators are often sitting on a loss mitigation file for a delinquent borrower while the foreclosure department, along with an outside law firm, is zooming towards foreclosure.  Short sale real estate agents know that we have to constantly request delays in foreclosure sale dates.  Most banks we have seen refuse to delay the sale date until a couple days before the sale date.  We have had one go to foreclosure sale after we had a short sale approval issued by the loss mitigation department with a date given for closing which was after the sale date.  The closing went through with the permission of the lender who recorded a release then months later the bank recorded a deed transfer back to the VA.  We have homeowners having to pay attorneys to fight the foreclosure to give them enough time to complete a short sale or attempt a loan modification.

• Banks do NOT work with customers to try to keep them in their homes.  We've had homeowners who were trying to achieve a loan modification who were told that the foreclosure sale date could not be cancelled because there was a pending modification but that a short sale contract was the only thing that could delay the sale.  A short sale is better for everyone than a foreclosure, but it is not "trying to keep them in their homes."

• The statement "Requiring mediation in those cases would just delay the inevitable" is a ridiculous statement.  Studies show that most of the loan "modifications" that have happened so far have not resulted in a more manageable payment for borrowers.  The most common one we've seen and heard about (if they are lucky enough to get any modification at all) is switching the person from an adjustable rate to a fixed rate...with the resulting payment being around the same amount.  Why don't the banks try true and meaningful modifications for a change?  This kind of statement is deceptive. 
  

Foreclosure is bad for ALL Florida homeowners, not just the homeowner it is happening to.  Banks, after foreclosure, are selling the homes for less than fair market value in most cases we've seen.  This leads to the continuing deterioration of market value of the homes of all Floridians.  It also sets the trap wider, just like a spider expanding their web, so when the next person loses their job, they also find out they can not sell and payoff their mortgage.  Then they are launched into the abyss from which they can't escape.

People are losing their homes, families are having their lives torn apart...and Mr. Sanchez's concern is over who is going to pay for the recommended mediation and/or counseling and that it will delay the foreclosure process?  It appears that he doesn't think the banks should have to pay and he even asks "Are the taxpayer's going to pay for that?"  My question is did the banks mind when the taxpayers paid for the bailouts?  Did the banks say, "Are the taxpayers going to pay for that?"

It's time to move past the blame and focus on the solutions to the problem.  If foreclosing on homeowners was a little bit harder (and more expensive) to do, maybe they would think harder about alternate solutions.  These solutions, involving modifications or short sales, can be beneficial to the homeowner and the bank's bottom line.  Solutions need to happen to provide much needed stability to everyone who owns a home in Florida.

Loan Servicer Math...Fuzzy Math Over at Carrington Mortgage Services (CMS) On a Loan That Was Sold Off To Investors As a Security.

This Julington Creek Plantation short sale deal could have been a template for how short sales need to look.  We got the contract on the property very close to fair market value.  We had an active marketing history that showed why this was a great contract.  Comps in support of the price.  Owner with a true, and permanent, hardship.  The short sale package was over 100 pages when all was said and done.  We provided  all of the financial information possible...all of it illustrated the hardship.

Our file was complete from the beginning and no one ever had to request additional information from us.  This was about as perfect as a short sale could be.

The buyers had gone ahead and gotten the appraisal done.  The appraisal came in at a couple thousand over our contract price.  We sent the appraisal to Carrington.  We were told that the BPO done by Carrington Mortgage Services came in slightly more, but in the same range.

We waited, and waited.  At one point we were told that the negotiator would have an answer for us within two weeks.  Then Carrington shut down their short sale operations in one city...so we waited for the file to be reassigned to a new negotiator out at their California operations center.  They kept giving us sad, sad stories about how the negotiators had hundreds of files on their desk.  (Not inclined to feel too sorry since I had a seller up against foreclosure.)

When we finally got the negotiator to answer his phone (after calling him for weeks with no response) we were blown away by what he had to say.  The CMS negotiator was telling us that even though our contract was at fair market value, it would be in the investor's BEST INTEREST to foreclose.  How exactly does THAT work in a declining real estate market with a fair market value deal on the table?  The negotiator further told us that they needed a net proceeds amount that exceeded both the Carrington BPO and the buyer's appraisal by far!  Now at least Carrington was diligent in informing us that even if we got that 20% above fair market value contract (where it would have to be to meet their "net" demand) they were asking for, they were not guaranteeing an approval because at that point the investor would have to sign off. 

THE INVESTOR NEEDS TO SIGN OFF NOW!  NOT HAVE SENIOR MANAGEMENT AT CARRINGTON MORTGAGE SERVICES BLOCKING WHAT IS A FAIR MARKET VALUE DEAL.   To read the whole Rejection of FMV Contract Letter from Carrington Click Here:  Carrington Rejection of FMV Contract Letter  If the loan goes into foreclosure, can they really expect to get above fair market value?  They will get less and there will be all of the foreclosure related expenses adding to the investor losses.  BUT Carrington Mortgage Services, who is just the servicer, stands to gain financially in a foreclosure even though the investors will lose.

Contacting the "Customer Advocate" department got us nowhere even though, to my delight, they DID admit the above in writing when it had been verbal up until that point. Another useful thing we got out of this was the name of the actual security that this mortgage was supposedly sold off as a part of.  According to Carrington, this loan is part of:  Carrington Mortgage Loan Trust/Series 2006-NC3

New Century originated the loan.  Carrington Mortgage Services is servicing the loan.  Wells Fargo is trustee according to the 8k filed with the SEC.  Coincidentally, Carrington also gets to service the loan if a foreclosure occurs.  It is in Carrington's best interest to not allow the short sale so they can continue to collect fees on this loan from investors who think that the servicer is looking out for their best interests when the servicer is looking out for the servicer's best interests.

Where is the oversight?  Investors...WAKE UP!!! 

A hint for anyone out there...their "Customer Advocate" department is actually a "Carrington Advocate" department.  The lady in that department was with New Century Mortgage before Carrington.  She has been with Carrington for ten years...But WAIT...her Linked In profile says that she is still with New Century Mortgage as well as Carrington.   I was surprised to see any mention of  New Century Mortgage since it was my understanding that they were shut down by regulators for their lending practices and then went bankrupt in 2007.  New Century Mortgage is who originated this loan that my seller has.  I started doing further research...New Century is not in business...or they ARE in business...or they are not really themselves...then just had to put it on hold in the interest of getting this blog post done today. 

Read this recent Forbes article for more on Carrington Mortgage Services and why this type of thing is probably happening: http://www.forbes.com/2009/08/22/carrington-capital-mortgages-business-wall-street-carrington.html

UPDATE!!!
Since posting this article, I have gotten calls from other agents about their Carrington Mortgage Services short sale deals that were rejected. One agent told me that she was told verbatim the excerpt from the letter above. In both of her rejected deals, Carrington asked for $15,000 more than the established Fair Market Value. Are any investors of this Carrington Mortgage Loan Trust out there?

My seller went on to file bankruptcy after this post. At the time of filing, they were over a year late and Carrington had previously modified their loan (around the time we started the short sale process) even though the homeowners had rejected the loan modification proposed by Carrington since it was not meaningful and would not help. Carrington sent them loan modification paperwork anyway, which the sellers refused to sign. Carrington still "modified" their loan, brought them up-to-date on their payments and started billing them for the "new amount". Even though no foreclosure suit had ever been filed or even a lis pendens...Wells Fargo (trustee for the group of Mortgage Backed Securities) filed a request for relief of stay in the bankruptcy.

Jacksonville Beach Short Sale Approval! Indymac Servicer / Freddie Mac Owner

We just got another short sale approval yesterday for our contract on a Jacksonville Beach condo listing.  Indymac is the servicer for the loan.  Freddie Mac is the investor.

This one was under contract for around two and a half  months when the approval was delivered to us.  When we put the house on the market, the sellers already had a foreclosure sale date set.  We were able to quickly get a contract on the condo and get the foreclosure sale date postponed.  Even with a very large inventory level in Jacksonville Beach.

When the BPO came in really high on this, indicating a value of $75,000 over our contract price, we didn't give up.  We successfully challenged the BPO and the negotiator came back and ASKED US TO REDUCE THE CONTRACT PRICE BY $15,000!!!

Freddie Mac approved all of the closing costs except for the home warranty.  They are paying the condo association lien, the delinquent condo fees, and all of the closing costs from the proceeds of the sale.  The seller is not being required to contribute any funds.

FHA Short Sale Closed...Another Successful Jacksonville Short Sale Closing with Buyer Saving Lots of $$$

We have another happy buyer...and another seller has avoided foreclosure through a Jacksonville short sale.  FHA Short Sales are some of the most predictable short sales you can participate in.  This type of short sale happens if the seller has an FHA loan on the property.

HUD has laid out specific guidelines on this type of short sale transaction.  We know these guidelines and can help short sales be successful through the application of this knowledge.

Our buyer got a big surprise in this one!  When she picked out this great townhome off of CR 210 in St Johns county the price was a good price.  This unit was more upgraded than the others, and she chose it over a foreclosure that was priced considerably less.

FHA short sales require the lender to review the sales contract (if all of the required initial steps have been taken and completed) within five working days.  As we've seen in the past, it did take longer than this.  We're not sure if it's due to lender backlog, or lack of understanding of the rules.  In any case, we had prepared the buyer for a potentially lengthy process, detailing out all of the pitfalls and problems that are common, so she was ready for anything.

Several days before closing, we got news that knocked the wind out of the transaction.  The lenders appraisal company (yes--lenders are allowed to own appraisal companies, not sure why...) had appraised the home.  It had come back almost 20% below the contract price.  The buyer did not have the money to make up the difference between appraised value and purchase price.

Because of our knowledge of the applicable rules, we were able to appeal for the lienholder to reduce the purchase price in line with the appraisal. 

It was quite a wait (around 5 weeks from that point) but well worth it.  Two weeks ago the seller's lienholder agreed to accept the price that was 20% lower than the prior contract price..  The buyer's original lender was not going to be able to complete the buyer's FHA loan in time since we were told that the seller's lienholder was insisting on closing within two weeks.  The buyer switched to a fabulous mortgage broker who was able to complete the loan within two weeks.

From start to finish,  this FHA Jacksonville short sale took a little over two months from contract to close. 

Not only did we help the buyer save roughly $20,000 more after the contract became effective due to the low appraisal, but we also saved the buyer other fees that the listing side tried to impose on her after the date of contract because of our knowledge of FHA short sale guidelines.  In addition we were able to recognize the artificial deadlines that the listing side tried to impose on us that were inconsistent with the contract and with HUD PFS guidelines.

Success!!!

Arms Length...Not Just Important for Shirts... Jacksonville Short Sales and the Evolving Arm's Length Requirements by Banks

As we actively work Jacksonville short sales constantly, we are seeing frequent changes to the way banks are dealing with and responding to this type  of real estate transaction. 

We are seeing the banks start to tighten up on exactly who is purchasing a short sale.  They want to make sure that the homeowner does not get their hands back on the house after the sale has taken place.  They don't really seem to care who owns it or lives in it after the sale has taken place as long as it is not the current homeowner or family member, however, this is evolving as we speak.  If you are involved in a Jacksonville short sale situation you need to be aware of this.

Take Wells Fargo, for example, as recently as May we did not have any type of addendum to the sales contract dealing with this on our Wells Fargo short sale transactions.  On the one we are currently involved in, an "Affidavit of Arm's Length Transaction" has been added to the bank's addendums to be signed by all parties. 

This particular addendum states, "No party to this contract is a family member, business associate, or share a business interest with the mortgagor."  It also adds, "The Buyers and Sellers nor their Agents have any agreements written or implied that will allow the Seller to remain in the property as renters or regain ownership of said property at anytime after the execution of this short sale transaction.

BPOs and Appraisals...The Insanity Factor in Jacksonville Short Sales

The seller's lender has to order either a BPO (Broker Price Opinion) or an Appraisal to determine the value of your Jacksonville short sale property and whether your short sale deal should be approved.  When an FHA loan is involved (seller's loan) then the appraisal is done up front and you are given the value that the bank must have to approve the deal.

In a short sale a valuation is required by both the seller's lender and the buyer's lender.  This used to be relatively simple part of the process.  Recently, BPO and Appraisal values have become quite problematic in the Jacksonville Real Estate market for short sales.

We used to love having the lender order BPOs instead of appraisals on our Jacksonville short sales because agents who are actively selling in the Jacksonville real estate market usually have a good handle on fair market value.  We used to see BPOs coming in at or below the contract price.  Appraisals, on the other hand, often came in too high.

This has all changed.  There is no predictability anymore when it comes to the valuation of the property by an appraiser or BPO agent hired by the lienholder.

Here are a few of recent examples of valuation problems with our Jacksonville short sales:

• Seller's lienholder appraisal comes in 20% higher than the Buyer's Bank's appraisal.  Buyer's bank won't lend on the property at the price the lienholder mandated.
• BPO agent values a property $75,000 higher than the contract price.  Property could not even be sold at $20,000 higher, which was the starting price.  Comparable sales support contract price.  Marketing history proves that the BPO is highly inaccurate.
• BPO agent values a home $30,000 too high.  The marketing history on the home supports that the home could not be sold for the BPO price.  

We are, of course, fighting the BPO and appraisal determinations in all of these cases.  When you have a good bank negotiator you can usually get a new appraisal or BPO ordered or at least file a challenge.  When you have a bad negotiator at the bank your challenge might not go anywhere.

Jacksonville short sales continue to be a challenging, ever-changing area of real estate.  Make sure you hire someone who understands the process and how to overcome the challenges involved in Jacksonville short sales if you will be buying or selling a home that is underwater on the mortgage.

Chances Are That You Are Making Your Mortgage Payment to Someone Who is Just Servicing The Loan for Someone Else.

Doing Jacksonville short sales we have come to realize that most homeowners have no idea who they actually owe money to.  So you took out your loan with Bank of America or Suntrust or Wachovia or some other bank and you think that means that they are the entity that owns your loan?  This is often not so.  In the past the law has only required notification to the homeowner if the servicer, that is the person collecting and processing your loan on behalf of the investor, has changed.

Your loan may have been sold to Investor A who sold it to Investor B who then turned it over to Investor C.  Or your loan may have been sold to Investor A who packaged it and sold off pieces to Investor B through Investor Q.  Sometimes your original lender will sell it to the investor after you go late (not sure if this is with disclosure or not).  If you are one of the lucky ones, your loan is just owned by Fannie or Freddie.  This uncertainty and selling off of loans  is something that can often lead to trouble if you are facing a Jacksonville Short Sale or are in Pre-Foreclosure. 

Depending on who the investor on your loan is, your Jacksonville short sale can be either easy or very hard.  Many times it's impossible for the homeowner to figure out who owns their loan.  The servicers are usually very elusive when it comes to the topic, simply referring to the party who owns your loan as "The Investor."  Most of the talking heads in the customer service department have no clue what is going on.  Many times this means that the deal will just take longer to get approval.  Other times it means that your deal will be wrecked and you will go spiraling into foreclosure.

The Truth in Lending Act was modified at the end of May and will now require notification when the owner of your loan changes (instead of just the previous requirement of notification of a servicer change).  In theory this is a great development, it remains to be seen how this is going to change everything.  So far we are seeing that the servicers are still being elusive and many homeowners are still in the dark about who owns their loan.

Do Not Think Having Your Home Listed for Short Sale Will Stop the Foreclosure Process

We work with Jacksonville short sales every day.  Jacksonville short sales are not a science, they are more of an art.  If anyone promises you success or specific results, be cautious.  There are no guarantees in the short sale process.  While there are some absolutes, such as the basic information that has to be included in a short sale package, there are many more factors that vary.  The process varies from bank to bank...and your experience is even different from negotiator to negotiator in the same bank.

One thing that we have found to be pretty consistent is that the short sales and loan modification attempts do not stop the foreclosure process.  When we are dealing with short sales, we have to constantly stay on top of what the lender is doing.

The foreclosure departments at banks always seem to be much more efficient and on top of things than the loss mitigation departments. 

We ask all of our sellers who we have Jacksonville short sales with to notify us immediately when they get correspondence from their bank or their bank's attorneys.  What the proverbial "other hand" is doing can not be ignored when you are attempting to short sale your property.  Staying on top of this can make the difference between a successful short sale and a short sale that is never completed because a foreclosure sale occurs.

We have to constantly request foreclosure sales be postponed.  As an example, we have one particular short sale currently with Indymac that has been particularly troublesome.  The sellers had attempted a loan modification.  They found out a week before the scheduled foreclosure sale that the loan modification attempt would not stop the foreclosure sale.  They were told by Indymac that only a short sale contract could stop the foreclosure sale.  We were able to get them a buyer just in time and got the foreclosure sale cancelled the day before. 

You would assume that they would give their own loss mitigation department time to process the file.  Not so.  Indymac's attorneys petitioned the court to reschedule the sale stating that it was cancelled to try to work out something with the homeowner but they have not been able to.  Their negotiator is in possession of a complete short sale package at a price that is likely above market value at this point.  She has had it for at least 45 days and has been working on it because we have been communicating with her.  Yet their attorneys represent that their "attempts" have not worked.  They will not cancel the new sale date yet.  This is the type of thing that a Jacksonville short sale specialist has to stay on top of or risk having the home sold out from under them while the short sale is in the final stages of approval.

Make sure you, and those you hire, are paying attention if you are trying to get a loan modification or short sale your Jacksonville home.

Banks want contracts not "offers." Jacksonville Florida Short Sale Information.

We ran across a situation with a buyer this week where the seller is sending in tons of offers to the bank for a Jacksonville short sale property.  This property was priced much too low, at a price the bank would never approve, to get lots of attention.  (This presents a totally different issue, which I'm sure I will get to on a future blog post)  We had been told there were already several offers in.  Our buyer put in an offer of over $30,000 more than asking price, understanding the short sale process, and knowing what the home was worth.

When we called a few days later to check the status we found out that the seller is not signing an offer and sending in a complete package to the bank with that offer.  Instead, they are sending in every offer that comes in, even though none are contracts. 

This is a very bad method.  The chance of success is very small.  First, the purpose of having a ratified offer is so the buyer will be around when the answer finally comes in from the bank.  Second, most banks we have dealt with won't even assign the file to the negotiator without a binding contract.  In this scenario, even if you can get a negotiator to make a decision on the file without a signed contract, the buyer will probably be LONG gone.  Supply is great which allows that buyer to find a different home in which the seller WILL commit to selling the home to them.  Even if the buyer is still around, you don't have a ratified contract and the buyer can try to negotiate with you on the price and/or terms or walk away.  

 Many (possibly even "most")  banks will require that the process start over when you find a new buyer at a different price rather than making adjustments to the file.  The short sale process should be done correctly from the beginning.

Lately, it seems that the banks are taking longer and longer.  We've seen banks that had previously given answers in 30 days or less taking 2-3 months.  The simple fact is that they are buried in files.  We were told by one bank the other day that they have 700,000 loss mitigation files.  We don't know how many negotiators this particular bank has, but unless their loss mitigation department is massive...that is a pretty hefty case load per negotiator.

The way to get your file approved much faster is to send in a complete file on day one.  If you owe more than your home is worth you need a real estate agent who understands the short sale process.  You can't afford to waste time on incorrect file submission, especially if you are late on your mortgage.

Banks are NOT waiting until after the negotiator gets to your file to start and proceed with the foreclosure process.  They will send your file to the foreclosure department where they are much more efficient than the loss mitigation department.  In the foreclosure department your file will likely be handled before the negotiator from loss mitigation can even pull your loss mitigation package from his or her stack.

Why Even (Especially) Short Sales Need Multiple Pictures On MLS. Jacksonville Florida Short Sale Advice.

When you need to sell your home fast, it is very, very important to have multiple pictures on the MLS showcasing your home.

The inventory for Jacksonville real estate is large.  You have to make your home stand out or the buyers won't take notice.  You need interior and exterior pictures of your home.  The pictures need to be of high quality and show off your home's greatest features.  If the pictures make your home look dark and cluttered they are not going to help you sell your house.  The pictures need to be taken carefully with all clutter moved out of the way as you go.   Many times the lighting needs to be adjusted before posting the pictures to the MLS.  Only the best pictures should be used online.  It is not unusual for us to take hundreds of pictures of a property to get the very best shots in order to showcase rooms or features in the best light.

If you do not have multiple pictures of your Jacksonville short sale on the MLS the buyers are usually going to think something is wrong with your home.  When this happens they usually reject it outright.  There are so many homes that are being showcased with multiple pictures it seems suspicious to buyers when a seller does not have multiple pictures of their home that is for sale.  Buyers assume that the seller is trying to hide the poor condition of the home from potential buyers even though this is not usually the case.

It is very common for buyers to tell us not to even send them homes that come up for sale if they do not have multiple interior pictures.  Don't put yourself at a disadvantage.

We believe these pictures need to go in at the same time the listing hits the MLS.  That way when automatic e-mails go out to buyers announcing the new listing, the buyers can see what your home has to offer.

Most sellers we see in short sale situations do not have any time to waste.  Banks don't waste any time once you are late.  It is important that your short sale be handled correctly from the beginning.

The Appraisals are Unpredicatable on Jacksonville Short Sales...Why Is There No Consistency?

The appraisal.  Sounds so simple, however, this is one of the biggest killers of Jacksonville Short Sales.

Short sales are unique in that you have two valuations from two different sources that need to match up, or at least come close.  If they do, the chances of a successful short sale goes up dramatically.  If they don't...then it becomes a big hurdle that may or may not be insurmountable. 

Imagine my surprise when I got an e-mail yesterday saying the appraisal on a Jacksonville short sale for one of my buyers came in short.  And not just short...but 20% short.  We were supposed to close on this short sale late next week, everything was complete, just a few last minute items on the loan...then news that the appraisal came in short.

This is an FHA short sale.  HUD guidelines require the lienholder to have a FHA appraisal of the property to determine the sales price under the HUD Preforeclosure Sale guidelines that apply to all short sales that involve an FHA loan on the selling side.  The seller's lienholder has an appraisal showing this northwest St Johns County townhouse is worth $100,000.  Our contract price is several thousand below that.  The buyer's appraisal came in at only $80,000.  How did this happen?  Lack of consistency in the appraisal industry.  Theoretically two separate appraisers, both following FHA guidelines, should have come up with a value that was the virtually identical.  So how did they come up a full 20% different?  Does the fact that the buyer's lender  OWNS the company who was responsible for the buyer's appraisal come into play?  Is that why this appraisal came in ridiculously low?  Why is this practice still being allowed?

Two appraisals by FHA approved appraisers should not have come in so different.  So who is right?  The buyer's lender will not consider that their appraiser could be off.  The only solution is for the buyer to come up with more money down.  Not a possibility with most cash-poor FHA borrowers.  So the best hope in this type of situation is that the seller's lienholder will listen to reason and take the buyer's FHA appraisal into account (which is allowed under FHA guidelines, but at the discretion of the negotiator and lender) and allow the buyer to buy at a lower price.  But 20% lower?  If the seller's lienholder says "forget it" then the seller's only option is to put the house back on the market and try to find another buyer.  Then the likelihood is that the new buyer's appraisal could be too low as well since the margin between the two appraisals is so large.  Even a 5-10% disparity will likely kill the deal in the future.

The buyer can go on to find another property and soon forget this one.  The seller will be the REAL loser in this.  They will end up having a foreclosure on their record when they made every attempt to help the lender sale the property and mitigate their losses.  Their credit will be ruined for years.  All because two appraisers,FOLLOWING THE SAME GUIDELINES,  have said two drastically different things about the value of a Jacksonville short sale property. 

Title Company processing the Jacksonville short sale? No thank you!

Buyers and Sellers of Jacksonville short sales beware.  There is an emerging phenomenon we're encountering working Jacksonville Short Sales.  We've seen several  Jacksonville area title companies who have been struggling for business that have decided to stick a label of "Short Sale Specialists" on their operation to get more business.  These title companies we're seeing do this are seriously hiking their fees up, "processing" the short sale transaction, and advertising themselves as experts.  Based on our experience, these people and companies are not in any way experts.  The ones we've encountered that are doing this are far from expert in the short sale arena.  (Just like with anything else, I'm sure there are some really good ones...we just haven't encountered them yet.)

If you need to sell your Jacksonville home and you owe more than your home is worth, do not hire someone who is going to turn your transaction over to a title company to process. You want to hire an agent who has an understanding of short sales and the different guidelines and issues involved.  You want to make sure your Jacksonville short sale specialist agent will be involved in the processing of your short sale after contract as well.

The latest title company "short sale specialist" experience we have had involves a "short sale specialist" who literally doesn't know the difference between FHA and Fannie Mae.  This "short sale specialist" submitted a preliminary HUD to the seller's lender that indicated a higher payoff than was possible if she had properly accounted for all seller closing costs on the preliminary HUD.  Then they came back to our buyer insisting that the buyer had to pay some of the sellers costs because the lender wouldn't.  Not true, these costs were never properly accounted for and submitted to the lender...a step in the short sale process that is extremely important. 

It is very important that the preliminary HUD have all possible costs accounted for, as well as extra time built in for the process to be completed.  This "short sale specialist" apparently did not know this.  This fact by itself can wreck a short sale deal up until the time of closing.  The HUD they submitted to the lender also does not properly account for prorations, so we are expecting them to come back later and tell us that the buyer has to pay some of the seller's taxes.  All of this could have been prevented with a knowledgeable person preparing the HUD correctly to submit to the lienholder.  When we tried to explain the relevant guidelines to her (in this particular transaction the seller has a FHA loan, which is governed by the HUD PFS program guidelines)  she kept calling this transaction a "Fannie Mae"  (not the same thing!!!) and told us that Fannie Mae required 88% net (not true either, but Fannie Mae has nothing at all to do with this transaction.)  Even if she had said "FHA requires an 88% net" it would not be accurate.  FHA only requires the 88% net of fair market value for the first 30 days during the marketing period which begins when the PFS Approval to Participate has been issued.  And this is an advertised "short sale specialist"

We've heard horror stories from other agents as well about these so called "short sale specialist" title companies and we've also experienced them.  Be careful when dealing with them.  IF you are a short sale seller, make sure your agent is a short sale specialist.  If you are in the market to purchase a short sale property, this is a good idea as well.  Deals that are put together correctly by knowledgeable short sale specialist agents usually go through.

If You Are Considering Purchasing a Jacksonville Short Sale Property or Selling Your Property Short...Hire a Short Sale Specialist.

A large percentage of our real estate business is working with Jacksonville Short Sales.  We represent both buyers and sellers in this type of transaction.

Working with short sales you have to be ready for anything.  We find it particularly challenging when the listing agent has no knowledge or expertise in short sales.  There have been times that our buyers have had to look for other alternatives, even though a particular home was very appealing, because those hired to do the job lacked fundamental knowledge in the short sale arena.

There are basic questions that you have to ask (and know to ask!!!) when you are representing a buyer in a Jacksonville short sale transaction.  We are often shocked at the responses we get when we ask these all important questions when representing our short sale buyers.  Most agents are not educated and qualified in the short sale arena since it differs so greatly from a normal transaction.   There are some Jacksonville short sale specialists that are very good at what they do, this is SO VERY IMPORTANT in a short sale transaction. 

If you are underwater on your mortgage and need to sell your home, hire a Jacksonville Short Sale Specialist.  ASK what qualifies them to be a short sale specialist.  The use of a Jacksonville Short Sale Specialist is also becoming increasingly important when you are looking to buy a Jacksonville Short Sale property since you need to be represented by someone who has a complete understanding of short sales and how to structure your offer based on the type of loan the seller has and the lender involved.

Let us know if we can help you.  904.371-9654.

Banks & Their Foreclosure Attorneys...What a Mess They Are Creating...What They Aren't Telling You on TV.

You've heard me talk before about how even when a homeowner is attempting to get a modification or complete a short sale banks will proceed with the foreclosure process.  It becomes a race against the clock for the homeowner, and us, if we are attempting to help with a short sale.  If they banks would just slow down and act responsibly they could cut their losses dramatically.

You've also heard me complain about how the right hand doesn't know what the left hand is doing.

Here is a good example that happened, or rather came to light, just the week before last.  We got a call from one of our sellers who we helped short sale his home so he could move on.  He had gotten some paperwork he didn't understand.  We asked him to fax it to us so we could see if we knew what it was.  It was a certificate of title conveying title to the VA Administration.  This was recorded at the end of April in the county public records months after title had transferred to the new buyer of the property.  This was also months after the bank had filed the satisfaction of mortgage releasing the property.

We immediately turned around and sent it to the closing attorney's who performed the closing.  We got a call a couple of days later from them telling us not to worry about a thing.  The title insurance company was working to straighten this out and they said that "they weren't surprised."  Apparantly they are used to banks doing this as it's common practice.

The closing attorney also called the clerk of court in the county where the property is located.  The clerk of court said that they wished this was the only case of this.  The employee in the clerk's office stated that the attorney's office (a foreclosure mill who does nothing but spit these things out) for this particular lender does this as a practice after the short sale has already taken place. 

We found out that a day or two after we alerted the closing attorney to this issue, the buyer had gone down to file for homestead exemption and found out that this problem existed with her title so she had called the closing attorney as well, not understanding what was going on.

Bottom line is that we have been assured that both the seller and buyer are okay in this and it's being cleared up, but why does this kind of thing even have to happen?

This is the kind of thing that someone needs to step in and stop.  The banks (in general) just continue to make bad decisions that keep leading them down the wrong path.  The path that leads to greater and greater losses.  But they aren't so worried about losses anymore...a sad fact that has been created by our political environment. 

The attorneys that have been hired to begin and complete a foreclosure process are determined to get these done as fast as possible no matter what negotiations may be going on between lender and homeowner regarding modifications or short sales...often cutting off the negotiation process when the bank could be saved hundreds of thousands of dollars (just with one home!!!) by going the route of common sense and good financial decision making rather than bullying.

As I was finishing this post my phone rang.  A seller for a recently completed short sale just received paperwork from an attorney's office for their old lender...foreclosure paperwork....this attorney's office has a court date to foreclose on the house that the seller no longer owns and the lender has released....here we go again!

Successful Jacksonville Short Sale. Another family saved from foreclosure. Litton Loan/Fannie Mae

We had another successful short sale closing today.  This was a Fannie Mae loan being serviced by Litton Loan.  This success is particularly sweet.  You've heard me talk about how the fate of your short sale often depends on whether you have a good or bad negotiator at the lender.  This is a Jacksonville short sale that almost never happened.  That is because it was assigned to a bad negotiator.  This negotiator, like most bad loss mitigation negotiators, was horrible at communication.  He got agitated when we asked for updates.  He failed to answer phone calls.  He refused to return e-mails and voice mails.  Ultimately he sent a one sentence e-mail saying, "

Per the investor, the request for a short sale has been declined due to the hardship not meeting there guidelines."  (grammatical errors his, not mine).

 

We spent the next several days trying to get in touch with this negotiator to find out what he meant.  Even the main customer service number at Litton was perplexed when they looked at the notes to the file.  He had simply put it that the short sale was declined with no additional information.  The customer service rep even noticed this was "weird."

 

This is where the quality, education and experience of your short sale specialist really comes in.  You see, to us when we are working our Jacksonville short sales...no just means, "not yet" or "try again" or "we'll approve it next time."

 

We updated all of the documents (since it had been a couple of months since the package was submitted) and resubmitted a complete and full short sale package with the same contract as if it were a totally new file.  We then called Litton and demanded that the negotiator that had been on the file previously not be allowed to touch it. 

 

Five weeks later we received our Jacksonville short sale approval.  The file was complete (very important!) , the negotiator did not have to ask for more information.  The negotiator didn't question the hardship.  Not once was it suggested that the hardship didn't meet investor guidelines.  The file was simply sent to the PMI company then to Fannie Mae and an approval was issued.

 

We closed today, three weeks after our approval was issued.  A foreclosure hearing is scheduled in the next week or two but the short sale was successful so that is entirely unnecessary now.  The happy and relieved seller has avoided foreclosure.  Our commissions for handling the Jacksonville short sale transaction are paid out of the proceeds of the sale and the seller did not have to pay us anything.

 

If you are in the situation where you owe more than your home is worth and can't keep your home.  If your lender won't work with you and you want an option other than foreclosure, give us a call.  We can give you an honest evaluation and let you know if we think we can help you.

Big Money Saving Suggestion For Banks! Stop the Insanity! Communicate Between Departments Regarding Modifications and Short Sales!

Working with distressed sellers there is one thing we have noticed that is very common among most, if not all, banks.  They waste a lot of money due to their inefficiencies and the lack of their ability to make common sense decisions.  The larger the bank, the worse this phenomenon seems to be.

Banks...if you are sitting on a loan modification package or a short sale package why do you insist on spending thousands and thousands proceeding with filing legal paperwork when chances are it's unnecessary.  Why do you proceed with the foreclosure process when you are going to modify a loan or approve a short sale.

Banks today are taking longer than ever to assign short sale or modification packages to a negotiator.  At the same time, they have a different department working towards foreclosure.  Coincidentally, this department seems to be FAR more efficient than their sister loss mitigation department.  Banks could save vast amounts of money just fixing this breakdown in their system.

We have seen short sales go all the way through a foreclosure sale while waiting on final approval from a negotiator in a loss mitigation department.  Stranger still...the short sale was still allowed to go through even though the bank had "bought the house back" at the courthouse.  So when all was said and done, the short sale went through and the foreclosure sale was somehow erased.  How much money did this cost the bank?  How much money would the bank have saved had they just held off and let the system work?  And yes...it is our "too big to fail" banks that are doing this type of thing.  We have found that "too big to fail" also usually means too big to function efficiently and effectively and repeated bad business decisions.  And since they are deemed to be "too big to fail" they are free to continue to operate inefficiently and ineffectively.  The free market would demand that they improve their processes to prevent failure...but things are not being allowed to work that way.

We have seen banks proceed with foreclosure action while the sellers are actively participating in the HUD Preforeclosure Sale program for FHA loans.  Why?  These homeowners are doing everything they can to short sale their home in a government created program.

We have approved short sales that we have to keep requesting that the banks cancel the foreclosure proceedings that the bank's outside attorneys keep scheduling.  What is the cost of this??? 

We have approved short sales in which the seller receives a nice large package of paperwork from an attorney regarding foreclosure a week before it closes.  The short sale closes...and the bank is out all of this money.  And they knew all along the home was in the process of a short sale and even had a definite closing date.  But they still pay an attorney to go through the foreclosure process.

We are seeing banks that have prescreened homeowners and said that they meet the qualifications for a modification.  These same homeowners have turned in their modification packages to the banks.  The loan modification packages are sitting around waiting to be assigned to a negotiator who can actually sign off on the modification.  Guess what another department is doing more efficiently while the loss mitigation department is trying to get through their stacks?  Working with outside attorneys to foreclose.  This is adding thousands and thousands of dollars of expenses when if they should just ramp up their loss mitigation departments to meet the demand.  But banks are not being forced to operate efficiently and effectively to stay in business...because that's just the way it is now.  They don't have to since the invention of the trendy new "too big to fail" label that is a thin disguise for "too big to think".

Banks need to stop spending unnecessary money filing legal paperwork and proceedings against people that they are likely going to modify or approve a short sale for.  This is just more wasteful spending...but when you remove the free market penalties for stupidity, inefficiencies and ineffectiveness,  you will only continue to get more of the same.  Stop the insanity.  Bring common sense back to the process (and elementary mathematics!!!).

Another Homeowner Who Avoided Foreclosure through a Jacksonville Short Sale-Indymac Loan

We had another successful Jacksonville short sale closing today.  Indymac approved the short sale of a beautiful home.  The foreclosure process had already been started when the sellers contacted us but we were able to get the home sold before the foreclosure took place.  We found a buyer and carried the home through the short sale process.  The homeowners avoided foreclosure and the buyers got a wonderful home for a great price!

Let us know if we can help you or someone you know.

"Short Sales Are a Waste of Time." No They Are Not. Why We Work Jacksonville Short Sales.

I hear this statement quite often.  I read these type of quotes often in newspapers, on blogs and hear it on television.  I have heard many buyers say this, sellers have said this, and even other agents say this, and I just don't understand.  I definitely disagree.  We hear from buyers quite often who previously worked with an agent who refused to show them Jacksonville short sales, or did everything in their power to discourage them.  A Jacksonville short sale can be a really good deal for a buyer.  That home that is a short sale could be the buyers perfect home.  We believe the buyer should decide based on their needs and circumstances whether a short sale is right for them.  If a buyer is working under a strict time constraint, then they probably shouldn't consider a short sale.  If they have a flexible timeline this could be a great option for them.

The short sale's success or failure starts with the offer.  When you truly understand this type of transaction your success rate goes way up.

We do Jacksonville short sales.  We enjoy doing short sales.  This is the most rewarding type of real estate transaction we have ever been involved with.  We're not talking about money.  It's definitely not the most rewarding financially.  Many times at the last minute the bank decides that unless you cut your commission X% they are not going to allow the short sale to go through and will simply foreclose on the seller.  How is that for a situation to be put in? 

We like short sales because we are really helping homeowners in need.  These are not bad people, these are people who just lost something.  Sometimes they lost their job, sometimes it is their health, sometimes they lost their family member(s) and sometimes it's something else.  Sometimes it's a combination of things.  These are people who have usually tried earnestly and sincerely to remedy the situation but with no success.  These are people that have spent countless hours on the phone with the lenders trying to get loan modifications only to be told the bank doesn't care.  We've seen banks that would rather lose $200,000 today than to modify a payment even a few hundred a month.

This is a hard job, the business of being a Jacksonville short sale specialist.  On occasion we have been told by some bank representatives that they don't care...they will just foreclose.  We have seen files denied and closed for what turned out to be no reason other than the negotiator assigned to the file felt like taking their bad day out on someone.  We have made multiple phone calls for weeks, while being ignored the whole time.  We have been yelled at by talking heads in the customer service department.  We have been hung up on.  We have been argued with.  We have spent hours and hours...even days challenging appraisals.  But still we refuse to give up, we just find a way around the obstacle we are facing and keep going.  Our ultimate goal is to get the short sale approved and we don't quit trying.  Giving up is not an option on something that is so important to a homeowner's future.

Short sales are the most frustrating type of real estate transaction on the planet from an agent standpoint.  Sometimes we work for months just trying to get an approval.  After the approval comes THEN we have to do the normal job of a real estate transaction, the part we get paid for.  All of the work we did to get the approval?  We don't get compensated for that.  It's just part of the overall package and the service we provide homeowners in need.

We have found short sale sellers to be very worthy of help.  We have dug in and fought relentlessly for these sellers.  We have spent countless hours on the phone, sending e-mails and sending faxes trying to help them out of what seems like an impossible situation for them.  We do all of this without any guarantee of ever getting paid a dime since we only get paid if it closes.  But we do this anyway because it is the RIGHT THING TO DO.

If you need help selling your Jacksonville home because you owe more than the home is worth let us know.  Our Jacksonville short sale services are free to you.  The lender pays our fees out of the closing proceeds.  There are never any upfront fees, we only get paid if the short sale is successful.  We also never charge a penalty.  If your circumstances change and you no longer need to sell your home, we happily let you out of the listing agreement.  We love it when homeowners who want to stay in their home can stay in their home.

Are short sales ever a waste of time for us?  No.

Will you be the next person we help?  Do you know someone who could use our help?  Tell them about us.