New Federal Housing Administration loan assistance

New FHA foreclosure loan assistance

Owners with FHA loans should soon be eligible for payment modifications under a new government program. Read more

Countrywide’s promised loan relief falling short for many

Countrywide loan relief falls short?

The defunct subprime mortgage giant promised $1B to struggling Floridians, but critics say it’s failing to deliver the goods. Read more.

Treasury Announces Short-Sale Support

The U.S. Treasury Department last week unveiled a plan designed to streamline and encourage short sales, a move RE/MAX leaders have been advocating for some time.

Under provisions of the newly created “Foreclosure Alternatives Program,” the process will soon include standardized documentation, cash incentives to lenders and moving allowances for homeowners.

RE/MAX International supports the government’s action.

“We applaud the administration for creating the Foreclosure Alternatives Program, which promotes the short-sale process,” says RE/MAX International Chairman and Co-Founder Dave Liniger (ABR, CRB). ”We’ve been talking with key lenders and government officials for months about the short-sale issue and couldn’t be more pleased that our hard work has finally paid off.”

Here’s a Treasury Department fact sheet about the plan, as well as a release from the National Association of Realtors.

Because RE/MAX International leadership recognized the viability of short sales as an important piece of the foreclosure puzzle, more than 5,000 Associates already have been trained through the Certified Distressed Property designation course, which covers the process in detail. The next airing on RSN is June 9-10.

“We’ve been preparing for, and pushing for, this type of action,” says Mike Ryan, RE/MAX International Senior Vice President of Media Training. “We’ve felt for a long time that short sales provide a lifeline for homeowners who can’t afford to stay in their homes, even with a loan modification. With a short sale, the sellers get out of a bad situation, the banks save on costs and the neighborhood avoids the many problems associated with vacant, foreclosed properties.”

Ryan says it’s more important than ever for Associates to learn how to handle short sales, which have traditionally been avoided by agents unwilling to navigate the long, frustrating and often unsuccessful terrain.

“It’s understandable why many Associates have been reluctant to pursue this business. But with distressed properties accounting for half of U.S. sales and a whole new level of attention now being put on making short sales easier to complete, it really is time to let go of any reservations,” Ryan says. “With the Treasury Department’s involvement, we’re going to see a lot more emphasis on short sales, through lenders, the media and the public. Our people need to be as educated as they can be about this segment of the market.”

Two days after the Treasury announcement, The New York Times published a story, headlined “Lenders More Open to Short Sales,” that included this passage:

“Mr. Mitchell of Lynx says short sales are often the best approach, even for homeowners considering a new loan to save the home. ‘It’s gotten to the point where people understand that sometimes you have to start over,’ he said. ‘A loan modification might help you in the short term, but sometimes what people need to do is get out completely.’”

The perception of short sales is clearly changing, Ryan says.

“It’s up to us, and each individual Associate and brokerage, to be prepared,” he says. “The foreclosure problem isn’t going away anytime soon, and in fact will probably get worse before it gets better. But short sales provide a source of relief – and we want our agents to be able to close them better than anyone.”

Watch for legal traps with distressed sales

WASHINGTON – May 18, 2009 – Short sales and bank-owned properties represent one of the best opportunities to grow a real estate business today.

Yet they can expose practitioners to legal liability if they’re not careful, legal experts said Wednesday at the 2009 Realtors® Midyear Legislative Meetings in Washington, D.C. Here are their tips for steering clear of trouble.

• Be wary of calling yourself an expert. Almost overnight, companies have sprung up offering the chance to become “certified” as a specialist in short sales or REOs. Although some programs might provide good training, you invite trouble if you go overboard and market yourself as an expert,” said Chuck Kasky, director of legal affairs for the Maryland Association of Realtors.

• Read the fine print. Some certification companies have an indemnification clause that puts all legal costs on your shoulders if they’re included in any lawsuit against you. “Read their disclaimers,” Kasky said.

• Don’t engage in the unauthorized practice of law. Increasingly common practices – broker price opinions, negotiating with lenders in short sales and advising homeowners about a loan modification they could consider before resorting to a short sale – could be challenged as either unauthorized practice of law or outside the scope of a sales associates’ license. Even accepting a fee for broker price opinions – in states where they’re allowed – might create trouble for sales associates who accept fees directly rather than through their broker, Kasky says.

• Check your E&O coverage. If you help homeowners navigate a loan modification, an E&O policy might not cover your actions if you’re sued, says Michelle Lind, general counsel of the Arizona Association of Realtors. Providing such help is considered the business of housing counseling agencies, not brokerages. Similarly, if you handle REOs for a lender, be sure your E&O policy covers property management activity, she says. Many REO property sales tasks are property management functions – getting utilities turned on, keeping the property secure if it’s vacant and even evicting people.

• Watch out for flippers. Be on the lookout for the growing practice of investors buying short sales and then flipping them, Lind adds. Depending on how they’re structured, the transactions might raise legal issues, and sellers might look to you if they’re unhappy with what they got for their property.

Source: Robert Freedman, Realtor® Magazine

© 2009 FLORIDA ASSOCIATION OF REALTORS®

Feds plan ’surge’ in mortgage fraud cases

TAMPA – Faced with rampant mortgage fraud that has helped pull the economy into a ditch, federal authorities are in the midst of a “surge” in investigations that they expect will increase prosecutions tenfold in the next year.

 

Read full story: http://www2.tbo.com/content/2009/may/07/feds-florida-ground-zero-mortgage-fraud/news-money/

Company responds to broker inquiries

We had added a blog this past weekend entitled Turning short sales into big profit. And this has created a buzz throughout our industry and the community in the Tampabay Area. And we came across follow on story that we thought you would definitley like to read. Below is a link to the page.

http://www2.tbo.com/content/2009/may/05/sp-company-responds-to-broker-inquiries/

Cindy and I are a family owned and operated business. We do things the old fashioned way. We plan in being in the Real Estate field for many years to come. We will assist anyone who is in need of help in selling their home under a Short Sale or Pre-foreclosure. Nick is Certified Distressed Property Expert. And is in communication with banks daily.

We hope that these types of actions do not have a negative impact on Realtors(R) as a whole. If you are having troubles or know someone who is. Please do not hesitate in getting in touch with us. You can always call us at 813-300-7116 or email us at NickandCindyDavis@verizon.net

We have been quite successful in assisting over 50 families in Short Sales, and over 35 families buy their home in the past 2 years.

Turning short sales into big profit

We came across this Article that was on the front page of the Tampa Tribune and we thought it was worth getting on our site:

http://www2.tbo.com/content/2009/may/03/na-turning-shortsales-into-big-profit/

Compliments to Writer! This article has caused people to question some of the activities that have recently been happening in our area. Let me start off by saying ethically the listing agent represents the Seller. We can facilitate both sides of a sale and represent the Buyer and Seller at the same time. But what is happening here the listing agent is not submitting the highest and best offer to the Original Sellers Lender. We have been doing short sales for nearly 3 years and have been quite successful at assisting our clients in getting the sale approved with no adversities.

All the things that some agents are hiding behind are legal in the way they were implemented.  The one thing that is questionable is CAN IT APPLY IN A SHORT SALE? Since our goal in a short sale is to get the best offer with the best terms for our Client, so that they can get out of the bad situation they are in. I wonder if that is the listing agent or “Investors” ultimate goal. Or is it just to make as much money off one sale.

Ultimately this is a bad day for the True Professionals in the field and we will have to deal with the ramifications of these type of people. What a shame it is. We have spoken with several banks and they will not accept Option or Even Assignable Contracts. So I hope all that are involved in this type of practice have put some of the cash they made away for a rainy day, because it is coming soon.

Things to consider. Is the bank seeing the end buyer’s offer? If there is a contract; can the home remain Active in the Local MLS System? Is it really a Short Sale to the end buyer? The answer to these questions would probably be NO! And that is not a good answer.

And just a few more things to think about. Whose money is funding the “Investors” Closing? Are all Closing Costs Paid on” Investors” purchase from the Bank? Or is just the end buyer’s sale? I am sure the County would like to get paid on a sale that happened. Why would the bank accept less from the investor when there is an end buyer who is willing to pay more (On the Same Day!) This all sounds kind of fishy to me. The truth of the matter is that there are good and bad people in every career out there and let’s hope that this does not tarnish the good ones.  

Oh we thought we would add that we submitted an offer for one of our customers to purchase a home in Valrico Last night, it was full price $130,000.00, and buyers are pre-approved up to $160,000.00 and we received a written message that said “Nick & Cindy- Per our discussion earlier. The seller is not accepting FHA on this particular property. If buyer can secure other financing, please let me know.’

I asked when we spoke on the phone what does this mean.  I was told by the agent “This was a flip with an option contract and due to the seasoning rule for FHA; they were not accepting FHA Offers”

 So this home cannot be purchased by our customer because they are entitled and choose to use an FHA mortgage.  All so an “Investor” can make their money on the flip. It is a sad day.

Senate passes bill targeting mortgage fraud

MORTGAGE FRAUD

The U.S. Senate voted Tuesday to hire hundreds more FBI agents and prosecutors to investigate the estimated 5,000 allegations of mortgage fraud reported each month. The Senate bill is estimated to cost more than $265 million a year for the next two years, but fines and penalties could make the program pay for itself.

Read the full story:
http://www.floridarealtors.org/NewsAndEvents/n5-042909.cfm

Sellers Beware Short Sale Scams

We have been doing Short Sales for almost two years now and we have been pretty successful in assisting our customers through what can be considered to be one of the most difficult times in their lives. The dream of owning a home and now that dream has come to an end at least for now. We are Realtors with RE/MAX and take our job very serious and it troubles us when we hear the stories of the people who are preying on someone in trouble.

We negotiate all of our short sales ourselves. We try and make light of the fact that we have most of the banks on our Alltel Circle of Friends, but it is true. When we get an offer on one of our listings we have a above 90% success in closing. Between the two of us we spend a great portion of the day speaking, faxing, and re-faxing documents for the 2^nd and 3^rd time to the banks.

OK, now for what is bothering us. We have heard about realtors who are doing things to expedite the sale (as they say) and submitting an Option Contract on the purchase of the home in pre-foreclosure. Here is an example:

Seller (Customer) owns a home with $200,000.00 mortgage and they are 2-3 months behind in payments. The Realtor has someone or submits an offer themselves to purchase the home for $125,000 (this price is below what is now market value) and they are now (Buyer 1) for this example let’s say value is $155,000.00. They record an option contract with the Clerk of Courts in the county where the home is located. And then they submit the offer to the bank and either negotiate the process themselves or use a third party to negotiate for the seller. Sounds good so far, usually the Realtor will explain that this contract will speed up the process since the banks are so overwhelmed with the number of short sale requests they are getting today.

Now the home stays active in the MLS system and the Realtor is advertising the home at $160,000.00 and listed as a short sale. Let’s say Buyer 2 submits an offer for $150,000 and the person who has the Option Recorded is the signatory as Seller on this contract now. But is it really a short sale? If Buyer 1 buys the home from seller and the bank accepts the $125,000 offer is it truly a short sale to Buyer 2?

The Realtor never submits the $150,000.00 offer to the bank, why not? Isn’t it their responsibility to represent their customer and submit the highest and best offer to the bank? One would think since a $25,000 difference to the bank could be the difference in forgiveness of the loss or the original Seller having to sign a promissory note for the deficiency.

But here is a scenario that can happen and sometimes it does.

Listing agent may represent Buyer and Seller for the Option Contract sale which could be between 5 or 6% commission in the short sale. $7,500.00 wow that is a lot of money right, but for some that is not enough. They think that they need to make more. Because if they are the option holder and become the Seller for Buyer #2 then they make the difference between $125,000.00 what they purchased the home for during the short sale. And then the new sales price of $150,000.00 which would be $25,000.00 more minus closing costs and if another Realtor is involved they must pay that realtors commission. What a mess right?

It astonishes us that people can justify to themselves that they are doing what is right for their customer by doing this. We have never submitted a bogus offer or an option contract in any of our short sales, the process if done correctly can take 30-45 days of price reductions to get the home within where you will get an offer on the home, this also will solidify to the bank that you did your due diligence and tried to sell the home for Fair Market Value but could not. Once an offer is received by the bank it averages 60-75 days for the banks to go through their process (baring no lost documents) that is why all of our packets go to the bank with the loan number on each page.

We can say from personal experiences that this Option Contract can be deemed a good thing, but we have actually been contacted by Realtors and investors who want to purchase our customers homes and have said to us that they will negotiate the short sale. Yeah right! I am sure that they will submit a really good offer on our customer’s behalf. In one instance we explained that this Seller actually was in the mortgage industry and sat down with two or three Realtors before contacting us and chose us to represent them because of all the shady practices and they were presented during the listing presentation. These people do not represent the customer and that is our responsibility they are our customer.

We also had a company call us and say that they could free up our time by negotiating the short sale for us. We asked what their success rate was and they responded 25%. Well that is significantly below what we are doing now so we passed. We believe in what we are doing and know that it is the ethical thing and will never waiver from it. We feel so confident in what we are doing that we are willing to provide anyone who is interested or does not believe what we are saying they can contact our customers. We have completed the Certified Distressed Property Expert Course this year and can say that this one of the best course we have ever taken. The course was informative and took us through the ins and outs of a short sale. No gimmicks or tricks, just work. Yes we are professionals with a license and this is our chosen profession. Work and vacation are not supposed to be the same thing. If you are in need of any assistance please do not hesitate in calling us with any questions.

Sellers beware; bad times bring out bad people.

‘Protecting Florida Homeowners’ roundtable discusses foreclosure prevention

TAMPA, Fla. – April 21, 2009 – Florida Chief Financial Officer Alex Sink brought together top Florida lenders and lawyers with the Florida Attorneys Saving Homes program yesterday in Tampa during a roundtable discussion focused on keeping more Floridians in their homes. As part of the ‘Protecting Florida’s Homeowners’ Roundtable discussion, top lenders and volunteer lawyers developed solutions for better communication and negotiation, as they work to ease some of the challenges facing Floridians who struggle to pay their mortgages and face the threat of foreclosure.

“As we are all aware, for a number of years Florida has been ground zero for the housing crisis faced by our country,” said CFO Sink. “That’s why I have worked to find avenues to provide real, tangible help to Floridians facing the threat of foreclosure. I hope today’s discussion serves as a foundation for increased cooperation between lawyers and lenders who want to keep more Floridians in their homes and more Floridians paying their mortgages on time.”

The roundtable gave lenders and pro bono lawyers the chance to discuss ways to improve communication and interaction. They also discussed how the new homeowner assistance plan from the Obama Administration affects their work moving forward.

Lenders represented at the roundtable included: Bank of America and Countrywide, IndyMac Bank, JP Morgan Chase and Washington Mutual, Saxon Mortgage Services, Wachovia and Wells Fargo, and SunTrust Bank.

CFO Sink plans to follow up on discussed action items, such as:

• Appointing a lender ombudsmen to facilitate and improve Florida Attorneys Saving Homes interactions with lenders.

• Identifying the key documents sought by lenders from homeowners to fast-track Florida Attorneys Saving Homes assistance.

• Setting timelines for resolutions, which would help both lender and lawyers manage time and expectations.

• Embracing the Making Home Affordable Plan to further assist customers with available federal assistance.

• Improving lawyer and lender expertise on issues related to foreclosure prevention.

• Stalling foreclosures during the negotiation process for Florida Attorneys Saving Homes clients committed to keeping their homes.

In 2007, CFO Sink reached out to the Florida Bar and asked that they provide assistance to struggling homeowners in the state, and the Florida Attorneys Saving Homes program was created. The program pairs pro bono attorneys with Florida homeowners who are behind on their mortgage payments, to help these homeowners try and find solutions with their lenders. Over 1,000 lawyers across the state have volunteered their time in response to CFO Sink’s call to launch this program.

In addition to the Florida Attorneys Saving Homes Program, CFO Sink has also launched the Florida Housing Help Initiative to assist homeowners facing foreclosure. The initiative partners with community organizations and elected officials to hold foreclosure workshops around the state, and nearly 1,000 families have already attended these events.

For more information on CFO Sink’s Florida Housing Help Initiative or the Florida Attorneys Saving Homes program, visit www.MyFloridaCFO.com.

© 2009 FLORIDA ASSOCIATION OF REALTORS