Naptown Blog - Annapolis/Anne Arundel Real Estate

How Will A Short Sale Affect My Credit? Here are the Facts!

Mon, 10 Jun 2013 06:36:42 -0700

“How will a short sale affect my credit score?” Sometimes stated as “how will a short sale affect my credit?” This is the number one question we get from Annapolis, Anne Arundel and Maryland home owners considering a short sale. They may seem like identical questions, but in reality, they are not. After years of guess work and speculation, we finally know the answer to both of these questions! I recently sat in on a webinar presented to Trusted Advisors by FICO, the company that actually generates credit scores for the Big Three credit reporting agencies, Experian, Equifax and Transunion. FICO laid out in detail, how short sales affect credit scores along with the affects of foreclosures, and bankruptcy. So “how will a short sale affect my credit score?” When FICO ran simulations in isolation i.e. all variables other that Foreclosure, Short Sale, or Bankruptcy held constant, the effect on credit scores were as follows: Foreclosure and short sale credit score affects were identical. Bankruptcy lowered credit scores more than Short Sales or Foreclosure. Additional findings were that the higher the borrowers score at the time of the Short Sale, Foreclosure or Bankruptcy, the bigger the hit to the borrower’s credit score and the longer it took for the credit score to recover. Empirically, (studying actual credit scores for home owners with short sales, loan modifications, foreclosure or bankruptcy in their credit history), FICO found that over time, home owners credit scores, recovered most quickly from short sales, no matter what their credit scores were originally, followed by loan modifications, and finally by foreclosures. They didn’t provide that level of detail concerning bankruptcy, but since the effects of bankruptcy on credit scores is longer lasting than any of the other events; it is a safe bet that credit score recovery from bankruptcy is going to take longer than a short sale, loan modification, or foreclosure. The answer to “how will a short sale affect my credit” is a more subjective and really more important. It has to do with how Banks perceive future risk with a borrower who has a short sale, foreclosure or bankruptcy in their credit history. The answer is that Banks perceive less risk from short sales than from foreclosure despite the fact that FICO scores them identically. FICO found that banks rated borrowers who had completed a short sale without any deficiency balance (i.e. a promissory note required for some portion of the deficiency to the bank as a result of the short sale) as lower risk than borrowers who had deficiency balances. According to FICO’s research, the banks perceive borrower risk from lowest to highest as follows…the lowest risk is associated with a short sale with no deficiency balance, followed by short sales with a deficiency balance, then foreclosure, and lastly the worst risk being assessed against bankruptcy. I’ll do a future blog on other credit actions that damage credit scores and what home buyers can do to improve their scores the fastest. Now you know the answer to the question; “How will a short sale affect my credit score?” -- Michael Davis The Davis Resnick Group LLC Info@DavisResnick.com www.DavisResnick.com 410.224.0667 Champion Realty, Inc. The Davis Resnick Group has been assisting distressed homeowners since 2007 with options to foreclosure. Davis Resnick closes better than 90% of all short sales representing sellers. When Experience Matters Most, Count on The DavisResnick Group. Find (Michael Davis, The Davis-Resnick Group, LLC) on Google+

Annapolis homeowners forced to apply for loan modifications

Fri, 17 May 2013 06:28:12 -0700

Annapolis homeowners forced to apply for loan modifications even though they were repeatedly denied loan modifications in the past. Sounds good right?... Wrong! These now unwilling homeowners who are being forced into the loan modification process no longer want the home, obviously can no longer afford the home, and financially are better off being free of the burden. In many cases, the Annapolis homeowners forced to apply for loan modifications are in the middle of short sales. There is a buyer ready to buy and a seller ready to sell but the entire transaction is put on hold, courtesy of the FHAand HUDbecause their guidelines now require that the borrower be put through a loan modification process regardless of any previously denied loan modifications. Short sales, which involve the sale of a home for less than the amount owed are long, arduous, and filled with uncertainty which is why houses sold in short sales sell for significant discounts compared to market prices. Now the short sale sellers and buyers have just been presented with even more uncertainty and delay. My Experience Says To Expect The Following: 1) 1) Foreclosure rates are going to start climbing again and; 2) 2) More and more homes are going to wind up in the hands of large investment funds at deeply discounted prices instead of in the hands of homeowners at reasonable prices. How This Can Happen: The banks, to a large degree, stopped foreclosure proceedings on homes over the last 18 months due to Congressional scrutiny that uncovered a massive pattern of fraud which became known as the “robo-signing scandal”. This massive fraud was perpetrated by the banks to hurry properties through foreclosure. Hey, did you hear of any banking executives go to jail for this?... Me neither. Surprise! The banks have been caught doing their best to line their own pockets instead of helping home owners, as demonstrated by the robo-signing settlement agreement. At this point, the banks just want to get as far away from their self-inflicted wounds as fast as they can. The government, as ever, is happy to oblige by assisting in creating a smoke screen. Annapolis homeowners forced to apply for loan modifications will experience additional delays in their short sales and increased foreclosures. But the government via the FHA and HUD can pat themselves on the back while they pretend to assist homeowners and demonstrate that they are now responding to their previous lack of action. Note that they are not actually offering realistic loan modifications: they are simply forcing homeowners to go through the loan modification process…again. So here is the new normal; require an application for a loan modification… …even though the seller may be in the middle of a short sale; …even though the homeowner may have been declined repeatedly in the past; …even if the homeowner moved out of the house a year ago and neither wants, nor can possibly afford the cost of the home. So once again, the homeowner Seller is going to lose out and the homeowner Buyer is going to lose out. Meanwhile, the bank executives snatch multi-million dollar bonuses and the funds get to “steal away” homes for pennies on the dollar. Success for the financial institutions compliments of Annapolis homeowners forced to apply for loan modifications thus increasing the likelihood of their short sales being delayed until their home is foreclosed on! Find (Michael Davis, The Davis-Resnick Group, LLC) on Google+

There's A Dirty Little Secret About Short Sales That The Public Doesn't Know

Fri, 18 Jan 2013 00:00:00 -0800

There’s a dirty little secret about short sales that the public doesn’t know, but insiders in the real estate business can’t help but know: There are lots of agents taking short sale listings that apparently have no idea what they are doing. At least that is the case in Maryland. Let me give you an example. I have been working with a buyer who wanted to purchase a short sale. We seriously looked at or made offers on four. I spoke to each of the listing agents and not one could tell me what kind of loan(s) the seller had. That’s four out of four! Even scarier is that of the “third party negotiators” I spoke to, at least one not only didn’t know but actually said to me, “what difference does it make? The bank just wants to get it sold.” This is so fundamental that it is mind boggling to me that an agent, not to mention a paid, third party negotiator, could take a short sale and not know this information! Why? Because the entire negotiating, approval, paper submission process is determined by the type(s) of loans. If the seller has an FHA loan, they need to make application to be admitted to the FHA Pre-foreclosure program and get an Authorization to Participate. If they have a conventional loan, they may qualify and need to make application for HAFA. If it’s a VA loan other considerations come into play. Knowing who the investor is also is key: is it Fannie or Freddie? Is it owned by the bank? Is it part of a big securitized pool? What’s shocking to me is how little concerned many brokers must be to allow their agents to list these properties knowing that they don’t know what they are doing. This trend has exploded over the last year. The reason this hasn't bitten the agents or their brokers thus far, in my opinion, is that as a result of the Robo-signing debacle, the banks essentially placed a moratorium on foreclosures last year. That is now history. (See excerpt from Bank of America alert below) My team has been doing short sales since 2007 and it has only been since the advent of the Robo-signing debacle that banks, to a significant degree, stopped pursuing foreclosures while a short sale was in process. Now that the banks have settled those issues with the government, the gloves are coming off again. BANKS WILL, ONCE AGAIN, BE PURSUING FORECLOSURE WHILE A SHORT SALE IS IN PROCESS WITH A VENGEANCE! Incidentally, this is where the real skill and experience in representing sellers in short sales comes into play. The agent/negotiator must be able to fend off the foreclosure while negotiating and completing the short sale. If an agent taking a short sale listing doesn't know or understand the significance of the kind of loan(s) the seller has, it's a pretty safe bet, the don't have the knowledge or experience to prevent or delay a foreclosure while trying to complete a short sale. There will be more foreclosures, there will be more people losing homes due to incompetent handling of the transactions by incompetent agents (and third party negotiators) and I think you can expect, there will be an increase in lawsuits against brokers for failure of oversight on these agents. Food for thought. From Bank of America Short Sale Update January 17, 2013: As of January 15, 2013, there will no longer be a temporary foreclosure hold during the Cooperative Short Sale property marketing phase. We may begin or continue the foreclosure process up until a submitted offer to purchase the property is approved by all relevant parties. Any existing short sale will not be impacted by this change. (emphasis added) There’s a dirty little secret about short sales that the public doesn’t knowFind (Michael Davis, The Davis-Resnick Group, LLC) on Google+

Clueless on Short Sales in Annapolis

Mon, 31 Dec 2012 00:53:53 -0800

Clueless on Short Sales in Annapolis I'm talking about Listing Agents. And on a larger scale, I am talking about many other Anne Arundel County Agents. To be fair, this isn’t simply a problem in Annapolis or Anne Arundel County. As best I can tell, this is endemic to short sales in Maryland within the Baltimore, Washington, Annapolis triangle. Working for buyers, I have spoken to many short sale listing agents and made offers on multiple short sales in the last three or four weeks. Not one of the agents on the other side knew what kind of loan their sellers had. I don’t mean to suggest that no agents doing short sales in this area are experienced and knowledgeable, but it is clear that a majority are not. So why does it matter if the agent doesn’t know what kind of loan the seller has as long as the deal is being “professionally negotiated?” It matters because this very basic information is critical to understanding the short sale process, what tactics to be used in contract negotiations, how to obtain lender approval, how to minimize or eliminate seller/borrower liability and the ultimate probability of getting to closing with the short sale instead of being foreclosed on. If the agent doesn’t even know what kind of loan the seller has and further what significance there is to that information, how can they effectively represent a seller in a short sale? Personally, I believe that when a Realtor takes a short sale listing without the experience or resources necessary to ensure success that it should be viewed as a violation of the Realtor Code of Ethics. Sadly, based on recent experience, it appears to be the norm rather than the exception. Unfortunately, distressed sellers are rarely armed with the information necessary to evaluate the competence of prospective listing agents in these circumstances. I suspect the agents simply tell the sellers, as they often do in their listing comments that the short sale is being “professionally negotiated” (whatever that means), and thereby feel absolved of responsibility. Getting the property under contract is, by the way, only the beginning and usually the easiest part of the process. Nonetheless, these agents seem to feel that all they have to do is get the property under contract, sit back then wait to get paid. Having closed in the neighborhood of 70 short sales while representing sellers since 2007, I have learned that price is just one part of the short sale puzzle. Often, contract terms between buyer and seller are even more important when working to get these deals closed. For the listing agent not to know the type of loan that their seller has, from my perspective, is simply appalling. If you think that’s too strong a term, I actually have a stronger one in mind. Agents frequently don’t know if the short seller has an FHA loan, VA loan, Freddie or Fannie loan. I’ve had agents tell me the second “went away”. ..What? “They aren’t pursuing the borrower”… Oh, so there is a release? Can I get a copy of it? “uh,I just got this from an attorney, you’ll have to ask them”…Seriously? I’ve had agents tell me “this is an FHA short sale and the BPO was done last week”…Really? BPO’s are not done on FHA short sales, they must do an appraisal. At which point, I am greeted by Silence. Then I ask, has the seller made application to be in the FHA pre-foreclosure program?... “Uh, well, I don’t know. XYZ company is doing the negotiations.” I’ve had too many of these kinds of conversations lately. But I strongly feel that this shows a breakdown of responsibility on the part of agents, their brokers, and the so-called “professional negotiators.” Some agents have tried to cover up their lack of knowledge by offering incorrect information until they realized that a smoke blowing exercise was not going to appease me. At this point they usually fessed up to “outsourcing” the “negotiations” with the lender which explained why they didn’t really know about any of those “details”. And if you think the fact that an agent has some kind of short sale “designation” is insurance against this, guess again. I remember when I started doing short sales, dealing directly with the banks on behalf of sellers, back in 2007, my greatest and constant fear was that the homeowner would wind up being foreclosed on. There were very few “third party negotiators” in the entire country back then and we dealt d irectly with the banks on behalf of the sellers. At that time most agents wouldn’t touch short sales due to the time required and complexity of the process. The last thing on earth a real estate agent wanted to do was to try to negotiate a short sale with a bank. Now most feel they don’t have to. And they don’t…don’t handle the negotiations, that is. This “freedom” from having to take on the responsibility of negotiating directly with the bank has led to an unf ortunate consequence: The concern that the homeowner might wind-up being foreclosed on and the consequent care that was engendered by responsible agents seems to have vanished. It’s a shame and a disservice to the sellers and is likely to wind up giving a big, black eye to real estate agents. I understand how hard it is to find listings today. I can see why the majority of realtors jump at the opportunity to list a short sale when the alternative is having no listings. But this could really backfire for our profession and damage our reputation as licensed Realtors for decades to come. In order for brokers, agents, and third party negotiators to serve short sellers properly, It is absolutely incumbent upon the agent to invest the time and take the care necessary to handle them properly. It’s incumbent upon the brokers to make sure their agents handling these actually have sufficient knowledge to do so. And, it’s incumbent upon the third party negotiators to know that they are doing business with an agent that has substantial knowledge of the short sale process. Currently, based on my informal poll, this is not happening. By the way, if you doubt the veracity of any of my statements in this post, just pick up the phone and call a few short sale listing agents who have recently listed a short sale and ask them what kind of loan the borrower has. Ask them if it’s an FHA loan, VA, Fannie or Freddie? Ask them if the borrower qualifies or has made application for HAFA? If they say it’s FHA, ask them if the borrower has applied for or received an Authorization to Participate? If you happen to be a potential short sale seller, here’s a tip for you: ask the agent to show you the MRIS print out detailing the actual short sales they have closed representing sellers and ask them how the negotiations were handled. Don’t be fooled by the “I’ve done lots of them” response. Note the emphasis on representing seller. Representing buyers doesn’t provide the experience you as a seller need from your listing agent. Unfortunately there are way too many agents who are: Clueless on Short Sales in Annapolis The Davis Resnick Group LLC Info@DavisResnick.com www.DavisResnick.com 410.224.0667 Champion Realty, Inc. The Davis Resnick Group has been assisting distressed homeowners since 2007 with options to foreclosure. Davis Resnick closes better than 90% of all short sales representing sellers. When Experience Matters Most, Count on The DavisResnick Group. Find (Michael Davis, The Davis-Resnick Group, LLC) on Google+

No More HAFA for Fannie Mae and Freddie Mac Short Sales in Annapolis!

Wed, 19 Dec 2012 03:52:10 -0800

No More HAFA for Fannie Mae and Freddie Mac Short Sales in Annapolis! Fannie and Freddie lagged Treasury’s original roll out with their own version of HAFA and is now dropping that program in favor of it’s own new program. Bank of America, in it’s inimitable style sent out an announcement today, December 18th, notifying agents that the cut-off date for Short Sale Agreements (SSA’s) to be issued to borrowers for Fannie and Freddie short sales files without an offer is (was actually) December 14th. Meanwhile, the U.S. Treasury, the originator of the HAFA program is coming out with it’s own revision to HAFA to align it’s program more closely with the new Fannie and Freddie short sale programs as announced in its Supplemental Directive 12-07 · These rules go into effect on February 1, 2013, though servicers may begin implementing them sooner. · Borrowers 90 or more days delinquent with FICO scores less than 620 have a “pre-determined hardship. They will be required to execute a Hardship Affidavit prior to closing, but servicers won’t be required to gather further proof of hardship-of course the servicer may still require it. · Servicers will be required to provide a decision as to acceptance into HAFA within 30 calendar days, down from 45 days. · Incentives for second lien holders have been increased significantly. · HAFA’s anti-flipping rules for short sales have been changed. Now short sales can be resold after 30 days (down from a 90 day waiting period) except that sales for more than 120% of the HAFA closing price are still prohibited between 31 and 90 days after the HAFA closing. · Investor owned properties may now qualify for HAFA. To qualify for Fannie or Freddie’s HAFA program, an application must be made by the borrower to the servicer no later than December 31, 2013. Check out my upcoming blog for information on Fannie and Freddie’s new short sale programs which commence on January 1. No More HAFA for Fannie Mae and Freddie Mac Short Sales in Annapolis! The Davis Resnick Group LLC Info@DavisResnick.com www.DavisResnick.com 410.224.0667 Champion Realty, Inc. The Davis Resnick Group has been assisting distressed homeowners since 2007 with options to foreclosure. Davis Resnick closes better than 90% of all short sales representing sellers. When Experience Matters Most, Count on The DavisResnick Group.Find (Michael Davis, The Davis-Resnick Group, LLC) on Google+

Loan Modifications Don't Save Annapolis Homeowners from Foreclosure

Mon, 10 Dec 2012 01:24:52 -0800

Loan Modifications Don’t Save Annapolis Homeowners from Foreclosure in Annapolis. Though not specific to Annapolis, this conclusion was reached in a Research Paper published by the Federal Reserve Bank of Atlanta which was the subject of an article in The Sunday New York Times The article examines empirical evidence for something many of us who assist in loan modifications and short sales have long believed...Loan modifications don’t save Annapolis homeowners from Foreclosure-- And neither does the requirement of judicial approval prior to foreclosing. The article compares foreclosures in “Judicial” states to “power-of-sale” states. Judicial states require the lender to appear before a judge to obtain permission to foreclose. In power-of-sale states, such as Maryland, the lender merely files the appropriate paper work, waits the statutory time period and then forecloses. The article also examines the outcomes of a law in Massachusetts, which requires a cure period (extending the time required prior to foreclosure). The researchers found that although Judicial states and Massachusetts, with its cure legislation, significantly extended the time from borrower default to foreclosure, the end result for the defaulting homeowner was the same: foreclosure. Interestingly, Maryland’s time frames appear to parallel those of the Judicial states, possibly because of the insertion of Maryland’s Foreclosure Mediation Law into the process. But again, the end result is the same: Loan Modifications Don’t Save Annapolis Homeowners from Foreclosure in Annapolis The Davis Resnick Group LLC Info@DavisResnick.com www.DavisResnick.com 410.224.0667 Champion Realty, Inc. The Davis Resnick Group has been assisting distressed homeowners since 2007 with options to foreclosure. Davis Resnick closes better than 90% of all short sales representing sellers. When Experience Matters Most, Count on The DavisResnick Group.Find (Michael Davis, The Davis-Resnick Group, LLC) on Google+

New Nationwide Independent Foreclosure Review Program available in Annapolis, Maryland

Tue, 01 Nov 2011 12:51:18 -0700

Were you or a client in foreclosure at anytime in 2009 or 2010? You need to read this blog. As a result of a consent decree between federal bank regulators including the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS) , and the Board of Governors of the Federal Reserve System, Home owners who had their homes foreclosed on from January 1, 2009 through December 31, 2010 will have the opportunity to have the foreclosure reviewed regardless of the fact that the home has been resold to another owner. Calls by us to the toll free number 888-952-0105, netted mostly information also found on the website www.independentforeclosurereview.com and uncertainty as to how foreclosed homeowners are to apply for a review. The person we spoke to stated that they ( The Independent Foreclosure Review Group) were selected to provide an independent review of the foreclosure process. Foreclosures found to have the following "problems" could be eligible for assistance although it is not clear what that assistance would take. When we asked for information on how to apply, we were directed to the Financial Services Roundtable ( www.fsround.com for additional information. The Financial Services Roundtable is a trade association which includes loan servicers. Servicers participating in this program include the following (from the www.independentforeclosurereview.org ): America’s Servicing Co. Aurora Loan Services Bank of America Beneficial Chase Citibank CitiFinancial CitiMortgage Countrywide EMC EverBank/EverHome Mortgage Company GMAC Mortgage HFC HSBC IndyMac Mortgage Services MetLife Bank National City Mortgage PNC Mortgage Sovereign Bank SunTrust Mortgage U.S. Bank Wachovia Mortgage Washington Mutual (WaMu) Wells Fargo Bank, N.A. Reasons for remedy's quoted from from the Review's Website Include: The property was sold due to a foreclosure judgment. The mortgage loan was referred into the foreclosure process but was removed from the process because payments were brought up-to-date or the borrower entered a payment plan or modification program. The mortgage loan was referred into the foreclosure process, but the home was sold or the borrower participated in a short sale or chose a deed-in-lieu or other program to avoid foreclosure. The mortgage loan was referred into the foreclosure process and remains delinquent but the foreclosure sale has not yet taken place. The property must have been owner occupied, serviced by one of the above listed participating servicers and in the foreclosure process sometime between January 1, 2009 and December 31, 2010 While it is only the first day of the roll out of the program, we would have hoped for firmer information from the group that is going to be doing the reviewing. Find (Michael Davis, The Davis-Resnick Group, LLC) on Google+

Maryland Homes - 100% Success Rate with Short Sales

Tue, 20 Sep 2011 07:39:39 -0700

Click image to view video. 100% success rate with short sales “How can you stand to do short sales with all the frustrations?” That was the question another agent asked me as we were walking into our office from the parking lot this morning. In essence, I told her we do them because we are successful at them. What I didn’t say was how much pleasure we derive from helping people solve what is a really big problem in their lives or the pleasure we get from overcoming the bureaucracy the banks have created to make these difficult. She then told me that she lost a listing to an agent who claimed “I have 100% success rate with short sales” My response was, “that agent’s done very few and was very lucky or they are flat out lying.” How do I know this? Although our close rate is better than 90% over the years representing dozens of sellers, there are occasionally: loan servicers who refuse to accept reality Sellers who request a short sale after 2 years of failing to pay their mortgage with a foreclosure sale scheduled in less than 2 weeks servicers who decline a short sale because they make more in fees by foreclosing than approving a short sale, regardless of the fact that the short sale is to the investors benefit. sellers who refuse to cooperate to the degree necessary to complete the sale buyers who pull out of transactions, sometimes just prior to getting a bank approval and just prior to a scheduled foreclosure sale date. Our experience is confirmed by top short sale agents in our network that we work with around the country who have done literally thousands of short sales. The agent from my office then told me that the other agent didn’t netgotiate the short sales, she had them done by an attorney. So in other words, the agent didn’t actually do short sales at all. The agent from my office said, that apparently, this other agent just withdraws the deals that don’t get approved from the market and essentially pretends they never happened. So if any agent tells you they have 100% success rate with short sales, I’d be highly skeptical and demand proof by getting a list of all the properties they’ve listed in the last 4 to 5 years. Odds are virtually 100%, that their track record won’t support their claim of “I have a 100% success rate with short sales.” In fact, it is quite likely that they don’t actually do them at all.Find (Michael Davis, The Davis-Resnick Group, LLC) on Google+

Maryland - VA Appraisals and Short Sales

Tue, 20 Sep 2011 06:08:12 -0700

Click image to play video. VA Appraisals and Short Sales Hi, I am Michelle Resnick. I am talking to you today about a short sale that we had with Wells Fargo. There were two VA Appraisals done. The buyers bank was able to get the VA appraisal done before the short sale bank, Wells Fargo, was able to issue their evaluation of the property. VA actually ended up with two appraisals and they were $20,000 apart. The buyer only qualified for the lower of the two values so we did dispute with VA After many, many phone calls, and lots of dialog going back and forth we were able to obtain a short sale approval for the buyer at the lower of the 2 appraisals. If anyone ever tells you, that when an appraisal comes in higher than the property value, you cannot dispute it, they are wrong. We did, we can, and we will. We are successful in getting these short sales done. If you would like us to help you please contact us today at (410) 224-0667 or at davisresnick.com. I am Michelle Resnick with the Davis Resnick group. We are your bridge to a brighter future. Find (Michael Davis, The Davis-Resnick Group, LLC) on Google+

FTC Eliminates Disclosure Requirements for Real Estate Agents on Short Sales

Mon, 18 Jul 2011 07:59:45 -0700

Amazing. The Federal Trade Commission actually repealed the non-sensical disclosure requirements tailored toward loan modification, but required for a while for short salling real estate agents. Click here to see the FTC's statement.Find (Michael Davis, The Davis-Resnick Group, LLC) on Google+

Introduction - Bank Schemes that Suck You Dry - Loan Modifications/Shorts Sales Annapois Realtors

Wed, 06 Jul 2011 04:50:43 -0700