San Diego real estate blog - Peter Toner

C.A.R. open letter on short sales

Ana Maria Goodemote — Thu, 31 Mar 2011 02:47:00 +0000

The California Association of Realtors had recently written an open letter …

… which had appeared in several newspapers statewide this month. In it, President Beth L. Peerce has outlined the difficulty we as Realtors® and you as consumers are facing with the short-sale process.

This letter is to address the banks responsibility in the approval process with hopes to try to streamline the sale; so more who are filing for a short-sale can sell, and buyers, can actually purchase the short-sale home they’ve made an offer on. I hope you find this an educational read on what we all have been going through.

For more information on short-sales in California, please go to shortsalescalifornia.org.

C.A.R. open letter on short sales

March 10, 2011

An important message from the CALIFORNIA ASSOCIATION OF REALTORS®:

I write on behalf of the CALIFORNIA ASSOCIATION OF REALTORS®, whose 170,000 members continue to witness the devastating consequences the home foreclosure crisis is having on California's families, neighborhoods, and communities on a daily basis.

The number of families affected by foreclosure is staggering. During the past three years, more than 640,000 Californians have lost their homes. With the number of homeowners who owe more than their home is worth hovering at 30 percent, experts predict there will be many more foreclosures in 2011 and 2012. Unless we take immediate, aggressive action to assist these homeowners, any meaningful recovery in the housing market and overall economy will continue to be delayed.

Tragically, only a fraction of those who face foreclosure will remain in their homes when all is said and done. Those whose incomes and financial circumstances meet strict guidelines may qualify for a loan modification that will reduce their monthly payment to more affordable levels. Yet the federal Home Affordable Modification Program (HAMP) is expected to prevent only 700,000 to 800,000 foreclosures nationwide before it expires at the end of 2012, and the program does little to help those homeowners who are unemployed or otherwise no longer able to meet their financial commitments. Their last hope is to sell their home, which often means convincing their lender or the investor who "owns" the loan (and, in many cases, the holder of a second mortgage lien and the mortgage insurer) to accept a "short sale."

With a short sale, homeowners with a proven hardship negotiate an agreement to sell their home for less than the balance owed. Although not every homeowner or mortgage is eligible, those who are able to finalize a short sale avoid a foreclosure on their credit record and can move on with their lives. Last year, 20 percent of home sales in our state involved short sales.

Short sales can play an important role in our state's economic recovery by accelerating the pace of home sales and reducing the inventory of bank-owned homes on the market. There are other benefits as well. Homebuyers who can qualify for a mortgage at today's low interest rates also are able to purchase a home at below-market prices. Banks get a nonperforming asset off their books and avoid the headaches associated with disposing of assets they don't want to own in the first place. Neighborhoods have fewer abandoned homes, and local businesses have more customers with money to spend.

Unfortunately, many homeowners are unable to successfully negotiate a short sale. According to a recent survey of 2,150 California REALTORS® who have assisted clients with a short sale, only three out of five transactions closed – even when there was an interested and qualified buyer.

What's the problem? For one, no two mortgage agreements are the same, so it can be difficult to standardize short sale processes and procedures. Many homeowners have second mortgages, which further complicate matters. Then there's the challenge of convincing multiple parties to take a financial loss or, in the case of loan servicers, to forego fees they otherwise might earn during the course of the foreclosure process.

Poor and slow service by many banks and servicers has only exacerbated the problem. Horror stories abound from potential homebuyers and REALTORS® forced to wait 90 or more days for a response to a purchase offer or being required to fax short sale applications or other paperwork as many as 50 times.

These delays discourage potential homebuyers from considering a short sale purchase and undermine the process for those who short sales are intended to benefit – the hundreds of thousands of families facing foreclosure.

Increasing the number of closed short sales by speeding up and streamlining the short sale process is one important way we can help California families avoid foreclosure and move our economy closer to recovery. That's why the California Association of REALTORS® is taking steps to enable more families to arrange a short sale. Recently, we advocated for improvements to short sale guidelines established under the federal Home Affordable Foreclosure Alternative (HAFA) program. We're meeting with major banks, U.S. Treasury officials, government-sponsored entities (including Fannie Mae and Freddie Mac), and others to urge them to standardize processes, comply with federal guidelines, improve communication with other stakeholders and increase staffing with the goal of eliminating service issues. We've also offered our members training in every aspect of the short sale process so they can assist their clients.

But we can't do it alone. That's why we're focusing the spotlight on short sales and calling on regulators, elected officials, nonprofits, business organizations, companies, and individuals with a stake in California's economic future to resolve this issue and others that get in the way of a recovery. It won't be easy, and some compromises will be required. The important thing is that we need to act today. Our families and our communities can't wait any longer.

Sincerely,

Beth L. Peerce
President
CALIFORNIA ASSOCIATION OF REALTORS®

Warning – beware of false designations

Erin McBratney — Wed, 09 Mar 2011 03:44:08 +0000

A consumer warning has been issued by the Department of Real Estate (DRE) …

… about false and misleading designations, certifications and/or credentials being used in the advertising and marketing of assistance to homeowners in connection with home loans, short sales and foreclosure rescue services.

The DRE has noticed a rise in the number of companies offering materials, expensive courses and "leads" that have no substantive or meaningful content and which are designed to allow those who pay for the courses to claim they have "certifications", which basically are worthless.

The DRE is warning consumers to be cautious and for licensees to only choose reputable courses, with quality content, for their certifications.

Erin McBratney, Realtor
Prudential California Realty
working with Peter Toner
DRE # 01846670

The wrong, bad sort of flipping

Peter Toner — Mon, 28 Feb 2011 23:08:28 +0000

Short sale scams are getting ever more inventive.

This one is brought to us by Sam Kraemer, General Counsel of Prudential California Realty.

I got a call last week about a new short sale scam that was, at least, new and interesting. In this transaction, shortly before listing the property for sale, the seller transferred the property into a family trust. Then, after it was put on the market, an investor offered to buy the property.

More of the gory details:

Understanding that short sale lenders prohibit flip transactions these days, the parties came up with a new, “creative” structure. Rather than buy the property in the first, short sale transaction, the buyer instead agreed to purchase the beneficial interest in the trust.

That way, when the bank approved the short sale and was paid off, the property would not transfer.

Instead the investor/buyer would become the beneficiary of the existing owner of the property, the trust.

Then, when the property was sold to the ultimate buyer who the investor had already located, title would transfer for the first time, therefore theoretically not violating the “no flip rule.”

Of course, it is very easy to see what is really going on here. This is really a flip transaction (not the kind in the photo!), just structured in a way so as to get around the bank’s prohibition of such deals. Of course, no one is telling the bank what is really going on and, as a result, we refused to be involved.

The short sale “professionals” are very clever in their scams and keep coming up with new ones so they can stay one step ahead of the banks.

Agents and owners need to be especially vigilant. These sorts of shinanagins can result in lots of time spent in small rooms with locked doors.

No wonder loan mods are hard :-(

Peter Toner — Wed, 09 Feb 2011 22:01:12 +0000

If you ever wondered if it was possible to talk your lender into a loan modification ..

…. you might want to watch this and see why some lenders are making a fortune by encouraging short sales.

The FDIC, One West Bank, Goldman Sacks all one tight little happy family.

Watch the video that explains all and I apologize if you feel nauseated afterwards

Foreclosure crisis stalls sales

Erin McBratney — Wed, 05 Jan 2011 18:36:22 +0000

Banks are having a tougher time selling properties due to the foreclosure mess.

The number of properties coming to auction in Arizona, California and Nevada has declined by more than 30% according to Foreclosure Radar, which tracks foreclosures in 5 Western States.

Sean O'Toole, CEO of Foreclosure Radar, says investors are backing away from sales because they fear the properties will be tied up in an investigation. O'Toole states, "the fear that has been created is based more in hype than in law".

It is his belief the problem is short-lived and ultimately will be settled in favor of the banks.

Changes proposed for mortgage interest rate deduction

Erin McBratney — Thu, 16 Dec 2010 20:20:03 +0000

Last week a proposal was issued by the White House's Deficit Reduction Commission

that calls for changes in how the country collects taxes and spends money.

One of the recommendations being made to Congress is a proposal to change the mortgage interest rate deduction.

A recommendation in the proposal offers a 12% non-refundable tax credit to all taxpayers and capping the mortgage interest deduction to loans less than $500,000 with no credit to homeowners on second homes.

This proposal is strongly opposed by both the California Association of Realtors (CAR) and the National Association of Realtors (NAR) who believe it will negatively impact the housing market, contribute to further price declines along with diminished equity for those who currently own homes and erode opportunities for future homeownership.

Your borrowers benefit from new guidelines

Erin McBratney — Fri, 10 Dec 2010 18:35:27 +0000

Fannie Mae (FNMA) has new lending guidelines taking effect December 13th

which will help some borrowers and hinder others.

The new rules will allow buyers to use grants & gifts from non-profit groups for their minimum 5% down payment.

There was a previous 5% contribution required from borrowers using their own funds with additional money for down payment permitted as a gift. Freddie Mac (FHLMC) is also considering similar guidelines.

Fannie Mae is cracking down at the same time on debt-to-income ratios, with the maximum ratio on a conventional loan set to drop from 55% to 45% under the new guidelines. There will also be increased scrutiny of payment histories on revolving debt and buyers who have missed a payment will have 5% of the total balance added to their ratios.

Additionally, borrowers who have gone through foreclosure will be excluded from qualifying for a FNMA loan for 7 years, an increase from the previous 4 year limit.

Debt relief service companies – new regulations

Erin McBratney — Wed, 17 Nov 2010 16:34:24 +0000

Effective October 27th, new federal laws are making it more difficult

for debt-relief companies to victimize consumers.

Now these types of companies are prohibited by the new laws from charging consumers until they've helped them reduce or change the terms of at least one debt.

The Better Business Bureau has received more than 6000 complaints since December 2007 from consumers regarding debt-relief companies.

The most typical complaints involved fees charged to consumers burdened with debt but failed to reduce or eliminate debts as promised.

Erin McBratney, Realtor
Prudential California Realty
working with Peter Toner
DRE # 01846670

California’s Cash For Appliances program – money still available

Erin McBratney — Sat, 13 Nov 2010 04:00:14 +0000

Cash for appliances!

There is approximately $8.3 million in rebate funds remaining in California's Cash For Appliances program as of last week.

The program started with $31.7 million.

Since April 22nd, rebate applications have been accepted by the state for $200 qualifying refrigerators, $100 clothes washers and up to $50 for room air conditioners.

The program was expanded on July 29th to include $50 for freezers, $100 for dishwashers, $300-$750 for water heaters and $500-$1000 for heating, ventilating and air conditioning systems.

So far, 191,502 applications have been received. Washers remain the most popular purchase with 75,734 sold.

The program will end when funds are depleted.

For details visit cash4appliances.org or call (888) 390-4034.

Foreclosure paperwork – robo signings

Ana Maria Goodemote — Tue, 09 Nov 2010 20:59:10 +0000

As I have been blogging recently,

the latest buzz surrounding real estate has been the stopping of the foreclosure process in many states due to foreclosure procedures being shortcut or not followed.

At the center of this appears to be the practice of “robo-signing” or the process of notary’s singing upwards of hundreds of documents per day in order to speed the foreclosure process along.

While the jury is still out on several of the mortgage companies in question, most economist and analysts agree the overall impact of this review will have minimal impact on the housing market. The rate of foreclosures remains high, but has not increased in the past year or so.

Recently economists are saying that their may be hope in the housing markets.

The foreclosure problem began with the subprime market and balloon payment loans then spread to those who had bought in the 2006 timeframe then lost their job as a result of the failing economy.

Companies are beginning to report profits again, which will lead to hiring of new staff or replacement staff.

As this happens, homes are going to become more attractive due to the unprecedented low values of homes.

While this won’t spark a housing boom like in the mid 2000’s, it will make home purchasing more attractive to those on the fence.

If you are on the fence about buying, think of it this way, do you want to pay someone else’s mortgage for them to own their home or would you rather pay yourself?

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