Mother & Daughter Blog

FHA is back to stay?? ... better find out about the 203k Streamline Renovation Loan

Thu, 12 Nov 2009 07:57:54 -0600

FHA is back to stay? Better find out about... 203K (Streamline Renovation Loan)

Qualification/Definition of 203K Streamline: If a buyer qualifies for regular FHA loan (203B); they qualify for FHA 203k Streamline. As long as the loan does not exceed $35,000 in non-structural upgrades or repairs. Questions about qualifications should be addressed with your lender. If your lender does not know about this type of renovation loan, please do not hesitate to ask your lender.

Repairs cannot take 6 months
Contractor must be able to pay out of pocket for up to 60 days and
Contractor cannot get but 2 draws from the bank during the job - no exceptions
State license contractor to do the work. **Most lenders will not allow the buyer to do their own work (check with your lender on this first)
It will take longer to close the transaction because of the necessary underwriting requirements
All documents that are required must be completely filled in and turn in on time
This loan does not cover previous incomplete construction work that was done prior to this transaction (check first)

Here is what you CAN you do with an FHA 203k loan?

Windows and doors repair/replacement - including garage door
Flooring
New appliances - purchase and installation
Repair or replacement of roofs, gutters and downspouts
Upgrade of plumbing and electrical systems
While you cannot do room additions - you can do minor remodeling
Exterior decks, patios and porches
Paint
Wall paper/covering
Weatherization including storm windows, storm doors, insulation and weather stripping
Exterior siding, paint(replacing old siding)
Disability access improvements interior and exterior
Basement finishing and remodeling
Basement and crawl space moisture control and waterproofing
Septic system or well repair or replacement

There is no reason this type of renovation loan cannot work with Foreclosures, Short Sales and Traditional sales. Just ask your lender.

There are other renovation loans out there. The other one that is coming up fast in the ranks is HomePath Renovation loan. I will research this one and post on it later.

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FHA 90 Day Rule can be a deal breaker!

Thu, 12 Nov 2009 06:55:29 -0600

For those that out looking to purchase a home that was recently purchased and is now being resold -- this is called a flip. There are rules that are associated with this type of resale if the buyer is a FHA buyer. The investor or flipper cannot sell the property to buyer if it is less than 90 days of the last sale date of the property. For buyers this is frustrating to see a property they like and find out it is cannot be sold to them because they are FHA approved-- especially when the property is in good condition and will pass FHA financing otherwise.

The FHA 90 Day rule is especially important to: (not necessarily in this order)

1. Agents/Brokerage

2. House flippers (investors)

3. Buyers that are FHA approved

This rule is probably one of the most important rules to a house flipper and really should be understood prior to purchase, upgrading and listing a flipped property. If you are a buyer, your agent will let you know that the property is not FHA approved due to the 90 day rule. This information is usally found in the agent confidential remarks of the MLS listing. This rule is not limited to just foreclosure properties it can be short sale, traditional sale -- its when an investor purchases a home, upgrades it and put it right back on the market.

In essence:

Time restrictions on re-sales - start counting from the date of last purchased date to the date of the execution of a new intent to purchase.
A property is ineligible to be sold to an FHA buyer within the first 90 days after the most recent purchase. It would be eligible on the 91^st day.
The price that the flipped is being listed to sale at: Most investors want to get the most from the property and will do a few upgrades and then price the property for double the amount they purchased the property for. There is nothing wrong with this and it is the name of the game. However, it may mean that if you sell the property FHA there will need to be extra valuations of the property before it can close. A second appraisal and documentation.
Prior to 90 days - this would actually be the 91st day after the flipper was last purchased.
If sold between 91 to 180 days: If property is sold after the 91st day of last purchase, the property is generally eligible for FHA mortgage insurance. However, HUD will require that the mortgagee

Additionally, while not a formal requirement by the FHA, many FHA underwriters will stipulate that the 90 days doesn't start the day the seller purchased the property, but instead, on the day the Warranty Deed was recorded. And in many places, the closing attorney legally has at least 60-90 days to send the Warranty Deed to the records office, and it can take a week or two after that before the deed actually gets recorded; therefore, it could be 90 days or more after the property is purchased before the FHA 90 day clock even starts ticking! Meaning it could be up to 6 months before you can sell the property to an FHA buyer!

While not all FHA underwriters will require the 90-day seasoning to start after the Warranty Deed is recorded, keep in mind that some will. A good flipper will control his/her deal from the outset, and part of controlling the deal is to control the lending process; make sure you know the rules that your buyer's lender will be following to get the deal done, and if those rules don't meet your basic requirements, insist that your buyers use a lender that you are willing to work with (and who is willing to work with you).

So whether you are the buyer or the flipper (investor), check out the rules and regulations to the FHA 90-day rule. It is showing up more and more on the MLS.

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Foreclosures & Short Sales: "AS IS - WHERE IS" is not reason to skip the Final Walk-thru!

Thu, 12 Nov 2009 05:31:11 -0600

Check it, jot it down now or run the risk of being blamed later!

With so many of the escrow transactions being foreclosed properties that are sold as is - where is - and if you the buyer is lucky there are some minimum repairs that the seller agreed to do. As agents we have to be right on top of our responsibilities and inspect and make notations that will be in the records at the time of the transaction as well as for later on - when we get that call of complaint about something not functioning in house! Department of Real Estate has a form that you need to fill out for this protection - use it!

This is the inspection you take the buyer with you and you "walk thru the property" and jot down what you see. It doesn't take that much time and can be so valuable for you to have on file. You complete the report and give it to the buyer to sign off on it. Or you can rest assured you will hear from this buyer again!

New construction walk thru is much different from a foreclosure (as is - where is) transaction. Foreclosed you expect it to not in next to mint condition, however, a new construction you expect it to be damage free and all fixtures and structure to be in complete working condition, with nothing missing.

Sometimes escrows can get so drawn out that we just want the transaction to close and may think that it is OK to skip the final inspection because you have been out to the property so many times and you know what condition it is in. NO good! Put it on paper! Protect yourself. You must continue your agent buyer - protection all the way to the end of the transaction (or you may find yourself being blamed for something that does not work.... Or something that you forgot to Walk Thru with the buyer and check prior to close).

This is why the rules are set in place to do a Final Walk Thru on all escrow transactions. Make a list of items that you will need to take a look at and make notation of the condition.

This applies even if there were no repairs done on the property and it was indeed sold as is, where is. Final Walk thru is still a part of the transaction.

Questions to know

Were there any repairs that the seller agreed to repair? You, the agent should have checked these where they were completed and yes, you will need to re-check with your buyer just prior to close of escrow.

Is there anything missing or damaged that was not there during first walk thru? With all the vandalism going on around the country - check to see if someone came in and took any items since your buyer did the first inspection. If yes, you will need to note the missing item - with the foreclosures if something is missing it is probably not the seller that took it. Vandalism of some nature is probably to blame. Police report is required if vandalism is involved.

Once you confirm these items are intact, you should jot down all that you notice in the house. Buyers sometimes will see you making these notations or hear you mention something and will want to revisit that item.

Remember to keep your inspection simple if you are selling as is and the item of concern is not something that agreed upon to be repaired and it is not a safety issue. Buyers want to get as much done as they can (understandable) - and if you know you will not be able to get the seller to do the repair or fix, please don't make promises to that buyer. Repeat the Sold as is to them, but just make notation of the item of concern.

Start out in the front yard, back yard and do a complete walk thru the house. Check doors, windows, locks, floors, walls, fixtures, AC, Heater, outlets, garage door opener, toilets, lights, trash out (this includes trash from side of the house), check the pool to be sure the pump works. New homes structures: would include making sure it was built as promised, options are included, floors are meeting the walls correctly and all other items are in complete working order. In a new building you will need to count the outlets too!

Note: New constructions you may have a better chance of negotiations with the seller, but be sure you get any agreement to make it right BEFORE close of escrow. If it is a foreclosure and there was no agreed upon repairs, it might a little hard to negotiate this late in the transaction, but it never hurts to ask and always be sure to write down the issue - document, document. And always document.

Happy Final Walk-thru and happy closing.

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Will the Seller consider FHA financing.... a common question

Mon, 09 Nov 2009 14:49:15 -0600

How important is it to make sure you indicate on the MLS if a seller will/will not consider FHA financing? Very. How many calls and emails will it save?

I believe this is why the MLS have a category for financing type. Since FHA is coming back stronger than before, it is wise to assume that somewhere around 80-90% of the offers received and they are owner occupied will be FHA financing. If not now, in the near future FHA will be the majority if the occupancy will be owner occupied.

Effective Dec 12, almost all of the FHA financing categories will require a 620 FICO score. Things are changing in the lending world and it is going to get harder and harder to finance a home loan.

Thank you to those agents that either put it in the terms field or in their confidential agent remarks. But when it is not on the mls at all - the first thing a buyer's agent will want to do is either call the listing agent or email them to get this information to avoid wasting their time on viewing this listing if it is not FHA.

The rant part: an agent that put no calls, no emails and have not indicated if FHA is possible. This leaves us buyer agents in trouble with our buyers.

Oh and don't forget that some sellers cannot take FHA if they short of the 90 days required to resale the property to using FHA financing to a property that you just purchased (1-89 days).

So to make the home search a lot less stressful for agents and buyers -à Agents please use the terms field of the MLS and let us all know if FHA financing is possible.

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Buyers: Definition of Short Sale is NOT offer "Short" of Listed Price and expect to get an approval!

Mon, 09 Nov 2009 14:28:44 -0600

Low List vs Property Value vs Reality plus the waiting game is what a short sale is all about?

Let me just let you know that agents usually list short sale properties - low - in order to get some attention to that property. They do not list low necessarily because there is something wrong with the property and it is not worth more.

Agents have been known to list low in order to get the attention focus on the property, in order to get the offer, in order to get short sale negotiations with the bank. In some cases, even with a low offer the agent is able to get a counter back from the bank on what they will consider to get the short sale moving -- but sometimes it backfire and they just denied the low offer.

Also, agents rarely have any idea of whether or not the bank will take the offered price (that is the list price) and cooperate by selling the home for less than what is owed on it. Short sales are not automatic. It is not "ask and ye shall receive" an approval type situation!

What they do know is that they must have an offer and the borrower/homeowner must have a hardship to show that they can no longer afford the property.

Low list is not the market value. The bank will probably not settle for less than or at least much less than what the home is worth. Also note: Banks do not use what the listing agent serve to them as market value of the property ~~ they will go and get a third party opinion (either BPO or appraisal) from another agent that is not associated with this property.

Low List vs Property Value vs Reality plus the waiting game is what a short sale is all about:

Low list: check the properties in the radius of (at least ¼ mile) and see if it is listed low. If listed low: is it to get attention to the listing or is there something wrong with the property?

Property value: recent sales in the area (1-3 months), Average sales price per square footage. Is the property of the same kind (comparable); is it short sale or foreclosure.

Reality: Will the bank entertain a short payoff on this property? Is the offer with the property value? Will the buyer hold on to "the waiting game timeframe"? And is the borrower/homeowner really in a hardship and cannot afford to pay for the property?

Waiting Game: Will buyer hang on and in some cases will the borrower/homeowner hang on for the ride of waiting on the bank to decide?

Some good news about short sales: FHA, VA, CalHFA, NSP and other programs are not excluded from Short Sales.

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Buyers... sorry that offer is pending .... so one buyer wants to go out EVERYDAY

Sat, 07 Nov 2009 20:25:05 -0600

And the buyer says ..... can we go out looking EVERYDAY???

The market is so confusing right now that it is almost that you have to take the buyers out to view properties at least 2 times a week! The properties are not staying on the market long, the offers are going way higher than the listed price and therefore the offers are in Pending before you can set up an appointment to go out and view it. Is this a good thing? What about your other buyers and other things you have to do during the day?

It is a good thing for the seller and the listing agent, but it is unfortunate for anxious buyers if there is no time to get the offers submitted before they are gone.

Fannie Mae has changed the way of their listings:

3-5 days on market before they will consider the offers ** this include the NSP buyers (assisted)
Offers up to 15 days will only be for the owner occupied buyers
After 15 days investors offers will be considered

Although we don't agree with all of Fannie Mae rules, these are a few good changes.

FHA buyers have enough competition and restrictions to their purchase -- this change should help them get at least a chance at the listings. FHA will not lend on flips that are younger than 90 days.

While it is almost impossible to take one buyer out EVERYDAY... it is wise to go often so your buyer does not miss the buying opportunity.

Need an agent? Give us a call...

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Short Sale Automation... does it mean FAST, SMOOTH and BENIFICAL or / how will it play out?

Sat, 07 Nov 2009 19:24:21 -0600

So how can the Short Sale process change where it really will help? I will admit Short Sale Automation does sound good!!! I can't wait to see it work.

After reading that REOTrans has first changed their name and secondly and probably most important: they are taking on automating Short Sale process. And then to hear that Bank of American is possibly that first bank to jump on the wagon.... well this brings about questions in my mind.

1. How does this help the agent's job of producing a successful Short Sale

2. Will REOtrans/Equator's involvement help or hender agents from getting the short sale listings? Will the banks end up with a preferred agent list and thus leave out a large number of local agents from the listings?

3. Will it cost the agent to have this new automation?

4. How will this help or hinder the homeowner/borrower? Will it indeed make the process simplier, smoothier, faster and without hassel the homeowners? Will agents have to do more even though it is automated?

5. When will it start? How do we become involved?

6. Or is it that the agent get the listings and then upload the information into the Equator system and manage the Short Sale request (if it is participating bank) through the system?

If the system is there for agent to upload their listings, request, documents and all with a timeline set to get the short sale approved and closed in a timely manner ---> this could be really good for all involved. But it turns out to be a war of the agents to sit by the system and wait for short sale properties to pop up on Equator system (sort of like BPOs) then it could turn out to be a not so good an idea.

** RETrans.com has changed their name to Equator

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Need more information on avoid a foreclosure? ....Take in a Local Workshop

Sat, 07 Nov 2009 18:40:41 -0600

How to avoid Foreclosure Workshops - connect with your local community services and learn as much as you can about how to avoid foreclosure. Make sure it is FREE and that you do not pay out of pocket for a FREE service!

There are still so many homeowners/borrowers that do not know what to do now that they are about to be in or are in pre-foreclosure. My suggestion is to take advantage of all the FREE services that are out there that may be to offer you a solution to your situation. Look for institutions that offer a FREE service and that have a good track record of doing it right way.

Here is a list of places that are sponsoring a FREE Foreclosure Workshop within the next couple of months. ** these are ones for Northern California, but they are nationwide - look in your area.

Citrus Heights
- Sponsored By: Mayor James Shelby and NID Housing Counseling Agency - Event Details [PDF]
  Date: 11/13 & 11/14
Modesto
- Sponsored By: El Concilio-Modesto and The Alliance - Bilingual - Event Details [PDF]
  Dates: 04-24-10 · 10-23-10
Oakland
- Sponsored By: City of Oakland Mayor Ronald V. Dellums and NID HCA - Event Details [PDF]
  Date: 11-07-09
- Sponsored By: NID Housing Counseling Agency - Event Details [PDF]
  Dates: 11-04-09 · 11-07-09 · 11-11-09 · 11-18-09 · 11-21-09 · 11-25-09 · 12-02-09 · 12-05-09 · 12-09-09 · 12-16-09 · 12-19-09 · 12-23-09 · 12-30-09
- Sponsored By: The Unity Council - Event Details [PDF]
  Dates: 11-11-09 · 11-18-09 · 12-02-09

There are many other resources that you can use (check with your local resources - community centers, etc). Do a web search under Foreclosure, Short Sales, Loan Modification, Pre-foreclosure, Making Homes Affordable, HUD and your local city should have resources on their sites.

Need an agent? Need a short sale? Give us a call!

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Late Paying Borrowers ~ get your documents together FIRST... message from Freddie Mae (youTube style) .. click in

Sat, 07 Nov 2009 17:37:00 -0600

Isn't it funny how we didn't hear much from Fannie Mae, Freddie Mac and even HUD during the 2004-early 2007 - and now they are in the headlines almost daily! Folks, they are here to stay this time.....youTube style! Click in on it and see how the information can be useful.

Well Freddie Mac has some valuable information that can help the "underwater" borrower/homeowner find their way to communicate better with their mortgage servicer when they make that call in an attempt to save their home from foreclosure:

If you are or you know someone that is a Late-Pay Borrower, Underwater, pre-foreclosure procedure tell them about this quick little video that can be of benefit to them. Key documents that borrowers should have on hand to help reduce the frustration of having to reduce repeated call, delays and possibly missing the opportunity to take advantage of the options that could be possible for them. The new Freddie Mac video, "Stop Foreclosure: Documents Your Lender Needs to Help You," Click here. It shows step-by-step which documents borrowers should have on hand when they call their servicer. These documents can cut the time a servicer will need to understand the borrower's situation, determine his or her eligibility for a workout, and process the application.

This video will point out that the following documents/information will be necessary for your Mortgage servicer to have - so get them ready and them on hand when you are talking to them:

Their most recent monthly mortgage statement

Pay stubs or other documents showing their household's monthly pre-tax income

Most recent tax return

Second loan or home equity line of credit statements

Account balances and minimum monthly payments on credit cards, car loans, student loans or other debt.

A short, concise description of the financial hardship that is causing - or leading to - a mortgage delinquency.

These documents are also required if you are planning on doing a short sale.

Here are some handy links:Making Home Affordable Program (En Espanol)
HUD-Approved Counseling Agencies (En Espanol)
Avoiding Foreclosure (En Espanol)
Freddie Mac Supports the Housing Recovery

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Buyer's Choice .... another improvement in the REO world!

Sat, 07 Nov 2009 16:29:33 -0600

Finally! Buyers have the choice of using a local escrow office to handle the transaction, thanks to the California Assembly Bill 957 - "The Buyers Choice Act". This bill was signed on October 12, 2009 and is now a law in the state of California (only).

I believe we will need to put our choice on the original contract just to be sure we get it for our buyer. When the seller (bank) choses they usually chose a company that is located either back East or in Southern California.

If you don't ask..... you probably will not get the escrow office that you want.

UPDATE!

Updated news: As it turns out this Bill may have holes in where the seller can still get it back to them getting the escrow company of their choice instead of the buyers, but either:

1. Not choosing offers that ask for the choice of local escrow company or

2. Bank countering back (on bank's addendum) with the name of their choice of escrow company - which means the buyer will either return the addendum signed and agree to all the terms or they may find that they will not get the property!

Either way, its a loop hole that may not be to the advantage of the buyer. This is a "stay tuned" possible improvement. As it turns out.....The judgement/advantage is still out on this one....

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All Buyers.... now is the time to make a move!

Sat, 07 Nov 2009 16:28:31 -0600

Did you know?

K12 Teachers, School Employees, Educators, Members of State Public Employee Pension System, Judges Pension System and Legislators Pension System are eligible for down payment assistance for the purchase of a new home.

And now with the Tax Credit getting the extension approved as well enhanced credit for all new buyers, plus the market situation -- it is well worth the above groups as well as non public service buyers to get up and get a move on in purchasing a new home.

Need an agent? Give us a call!

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Helping you Avoid Foreclosure: Fannie Mae adds another Avenue/Option for homeowners

Fri, 06 Nov 2009 16:43:12 -0600

Fannie Mae offers - Deed for Lease Program instead of immediate foreclosure. this is another option rather than foreclosure or Short Sale.

If you do not qualify for a loan modification or have failed a loan modification plan you may be in luck to get in this Fannie Mae Deed for Lease Program. If your property is a Fannie Mae property you may qualify for the Deed for Lease Program that Fannie Mae just announced. This program can prove to be very useful and a stress reliever for homeowners that need more time to get their finances in order before completely moving out of their home. It beats a foreclosure no matter how you look at it.

Borrower must be willing to transfer their property to the lender by completing a deed in lieu of foreclosure and then lease back the house at a market rate.

There are some guidelines that you must meet - here they are in a nutshell: In order to qualify you must meet these basic requirements: If you answer yes to the questions below, contact your Fannie Mae representative to see if you can get started with this program to avoid foreclosure and evictions.

1. Is this a Fannie Mae property - Don't know? Go to: http://loanlookup.fanniemae.com/loanlookup/

2. Are you living in your property and is it your primary resident? ** TENANTS may qualify for this program as well

3. Can you afford to pay a monthly rental that is no more than 31% of your gross income. Also, that you are willing to take the commitment to pay the rental - on time.

4. Do you have a second lien and are you able to get them to release you from any obligation of that loan?

Need more information on this program? Go to www.efanniemae.com. This is another avenue/option of options to avoid foreclosure?

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Attention All Wachovia World Savings and Golden West Home Owners Get Paid $5000 To List and Sell Your Home

Fri, 06 Nov 2009 15:11:41 -0600

This is the best news for Short Sales that I've heard in a while. I am researching to see if I can get a list of other banks/lenders that are doing the same or similar programs.

Homeowners: please check with your agent to see this program is something your bank/lender is willing to do.

Stay tuned and Thank you Mike.

Via Mike Jackson Realtor Pleasanton Homes For Sale (Realty World Global):

Wachovia has increased their incentive for you to short sale your home this month of October 2009. If you can't afford to make your payments and your equity is upside down, see if you can apply for a loan modification by calling 888-308-3964. If you don't have a job or can't prove your income you will not qualify for the loan modification and the short sale will be your next best option. Wachovia will pay up to $5000 for you to list and short sale your home and they have a very quick turn around time for approvals here in the Bay Area. The vice president of the Wachovia short sale department here in Livermore told us they can have an approval within a week since they currently don't require income documentation or a hardship. You don't have to be late to short sale your home and ti can be your owner occupied property, second home or investment property. If anyone decides to walk and think that's their best option the lender will 1099 you for the full amount. Call me today to go over your options.
Mike Jackson, CNE

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Attention All Wachovia World Savings and Golden West Home Owners Get Paid $5000 To List and Sell Your Home

Fri, 06 Nov 2009 15:11:39 -0600

This is the best news for Short Sales that I've heard in a while. I am researching to see if I can get a list of other banks/lenders that are doing the same or similar programs.

Homeowners: please check with your agent to see this program is something your bank/lender is willing to do.

Stay tuned and Thank you Mike.

Via Mike Jackson Realtor Pleasanton Homes For Sale (Realty World Global):

Wachovia has increased their incentive for you to short sale your home this month of October 2009. If you can't afford to make your payments and your equity is upside down, see if you can apply for a loan modification by calling 888-308-3964. If you don't have a job or can't prove your income you will not qualify for the loan modification and the short sale will be your next best option. Wachovia will pay up to $5000 for you to list and short sale your home and they have a very quick turn around time for approvals here in the Bay Area. The vice president of the Wachovia short sale department here in Livermore told us they can have an approval within a week since they currently don't require income documentation or a hardship. You don't have to be late to short sale your home and ti can be your owner occupied property, second home or investment property. If anyone decides to walk and think that's their best option the lender will 1099 you for the full amount. Call me today to go over your options.
Mike Jackson, CNE

SEARCH THE MLS HOME VALUES GET PREQUALIFIED

Bank Owned Properties/REOs: Multiple Pre-Approvals... ~ Buyers you may have to get pre-approved by more than one lender - after all!

Fri, 06 Nov 2009 13:08:06 -0600

I've been so busy working on the listing side, I have not been noticing the variety of Agent Confidential remarks that are popping up on the listings these days.

This one is one that is becoming more popular and annoying:

Buyer must be pre-approved with the "seller's sponsored mortgage company" - not required to use this lender, can use your own. This requirement can delay a buyer from putting in an offer in time to be considered, the way properties are moving into Pending these days! While the buyer is trying to get in touch with the bank's sponsored Mortgage consultant, the property is now in Pending!!!

It works better or faster when the seller require that the buyer is pre-approved by a direct lender -- doesn't it??? And I wonder when this will catch on with short sales too - or will it?

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Bank Owned / REO & Earnest Money ~ new twist!

Fri, 06 Nov 2009 13:02:40 -0600

Dear Listing agents:

Can one of you please explain to me why it is necessary to have the buyer bring the earnest money deposit to you PRIOR to placing the offer? Is this a way to tie up the buyer's money, with a strong probility that their offer will not be accepted by the seller in the first place and this can delay them from being able to accept another offer and have their earnest money handy to send in to escrow and get the transaction moving on something their offer was accepted???

And will this catch on with Short Sales later on?

Is this fair to buyers that don't even know if their offer is going to be accepted?

Please advise.

Signed concerned agent.

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How to get rid of a promissory note after a short sale

Fri, 06 Nov 2009 12:41:35 -0600

This is a really good post, well worth re-blog. Thanks, Ken!

Via Ken Lawson JD, Short Sale Coach (TheLawsonGroup Mediation Svcs www.LawsonGroupMediation.com):

A lot of people have been required to sign a promissory note as a condition to the lender approving a short sale.

The promissory notes are usually for a small to moderate percentage of the deficiency balance, paid over ten (10) years, with no interest. The promissory note requirement is usually a good deal, and see my other articles on this subject concerning predicting when a promissory note will be required.

However, many homeowners are in severe financial distress, and the thought of having another payment following the short sale is not a happy one!

Most borrowers after a short sale need to find a place to rent, and another payment on top of rent might often push the borrowers over the edge. It is often the case that a short sale falls through simply because the borrower rejects the idea of a promissory note.

However, do not despair! There is a way out of it.

Your seller may only have to make the promissory note payments for a year, or even less.

Why? Because after the file is closed and the new loan (promissory note) has been set up for collections, a short time is required for the lender to see that the borrower makes faithful payments. If so, then about a year out (often as soon as immediately, depending upon the lender), the borrower can seek to settle the debt for a fraction of what is owed.

"But for how much?" you might ask. Almost any lender will settle a promissory note for 80%, without hesitation. 60% takes some discussion and effort to convince them, but many will do it. To settle the debt for 50% may require financial distress on the part of the borrower, with low income and difficult circumstances.

The best way is to go to a lawyer and have the lawyer draft a letter and fax it to the lender's customer service department (collections), with a copy to the lender's bankruptcy department. The lawyer can state that the borrowers have come to him to discuss the promissory note obligation, and their difficulty paying it. They are considering bankruptcy, but this promissory note is the only issue causing that consideration. The lawyer then makes an offer for 10%-30% depending upon the borrowers' financial condition.

In my law practice, we often contacted various creditors when the clients did not really need a bankruptcy, but did need relief. 10%-30% was often the amount for which the lenders would settle. However, it was often the case that my being an attorney was the instrument that got them to agree. Why? Because the lenders know we are serious.

Best wishes,

Ken Lawson, JD

TheLawsonGroup Mediation Services

CIT and Bankruptcy are now in a relationship! or... another one bits the dust!

Mon, 02 Nov 2009 01:38:33 -0600

News release: CIT has filed for bankruptcy. OK this might not be a surprise, but has anyone figured out what they did with the $$$$ Millions they got just a few months ago. Did they too get bonuses all distributed and spent and then went into bankruptcy?

Now what about all the homeowners are caught up in this bank and where are all the mortgage loans going or are they already sold away.... and if yes - where did that money go? What role did this bank play in the foreclosure/Mortgage crisis? How many short sale requests did they deny?

These and many many more questions, we will probably never get the answers to. And now all we can do is wonder which bank will be the next to fall? And how long will it take it rise it head again?

For more information... Check out our Website and our Blog... - Website: http://www.motheranddaughterrealtyteam.com - Blog: http://activerain.com/brooksrm2042 - Check me out on Facebook

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Halloween or Not.... They can still "Haunt" you later!

Fri, 30 Oct 2009 08:06:56 -0500

Just some quick reminders that there are few basic behaviors that us agents need to continue to do - no matter what the situation is. In real estate... Haunting time is not just at Halloween if you get too loose with your procedures.

Buyer Repair Bills - Remember Buyers are quick to agree to purchase AS IS - WHERE IS: But after purchase and the repair bills start to kick in, they forget the AS IS WHERE IS and start looking to blame someone for all the problems they are having with the property! So to protect your buyers and all others...

Recommend that the buyer request from the seller or they GET A HOME PROTECTION PLAN

* Old Republic Home Protection Plan is a good one.

Buyers not getting a Home Inspection??? Remember buyers tend to forget that you "bugged" them about getting an inspection after the purchase. So to protect your buyers and all others involved....

Recommend, recommend the buyer to get an inspection FIRST.. if they refuse (have them sign a waiver)

Buyers would not get a Termite Inspection?? Remember buyers say it doesn't matter, but it will later on!

Recommend, recommend the buyer to get an inspection FIRST.. if they refuse (have them sign a waiver)

Buyers not asking for more from the seller... ie. 1/2 escrow fees, transfer fees (escrow & closing fees): When its time to close, the buyer begain to feel they are paying too much to close??? That the seller should make more repairs - or all repairs even costmetics????

Recommend that they ask for what they want upfront in the initial offer submitted. Do not try to ask for less in order to get the offer and then bumbard the seller with addendums to increase the concessions. MIGHT NOT work - then you run the risk of loosing your deposit if you do not go through with the sale.

These are just a few of the "Haunting" situations that buyers find themselves in after they have submitted the offer, purchased the property and have no place to turn or no one to blame.... but they will!

For more information... Check out our Website and our Blog... - Website: http://www.motheranddaughterrealtyteam.com - Blog: http://activerain.com/brooksrm2042 - Check me out on Facebook

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Short Sales: Borrower(s) Are you ready? .....Answers/items to have for your agent

Thu, 29 Oct 2009 19:43:11 -0500

If you feel you may be in need of a short sale, you should do your homework on what you will need to have to provide to the agent. ADVICE: Choose an agent that knows how Short Sales work, have experience with short sales and is willing to do a short sale. In addition it is always a good idea to show your identification to the agent to be sure they know that you have the right to sign to list and sell the property.

First thing to do: Contact your lender and request a loan modification or other options.

Here are some items, questions that you will need to know the answers to:

Name, Address of all borrowers on the property......
Are you in current hardship......?
Have you contacted your lender to ask for a loan modification or other options? If yes, what did they tell you....?
What do you owe on your mortgage.....?
Are you in default....? If yes, when did you go into default and do you have the paperwork?
How Many Lenders or Lienholders do you have?
Who are the lenders? 1^st and 2^nd Lienholders?
Are you serious about doing a short sale?
The agent should tell you that you will the following: Do you a problem getting any of the following

Current pay checks stubs (last 2 at least)

W2s for last year

Tax forms for last year

Hardship letter in your own words

Financial statement * you can use the one you used to request the loan modification

Is this your primary resident?
Do you have other properties that are/are not in trouble?
When can you meet?

Your agent may have other questions but will be really relieved if you have these questions already answered for them. It will save time.

For more information... Check out our Website and our Blog... - Website: http://www.motheranddaughterrealtyteam.com - Blog: http://activerain.com/brooksrm2042 - Check me out on Facebook

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Short Sale Approvals: Wiliness, Procedures, Attitude, Customer Service Varies - bottomline... it is still better for the borrower

Thu, 29 Oct 2009 18:27:39 -0500

The majority of the bank/lenders have pre-determined criteria for submitting a short sale. I am still not convenience that they all have pre-determined criteria for short sale approval. Most are willing to entertain a short sale approval or at least will take the time to make it seem that the file is being reviewed ** some take months!

However, there is still a large number of foreclosures still going on and a great deal of those properties were short sale listed prior to foreclosure - had offers into the bank/lender and did not get an approval or in some case not even a sign of negotiation

Here is some of the information that I believe most banks/lenders have in common:

Require the borrower to be in HARDSHIP LETTER and to submit it in writing (see Hardship Sample Letter:
Require a Financial Statement, Income Statement, W2s, Current paycheck stubs, some will ask for last year's income tax statement, retirement information, bank accounts (it varies what they will ask for).
They all require a signed by borrower and buyer offer
They will need a Short Sale package from the agent to include all the items that they tell the agent they need
Short Sale - incurs a smaller financial less than foreclosure or non-payment of mortgage
Short Sale is typically faster, less expensive than a foreclosure
Most bank/lenders have a loss mitigation/foreclosure department
Majority of the bank/lenders will not take the listing agent evaluation and will get their own (either an Appraisal or Broker Price Opinion (BPO)
Times are changing and short sales can be approved even if the loan is not in default (but most will not entertain if there no obvious hardship) ** please note: Hardship must be true information
Most are willing to entertain a short sale approval or at least will take the time to make it seem that the file is being reviewed ** some take months! Agent must be aggressive about requesting that Trustee Sales date be postpond if it is approaching because bank/lender will not automatically do it - they will just let it go to the sale
Bank approved short sale does not guarantee acceptance! ** EVERYTHING must be in writing. Without a written agreement .... you have nothing
First Lien holder does not have the power to approve a junior lien ** agent must negotiate with both lienholders (all lienholders)
Regardless of the bank/lender if a short sale is approved and completed, it will remain on the borrower's credit for seven (7) years
When bank/lenders approve short sale it allows the borrowers to feel good that they made a decision to be brave and request the short sale instead of just leaving the property. In the long run.. it will be better for the borrower.
There is no uniform Short Sale package -- it all depends on the individual bank/lender requirements

Still and all... no bank is the same and really no negotiator within the same bank/lender is the same! Do not anticipate what a bank will or will not do --- be like Nike and JUST DO IT and see!

For more information... Check out our Website and our Blog... - Website: http://www.motheranddaughterrealtyteam.com - Blog: http://activerain.com/brooksrm2042 - Check me out on Facebook

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Short Sale Approvals: Are we moving forward?

Thu, 29 Oct 2009 17:23:42 -0500

This may be a good time to take a review of where short sales are now, with only 2 more months left in 2009.

The Short Sale is still the most economical solution to avoid a possible foreclosure. This does not mean it is the easiest. It does not mean that you will not endure some stress while going through this process and it surely does not mean you will not need to have a barrel of patience in order to complete this process.

The market is loaded with Short Sale listings. Some listings are new, but most have been on the market for over 30-45 days and holding. There are plenty of the short sale listings that are now in short sale contingent status. Short Sale Contingent means that the agent has received and presented at least 1 offer to the bank/lender for short sale approval. In most cases, when the status of the listing is Short Sale Contingent you can still submit offers to the agent. It will depend on where the agent feels the negotiations are if that agent will submit your offer right away or if it will be presented later on -if the offers that the bank/lender have before them not making them happy enough to approve the sale.

So while there are deals out there, when making an offer for a Short Sale listing keep in mind that the bank is probably not going to approve an offer that is way below the market value of the property. Some agents will list the property at least 10% below the low end of the market value, but that does not mean the bank/lender will accept an offer with that strategy. You can bet the bank/lender will be looking more at the higher offers.

The bank will not rely on the listing agent's evaluation of the property. They will hire their own appraiser or agent to do a Broker Price Opinion. So if your offer is lower than either, the bank/lender may counter your offer or simply deny it. Rarely will they approve it if it is far lower than the evaluations they have obtained.

I have received calls asking which bank I think is the hardest to get a short sale. I cannot answer that question because it depends on not just bank - it's the negotiator and how much of a workload, concern, knowledge, care, or time they have to put in on the file. GMAC does have tricks that they use (at least in my experience), they take forever to review the file, claim that they did not get documents that you know that you faxed or sent to them a couple of times, then they will not contact you personally until the time is almost up for the trustee sale and ask you for all these documents that will probably take you longer than what time is left. But... hold on! Bank of America, Wells Fargo, National City, etc will do the same!

So in summary... where are the short sales here at the end of October 2009? They are increasing and we will see more and more short sales coming on the market -- the big question still WHEN WILL THE BANKS Stream-line their short sale process and treat these requests seriously?

For more information... Check out our Website and our Blog...

- Website: http://www.motheranddaughterrealtyteam.com

- Blog: http://activerain.com/brooksrm2042

- Check me out on Facebook

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Short Sale: Homeowner's be accessible to your agent!

Tue, 20 Oct 2009 07:53:05 -0500

If you want me to Short Sale your property... please be accessible! Don't get lost where even I can't find you!

Homeowners, we know that being up side down with your property is stressful. We are sensitive to what you and your family is going through. We are here to help. But we need a little help from you.

We need you to be available to us when we try to get in touch with you - especially if you are still living in the home and we need to show the property or have questions from the lender in order to continue negotiating the short sale request.

Nothing worst than to have the lender call with a questions during negotiating and the agent cannot find the buyer! Nothing worst... unless you consider agent getting the short sale approved and in writing and then the agent cannot locate the homeowner in a timely manner!!!

Not good.

Communication is very important in the short sale process. Don't let your agent down. Be available.

Need a short sale specialist?

Rosemary Brooks

866-543-0461.

Website: motheranddaughterrealtyteam.com

Email: rosemary2042@gmail.com

Buyer: Serious... but undecisive !

Tue, 20 Oct 2009 07:38:43 -0500

Ok we're told you about the buyers that may not be serious about buying! But what about the buyer that cannot make up their mind to put in an offer on a property that they like? What about the buyer that seem to like to have you drive them around, look at properties and never can decide if they really like the property or if they should put in an offer.

I am all for a buyer being sure, but with the market as it is ... they really need to make up their minds quicker. Once you see the property you really like... you'd better go on and put that offer in or the property will be gone to the next buyer that could make up their mind.

The process of buying is:

Get qualified
Make a list of area *location, features you are looking for and find yourself a good real estate agent
Give the agent the specs for your new home
Go out and view the property, take your list and if you like, slightly like or think it is the home for you -- put in an offer! Do not wait for a long time and then tell the agent to put in an offer... because the property is probably in pending by then

** some agents urge their buyers to put in an offer as soon as they figure out they like the property so that they can have a chance at purchasing the property

This is one of the main steps of making an offer: Be real in your offered price. Low balling is almost a think of the past. Nowadays offers are coming in at least (at least)... 3% over the list price. That is "at least". Being competitive is the way to go.

Buyers you have to get a move on.... if you really want the property!

Our Website: motheranddaughterrealtyteam.com

Short Sale - Hardship letter (sample)

Tue, 20 Oct 2009 07:23:21 -0500

THIS IS A SAMPLE HARDSHIP LETTER: There are several hardships that homeowners are running into. Probably no two homeowners have the very same hardship or events leading up to that hardship. Hopefully this sample will fit your needs as a sample and a way to get started writing your hardship letter. Although Short Sales are changed a little, this hardship letter is still very important to getting your short sale approved.

Agents: Your seller should be able to tell you why they are in a critical condition and why they need to short sell their home. I always ask the homeowner first, to be sure they have a hardship. It will make the short sale process run smoothier if this is the case.

*******************************************************************************

Lender Name Lender Address Lender's fax number

Today's Date

RE: Hardship Letter - Short Sale for _____________________ address

To whom it may concern:

I purchased my home at _____________ in ___________. At that time I was employed by _______and business was very good. My salary and the possibility of a promotion and raise made me sure that I could easily support my mortgage. Unfortunately, a downturn in the market caused my company to reduce its workforce and I was laid off.

After searching for a comparable job, I finally got a temporary position as an office assistant as I continuing seeking other work. I struggled for several months to make my mortgage payment, and was also hit with some medical payments that I did not expect (the COBRA payment was more than twice what I was paying when employed). I knew I would have to sell my home to protect my credit rating and possibly have enough cash left over for moving expenses and some savings. I put my home up for sale by owner in _________, but there were several problems that I did not have enough money to fix, such as the broken fence in the back yard and some pretty severe leaks in the roof which indicated a new one was needed. Over the next three months I lowered the price three times but still had no takers. I am now working with a real estate agent and I believe she will be able to help me sell quickly.

I really love my house, but I know that I cannot afford it. I am a single parent, working as a temporary employee with few benefits and no savings. My financial situation cannot sustain a home mortgage of nearly $2200 per month. I want to sell the home, avoid foreclosure and salvage my credit. I know that a foreclosure on my record will affect me for years to come. I would ask that you please assist me in avoiding this.

Please accept this offer as payment in full. My attorney has advised me to file bankruptcy, but I prefer to avoid further destruction of my credit. I just want to move on and start over.

I deeply appreciate your help and understanding in this matter. If you have any questions, or need anything further from me, please contact my agent or me personally.

Sincerely, Home Owner Name Address and Contact Information

Our Website: motheranddaughterrealtyteam.com