The news has been abuzz in the past few weeks about the historic Robo-Signing Settlement reached between the government and five major lenders. Chances are you have a lot of questions:

• What is robo-signing?
• Which banks are involved?
• How much money is the settlement worth?
• Who is eligible?

For distressed homeowners, however, there is only one question that is important: Can this settlement help me stay in my home? This report will help to answer all of these questions and help homeowners who are in danger of foreclosure learn what options are available to them.

WHAT IS ROBO-SIGNING?

During the height of the foreclosure crisis, many banks were faced with more foreclosures than they were equipped to handle. The government alleges that, during this time, some banks fraudulently processed and approved these foreclosures at an impossible pace.

They automated part of the process by having numerous people forge the signature of bank officials to complete the foreclosure. This practice was given the name “Robo-Signing” by the media.

WHICH BANKS ARE INVOLVED?

There were five national banks involved in the settlement:

• Bank of America
• JPMorgan Chase
• Wells Fargo
• Ally Financial/GMAC
• Citigroup

CAN THIS SETTLEMENT HELP ME STAY IN MY HOME?

The answer: Possibly! While the government intended a portion of this settlement to punish the banks for their fraudulent behavior, it is clear that the main focus of the settlement was to get the banks to help current distressed homeowners and create some positive movement in the housing market. While there is no guarantee that homeowners will meet the eligibility requirements of the settlement, there are more options available to those who wish to pursue foreclosure alternatives.

WHAT DO I DO NOW?

As a Certified Distressed Property Expert (CDPE), I make it my business to know all of the ins-and-outs of the options that are available for people who are in danger of losing their homes. Even if you are not specifically eligible under this settlement it is important to remember one thing:

YOU HAVE OPTIONS!

As a Certified Distressed Property Expert (CDPE) I am uniquely qualified to help determine your eligibility and answer any questions you may have about the settlement. Call me or email me and set up your free, confidential consultation. Let me help you figure out the best foreclosure alternative option for you.

The Trademark Loss Mitigation team is a family owned business and  includes a multi-state network of real estate agents, attorneys, title companies, short sale negotiators, credit repair providers, mortgage providers, inspectors and investors. Together, those professionals act as a NO COST short sale outsourcing solution for Realtors and Homeowners.

Jim McNinch, Certified Distressed Property Expert (CDPE);

Short sale agent, Short sale specialist

Jim@trademarklossmitigation.com

http://hosted.cdpe.com/trademark
http://www.trademarklossmitigation.com
832-330-4588

Two weeks ago, we received buyer contracts for two of our short sales – each FHA buyers.  While both had credit histories that would qualify them for a FHA loan – both had over $1000 in disputed collections, one was just $1,200.

As neither had locked in their loans or an established a “loan case number”, under the new rule, that would have disqualified them both effective April 1^st.  Luckily, we were able to secure their loans through their lender and ours in time.

Now it appears that we had a little more time.

The Federal Housing Administration (FHA) rescinded and will delay a rule that as of April 1 prohibited borrowers with more than $1,000 in disputed collections accounts from getting a federally backed mortgage, according to a notice sent late Friday.

FHA postponed the rule until July, and will take public comment from lenders, builders and others in the industry until then to clarify guidance. “There is clearly a bigger ripple effect here than the Department of Housing and Urban Development might have anticipated going into this revision,” said Lisa Jackson, senior vice president of research and business development with John Burns Real Estate Consulting. “Any measure that impacts even 10% of sales is meaningful and our analysis shows it would be far greater in some markets.”

The FHA attempted to ease the original proposal, allowing borrowers to provide written documentation on “life event” disputed accounts with them, such as bills stemming from illness, divorce or unemployment in order to obtain an exemption. Borrowers could previously show the lender they arranged a payment plan to settle other accounts too in order to qualify, including credit card and utility bills.

According to the alert sent Friday, the FHA ensured lenders they would not be in violation of the new rule for loans written between April 1 and April 8. Until July, the old guidance will be put back into place.

Analysts from JPMorgan Chase said the rule would affect many first-time homebuyers the most, those most likely to carry such debt. The analysts estimated the rule could cut FHA demand by up to 20%, and the damage would affect homebuilders differently depending upon how much of their business hinged on these borrowers.

The FHA previously said it adopted the rule in order to reduce default risk for newer books of business. Mortgages written during the housing bubble continue to haunt the agency.

Whether FHA will permanently rescind this rule is yet to be seen.  If not, we will undoubtedly see additional pressure on homebuyers, particularly 1^st time homebuyers, in obtaining real estate financing.

The Trademark Loss Mitigation team is a family owned business and  includes a multi-state network of real estate agents, attorneys, title companies, short sale negotiators, credit repair providers, mortgage providers, inspectors and investors. Together, those professionals act as a NO COST short sale outsourcing solution for Realtors and Homeowners.

Jim McNinch, Certified Distressed Property Expert (CDPE);
Short sale agent, Short sale specialist
Jim@trademarklossmitigation.com

http://hosted.cdpe.com/trademark

http://www.trademarklossmitigation.com
832-330-4588

Today’s guest post features excerpts from attorney Ron Ballard’s recent article featured on his blog.

Read the original post here in its entirety:

Agents Face High Risks with Bank of America New TPA

“BANA has created an exclusive, full-employment club for local real estate agents, brokers and attorneys to the exclusion of everyone else.”

• Real estate agents (and attorneys) soon will be held legally responsible for reading the corporate mind of Bank of America. Fortunately for everyone else, they will not be allowed to even communicate with Bank of America, much less be required to read its mind. Unfortunately, all of this will further harm distressed borrowers and suffering neighborhoods by discouraging short sales and increasing foreclosures.This all results from a new “Third Party Authorization” form (TPA) which reportedly is mandatory on all Bank of America short sale files as of April 14, 2012.

• The new TPA makes real estate agents, brokers and attorneys (the only people who will be allowed to communicate with BANA, more on that later) personally liable if they “knowingly misrepresent or omit to state, any material fact in order to induce the Borrower(s), BANA, the lender, the investor or the insurer to agree to the terms of a Short Sale that the Borrower(s),  BANA, the lender the investor of the insurer would not have agreed to had all material facts been known” [exact verbiage carefully transcribed to preserve grammatical and punctuation errors].

• The new TPA requires the Designated Representative to represent that he/she is a licensed real estate agent, real estate broker or attorney (“Licensee”) in good standing in the state in which the Property is located and has all licenses, permits and authorizations to perform the duties undertaken by it.

• Moreover, several important classes of people will be excluded. For example, borrowers who want their private financial information transmitted through their accountant or bookkeeper must now use an attorney or real estate agent instead. An elderly or disabled person cannot have a family member or caregiver help them communicate with BANA. A member of our armed services serving abroad cannot have a family member or friend authorized communicate for them.

• Many States do not require short sale processors to be licensed, particularly if they are not being compensated. BANA overrules these State laws and policy making decisions.

• BANA has created an exclusive, full-employment club for local real estate agents, brokers and attorneys to the exclusion of everyone else.

• The reality of short sales is that the buyer is most often the most motivated person to get the deal closed. Many sellers are not making house payments, so why should they be in a rush to close the deal and have to move and start paying rent? In California, most will not be subject to a deficiency liability or cancellation of debt income taxes.

• Yet, BANA excludes buyers from short sales communications unless they do so through an agent, broker or attorney. Since when is a person prohibited from communicating on their own behalf? All this does is inject additional people who might misstate information or omit facts they do not know when they are not the principal in a transaction.

The Trademark Loss Mitigation team is a family owned business and includes a multi-state network of real estate agents, attorneys, title companies, short sale negotiators, credit repair providers, mortgage providers, inspectors and investors. Together, those professionals act as a NO COST short sale outsourcing solution for Realtors and Homeowners.

Jim McNinch, Certified Distressed Property Expert (CDPE);
Short sale agent, Short sale specialist
Jim@trademarklossmitigation.com

http://hosted.cdpe.com/trademark

http://www.trademarklossmitigation.com
832-330-4588

 
Considering Bankruptcy?

There may be alternatives you’ve never considered.  Millions of homeowners today are having difficulty making mortgage payments, and bankruptcy may seem unavoidable. However, it is crucial to understand the consequences and alternatives to bankruptcy, which may include the short sale of your home. A short sale will get you out from underneath unaffordable mortgage payments and may provide you with breathing room to restructure your finances.

“The Hidden Costs of Bankruptcy” is a FREE report that I’ve prepared for
you, available at:  www.hosted.cdpe.com/trademark

Filing for bankruptcy can be complicated and devastating to your finances. As a CDPE-designated agent, I have been trained to assist homeowners facing financial challenges and can help you find the best solution for your unique circumstances. During this overwhelming time, I can help you find a path to a more solid, stable future.

If you or someone you know is facing overbearing financial obligations and have considered declaring bankruptcy, the whole world—not just a mortgage—may feel upside-down. But during this stressful time, it is important to understand the processes and consequences of bankruptcy and any feasible alternatives in order to make the most informed decision. This report will help shed light on the complicated subject of bankruptcy, as well as some lesser-known alternatives.

Declaring bankruptcy, or legally stating one’s inability to pay off debt, can provide a homeowner with relief from creditors and—if faced with foreclosure—protection from a lender’s deficiency judgment. However, it can also leave the individual with lasting financial and emotional wounds. While declaring bankruptcy may temporarily halt foreclosure proceedings and allow for the reorganization of debt, in most instances the homeowner will be forced to vacate the property and foreclosure will be imminent.

Bankruptcy is also stated on one’s public record and can remain there for 7 to 10 years. This lowers one’s credit score significantly, showing lenders and future employers a history of financial challenges and low creditworthiness. For instance, a low credit score due to bankruptcy could inhibit future attempts to obtain another home mortgage, and may affect an employer’s willingness to hire an individual.

The emotional effects of bankruptcy are less recognizable than the fiscal ones but no less distressing.  Declaring bankruptcy is ranked among the top life-altering negative events one can endure and it can negatively affect one’s emotional and psychological
state, making recovery a challenge.  As a CDPE-designated agent, I can help you understand these alternatives and work with you to settle on the best path for your future.

Perhaps the most damaging misconception about bankruptcy is that it is a “get out of debt free” card. It cannot erase the financial obligations of taxes, student loans, child support or alimony. In addition, bankruptcy is not a solution for everyone. Each situation is unique, laws vary by state, and the procedure is complex and lengthy. It begins with a petition for bankruptcy, including whether you fall under chapter 7, 11 or 13 of the Federal Bankruptcy Code, which can be up to 60-pages long. Then you need to gather and organize personal documents stating assets and liabilities, income and expenditures, contracts and leases, and other financial affairs.

Filing for bankruptcy is a legal process and if it is your decision to pursue this path, you should consult with a specialized bankruptcy attorney. If you need help finding one, I can assist you.

In order to confidently choose a solution for your circumstances, it is important to be aware of any potentially less-damaging alternatives. In many cases, mortgage payments represent the largest portion of an individual’s debt. It’s helpful to consider looking at one’s debt with the mortgage payment eliminated or replaced by a lower rental payment. Would this alleviate the financial strain?

Homeowners facing financial hardship, showing a monthly shortfall and heading toward insolvency may qualify for a short sale, in which a home is sold for less than the mortgage amount owed.

A short sale is a dignified alternative to foreclosure, with less harmful effects on a homeowner’s credit score, future home loan eligibility, employment and security clearance. Through this process, certain homeowners may even be able to recover some existing equity.  Short sales have become a strong and beneficial solution for homeowners, and lenders and the government are fully supporting them.

If you are considering bankruptcy because of overwhelming mortgage payments, you may not see any light at the end of the tunnel. However, I am here to assist you. As a CDPE-designated agent, I can assist you in evaluating options for your particular situation.  Bankruptcy is not always an inevitability, and it might not be right for you. Contact me today and let me help you find a successful path for a more stable and happy future.

The Trademark Loss Mitigation team is a family owned business and  includes a multi-state network of real estate agents, attorneys, title companies, short sale negotiators, credit repair providers, mortgage providers, inspectors and investors. Together, those professionals act as a NO COST short sale outsourcing solution for Realtors and Homeowners.

Jim McNinch, Certified Distressed Property Expert (CDPE);

Short sale agent, Short sale specialist

Jim@trademarklossmitigation.com

http://hosted.cdpe.com/trademark

832-330-4588

FIDUCIARY AND LEGAL RESPONSIBILITIES OF REALTORS RELATING TO SHORT SALES – Part II – Explaining to the Homeowner What Their Options Are.

First my disclosure:  I am not an attorney.  This is a Part II of 4 RE-Blogs from one of my consulting attorneys regarding a important subject on fiduciary responsibility for those of us who do short sales as a licensed agent.

By Jeff Watson, Attorney, jwatson@srecnow.com

FIDUCIARY AND LEGAL RESPONSIBILITIES OF REALTORS RELATING TO SHORT SALES - Part II - EXPLAINING TO THE HOMEOWNERS WHAT THEIR CHOICES ARE
This is the first obligations of a Realtor. A real estate agent who chooses to become involved in a distressed property or in a short sale transaction must have adequate knowledge and training in order to convey all of the necessary material information to a homeowner so that the homeowner can make an informed decision about what their choices and options are.

The options and choices facing a homeowner in foreclosure can be separated into four categories. The first is to remain in the property as a “squatter” using multiple bankruptcy filings until the foreclosure auction occurs and they are evicted. This allows the homeowner to stay in the property for as long as possible at little or no cost.

The second option that the homeowner has which is usually very unrealistic is to list the property for an amount high enough to pay all of the liens in full and pray that some buyer will come along and pay that price. Ultimately, the result is that the homeowner lives in the property without making payments, experiences foreclosure, and then is often confronted with the need of having to file bankruptcy in order to discharge the personal responsibility of hundreds of thousands of dollars of debt.

The third option and one that is frequently recommended by many traditional real estate agents who do not understand all of the complexities of the short sale world is for the homeowner to list the property seeking a short sale buyer and hope that the short sale buyer has the patience and endurance to wait out the 90 plus day process as the seller(s) or their agent negotiates with the lien holders all of the things necessary to get the short sale approved. The biggest concern and drawback to this approach is that the buyer will get frustrated over waiting 90 or more days and move on to another house that is already available.

Second and more insidious concern with this is that the real estate agent and the seller are not always properly equipped to handle the negotiations with the lender. The lender is in the process of seeking to collect a debt and they will use any and all means at their access in order to try and obtain money and information. Unless the agent is extremely familiar with the entire short sale process as well as the BPO process they can make fundamental or critical errors that will either delay or destroy the short sale process.

The fourth option that can be presented to a homeowner is for the homeowner to list the property seeking a short sale and to work with a competent and knowledgeable investor who seeks to buy the property. In exchange for the investor agreeing to wait the 90 plus days to be able to buy the property the investor assumes the responsibility for negotiating the short sale so that the investor knows where the process is at all times. The investor/buyer may be choosing to keep this property in their own keeper portfolio as a rental property or they may be seeking to quick turn this property for a profit. The advantage to this approach is that there is a competent, persistent, committed end buyer who has submitted a legitimate arms length contract to the Bank in order to buy this property.

An additional benefit to this strategy is that the investor is knowledgeable about the entire short sale process and understands the key steps in the negotiation process and is able to handle the BPO in a manner that will more likely result in favorable short sale outcome. Few, if any, homeowners realize that during the BPO they should be emphasizing the negative aspects of the distressed property, rather than promoting it’s benefits, features and attributes. An investor who is aware of how the BPO process works will
make sure that the BPO agent has all of the necessary information in order to properly and accurately complete the Fannie Mae BPO form.

A Realtor that adequately understands these choices can then present the foregoing options to the homeowner who is in default or distress.

Related Posts:

( Click To Review) FIDUCIARY AND LEGAL RESPONSIBILITIES OF REALTORS RELATING TO SHORT SALES – Part I

The Trademark Loss Mitigation team includes a multi-state network of real estate agents, attorneys, title companies, short sale negotiators, credit repair providers, mortgage providers, inspectors and investors. Together, those professionals act as a NO COST short sale outsourcing solution for Realtors and Homeowners.

Jim McNinch, Certified Distressed Property Expert (CDPE);

short sale agent, short sale specialist

Jim@trademarklossmitigation.com

http://hosted.cdpe.com/trademark

832-330-4588

Jeff Watson, Attorney jwatson@srecnow.co

FIDUCIARY AND LEGAL RESPONSIBILITIES OF REALTORS RELATING TO SHORT SALES - Part I

A growing issue among Realtors regarding short sales is their concern over what are their fiduciary duties, as well as what are their legal responsibilities, when they choose to represent a party involved in a short sale transaction.

While the language may vary from state to state, the common principle is that licensed professionals must only handle professional matters upon which they are adequately trained and/or have adequate resources and supervision to make sure that these matters are competently handled by the licensed professional. This is a principle that applies to lawyers, doctors, accountants and real estate agents.

The first area is to whom does a Realtor owe a duty? The real estate agent owes a duty; a fiduciary responsibility and/or legal responsibility,  to whoever they choose to represent in a transaction. Often it will be a homeowner in distress, default or foreclosure. The duty that flows from the agent to the homeowner does not extend to the lender who has started the adverse or hostile foreclosure action against the homeowner in default or distress.

This is important because some Realtors mistakenly believe that they are responsible for keeping the lender abreast of any new offers on the property that are received during the short sale negotiation process, even after the property is under contract and the initial short sale package has been sent to the bank for evaluation.

Realtors must understand that they work for the homeowner or the buyer. Not both, and not for the Bank. While the Bank has the veto power over the offer, it is the homeowner who makes the decision regarding which offer to accept. Furthermore, it is up to the homeowner to decide whether they choose to pursue a short sale.  Realtors who choose to work in the world of distressed properties and work with homeowners who are either in default or foreclosure must understand that there are two inevitables that change the entire landscape. Number one, they are in the world of negative equity, i.e. the property is worth less than what it owed.

Secondly, as a result of adverse financial circumstances being experienced by the homeowner the inevitable foreclosure is coming.  It is not a question of if, it is only a question of when. The train is coming down the tracks, it will arrive, but we don’t know exactly when.  Therefore, all actions and decisions must be made in the perspective of a) the home has negative equity, and b) the homeowner is going to lose their house.

Sellers that lose their home to foreclosure and are forced then to file for bankruptcy in order to discharge all of the hundreds of thousands of dollars of personal debt end up in the worst situation possible. Sellers who are able to successfully sell their house via a short sale and have avoided the actual foreclosure from completely occurring, and have paid off via the short sale hundreds of thousands of dollars of indebtedness that they were personally responsible for, are in the best situation. Homeowners can fall into any one of these categories or anywhere in between.

It is absolutely critical for a Realtor to realize that once they are dealing with a property that has negative equity with an inevitable foreclosure date the traditional rules of seeking to sell to a buyer who provides the highest and best offer go out of the window and getting the property sold is more important than the purchase price.

The Trademark Loss Mitigation team includes a multi-state network of real estate agents, attorneys, title companies, short sale negotiators, credit repair providers, mortgage providers, inspectors and investors. Together, those professionals act as a NO COST short sale outsourcing solution for Realtors and Homeowners.

Jim McNinch, Certified Distressed Property Expert (CDPE);

short sale agent, short sale specialist

Jim@trademarklossmitigation.com

http://hosted.cdpe.com/trademark

832-330-4588

A short sale

In a short sale, the lender allows the home to be sold for less than the mortgage balance. As a result, prices often are affordable. On top of that, today’s mortgage interest rates are low. But short sales are complex and can take a lot of time.

Short sales are complicated because the final price must be approved by the both the home seller and the seller’s lender. So short sales require extra time to move from an offer to a settlement — sometimes as long as six to nine months.

In general, first-time homebuyers should definitely consider short sales because they offer a terrific opportunity to get a great house at a discounted price.The only drawback is timing because some banks are still notoriously slow at approving an offer. Buyers who need to move within a specific timeline because their lease is expiring or a school schedule may not want to make an offer on a short sale.

According to CoreLogic, short sales represent about 8 percent of all home sales in 2011.

First-time buyers and successful short sales

First-time buyers are often less patient than move-up buyers, and don’t want to wait for a short sale to go through. According to the monthly Campbell/Inside Mortgage Finance Housing Pulse Tracking Survey, the share of short sales purchased by first-time buyers dropped to 40 percent in August 2011 after peaking at 54 percent of all short sales in November 2009.

“A short sale can be a great way to get an undervalued property, but buyers need to make sure that both agents, including their buyer’s agent and the listing agent, are experienced with short sales,” says Mike Cuevas, a Realtor with Exit Realty in Chicago. “I always recommend that buyers put in a drop-dead date into their contract, such as allowing the lender 30 days to approve the offer, because this puts pressure on the listing agent.”

First-time buyers should interview real estate agents to find a buyer’s agent with short-sale experience in addition to a deep knowledge of the local real estate market, so they recognize the value in a specific property. Griffin says buyers should choose an agent with experience in their price range, so they will know whether the offer is in line with current market conditions.

Short sale pitfalls

In addition to the uncertain timing of a short sale settlement, buyers must be aware that the homes are typically sold as is, meaning the seller won’t make repairs.

“I recommend that buyers have a home inspection, even before the bank approves the offer, so that they have an opportunity to get out of the deal if the home has defects,” Cuevas says.

A home that needs repairs may not qualify for Federal Housing Administration financing, which is popular with many first-time homebuyers because of the low 3.5 percent down payment requirement.

“Buyers should have their agent find out about the condition of a property, so they can estimate whether FHA financing will work,” McDonough says. “FHA rules have stricter definitions of livable condition, but if the home is in good condition, it should be approved. If the home needs repairs, buyers can opt for FHA 203(k) financing to wrap repair costs into their mortgage.”

McDonough says buyers with conventional financing and at least 5 percent for a down payment will be in a better position for a short sale approval because they are considered less risky borrowers.

“The biggest risk for buyers, besides timing problems, is that they may put in an offer on a short sale, become emotionally attached and then the deal falls through,” says McDonough. “Some buyers know they don’t have the risk tolerance for that experience.”

As with any other home purchase, buyers should be both financially and emotionally prepared for their purchase with a pre-approved mortgage, cash for a down payment and plenty of patience.

The Trademark Loss Mitigation team is a family owned business and includes a multi-state network of real estate agents, attorneys, title companies, short sale negotiators, credit repair providers, mortgage providers, inspectors and investors. Together, those professionals act as a NO COST short sale outsourcing solution for Realtors and Homeowners.

Jim McNinch, Certified Distressed Property Expert (CDPE);

Jim@trademarklossmitigation.com

http://hosted.cdpe.com/trademark

http://www.trademarklossmitigation.com
832-330-4588

Certified Distressed Property Expert

Bank of America Short Sales

On March 20, Bank of America released a standardized Third-Party Authorization form to be used on all Bank of America short sales beginning April 14, 2012.

You can download the form from Bank of America’s Agent Resource Center at http://www.bankofamerica.com/realestateagent.

Bank of America will accept other forms until April 14; however, we recommend implementing the form on your next Bank of America short sale!

You should continue to use your generic Short Sale Authorization to Release Information Form with home owners’ associations, second lien holders, or anyone else you need information from as necessary.

A re-blog from attorney Jeff Watson www.topshortsalelawyer.com

Jeff Watson

Dear Friend,

First, allow me to congratulate Bank of America executives on providing a new acronym for themselves: BANA, which fully stands for Bank of America National Association. The remainder of this reading is best done while listening to Madonna sing “Material Girl” (convenient YouTube link is http://www.youtube.com/watch?v=R0FXPqYpt0g).

As Madonna is beginning to go into her pop hit, allow me to express my condolences to the title companies and escrow agents across America that have been completely omitted by BANA from this form. Apparently you are either not allowed to have access to information regarding short sales, you don’t need it, or you are deemed to be completely immaterial to the short-sale process and closings. The complete omission of escrow agents and title companies from this latest BANA Third Party Authorization is most curious.

Page 1 of this two-page authorization is benign. It is, however, worthy of noting that now the homeowner is deemed to be the one responsible for selecting the authorized representative.

When we move to page 2, however, it gets interesting. I will do my best not to comment upon the poor grammar used in the very long run-on sentence. Instead, I want to focus on the one key word that was undefined but means everything. By now, Madonna will have said it multiple times if you are listening to the song: “MATERIAL”.

Unfortunately, we are now beginning to go down a rabbit hole with BANA as to what do they mean by “material”? Material in the present sense, or material six months after the deal closes when someone says, “Well, if I would have known then what I have learned now, I would have done something differently!”

When you read that language, you will see that BANA wants to create and impose a duty not to omit or conceal, or to fail to disclose, on the authorized representative. Did you notice that the duty runs unilaterally rather than reciprocally? Yes, BANA still has the right to lie to you about whether they have really received the documents. BANA still has the right to lie to you about the results of the BPO. Now you see why I wanted you to listen to Madonna’s “Material Girl” to distract you from the enraging bias, attitude and arrogance displayed by BANA.

We then turn to the very difficult matter of what a reasonable person believes is a material fact regarding one of these complicated transactions known as a short sale. In case you are wondering, reasonable people can disagree over what is reasonable. Therefore, reasonable people could disagree over what is a material fact. Given the unilateral nature and poor quality of thought put into this Third Party Authorization, I would be hesitant to execute this Third Party Authorization and return it to BANA without including in it your definition of what you believe to be a material fact. The absence of a definition of “material” opens a relativistic “rabbit hole”.

Best regards,
Jeffery S. Watson

Bank of America Homeowner Rent Program

Bank of America, the nation’s second-largest lender, is launching a pilot program this week that will offer a limited number of customers behind on their mortgages to transition from owner to renter.

The bank, which was saddled with thousands of delinquent loans when it took over mortgage giant Countrywide, says that beginning this week “in targeted hard-hit markets,” it will offer a limited number of mortgage customers who are facing foreclosure an opportunity to remain in their homes, and transition to tenant status. The program is called “Mortgage to Lease.”

“This pilot will help determine whether conversion from homeownership to rental is something our customers, the community and investors will support,” said Ron Sturzenegger, Legacy Asset Servicing executive at Bank of America in a statement. “This program may have the potential to further round out the broad set of solutions we offer our customers in need of assistance.”

Here are the qualifications for this ‘pilot program’:

• Borrowers would agree to a what is known as a “deed-in-lieu” of foreclosure, where they essentially sign over ownership of the property to the lender.
• Former owners would be offered one-year leases with options to renew the leases in each of the following two years at rents that the bank determines are at or below the current market price.
• The bank began sending letters Thursday offering leases to 1,000 homeowners in Arizona, Nevada and New York.
• Borrowers would have to demonstrate an ability to pay the market rent. In other words, the former owners would have to apply to lease their homes back from BofA.

• Rents would be based on a BofA formula. For example, a soon to be former owner with a $250,000 mortgage and monthly payments of $1,600 could swap the house for a lease, renting the home for $900.
• Borrowers selected for the program must be at least two months past due on their mortgage and face considerable risk of foreclosure.
• Bank of America is reaching out to borrowers who have exhausted other alternatives to foreclosure or who haven’t responded to earlier solicitations.
• Homeowners with second mortgages or other liens won’t be selected.

Watch this video. Did  the Bank of America Executive correctly say that they were going to set the rents to be below market? How will that work out for the other local land lords who have mortgages?  Also, why would someone who is living in their home for free…not making payments…all the sudden want to become a tenant and pay a lease….”

National Mortgage Settlement

Here is a Re-Blog from my attorney Steve Beede sjbeede@bpelaw.com

Since the National Mortgage Settlement was first announced last month, we’ve been awaiting the details of what this will mean for upside-down owners. Details have slowly emerged and yesterday, the proposed Settlement documents were filed in Federal Court.  Although the Settlement still requires Court approval, what we’re seeing is the potential for some very significant relief for those at risk of losing their homes. Today, I’ll share with you what I believe you need to know about the National Mortgage Settlement and what to expect going forward.

On Monday, March 12th, the proposed Settlement documents were filed in Federal Court revealing what each of the Lenders is required to do. You can read the details at http://nationalmortgagesettlement.com/.

How they’ll meet those obligations is critical to upside down homeowners. Those details are slowly emerging through analysis, press-releases, and side deals.

Here’s what you need to know so far:

1.  The Lenders – the Settlement ends lawsuits by the Federal Government and State Attorneys General against:

(1)  Bank of America
(2)  Wells Fargo
(3)  JP Morgan Chase
(4)  Citigroup, and
(5)  Ally Financial (formerly GMAC).

2.  The Settlement – requires the 5 Lenders to collectively provide up to $25 Billion in relief to distressed borrowers and payments to government agencies.  This will be provided through a combination of direct cash payments and credits for debt reduction and other loan adjustments.  The individual lender shares are:

3.  The Allocations – The Settlement requires the Lenders to provide the relief through three

broad categories:

(1) Foreclosure Assistance Payments – paid to State and Federal Government agencies to fund and/or reimburse their various borrower assistance programs.  The agencies get to use these funds as they see fit;

(2) Consumer Relief Programs – These funds are not actually “out-of-pocket” payments.  Rather, the Lenders will receive “credits” against this obligation in exchange for principal reductions on existing loans.  These will be made in two different categories:

(a)  1st Lien Principal Forgiveness – they will receive “credits” against their Settlement obligations for each $1 of debt forgiveness on loans. The amount of the credit will likely vary based upon the loan to value (LTV) ratio involved.  A minimum of 30% of the credits must be allocated to principal forgiveness on loans with an LTV of 175% or less.

(b)  2nd Lien Principal Forgiveness – Lenders will receive a sliding scale of credits based upon the delinquency of the borrower with the least delinquent loans receiving the highest credits. Presumably, those who are not delinquent at all on their 2nd loans will get no relief.

(3) Loan Refinancing – These funds will be used to assist debtors in refinancing their existing loans. Credits are likely to be based upon a formula that factors: (1) new interest rate compared to old interest rate; and (2) amount of debt forgiveness involved. So, each loan can bring a different result.

4.  The Side Deals – The Settlement is very complex and the devil will be in the details since each lender can map out exactly how it plans to satisfy its allocations.  See my recent Blog on the Wells Fargo roadmap for an example of that Lender’s plans. However, already participating lenders are cutting “side-deals” to obtain a better result by offering even better settlement options:

a.  Bank of America – announced deeper principal reductions for about 200,000 homeowners, up to $100,000 each.  In exchange, they will avoid up to $850 Million in penalties.  BofA has also announced that it is temporarily halting foreclosures while it identifies and solicits the potential beneficiaries of these reductions.

b.  Ally Financial – announced possible principal reductions to current market value.  Further, some borrowers in extreme financial distress may get reductions to 85% of their home’s value.

5.  What to Do Now – Although the Settlement terms must still be approved by a Federal Judge, if you are in financial distress and in danger of losing your home, contact your State Attorney General’s office for information and contact links with the specific lenders.  The Texas  AG’s website for the National Settlement is at

https://www.oag.state.tx.us/oagnews/release.php?id=3969

and has internet and/or phone contacts for each of the participating lenders.  Don’t expect immediate relief.  The Settlement is a process that still requires Court approval, will take several months to get organized, and will take up to three years to fully provide benefits.  But, it does promise substantial relief for those who qualify and diligently pursue the available benefits.

Meanwhile, if you or someone you know is struggling with an upside-down property and don’t know what to do, our NO COST Consultation Program and short sale negotiation service can offer knowledge of what to expect and form strategies to either keep the property or move on with as little financial risk as possible. To schedule a Consultation, please contact our office at 832-330-4588.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are upside-down on your loan, especially if youre facing a lender lawsuit, get competent legal advice in your State immediately so that you can determine your best options.