SHORT SALE WORK-AROUNDS

Oct 18th, 2011

SEE VIDEO PRESENTATION LINK AT END OF POST

 

As you should know from reading my Blog postings, the passage of Califonia’s SB458 on July 15th changed the game plan for doing short sales.  Its most important aspect was barring junior lenders from having recourse against the borrower/seller or even asking them for monetary contribution. Although the feared crash of short sales has never occurred as severely as expected, real estate agents have been struggling to get junior lender cooperation. What has evolved is a number of “work-arounds” to get the junior lenders satisfied and get the short sale completed.

A workaround is simply a method, sometimes used temporarily, for achieving a task or goal when the usual or planned method isn’t working.  In the case of short sales, junior lenders who aren’t satisfied with what they may get from the first lender’s sale proceeds and barred by SB458 from getting anything from the borrower may refuse to do the short sale and hope they can do better if they sue the borrower after the first lender forecloses. Here are a few of the ways that creative and successful real estate agents are working around the SB458 restrictions and saving their clients from foreclosure:

1. Get Money from Someone Else – SB458 simply says that no lender can request a contribution from the Seller/borrower as part of a short sale.  It does not say that a lender cannot get contribution from others.  First Lender: Typically the only money offered to junior lenders comes from the First Lender that gets almost all of the sale proceeds. Generally, first lenders make more money from a short sale than they could from a foreclosure but they regularly refuse to give the juniors any more than $6,000.  But if a foreclosure would bring much less to the first lender, they could be convinced to share more with the junior in order to net more for themselves through the short sale.  Buyer: It is the Buyer who is bringing the money to the table.  If the Buyer really wants the property, they may be willing to contribute money to the junior lender to make the deal happen. This might be workable into the Buyer’s loan.  Real Estate Agents: Although agents hate this, it is not unusual for lenders to look to the agents to cut their commissions and let the difference go to the junior lender.  This is a “something is better than nothing” approach that unfortunately penalizes the parties that have put the deal together.

2.  Voluntary Seller Contribution – SB458 states that a lender cannot “require” the seller/debtor to make any contribution. But nothing says that the seller cannot “volunteer” a contribution. While in reality, no-one generally voluntarily decides to give money when they are not asked for it, the drafters of SB458 allowed that a seller may do just that if they have the funds and they want to get the deal done.  Typically this will be in response to a junior lender responding to a short sale offer with a requirement that they receive $X more.  While this does not state who must pay this, the language of the request is that any other party in the short sale can do so, including the seller.

3.   Re-write the Buyer’s Offer – If the junior lender can’t be satisfied, then the deal could die.  If so, then some agents have gone back to the buyer and written a new short sale offer for a lower purchase price than the original deal… lower by the additional amount the junior lender wants to receive.  The new offer is submitted and, if the first lender accepts the offer terms, the junior lender counters at the original offer price with the increased money going only to the junior lender. This has been working.

4.  Discount the Junior Loan outside of escrow – If the first lender refuses to allow money to be paid by the seller to the junior lender, then the sale might die and the seller would face foreclosure. Instead, it is possible to put the escrow on hold and, outside of escrow, the seller could negotiate with the junior lender to accept a discounted payoff of their loan.  For example, the seller pays money to the junior lender and the junior lender accepts this as satisfaction of the debt and releases their lien.  Then the escrow is re-opened, only the first lender is left in the deal, and the short sale closes.  We typically are successful negotiating discounted loan payoffs for 10-20% of the current balance.

5.   Discounted payoff before short sale – For some sellers who are upside-down on a property but have substantial other assets, there is a danger in doing a short sale in that the Hardship Application process requires that they disclose their personal assets.  This can cause a junior lender to reject a short sale because they believe they can collect from the seller in a post-foreclosure lawsuit.  In such cases, it can be better to negotiate a discounted payoff with the junior lender before you ever start the short sale.  Now it is simply a business transaction: how much will the junior lender accept in exchange for a lien release?  Again, 10-20% is common but generally no financial statements are required. If this works and the junior loan is eliminated, then the seller may be able to proceed with the short sale knowing that first lenders will almost always accept the short sale terms.

All of the foregoing concepts are foreclosure-avoidance, short sale success strategies that real estate agents and their clients are actually using in today’s California real estate market. If you are having success with other creative approaches, please let us know. Remember: all agreements in a short sale must be disclosed to everyone and must appear on the Closing Statement (HUD1). No secret side deals are allowed. Secret side deals are mortgage fraud and could subject participants to severe legal consequences.

If you are a California property owner, consider our $200 Attorney Consult program that will help you determine all of your options and choose the best strategy to enable you to move forward as intact as possible.  To learn more, contact me at sjbeede@bpelaw.com or call us at 916 966-2260.  If you are interested in discounted loan negotiations, please contact my Associate Attorney, Alex Munn, at awmunn@bpelaw.com or call him at the office.

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

 

WATCH STEVE’S VIDEO PRESENTATION ON SB 458 BY CLICKING HERE

 

 

 

]]> http://www.shortsalereporter.com/new-ca-law-sb-485-mortgage-deficiency-judgments-selleragent-victory-or-victim-of-unintended-consequences/feed/ 0 http://www.shortsalereporter.com/new-ca-law-sb-485-mortgage-deficiency-judgments-selleragent-victory-or-victim-of-unintended-consequences/ http://feedproxy.google.com/~r/ShortSaleReporter/~3/eTNdbGUueKg/ http://www.shortsalereporter.com/video-using-facebook-to-market-to-homeowners-and-other-referral-sources/#comments Mon, 13 Feb 2012 16:42:48 +0000 Jim McNinch http://www.shortsalereporter.com/?p=895

Video: Using Facebook to Market to Homeowners
and Other Referral Sources

 

 

Easy steps to set up and use FaceBook to market to homeowners in pre-foreclosure, find short sale clients and other resources.

 

This is the 2nd video of Trademark’s series on Marketing To Distressed Homeowners.  The video will cover how to set up FaceBook, a number of easy add-ons and techniques to maximize your Social Media Presence.

 

Click Here To View Video

]]> http://www.shortsalereporter.com/video-using-facebook-to-market-to-homeowners-and-other-referral-sources/feed/ 0 http://www.shortsalereporter.com/video-using-facebook-to-market-to-homeowners-and-other-referral-sources/ http://feedproxy.google.com/~r/ShortSaleReporter/~3/Dkv_nTvzeLA/ http://www.shortsalereporter.com/the-national-mortgage-settlement-hype-or-help/#comments Fri, 10 Feb 2012 18:00:00 +0000 Jim McNinch http://www.shortsalereporter.com/?p=876

National Mortgage Settlement

BPE Law Group E-News
Business – Property – Estate Planning
February 10, 2012

The news media is heralding what has been called the “National Mortgage Settlement”  as being a great benefit for distressed homeowners.  But behind the headlines this seems like a lot more government hype than any real help.  The public remains torn between whether it is morally or economically sound to provide help to those who can’t pay their debts or whether we should force help from lender’s whose policies may have created this recession.  In this newsletter, I’ll highlight what this Settlement is all about and what you can expect.

As always, if you have any questions about your real estate, business, estate planning, or any other legal issue, please let us know by e-mailing me at sjbeede@bpelaw.com; www.stevebeede.com

Steve Beede

THE NATIONAL MORTGAGE SETTLEMENT

Nearly two years ago the State’s Attorneys General across the country along with Federal Officials collectively began to investigate the largest lenders regarding the foreclosure practices of the banks. This led to the “Robo-Signer Scandal”, the discovery that many lenders were just ramming foreclosures through with falsified and fraudulent documentation.

In response, the Attorneys General of many States filed lawsuits against the five largest banks:  Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial (formerly GMAC). Yesterday they reached a Settlement. Although the details of the Settlement are still being worked out, here is what we know so far:

1.  The Banks will pay $25 Billion – While this sounds like a large amount of money, the allocation of these funds to solving the nation’s housing problems will be what matters. Here are the designated allocations:

(1)   $10 Billion for Loan Modifications & Principal Reduction for up to 1 Million Homeowners – if evenly allocated, this would provide at best a principal reduction of $10,000 per homeowner. California will receive $430 Million of these funds. But with California alone having 2 million homeowners upside-down an average of $50,000 or more, this is unlikely to enable very many people to keep their homes.

(2)   $3 Billion for Refinancing of Loans – for those who can qualify for loan refinancing, these funds will effectively result in principal reduction of existing balances. It is unclear how this will be handled.

(3)   $1.5 Billion for People who were by Robo-Signer Foreclosure Abuse – this fund will provide a payment on $2,000 to up to 750,000 homeowners who were improperly foreclosed upon.

(4)   $10.5 Billion to the States and Federal Government – the highest portion of Settlement funds will go to Government agencies – not homeowners – to compensate for loss of public funds related to servicer misconduct. It is unclear what these “losses” are but they may include loss of property tax revenue, legal costs, public housing, etc.

2.  The Settlement Does Not Apply to Loans Owned by FNMA and Freddie Mac – These two Government Sponsored Agencies (GSE’s) agencies now own approx. 50% of all loans in the U.S. and up to 80% of all the subprime loans that are in the most trouble. This Settlement will provide no help for these homeowners. Even though FNMA is under a Government Conservatorship, FNMA actively opposes any principal reduction of its loans.

3.  The Settlement Money will NOT be Available Immediately – While the website touting the Settlement talks about “Immediate Aid” and “Immediate Payments”, that will not be the case. It will be 30-60 days before anyone is designated to Administer the Settlement and start working out the details. After that, it will be 6-9 months to somehow identify those homeowners who were affected by the lending abuses and contact them with details on how they might apply for benefits through the Settlement.  The Banks have 3 years to perform their obligations in paying the Settlement Money.

4.  The Banks Will Gain Immunity from Government Prosecution for Robo-Signer Abuse – The biggest beneficiary of the Settlement may well be the Banks who for a relatively small sum of $25 Billion (they earned $317 Billion last year) will end the existing litigation and be protected from any more State or Federal claims related to the Robo-Signer scandal.  This will not stop any individual claims by homeowners nor will it stop any claims for other lending abuses.

The bottom-line: This Settlement is only a drop in the bucket of the monetary relief that is truly needed to enable upside-down owners to keep their homes and get our nation’s real estate and economy back on track. It will have no real or lasting effect except for the few lucky homeowners that get enough funds to make a difference. For the lenders, this relatively small penalty will not be likely to punish them for their abuses nor deter them from such conduct in the future.  So, who wins from this Settlement?  Once again, it’s not the homeowners.

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@trademarklossmitigation.com

http://hosted.cdpe.com/trademark

Unfortunately, many homeowners get misinformation or very incorrect and misleading information regarding short sales from their friends, on the web or even other agents.

Here is the most common questions our clients have asked:

Q: I hear short sales are a huge hassle and seldom work.

A: I work on short sales with my clients every day.  They felt like the paperwork and extra effort involved might not be worth it.  But they found that once we had successful closings, it was worth the hassle and better than losing their homes to foreclosure.

Q: I can’t afford to pay my mortgage, how can I afford to pay you?

A: The downturn in the economy has affected us all.  Many of my clients felt the same way you do.  But they found that in a short sales situation, the lender typically pays for the closing costs including realtor fees,  in order to sell the property, enabling you to hire me with no bottom line cost to you.

Q: I want to wait and see what happens, my situation isn’t that bad because I’m still current.

A: Many of my clients were still current when they began working with me.  They felt their savings would last long enough to hold off the inevitable or until the market shifts.  But they found the reality is if you can’t pay your mortgage or there’s no shift in the market it’s better to be proactive with the lender than continue to waste their resources on a lost cause.

Q: I’m going into foreclosure in a few months or weeks, I don’t have time for a short sale.

A: I’ve had clients in the same situation you’re in right now. They felt there was no time to sell their home, either.  But they found that if we communicated with the lender, there is a good chance they would grant an extension and were able to postpone foreclosure and sell the house.

Q: I hear short sales affect your credit the same as foreclosure

Many of my clients have heard the same thing. They felt that if the damage to their credit was going to be the same it wasn’t worth the trouble. But they found after a successful closing that the credit consequences of a short sale don’t last nearly as long as foreclosure.

When faced with unaffordable mortgage payments, your
house can feel more like a cage than a home. You may feel
trapped because it’s hard to know what to do to improve
your situation, and you may just want to give up.

Don’t give up!

The reality is you don’t have to be a prisoner to a
mortgage you can no longer afford. You have options and
you’re not alone. I can help you find the key to financial
stability through education and a greater understanding
of your alternatives.

Learning Your Options

You actually have many options when it comes to
seeking relief from challenging housing payments. When
reviewing the following list, think about which alternative
may be best for your specific situation.

Short Sales

Generally considered one of the most viable alternatives
to foreclosure, short sales allow homeowners to minimize
financial damage and move on from a burdensome,
unaffordable mortgage. In many cases, short sales allow
borrowers to qualify for a new mortgage in as little as two
years, as opposed to five years or more after a foreclosure.

The following are some of the
benefits of short sales:

• Avoid foreclosure at no cost to you
• Lesser impact on credit scores
• Security clearance protection
• No challenges to future employment
• Retain some control over the sale of your
property (vs. public auction)
• The ability to negotiate away a deficiency
judgment (collection of your mortgage debt)
• Shorter waiting periods to get another mortgage

FOR IMMEDIATE RELEASE

As Foreclosures Rise, Trademark Loss Mitigation Steps in to Help Homeowners

This is the first video of Trademark’s series on Marketing To Distressed Homeowners.  The video will cover how to set up twitter, a number of easy add-ons and techniques to maximize your Social Media Presence.

New HAFA Changes

In March 2009, the U.S. Treasury issued guidance for loan modifications by participants in the Making Home Affordable Program.  The program was  updated and expanded in April of 2010 to include the Home Affordable Foreclosure Alternatives Program (HAFA).

HAFA  provided borrowers with an alternative to foreclosure through a short sale or deed-in-lieu (DIL) of foreclosure.
On August 9, 2011, the Treasury Department issued yet again another program update Supplemental Directive (11-08) (Click on link to download a copy) – however, for those homeowners that can benefit by and qualify for this program, these changes are not all that bad!

 
The new policy changes and clarifications of previous HAFA policies are as follows:
√    Borrowers are currently provided with a 14-day period to respond to a servicer’s invitation to participate in the HAFA program. The 14 calendar day period response time is only intended to give the borrower a guaranteed minimum time period to respond to the servicer. It is not meant to that if the borrower elects to participate in HAFA after the 14-day period that they are not eligible. Servicers may consider a borrower for HAFA whether or not they respond within the 14-day period.

√   Unless prohibited by investor rules, servicers should utilize the HAFA program rather than a lender’s or servicer’s proprietary short sale process in all cases where a short sale is approved by the servicer and the transaction meets the guidelines of the HAFA program.

√    It is clarified that the aggregate cap of $6,000 that is available to satisfy subordinate liens applies only to subordinate liens that are secured by a mortgage on the subject property. The $6,000 cap is not applicable to non-mortgaged subordinate liens such as mechanics’ liens or homeowner association liens. Servicers are allowed to authorize any additional portion of the gross proceeds to be used as payment to the subordinate non-mortgage lienholders in exchange for a lien release and release of borrower liability. This means that more than $6,000 can be paid to subordinate liens as long as no more than $6,000 is paid to the mortgage liens.

√   Before October 15, 2011, each servicer must develop and implement procedures that the servicer will follow to periodically to reevaluate property value and to reconcile discrepancies between the servicer’s market value estimate or BPO and the market value data provided by the borrower or the borrower’s real estate broker.

√   The term “Minimum Acceptable Net Proceeds” in a HAFA Short Sale Agreement does not really mean it is the minimum amount that must be netted from the short sale. The new supplemental directive clarifies that servicers are not prohibited from accepting a purchase offer that would result in net proceeds less than the previously stated minimum acceptable net proceeds if the servicer determines that the proposed sale is in the best interest of the investor.
√    Borrowers may use their $3,000 relocation incentive to pay for transaction costs that the borrower has instructed the closing agent in writing to pay, such as the cost of legal representation, overdue utility bills or minor repairs identified during the property inspection. However, borrowers may not use the relocation incentive to pay for the release of subordinate or non-mortgage liens recorded against the property and borrowers may not be required by the servicer, as a condition of the sale, to utilize the relocation incentive to pay any transaction expenses.

√    Servicers must, no later than October 15, 2011, complete and post on their websites a HAFA matrix explaining their HAFA program in a format that can be used to compare it with other servicers’ HAFA programs. The matrix is intended to assist the borrowers and their real estate agents in understanding any unique components of the particular servicer’s HAFA policy or any differences in the HAFA policy of a particular lender. The Treasury Department will post on the MakingHomeAffordable.gov website information for the public about the web location of each servicer’s HAFA matrix. This is intended to make it easy for borrowers and their agents to identify in advance any different requirements between the various servicers’ HAFA policies.

 
In California, many short sale sellers are opting out of HAFA these days. This is due, in part, to the fact that California short sale sellers now have the anti-deficiency protection provided from all lien holders in Senate Bill 458.

 
In addition, the HAFA program can add considerable time to the short sale process putting significant pressure on sellers and buyers alike.

 
Nevertheless, there are some real benefits to HAFA for certain short sale sellers. If your clients are considering a short sale, you should definitely advise them to do the research and select the approach that best fits their needs.

FTC Mortgage Assistance Relief Services (MARS)

Although the FTC’s MARS Rule took effect on January 31, 2011, most real estate brokers have little or no knowledge regarding the impact on their practice.

Why hasn’t someone told me about MARS?

Most publications only recently have had a chance to read through and analyze the MARS Rule.  Not only is the Rule 15 pages long in semi-legalese; the actual “law” as added to the Federal Register 16 CFR Part 322 Mortgage Assistance Relief Services; Final Rule is 51 pages plus another 160 pages of explanation and history.  In other words, government work at its finest.

The new MARS rule does apply to real estate brokers (and their agents) (as well as title officers, etc.) who attempt to negotiate or otherwise provide services and/or endeavor in efforts related to halting a foreclosure or obtaining lender or servicer approval of a short sale.  The penalties are steep and more than just your entire commission is at risk if you step over the line.

Watch the video by attorney Adam Buck of Buck Edmunds Law for an in-depth summary of how you can comply with this complex rule when marketing to homeowners and negotiating short sales.

If you are an agent/broker, involved in short sales, or are a 3rd party short sale negotiator and have not yet heard about or sought legal advice on the new FTC Mortgage Assistance Relief Services (MARS) Rule that takes effect on February 1, 2011, it would be worth your time to talk to your Broker, attorney or other legal adviser.

I am not an attorney and this is not legal advice!  You should seek your own legal advice from a legal practitioner.  This post is a summary of the rule, and interpretations of that rule by my attorney and the opinion of other attorneys I have talked to or read in various blogs.
I think it is easy when first looking at this rule as a short sale negotiator, real estate broker/agent or investor, to discharge any required compliance to the rule, particularly if one is not charging the homeowner any fees for services.

When looking at the overview on the FTC’s website, http://www.ftc.gov/opa/2010/11/mars.shtm , it is easy to surmise FTC is clearly targeting predatory Mortgage Relief Servicers, particularly those who were charging homeowners upfront fees and providing false marketing promises.

Case in point, FTC Chairman Jon Leibowitz said, “At a time when many Americans are struggling to pay their mortgages, peddlers of so-called mortgage relief services have taken hundreds of millions of dollars from hundreds of thousands of homeowners without ever delivering results,”.  Thus, FTC is issuing the Mortgage Assistance Relief Services (MARS) Rule to protect distressed homeowners from these mortgage relief scams that have sprung up during the mortgage crisis. Particularly those operations that falsely claim that, for a fee, they will negotiate with the consumer’s mortgage lender or servicer to obtain a loan modification, a short sale, or other relief from foreclosure.

However, my attorney,  Todd J Sullivan J.D, and other attorneys are taking a more conservative approach.  They contend that if you are engaged in any short sale endeavor undertaken in an effort to stop a foreclosure sale, take any fees associated in that short sale, engage in  short sale negotiations or use a 3rd party negotiator, you probably fall under the ruling should take a closer look at the rule’s requirements.

Overview of the Rule

Advance Fee Ban: The most significant consumer protection under the FTC’s new rule is the advance fee ban. Under this provision, mortgage relief companies may not collect any fees until they have provided consumers with a written offer from their lender or servicer that the consumer decides is acceptable and a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer.

The companies also must remind consumers of their right to reject the offer without any charge.

The Rule requires mortgage relief companies to disclose key information to consumers to protect them from being misled and to help them make better informed purchasing decisions. In their advertising and in communications directed at individual consumers (such as telemarketing calls), the companies must disclose that:

• they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;
• the lender may not agree to change the consumer’s loan; and
• if companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.

Companies also must explain in their communications to consumers that they can stop doing business with the company at any time, can accept or reject any offer the company obtains from the lender or servicer, and, if they reject the offer, they don’t have to pay the company’s fee. The companies also must disclose the amount of the fee.

Prohibited Claims: The MARS Rule prohibits mortgage relief companies from making any false or misleading claims about their services, including claims about:

• the likelihood of consumers getting the results they seek;
• the company’s affiliation with government or private entities;
• the consumer’s payment and other mortgage obligations;
• the company’s refund and cancellation policies;
• whether the company has performed the services it promised;
• whether the company will provide legal representation to consumers;
• the availability or cost of any alternative to for-profit mortgage assistance relief services;
• the amount of money a consumer will save by using their services; or
• the cost of the services.

In addition, the rule bars mortgage relief companies from telling consumers to stop communicating with their lenders or servicers. Companies also must have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.

Compliance

Todd J Sullivan J.D. on January 13, 2011 stated new MARS rule does not apply to real estate brokers who provide only real estate brokerage services to their clients (e.g. listing, showing, negotiating the transaction with the buyer) and who do not attempt to negotiate or otherwise provide services related to obtaining lender approval of a short sale.

Although the intent of the rule is to avoid including real estate brokers and agents handling sales of real property in the definition of MARS, from the language contained in the Supplementary Information in the Federal Register, it is clear that real estate agents and brokers handling short sales, title re-conveyance or any other sale or endeavor undertaken in an effort to stop a foreclosure sale would be covered by the MARS definition:

Under FTC Section 322.2 DEFINITIONS (i) ”Mortgage Assistance Relief Service” means any service, plan, or program, offered or provided to the consumer in exchange for consideration that is represented, expressly or by implication, to assist or attempt to assist the consumer with any of the following: and followed by subsection (6) Negotiating, obtaining or arranging:

(i)    A short sale of a dwelling,
(ii)   A deed-in-lieu of foreclosure, or
(iii)  Any other disposition of a dwelling other than a sale to a third party who is not the dwelling loan holder.

If so, that Realtor is a MARS provider and must comply with all the statutory requirements under the FTC Final Rule.

Remember, while typical real estate brokerage services are not classified as a provider under the new MARS rule, you cannot use the real estate brokerage services as a shield to compliance with the new rule if you are legitimately engaged as a Short Sale Negotiator.

Marketing and Representation Disclosures

Short Sale Negotiators must now provide significant disclosures in any and all commercial communications issued to homeowners:

(1) “(Name of company) is not associated with the government, and our service is not approved by the government or your lender.”

(2) “Even if you accept this offer and use our service, your lender may not agree to change your loan.”

In Addition, the negotiator must refrain from:

• Representing in connection with the advertising, marketing, promotion, offering for sale, sale, or performance of the short sale negotiation service, that a consumer cannot or should NOT contact or communicate with his or her lender or servicer;
• Making a representation about the benefits, performance, or efficacy of any short sale negotiations service unless, at the time such representation is made, the provider possesses and relies upon competent and reliable evidence that substantiates that the representation is true.

Fees Assessed to the Seller:

When making any commercial communications directed at a specific consumer, the disclosures must also include the following:

“You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (insert amount or method for calculating the amount) for our services.”

For the purposes of this disclosure, the amount the consumer has to pay consists of the total amount the consumer must pay to purchase, receive and use all of the mortgage assistance relief services that are the subject of the sales offer, including, but not limited to; all fees and charges.

• May not request or receive payment of any upfront fees or other consideration until the consumer has executed a written agreement with their lender or servicer incorporating the offer of mortgage assistance relief the Short Sale Negotiator obtained;
• Must disclose, at the time the Short Sale Negotiator furnishes the consumer with the proposed written agreement with their lender or servicer (e.g. the short sale approval letter), the following information:

“This is an offer of mortgage assistance we obtained from your lender [or servicer]. You may accept or reject the offer. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [same amount as previously disclosed] for our services.” “

Many Short Sale Negotiators attempt to get paid by the listing broker. Even if that is the case, a disclosure of that fee must be made.

Conclusion

While the National Association of Realtors has yet to come out with its position on this ruling, the message from the attorney’s positions are very clear:

• Provide Full Disclosure and Transparency;
• Avoid any exaggerate marketing promises;
• Avoid any fees from the homeowner.

As a 3rd party negotiator and a realty/investment entity providing foreclosure relief services, Trademark is taking a conservative approach to this rule.  This is to ensure we are in compliance as well as for the protection of our client base.  While we have been disclosing similar language to the parties involved in our transactions for years, we are updating the disclosure language in our marketing and communication to the homeowner.  In addition, we do not, nor do we intend to charge any fees to the homeowner.

For additional questions or followup, please contact jim@trademarklossmitigation.com

This is a five part series to discuss, in detail, the various options the typical homeowner has when facing a foreclosure on their home.

When the American Dream Has Turned Into a Nightmare.

Owning a home is a big part of the American dream. It is a place where you can put down roots, raise a family, and create a lifetime of memories.  But in today’s difficult economy, homeowners face more challenges than ever before. It is not only more difficult to finance a home, it is rapidly becoming more difficult to keep up with payments and stay in your home.

More and more homeowners from every income level now realize that their dream has turned into a nightmare. Mounting debt, job losses, falling home values, and other widespread economic factors have combined to create a no-win situation. And most people have no idea where to turn for help.  Even the most educated have little idea on their options to avoid foreclosure.

In this Series Entitle: Options To Avoid Foreclosure, we will take a look at why foreclosure is a growing problem in America and what many of your options are to avoid losing your home and credit. And we will show you what the Federal government has done to pave the way for a new program that may enable you to get out from under your mortgage debt and rescue your credit rating.

Why Are More and More Homes Foreclosing?

For years, most people assumed that foreclosure only happened to the “other guy.” And in truth, foreclosure was a rare problem.

Today, foreclosure is happening to people at every economic level. In fact, many middle class families, who otherwise pay their bills and manage their money carefully, are shocked to discover that they may be forced to go through foreclosure and lose their good credit rating.

While it is true that a few homeowners have taken on more home than they can afford, in most cases, the struggling economy has created the problem.

For one thing, American jobs have been going overseas for many years. Cheap labor in other countries encourages U.S. companies to export their work force, including management and middle management positions. Layoffs, forced retirements, and salary cutbacks can play havoc with your budget and turn a previously affordable home into a financial liability. If you are a two-earner family, you can be devastated when one person loses a job.

Another problem is that if you financed your home with an adjustable rate mortgage (ARM), you may now be watching your loan rate rise, along with your monthly payment. You may not have expected to stay in your home long enough for this to be a problem, but since the housing market has slowed and buyers are hard to find, you are stuck with high mortgage payments you cannot afford.

Then there are unfortunate situations, such as divorce or injuries on the job which often create financial hardship. In the case of an injury, you could be out of work for weeks or months with little or no pay.

To make matters worse, lenders seldom have programs in place to help their customers. They may have gladly collected a fortune in interest, but when you miss just a few payments, they will begin the foreclosure process without hesitation.  This leaves the homeowner with little understanding of their options to avoid foreclosure.

This is the 1st of a five (5) post series on Options To Avoid Foreclosure.  For more information, please refer to the following sequence of articles:

If you are at least 30 days behind on your mortgage payments, call your local Short Sale Agent or Short Sale Specialist as soon as possible. The sooner you call, the more options to avoid foreclosure you will have available to you. Every day that passes makes it less likely that you will be able to avoid foreclosure and rescue your credit rating.