Archive for month March, 2009

No Deficiency Notes for MY clients

Sunday, March 15th, 2009

Another Great Success Story for my client in Roswell, GA.  I’ve been working with this client on a Short Sale transaction for 8 months now, and we had wonderful news this week.

First, some background on the scenario.  The market value of the property was $900,000.  There were two mortgages with different lenders.  As I noted in an earlier blog, in the beginning my client thought it would be easier for me if he hired an Attorney to negotiate with both lenders.  In the earlier article, you can see why that made me decide never to let an attorney negotiate for me again.

We worked with an offer for over three months – a great offer at the time.  The lienholder in second position wanted, and even demanded (how funny!), to net $42,000 from the short sale, and have a deficiency note in place on the borrower for the balance of the loan.  Oh, and my commission could only be 1% (which the lawyer agreed to, by the way).

Even when both lenders agreed on the transaction, I managed to increase my commission back to a reasonable amount, and my client was tempted to accept the deficiency note, the second lienholder took a month to send me their acceptance letter.  During this time, the buyer got tired and walked away.

I took control of the negotiations away from the attorney when my commission was ridiculously reduced, and started over from scratch after the buyer withdrew his offer.  Months passed, and finally I received an offer $100,000 BELOW the initial offer – just three days before the property was to be foreclosed.  I contacted the lenders, and Lender 2 – even when they knew they were going to lose everything – demanded a specific amount in order to accept the transaction.  The next day, when I received the Acceptance Letter, it included a deficiency note that at this time was not part of the agreement (they had not mentioned it in the phone call).

They were offended when I told them it was not going to work.  They stated they would not negotiate any further.  I thanked them for their time and hung up.  The next day at 7:00am, I received a phone call from the same negotiator stating that they had reconsidered the offer and were open to agree to the original amount and no deficiency note.  Because the second lienholder was lazy and made unrealistic demands, at the end of the day we closed the transaction paying them just $16,000 and no deficiency note whatever.

The Lender in the first position was always very helpful and open to work through the transaction. My client is thrilled that after 9 months they sold their house and do not owe anything to any lender.  Now at the end of the transaction, do you think the Attorney was working in my client’s best interest?  Or working for an outrageous hourly fee for their own benefit?

Share with me your stories.  I would like to hear from you.  I love to share this kind of success story with my current and future clients, and remind them: you are in great hands with me working on your behalf.

President Obama’s Housing Plan

Wednesday, March 11th, 2009

On March 4th, President Obama laid out some of the details of his Homeowner Affordability and Stability Plan.  It is mostly aimed at people who already bought their homes.  It has two large components: one to help those who cannot pay their mortgages and are already behind, the other to help those “under water” who have a home worth less than their mortgage.  A smaller part of the plan is to extend and change the first-time home buyer credit.  As with most bailout policies of the last year, this one has its share of proponents and antagonists.  Without discussing the appropriateness of the approach, I would like to take a moment to point out the benefits for you, depending on what group you belong to.

For those behind on their mortgages and unable to get current, the idea is that you talk with your lender to see if you can qualify for the government plan.  The lender gets some money from the government as an incentive to help you modify your terms.  You would negotiate a payment you can afford, and the lender gets money from the goverment corresponding to how faithfully you pay the new mortgage – how much is unclear.  Obviously, if your new negotiated payment plus the government subsidy add up pretty close to your current payment, the lender is more likely to accept as it prevents a default.  But if the two do not add up to a reasonable portion of your mortgage, the lender has no reason to want to accept it. 

For those current but underwater, the idea is to refinance the loan under Fannie Mae or Freddie Mac (only if they already hold your mortgage) into a 15 or 30 year fixed rate loan.  To qualify, you must have a home worth less than the mortgage, but not by more than 5%.  If you have a $200,000 mortgage, for example, the house must appraise for between 200,000 and 210,000.  Anything more or less does not qualify. It is aimed at those in that underwater position who have a current interest rate significantly higher than the market rate.  If you are not in that position, the plan is not likely to help you even if you qualify.

If you have never owned a home before, the government has changed the first-time home buyer tax credit.  The one passed last year was for up to $7500, but it was treated as a loan that had to be paid back over 15 years through your taxes (500 per year).  This one has no repayment clause, and was increased to $8,000.  So, in essence, the government is giving you $8000 to add to your downpayment.  It is a fantastic deal, open only to first time home buyers.

For more information on the Plan, go to http://www.whitehouse.gov/blog/09/02/18/help-for-homeowners/.

Let me know if you think this plan will help you, and what you think about the whole idea, by leaving a comment here.