Archive for the 'Announcements' category

Are you positioned for the new Short Sale Guidelines?

Tuesday, January 5th, 2010

It has been great to see how Short Sales are taking an important place in the Real Estate Market over the last 4 years.  When I started to negotiate Short Sales back then, nobody in my office knew or understood this type of transaction (I don’t think this has changed all that much since then…) and one of my brokers even said to me: I don’t understand this transaction, why don’t you find “normal” clients and “normal” transactions?  Now she calls me for advice. 

Well, the time came.  Agents wanted to get involved in Short Sales in order to survive, and banks are now supposedly more open to negotiate short sales.  But they have also been pretty creative…

Starting in April of 2010, some new Federal Guidelines are coming to the table.  It’s called “Introduction of Home Affordable Foreclosure Alternatives – Short Sale and Deed in Lieu of Foreclosure” from the Making Home Affordable Program.  On the surface, there is some good work in this document.  On the other hand, it reflects some of the “creativity” that has crept into the process with some lenders.

On one page, a rule says “Prohibits the servicer from requiring, as a condition of approving the Short Sale, a reduction in the real estate commission agreed upon listing agreement.”

Then about a page later: “The amount of the real estate commission that might be paid, not to exceed 6% of the contract sale price, and notification if any portion of the commission must be paid to a contractor of the servicer that has been retained to assist the listing broker with the transaction.”

This hits home with a transaction I am working right now with Everhome Mortgage  A year ago, this company received my packages, processed them, and if it made sense for them I got an approval letter.  Now they have contracted with another company called National Quick Sale.  No one wants to disclose who the owner is of that company, and because it is an LLC, it is harder to investigate than the big corporate lenders.  One wonders if there might be an “unhealthy” relationship in there somewhere.  I find it interesting that the Servicing company and the Mortgage company have the same area codes and prefixes…

Everhome now requires agents to use National Quick Sale to process Short Sale transactions.  From press releases on the internet, it appears other smaller lenders are doing the same.  National Quick Sale charged me $100.00 just to register for the “opportunity” to negotiate the short sale with them on Everhome’s behalf. 

I had already been working on this transaction for months for my low income client, who owns a low value home, which of course means a small commission.  National Quick Sale sent me an email stating I needed to put 1% in the HUD, plus a $250.00 processing fee.  I did this, then after a month trying and failing to get any responses, finally the person told me yesterday that the contract between National Quick Sale and Everhome is that Everhome is to be paid this 1% plus $250 from my commission.

“That’s funny,” I said.  “The negotiator did not explain that statement 6 weeks ago,” and her statement was clear that they were being hired by Everhome, not me or my client.  I find it utterly amazing how everyone feels they have a right to negotiate away MY commission without asking my opinion.

When you are put in this position, you ask yourself: Is it really worth my time, knowledge, effort, and the money I invest in each sale in order to pay for advertising, MLS fees, gas, signs, lockboxes, phones, and of course my time (which I mention again because short sale negotiations require so much more of it)?  How many of you would just give up and let the property go to foreclosure instead?  There is not a “win-win” anymore.  The lender wants a full-time contractor (we agents) who works for free.  This virtually guarantees that people in the low income bracket with lenders who have these unnatural alliances are at a huge disadvantage in finding a person who will help them because Real Estate Agents do not want to work for free.

How many of you would accept a new client in this situation?  How many of you would let a transaction like this one die now that the lender is [forgive my harsh language] stealing nearly half the commission?  Who has a new and interesting way to fight back against this unfair [and unrealistic] practice?  This forum has a lot of us experienced agents; let’s see what we can do to fight back, what we can do to change the rules.

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.

More Detail on the Housing Stimulus Bill

Monday, August 18th, 2008

The announcements surrounding the home stimulus bill said vaguely that they would help home owners who are in trouble and cannot pay their mortgages.  But how?  The idea, they said, was to help you refinance your loan, but they provided no details.  Well, here are the details.  If you have an FHA backed loan, it can be renegotiated:

FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.

So what does this mean for you? If you have an FHA backed loan of 200,000, you can refinance it at 180,000, with a fixed (and hopefully lower) rate.  If you then sell it 8 years later at 220,000, you would owe the bank $20,000.

Unfortunately, the Mortgage Revenue Bond Authority is still as murky as it first seemed.  It simply says municipalities can use a part of the $10B to help people renegotiate their loans.  We will continue to keep an eye on it and see how we can use it to help you.

Does this new law help you?  Let us know.  Also, if you find out more information about the municipalities Bond Authority, please post it here to get the news out.

 

 

What Does the Housing Stimulus Bill Mean?

Tuesday, August 5th, 2008

President Bush Signs Landmark Housing Bill into Law

On Wednesday, July 30, President Bush signed into law H.R. 3221, the Housing and Economic Recovery Act of 2008, aimed at ending the current cyclical downturn in the housing industry. The housing bill is intended to help home buyers and strapped borrowers and strengthen the housing finance system, according to the National Association of Home Builders (NAHB).

“This milestone bill contains several provisions to get home buyers back into the marketplace, stop the slide in home prices, provide a lifeline to borrowers facing foreclosure, improve mortgage liquidity and bolster confidence in Fannie Mae and Freddie Mac,” said NAHB President Sandy Dunn.

The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than lose their homes.

Key elements of the Housing and Economic Recovery Act of 2008 that may affect you include:
FHA modernization and expansion.

  • A revitalized FHA will have greater flexibility to respond to the needs of borrowers, enable more working families to become home owners and play an important role in the mortgage markets. To address the foreclosure crisis, the FHA is given additional authority to insure up to $300 billion of mortgages to refinance loans headed for foreclosure.

Mortgage Revenue Bond Program.

  • The measure gives states the ability to issue an additional $11 billion in mortgage revenue bonds, which will help strapped borrowers seeking to refinance their home loans.

Low Income Housing Tax Credit.

  • Enhancing this program will expand the supply of much-needed affordable rental housing.

Additionally, the law tries to stimulate buyers to ‘get off the fence’ and buy thier homes.

So what does this all mean to you?  First, the lender should be more willing to negotiate terms with you, possibly lowering your mortgage payment, so that you can stay in your home.  If that does not work, they should still be more willing to do a Short Sale.  Finally, if you do end up leaving your home via a short sale or a foreclosure, finding a place to rent should be easier to do.

Let us know what you think of this new law, and how it affects you.  We’d love to hear from you.