Archive for the 'Sellers' category

“This House Has Not Been Stigmatized As a Foreclosure” (Yet):

Tuesday, June 15th, 2010

In the past 6 months, I have found more and more cases where the BPOs and Appraisals that Loss Mitigation Departments are receiving are higher than foreclosures in the same area – and even in the same subdivision.

I have a client who is working on a Short Sale with one of the Big Banks.  The bank sent me an appraisal on the property, after I submitted the one and only offer I have received for this property in six months.  The negotiator came back and countered the offer asking for $35,000 more than the buyer was willing to pay.  Not surprisingly, the buyer dropped his offer and I was at square one again.

I contacted the negotiator and asked her how it was possible to have an appraisal $35,000 higher when her own company has a foreclosure property under contract in the same subdivision for $35,000 less than the appraisal claims this house is worth.  She stated that the Appraisal showed a higher value because the house had not been “stigmatized” as a foreclosure yet, and the tax records show that the foreclosure is a few square feet larger than the Short Sale.  The loss mitigator stated that they would not review any offer below the appraisal’s number, and I needed to increase the listing price to match it.

Two months passed, and a new negotiator has been assigned to the file.  I shared the same information adding that yet another house foreclosed by the same bank has already closed, and both the foreclosures are less than the $35,000 additional that the bank is asking any buyer I receive to offer for a short sale on my client’s house.

In the Real Estate market we are enduring in Georgia, it is like pulling teeth trying to keep a buyer happy during a transaction that involves a short sale.  It is even more frustrating when you are competing with foreclosures and a 6 month long process to close.  I cannot count the number of times I get a call from a buyer’s agent asking to see one of my properties now, and when they find out it is a Short Sale, they do not bring their buyers.  They just skip those houses.

So where is the real stigma?

Short Sale Testimonials: the Good and the Bad

Thursday, March 25th, 2010

“What I have to say is that Ms. Adriana West was very efficient and attentive to all my questions since I signed my contract with her until the closing.  Thanks.”

The feeling I enjoy every time I close a Short Sale and receive this kind of feedback is wonderful. I know for sure this Seller is going to be able to re-build his financial future.  This is one of the more important reasons I started working in Short Sales in the first place.

I would like to know how to give this kind feedback (the good and the bad) to a Lender or Servicing Companies that is not doing its job, and have them listen, while millions of people are facing foreclosure.  When they are in the middle of a Short Sale process, waiting for months and months for an answer, calling the Lender every week and still go into foreclosure – with their houses selling for less of the Offer that was in the Short Sale process.

This month one of my clients experienced this situation, working with Everhome and their service provider for Short Sales transactions National Quick Sale.  We worked together for over 4 months, and provided everything to this servicing company.  I paid a fee up front just to have the privilege to process the Short Sale through this Company (and lose an additional one point of my commission + $ 250.00 because they require it just to process the transaction).  After calling, sending emails, contacting supervisors of both companies, and proving to them that the offer we submitted was 20K above what the properties are currently selling for in this particular subdivision, they decided randomly to foreclose and not give any answers.

Now, you might think: well 20K is not that much…in this case it really is that much when the property is only worth $60,000. 

After the foreclosure, I kept calling and sending emails.  Somebody left me a message saying that the “investor” owner of that loan decided to foreclose instead of extending. When I tried to call back, the telephone number that this gentleman left turned out not to be his, it is from a completely different lady.  I never heard from them again.
My client was asking me if there is a way to hear get an answer from them, due to the fact that her house is going to sell for less than the offer we were working with. She believes that she did all she needed to do to go through the Short Sale process, she would like to have a letter from the “Investor/owner of her Loan” to really understand the reason why her file was not important.

I always like to post good news here in my blog, and not be so negative.  On my next blog I will share a transaction through another Lender… a positive one… they are improving their system and it is actually working!

Royal Banks and Serf Clients

Friday, February 5th, 2010

I had a question from a client: “Why is it that nobody hears me?”

Working on Short Sales can give you some frustrating moments when I, as an Agent, do not understand where fairness enters into the picture.

I had a Short Sale in process with a foreign bank that seems to believe themselves part of the royalty — maybe that is due to their country of origin.  I had submitted an offer back in October 2009, and my client patiently provided all of the extra documents that the loss mitigation department requested for three months.

The foreclosure date was set for 02/02/2010. I have called this department every other day for the past several weeks and every time they needed an extra document to be able to review the file. One day before the foreclosure date, I called back again and the gentleman who answered the phone was not in the mood to help me at all. He stated that because the offer was so low (they have had this offer for three months), he did not believe that they can make an extension of the foreclosure date in order to review the file.

I did not understand why they did not counter the offer, or tell me this three months earlier so that I might be able to negotiate a better offer with the buyer. The bank representative asked me about the listing and the listing price.  I explained that this house had been on the market for over six months, with regular periodic price reductions, and this was the only offer I was able to get. He interrupted me and told me that he was going to send an e-mail to the investor (which happened to be Freddie Mac), but that he did not see a reason to extend the foreclosure process.

My level of frustration steadily increased as he refused to allow me to speak. He told me that if I didn’t have anything more to offer there was nothing more to discuss, and hung up the phone.

I called again, and this time a woman answered who review the notes and told me that I had just talked with this person — so why was I calling again? She stated that the file was incomplete, and that there is no way that they were going to accept to extend the foreclosure with an incomplete file. I asked her why this gentleman did not tell me about the file being incomplete when I called in the first place, and asked her to review the file since I had sent all requested documents more than one time. She asked me to hold and transferred me back to the original “gentleman” who denied that he had hung up on me. Now, because his ego was hurt, he tells me that he has decided the investor is not going to extend the foreclosure process and that was it.  I asked to speak to his supervisor, and he transferred me to his voicemail.

Persistent me, I called back two hours later. The person who answered the phone transferred my phone call to the supervisor, who said that he had been trying to call me but nobody answered. When I explained my frustration, he closed the communication and told me that the file was closed and the house was going to foreclosure. I told him about my previous conversation with the negotiator (he was aware of it), and told me that the investor did not accept an extension to the foreclosure and that was the end of it.

Upon discussing it with my client, they did not understand why some people in short sale departments believe they have the power to play with the public’s financial future just because I, as my clients agent, was asking for an answer and trying to keep the process moving for my client. This supervisor and negotiator each get a check every week or 15 days and it doesn’t matter to them if they’re doing their job well or not. Their company is not the owner of the loan, it’s Freddie Mac. How sweet? And it’s my client who is suffering the consequences.

Why do these people believe that one must treat them as royalty in order for them to do the job that they are being paid to do? The only ones who suffer the consequences are my client who has done everything possible to try to follow their guidelines, and myself wasting all the months of work to get to this point.

When will these banks begin to treat our clients (theirs and mine) as human beings that feel and eat and breathe the same air as they do and that we are all citizens of the same country?

My client was asking me if there existed some document explaining that Freddie Mac was not interested in their short sale. Unfortunately my response was no.

Where is there an entity, Hotline, government site, anything where borrowers can complain of the treatment that they receive, or we real estate agents receive as we try to help them through this recession?

Posted in Learn, Sellers, Why an Agent | Comments Off

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.

Don’t Trust the Sun

Thursday, December 10th, 2009

A couple of months ago, I was in the middle of one of the most unusual short sale transactions I have experienced in the last four years. In this particular case, I was representing the buyer. This was the listing agent’s first short sale transaction.  So after explaining my experience with both the listing agent and the seller, the seller authorized me to assist in negotiating with the banks.

The seller was legally an LLC, not an individual. It is relevant, however, that the Lender’s negotiator was a vice president at a local Bank similar in name to the title of this blog, rather than the national 1-800-number. With the exception of dealing with this negotiator, throughout the transaction all had gone well and smoothly.  Nothing interesting in any way, unless you are one of the parties to the transaction.

What made this blog worth writing was the negotiator. Again, this is a vice president. This negotiator would only talk with the Seller. He literally refused to put one word in writing stating that the only thing he will do is sign the HUD-1 after the transaction is closed, if it meets his agreed criteria. On the other hand the underwriters for the buyer’s loan would not give their approval without something in writing saying that the closing would remove all liens from the property – and the only piece of paper missing was from this vice-president.

A vice-president in charge of loans at a major bank cannot have that position without understanding the requirements of the underwriting department. It is not possible for this person not to understand that without a written document approving the removal of the lien, the underwriters will not release the loan.  He must understand that the closing table is dominated by attorneys, and no attorney will believe the spoken word of anybody — it must be in writing. So, we are at an impasse.

Of course, as you would expect with such a strange reaction, there was a back-story that we did not know until just before the end.  The bank was negotiating a multi-faceted lawsuit with the managing partner of the LLC which included a large cash settlement.  We got our one-sentence approval the day that VP got his $55,000 cashier’s check.  It became very clear to us that this was the bank’s intended strategy — to use the pressure of the delayed and re-delayed closing to force the seller to respond to the lawsuit settlement.  This does not excuse, however, the downright rude attitude of the executive representative of the bank. It also underscores the fact that lenders will do whatever they feel they need to do in order to achieve their results, with no regard to what is ethical or fair to the other parties of the transaction — such as giving us a clue of what was going on earlier in the process.

Although it turned out well for all parties in the end, I am always interested in suggestions that might have avoided all of the stress on everyone involved in the transaction. And in the meantime, if any of you run across a negotiator who refuses to put anything in writing, maybe this blog will give you the clue I was missing all along.

Going Back to Far Wells?

Wednesday, November 18th, 2009

I just received the most interesting phone call! I need to write this blog while the details are fresh in my mind.

I had a couple of short sales where the second lien is a line-of-credit from a major unnamed lender (go figure…  from the title). In both cases, the first lender was reasonable and responded within an appropriate timeframe with an approval. In both cases, this second lender refused to accept reasonable amounts, or the amounts dictated by the first lender (which in one case was THE SAME LENDER holding both loans). The negotiator from the Line of credit refused, and refused, for several months to try to work with my Seller:  If they were not going to get their significant percentage of the outstanding balance, plus a promissory note, they were not going to release the lien. There is no room for negotiation. There is no flexibility in these guidelines.

It became clear that this lender was simply not going to accept the short sale transactions I was negotiating with them. The sellers reached the point where things could no longer wait, and decided to file bankruptcy.  Both of them.

Now here we are three weeks after our last conversation with this lender. I had stopped calling because the clients had filed bankruptcy. There was no point. So I just get a phone call from the negotiator who has both files asking me for a status on the transactions. “Oh, they have both filed bankruptcy because your organization would not accept to negotiate a short sale in any other way than your guidelines.”

The negotiator asked if there was any way to bring the Short Sale back to the table. “Sorry, no, as I understand it, all the papers have been filed by the Seller with the court.”
The negotiator gushed about how unfortunate this was, that now they had some leeway to work with. Did I have any other clients that she could help me with?  The change in tone and manner was astounding!

I cannot help but wonder…  how many bankruptcies and foreclosures did it take to prompt this phone call?  And, have they really changed their ways?  Are other lenders sounding like they are beginning to see the light?  Please let us know what you are experiencing out there.

My house was foreclosed and I did not know…

Friday, October 23rd, 2009

In the last week I have received many responses to the last blog that I wrote (Do They Really Know What They Are Doing?).  The majority of the people (who happened to be homeowners) have told me that after working a short sale with Bank of America for months, and having strong offers, the bank foreclosed and never gave a response to any of the offers.

One of these was a homebuilder who had more than $200,000 equity in his house, and even so the bank foreclosed. Well, BOA clearly shows the it has no feelings involved with these processes. I truly believe, however, that it is my responsibility as an agent to follow up with this bank and make sure that my listings are not foreclosed in the middle of the process. I can say that I have saved each of my listings from foreclosure between two and four times each during the short sale process. It is a long and frustrating process, one in which I spend over three hours doing it each time, but I truly believe my clients deserve this time and effort.

I show the bank that it is a good business decision not to foreclose, and when they see that I do not give up calling and calling until the extension is given (I think I become a pain in their…), then they do it.

Your clients really deserve an agent who is working in their best interest.  Are you really up for all this hassle?  If the answer is no, please refer these clients to an agent who is willing to make this commitment and has the experience to make it happen.  It is better for everyone involved, and could mean the difference between bankruptcy and saving the client’s financial future.

Do They Really Know What They Are Doing?

Thursday, October 1st, 2009

A couple of weeks ago, I contacted Bank of America to try to stop 3 foreclosures on different properties where I had submitted offers about 4 months ago – and all this time they had not “had time” to assign a negotiator.  Usually, I need to call three or more times before I am lucky enough to find a person who really wants to help me and make the best of his/her time for the company they work for.

The first person who answered the phone told me that there was no way to stop the foreclosure unless the negotiator said so.  By the way, remember I still don’t have a negotiator?  Between calls, a negotiator had been assigned – who decided to close the short sale without telling anybody.

I hung up in frustration, and called back again.  The person who answered the phone this time told me that she cannot do anything.  I asked her to transfer my phone call to her supervisor, and she asked me to hold.  10 minutes later, she returned saying her manager was too busy, and after looking at the file her manager stated that the offer was too low and they needed one more than 30K higher in order to stop the foreclosure.  It was now clear that the only goal she had in mind was to get rid of my phone call and move on – the numbers did not make sense at all and were considerably higher than the outstanding principal.  I hung up again.

Calling for the third time, I reached someone who really wanted to work and do what she was being paid for.  After sharing my frustrations with her, she explained to me that her company received 400,000 short sale packages every week!

The numbers do not fit in my mind, but let’s assume it is accurate.  I said – with these kinds of numbers, the company must be hiring like crazy.  She said “Yes, indeed, they are hiring.”  But who are the people who are in charge of these files?  I realized that every time I make a call, I need to talk to at least three or four people before I find someone who really wants to work and deserve their monthly paycheck.  So how much are the banks losing for their lack of interest or ability to hire people who really care about doing their jobs right?  Employees who really care about the bank and have the knowledge to do the job.  Do they really know what they’re doing?

Tell me: are you hearing the same volume from your lenders?  How often are you speaking to the same person you spoke to in the past?  Do the people you talk to have the knowledge to be able to do their jobs, or are you training them – saving Bank of America the training expense?

Short Sales with FHA Backed Loans

Monday, August 24th, 2009

For the last six months (yes, we have been waiting 4 months for a response), I have been representing one of my clients in Mableton, GA, to do a Short Sale on his property.

My client gave me all the documentation I needed to make the Short Sale packet, we received an offer, and sent the complete package to the lender.  Then we sat back and waited…. And waited…. And waited…  This Big O bAnk took all the time they wanted in processing the short sale.  In one of the 100 phone calls I made, they told me that since the loan was FHA, I would be assigned to a “Special” negotiator (Man, did I feel “Special” that day), but since they had so few negotiators that managed the FHA process, I would need to be patient (More than I already had been?).

When I finally got the negotiator to look at the file, he told me that he needed a “Vacancy Letter” from my client explaining the reason why he was not living in the house.  My client explained *honestly* that he had lost his job and after several months without work, he received an offer of work in another state, so he had to move with his family.  My client, trying to be responsible, kept paying the mortgage on the “vacant” house for almost a year – all the while attempting to sell it without any luck.  When he ran out of savings, his only option was to call me and begin the short sale process.

After receiving this letter, the “special” negotiator sent me an email saying that she had declined the file.  I called and asked why???  She told me it was because the client had “Abandoned” the property.  I responded with a copy of the FHA guidelines (which they should know better than I, they are the rules they must operate by) where it states:

The property must be owner-occupied, no “walk-a ways” or investment properties. Exceptions: when it is verifiable that the need to vacate was related to the cause of default (job loss, transfer, divorce, death), and the subject property was not purchased as rental investment, or used as a rental for more than 18 months.

When this “special” negotiator understood that I knew the rules, she stated that she had proof that my client had rented the property, and FHA properties cannot be rentals…  When I asked for copies of this “proof”, the call magically was dropped, and suddenly, no one returned my calls.

My client and I appealed the case with HUD, and their response was that the only thing they were able to do was to ask the lender to review the file again. Supposedly, the bank did so, and denied the Short Sale yet again.

After this long story, I ask myself: How important is it for the Big O bAnks to pay these negotiators out of their pocket to review loans that are backed by HUD?  How much effort will this bank tell their negotiators to spend when, at the end of the day, all they are doing is servicing the loan and they won’t be the ones losing the money with a Foreclosure?

The buyer is still there, with an offer better than what HUD will get selling the house after foreclosure in a couple of months…

Does anyone have any answers or advice to share with my audience on how to respond to these disasters that happen every day with the few remaining banks that have not collapsed?

Playing with your financial future

Thursday, June 4th, 2009

An investor called me and told me that he was interested in buying all my Short Sales. I was thrilled, even though I thought it was too good to be truth. I met with him at my office and he gave me a contract that I would have to use to work with him.

In explaining his contract to me, he said that his “idea” to buy all my short sales that I had been working was that he would make an offer from the beginning of the process (with a rather ridiculous amount) and that I had to find another buyer to make an offer (for more than his).  Then he would give the other buyer the option to buy the house, but he would keep the difference between the two offers at the end of the transaction.

I talked with my lawyers, and in Georgia it is not illegal to agree to this kind of transaction, but from my point of view it is unfair.  Especially when I as a Real Estate Agent am representing a seller in distress, not the bank, not that investor.  I understand that every human being needs to make their living, but it is not always the fair way.

Sellers, would you like it when a person is taking advantage of your situation, playing with your financial future.  How many of you believe that this investor is going to be fair, if the bank does not accept his offer, or the investor does not allow any competing offers to be presented if he does not make money on the transaction.  Even worse, how many of you believe that this investor will buy the house at the end of the day, if he’s lucky enough for the bank to accept his offer, but no second buyer has come along to make another offer?

Short Sales are demanding and can also be a source of revenue for lots of investors.  Which of these investors will be interested in the seller’s financial future?  It was good for my sellers that I am interested in their financial future and helping them make a new financial life for themselves.  Let me know if I can help you protect yours.