Posted by Adriana in Learn, Sellers, Why an Agent

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?

Posted by Adriana in Uncategorized

A couple of days ago, I was talking with one3 of my colleagues about Short Sales.  I was astonished when my colleague told me the story of one of her clients in Woodstock, GA.  The client had a first mortgage and a line of credit with one of the banks that was saved from collapse by being bought out during the crisis.  During the Short Sale process, the second lien holder said that the only way the Short Sale could happen was if the client signed a deficiency note – because when they signed the papers for the line of credit, they signed two types of notes: one against the house, the other was a Personal Note.  Since the lender had the Personal Note, they felt they had the right to have a deficiency note signed by the home owner, or otherwise the Short Sale would not happen.

The client decided to sign the deficiency note.  Three months later, and life has moved on.  They now live in a different state.  Their son won a scholarship to go to college, and their life was taking a positive turn.

Last week, they found out that their bank accounts had been frozen.  They had left their checking and savings accounts with that same bank that had required the deficiency note.  The bank froze their accounts and took all the salary earned by the husband – and did not stop there.  The son who was going to college also had his account with that bank, and had received his scholarship payment as well.  But since he was a cosigner for them…..  The bank took all the scholarship money as well.

How far can a bank go with a deficiency note?  Far enough to ruin the life of a student waiting to start his college career, certainly, and without a moment’s troubled conscience. 

This story has helped me fight even harder every day for my clients, and to NEVER accept a deficiency note in any of my transactions.  If you end up agreeing to one on behalf of your clients, at least tell them to make sure they don’t have any other accounts with that bank – or any of its tangled siblings as the banks buy each other out.

Please share your good and bad experiences with me – we can learn from each other.

Posted by Adriana in Uncategorized

In February 2009, new rules were announced for those who cannot pay their mortgages, who want to make a Short Sale on their property, and whose original mortgage was backed by HUD, VA, FHA and other government entities.

The Pre-foreclosure Sale Program allows a Mortgagor in default to sell his or her home and use the sales proceeds to satisfy the mortgage debt, even if the proceeds are less than the amount owed.

FACTS
• Outright sale of mortgaged property to a third party and must be an “arms length” transaction.
• Outstanding indebtedness includes; unpaid principal balance + delinquent interest + Partial Claim (if applicable).
• HUD will pay $750 – $1,000 incentive to the Mortgagor.
• HUD will pay an additional amount up to $1,500 for the discharge of junior liens after the Mortgagor’s incentive has been applied.
• HUD allows all reasonable costs of the sale including up to 6% sales commission, transfer tax stamp and other customary closing cost.
• HUD allows up to 1% of the buyer’s mortgage amount for closing costs if the transaction involves a new FHA-insured mortgage.  Certain categories of costs are excluded.
• Sale amount must be between 84% and 88% of the “As-Is” appraised Fair Market Value depending on the number of days since application.

Some restrictions exist on the condition of the property and how repairs are valued.  Check out the official site for details.

ELIGIBILITY
• The property must be owner-occupied, no “walk-a ways” or investment properties, with some exceptions on investments.
• The Mortgagor must be 31 days or more delinquent at the time of the Preforeclosure Sale closing.
• The Mortgagor must provide documentation substantiating a reduction in income or an increase in living expense, and documentation that verifies the Mortgagors need to vacate the property (if applicable).

Under no circumstance should the Mortgagor be encouraged to default on their mortgage for the purpose of participating in the Pre-foreclosure Sale Program.

Sharing this information with all of you means that more Short Sales transactions will complete, and that Loss Mitigation negotiators will be more fair in our transactions.  As I mentioned in an earlier blog, I am still negotiating a Short Sale since September, 2008, with one of the “Big Boys” who instead of making a price reduction when they needed to in order to make the transaction happen, they instead increased the sales price of the property.

Let’s continue to help people, and please share all the comments and knowledge you have and tell me your stories.  Together we can make this market work for us all.

Posted by Adriana in Learn, Sellers, Why an Agent

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.

Posted by Adriana in Buyers, Why an Agent

Last week I closed on a property located in Loganville, GA, representing the buyer.  The property was brand new construction; the bank had foreclosed on over one-third of the subdivision.

 

Even though it was a foreclosure, the bank agreed to pay for:

$5,000 in closing costs

$   480 for a home warranty

$   330 for HOA transfer and assessment fees

$   300 to install two new windows that had been broken

$   400 for a termite bond

 

As we were closing, the attorney saw those numbers on the HUD and told my client that he might have had a good advocate in the process, and my client agreed with him.  When the closing had ended, the attorney turned to my client and told him that he had closed that morning on a house in the same subdivision, with the same floorplan, for a price $35,000 higher than we were paying.

 

In these times where everyone is counting the pennies, you need to look not just for an agent who will represent you, but for an advisor who will advocate in your favor during the whole process.  One who will help you to purchase your dream home while looking out for your best interests.

 

I would like to earn your business by providing you with that same level of service, and have a client for life.  What do you buyers think of this kind of service?  Leave us a comment here and tell us what kind of service you are looking for.

Posted by Adriana in Learn, Sellers, Why an Agent

I love hearing that these blogs are helping people in one way or another, whether it be a seller in distress or an agent trying to make some Short Sales happen, to gain experience and make more transactions in this very difficult market.  But I don’t think the lenders are getting the same message.

One of the longest transactions I’ve ever had over the years I’ve been doing Short Sales is with one of those lenders who “didn’t need the Bailout money,” they said, in order to survive.  But in the end, they decided to accept the government’s money anyway – or excuse me, our money – yours and mine.

The theory they started out selling us, the public, was that the money would be used to help all those people in financial distress.  A few weeks later, the lender decided instead to use the money to buy another large bank.

So, you will understand if I sprinkle a little sarcasm in my story about this lender.  I have been working on this one since September 2008, when I sent an offer I received to the Loss Mitigation Department.  The negotiator assigned to the file took all the way through December and into January to even order the BPO.  When the BPO came in, he decided to counter for about $4,000 more than the offer because the offer seemed low.  By the time he countered, now it was February.

So let’s do the math.  This man waited four months to process the file, order a BPO, and make a counteroffer for $4,000 higher.  This means the negotiator was asking, in effect, for the amount of money the seller had not paid on the mortgage for those 4 months.  Is it fair to the seller, who his doing everything in his power to sell the property, when the negotiator delays and delays the process?

After the negotiator finally gave me the numbers for the counteroffer, and the buyer actually accepted them, I sent all the documents.  Once again, I could not reach anyone by telephone until a month later, when by magic, the loan was assigned to a different negotiator.

It took all of February and March to finally have this new negotiator answer my calls, who proceeded to tell me that their counteroffer was for even more money than they had originally agreed.

After convincing the buyer yet again, the negotiator finally sends me an approval letter, with which the closing attorney tells me he cannot close because the terms are unclear and the transaction might be open to fraud.  Yes, fraud.  After explaining all this to the negotiator, he decides to send me a new approval letter, asking for yet another higher number (for the third time changing the numbers and the approval letter).

Then he had the temerity to tell me  that if the buyer did not accept this change, I should reduce my commission to match his numbers. 

I would love to know if this negotiator is paid a flat salary or a commission.  I would love to know if he’s willing to give up a little of his salary to close a short sale.  Or maybe, as we see in the news every day, he not only gets a salary, but a nice bonus.  But to me, the real question is: Are they doing the job they’re being paid to do?

Now you ask me, why are you doing this?  Why put yourself through all this?  Well, let me tell you it’s not all about the money.  As you can see, left and right, they always want to cut my commission.  But at the end of the day, I firmly believe that I’ve helped someone begin a new life and have a new opportunity to reconstruct their future and their financial standing.  Maybe I’m naïve, but the truth is I feel pretty good.  Especially when I win one of these big battles.

In other words, the only kind of STIMULUS PAKCAGE that homeowners in distress receive is through fair and honest agents that do not give up in the process, fight for their clients, and make a Short Sale happen.  If any of you are in need of this type of Stimulus, let me know.  You can be assured that you are in good hands.

Posted by Adriana in Learn, Sellers, Why an Agent

 

I was working with a client in Kennesaw GA.  He was convinced that the honest thing to do was to try to continue paying the mortgage as long as he possibly could, even when his wife had been fired and they need to use what little savings they had to try to make it…. Until a Short Sale was approved.

 

Eventually we received an offer and waited for over 3 months for an answer, with weekly phone calls to the Lender’s Short Sale dept. Finally, I received an answer: This file is not a top priority for the Lender to review. They do not have a time frame for the review process, and the person who gave me this news promptly hung up the phone on me.

 

How can it be that the lenders in this country are punishing those who are trying to be good citizens, do what they’re supposed to do, and “play by the rules”?  In this case, my client was continuing to crunch numbers and make huge sacrifices while they were waiting for an answer.

 

Is this really the time to be trying to teach us all to be bad citizens because this fits the Lender’s Guidelines?   Please tell me what kind of behavior we should expect and accept from these lenders?  They are already more responsible for the problem than is the public.  Do we have to give up our moral principles in order to become a priority file for the lender?

 

Let me know your thoughts.  Why do we bail out those who have caused the problem at the expense of those who play by the rules?  What can be done to fix it?  How do we tell our lawmakers to apply some “common” sense to common problems?  Leave a comment here and let us know.

Posted by Adriana in Learn, Sellers, Why an Agent

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.

Posted by Adriana in Announcements, Buyers

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.

Posted by Adriana in Learn, Sellers

I respect the companies who negotiate Short Sale transactions for agents, but in my personal opinion, I prefer to handle my own negotiations.  Let me illustrate why.  A few months ago, one of my clients thought that it would be easier for me if he hired an attorney to negotiate his Short Sale with both lenders.

After three months of frustration, with my client paying ridiculous fees to this attorney, here is the settlement that he reached:
 - My client was going to have a deficiency note from the second lender in the amount of $160,000
 - My commission would only be 1%
 - The Buyer’s agent would only get a 1% commission
 - He would get his fees, directly from my client’s pocket

After discussing this with my client, who could not handle the deficiency notice, I stepped into the negotiations and tried to fix it as soon as I heard, about a week before closing.  The second lienholder did not give us the acceptance letter, and we ended up losing the buyer.  If the client would have to declare bankruptcy because he couldn’t pay the deficiency note, a foreclosure was his better option.  But I kept on trying.

I do not have anything against anybody, but I truly believe I am in this business to help people in a fair and honest way, on all my listings and transactions.  This is my livelihood and I need to be paid for all the effort, time, and help that I offer to my clients.  This is why I believe that all the parties involved must work with honesty toward the same goal: Helping a homeowner in distress to create a new future on the financial level.

I applaud all those of us who strive to achieve our goals of helping people, and being paid for our work.  I can say with pride that none of my clients has ever received a deficiency note after the short sale has been settled.  And this is why I will never accept a listing where I need to allow an attorney to negotiate on my client’s behalf again.

We learn from our experiences.  Tell me how you work, and what kind of responses you get from your lenders.  The end of this story is an incredible success, and I will tell you all about it in a couple of weeks when we close this transaction.