Short Sale - Week 11

This is Part 11 of an on-going series documenting my most recent experience attempting to use Bank of America's Equator system to complete a short sale. You can find earlier posts in this series at:

Short Sale - Week 1

Short Sale - Week 2

Short Sale - Week 3

Short Sale - Week 4

Short Sale - Week 5

Short Sale - Week 6

Short Sale - Week 7

Short Sale - Week 8

Short Sale - Week 9


Short Sale - Week 10

Analysis - Days 71 - 76:

All quiet on the Short-Sale front. Escrow is drawing closing papers and there is nothing left to negotiate.

Hint:

Even though closing is not for a few weeks, once all issues are settled, have the closing papers drawn and signed as soon as possible. Remember that, even though the escrow is all but completed, the buyer and seller are busy with preparing to move in and move out. So the more you can get done ahead of time, the better.

Short Sale - Week 10

This is Part 10 of an on-going series documenting my most recent experience attempting to use Bank of America's Equator system to complete a short sale. You can find earlier posts in this series at:

Short Sale - Week 1

Short Sale - Week 2

Short Sale - Week 3

Short Sale - Week 4

Short Sale - Week 5

Short Sale - Week 6

Short Sale - Week 7

Short Sale - Week 8

Short Sale - Week 9

January 13, 2011

• The final fee negotiation is now settled. The buyer and seller have agreed to accept the investor's offer as it stands, and I notify Equator and escrow that we can move forward with closing. I ask escrow to prepare closing papers as soon as possible.

January 14, 2011

• I meet with the seller to make sure she is clear about when she needs to turn the home over to the buyer. I also discuss what condition the property will be in at close. I am relieved to learn that she intends to make sure the home is in good condition at close.

Analysis - Days 64 - 70:

With the resolution of this last closing cost, I am feeling like this escrow will actually close. I understand that nothing is over until the bank says it is. And I also realize that things go wrong at the last minute. But, at least on paper, all the parties seem to be in agreement.

Hint:

This can be a very emotional time for sellers. Up to this point, the idea of going through with the short sale - and losing their home - isn't quite real. Help your sellers plan the transition. Explain that it would be a very nice gesture to leave the home clean and neat. If the sellers balk at this, gently remind them that it's not the buyer's fault that they have economic problems. The buyer is simply looking to take over the stewardship of the house and maintain it as a nice home.

Courthouse Auctions Bring Out Bid-Rigging

Daily Real Estate News, January 21, 2011

The FBI is investigating whether real estate investors in California are cheating the system at auctions to keep prices on the properties low.

The FBI says it believes some participants are paying others to not bid on some properties so the home’s price during the auction remains low--a practice known as "bid rigging."

Bid-rigging is illegal and can carry up to 10 years in prison and a $1 million fine.

In one recent case, Anthony B. Ghio, a real estate professional in Stockton, Calif., pleaded guilty to bid ridding. He admitted to conspiring with a group of real estate speculators who agreed not to bid against each other at certain public real estate foreclosure auctions in the county, according to officials. The purpose was to “suppress and restrain competition” and purchase real estate at “non-competitive prices," the U.S. Department of Justice said in a news release about the case.

After a designated bidder purchased the property, the group would then hold a second private auction to decide who would end up with the property.

Source: “FBI Looks Into Bid Rigging at Courthouse Auctions,” The San Francisco Chronicle (Jan. 21, 2011)

Keep Your Home California Introduces New Program For Unemployed

Unemployed California homeowners now can apply for up to $3,000 a month in mortgage assistance to tide them over for up to six months while looking for work.

The Unemployed Mortgage Assistance Program (UMA) is the first of four programs the state is scheduled to roll out as part of an initiative called “Keep Your Home California.” The programs are supported by $2 billion in federal dollars provided through the Hardest Hit Fund.

Eligible homeowners who are struggling to make their mortgage payments after suffering a job loss may qualify for assistance.

For more information go to http://www.keepyourhomecalifornia.org/

House Flipping Fraud on the Rise

A high percentage of mortgage applications from house flipping is causing investigators to become increasingly alarmed. House flipping is when investors buy properties for quick resale and profit.

Lenders have reported greater occupancy fraud, employment fraud, and undisclosed debt on many of these mortgage applications.

Mortgage fraud continues to increase across the nation, rising by more than 20 percent since fraud rates reached a low point in early 2009, according to CoreLogic’s 2010 Mortgage Fraud Trends Report. CoreLogic’s recent study also found that one in every 24 REO sale transactions are associated with a fraudulent resale.

“Fraud continues to shift to areas of the lending business where large volume increases occur over short periods of time, or where advanced risk mitigation processes are not squarely in place,” says Tim Grace, senior vice president of Fraud Solutions at CoreLogic.

The biggest home flipping hot spots are Southern California, Phoenix, Detroit, and Atlanta.

Source: “Open House; Flipping Tied to Mortgage Fraud,” The Herald News (Jan. 16, 2011)

Bank Admits Overcharging Troops on Mortgages

JP Morgan Chase, one of the nation’s largest banks, says it overcharged some 4,000 troops on their mortgages and improperly foreclosed on 14 military families.

The bank admitted the mistake during a lawsuit that was filed by Marine Capt. Jonathan Rowles, who was on active duty when the bank overcharged him and his family by as much as $900 a month on their mortgage.

Active-duty troops get their mortgage interest rates lowered to 6 percent and are protected from foreclosure under the Servicemembers Civil Relief Act. But Chase says it mistakenly had been charging Rowles, who had a resetting adjustable rate mortgage, at rates above 9 percent or 10 percent before later correcting his rate to 6 percent. Collection companies said the family owed $15,000 in uncollected fees.

“We are deeply appreciative of those who fight to protect our country and Chase funds a number of programs that provide benefits to military personnel and veterans, and while any customer mistake is regrettable, we feel particularly badly about the mistakes we made here,” Chase chief communications officer Kristin Lemkau told NBC News in a statement.

To make amends, Chase will be mailing about $2 million in refunds to families who were overcharged. Most of the families who were improperly foreclosed upon have already gotten their homes back.

Source: “No. 2 Bank Overcharged Troops on Mortgages,” MSNBC.com (Jan. 17, 2011)

Short Sale Week 9

This is Part 9 of an on-going series documenting my most recent experience attempting to use Bank of America's Equator system to complete a short sale. You can find earlier posts in this series at:

Short Sale - Week 1

Short Sale - Week 2

Short Sale - Week 3

Short Sale - Week 4

Short Sale - Week 5

Short Sale - Week 6

Short Sale - Week 7

Short Sale - Week 8

January 10, 2011

• I contact the closing officer to see if there has been any response from the investor. She tells me the investor says they will review the file today.

January 11, 2011

• I contact to closing officer again to ask if she has heard from the investor. No response.

January 12, 2011

• The closing officer tells me that the investor refuses to pay one of the closing costs. She tells me that someone else needs to pay this $10,000 fee, or the investor will cancel the deal!
• I ask if the investor is willing to lower the price by any amount to compensate the parties for this additional expense. I am told no.
• I contact the buyer and seller, let them know what is going on, and ask if either of them is willing to pay some or all of this new expense.

Analysis - Days 57 - 63:

It is frustrating to realize the investor is willing to walk away from closing the deal at the last minute. Of course, to them this is just one of thousands of deals, but for the buyer, seller, and agent, this represents months of work. And, of course, this is exactly what the investor is counting on.

Hint:

Prepare your buyer and seller to expect last minute renegotiations that may end up costing the buyer and seller more than initially negotiated.

Short Sale Week 8

This is Part 8 of an on-going series documenting my most recent experience attempting to use Bank of America's Equator system to complete a short sale. You can find earlier posts in this series at:

Short Sale - Week 1

Short Sale - Week 2

Short Sale - Week 3

Short Sale - Week 4

Short Sale - Week 5

Short Sale - Week 6

Short Sale - Week 7

December 31, 2010

• I am surprised to receive a phone call from the Negotiator. He tells me he made a minor error on the counter offer, so he has resubmitted the counter for the buyer's approval. He asks me to accept the counter ASAP. While we're on the phone, he thanks me for being so responsive. I am surprised to hear that, more often than not, he has to coax agents into cooperating.
• I get the buyer's approval for the change and submit the accept counter.

January 3, 2011

• B of A accepts the buyer's offer! They send an acceptance letter and a settlement form that I am to fill out. I need updated settlement number, so I call my escrow officer to get the updates. I complete and submit the form to the Closing Officer to whom the file has been assigned. For those of you keeping score, this is the third person at B of A who has worked on the file, and that does not include the "investor".

January 4, 2011

• The Settlement Officer has rejected the settlement statement. There are closing fees that B of A refuses to pay. I call my escrow officer and we rework the numbers to eliminate those fees from the seller's costs.
• But there is a larger issue. When B of A asked for a final settlement statement, this triggered the escrow company to contact the HOA to find out exactly what is still owed against this property. They are told that there is special assessment of about $10,000 that must be paid at closing. Once again, I rework the settlement statement to reflect this debt and resubmit it to the Settlement Officer.

January 5, 2011

• The Settlement Officer accepts the revised settlement statement but asks me for documentation explaining the assessment. I download this information into Equator and she resubmits the revised offer to the investor.

Analysis - Days 50 - 56:

The process is becoming an emotional roller coaster. One minute you have an accepted offer, the next there's a call saying the offer has an error. I revise the offer per B of A's requirements only to have them toss it back with a refusal to pay certain fees. I revise the offer AGAIN removing those fees, only to have to resubmit for a special assessment. And, underlying it all, is the small print that accompanies ever correspondence from B of A that warns me that the bank can cancel the deal at any moment for any reason. In other words, it ain't over 'til it's over.

Hint:

Make sure your agent responds quickly to any requests from Equator. It is unacceptable for the Negotiator to have to plead with an agent for documentation. Yes, short sales are time consuming, but if your agent is not 100% dedicated to getting your short sale approved, then you need a new agent!

Banks Lose Pivotal Foreclosure Case

A recent decision by the Massachusetts Supreme Judicial Court is expected to have sweeping implications for the nation’s banking industry when it comes to how they’ve approved foreclosures and may even invalidate thousands of foreclosures across the country.

The court, in affirming a lower court’s ruling, invalidated two mortgage foreclosure sales because the banks failed to prove the home owners actually owed the mortgages at the time of foreclosure.

In recent months, the industry has been under fire across the country for using “robo signing” to review foreclosure affidavits, a process in which low-level employees went through hundreds of foreclosure affidavits a day without verifying any of the documents. Such blanket procedures have hurt the banks’ ability to prove that they owned the mortgages.

In the Massachusetts case, the court found that the banks — who were not the original mortgagee — failed to show that they held the mortgages at the time of foreclosure, which called into question whether the foreclosure sale was valid.

"There is no dispute that the mortgagors of the properties in question had defaulted on their obligations, and that the mortgaged properties were subject to foreclosure,” wrote Justice Robert Cordy about the court’s decision. “Before commencing such an action, however, the holder of an assigned mortgage needs to take care to ensure that his legal paperwork is in order.”

Attorney Paul Collier III, who represents Antonio Ibanez, one of the home owners in the case, said the ruling stands to affect thousands of mortgages across the country.

"For home owners and foreclosures in general, it means that any mortgage foreclosure which was initiated by a securitized trust at a time when the trust had not obtained a mortgage assignment which gave it the lawful right to do so is void," Collier told the Associated Press. "Those home owners, like Mr. Ibanez, still own the property."

Source: “Highest Massachusetts Court Rules Against 2 Big Banks in Pivotal Mortgage Foreclosure Case,” Associated Press (Jan. 7, 2011)

Become the Star of This Video - And Learn Options to Avoid Foreclosure

Fannie Mae just launched WaysHome, a new, interactive website that helps homeowners understand their options to avoid foreclosure.

The site is a set of short videos. At the end of each video, you make a decision and, based on your decision, the next scene is played out. This site is very well done and very educational.

Here's the press release from Fannie Mae:

Today, January 6, Fannie Mae launched WaysHomeTM, a new interactive video to educate homeowners about their options to avoid foreclosure, motivate them to make the right decisions, and encourage them to seek help. WaysHome is part of Fannie Mae's Know Your OptionsTM consumer initiative to help today's struggling homeowners and is available on KnowYourOptions.com.

Overview

A unique and innovative learning tool, WaysHome allows homeowners to put themselves into real-life situations and make decisions -- then see the consequences of these decisions play out in front of them.

Through WaysHome, homeowners can:

Participate in an interactive video simulation.
Select a character and go through the simulation "playing" that character.
Follow characters as they encounter financial hardships and challenges that affect their ability to pay their mortgage.
Choose different paths based on real-life situations.
Experience the positive outcomes or negative consequences of their choices (i.e., if they avoid taking action, foreclosure may be their only option).
Learn about options that may be available to help.
Discover the right paths to avoid foreclosure, know their options, and find their way home.