Short Sale - Week 14

This is Part 14 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

Short Sale - Week 11

Short Sale - Week 12

Short Sale - Week 13


February 11, 2011

• I contact my escrow officer to confirm that all is set for closing next week. Per Equator, I have to submit a closing statement just prior to close. I ask escrow to prepare the final update so I can submit it on February 14.

February 14, 2011

• Escrow sends me the final closing statement and I submit it to Equator.
• I receive a call from Equator's closing officer who tells me there is a problem. The closing statement shows that the buyers are purchasing the home in the name of their trust rather than as husband and wife. B of A demands to see the portion of the trust that shows the beneficiaries. They want to make sure the buyers are not planning to will the property to the seller! I immediately call the buyer and have him fax me the appropriate pages, which I then send to Equator.

February 15, 2011

• I receive notification from Equator that the bank has cleared the purchase to close. I call escrow to make sure they have the same notice. The notice also instructs me to send Equator some closing documents once escrow has closed.

February 17, 2011

• Escrow confirms that the purchased has closed. I notify the buyer and seller.
• Escrow sends me the final closing papers which I then send to the bank via Equator.
• Equator closes the file!

Final Analysis:

After 120 days of marketing, plus another 97 days in escrow, this short sale has finally closed. This has been a long and stressful time for all participants; short sales are not for the faint of heart. But in the end, the seller was able to move on with her life, the buyer got a wonderful home at a great price, and I actually got paid for 217 days of work. In the world of short sales, this is a happy ending.

Too often, the deal does not close. Sometimes it's because the buyer gets frustrated with the long close and walks away from the deal. Other times, after months of negotiating, the lender and buyer can't agree on sales terms. And if there is more than one loan on the property, this process must be completed with each lenders individually.

I commend Bank of America's Equator system for really streamlining the process (yes, 97 days to close is FAST for a short sale). Because all information is handled on-line, the agent has written instructions from the bank as to what is required and when. Documents are uploaded to the bank via Equator, so there is no question whether or not the item was received. In other short sales, banks require that I fax documents. I do so, only to have them claim they did not receive them, so I have to re-fax. This can really delay the sale. Equator is a much more efficient solution.

Just as importantly, I was fortunate to have a buyer and seller who were eager have the sale close and were willing to provide the required information quickly. If you read the history of the sale, you'll note times when the bank wanted a specific piece of information. My clients worked with me to get it to the bank almost immediately. This really helped speed up the close.

And finally, if you're an agent reading this blog for some tips on how to work with short sales, here are some suggestions:

• Make sure both buyer and seller are 100% dedicated to going through with the purchase
• Respond to all requests from the bank quickly and politely. Don’t vent your frustration on them. They are also trying to close the deal and can be an advocate for you in getting the sale to close
• Stay organized. Make sure you know what is needed and when. Try to anticipate what the bank may require and get it now so you can submit it the moment it is requested
• Communicate with your client, even if it’s to tell them that nothing has changed. They may be on an emotional roller coaster and need to hear from you that things are still moving forward
• BE PATIENT!

I’m glad so many of you found this helpful. Thanks for the terrific emails and comments. It’s gratifying to know this has helped some of you already!

Warning Against False Claims of Expertise

The following is an excerpt from a memo published by the California Department of Real Estate

Consumer and Industry Warning: False and Misleading Designations and Claims of Special Expertise, Certifications and/or Credentials

By Wayne S. Bell
Chief Counsel --
California Department of Real Estate

The DRE has noticed an increase in the use of questionable and possibly misleading terms such as "expert", "certified", and "specialist" in the marketing and advertising of assistance to anxious homeowners in connection with their home loans and foreclosure rescue services and short sales A growing number of individuals and companies, many of whom are unlicensed, purport to be "experts" in the area of short sales, "certified" forensic loan auditors, short sale "specialists", loan modification "specialists", loss mitigation “experts”, “fraud investigators”, and the like, and many of these designations and claims seem to be nothing more than marketing ploys by unscrupulous fraudsters to capitalize on the desperation and vulnerability of unsophisticated and/or financially strapped homeowners.

The best advice to consumers is that you need to be wary and cautious when thinking about retaining the services of people or companies calling themselves "specialists", "experts", or "certified" in the areas of mortgages, lending, foreclosure rescue, and real estate.

Check out prior alerts and warnings of the DRE, and note that you are wise to never pay for such services in advance. In addition, you can do some of the advertised services yourself. In other cases, such as with forensic loan audits, there is a serious question about the value of such services. In still other cases, there are free services that might be available to you through HUD-certified housing counselors.

If you still choose to use the services of third parties for a fee(s), ask them questions, lots of questions, and then verify, verify, and verify some more. Check them out on the DRE website, at www.dre.ca.gov . If they are lawyers, check them out on the State Bar's website, at www.calbar.ca.gov . Check them out through the Better Business Bureau. Check them out through a Google search on the Internet.

The point here is that you need to view the claims of expertise, certification, and specialization with a critical eye, verify the claims, and ask specific, detailed questions.

Suggested Questions to Ask (This List is Not Exhaustive, But It Will Give You Good Information on Which You Can Make a Reasoned Decision)

1. How many transactions or services of the type you are advertising have you successfully performed? Ask them to give specifics and contacts.

2. Do you have a list of your last ten customers? If so, get it and call them. Do your own background check. And note that even if the person or company is "highly recommended" by so-called satisfied customers, the risk of a scam is not eliminated entirely.

3. Are you licensed by the California Department of Real Estate? If not, why not? What exemption from the licensing laws do you claim? If they are licensed, check to see if they have been disciplined by the Department (go to www.dre.ca.gov).

4. What qualifies you as an expert? How did you get that expertise?

5. You state that you are a specialist. What specialist qualifications do you have and what does that mean?

6. You say that you are certified. Who issued the certification? Do any government entities or recognized industry trade groups (such as the California Association of Realtors and the National Association of Realtors) recognize the certification? If so, which ones? Then you can and should verify that information.

7. What course of study did you undertake to become certified or specialized?

8. What are the requirements for certification or specialization?

9. How many hours of coursework were involved?

10. What professional organization gave you the designation or certification? And when were they formed? If they give you a name, check out that entity with the California Secretary of State, Better Business Bureaus, with the California Association of Realtors, and see if any complaints are noted through a Google search.

11. When did you get the designation?

12. Did you take an examination? If so, who conducted the test, how long was the examination, and when did you take the examination?

New Fed Rule May Lower Costs for Borrowers

A new Federal Reserve rule that takes effect April 1 is expected to lead to lower costs for borrowers, but some experts say it’s going to hurt the mortgage industry.

Under the new rule, borrowers who get their mortgages through brokers likely will pay less for services and brokers will be required to offer borrowers the lowest possible interest rate and fees that they qualify for. Most banks and other direct lenders, including some mortgage companies that operate like banks, are exempt from the rule.

The new Federal Reserve rule--the “Loan Originator Compensation amendment to Regulation Z”--is to help prevent borrowers from being steered into high-cost or risky loans.

Mortgage brokers used to earn more money on a loan the higher the interest rate and points. But the new rule covers how a loan originator is paid, setting a fixed commission and no longer tying the amount to the loan terms.

Some in the mortgage industry aren’t happy with the new rule, saying it makes mortgage brokers less competitive against the big banks.

“I will now get paid the same amount to process a plain-vanilla loan as I will a complex loan of equal size that requires more work,” says Mark Yecies, an owner of SunQuest Funding, a mortgage broker and lender in Cranford, N.J.

Officials with the National Association of Mortgage Brokers also have expressed concerns, saying the rule would likely put a lot of independent brokers out of business.

Source: “New Fed Rule for Mortgage Brokers,” The New York Times (Feb. 17, 2011)

Chase Offers Military Aid, After Past Mistakes

J.P. Morgan Chase & Co. is launching programs in April to help military families and vets stay in their homes. The announcement comes shortly after J.P. Morgan admitted to wrongly foreclosing on 18 active-duty military members and overcharging 4,500 on mortgages.

The military programs will include reduced mortgage rates for those covered under the Servicemembers Civil Relief Act, as well as enhanced mortgage modifications for active-duty military personnel since Sept. 11, 2011.

Chase also said it would not foreclose on any active military personnels' homes. If a wrongful foreclosure does occur, the bank would forgive all of that military member’s remaining mortgage debt, the company said. Also, within the next five years, the bank says it plans to donate 1,000 homes to military personnel and vets.

"This company has a great history of honoring military and veterans, and the mistakes we made on military foreclosures are a painful aberration on that track record," says Chairman and Chief Executive Jamie Dimon.

Meanwhile, following Chase’s admission of wrongfully overcharging and foreclosing on military personnel, lawmakers are considering new legislation to help prevent military personnel from losing their homes and being faced with high interest rates.

Source: “J.P. Morgan Unveils Mortgage Programs for Military Customers,” Dow Jones News Service (Feb. 15, 2011)

Short Sale - Week 13

This is Part 13 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

Short Sale - Week 11

Short Sale - Week 12

February 10, 2011

• I contact my escrow officer to confirm that all is set for closing next week. Per Equator, I have to submit a closing statement just prior to close. I ask escrow to prepare the final update so I can submit it on Monday

Analysis - Days 84 - 90:

The buyer is still very concerned that something will go wrong at the last moment. He's worried that the bank won't allow the closing. He's worried that the seller won't be out of the property in time for the closing. He's worried that the home will be left in poor condition. After three months of uncertainty, I can understand his concerns and spend much of the week trying to reassure him.

Hint:

Don't ignore your clients' emotional needs. Be sure to keep communicating, even if it's just to let them know everything is still on track.

CalHFA Announces Full Implementation of $2 Billion Effort

SACRAMENTO – The California Housing Finance Agency today announced the full implementation of four programs to fight the ongoing foreclosure crisis in California, with the primary goal to help families remain in their homes.

The programs, under the umbrella title of Keep Your Home California, are federally funded as part of the U.S. Treasury Department’s Hardest Hit fund, and are aimed at helping low and moderate income homeowners struggling to pay their mortgages amid the worst real estate crisis in decades.

“Our goal is to get the very most out of these federal dollars to assist California families,” said Steven Spears, Executive Director of CalHFA. “With families struggling through a number of financial hardships and the disruption in the real estate market, these programs will help those in need while stabilizing neighborhoods and communities severely impacted by foreclosures.”

California received a total of nearly $2 billion through the Hardest Hit fund. After consulting with community leaders throughout the state, four programs were created to assist California families.

Mr. Spears said that all four programs are intended to help avoid foreclosure: three offer several forms of mortgage assistance, as well as a separate program that will provide transition assistance to borrowers who execute a short sale or deed in lieu transaction.

All of the programs are designed specifically for low or moderate income homeowners who are either unemployed or are facing another financial hardship, have fallen behind on their mortgages and owe significantly more than the value of their homes.

“In partnership with the federal government, Keep Your Home California is one more step we are taking to help low and moderate income California families who are struggling to remain in their homes,” said Assemblymember Norma Torres, Chair of Assembly Committee on Housing and Community Development. “No one program will solve the foreclosure crisis affecting our state, but together we hope to make a difference for as many families as possible.”

"The foreclosure crisis continues to hinder our potential for economic recovery, and strips stability from our communities,” said Assemblymember Mike Eng, Chair of the Assembly Committee on Banking and Finance. “I'm pleased that the Keep Home California program is ramping up to address these challenges and, as the program moves forward, I will continue to monitor its progress to ensure that it's an all around success at assisting California borrowers."

Specifically, the Keep Your Home California programs provide:

• Mortgage assistance of up to $3,000 per month for unemployed homeowners who are in
imminent danger of defaulting on their home loans.
• Funds to help homeowners who have fallen behind on their mortgage payments due to a
temporary change in a household circumstance. The program will provide up to $15,000
per household to reinstate mortgages to prevent foreclosures.
• Money to reduce the principal owed on a mortgage for a home where the low or
moderate income homeowner is facing a serious financial hardship and owes
significantly more than the home is worth. The program requires lenders to match any
assistance provided by the Keep Your Home California program.

A full description of the programs can be found at www.KeepYourHomeCalifornia.org

How to Apply:

The programs will be limited to homeowners who meet a number of criteria, including owning and occupying the home as their primary residence, meeting income limits and facing a financial hardship. Homeowners who consummated a “cash-out” refinance are not eligible for Keep Your Home California programs.

To apply for the assistance, a homeowner should contact the Keep Your Home California call center toll-free at 888.954.KEEP(5337) or their mortgage servicer – the company to which the borrower sends monthly mortgage payments. Each of the mortgage assistance programs requires the participation of the mortgage servicer.

As of February 9, the following servicers are participating in all four Keep Your Home California programs:

 GMAC
 Guild Mortgage
 California Housing Finance Agency
 California Department of Veterans Affairs

Other servicers, including Bank of America, JPMorgan Chase, CitiMortgage and Wells Fargo are currently participating in some, but not all programs at this time. The list of participating servicers is expected to expand in the coming weeks.

Full details regarding servicer participation can be found at www.KeepYourHomeCalifornia.org.

“The problems of unemployment and the unprecedented disruption in our real estate markets have impacted so many families,” Mr. Spears said. “These programs are designed to move homeowners who have been told ‘no’ into the ‘yes’ category and qualify them for a mortgage they can afford over the long term.”

Borrowers with questions about the program may call Keep Your Home California toll-free at 888-954-KEEP(5337).

Short Sale - Week 12

This is Part 12 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

Short Sale - Week 11

January 27, 2011

• I notify the seller that her closing papers are ready. She asks me to send them to her attorney for review. The attorney approves the documents.

January 28, 2011

• The seller signs her closing paper. She asks me if the bank can still kill the deal. I inform her that it ain't over until it's over.

February 1, 2011

• The buyer signs closing papers and brings the funds needed to close to the escrow company.

Analysis - Days 77 - 83:

This has been a very stressful week for the seller. Even though both buyer and seller have signed their paperwork and all the buyer's closing funds are deposited with the escrow company, the seller is worried that the bank will cancel the deal at the last minute. Bank of America - we know you're listening. So please, if there is some way you can let sellers and buyers know that you will not cancel a transaction on a whim, that would help alleviate their stress. Maybe a document that states you agree to allow the transaction to close unless you suspect specific problems are found (fraud, etc.)?

Hint:

It's been a long, difficult process and your clients may need to hear from you that things are still on track. Don't drop the communications ball at this late stage.