Free Webinar on HAFA Short Sales

As many of you may know HAFA will be in full effect come August 1st.  I will be hosting replays of a HAFA Webinar designed to educate homeowners on the HAFA process, how to qualify, as well as pros and cons.  If you would like to attend the webinar registration is free.

To register for the webinar please email me at jnewman@kwflagship.com

If you are a Maryland homeowner and would like to discuss your options as they pertain to foreclosure prevention, loan modification or short sales, contact me today at 301-343-7671.

Top 5 Reasons Short Sales Fail

I was talking with a homeowner last week about potentially listing his property and he asked me a great question.  Why do Short Sales Fail?  From my experience, here are the top 5 Reasons

1. Listing agent is inexperienced and has not closed many Short Sales
2. The lenders BPO/Appraisal comes in too high.
3. The seller has not been educated about their options prior to engaging in a short sales and pursues bankruptcy, loan modification or deed-in-lieu during short sale process.
4. The seller does not provide documentation needed to process short sale.
5. The buyers agent is not property educated with the short sale process and does not properly advise the prospective buyer.

While there are many other reasons that a short sale may fail, I continually run into these situations.

If you are a Maryland homeowner and are considering a short sale as an option to avoid foreclosure.  Contact me today at 301-343-7671 or sign up for my weekly newsletter for more information.

Deficiency Judgement in Maryland

I get asked questions about deficiency judgements almost daily by both homeowners and fellow Realtors alike.  Here are some quick bullet points concerning deficiency judgements as they pertain to foreclosure or short sales.

• Lenders in Maryland HAVE the right to pursue a deficiency judgement when a house is sold for less than the remaining mortgage balance.  Whether the house is sold at Trustee Sale (foreclosure) or Short Sale.

• Maryland laws allow lenders up to 3 years to pursue these deficiencies.
• If a homeowner pursues a short sale vs. foreclosure typically they will be able to negotiate more favorable terms.
• If a homeowner decides to let their home go to foreclosure, they may not know of any deficiency judgement for years, leaving the homeowner “in the dark”
• Most deficiency judgements can be negotiated.
• HAFA (Home Affordable Foreclosure Alternatives) program allows a homeowner to Short Sale their property and the lien holders must forgive homeowners of any deficiencies.

If you are considering a short sale, or need assistance with a loan modification or foreclosure alternative advice, contact me today.

Short Sale Expert in Maryland

Many Realtors in Maryland are jumping on the Short Sale bandwagon as of late.  Several of them are even proclaiming themselves Short Sale Experts.  I would be a little hesitant about using someone who proclaims themselves to be a Short Sale Expert, here are a couple of reasons why.

Websters dictionary defines an expert as someone who

: having, involving, or displaying special skill or knowledge derived from training or experience

So lets take a closer look at two of the most important words in this definition TRAINING and EXPERIENCE.   There are several courses designed to train Realtors on Short Sales ranging from 4-16 hours.  What a Joke!!!  I spend almost 16 hours EVERY WEEK continuously training myself on the short sale industry.  The programs, guidelines and lender processes are changing on a monthly basis, so a Realtor needs continuous training to meet the changing environment.

Experience, well this one is easy.  How experienced is your Realtor with short sales?  To find out, ask him/her.  How many short sale transactions have you closed in the past 12 months and show me the documentation or provide me with a list of homeowners you have helped.

See many Realtors believe that Short Sales will be the next BIG THING in Real Estate. Unfortunately, many homeowners will see their house go to foreclosure by choosing the wrong Realtor.  Homeowners, make sure you do your homework, a short sale is a complicated transaction and cannot be handled by a so called EXPERT.

Don’t Expect Housing Rebound Anytime Soon

According to  a recent study completed by Fiserv housing prices may not rebound to there highs of 2006/2007 till at least 2020 in MD !.  Now real estate values rise and fall with the tides and location is critically important to overall values.  So pockets of our state may see a rebound earlier.

I hate to say it but I am somewhat a believer in these numbers.  If you look at the recent economic numbers, we may in fact go back into a recession.  If not, we will certainly see a prolonged period of below average growth and high unemployment figures.  If people cannot work, they cannot buy homes.

Also, many homeowners (as much as 25%) currently owe more on their home than it is worth, so until housing values rebound they will not be in a position to move up.  First time homebuyers are making up the majority of purchases these days, but they are buying distressed properties such as short sales and REO’s. So there is no one to MOVE UP.

Here is a link to the full article

http://www.housingwire.com/2010/04/09/peak-house-prices-will-return-to-sand-states-after-2025-fiserv

If you are waiting for the market to rise to that you can sell your house, you may be in for a long wait.

Deed-in-Lieu’s becoming popular

You know it is sort of interesting as I was writing this article another Realtor contacted me and stated that her clients just received a letter from Bank of America, offering them a Deed-in-Lieu as an alternative to foreclosure or Short Sale. In Maryland, Deed-in-Lieu’s are especially advantageous due to our laws regarding deficiency judgements.

Many lenders are increasingly offering homeowners this option.  Interestingly enough, lenders are being proactive in offering homeowners this option.

So with this being said are we seeing a philosophical change to how lenders are viewing distressed homeowners?  A deed-in-lieu has many benefits over both Short Sale and Foreclosure.  With a Deed-in-lieu lenders typically forgive homeowners of any deficiencies and the process can typically be completed within 90 days.  The downside to a deed-in-lieu is that it will be recorded as a Foreclosure on ones credit.

If you have more questions about Short Sales, Deed-in-Lieu’s or other foreclosure alternatives give me a call today at 301-343-7671.

Strategic Defaults on Fox News

Why Short Sales Fail?

There are over 50 reasons that Short Sales fail, therefore it is imperative that a homeowner choose a Realtor that can GET THE JOB DONE! Nationally the success rate for short sales is under 30% !! The Newman Group boasts an 82% success rate in closing short sales and this is due to our process, education and team approach.
Training
a) No seller negotiation training
b) No lender negotiation training
c) No training to deal with buyer’s agents
Buyer Never Found
a) Priced too high
b) Agent letting bank dictate pricing

Offer Too Low
a) Lender BPO/Appraisal came in too high
i) Lender wants certain percentage of that BPO
ii) Offer is below this number
b) Appraisal does not meet guidelines (loss too high)
Preliminary HUD-1
a) Purchase price on HUD-1 does not match buy/sell agreement
b) Seller/Buyer names do not match buy/sell agreement
c) HUD-1 shows proceeds going to seller
d) HUD-1 has too many or unapproved fees on the seller side
e) Seller closing costs are excessive
f) Commissions are excessive
g) Seller Concessions Are Excessive
h) Too Much Going To Junior Liens
i) Closing date too far away
Purchase Contract
a) Certain language unacceptable to lender
b) Certain language needs to be added for lender
c) Buyer must by arms-length (unrelated third party)
d) Buyer must be individual vs. company (for some lenders/investors)
Short Sale Package
a) Incomplete
b) Out of Order
c) Missing Loan Number on Each Page
d) Uses “Generic” forms vs. lender-specific forms
Junior Liens
a) Will not discount to amount required by senior lien holder
b) Want contribution prior to closing to meet senior lien holder’s requirement
c) IRS liens can be difficult & time consuming to remove
Unsecured Note / Deficiency / 1099-C / Seller Contribution
a) Note: Lender may require seller to pay back all of the loss
b) Deficiency: Lender may not agree to settle account
c) 1099-C: Lender may issue 1099-C; Seller may (or may not) be liable for paying taxes on this phantom income (see H.R. 3648, Mortgage Forgiveness Debt Relief Act of 2007)
d) Seller Contribution: If show assets or cash flow
Bankruptcy
a) Seller files bankruptcy in middle of listing
b) Lender refuse to discuss file during bankruptcy
c) Bankruptcy adds 3-4 months to the short sale process
Miscommunication
a) Seller does not cooperate with showings
b) Agent does not communicate with seller
c) Agent over promised and under delivered
FHA Specific Loan Issues
a) Appraisal comes in too low
b) Appraisal shows too many repairs
c) Property must be owner-occupied
d) Seller must be at least 30 days late
e) Seller must attend counseling
f) Seller must apply for short sale program
Seller Frustrations
a) Seller backs out and decides to pursue other options due lack of communication with agent
b) Seller backs out because process takes too long

In addition to these reasons, banks now have several different types of Short Sales, depending on whom the investor is.  So now more than ever, it is imperative that you use a Realtor that is a specialist in Short Sales.  If you would like to discuss your situation in more detail, give me a call today at 301-343-7671.

Mortgage Assistance for Unemployed

The Financial Reform bill being tossed around in Congress has several provisions that may help those borrowers who are unemployed.

As of today, there are not many options for mortgage assistance for borrowers who have recently lost their jobs. Unfortunately, the modification programs currently available are really geared to those individuals who have consistent income. Well, many homeowners are without employment and therefore do not qualify for a typical loan modification.

As part of the new Financial Reform bill several members of Congress have recently added bills to ensure that those unemployed borrowers are given an extended period of time to bring their loan current. One bill put forth The Homeowners Emergency Mortgage Assistance act may enable unemployed borrowers to borrow up to $50,000 and two years to pay that money back in order to keep their mortgage current. This bill still has to be approved by lawmakers, but Congress has promised that they will have a bill ready for the President to sign by July 4th.

If you are facing mortgage difficulties and would like to discuss your personal situation in more detail, contact me today at 301-343-7671 or email me at jnewman@kwflagship.com

What Lenders have the best Short Sale Processes

Deutsche Bank came out this week with their own version of a ranking process for servicers on Short Sales.  I may argue with some of the timelines discussed but nevertheless here is the list.

1. GMAC-  GMAC had the shortest turn around time for a short sale avergaing six months per transaction
2. CitiMortgage- Citi came in at 2nd averaging 7.5 months.
3. Wells Fargo- Wells came in third averaging 8 months.
4. Bank of America and Countrywide trailed the group.  Coming in at a whopping 11 and 13 months!!

This was not an extensive list of all servicers, but merely a snapshot of the largest servicers across the country.  In my opinion, most of the servicers are doing a much better job processing the short sale files, as of recent.  Many lenders are even proactive and calling the homeowners and their respective Realtors to discuss the files.

If you are a Maryland Homeowner and are experiencing difficulties, with a loan modification or need assistance with a short sale or deed-in-lieu, contact me today at 301-343-7671.