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Bank of America: $20,000 short sale incentive to struggling homeowners

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CHARLOTTE, N.C. – Oct. 7, 2011 – Bank of America, the nation’s largest mortgage servicer, is offering Florida homeowners up to $20,000 to short sale their homes rather than letting them linger in foreclosure.

The limited time offer has received little promotion from the Charlotte, N.C.-based bank, which sent emails to select Florida Realtors earlier this week outlining basic details of the plan.

Only homeowners whose short sales are submitted for approval to Bank of America before Nov. 30 will qualify. The homes must have no offers on them already and the closing must occur before Aug. 31, 2012.

A short sale is when a bank agrees to accept a lower sales price on a home than what the borrower owes on the loan.

Realtors said the Bank of America plan, which has a minimum payout amount of $5,000, is a genuine incentive to struggling homeowners who may otherwise fall into Florida’s foreclosure abyss.

The current timeline to foreclosure in Florida is an average of 676 days – nearly two years – according to real estate analysis company RealtyTrac. The national average foreclosure timeline is 318 days.

“I think this is a positive sign that the bank is being creative to try and help homeowners and get things moving,” said Paul Baltrun, who works with real estate and mortgages at the Law Office of Paul A. Krasker in West Palm Beach. “With real estate attorneys handling these cases, you’re talking two, three, four years before there’s going to be a resolution in a foreclosure.”

Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance, called the short sale payout a “bribe.”

“You can call it a relocation fee, but it’s basically a bribe to make sure the borrower leaves the house in good condition and in an orderly fashion,” Cecala said. “It makes good business sense considering you may have to put $20,000 into a foreclosed home to fix it up.”

Homeowners, especially ones who feel cheated by the bank, have been known to steal appliances and other fixtures, or damage the home.

“This might be the banks finally waking up that they can have someone in there with an incentive not to damage the property,” said Realtor Shannon Brink, with Re/Max Prestige Realty in West Palm Beach. “Isn’t it better to have someone taking care of the pool and keeping the air conditioner on?”

A spokesman for Bank of America said the program is being tested in Florida, and if successful, could be expanded to other states.

Wells Fargo and J.P. Morgan Chase have similar short sale programs, sometimes called “cash for keys.”

Wells Fargo spokesman Jason Menke said his company offers up to $20,000 on eligible short sales that are left in “broom swept” condition. Although the program is not advertised, deals are mostly made on homes in states with lengthy foreclosure timelines, he said.

And caveats exist. The Wells Fargo short sale incentive is only good on first lien loans that it owns, which is about 20 percent of its total portfolio.

Bank of America’s plan excludes Ginnie Mae, Federal Housing Administration and VA loans.

Similar to the federal Home Affordable Foreclosure Alternatives program, or HAFA, which offers $3,000 in relocation assistance, the Bank of America program may also waive a homeowner’s deficiency judgment at closing.

A deficiency judgment in a short sale is basically the difference between what the house sells for and what is still owed on the loan.

HAFA, which began in April 2010, has seen limited success with just 15,531 short sales completed nationwide through August.

But Realtors said cash for keys programs can work.

Joe Kendall, a broker associate at Sandals Realty in Fort Myers, said he recently closed on a short sale where the seller got $25,000 from Chase.

“They realize people are struggling and this is another way to get the homes off the books,” he said.

© 2011 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services

Lenders go after money lost in foreclosures

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By Dina ElBoghdady
Washington Post Staff Writer
Wednesday, June 16, 2010

After the bank foreclosed on Fernando Palacios’s Gainesville home in March, he thought he was done with what he described as the most stressful financial situation of his life.

The bank sold the home for far less than Palacios owed on it, as often happens with foreclosures. What Palacios did not see coming was the letter from his lender demanding that he pay the shortfall: $148,064.02. “I really thought I was through with this house,” said Palacios, who fell behind on payments when the economy soured and his cleaning business stumbled.

Over the past year, lenders have become much more aggressive in trying to recoup money lost in foreclosures and other distressed sales, creating more grief for people who thought their real estate headaches were far behind.

In many localities — including Virginia, Maryland and the District — lenders have the right to pursue borrowers whose homes have sold at a loss to collect the difference between what the property sold for and what the borrower owed on it, also called a deficiency.

Before the housing bust, when the volume of foreclosures was relatively low, lenders seldom bothered to chase after deficiencies because borrowers had few remaining assets to claim and doing so involved hassles and costs. But with foreclosures soaring, lenders are more determined to get their money back, especially if they suspect borrowers are skipping out on loan they could afford, an increasingly common practice in areas where home values have tanked.

Palacios said he was committed to staying in his house, which he bought in 2005. He sunk $20,000 into improving it and hoped to raise his children there. But his lender refused to modify his loan, he said. To avoid personal liability for the deficiency, Palacios is filing for bankruptcy protection, as many people do who are in similar situations, said Nancy Ryan, his bankruptcy attorney.

“I am definitely seeing more people come through my door who walked away from houses a year or two ago and thought they were as free as the dead,” Ryan said. “They’re stunned when they realize they’re not.”
Several lenders contacted for this story declined to say how often they pursue deficiencies. But many said they try to collect the debt if they conclude the borrower can repay all or part of it.

“Lenders are not going after people who face a hardship,” said John Mechem, a spokesman for the Mortgage Bankers Association. “If they can’t pay their mortgage because they have a loss of income, there is no point in going after them.”

Those who had a second mortgage, such as a home-equity line of credit, in addition to their primary mortgage may find themselves particularly vulnerable, especially if they tapped into the equity line for cash.

Second lenders are last in line to get paid when a distressed property is sold. There’s usually little or no money left over for them, making it more likely that they will pursue large deficiencies, several attorneys said.

Gretchen Somers said she and her husband understood the risks last year when they completed a “short sale,” a transaction that allowed them to sell their Manassas home for about $150,000 less than they owed on it. But they felt they had no other options.

Somers said her family hung onto the house as long as possible. They tried but failed to sell it when her husband was transferred to Arizona for his job in early 2006, just as home prices were softening. They moved back into the house then tried to sell it again in 2008, after their adjustable-rate mortgage reset and their monthly mortgage payment nearly doubled. But home prices had plunged further by then, making it even tougher to sell.

Last year, their first lender and their home-equity line lender granted permission for the short sale. But the second lender reserved the right to come after the couple. Six months later, a collection agency called demanding $85,000 for related losses.

In hindsight, Somers said she and her husband should have just walked away from the house. “We took care of the house because we wanted it to sell,” Somers said. “If they were going to come after us anyway, we shouldn’t have done them the favor of making sure it looked good and cutting the grass even after we moved out, We should have mailed them the key and said: ‘Here you go.’ ”

Carlos Cortez and his wife managed to escape that fate after their second lender came after them for $70,000 when their short sale was completed on his Manassas Park townhouse in 2008.

Cortez knew that was a possibility, but he went through with the sale because his real estate agent said the lender was engaging in scare tactics.

James Scruggs, an attorney at Legal Services of Northern Virginia, said the lender appears to have backed off after Cortez argued that that the loan officer falsely qualified him and his wife for a home-equity line by fabricating key details about their finances.

A handful of states do not allow lenders to pursue deficiencies, nor does a federal program that took effect April 10. Lenders participating in that initiative are paid for approving short sales and as a condition, they cannot go after outstanding debt.

In many states, lenders can go after deficiencies, though laws vary widely, said John Rao, an attorney at the National Consumer Law Center. Some states limit how long the banks have to file a claim or collect the debt. Others may calculate deficiencies based on the fair-market value of the house, Rao said. For instance, if a home sells for $200,000 yet its fair market value is $250,000, “the borrower who owes $240,000 on the mortgage would not have a deficiency,” he said.

Borrowers should get a waiver in writing from their lenders to protect themselves, said Diane Cipollone, an attorney at the nonprofit Civil Justice. “Nobody should assume the deficiency is forgiven,” she said.

Understanding the HAMP & HAFA program

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This is a great video which will give you a very good understanding of how the HAMP & HAFA programs work and what you need to do to get approved.

The Price Group have completed many short sales in Pinellas & Manatee, we are ready to assist you with the HAMP & HAFA programs, so if you need advice call us today!

If you found this infomation useful please forward to a friend or retweet using Twitter.

Home Affordable Modification Program – Is Help On Its Way?

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If you are like many American’s who purchase or refinanced their home during the heat of the real estate boom this could be the program that was designed to help YOU! Over the past 2 years I’ve been working to help many clients who have found themselves upside down and need financial help to correct their housing situation. It’s been a long and hard road for many of these good people whose lives have changed in one way or another.

Finally it looks like our government has taken a step in the right direction to streamline the process of helping these good hardworking people.

There are two program: The first is called HAMP, and this is how it works:
The Home Affordable Modification Program is designed to help as many as 3 to 4 million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term. The program provides clear and consistent loan modification guidelines that the entire mortgage industry can use.

Borrower eligibility is based on meeting specific criteria including:
1) borrower is delinquent on their mortgage or faces imminent risk of default
2) property is occupied as borrower’s primary residence
3) mortgage was originated on or before Jan. 1, 2009 and unpaid principal balance must be no greater than $729,750 for one-unit properties.

After determining a borrower’s eligibility, a servicer will take a series of steps to adjust the monthly mortgage payment to 31% of a borrower’s total pretax monthly income:

•First, reduce the interest rate to as low as 2%,
•Next, if necessary, extend the loan term to 40 years,
•Finally, if necessary, forbear (defer) a portion of the principal until the loan is paid off and waive interest on the deferred amount.
Note: Servicers may elect to forgive principal under HAMP on a stand alone basis or before any modification step in order to achieve the target monthly mortgage payment.
The Home Affordable Modification Program includes incentives for borrowers, servicers and investors.

If you can’t complete the HAMP program for one or a number of reasons than you maybe (should be able to) go in to the second program call HAFA.

Here is the info on HAFA: How HAFA Can Help

The Home Affordable Foreclosure Alternatives (HAFA) Program was designed to complement the Home Affordable Modification Program (HAMP) by helping current homeowners with mortgage debt who are eligible for HAMP but still cannot keep their home.

When a borrower applies for help from HAMP, not everyone succeeds with the program. Sometimes their lender is unable to approve a loan modification. Other times the borrower declines the terms of the loan modification. Some borrowers are approved and accept the terms of the modification, but fail to complete the program for various reasons. Before HAFA, these borrowers were usually headed for foreclosure.

HAFA gives those borrowers a viable alternative to foreclosure. If they have or want to find a buyer for their home, they may request approval for a short sale with pre-approval short sale terms and minimum acceptable net proceeds. If not, they may request approval for a deed-in-lieu . When a borrower applies for help with one of the HAFA solutions, the program already has their financial and hardship information from their HAMP application.

HAFA also imposes limits on the lender to help the borrower. Under the terms of this program, a lender must release the borrower from all future liability for the first mortgage debt. The lender may not ask the borrower for cash or a promissory note, and the lender may not ask a court for a deficiency judgment. The program also prohibits the lender from asking the listing real estate agent to discount their commission at the closing of a short sale.

All documents have been standardized and procedures, time frames, and deadlines have been streamlined under HAFA to make the process easier for both borrowers and lenders.

HAFA also provides financial incentives for both borrowers and lenders to participate in the program. Borrowers are entitled to receive $1,500 in relocation assistance , to be paid at closing. Lenders or loan servicers may receive up to $1,000 to help with administrative costs. There are also financial incentives for the lender or investor on the first mortgage to allow some of the proceeds from the sale of the property to be paid to subordinate lienholders.

Finally, participation in the HAFA program puts the foreclosure process on hold for the borrower. The lender may initiate the foreclosure process, but if the borrower is in the middle of the application process, or if any approved short sale or deed-in-lieu agreement has not been completed or reached its deadline, the lender may not complete the foreclosure process.

 

There are a lot of people who need this information so please forward to a friend or RT on twitter

SFR certified (Short Sale & Foreclosure Resource agent)

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I’m a pleased to announce that in addition to successfully negotiating and closing over 40 short sales in the past 24 months, I’ve also completed the “Short Sale & Foreclosure Resource course” The only course approved by the Board of Realtors. I’m now SFR certified, yes…

Over the past 2 years I have developed a system to help my clients through this changing market, often I’m referred clients from other real estate agents both at Coldwell Banker and other offices because of my proven track record and success in negotiating short sales. There are still many agents who don’t know what they are doing or don’t want to deal with short sales. I didn’t want to pass off my clients to someone else, and I love a challange and wanted to do all I can to help people in need.

So don’t loose your home to foreclosure and suffer the huge credit hit and the inability to purchase a home for 5 years or more, with our holp we can help you keep your credit and put you in a position to purchase a home in just 24 months taking advantage of the low home pricing I feel will still be around.

Don’t hesitate to contact us to schedule a confidential consultation today.

Short Sale VS Foreclosure VS Deed-In-Lieu of Foreclosure; which of these is the best choice for a homeowner in distress

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The foreclosure process can be very stressful for homeowners; some home homeowners get so depressed, that they do nothing, some 57% of homes get foreclosed on and the owner never called their lender to work out a loan mod or ask for help!. While others who are proactive sometimes end up being given the wrong advice or make decisions that are not well informed. If you are a homeowner dealing with this situation, you will have to make a decision on whether to get your property sold as a Short Sale usually at the discount approved by your lender, or give the property back to them as a Deed-In-Lieu of Foreclosure or just let them complete the Foreclosure. You need to decide which of these three options is the best for you both in the short and long term? Deciding which option to take might be tough especially if you do not know how each will affect your credit and ability to buy a home in the future.

Short Sale VS Foreclosure VS Deed-In-Lieu of Foreclosure
A short sale transaction occurs when a lender agrees to a discounted payoff on the loan balance, due to the financial hardship experienced by the homeowner and/or a decrease in the resale value of the property. A short sale is the best option if you are facing foreclosure because it is a lesser financial loss. You get to avoid foreclosure, reduce the adverse effects on your credit and increase your chances of getting a loan to buy a home within a shorter period of time.

Foreclosure occurs when a lender sells or gets back a parcel of real property, after the owner failed to conform to their mortgage or deed of trust agreements. The estate becomes the absolute property of the lender. The foreclosure process generally starts with a formal demand for payment in the form of a letter called Notice of Default (NOD) issued from the lender. It varies from state to state but in most cases the lender usually issues this notice when the homeowner has been 3 months irregular on their mortgage payments. The notice is typically a warning that they will sell your property if you do not make your payments current.

Deed in Lieu of Foreclosure is the alternative to a foreclosure. This is a settlement, which is voluntarily made, and in good faith in which the borrower surrenders their house to the lender and moves on with nothing owed. The main advantage for the borrower is that it immediately releases them from the debt associated with the defaulted loan. The borrower also avoids a painful and time consuming foreclosure. The main advantage for the lender is a reduction in the time and cost of repossessing the property. In most cases a lender will only accept a deed in lieu if there are no other liens attached to the property or these liens can be significantly reduced. The reason is because they do not want to be responsible for the other liens that are attached to the property; this is why most lenders will push for a foreclosure instead because it removes all junior liens.

How does each of the three options affect your credit and the length of time it will take to buy another home?

Short Sale: This the best option for a homeowner facing foreclosure due to its reduced adverse effects on their credit and their ability to get a loan to buy another home in a shorter period of time.
Short sale credit reporting options are:
• Paid Settlement – In which, credit score will drop 50-150 points or more depending on the number of missed payments.
• Paid, As Agreed – in which, won’t hurt the score at all as long as the borrower is paying regularly.
• Unrated – In which, may drop a few points.

Fannie Mae & Freddie Mac guidelines states that the waiting period before you can buy a new home is 2 years from the date the proceeding is completed. And there is no exception for extenuating circumstances.

Foreclosure: This is the least advantageous of all of the three options; it will remain in the credit report for 7 years from completion date and the credit score will drop from 50-250 points. Another disadvantage is that when Deficiency Judgment or Tax Lien is filed the credit score may drop an additional 100 points.
Fannie Mae & Freddie Mac current guidelines state that the waiting period is 5 years from the date of foreclosure completion proceedings.
Below are requirements in addition to the 5 years up to 7 years after completion date:
• Purchase of a primary or principal residence is permitted, 10% minimum down payment and the minimum credit score is 680.
• Purchase of a second home or property investment is not permitted.
• No cash-out refinance is permitted.

Extenuating circumstances are acceptable such as loss of employment and severe medical crisis and if approved the waiting period is 3 years from the date of foreclosure completion proceeding. The same additional requirements are applied as above except the minimum credit score of 680 is not required.
FHA Guidelines state that the waiting period for a foreclosure is 3 years from the foreclosure completion proceedings. However if foreclosure is a result of extenuating circumstances such as serious illness or death the lender may grant an exception.

Deed in Lieu of Foreclosure: Credit scores will carry the same serious effects as Foreclosure because most lenders report a deed in lieu of foreclosure as foreclosure. However the reality is that what is reported can actually be negotiate with the lender. It will remain on the credit report for 7 years from settlement completion.
Deed in Lieu credit reporting options:
• Paid Settlement – In which credit scores can drop up to 150 points
• Paid as Agreed- Credit scores show a dropped over 100 points due to default in payment but with this option borrower could purchase a home in a short period of time.
Fannie Mae & Freddie Mac guideline state that the waiting period for a Deed in Lieu of Foreclosure is 4 years from the date of completion proceedings.
Additional requirements after 4 years up to 7 years from completion date:
• Greater than 10% minimum down payment required for the transaction or purchase of investment property, principal residence or a second home by a borrower.
• There is a limited-cash-out and cash-out refinance are permitted if eligible and meet the requirements.
• Extenuating circumstances, physical condition such as medical crisis or other factors such as loss of employment that caused a borrower to choose the option Deed In Lieu of Foreclosure, the waiting period is 2 years from the completion proceedings.

In summary, the guidelines stated above clearly show the advantages for you to choose to short sale your property compared to allowing it to go into foreclosure or deed in lieu because the adverse effects to your credit is reduced and also, you will just have to wait 2 years to get a loan to buy another home instead of 4 years with the deed in lieu option or 5 years with the foreclosure.

If you have additional questions please feel free to email or call me.

Banks are forcing values down by using Short Sales

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http://www.DavidPriceRealtor.com. What are the banks thinking today? Banks are more conservative than ever and are forcing property values down in stable neighborhoods.

I understand banks trying keep their equity position high and prevent further losses, but allowing appraiser to use “Short Sales” as comps in a an arms length transaction is crazy.

Buyer’s who buy short sale homes are looking for a deal and they often get one, discounts as much as 10-30% or more in some cases, I’ve seen banks sell homes to investors who then flip the home and make a profit so I know what is going on. Freddie Mac has a policy that they will accept an offer on a short sale if it’s within 77% of the BPO or appraisal value, which is great for the buyer who has waited 4-9 months to get an answer from the seller’s bank.

Where this breaks down is the poor homeowner next door, who has been paying his mortgage on time for years, and now, his property value just got flushed because appraisers are told to uses these short sales and not make adjustments.

Banks are missing the big picture, right now homeowners who maybe upside down with their property values, but are making payments are thinking and being advised to stop making payments, take a hit on their credit and get out why so many others are doing the something!

Appraisers need to not use short sale or make an adjustment anywhere from 10-30% so they don’t bring down values of non short sale homes anymore!

Lifeline needed for underwater homeowners!

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I’m meeting more and more homeowners who just don’t want to wait for the market value of their homes to catch-up to the price they paid or the mortgage they have. If your home has a lost a lot of equity and your underwater, maybe you are struggling to make the payments, their is hope, really! check out making homes affordable to see if you can get help.

If you don’t qualify for this government program try contacting your lender to see if they can assist with a loan modification if you don’t get help from the lender DON’T walk away! Lenders are pushing for more people to short sell their home because you are helping them solve a problem and saving the bank money. Yes, you are helping the lender solve a problem, both you and the lender have a problem. You can’t afford the house and they are not getting paid. Some lenders are also giving borrowers (the seller) cash at closing to help move. Wells Fargo offered one of my clients $2,500!

Check out a video I did on short sales to see why it’s better for to short sell your home than walking away! Video Link

NEW YORK – Feb. 4, 2010 – An estimated 4.5 million homeowners owe more than their homes are worth. That number is likely to peak at 5.1 million in June, affecting 10 percent of homeowners and making them increasingly likely to just walk away.

“We’re now at the point of maximum vulnerability,” says Sam Khater, a senior economist with First American CoreLogic, the firm that conducted the recent research. “People’s emotional attachment to their property is melting into the air.”

Consultants at Oliver Wyman calculated that 17 percent of owners defaulting in 2008 –about 588,000 – chose to default even though they could pay.

First American estimates that it would cost around $745 billion – about the same as the original 2008 bank bailout – to restore all underwater borrowers to the break-even point.

Doing so would be seen as highly unfair by many taxpayers, says Michael S. Barr, assistant Treasury secretary for financial institutions, but doing nothing would be another blow to a fragile economy.

Source: The New York Times, David Streitfeld (02/022010)

Lifeline needed for underwater homeowners – Is Walking away the only option?

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Link To Lifeline Needed For Underwater Homeowners

I’m meeting more and more homeowners who just don’t want to wait for the market value of their homes to catch-up to the price they paid or the mortgage they have. If you’re home has a lot of equity and you’re underwater, maybe you are struggling to make the payments. There is hope, really! Check out making homes affordable to see if you can get help.

If you don’t qualify for this government program try contacting your lender and see if they can assist with a loan modification (CLICK HERE FOR ANSWERS) if don’t get assistance from the lender, DON’T walk away from your home the problems don’t disappear! Infact it will get a lot worse.

Lenders are willing and advising borrowers to short sell their homes because you are helping them save them money. It cost the bank on average $50,000-$80,000 to foreclose on a home. By Short Selling you’re home you are helping the lender solve a problem they have. Both you and the lender have a problem, you can’t afford the house and they are not getting interest paid on the loan. Some lenders are also giving borrowers (the seller) cash at closing to help move. Wells Fargo offered one of my clients $2,500!

Check out a video I did on short sales and why it’s better for you than walking away and facing a foreclosure!
I’m here to help so feel free to call me anytime or shoot me an email.

Indian Rock Beach Fl, waterfront townhome

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Moor your sail boat at your door! Gorgeous town home, builder’s own unit with ALL the extras. Wood floors, crown molding, built-ins, granite-WOW factor! Deep water slip allows for yachts or sailboats. Loads of storage + a 2 car side by side garage! French doors open to private balconies overlooking a gorgeous landscaped yard. Perfect for BBQ’s! Enjoy boating in the pristine Gulf waters. Walk 1 block to white sandy beaches, restaurants & shops or relax on your private roof top terrace with endless views of Gulf and Intracoastal. Located on the best beach-Indian Rocks. This is a home worthy of all this fabulous community offers! “Sale is subject to seller’s lender’s approval”.