7Oct11 Bank of America Offers $20k Short Sale Incentive

Courtesy of The Palm Beach Post, comes some fresh news for Florida, offering up to $20,000 to short sale vs. 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.

This signals, in our opinion, the pressure they are feeling in Florida as the housing market continues to languish and the continued pressure to clear up these loans that are facing imminent foreclosure. Other interesting facts in the article include the fact that the current foreclosure timeline is almost 676 days – almost two years!

“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.”

Bank of America says that if the program shows promise in Florida, it could be expanded to other states. Other companies, including Wells Fargo and J.P. Morgan Chase also have similar programs.

More details:

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.

In our opinion, this is just again a math decision a bank makes that falls in line with the bank’s decision. How does the bank minimize their lost? Short sale with a $20k kicker; or something else?

Post your thoughts in the comments!

 

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13Jun11 Six New Lender Short Sale Packages Added to Document Library!
We have added six new short sale packages to our doc library, bringing us up to over 70 lender specific short sale packages! Sign in to your account today to download and view all of our short sale packages, documents, tools, and templates!
  • Nationpoint Mortgage
  • Wells Fargo Short Sale Package
  • NationStar Financial Short Sale Package
  • PNC Short Sale Package
  • Titanium Short Sale Package
  • Sun Trust Short Sale Package

How do you get all these packages? Sign up for Short Sale Artisan (with a free 7-day trial!) and visit our document repository!

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13Jun11 Surprise, Surprise – Government Short Sale Programs Continue to Flop

Anyone who’s followed the Art of Short Sales for any period of time knows that we have not been a huge fan of the HAFA, HAMP, and other government programs designed to ease the short sale process.

This week’s CNN article by Diana Olick continues to prove that over a year after its inception, the program continues to draw poor numbers.

HAFA provides financial incentives for servicers and borrowers to do short sales (selling the property for less than the value of the mortgage) and deeds in lieu of foreclosure (basically just giving the property back to the bank). The program launched in April of 2010 and was later streamlined in December, 2010, based on feedback from mortgage servicers, real estate agents and homeowners.

So far, HAFA has completed 7,113 short sales or DIL’s. In April, however, HAFA saw 1,666 completed, up 74 percent from the 959 done in March.

The government is touting this is a huge success – “a 74% growth!” – but as Diana points out, a 74% growth of nothing is still pretty close to nothing.

According to the article, JP Morgan Chase alone does close to 5,000 short sales a month -and that’s just one bank. The expectation is that the top few banks are likely doing in excess of over 20,000 short sales a month – in that light, HAFA is still producing inconsequential results.

Similarily to what we’ve said here, HAFA’s targeted audience limits the exposure it could potentially have.

“HAFA is a taxpayer funded program, so it has eligibility requirements targeted at a certain segment of the population,” says Risotto, noting that the program is for owner occupants who can demonstrate financial hardship and whose first mortgage is less than $729,750. “HAFA is not meant to be for every person looking to do a short sale,” she adds.

That knocks out investors, jumbo loans and borrowers who don’t meet the “hardship” requirements of the Treasury. The big banks are likely more lenient on that last one, again knowing that a short sales will be cheaper in the end than a foreclosure.

What are your thoughts? Had any success with HAFA? Post in the comments and let us know about it!

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17Jan11 CNBC Short Sale and Foreclosure Forecasts for 2011 and a HAFA Revamp

Came across this article from CNBC last week discussing the impact HAFA has had (read: not what was expected!)

The treasure department says the following

“While HAFA has been widely credited with streamlining the short sale process by setting clear timelines, documentation requirements and procedures, feedback from various stakeholders including servicers, housing counselors, realtors and others supported that additional enhancements could be made to further streamline short sale transactions, to the benefit of homeowners.”

As a result, HAFA rule changes include the following:

A recent report from the folks who oversee the TARP (the Congressional Oversight Panel) said that the Treasury has spent just $4.3 million on HAFA for 661 short sales. So Treasury, last week, decided to change the rules a bit:

  • HAFA no longer requires that servicers verify the borrowers finances
  • HAFA no longer requires servicers to determine if the borrowers monthly payment is higher than a 31 percent debt-to-income ratio.
  • HAFA no longer requires second-lien holders to agree to accept 6 percent of the unpaid principal balance owed them, up to $6,000. Servicers now decide who gets paid how much, with a cap still at $6000.
  • HAFA now requires borrowers seeking a short sale get an answer/agreement within 30 days.

We have criticized HAFA since its inception and are not surprised at all to see it faltering. That said, the guidelines mentioned above look like they provide marginal improvements, but not enough to drastically change anything. In particular, one we wrote about in an earlier blog post:

Removing the case-by-case analysis that short sales need: Every short sale transaction is different, and lender should approach them as such. HAFA requires lenders to identify their minimum net proceeds ahead of time, and the guideline requires 120 day period to change that value. This means that if a property falls outside of the minimum net proceeds, it isn’t eligible under HAFA. That’s a shame; because the house is worth what the house is worth, and even in the span of 120 days the criteria used can change. It removes flexibility from the process, which is critical when handling these transactions.

This was not adjusted and really makes it difficult for lenders to truly handle transactions on a case by case basis.

What are your thoughts on the market forecast and the HAFA program?

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17Jan11 Inman News Predicts 5 – 8 Years of Continued High Short Sale Volume

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Well, 2011 sure is off to a heck of a start, isn’t it? As we predicted here over and over again, the short sale marketplace is going to continue to be an important part of the still-stagnant housing recovery for the foreseeable future. So if you aren’t up to par on what you are doing, it’s time to get on board!

This recent article from Inman expands on what we have been saying, and predicts 5- 8 years of high short sale volume. What does this mean to you? You need to be competent in managing your short sales, and Short Sale Artisan helps you do exactly that! Even to 2020 and beyond!

The short-sale marketplace is not failing down anytime soon, and if genuine estate professionals wish to excavate into that niche, they should teach themselves thoroughly. That was a summary from dual short-sale specialists who spoke during Real Estate Connect Thursday.

“We’re looking during 5 to 8 years conservatively (of high short-sale volume),” pronounced Holly Maloney, a authorized short-sale dilettante and a Realtor during Huff Realty in Cincinnati, Ohio. “It’s a marketplace that’s going to be there. You possibly learn how to do it, teach yourself or work with someone who knows how to do it, differently you’re going to be giving business away.”

5 – 8 years is their conservative estimate!

Travis Waller, a authorized residential dilettante during RE/MAX Advantage Plus in Teaneck, N.J., expects disastrous equity to trigger a second call of foreclosures “that no one is even vocalization about.”

More than one in 5 homeowners with mortgages — scarcely 11 million borrowers — due some-more than their homes were value during a third quarter, according to a latest numbers from debt information aggregator CoreLogic.

“Until stagnation gets better, a market’s not going to get better,” Waller said.

Again making the case that volume and low home sales, and further depressing home values, as well as a jobless recovery, are contributing to home sales lagging some of the other gains that have been made throughout this economic “recovery”.

“It unequivocally comes down to display of your papers to a banks. The banks commend who has knowledge and who doesn’t,” he said. He generally represents sellers and carries between 15 and 25 listings in a month.

That is what we have been saying at Short Sale Artisan for well over a year. Formulating an ironclad short sale package is crucial to your package getting accepted. That isn’t going to change in the future, as you are always making the case to the bank that the short sale is the best way for the lender to mitigate their loss.

Both also offering agents this tip: Get a e-mail residence for a detriment slackening officer you’re traffic with. “It expedites a routine since during that indicate we can start e-mailing (him or her) PDFs,” instead of promulgation them faxes, Waller said.

This is a very key statement and underpins the importance of building relationships with loss mitigation representatives and banks you work with. If you are a high volume customer, they recognize you, and your offers are reasonable; you will dramatically improve the likelihood of speeding up your short sale offer and getting to approval.

Short sales will continue to play an important role for the foreseeable future – so you need to know them! What are you plans and predictions for the future of the short sale marketplace?

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