Friday, January 27, 2012
Wednesday, January 25, 2012
HAFA Guidelines with Second Lien Holders
The HAFA guidelines state that the max amount to second lien holders is to be $6000 and no other parties such as the listing or selling agents, buyers or sellers can contribute to a higher amount that a second lien holder may be requesting. It is important to understand that second lien holders DO NOT have to be participants in HAFA. If you have a first and second with the same lien holder such as Bank of America, Chase or Wells Fargo, you have a greater chance of the second accepting the $6000. These are the top 3 financial institutions in closed short sale transactions.
I recently had a transaction with Bank of America in first position and Green Tree in second. The homeowner was approved for the HAFA program. The $6000 max allowable per Bank of America was not acceptable for Green Tree. We were approved at $8500. Green Tree would not reduce their payoff and advised us they are not participants in the HAFA program and would let the home foreclose if they did not get the additional $2500. It is amazing to me after the housing crisis of 2008/2009, there are still lenders cutting corners and putting people at risk of fraudulent activities. Green Tree insisted that we either make a payment after the close of escrow or before the close of escrow.
Making a payment before the close of escrow may sound reasonable to you. No one can stop a seller for making a payment towards their mortgage; or anyone making a payment on the sellers behalf and we avoid payments outside of escrow once it is closed. After some further research with my Real Estate attorney; unless we are able to get in writing from BofA and the HAFA department that they would allow us to pay the $2500 BEFORE the close of escrow, it is all the same as we were moments from closing. This is where it gets fun; I spoke to both the HAFA department and BofA and was told by both they did not see a problem but neither of them were willing to put it in writing therefore; all parties would be at risk of fraud.
It was hard to let all those months of hard work go to waste but at the end of the day, nothing is worth losing your license to cut a few corners to close a deal. There are ways to prevent this from happening in the future. The law that passed last July, extending to second lien holders stating; banks cannot pursue for a deficiency judgment after a short sale, has made negotiating more difficult. Seconds such as Green Tree are wanting 13-15% of the unpaid balance instead of the traditional 10%.
Here are a few tips to help you avoid these types of circumstances BEFORE you take on a short sale transaction.
1. Pre-qualify your clients and ask the right questions. (Nothing is more frustrating than negotiating a file for a REALTOR who did not properly qualify their client.)
2. Compare the sellers circumstances with the HAFA guidelines to see if they most likely we be approved for the program. (You can find the HAFA guidelines on the Internet.)
2. What is the balance of the second lien?
3. Who is the second lien holder? (If you have a first and second with the same lender you most likely will be fine. If the liens are with two different lenders then you will need to call the second and find out if they are a participant in the HAFA program)
4. Find out what amount the second will expect to receive in order to allow the short sale to go through BEFORE you list the property or start negotiating the file.
5. If it is above the 10% you will need to set expectations with your seller before you decide to take the listing and explain they may have to contribute to the payoff of the second.
6. Determine if this is a qualified candidate for a short sale
6. Get everything in writing.
Nothing is worse than spending months on a file, jumping through hoops to save a deal for it to blow up at the end however; These are circumstances we can control. Taking the proper steps before hand will allow us to make the right choices and save time and energy instead of fighting a losing battle.
(Quote) “The most important thing in communication is hearing what isn’t said.
- Peter Drucker (1909-2005)
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we
I recently had a transaction with Bank of America in first position and Green Tree in second. The homeowner was approved for the HAFA program. The $6000 max allowable per Bank of America was not acceptable for Green Tree. We were approved at $8500. Green Tree would not reduce their payoff and advised us they are not participants in the HAFA program and would let the home foreclose if they did not get the additional $2500. It is amazing to me after the housing crisis of 2008/2009, there are still lenders cutting corners and putting people at risk of fraudulent activities. Green Tree insisted that we either make a payment after the close of escrow or before the close of escrow.
Making a payment before the close of escrow may sound reasonable to you. No one can stop a seller for making a payment towards their mortgage; or anyone making a payment on the sellers behalf and we avoid payments outside of escrow once it is closed. After some further research with my Real Estate attorney; unless we are able to get in writing from BofA and the HAFA department that they would allow us to pay the $2500 BEFORE the close of escrow, it is all the same as we were moments from closing. This is where it gets fun; I spoke to both the HAFA department and BofA and was told by both they did not see a problem but neither of them were willing to put it in writing therefore; all parties would be at risk of fraud.
It was hard to let all those months of hard work go to waste but at the end of the day, nothing is worth losing your license to cut a few corners to close a deal. There are ways to prevent this from happening in the future. The law that passed last July, extending to second lien holders stating; banks cannot pursue for a deficiency judgment after a short sale, has made negotiating more difficult. Seconds such as Green Tree are wanting 13-15% of the unpaid balance instead of the traditional 10%.
Here are a few tips to help you avoid these types of circumstances BEFORE you take on a short sale transaction.
1. Pre-qualify your clients and ask the right questions. (Nothing is more frustrating than negotiating a file for a REALTOR who did not properly qualify their client.)
2. Compare the sellers circumstances with the HAFA guidelines to see if they most likely we be approved for the program. (You can find the HAFA guidelines on the Internet.)
2. What is the balance of the second lien?
3. Who is the second lien holder? (If you have a first and second with the same lender you most likely will be fine. If the liens are with two different lenders then you will need to call the second and find out if they are a participant in the HAFA program)
4. Find out what amount the second will expect to receive in order to allow the short sale to go through BEFORE you list the property or start negotiating the file.
5. If it is above the 10% you will need to set expectations with your seller before you decide to take the listing and explain they may have to contribute to the payoff of the second.
6. Determine if this is a qualified candidate for a short sale
6. Get everything in writing.
Nothing is worse than spending months on a file, jumping through hoops to save a deal for it to blow up at the end however; These are circumstances we can control. Taking the proper steps before hand will allow us to make the right choices and save time and energy instead of fighting a losing battle.
(Quote) “The most important thing in communication is hearing what isn’t said.
- Peter Drucker (1909-2005)
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we
Saturday, January 21, 2012
Lenders and government agencies prohibit rent backs in a short sale
I was sent an article in the Huffington Post from my Real Estate attorney I wanted to share with you in regards to a new strategy housing investors are advocating to keep homeowners who can no longer make their mortgage payments in their homes. Investors will purchase the property from the homeowner and then lease the property back to the previous owner at an affordable rent.
As the article states, it does seem like a winner for both the homeowners and the banks. The homeowner gets to stay in the property without the stress of making an unaffordable mortgage payment; meanwhile, the lender keeps a foreclosure off their books and avoids all the costs it takes to maintain the home until it is resold.
This does sound like a sensible solution however this is prohibited. The major financial institutions as well as the government programs such as Fannie Mae, Freddie Mac and the Federal Housing Administration all have this policy in place. Short sales are increasing at an alarming rate but the banks will refuse to allow these types of transactions unless the buyers sign legal documents promising they will not rent the property back to the previous owner.
These policies are put in place in order to reduce fraudulent transactions for instance; a homeowner might find someone to buy the property at a reduced price and together they could sell the home and split the profits. A homeowner and an investor may have good intentions but the banks do not know that. With all the legal issues attached to short sales and the constant changes in policies and guidelines, REALTORS, such as myself have taken extra precautions when handling a short sale transaction to protect ourselves from any legal ramifications. I may somewhat agree that this strategy would be helpful however; I do not blame the banks for taking their own precautions. Whether I agree or disagree really doesn't matter. If it is prohibited then there is no choice but to abide by the rules.
I have had many clients desperate to stay in their homes . No one wants to uproot their kids from their friends and school districts. I can appreciate that. I believe it is in our clients best interest if we can get them to think long-term. Values are going to continue to drop and we are going to be in a buyers market for quite some time. If we can short sale their property and help them enroll in a good credit recovery program they will be eligible to buy a home again in 18-24 months Vs 5-7 years in a foreclosure and be able to take advantage of this buyers market and get into a home and a location that may be even better than what they have now; in a home that is actually appreciating in value at a more affordable payment.
There is no doubt that the constant changes in the market place have been frustrating and at times it feels that we plug one hole just to have another one spring a leak and cause more damage. If we can focus more on what we can control instead of what we can not control this will enable us to roll up our sleeves, checking all negativity at the door and all opinions on how we think things should be and allow us be a guiding light for our clients.
(Quote) Accept the challenges so that you may feel the exhilaration of victory.
- George S. Patton
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
As the article states, it does seem like a winner for both the homeowners and the banks. The homeowner gets to stay in the property without the stress of making an unaffordable mortgage payment; meanwhile, the lender keeps a foreclosure off their books and avoids all the costs it takes to maintain the home until it is resold.
This does sound like a sensible solution however this is prohibited. The major financial institutions as well as the government programs such as Fannie Mae, Freddie Mac and the Federal Housing Administration all have this policy in place. Short sales are increasing at an alarming rate but the banks will refuse to allow these types of transactions unless the buyers sign legal documents promising they will not rent the property back to the previous owner.
These policies are put in place in order to reduce fraudulent transactions for instance; a homeowner might find someone to buy the property at a reduced price and together they could sell the home and split the profits. A homeowner and an investor may have good intentions but the banks do not know that. With all the legal issues attached to short sales and the constant changes in policies and guidelines, REALTORS, such as myself have taken extra precautions when handling a short sale transaction to protect ourselves from any legal ramifications. I may somewhat agree that this strategy would be helpful however; I do not blame the banks for taking their own precautions. Whether I agree or disagree really doesn't matter. If it is prohibited then there is no choice but to abide by the rules.
I have had many clients desperate to stay in their homes . No one wants to uproot their kids from their friends and school districts. I can appreciate that. I believe it is in our clients best interest if we can get them to think long-term. Values are going to continue to drop and we are going to be in a buyers market for quite some time. If we can short sale their property and help them enroll in a good credit recovery program they will be eligible to buy a home again in 18-24 months Vs 5-7 years in a foreclosure and be able to take advantage of this buyers market and get into a home and a location that may be even better than what they have now; in a home that is actually appreciating in value at a more affordable payment.
There is no doubt that the constant changes in the market place have been frustrating and at times it feels that we plug one hole just to have another one spring a leak and cause more damage. If we can focus more on what we can control instead of what we can not control this will enable us to roll up our sleeves, checking all negativity at the door and all opinions on how we think things should be and allow us be a guiding light for our clients.
(Quote) Accept the challenges so that you may feel the exhilaration of victory.
- George S. Patton
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Tuesday, January 10, 2012
"2012" Making Dreams Come True!!!
(Quote) Man, alone, has the power to transform his thoughts into physical reality; man, alone, can dream and make his dreams come true.
"Napoleon Hill"
When I was a girl just ten years old, my father bought me a cabbage patch doll for Christmas one year. She had pudgy cheeks and her lips were puckered together like she just took a bite out of a lemon. In my opinion, it was the ugliest doll I had ever seen. When my father said he bought it because it looked like me; I remember holding the doll up to the mirror and thinking that my father must have tipped back a few beers before he bought that gift because I did not see the resemblance. Tossing that gift aside, determined to create my individuality; I became more interested with the gift my father bought my two little brothers.
It was a blow up punching bag. I was fascinated with the way you would hit the bag, it would hit the floor and then quickly pop back up. I began beating the living day lights out of that bag just so I can see it pop back up. Needless to say my brothers were not to happy but no one wants to bother a girl that appears to have a passion for punching.
I tell this story because when I look at the last 5 years of my life, I have at many times felt like that punching bag falling down more times then I care to remember at very rapid paces. There were so many obstacles and issues to solve, battling negative thoughts, traumas to be healed from. I have definitely not done life perfectly personally or professionally but one thing I have done perfectly is POP UP! There will always be some thing to overcome but as I quickly learned; getting knocked down does not feel good, but popping back up builds character and creates hope and possibility and a chance for a more peaceful existence.
As a child coming from a home that was certainly not a positive environment to say the least; I have always felt a sense of magic in the air. A hope for a better life, a brighter future. For me it starts with that first cup of coffee in the morning. I cannot wait to wake up just to smell the coffee brewing in the air. Thank god for automatic timers. I like to sit in my bed with my coffee snuggled with my blankets and contemplate my day and envision my goals. And then the magic hits me and I am like a girl at Christmas again. I am in awe, wonder and anticipation of what will happen next. What is around that corner? I just have to know.
TODAY, I am pleased to announce that Lotus Realty Group not only helps home owners and REALTORS in negotiating their short sales; we are now our own broker. We are extremely excited to welcome agents on our team. I have worked very hard to create successful tools and a warm environment for myself, my team and for anyone that would like to be apart of what we stand for and allow us to help them achieve their highest potential. In addition, my Real Estate attorney, David Bright and I will be teaching 2 day seminars in California and possibly in other states; the Legal and Practical sides of Real Estate and how to Survive and Thrive in a down economy. We will be offering a short sale certification and 12 hours of DRE credits. Coming soon to a website near you :-) I am so humbled at the gifts life has given me and so grateful to all those who support me. My team, my clients and my business partner and my friend, Stephen Bick. Without his wisdom, courage and strength none of this would be possible. Happy new year everyone. May all of YOUR dreams come true in 2012.
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
"Napoleon Hill"
When I was a girl just ten years old, my father bought me a cabbage patch doll for Christmas one year. She had pudgy cheeks and her lips were puckered together like she just took a bite out of a lemon. In my opinion, it was the ugliest doll I had ever seen. When my father said he bought it because it looked like me; I remember holding the doll up to the mirror and thinking that my father must have tipped back a few beers before he bought that gift because I did not see the resemblance. Tossing that gift aside, determined to create my individuality; I became more interested with the gift my father bought my two little brothers.
It was a blow up punching bag. I was fascinated with the way you would hit the bag, it would hit the floor and then quickly pop back up. I began beating the living day lights out of that bag just so I can see it pop back up. Needless to say my brothers were not to happy but no one wants to bother a girl that appears to have a passion for punching.
I tell this story because when I look at the last 5 years of my life, I have at many times felt like that punching bag falling down more times then I care to remember at very rapid paces. There were so many obstacles and issues to solve, battling negative thoughts, traumas to be healed from. I have definitely not done life perfectly personally or professionally but one thing I have done perfectly is POP UP! There will always be some thing to overcome but as I quickly learned; getting knocked down does not feel good, but popping back up builds character and creates hope and possibility and a chance for a more peaceful existence.
As a child coming from a home that was certainly not a positive environment to say the least; I have always felt a sense of magic in the air. A hope for a better life, a brighter future. For me it starts with that first cup of coffee in the morning. I cannot wait to wake up just to smell the coffee brewing in the air. Thank god for automatic timers. I like to sit in my bed with my coffee snuggled with my blankets and contemplate my day and envision my goals. And then the magic hits me and I am like a girl at Christmas again. I am in awe, wonder and anticipation of what will happen next. What is around that corner? I just have to know.
TODAY, I am pleased to announce that Lotus Realty Group not only helps home owners and REALTORS in negotiating their short sales; we are now our own broker. We are extremely excited to welcome agents on our team. I have worked very hard to create successful tools and a warm environment for myself, my team and for anyone that would like to be apart of what we stand for and allow us to help them achieve their highest potential. In addition, my Real Estate attorney, David Bright and I will be teaching 2 day seminars in California and possibly in other states; the Legal and Practical sides of Real Estate and how to Survive and Thrive in a down economy. We will be offering a short sale certification and 12 hours of DRE credits. Coming soon to a website near you :-) I am so humbled at the gifts life has given me and so grateful to all those who support me. My team, my clients and my business partner and my friend, Stephen Bick. Without his wisdom, courage and strength none of this would be possible. Happy new year everyone. May all of YOUR dreams come true in 2012.
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
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