Another Hurdle for Short Sales-Article in North County Times

Below is an interesting article I read in the North County Times and I wanted to make sure you all had an opportunity to read this to prepare for the possibilities of this happening with your current transactions. Please feel free to give me a call if you would like to discuss further. Happy Thanks Giving to you all!!!


Add this to the long list of things that could derail a short sale.


A growing number of short sellers in San Diego County are seeing their deals suddenly fall apart and cash bonuses disappear because the companies that accept and manage borrowers’ mortgage payments every month — like Citi, Chase and mainly Bank of America — are selling off the servicing rights to those loans to smaller companies for financial reasons.


“You’re wasting your time; you’re wasting everyone’s time,” said Brian Ruhl, a San Diego Realtor who has had to handle a handful of these cases during the past six weeks. “We’re asking on every (client) file now.”


Short sales are deals that let overextended borrowers sell their homes for less than what they still owe as long as the banks say yes. Short sales, once rare deals before the recession, now make up an estimated 29 percent of total home resales in San Diego County, based on October numbers from local real estate tracker DataQuick.
       

Servicing transfers or releases, which don’t affect the investors who own those mortgages, are nothing new. Realtors say they’ve always been around, spiked during the housing boom and have been occurring infrequently in more recent years.


They’ve suddenly spiked again, not surprisingly because servicing transfers can be a lucrative, cash-driven business for big-name lenders as well as for the small firms that buy up those rights.


How it works: Mortgage servicers are companies to which you send your mortgage payments and call if you have questions on your loan. When your loan is originated, they get a small interest of that for monitoring whether borrowers are in fact paying on time. Mortgage companies typically get 25 basis points for each home loan, which translates to $500 a year on a $200,000 mortgage, based on details from top investment publication Seeking Alpha.


Servicing rights can either be retained or they can be sold to other companies for cash.


In Bank of America’s case, they’ve been focused on selling, especially “delinquent loans needing extra attention, largely to smaller companies who specialize in that type of high-touch servicing,” said bank spokesman Richard Simon, who acknowledged that selling has increased since the start of the year.


Service releases have made sense for Bank of America, which was dethroned by J.P. Morgan Chase as the nation’s biggest bank last year, for two key reasons. One, they want to offload “legacy mortgage issues” from the acquisition of loans from the now-defunct Countrywide, and two, the demand for buying servicing rights has become “robust,” Simon added.

Who decides what’s released and when?


“Market factors and strategies of the servicers and/or investors,” wrote Simon, in an email to the U-T San Diego.
       

The gains realized by companies like Bank of America with such sales have meant potential losses in time, effort and money for those involved in the short sale process.


Some consumers who had just begun or were in the middle of short sales and had their servicers change are now having to start from scratch with the new company if they want to get the deal done, real estate pros say. How this typically unfolds: The short sale is in full swing, a borrower suddenly gets a letter stating the servicer is set to change in a couple of weeks, and all the borrower can do is wait until the change occurs.



The change, which can tack on an extra four to six weeks to an already lengthy short sale, can jeopardize deals with prospective buyers because short sale agreements can expire and patience from buyers tend to wear.


“Who do you complain to?” said San Diego real estate broker Vincent Scuncio, who’s also dealt with about a handful in the last six weeks. “You can rage against the machine, but then what?”


Such changes also have mucked up cash incentives promised to homeowners who agree to complete short sales. When the servicer changes, it’s more likely than not that the new servicer will not carry through with awarding the incentive, which can mean the loss of thousands to tens of thousands of dollars that could help struggling homeowners, Ruhl said.


“The $15,000 to $20,000 pushes them over the fence” of doing a short sale, said Ruhl, who added that some potential short sellers still hold out hope for a loan modification. “They’re a month into it and then they find out it’s being service released ... They don’t get it (cash incentive.)”


How can a borrower protect themselves from a service release jeopardizing their short sale?


Ask lenders if there are plans for a service release. They’re required to tell you, Ruhl said. Also, this way, you’ll know how much time you may have to close the deal.


Bank of America, which appears to be doing more service releases than other lenders, has heard similar complaints from real estate agents from other parts of the country, so much that they issued an FAQ on this issue to those who deal with short sales earlier this month.


“The fact is, there are many potential obstacles to the completion of a short sale throughout the complex process,” said Simon, of Bank of America. “The release of servicing is just one and several others occur more commonly.”


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...


Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions: 858-764-7300

Time to plan for a successful 2013!!!!

(Quote) Crystallize your goals.Make a plan for achieving them and set yourself a deadline. Then, with supreme confidence, determination and disregard for obstacles and other peoples criticisms, carry out your plan. "Paul J Meyer"


As 2012 comes to an end we reflect on the events of the past. We let go of what is no longer working and come up with a strategy to be more productive to achieve our highest potential in the upcoming year. I don't know about you but I certainly plan on knocking it out of the park in 2013. Professionally and personally. In my opinion the level of ones success is based on the level of personal growth. The questions to ask yourself are:


a) Was I consistent in all areas of business such as keeping a schedule and time blocking for prospecting, marketing, appointments and lead follow up?


b)Was I disciplined?


c) Was I balanced with exercise, good nutrition, play, and spending time with family?


d) Did I procrastinate or did I approach everyday with passion and productivity?


e) What areas do I need to improve in 2013 to accomplish what I need to accomplish?


f) Will I be focusing on listings only ( traditional, short sales or both), working only with buyers; or will I be working with both listings and buyers?


It is important to be specific with your schedule and what you put in your schedule. Experience has taught me if I have my hands into too many things I defeat my ultimate goal which is to be effective and efficient and give good customer service and increase my referrals. Although I am experienced in all sides of real estate clearly my area of focus has been short sale negotiating for REALTORS. Focusing on that area and doing it well and helping others achieve their goals has helped me acheive mine and all other aspects of the business naturally started to come full circle for me.


My hope for all of you in this upcoming year is to have a plan in place and follow it with all of the passion that you have inside of you to accomplish your goals. Anything is possible when we get our minds right and sharpen our vision and move in the direction of our dreams.


Short sales are still going to be an important part of our market and I am always here for your continued support in closing your short sale transactions. I am happy to sit down with you and help you incorporate short sales into your schedule. I have created a platform that has helped many agents become very successful in marketing, prospecting and pre qualifying. With our help in taking the negotiating off of your plate this will allow you too focus more on prospecting and building your pipeline.


Here are some key points to watch out for in the current short sale market:


1. Bank of America is starting to incorporate a new program for qualified candidates that will allow the second to basically be written off to help homeowners experiencing difficulty to stay in their homes. The second HAS to be a BofA second. The lender will send out a letter to the homeowner to call in to customer care to discuss further options. Please keep in mind when you have a client entertaining a short sale but is on the fence and inquires about this please set proper expectation and let them know that BofA may be their lender but there are specific qualifications and there is no guarantee they will be able to participate. The best advice you can give them is to have them call a BofA representative to discuss if this is a viable option for them. There still may be tax implications so if a client of yours is involved in this program they will want to still talk to a CPA.


2. Lenders want to close on time and as I have said in the past extension's are not going to always be granted and you will most likely see it happening less and less over months to come. Your best option is too make sure that your homeowner is thoroughly qualified for a short sale, you have a complete short sale package and you are on top of the buyers lender. If all parties have done their job properly there is no need for an extension request.


3. Lastly, Clearly we are suffering from low inventories and it has become harder and harder to get offers accepted. I would suggest not taking the first offer on the table. Cash and conventional are always better as government loans have been taking alot longer. You can see how that can pose a problem when a short sale lender wants to close in 30 days and just because you may have a buyer contract with a 45 day close does not mean the short sale lender will honor it. I would suggest giving a time limit of one week of allowing all offers to come in and let all agents know you will be making a decision for example; Wednesday the 21st at 3:00 pm. This will allow you to pick the best offer and also give the buyers agents a good feeling knowing that at least they are in the game and have a shot. But be very selective on a short sale listing. Be mindful. Is there a sale date? What stage of the foreclosure process is this property in? Because if it is a home that has a sale date in 3 weeks that has already been postponed 3-4 times your chances will be less than average of getting it extended.


Lotus Realty Group is here to help. We ask that you contact us before you take a listing so we can give you the proper analysis of your situation and give you the proper paperwork to be fully prepared at your listing appointment. Effective and Efficient is our goal.


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...

The Great Approach-2012 Beckons

(Quote) We fatuously hoped that we might pluck from the human tragedy itself a consciousness of a common destiny which should bring its own healing, that we might extract from life's very misfortunes a power of cooperation which should be effective against them.

As we approach the end of the year it is important to look at where we came from. The housing crisis certainly did cause panic and chaos throughout the nation and forced us all to really look at our actions and our motives as to why we ended up here and how we would need to move forward stronger with awareness to prevent the same mistakes from occurring.

In 2012 there were a lot of efforts within the financial institutions to make short sales more favorable to a homeowner rather than just walk away from their properties and allow it to foreclose by offering large incentives and tightening up their systems to allow short sales to close faster making the process more effective and efficient. With the nationwide unemployment issue along with other hardships such as death, divorce and value depreciation; homeowners are still defaulting on their mortgages.

We have experienced low inventories this year which has made it difficult for buyers to get accepted offers however; I believe homeowners are holding off on making a decision to sell to see if the Mortgage Debt Relief Act will be extended into next year which will allow homeowners to be free from paying taxes on the cancellation of debt. I believe after elections we will see a lot more homeowners putting their homes on the market therefore bringing about more inventories. Thus far in 2012, we have seen a steady appreciation of home prices, and while next year will likely be a bit more volatile, the positive trend should continue but I also believe we are not completely out of the woods yet. It is my opinion that it will be another 3 years before we truly stop the bleeding.

What life lessons can we take from the debacle in the housing industry to make us stronger in 2013? Since most people’s wealth is tied to their house this is something we need to look at.
Don’t ever leverage yourself particularly just because everyone else is. You don’t have to keep up with the Jones’ just make sure that you are protected.

This leads into being comfortable in your own skin rather than relying on others or property values to keep your self- esteem up. Things can go down even when the experts tell you they cannot so do your own homework or find a trusted advisor that can help you. Don’t get sucked in by the sales person. Just because you lost your house it doesn’t mean that all is lost. There are billionaires that do not own a house as they do not want to be tied to one location.

There is freedom from a lack of possessions and the bills that come with it. Is the dream of owning a home your dream or is it because you have bought into the slogan “Americas Dream”? I encourage you to make your own decisions and stop pointing a finger at others for your lack of convictions.
If your health is good and you are emotionally strong then you are ahead of the rest regardless of whether you have the mansion or not. It has been my experience those who do own massive houses wish for the simple things in life. The more you have the more pressure there is too maintain it. I am not saying that you should not own a home. I am just saying that your motivation to buy should be pure in intent and not bite off more than you can chew. .

I have seen many people go through transitions this year. I have a friend who experienced a divorce which caused him to sell his house and then lost both of his parents in a year period. It is amazing to see his journey and his change of perspective. It certainly has made him very humble and appreciative of his life and what he has and he has walked through it all with grace and dignity. Though there is a sense of loss there is also compassion and understanding for others. When we are emptied of self that is when god’s grace comes in and gives us the opportunity to fill that emptiness with good choices, right action and respect for all humanity.

I have had my share of ups and downs this year and I can honestly say that at the time I felt defeated to some degree. I was forced to look at all of my points of character that led me into the unfavorable conditions I put myself into. What were my motivations? What drove me to want the things I had? Were they serving me? How could I be of better use to myself and others?

I am so grateful today for all of those experiences. I have softness in my heart today and a deep desire to help others whether it is helping a homeowner short sale their property or being a listening ear and a hand to hold when someone is in need of a friend.

Hardships, though they do not feel good and there are growing pains that come along with it, there are many hidden blessings that give us so much hope for the future and the ability to unite in love and compassion and blaze a trail for those still lost in the fire.

Let’s be that light and shine brighter than ever. What do we have to lose? Using our experience in hopes that others might be healed. What greater way to bounce back from adversity so that nothing that we go through in life is in vain.

I wish you all a wonderful holiday season filled with peace, love and light and Happy New Year.

Extra Tip

If you are a REALTOR submitting an offer on a short sale as your own personal property; the short sale lender may decide to NOT give a you a commission.


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...