LOAN MODIFICATION ATTORNEYS UNDER INVESTIGATION

Source: CALIFORNIA ASSOCIATION OF REALTORS

LOAN MODIFICATION ATTORNEYS UNDER INVESTIGATION

The State Bar of California has recently launched numerous investigations against attorneys for misconduct related to loan modifications. In a rare move, the State Bar has released the names of 16 attorneys under investigation, by opting to waive investigation confidentiality in favor of public protection. These attorneys have allegedly taken fees for promised services, but failed to perform those services or even communicate with their clients who face the possible loss of their homes. Their non-attorney staff may also be under investigation for unlawfully practicing law.

Not all attorneys engaged in loan modifications are unscrupulous. However, this announcement from the State Bar serves as a good reminder for REALTORS® and their clients to be careful when dealing with attorneys and others for loan modifications. Scam artists may intentionally associate or affiliate themselves with attorneys in an attempt to lend credence to their fraudulent schemes. The list of attorneys currently under investigation is available at http://calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=10144&n=96395.

Jeremy Smiley
Realtor, Short Sale Specialist
London Properties
(559)790-8760
www.JeremySmiley.com
www.FresnoBailOut.com

Important Info For Fresno Homeowners Considering a Short Sale – New Housing Crash Will Send Shadow Inventory Above 7 Million

Important information for Fresno homeowners thinking about a short sale.  It’s only going to get worse in the coming years according to the Wall Street Journal.  In a recent Wall Street Journal article , analysts from Amherst Securities projected a come back of over 7 million new foreclosures.

Source: Shortsellit.com

• Which is 5.5 x’s the amount as in 2005.

The causes range from failed Loan Modifications, Legal wrangling, re-defaults of loan mods, bank practices and moratoriums.  What this means:

• National home prices drop another 6 – 13 %
• Higher in the hard hit states of California, Florida, Nevada and Arizona

Why is their a “Shadow Inventory“?

• Banks are unwilling to take on the added expense of additional foreclosures.  The cost of repairing, marketing and upkeep is too great. It is cheaper to keep “non- performing borrowers” in the properties.
• Banks are offering “Loan Modifications” in lieu of foreclosures however, as most of us are aware, they often fail as a result of the property being upside down in equity and the higher payments associated with the initial loan modification.  A modest change in a mortgage rate is not enough to impact the monthly payment. And as in most cases, lenders are not offering reductions in mortgage principles.

Another interesting fact is due to this “swell” in inventory, banks, which will traditionally bid on these properties at the “courthouse steps” are no longer bidding, allowing for deep discounts to able investors.

• According to ForeclosureRadar.com, 19%of all homes sold in California trustee sales in August were to investors and not lenders…a 500% increase in the past year.

So, what does this all mean…we’re faced with a “tsunami” of foreclosed homes that will undoubtedly affect the price of your and your neighbor’s home.

No matter how the televisions pundits spin this mess…we’re facing a continued catastrophic upheaval in the housing industry.

As a real estate agent, don’t be panicked…get to know your “short sale” process…it’s the banks most favorable alternative. Short sales bring an additional 25 to 40% more to the banks bottom line than a foreclosure or “deed in lieu.

Six steps to take before agreeing to a short sale of a home

Source: 7Online

Although some economic indicators hint that the U.S. economy is moving toward a recovery, home values are still suffering from a serious economic hangover. Many home owners are putting off a sale until prices recover. But some owners must sell immediately, even at a loss. Selling a home for less than the debt on the loan — called a “short sale” — is not desirable, but sometimes it is necessary for those who face major financial hardship.

While things may be improving — one August report indicated that 80 percent of real estate markets increased in median home value — a separate July report found that home values are down 21 percent from their peak in the second quarter of 2006. However, July was the sixth consecutive month that the decline in national home values lessened.

Lower home values mean that many home owners are “upside down” in their mortgages, meaning they owe more on a mortgage than the home is now worth. This is especially true in the current real estate market, because low down payments and cash-out refinance deals were the norm in the past decade.

If you are facing a possible short sale, consider these points:

1) Know what qualifies for a short sale

Several factors make a home a candidate for a short sale. Typically these are a general drop in home values (such as has happened in many markets recently), a mortgage that is near default status, or a home owner who is unable to pay due to hard times.

2) Find the right real estate agent

The short-sale process is specialized. Lenders have stringent requirements and might ask agents to take a lower-than-standard commission. Look for agents with experience.

3) Talk to the lender

If your home is worth less than the mortgage amount, you will need special permission from the lender to sell the home at a loss for its current value. If the sale stems from financial hardship, you will need to prepare a hardship letter explaining why you need to sell. Remember that some lenders will be open to the possibility of a short sale to avoid the alternative of foreclosure. If you are a good borrower hit by bad times, make sure to communicate this effectively to the lender.

4) Understand tax consequences

In some cases, a lender forgives the difference between what is owed and the selling price. Lenders can classify that forgiven debt as income to you, which means that you would be required to pay income tax on the amount. However, the Mortgage Forgiveness Debt Relief Act of 2007 allows some home owners to exclude that income. This exclusion primarily applies to those whose home was foreclosed on or who had debt forgiven as part of a loan restructuring. Individuals who are truly insolvent (total liabilities are greater than total assets) also can file IRS Form 982 declaring the insolvency to have the tax waived. To learn whether you qualify, consult a licensed tax advisor.

5) Know it will impact credit

A short sale is recorded on a credit report as a pre-foreclosure proceeding. As such, it will damage credit scores. Still, it may be the best alternative for some homeowners.

6) Consider alternatives

If paying the mortgage is the problem — rather than a desire to sell — you might have options. Some lenders will consider a loan modification, which seeks a permanent change to the loan, such as lowering the payment and extending the loan’s term, or rolling delinquencies into future pay­ments. Government programs such as Hope for Homeowners also fall into this category. Another option is a “deed in lieu” of foreclosure, which essentially allows the borrower to return the title or deed of the property — giving the home back — to the mortgage holder to avoid foreclosure. The borrower forfeits equity in the property, but avoids a foreclosure on his or her credit record.

Short sales are hard facts of life following a serious real estate downturn like the one our nation has undergone. Do your homework before agreeing to a short sale. Becoming a knowledgeable seller will help make the process as painless as possible.

Fannie Mae Wants Short Sale Borrowers to Own Again

The first two question I always get when meeting with home owners trying to make the decision to short sale are;  “How will a short sale affect my credit?” …and “When will I be able to buy another home?” When it comes to when they can buy another home, you should know that Fannie Mae wants homeowners who short sale to own another home sooner rather than later.

Fannie Mae wants short sale borrowers to own again.  How I know this? Borrowers who short sale may be considered for any type of loan program without restrictions in as little as 18-24 months from the short sale close date.  This is a significantly shorter time-period and less restrictive than their requirements of borrowers who choose the deed in lieu option or allow the property to go to foreclosure.

Those that allow their home to go to foreclosure must wait a minimum of 5-7 years before being considered.  Only loans for a primary residence are considered and they will be required  to make a sizeable down-payment and must have a strong credit score.

There is an underlying message here:  If Fannie Mae will loan to a borrower who took the short sale option faster and with less rules than those that choose foreclosure, then Fannie Mae WANTS HOMEOWNERS TO SHORT SALE.  Wouldn’t you read it that way?

The irony is that servicers of Fannie Mae loans are exceedingly slow at processing Fannie Mae short sales.  Fannie Mae needs to force servicers to become more efficient in their review of short sales.  Their lack of restrictions on servicers is not on the same page as their obvious approval of the short sale option.
[Based upon information released by Fannie Mae in 08]

California Governor Signs Important Short Sale Bill

The California Senate passed SB306 today…Expediting the Short Sale process

So the question is “what does this means to home owners and the Short Sale process.

1. If the Realtor is working with an escrow officer who has prepared a HUD1 the Lenders or Service Companies must either deny a Short Sale offer in 4 days from receiving the offer or it is assumed to be “accepted.”
2. Lenders and Service Companies doing business in the State of California are mandated to respond to a Short Sale offer in 21 days.

This is great news, because one of the major strikes against the Short Sale is the time it takes to process…often time upwards of 120+ Days.

I have been anticipating that Government needed to get involved in the Short Sale practice as it is becoming more the mainstay in the state of California as with many other states.

I’m not sure next steps however; it is a step in the right direction.

Jeremy Smiley
Realtor
Certified Short Sale Specialist
London Properties
(559)790-8760

CA’s Foreclosure Moratorium Has Ended — Now What?

Source: LBPost.com

California’s moratorium on foreclosures ends today.

The thought strikes fear in those in real estate, perhaps more so for the mystery it holds than for the threat of a flood of foreclosures swamping the market. “It’s hard to predict,” said Allison Van Wig, a Keller Williams Realty agent who moderated a panel Monday at the Long Beach/South Bay Chapter of the Women’s Council of Realtors leadership luncheon.

The California Foreclosure Prevention Act, which established a 90-day moratorium on foreclosure that went into effect June 15, ends today. RealtyTrac’s report for August shows foreclosure activity is down from the same time last year—9% from a year ago and 15% from the previous month—but the question is: are they going to be up in September and months following, now that the moratorium’s up? That’s what happened earlier this year after the federal government’s moratorium on foreclosures came to an end.

For the most part, panelists at Monday’s real estate event expressed concern, mixed with a hint of optimism, about the end of the moratorium, and they offered their thoughts on general market conditions to a crowd of more than 100 professionals from the industry gathered at The Grand in Long Beach.

Richard Daskam, another Keller Williams agent, noted that he reads legal notice advertisements in the Long Beach Press-Telegram daily to keep tabs on trustee notices of foreclosure sales. What Daskam’s seen is a surge in notices in the 90808 and the 90815 ZIP codes. He recently conducted an online foreclosure search in which little bubbles pop up with addresses in locations where a foreclosure can be found in affordable areas, like Hawaiian Gardens, South Gate and Compton. “There were so many bubbles that you couldn’t even see the streets,” Daskam said.

Marna Brennan, with First Team Real Estate, is hopeful banks won’t start foreclosing following the end of the moratorium and then hurriedly sell of properties once they own them. “I’ve heard the banks are going to pace the number of (real estate owned properties) they put back on the market,” she said.

Fellow panelist John Dumke, with Keller Williams, said he doesn’t believe the end of the moratorium will “to be a big impact on neighborhoods.” In nicer areas, you have true buyers looking for their ideal homes, and in more undesirable areas you have “repos dictating values.”

On a brighter note, panelists say that in-spite of the hard-to-predict impact the end of the foreclosure moratorium will have on Southern California, we have reached bottom and the market will be on the way up sometime in the near future.

“Obviously I’d say the market’s not going down,” said Dumke, who noted in the Los Altos neighborhood of Long Beach that the housing supply has dwindled to a meager one to one-and-a-half-months. Such short supply is putting upward pressure on pricing, he said, adding, “I’d say we’ve seen prices come up $20,000 to $40,000.”

Daskam agreed. “I’d say we’re at the bottom of the pendulum. It doesn’t matter now when you buy, as long as you buy before prices start going up quickly the other way.”