San Jose Short Sale Agent: Silicon Valley Foreclosure Prevention Specialists

Here is an interesting article about how the BBB (Better Business Bureau) rated the major loan servicing companies which handle loan modification and short sales.  It’s was an interesting read for me because I was having a lot of difficulties recently with Chase, they have been ruthless and unreasonable in their demands, especially when they are in junior positions.  It used to be that Bank of America was the bank that everyone doing short sales bad mouthed; but my feeling was Chase was getting up there.

I was far from surprised to discover that Chase had received an “F”  from the consumers who were dealing with them.  The interesting fact is that Bank of America, which used to be at the bottom has now received an “A+”!  I can attest to this change  as well, because with the implementation of Equator into their short sale business and with their executive, Matt Vernon’s, committment to change the way they approached short sales,  their level or service and the speed with which they handle matters have changed  180 degrees.   They are one of the best to work with right now.

Another interesting point that the article tackles is the bait and switch loan mods that we are beginning to hear about.  Homeowners being strung out for months on these “temporary modifications” and while waiting (and paying) getting foreclosed on without notice.  At first, these instances sounded like anomalies, but the frequency of these instances is increasing; thereby indicating some sort of concerted effort rather than mere fluke incidents.

See what grade your loan servicer received.

http://www.shamethebanks.org/jorge/bbb-f-grades-to-chase-litton-ocwen

I get upset when people don’t try their best.  I realize everyone is different and has different personalities, but we, as Realtors, are all in the business of representing the best interests of our clients.  As Realtors, we have a fiduciary duty to our clients: this means we are to put client’s interest ahead of our own.  We must do our best for our clients.  I’ve heard too many Realtors cave into the lenders without putting up much of a fight.

With the economy still in its anemic state and unemployment level still hovering near historic high of 10% (11.5% here in Silicon Valley), the prospect of depleting the inventory of distressed properties in the immediate future does not seem feasible.  The high level of unemployment and implementation of HAFA with the support of Fannie Mae and Freddie Mac means the next few years will be busy years for short sale.

If, you therefore, choose to make a living helping distressed homeowners fight foreclosures, then by all means go out and fight for them because they need all the assistance you can provide.  This often time means pushing on even when the lenders say no or put up road blocks in your path.  The negotiators working for lenders are not highly compensated and are often over-worked, so they simply do not care and are often willing to send homeowners into foreclosure because of minor technicalities.  Some will help out homeowners by going out of their way to help your clients, most will not.  It’s the nature of the bureaucratic systems in which they work.  It doesn’t mean they are bad people, it just means there is little or no incentive for them to go out beyond what is expected of them.  So it is up to us, the Realtors to step up and earn our commissions.

As a San Jose Short Sale Agent, I recently received a call from an attorney friend of mine who wanted me to help his client because the East Coast lender/servicer denied their loan modification request and would not agree to extend a trustee sale which was scheduled some three weeks out.   He got tired of dealing with this lender and wanted to know if I could get the sale date extended and complete a short sale.  Three weeks to stop a foreclosure was a tall order, but I thought I could help.

Getting a bona fide buyer took longer than I anticipated and we had only one week left before the scheduled trustee sale.  I immediately contacted the lender to advise them we had a solid offer and that I had just submitted a short sale packet.  The curt response I got was that their investor had a policy not to extend Trustee sales unless the short sale packets were submitted at least 10 days prior to the sale date: I was three days too late. She would not even consider looking at the offer or the packet. 

I had worked too hard during the past two weeks to simply be told that due to some arbitrary deadline; my clients were going to be thrown out in the street when we had a perfectly good buyer wanting to purchase their home.   I escalated the matter to the negotiator’s supervisor.  She simply reiterated their investor’s policy and told me there was nothing she could do.  I wasn’t going to be stopped by these bureaucrats who didn’t want to lift a finger.  I searched the internet and found the Corporate Communication Director’s contact information.  This time, I was going to use my ace card: my client’s hardship was his wife’s cancer. While she was receiving treatment, she eventually lost her job and the second income which was required to meet their mortgage obligations.

By the time I got the number and the email address (they are in the East Coast), the office was closed, but I left a voicemail and sent an email explaining my situation and that I would contact the local media and explain that the big East Coast lender, because of an arbitrary deadline and because it was inconvenient, would rather throw a cancer victim out into the street, even where there is a willing bona fide buyer, because we missed an arbitrary deadline by three days!   I was not going to let my clients get thrown out into the streets when we had a willing buyer.

The following afternoon, I got a call from the executive office.   They were more receptive and cooperative then the loss mitigation department employees.  The helpful woman said she would get in touch with the appropriate person at the loss mitigation department and do everything she could to get an extension on the sale date.

The next day, I got a call from someone who was a VP at loss mitigation, she began to tell me that the sale date could not be extended because it was the investor’s policy and therefore, they could not deviate from it and began to tell me all the reasons why her hands were tied.  This was a completely different response than the woman from the executive office.

I wasn’t going to simply accept her explanation, I simply would not accept that they had zero influence in extending the trustee sale; I didn’t fall off a turnip truck yesterday.  I called the executive office and again threatened to call the local consumer affairs reporter.  This time the helpful lady told me to disregard what I was told by the loss mitigation employee because she was going to pull strings and get it done.  She asked me to trust her and to call the attorney service the next day and confirm for myself that the extension was granted.  I had no choice as we were down to four days before the sale date.  I called the attorney service the next morning and got the news I was waiting for: we received a 60 days extension.

Between the attorney friend and myself, we were told on four different occasions that the trustee sale could not be extended.  They were simply refusing to lift their fingers to help out the borrower.  I had no choice but to refuse to accept their answers because doing so  would mean that my clients would literally be thrown out into the street when we had a willing buyer to take their home.   I was not proud of exploiting my client’s cancer condition, but I had to protect their interest by any means necessary.  In the end we persevered because I refused to listen to them when they told me no.   I guess I am hard headed in that way; but my clients are thankful and that is good enough for me.

Once again, with poor economic forecast and what I consider to be the twin pillars of  real estate distress (unemployment and negative equity) continuing to remain problematic in most of the country; and the Federal Government’s HAFA program being encouraged for those who cannot qualify for loan modifications, we should hardly be surprised that Short Sales are increasing in popularity in California and the rest of the country.   It simply makes financial sense for a lot of homeowners, lenders and investors at the moment.

What we have learned from the article below is that short sale transactions have tripled since 2008 and California accounts for about 25% of all short sales in the nation. Until we eliminate these distressed properties from competing in the marketplace with normal, non-distressed properties, we cannot expect the housing sector to come out of its current funk.

We all wait with hopeful anticipation of positive long term housing news which seem to elude us in favor of uncertain or often times confusing short terms trends.   Depending on the day of the week, we can get information that we are heading in the right direction or in the wrong direction. No one can predict with any amount of certainty whether we are out of the housing slump or not.

As I have said over and over, like a broken record, until and unless we can address the unemployment issue, the housing sector will not come out its current mess. Those people who are out of a job are more willing to give up their homes and those who have jobs are afraid of being laid off and will not consider buying a new home or moving up to larger homes.  So we have a situation where the unemployed are unloading properties, but the employed who can afford to buy are too afraid to buy.   It’s a sticky mess we are in.   Unfortunately, add to that the issue of  what many call the shadow inventory, and we are looking at many years out into the future where distressed properties will continue to affect the real estate space in a negative manner.

Yes, Short Sales will continue to soar in California, but that is not necessarily good news.

http://www.latimes.com/business/la-fi-short-sales-20100811,0,7193924.story

The increase in short sales is self-evident in any MLS system around the country as the number of homeowners who are unable to qualify for loan modifications and do not want to be forced into foreclosures seek out a better alternative.  Foreclosure or short sale?  The choice is obvious.

Freddie Mac CEO Ed Haldeman announced the number of its short sales increase by 600% from 2008!  An increase was certainly obvious, but 600%?   And with HAFA still ramping up, that number is sure to increase in the near future.

In a statement put out this week, Haldeman said Freddie Mac is doing everything it can to prevent more foreclosures, and that short sales are becoming an ever-popular tool in situations where foreclosure is imminent and modifications have failed.

The rationale behind this increase in foreclosure is, again, obvious for distressed homeowners.

“Foreclosure alternatives like short sales and deeds-in-lieu help borrowers to avoid the stigma of foreclosure, shorten the waiting period before they can buy a new home, and may inflict less damage on their credit reports,” Haldeman said.

He added that these alternatives are also helpful to lenders and insurers. Citing several independent studies, Haldeman said banks lose more than $50,000 per foreclosed home or as much as 30-to-60% of the outstanding mortgage.

You don’t need media reports like these to know that short sales are increasing dramatically, just ask your local realtor who handles a lot of short sales whether their short sale volume is increasing.

Why would banks agree to a short sale when they know they are going to be losing money?  This is the question I get posed to me frequently.  My answer: it costs them less money than to foreclose on a property; lenders’ primary responsibility is to mitigate their losses. Once we understand that, then the concept of a short sale is really not a mystery.

When you speak with short sale negotiators and other people in the industry, it is common knowledge that banks make more money when the sale is completed through a short sale, rather than permitting a property to go into foreclosure.  This was the unspoken truth that everyone acknowledged but no lender published any data to support or deny these truths.  Not having published data can be problematic for bloggers, as  postings are much more credible when there is data to support your contentions, rather than anecdotal evidence.

Today, for the first time, I discovered published data which sheds light into the true disparity between homes that are disposed as short sales vs. those disposed as REOs after returning to the lenders after foreclosures.    Short Sales net the banks between 13-26% more than REO sales according to Clayton Holdings after conducting a 6 month survey conducted between October 2009 – March 2010. (I’ve heard some higher numbers from other industry insiders).

13-26% is a nice tidy bag of cash for the lender holding those underwater mortgages; fantastic job of mitigating their loss.   And people still wonder why short sales are approved.

The announcement of HAFA in April was supposed to change the way we do our business for those of us who do a lot of short sales.  Not because it was supposed to revolutionize the way short sales were done, but because it was going to be the Federal Government stepping in and trying to standardize the process of how to complete a short sale.  In the lawless world of short sales, that was like a cool breeze on a hot sticky day: very much welcomed.

Many naysayers poo poo’ed the program, saying it was never going to fly and that lenders would not abide by the terms because it was not in their favor.  But you know, there always will be naysayers whose job it is to simply criticize any new idea that comes along which challenges the status quo.

Yes, there are still glitches in the system and many employees of banks do not understand or have not been trained in HAFA and we get to deal with a high percentage of them who are not helpful.  However, an announcement made last night will resonate and have long term impact on the dynamics of the distressed properties marketplace, in my opinion.

Matt Vernon, the executive in charge of short sales and REOs at Bank of America (BofA) announced that institution will now focus on short sales to liquidate their assets before they get into foreclosure.  “We’re going to do everything possible to liquidate property prior to foreclosure,” Vernon said. “REO will still be available, but we will do everything we can to do short sales.”   This is wonderful news for consumers as their underwater properties can be disposed of without having to be forced into foreclosure and devastating their credits.  This is also good for banks because industry surveys have shown that nets proceeds to banks are significantly higher when short sales are utilized as compared to REOs.  BofA is of course is still in the business of making money and has chosen a profitable method, but this method also benefits the homeowners as well. And with all of the loan modifications applications out there, and the unfortunate reality is that a large percentage of those loan modifications will default and end up on the foreclosure circuit.

Mr. Vernon has spoken previously and have been pushing for the notion of short sales taking a more prominent role at BofA. BofA was suffering  from backlash on their Loan Origination business as a consequence of them developing a notorious reputation in the short community as being difficult to work with.  This move will be followed by other banks in my opinion, like airlines follow and match fares when one major player comes out and takes a stand.

HAFA may not have lived up to the expectation people had about its efficacy in making  short sales easier to handle or process, but what it has done is provided an environment where a big player like BofA can come out and concentrate on short sales as a major tool to unload their real estate portfolio.  This move on the part of BofA has now pushed short sales out of the niche market and pushed it into the mainstream, making it easier for consumers to get short sale approval, and hopefully quicker too. Now here is truly a win-win solution for all involved parties.

It has been a little over a month since the long awaited HAFA program was rolled out.   Most larger institutions and loan servicing companies have signed on to voluntarily participate in the program.  It is truly a win-win for both the lenders and the borrowers.

One of the biggest benefits of a HAFA approved short sale is the cash contribution component to the homeowners for their moving expenses.  This was commonly called Cash for Keys in the REO world, and now it is available to the short sale world as well.

Here is a fantastic valued Townhome in Fremont.  It is truly close to everything.  Shopping, Lake Elizabeth Park and Freeway.

I wrote a series about HAFA and the what it means to the distressed homeowner.

However, people have been asking to see some “official” details in writing.

So here it is.  Here is the  Making Home Affordable Progams’ letter which it will send out to distressed Home Owners who do not qualify for loan modifications.    It breaks down the program down into the Who, What and the Whys.