San Jose Short Sale Agent: Silicon Valley Foreclosure Prevention Specialists

Excellent news for unemployed homeowners who may be carrying Freddie Mac mortgages.   Starting February 1, 2012, if you make prior arrangements with Freddie Mac through their servicers, there may be up to 12 months of forbearance.

Details below

Freddie Mac Now Permits Up to 12 Months Forbearance to Unemployed Borrowers – Jan 6, 2012

Here is an open letter from CAR’s president, Beth Peerce, discussing the need to get lawmakers and other involved parties to create a more standardized short sale process.  It is a good explanation of the challenges that stand in the way of getting a short sale approved.

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.  After all, they work for organizations that engage in semi-deceptive practices like dual track foreclosures.  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.

The two GSEs (Government Sponsored Enterprise) Fannie and Freddie Mac have tremendous impact on the housing industry.  Unfortunately, they also have in their portfolios, a lot of distressed loans where homeowners are severely under-water and do not know what to do.

They have attempted to deal with the situation by providing better options like short sales and deed in lieu programs.  As with any government programs, there is a lot of bureaucracy, so to streamline the process and have one website where the homeowners can obtain all of the options available for a Fannie Mae loan, the former has created this website.

www.knowyouroptions.com

It is a one stop shop to learn about all of your options if you have a Fannie Mae loan.

Freddie Mac still has not announced their own website, but these two organizations often operate in unison, so it would not be a big surprise to see it announce a similar website in the near future.

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.

Today, Fannie Mae announced how it would deal with strategic defaulters: they will be punished by being unable to qualify for a loan for up to 7 years through Fannie Mae and the latter will reserve the right to take legal action to recoup the losses in states that permit deficiency judgments (not the case in California).  The line has been drawn in the sand.

Strategic defaulters, or those borrowers who have the financial ability to pay their mortgages but who choose not to and walk away because the value of their homes are underwater, are becoming a big problem for banks as the stigma is becoming less and less meaningful and the distressed properties market is ever increasing.   One study puts strategic default at 1/3 of all defaults which eventually lead to foreclosures.

Fannie Mae is addressing a big problem for itself and trying to force strategic defaulters to think twice before walking away from their mortgage obligations.  It’s a perfectly understandable move on its part as it is trying to do potential future damage control.   This reason is also why it has agreed to participate in the HAFA program guideline to encourage negotiated and approved short sales rather than have homeowners simply walk away. Fannie Mae and Freddie Mac have figured out it is better to work with the distressed borrowers and, for those who qualify, work out an agreed short sale resolution rather than have the property foreclose, as the loss to them will be significantly greater in the end. They are simply engaging in good business practices by mitigating their loss.

For those of you who have been following HAFA, one thing that bothered most people was the fact that the large GSEs Fannie Mae and Freddie Mac were not participating in the HAFA program.  Well, as of June 1, that is no longer the case.  Both Fannie and Freddie have announced they will implement their own version of HAFA starting August 1, 2010. Like the private sector’s  HAFA program, the program will end on December 31, 2012.

However, some of the major differences offered by the new Fannie Mae and Freddie Mac HAFA programs include, but are not limited to:

- Both institutions will pay the servicer a $2,200 incentive fee for successful short sales
- Both institutions will pay the servicer a $1,500 incentive fee for all successful DILs
- The Deed for Lease (D4L) is available for borrowers who request and are approved to remain in the property following a successful DIL

The specific details on these programs are listed in their websites.  eFannieMae.com andFreddie Mac Bulletin.

What does this latest move mean?  It simply means that with the two large Government Sponsored Enterprises (GSE) now on board with HAFA, the short sale process and its effect on how the process will be handled in the future is now complete.  The days of lenders dragging their feet and making up their own rules on how short sales will be processed and approved is over now (theoretically, at least).  Everyone will have the same process by which to abide.