San Jose Short Sale Agent: Silicon Valley Foreclosure Prevention Specialists

It was a pleasant, beautiful sunny day today as the San Jose Short Sale Agent drove around previewing some homes while listening to some oldies on the radio.   It turned into a much nicer day when my client who was closing on his short sale today, invited me to lunch after he picked up his check for the $3000 relocation assistance check from his HAFA short sale.  He was so excited that the nightmare was ending, that he wanted to celebrate with me.

It a little over two months ago when he contacted me, feeling he was at the end of his ropes.  Chase had just informed him they were denying his request for a loan modification after dragging it out for months and the prospect of staying in his home was now up in the air.  But he had made up his mind.  He realized, despite his emotional attachment, he could no longer afford to keep the home.  He had to give it up and move on with his life and make a new life for him and his family.

In a little over two months, that same lender – Chase – was willing to allow him to sell his home for a loss, forgive him the deficiency, but on top of that gave him a check for $3,000 to help with the relocation to his new rental.   As we were discussing over  dim sum lunch, he was so happy and grateful that he is able to move forward without the burden of his mortgage, he seemed like a different man.  He was saying he could not sleep even last night, because he was concerned that something could go wrong and we would not be able record the deed and close escrow today.  He was going to sleep well tonight!   My client is now a friend and an evangelist on my behalf.

We were discussing why more people who are in similar situation as himself would not choose his route if they were unable to get loan modifications or otherwise afford to keep their homes.  We came to the conclusion it is probably due to lack of information.  If distressed homeowners knew that their income tax exemptions and the benefits of financial incentives from HAFA were ending soon, they would probably take decisive action as to prevent missing out on those valuable benefits.  He would tell his friends whom he knows are having difficulty paying their mortgages to take action.

Dear reader, if you or someone you know, are in a similar situation where you have come to the conclusion that you cannot afford to keep your home, but you cannot sell your home either because of the debt you owe to the banks, please take action soon and before this year is up.  Naturally, if you reside in the greaterSilicon Valley, I would love to help you so you can move forward with a new chapter in your life.

However, I am not saying you have to come to me necessarily; I respectfully and sincerely urge you to talk to someone who is an expert in the field of Short Sale  and get help soon before the two programs expire.   I think I would not be doing my job and my personal quest to help as many people fight foreclosures if I were not educating people about programs that are available; yet many people are not taking advantage due to lack of information.

Please talk to someone.  Indecision means you are making a decision to allow foreclosure to happen to you.

The word is getting around.  JP Morgan Chase and other large lenders are actively encouraging homeowners who are in distress and not able to make their mortgage payments by offering them incentives of up to $25,000 if they are successful in short selling their homes.  So far this has only been information from third parties and other sources whose clients were solicited by mail.   Today, I learned that one of my colleagues had a client reach out to him because Chase had wanted the borrower to do a Short Sale with a CDPE designated agent if they wanted to receive $25,000.   Silicon Valley Homeowners, if you receive this type of letter, you need to contact a CDPE designated short sale specialist like myself.

I need to point out that not everyone is automatically extended this offer.  You must be the recipient of a letter specifically offering you the money.     But one thing is certain: this is no joke, this is happening because the lenders like Chase have figured out that they can still make more money by permitting short sales to be completed than go into foreclosure.   Banks never do anything unless they can make money as the end result.

I got a chance to watch a couple of agents go at it with each other in a real estate forum trying to answer a question about doing short sales.   It was interesting, to say the least.  Besides the two main agents who proclaimed themselves the “experts” and hijacked the conversation, there were a few others who chimed in and made some comments.  But the question was never specifically answered.

The question posed was whether a lender will approve a short sale if the borrower had assets. He didn’t provide a lot of detail but wanted to either do a short sale or let his home go into foreclosure and he specifically asked not to get into a debate about the ethics in not paying his mortgage.

The argument or “discussion” in the forum quickly evolved into a big debate about the ethics of what people considered to be strategic default.  One expert proclaimed it was morally and ethically wrong to engage in strategic default and the lenders would not go for it. The other expert proclaimed morality and ethics had nothing to do with his decision and it was more about money.

As a San Jose Short Sale Agent, I tend to agree with the latter expert.  When you are dealing with short sales with lenders, the department you deal with is called Loss Mitigation.  Let me say it again:  Loss Mitigation.  Their job description is patently obvious: it is to mitigate or lessen the loss for the lenders.

Yes, there obviously are moral and ethical implications of not paying your mortgage when you have the financial ability to do so.   I firmly believe you should pay when you can and live up to your contractual obligations.  However, the question posed specifically asked not to judge the ethical implications but sought opinion as to whether a lender would agree to a short sale when the borrower stopped paying and was headed towards foreclosure.

There is no definite yes or no answer in these matters as the answer lies in the details.  It has a lot to do with how much assets the borrower has or does not have.  However, if the lender is faced between foreclosure and short sale, from my experience, the loss mitigation department chooses short sales over foreclosures.   At the end of the day, the primary decision will be about which method loses less money for the lenders, then, other factors like ethics and mortality can be entertained.

Why do you think big lenders like Chase and Wells Fargo are offering people up to $35,000 to do a short sale without even verifying their financial information?   HAFA recently amended its rules to state that servicers are no longer required to verify any financial information, but only to collect signed hardship letters.  Do these actions by large lenders and servicers sound like they are overly concerned about the ethical or moral issues surrounding foreclosures?

I can’t speak for other States, but in California, the recent changes in the law means if the lenders agree to permit a short sale, then the issues about deficiencies become null and void.  Once a short sale has been approved, the seller can walk away clean without looking over their shoulders.  Yet, another procedure that make completing a short sale more effective and efficient and preferable to foreclosure.  It’s all about money; if the institutions can make more money foreclosing, they will certainly choose that method, but everything recently is geared towards choosing short sales.  Yes, the lenders hate strategic defaulters, but they hate losing money even more.

So back to the question about would a lender approve a short sale if the borrower has assets?  It would depend on how much assets the borrower had and whether foreclosure would yield more money for the lender or a short sale.

We get all kinds of requests and questions about who can qualify for a short sale.

Many people, due to unforeseen hardships, are unable to make their mortgage payments are able to qualify and get the needed approvals.  However, because the short sales are becoming such a large part of  real estate transactions and all participants are trying to standardized the process through the  HAFA  program and because  HUD, a government agency,  oversees and encourages the utilization of short sales, not everyone will qualify.

Simply put, if you have been convicted of certain financial misconduct, most lenders who participate in the HAFA program cannot permit a short sale to be approved.

Below is the Dodd Frank Certification which is a part of the JP Morgan Chase’s  Short Sale package.    If you answer yes to any of these offenses, you are ineligible to receive any benefits that result from a short sale approval.

Dodd Frank certification

As the Robo-Signer scandal continues, PNC has stalled foreclosure efforts in 23 states and Bank of America has stopped their foreclosure efforts in all 50 States until further notice.

Granted that California is a non-judicial foreclosure state, but the impact of these possible fraudulent actions on the part of these lenders is reverberating throughout the entire  industry and may have implications for non-judicial states as well.    Questions continue to rise as to the validity of these lender practices and how many homeowners may have been negatively affected.   An institution like Bank of America would not be stopping foreclosures in all 50 states, unless their own attorneys discovered something questionable about their practice.   More regulatory scrutiny certainly will follow.

This saga is getting more interesting every day.

This is now the Third National lender to halt its judicial foreclosure efforts in 23 states.

It obviously was common practice among these national lenders to have the “Robo-Signers” sign off on judicial foreclosure documents without having personal knowledge about each case, as it is required in judicial foreclosures.  With each of these banks voluntarily stalling their foreclosures efforts, the question as to the veracity of those homes that were already foreclosed on within the past three years must necessarily be challenged.  This could possibly means thousands, if not, tens of thousands of foreclosures, depending on how many lenders in those 23 States used these Robo-Signers.

Attorney Generals of several States are demanding a moratorium on foreclosures.

This story definitely will continue on as more players either come out voluntarily or are forced out.  Stay tuned.

But the larger implication

This is the second national lender, in as many weeks recently, to stop their foreclosure efforts due to accusations its employees were signing foreclosure documents without personal verification of documents as required in these states in question.   It seems obvious, that in their zeal to foreclose on borrowers, they are cutting corners to expedite the process.  Unfortunately, this raises the questions as to how many properties that have already been foreclosed on had technical defects in their protocol.  Were those folks thrown out when they should not have been thrown out?

Local Attorney Generals are now involved and Congress will be looking into this to see the scope of these errors.  More to come, I’m sure………..

As people still struggle with unemployment and the financial distress associated with such hardship, the prime beneficiaries of TARP (bank bailout program) continue to benefit and even thrive at the expense of tax payers who help fund the program to help them out of their difficult situation in the first place. As a San Jose Short Sale Agent, I see how lending institutions deal with its customers on a daily basis, yet I am continually amazed at the means by which these gargantuan lending instituations  have benefitted during their time of need, yet when the individual home owner are struggling, rather than help, they pounce right on them and go for the jugular…..

Here is a ridiculous illustration of that point.   During this economic morass we are all enduring, city and county governments also suffer as a result of the individual home owner not being able to pay their property taxes.  Because we are treading on unchartered territories and local government is in desperate need of cash flow, some of them are now selling their delinquent tax bills to third party companies for cash.  [By the way, this is what these large banks are doing with their HELOC (home equity line of credit) and why they are now starting to play hard ball and refusing to sign off on short sales unless they are given the right to settle said deficiency after the closing.  They write off their loss, turn around and sell the right to collect to a collection agency for additional cash and walk away to let the collection agency deal with collecting the deficiency.  It’s a win-win for the banks because they are squeezing as much as they can out of the borrower  at the first bite level and letting someone else get a second bite at the borrower in exchange for a fee.]

These tax lien purchasing companies are not affiliated with, nor have any interest in the local communities, so they are pushing the local homeowners quicker into foreclosure by adding additional penalties and obscene interest rates, which the homeowners cannot afford, then forcing them into foreclosure to collect their debt from the proceeds of the sale.  All of this suffering and devastation over a very small percentage of the value of the property.

Think about this: it is not the lender that is owed the mortgage, nor even the lender which owns the line of credit, it is the third party entity that bought the rights to the delinquent tax bills that is forcing a homeowner into foreclosure over a few thousand dollars, which was inflated due to their horrendous interest and penalty charges…… What’s wrong with that picture??!!

The largest of these entities which buys and sells property tax liens, the one which is devastating Lucas County, Ohio and the one discussed in the New York Times article is called Plymouth Park Tax Services. Guess who is the parent company of this little known company?   JP Morgan Chase – perhaps the biggest beneficiary of TARP!

Thank God, Santa Clara County is not selling its tax liens to these companies.