How much do you know about your SHORT SALE?

OK... How much do you know about your short sale? If you have been selling any real estate lately, you know that short sales are common in every area and state of the market. From what the people who know are saying, we need to get used to short sales.

I was in a meeting today with a senior VP for Bank of America. The meeting was pretty generic in nature in that much of the content was the company line on the general short sale subjects. One topic discussed hits home on a variety of levels.

That topic was investor approvals. From the Realtor standpoint, we think how hard can it be? Get an offer, approve it, close it. I didn't know this but any loan could have multiple investors. It is not uncommon for a loan originator to sell different components of the loan to specialty investors.

The VP spoke of a scenerio of a first loan with 4 investors and a second loan with 3 investors. All different. All with a stake in the loan. Each has to agree on a settlement for a short sale to be approved. This explains why it takes so long in many cases to get an approval. It also explains why in many cases approval is not agreed to by the investors.

If you read my last blog, it spoke to the IndyMac/FDIC "arrangement" for shared loss in REO properties and how the investors have monetary incentives to foreclose instead of modify or agree to a short sale.

The question I had for the VP was.. "What is the obligation of the bank to disclose who the individual investors are in a short sale transaction to the borrower/agents/buyer?" The borrower has never been told who these investors are for the most part. Maybe some are in bankruptcy. Maybe some are in a situation where they don't want to report a loss in a particular quarter. Maybe some want the property because of some sweetheart deal with the FDIC.

The reply was... "A listing agent should have access to that information."

Ok, that doesn't really answer the question. I was asking what the disclosure threshold is on the bank's part. You know... Truth in Lending, all that. The question went unanswered.

Ok, what is my threshold for disclosure about individual investors to my clients? What is the threshold for the Seller's disclosure to the Buyer? What is the threshold for the Buyer's agent to the Buyer? Do we say... "The transaction isn't really a transaction until the bank approves it... well not really the bank... well yes, the bank, and... oh yeah... there are a couple, three investors who have to approve it too... But that is just for the first... the second... you get the idea..."

I asked my broker to check with legal. They hate me.

I wish I had the answers. I am wondering about the clients who come back to us at some point in the future and say... "You never told me about that... here is my attorney's name and number."

I don't want to make this into anything more than it is... So, what do you think? Let me know.

How much do you know about your short sale?

You can contact me via my website at www.bigmark.net You will find all kinds of interesting content there. Including the best search engine for civilians in the business. Search any listing in the MLS, even commercial listings and REO's.

Commercial Real Estate Market decline slows according to the NAR.

Being a hybrid realtor, working with commercial and residential clients, I've noticed a lot of similarities between the two markets.

With this latest decline, people are loosing their jobs, businesses are closing. Property values are declining, short sales are happening, and foreclosures have hit both markets. Many sources tell you that the worst is yet to come. There are significant numbers of mortgages in jeopardy.

As I'm proof reading this, I'm getting depressed. I have many friends and clients who are feeling the "pinch". But there may be some good news out there. We are hearing that the residential market may have hit bottom. Here is a press release from the National Association of Realtors that identifies some positive trends in the commercial market too. Check it out:

http://www.realtor.org/press_room/news_releases/2009/08/decline_slowing

It says the trend of decline in the commercial real estate market is slowing. That may or may not be a long term trend. I hear talk about commercial foreclosures around the corner.

If you have read any of my blogs in the past you may be able to guess what the theme of my comments will be... (I'll try to keep it short)

The commercial market has certainly been affected by the recession. Less in the economy means less jobs which means more businesses closing which means more vacancies which means less rent which means less ability to make mortgage payment which means investment portfolios are smaller which means... you get the idea.

One tool that the residential market has has some success with is loan modification.

I see loan mods helping the commercial markets as well. Work it from the bottom up... If a landlord can get a loan mod, they can negotiate with a tenant who may be having troubles to lower their rents which may help keep the business in operations which means jobs can be saved which means more cash in the economy. I think?? Or the banks can foreclose and become landlords, or try to sell investment properties in a down soft market. Which means... for another blog.

Let me know what you think...

Lender may need some help with processing Loan Mods

I spoke to a client yesterday that was trying to get a loan mod. He has been talking to his lender for months. He lost his job 6 mos. ago and has been unable to get a job since then. He's living on savings and has made all of his payments to date. He bought at the peak.

He has not heard from his lender for almost 60 days. He just found out through an account manager that the mod department had rejected his file and had failed to inform him. This all took place in June.

My advice was to re-apply for the loan mod. Since the federal guidelines with President Obama's Making Home Affordable program are out there for mods, his lender may have a better program now. I also told him that he may not have made the cut for eligability due to the volume of mod's. He wasn't into the "Red Zone" yet.

I saw this article this morning that gives an indication that the loan mod wave has saturated or even overwhelmed the lenders ability to keep pace with the requests for mods.

Read this article from PR Newswire reported in Forbes. It just goes to show that it may take persistance from the borrower to get the mod.

I think it also gives us a message for our clients and people who come to us for information. We need to tell them to keep at it...stay focused... and it may take some time to get the mod.

Here is the article:

http://www.forbes.com/feeds/prnewswire/2009/07/24/prnewswire200907240952PR_NEWS_USPR_____PH51495.html

Let me know what you think and if this helps you or any of your clients.

How to Keep Your Home and Avoid Foreclosure from Freddie Mac

If you have been following this blog, you have heard about this video from Freddie Mac. It is a resource for people in jeopardy of being foreclosed on. I have received quite a bit of feedback from my clients and other people who have seen it. The feedback is overwhelmingly positive.

That's why I've decided to post it again. Please take the time to view it yourself. But more importantly, share it with anyone you know who may benefit from this information.

Check it out:

If you'd like further information about foreclosures or any real estate subject, go to my website:

http://www.bigmark.net

Follow me on Twitter, check out YouTube videos, follow this blog, or download a real estate app for your smartphone. And as always, you can access the best real estate search engine for civilians in the industry at the Rockcliff "Gateway" or call me @ (925) 890-6400

More Content, More Places, Better Results!

Reasearch shows that as many as 25% of Foreclosures are from people who can afford their payments

Here is an interesting article from Market Watch. It says that as much as 25% of foreclosures are from people that can afford thier payments. Check this out:

http://www.marketwatch.com/story/why-those-who-can-pay-walk-away-from-mortgages?siteid=rss

Here are a few of my thoughts about the article.

With 25% of defaults are made by people that can "afford" their payments. These people are taking a calculated loss approach to their equity, credit, and housing. I can't say if they are right or wrong.

Many don't have another option. They can afford rent. Probably can sustain the hit to their credit for a few years too. Who knows there may be amnesty in the future.

Many banks are taking the Jessie James (of West Coast Chopper fame) approach with their customers. Jessie James has a "Pay Up Sucker" tatoo on the palm of his right hand.

Doesn't matter what the rate is. Doesn't matter what the property value is. Doesn't matter that the neighbor hasn't made a payment in 10 months and is still in the property.

Hopefully the federal TARP for loan mod programs will give these people another option. Get a loan mod to lower their loan balance and payment. The borrower stays in the house. The lender continues to get payments. No foreclosure, no further excessive devaluation of the property. The bank gets some relief.

Lenders currently offering voluntary loan mods to their customers are showing a much lower foreclosure rate that the JJ lenders. Many have learned throughout this process that it makes better scenes to mod than kicking the customer to the curb.

I have even seen commercial lenders in the market place trying this approach with heavily leveraged commercial property owner. Mod the rents, mod the payments, mod the loan. Again a more equitable solution than taking the property.

And a better use of federal funds than creating bigger government. (No offense to Jessie James)

What do you think?