The foreclosure mess isn’t going away
The foreclosure mess isn’t going away
By Mantas Raulickis and LV-REO TEAM
Las Vegas Short Sales
You have heared about how big banks cut corners on paperwork over the last few years in order to speed struggling homeowners into foreclosure. And a “60 Minutes” report that aired last night offers fresh anecdotal reporting on just how irresponsible–and potentially fraudulent–the banks’ practices were. Meanwhile, compelling video of a grandmother being evicted from her home by a SWAT team last week suggests the banks aren’t slowing down their rush to foreclosure and eviction.
Banks profit by processing a vast number of homes into foreclosure as quickly as possible. But as “60 Minutes” details, many of the mortgages at issue were bundled and sold from one Wall Street investor to another during the housing boom, with scant attention paid among financial players to the actual underlying ownership documents. And as the foreclosures unwind in a slew of court proceedings nationwide, many banks have produced dubiously rendered legal documents that seek to shore up the ownership paperwork long after the original mortgage transactions were on the books. In some cases, financial institutions paid contract companies who employed an army of “robo-signers”—office workers who forged signatures on mortgage documents that were then used to initiate foreclosures.
You can watch the full 14-minute report here:
Scott Pelley of “60 Minutes” spoke with one former robo-signer, Chris Pendley, a man who had been paid to sign the name “Linda Green” thousands of times over the course of an average workday on mortgage documents.
There was an actual Linda Green, Pendley discovered, but she was no bank president either; she is a former shipping clerk for an auto parts store who was also hired on as a robo-signer at Docx. One plaintiff in a pending lawsuit discovered that Green is named as a vice president for 20 different banks in different mortgage documents, all bearing strikingly different renditions of her signature. She didn’t agree to an on-camera interview, but she told Pelley that the company selected her name because it was short and easy to sign rapidly on the doctored ownership documents.
All 50 state attorneys general are currently conducting an investigation into the foreclosure mess–including cases that involve forged documents like these. And Shelia Bair, head of the Federal Deposit Insurance Corporation, told CBS she thinks the banks should have to pay billions to set up a compensation fund for those who are being forced to accept foreclosure without proper documentation.
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GMAC Short Sale Approval Letters – DEFICIENCY WAIVED
GMAC Short Sale Approval Letters – DEFICIENCY WAIVED
By Mantas Raulickis and LV-REO TEAM
Las Vegas Short Sales
We just closed another GMAC short sale. This property had one mortgage with GMAC. GMAC is one of the easiest banks to work with in my opinion. So far I have never had any issues with GMAC short sale in terms of getting the debt forgiven. However, we do know that the decision is ultimately made by the investor. Here in this case, the investor who I will keep anonymous never forgives any debt but rather releases the liens only. I have been told my the negotiator couple investors who do this with all their short sales. If you have a similar experience, call me and we can compare notes. Here’s some facts concerning this short sale:
1. Approval timeframe: 45 calender days
Most GMAC short sales take little over a month and sometimes up to 2 months depending on the situation.
2. Amount Forgiven
In this case, the loan is not being forgiven but GMAC or the investor is dealing with ~150k loss.
3. Hardship reason is loss of income.
Here’s the GMAC first mortgage short sale or lien release letter.
GMAC along with Bank of America are using equator to facilitate their short sales. If you have a mortgage with GMAC and you are considering a short sale, feel free to call me at 702-588-6868. Or you can email me here. I have been involved in more than dozen GMAC / Homecomings short sales and I know their system very well.
Las Vegas Short Sales
Bank of America Short Sale – DEFICIENCY WAIVED!
Las Vegas Short Sales
Bank of America Short Sale Approval Letter Changes
BANK OF AMERICA SHORT SALE APPROVAL LETTER CHANGES
- Las Vegas Short Sales
You may have been reading about Bank of America short sale approval letters and some changes that have occurred. The Bank of America Short Sale Approval Letter has had various versions dealing with deficiency of the promissory note. This article will look at the BofA short sale letter recent changes.
Short Sale Approval Letter After August 2010
Beginning in late August 2010 (so I have read) the BofA letter language was material changed. The new form used language that states, “Upon receipt of the agreed amount, BAC Home Loans Servicing, LP, and/or its investors will waive the remaining balance due on the above referenced loan and release the borrower from further obligation therein, and waive all rights to pursue further judgment or deficiency. BAC Home Loans Servicing, LP will report the debt as “settled for less than the amount owed” and issue a 1099 for the remaining balance.” Now I have my hands on just such a letter.
Here is the post August 2010 BofA Short Sale Approval Letter:
Please realize that currently BofA is using both letters, depending on numerous factors not all of which anyone outside (and probably inside) BofA can recite with certainty. In fact you can see that these letters were both received in first 2 weeks of November.
The question comes up when does BofA issue one letter or the other?? My first thought would be that the primary residence got the waiver language. Wrong! This was an investment property and the seller has multiple properties. As you may or may not know, BOFA is usually not the investor who owns the promissory note and mortgage – but BoA is the servicer and given the authority to negotiate the terms of the short sale, subject to final approval by the investor. That is why different lenders have BofA issue different terms for their short sale approvals, whether it be a contribution of cash to the short sale, or a post closing promissory note, or a residual deficiency option.
Las Vegas existing-home sales fall; median price at $115,000
Las Vegas existing-home sales fall; median price at $115,000
February 27th, 2001 By Mantas Raulickis & LV-REO TEAM
The Las Vegas housing market started this year with sluggish sales and lower prices, although new-home prices rose 2.8 percent, Home Builders Research reported Thursday.
Las Vegas Short Sales, Short Sales Las Vegas
The firm counted 232 new-home sales in January, eight fewer than the same month a year ago, at a median price of $208,145, an increase of $5,693 from a year ago.
Consumer sentiment appears to be on the upswing, judging by the dramatic increase in traffic through new-home subdivisions in the last two weeks, housing analyst Dennis Smith of Home Builders Research said. Several builders held grand openings showing off new floor plans.
“What that indicates is consumers want to see some new and innovative product because they haven’t seen that much new,” he said.
Builders have backed off during the downturn, pulling just 232 new-home building permits in January. That number is expected to rise in the coming months as builders gear up for the spring selling season, Smith said.
Existing-home sales dipped slightly to 3,098, compared with 3,111 in January 2010, Home Builders Research reported. The median price fell by $10,000, or 8 percent, to $115,000. The price had been ranging from $119,000 to $126,000 for the past 19 months.
The drop in January’s median price bears watching as it could be an indication of further price declines in Las Vegas. Some national reports are projecting home prices will fall another 10 percent to 15 percent this year.
That would take the Las Vegas resale median down to about $103,500.
“It wouldn’t stay there long as investors would flood our city snatching up homes and flipping some while others would enter the rental pool,” Smith said. “We’re already getting investors, but I know investors that are sitting on their wallets waiting for the lowest prices they’ve ever seen. They want to feel comfortable they’re getting the best prices they can get.”
For prices to drop that dramatically, Fannie Mae and Freddie Mac would have to begin dumping their local inventories, the analyst said. He does expect to see a rise in bank-owned homes sold at auction.
“Reports of the overwhelming supply of shadow inventory homes we have all heard about for the last two years may begin to slowly materialize in 2011,” Smith said.
Las Vegas-based SalesTraq reported a median resale price of $109,000, a 9.2 percent decrease from a year ago and the lowest median since 1991. The firm showed a 3 percent increase in existing-home closings to 3,785 in January.
New-home sales fell 15.3 percent to 233, while the median price rose 3.1 percent to $208,145, according to SalesTraq.
Short sales , or lender-approved sales of homes for less than the principal mortgage balance, are starting to force a change in the Las Vegas housing market, SalesTraq President Larry Murphy said.
They accounted for 20 percent of January sales and commanded a median price of $120,000, higher than even nondistressed properties ($110,000).
Given that 70 percent of Las Vegas home mortgages are “underwater,” this may be a signal that there could be a significantly higher proportion of short sales in the future, Murphy said. That would be an impetus to push prices higher.
Nearly 8 percent of Clark County homes had received a notice of default in January. Although that’s considerably less than last year’s 20 percent, Murphy said he still sees a significant number of foreclosures hitting Las Vegas in the near term. Still, given the nature of the Las Vegas economy, he expects to see a higher proportion of short sales later in the year.
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New HAFA Guidelines Effective Feb. 1, 2011
New HAFA Guidelines Effective Feb. 1, 2011
February 26th, 2011 by MANTAS RAULICKIS & LV-REO TEAM
The Obama Administration’s HAFA short sale program has been in effect since April 5, 2010 and was created in an attempt to encourage lenders to do short sales and prevent homes from going to foreclosure.
Las Vegas Short Sales
Since its inception, however, only 661 HAFA short sales have been completed nationwide – a fraction of the number the Treasury Department and the Obama Administration had hoped for.
Effective February 1, 2011, the federal HAFA short sale guidelines will be amended in an effort to include more borrowers in the HAFA program and therefore reduce the number of homes in the United States that will go to foreclosure.
HAFA or Home Affordable Foreclosure Alternatives program is a joint government & lender program which allocates both a $3,000 incentive for borrowers who complete a successful short sale, as well as up to $6,000 to go to the 2nd lien holder in the short sale. It also specifies that the 2nd lender will not pursue a deficiency against the borrower.
The primary change in the HAFA program is the elimination of the debt to income hardship requirement for borrowers. Previously, in order to qualify for a HAFA short sale, the mortgage payment on the first mortgage had to exceed 31% of the seller’s gross monthly income.
This financial hardship requirement has now been removed, so sellers who wish to do a HAFA short sale will no longer need to meet any arbitrary income or financial hardship ratio, which should dramatically broaden the spectrum of borrowers who will qualify for the HAFA short sale program.
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New HAFA Guidelines – Answers To Frequenty Asked Questions
New HAFA Guidelines – Answers To Frequently Asked Questions
Here are NAR’s FAQ’s for you to better understand what these guidelines REALLY mean for us, and our Buyer and Seller Clients. Way to go, NAR!!!
The guidance and forms released on November 30 do not apply to loans owned or guaranteed by Fannie Mae or Freddie Mac. Those enterprises will issue their own HAFA guidance and forms.
Las Vegas Short Sakes
Principal residence.
First lien originated before 2009.
Mortgage delinquent or default is reasonably foreseeable.
Unpaid principal balance no more than $729,750 (higher limits for 2 to 4 unit dwellings).
Borrower’s total monthly payment exceeds 31% of gross income.
Short Sale Agreement (SSA). The servicer will send this to the borrower after determining the borrower is interested in a short sale and the property qualifies. It informs the borrower how the program works and the conditions that apply.
Alternative RASS. If the borrower already has an executed sales contract and asks the servicer to approve it before an SSA is executed, the Alternative RASS is used instead. The Servicer must still consider the borrower for a loan modification.
Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
Uses borrower financial and hardship information already collected in connection with consideration of a loan modification under HAMP.
Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).
Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
Uses standard processes, documents, and timeframes/deadlines.
Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis; up to 3% of the unpaid principal balance of each subordinate loan).
Servicers must consider HAMP-eligible borrowers for HAFA within 30 days after the borrower does at least one of the following:
Does not qualify for a HAMP trial period plan.Does not successfully complete a HAMP trial period plan.
Is delinquent on a HAMP modification (misses at least 2 consecutive payments).
The borrower has 14 calendar days from the date of the Short Sale Agreement to sign and return it to the servicer.
The Short Sale Agreement must give the borrower an initial period of 120 days to sell the house (extensions permitted up to a total of 12 months).
Within 3 business days of receiving an executed purchase offer, the borrower (or agent) must submit a completed RASS to the servicer, including (i) a copy of the sale contract and all addenda; (ii) buyer documentation of funds or pre-approval/commitment letter from a lender; and (iii) all information on the status of subordinate liens and/or negotiations with subordinate lien holders.
Within 10 business days after the servicer receives the RASS and all required attachments, the servicer must approve or deny the request and advise the borrower.
The servicer may require the closing to take place within a reasonable period after it approves the RASS, but not sooner than 45 days from the date of the sales contract unless the borrower agrees.
The servicer must release its first mortgage lien within 10 business days (or earlier if required by state or local law) after receipt of sales proceed from a short sale or delivery of the deed in the case of a DIL. Investor must waive rights to seek deficiency judgment and may not require a promissory note for any deficiency.
Requests a short sale or DIL.
The SSA states that the servicer will pay the commission as stated in the listing agreement, up to 6%.
If the servicer has retained a vendor to assist the listing broker, the vendor must be paid a specified amount from the commission.
Neither buyers not sellers may earn a commission in connection with the short sale, even if they are licensed real estate brokers or agents. They may not have any side deals to receive commission indirectly.
Contingency clause—sale is subject to written agreement of all sales terms by the mortgage holder and, if applicable, mortgage insurer.
Servicer Incentive–$1,000 for administrative and processing costs for a short sale or DIL completed under HAFA. Investors may provide additional incentives.
Investor Reimbursement for Subordinate Lien Releases—up to $1,000 for allowing up to $3,000 in short sale proceeds to be paid to subordinate lien holders. Subordinate lien holders that receive HAFA incentive must agree not to pursue deficiency judgments.
Las Vegas Short Sales
Participating servicers must have a written policy, consistent with investor guidelines, that describes the basis for deciding whether to go ahead with a short sale in individual cases.
Assess expected recovery through foreclosure and disposition compared to a HAFA short sale or DIF.
Use of borrower financial information from HAMP. (May require updates or documentation.)
Property valuation.
Review of title.
Borrower notice if short sale or DIL not available (to borrowers that have expressed interest in HAFA).
While determining borrower’s eligibility and qualification for HAMP or HAFA.
While awaiting the return of the Short Sale Agreement by the 14 day deadline.
During the term of a fully executed Short Sale Agreement (while the borrower seeks to sell).
Pending the transfer of ownership based on an approved sales contract per the RASS or Alternative RASS.
Pending transfer of ownership via a DIL by the date specified in the SSA or DIL Agreement.
The borrower must vacate the property by a specified date, leave the property in broom clean condition, and deliver clear, marketable title.
The amount of debt forgiven might be treated as income for tax purposes. Under a law expiring at the end of 2012, however, the tax may not apply. Forgiven debt will not be taxed if the amount of forgiven debt does not exceed the debt that was used to acquire, construct, or rehabilitate a principal residence. Check with a tax advisor.
The servicer will report to the credit reporting agencies that the mortgage was settled for less than full payment. There will be a negative effect on credit scores.
Buyers may not reconvey the property within 90 days after closing.
