By now, most Realtors® have heard the rumblings about defective bank foreclosures in Oregon and elsewhere. What you may not have heard is that these flawed foreclosures can result in potential title problems down the road.
Here’s the “Reader’s Digest” version of the issue: Several recent federal court cases in Continue reading “Realtors® – Use Caution When Representing Buyers of Bank REOs”
This set of FAQs is a continuation of a series of Q&As based upon the most current short sale information. The link to Part One can be found here. ~ PCQ
11. Question: What is a HAFA short sale?
Answer: This government program has been around since late 2009, and was touted as one that would “streamline” the short sale process. Initially, it was intended only for borrowers coming out of unsuccessful loan mods. That does not Continue reading “2013 Short Sale FAQs [Part Two]”
The local and national real estate markets have been on the ropes for five years. The third quarter of 2007 was the statistical peak for housing prices in the Portland-Metro area. From that point forward, the real estate market went into a downward spiral from which it has never fully recovered.
However, the third quarter of 2012 was the first time since the third quarter of 2007 that home prices have actually increased over the prior year. Bend, Oregon is experiencing the same resurgence.
So for those homeowners still awash in negative equity, 2013 may be the last and best year to complete a short sale with a minimum of adverse consequences. This is especially true since this year we know that if a home is short sold [or foreclosed, or deeded back in lieu of foreclosure] the seller will not have to pay income tax on the cancelled debt.[1] We don’t know if the forgiveness law will be extended into 2014. The extension for this year was not even announced until early January 2013, causing a lot of anxiety for homeowners who were unable to complete their short sales by December 31, 2012.
What follows are a series of FAQs based upon the latest information I have acquired while consulting with homeowners on their foreclosure avoidance options. ~ PCQ Continue reading “2013 Short Sale FAQs [Part One]”
I’ve written several blog posts about the mortgage insurance (“MI”) problem. Two of the several posts are found here and here.
In many cases, MI is not purchased by the borrower, but by the lender – without the borrower’s knowledge and after the loan has already been made. This type of MI is technically referred to as “credit enhancement”, and is bought by the originating lender, say Countrywide [now Bank of America] as the loan is being bundled with millions of dollars of similar mortgages, and sold to investors through a process called “securitization.” Since MI insures the ultimate owner of the loan, i.e. the investor, this enhancement makes it more attractive in the pool of securitized loans being sold. And by placing MI on the mortgages bundled and sold, the ratings agencies, such as S&P and Moodys, give the bonds better investment ratings. Continue reading “Mortgage Insurers – Short Sale Shakedown Artists”
Introduction. After three years of counseling folks in the throes of making a distressed housing decision, I have to honestly ask myself if loan modification today is a prudent, wise, or productive endeavor. Regrettably, in most – though not all – cases, the answer is an emphatic “No.” Of the many consumer advocates, attorneys, and counselors out there, I may be in the minority. But I suspect that of the many consumers who have gone through the modification process, I am in the majority. Continue reading “The Myth of Lender Modification”
Background. The Big Banks, their excesses, and the stories of their rapacious greed, are slowly receding into the rearview mirror of memory, like an Elm Street nightmare. We all know how it ended; the federal government bailed them all out to the tune of $445 billion. Some accepted the money begrudgingly, saying they were forced to take the medicine although they weren’t really sick.[1]
Clearly, the Big Banks have suffered huge reputational damage over the last few years – and rightfully so. But there was another player during these years that – except for those who have followed the story of the Financial Crisis – seems to have gone relatively unnoticed in the public eye; probably because the word “bank” is not found in its name. The company is American International Group, or “AIG”. Interestingly, the name and acronym give no hint of its core business. It is an insurance company! That’s right, insurance; quite possibly the world’s most boring, dry, unsexy and uninteresting profession, second only to statisticians.[2] Continue reading “AIG – Hapless Victim or Reckless Ingrate? (Part One)”
Introduction. Now that the market is s-l-o-w-l-y returning to a semblance of normalcy, perhaps it’s time to go back and revisit some real estate basics. For the last several years, with the market dominated by short sales and bank-owned REO sales, many practices that were considered ‘SOP’, fell by the wayside. For example, even though the statewide OREF Sale Agreement form was chock full of seller representations, when an offer was made to a bank in an REO sale, the bank would ‘counter’ with an addendum that effectively scrubbed all the seller reps out of the document. Buyers were on their own when it came to protection. Similarly, although most contingencies retained some semblance of meaning in short sales, the condition of the property was presented on almost a take-it-or-leave-it basis in short sales, since most banks declined to spring for most repairs unless they were of such a magnitude as to require the concession.[1] Continue reading “Representations and Contingencies in Oregon’s Statewide Sale Agreement Form”
The online newsletter Mortgage Servicing News carried an interesting article that Realtors® should reprint and carry around in their pocket or purse. It was titled: “Servicer-Realtor Exchanges Can Boom or Bust Short Sales” and can be found online here. The premise of the article is smart, short and simple: Servicers should work closely with good real estate agents who specialize in short sales.
To quote:
January 29, 2013 was a very bad day for Diane Hathaway. That was the day she pled guilty to bank fraud, committed in the course of securing her lender’s consent to a short sale of her Michigan manse in Gross Pointe Park. The home reportedly carried a $1.4 million mortgage with online bank, Ing Direct,[1] and was short selling for $850,000. Apparently, fearing that the lender would pursue them for the entire deficiency[2], she and her husband decided to claim financial hardship by concealing and shifting assets, including a second home in Florida. Continue reading “Short Sale Fraud – Hard Time For A Bogus Hardship”
“To be forewarned is to be forearmed.”
The term “deficiency” arises in the context of a borrower’s default to their lender. It refers to the difference between what the lender/servicer recovers, e.g. through short sale, deed-in-lieu-of-foreclosure (“DIL”), or foreclosure, and the total debt owing. Let’s go through each one, and see how and when the issue is likely to arise:
1. Short Sales. This is a sale of the distressed property where the net sale proceeds [after deducting costs of sale, such as real estate commissions, escrow, title insurance and recording fees] are insufficient to pay the total indebtedness due, i.e. principal, interest, late fees, and lender advances, such as property taxes and insurance. The difference between the amount recovered and the amount due is the “deficiency.” Continue reading “Borrower Exposure to Deficiency Risk”
