Mortgages: Breaking Loose at Last?

Millions of delinquent mortgages have been frozen in a kind of limbo for some time now. Their servicers are unable or unwilling to take definite action, for a variety of reasons. But there are signs that the ice may be beginning to break. Consider the following:

-As part of its settlement with investors announced in June, Bank of America has agreed to release certain high-risk loans to subservicers, and to pay additional fees to investors if servicing timelines are not met.

-Bank of America has also announced plans to sell off a portion of its servicing portfolio.

-A July 22 article in DSNews describes a proposal now being considered by the U.S. Treasury to allow some securitized loans to be sold at a discount to new investors.

What does all this mean? Simply, loan servicers may now be free to act much more swiftly to resolve their defaulted loans.

The big servicers and—their investors—have been paralyzed not only by the volume of delinquencies, but by their own pooling and servicing agreements, which strictly limit their activities. New servicers will not be shackled by those agreements, and unlike the original servicers, will likely be equipped to handle just such problem loans.

New investors will also be inclined to move quickly toward resolution; having purchased the loans at a discount, they’ll have nothing to lose by disposing of them, by modification, short sale, or foreclosure.

This could be good news for the entire industry—but especially for those in the trenches trying to help homeowners resolve their troubles, one way or another.

http://www.dsnews.com/articles/regulators-considering-new-housing-policies-2011-07-22

Wells Fargo Announces They Will Now Use Equator for Short Sales

I know Equator is efficient but sometimes it’s nice to have someone else on the phone rather than a program where you never really speak to a human on the other hand. Equator organizes the tasks and process of a short sale.

Isn’t organized in managing loss mitigation but it misses a more human component when negotiating short sales. Today I received a message below that Wells Fargo is going live with Equator.

Love it? Hate it?

July 15, 2011

Dear MONIQUE CARRABBA:

We’re following up to see if you’ve had the opportunity to simplify the short sale process for your Wells Fargo properties by using the Equator platform.

Take advantage of the automated process

Now that we’re part of the Equator network, we encourage you to use this platform to help you initiate, manage and process any short sale transactions for Wells Fargo Home Mortgage properties.

As a reminder, Equator is available at any time to help you:

Initiate the short sale process – with a few steps, initiating the sale is easy
Check the file status of your short sales – to stay on top of tasks and on target with deliverables
Upload documents – to easily verify documents have been submitted
Access the workflow of requested items for short sales – to readily know the items still needed

The following types of loan will be accepted through the system for your Wells Fargo short sale properties:

Wells Fargo Home Mortgage conventional loans, including Fannie Mae and Freddie Mac loans
America’s Servicing Company loans
Veterans Association (VA) loans
Home Credit Solution (HCS) loans

Contacts – if you need assistance

With process-related questions, or specific questions regarding offer status or initiating Wells Fargo short sale properties:

Call the Wells Fargo short sale team at 1-866-903-1053
Representatives are available to help you Monday through Friday, 7:00 a.m. to 10:00 p.m., and Saturday, 8:00 a.m. to 4:30 p.m. Central Time

With technical questions about Equator workstation:

For support via web chat, log in to the agent portal at www.equator.com, click on ‘Need Help? Live Chat Online
For support via email, please address questions to agenthelp@equator.com

Don’t delay. Start using Equator to streamline the short sale process for your Wells Fargo properties.

Sincerely,

Bart Vincent
Senior Vice President, Short Sales
Wells Fargo Home Mortgage

Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. ©2011 Wells Fargo Bank, N.A. All rights reserved. NMLSR 399801 CS3198 – 5/11

Buying a Property at a Probate Sale in Los Angeles

Purchasing a property in Los Angeles that is a probate is very easy. The property is listed on the MLS, so your Realtor can help you find what’s out there and help you find a good property. You will likely need 10% down to make an offer. There are two types of probates. With court confirmation and without. If it has court confirmation you will need to go to court and it will be subject to over bidding. Over bid amounts are usually 5% above the accepted offer plus $500. After the first overbid you can bid in increments of your choosing. If you are an over bidder you will need to have a real estate agent present with you are the time of bidding. The judge will ask if there are any overbidders for the property you are interested in. You will need to step forward with your cashiers check for 10% of the overbid amount plus 10% of the maximum amount you plan on bidding.

If there is no overbid it’s like purchasing a regular property. If you are the accepted offer keep in mind that a probate will likely not pay for termite and some items that are normally a seller’s responsibility. The sale is likely as-is. Depending on what your offer is, it’s customary not to schedule a court date until the buyer has removed their contingencies (inspections & loan). If there aren’t any overbidders at the court confirmation then you can close escrow afterwards usually within 15 days.

Foreclosure Filings are Down as the Time to Foreclosure Speeds Up In Some States

On average it took less Time to Foreclose in California, Arizona and Nevada in June 2011, countering what has been a growing trend to extend the foreclosure process. The time to foreclose has increased on a year-over-year basis throughout our coverage area, with the largest increase seen in Nevada where it now takes on average 319 days to foreclose, up from 239 days a year ago. California saw the second most significant increase with the average time to foreclose at 317 days, up from 261 days a year ago. The least change was observed in Washington where the average time to foreclose is 106 days, only slightly higher than the 105 days seen a year ago.

Foreclosure filing activity was down throughout our coverage area in June 2011, with fewer foreclosure filings in all states. There were fewer foreclosure sales, both Back to Bank and Sold to 3rd Parties everywhere except Oregon which saw an uptick in activity at the courthouse steps.

“While the decrease in the time to foreclose last month is statistically interesting,” says Sean O’Toole, CEO and Founder of ForeclosureRadar, “We do not see it as signaling an end to lenders looking to avoid losses that they can’t afford by continuing the extend and pretend policies of the past.”

California saw slowed foreclosure activity across the board. Notice of Default filings fell for the third consecutive month after a slight 1.5 percent drop in June. Notice of Trustee Sale filings were down in June as well, with an 11.7 percent decline month-over-month and a 34.3 percent drop from June 2010. Cancellations of foreclosure sales decreased for the second time in as many months, with a 3.0 percent drop compared to May. Foreclosure sales on the courthouse steps were slower than the prior month, with 13.4 percent fewer sales Back to Bank and 7.1 percent fewer foreclosed properties Sold to 3rd Parties. For the first time in six months the average time to foreclose decreased, down 7.9 percent to 317 days month-over-month but remained up 21.5 percent as compared to this time last year. Third parties continued to resell inventory more quickly, with the time to resell down 1.5 percent month-over-month to 131 days, clearly outperforming banks, which took an average of one hundred days longer at 231 days to resell inventory (REO).

Data courtesy of Foreclosure Radar

Cooperative Short Sale Blunders

If you have a pulse and you are active in the short sale game, you have undoubtedly heard about Bank of America’s Cooperative Short Sale Program. It is hailed as a HAFA-like short sale program without the mucky guidelines of HAFA (like occupancy status?).

An ex-top B of A negotiator, Elena Celestine, who is now their circuit speaker, talked about this program at an event I attended in Los Angeles last week. She was a gifted speaker, and fun to watch in action. She scolded agents lightly from time to time for the goofy things we do, and even told the occasional “homeowner” joke. But one thing was apparent. She was out of touch. She said that B of A’s Coop program was basically HAFA without the occupancy restrictions. One problem, HAFA no longer had the same occupancy restrictions since SD 10-18 came out earlier this year. Also, she said the Coop program was identical to HAFA in all other ways. Uhhh, nope. It does not promise the $6,000 to the junior liens, it does not “always” promise full satisfaction of the debt, and it is vaguely defined in several other areas. It is an investor-driven program with lots of potential. But, it is not really like HAFA except for the fact that the program does offer pre-approved listing prices when B of A can get in contact with the borrower early on.

That brings us to my little tale. I was referred to a nice lady (and her not so nice soon to be ex-husband) to discuss the option of a short sale. She lived in a beautiful Riverside, CA 3,000 sq. ft. home on an acre of land with a beautiful infinity salt water pool with a million dollar view. She has a first with Bank of America for $550k, a second with Green Tree (was B of A HELOC) for $225K, and a third with Key Bank which is a quasi-construction loan for $55K. The property is worth about $500k today. Not a pretty deal to say the least. But there was a bright side!

The first with B of A was initiated by B of A as a Coop short sale. I even got a call from Christine Gonzalez from the B of A Simi Valley office to prove it. She told me that I would need to do no negotiating for my client as the Realtor. Wow! You mean you guys will deal with the NASTY Green Tree for me? You know they will demand a minimum of 5% of the purchase price on all charged off debt. Is B of A willing to do that? Her answer…”we will allow $3,000″. How about the construction loan third? “We may not allow them to get anything.” Christine, will you be doing the negotiating on this file? “No, John Bustos who sits next to me will”. Oh, so he’s who I should be talking to…

Bottom line folks, this is a mess. She is a low-tiered set up person who makes fanciful promises to the borrower to encourage her to initiate the short sale so she (Christine) can get a pat on the back and move on to the next borrower. Another out-of-toucher.

I just took the listing last night, sign goes up tomorrow, and it is “pre-approved” at $500k. I’lll keep the network posted on how this transaction transpires. Should be interesting.

HAFA Numbers Surge in April!!!

The Treasury’s HAFA program finally has something positive to offer in the way of national news. In December of last year, John Prior of Housingwire.com reported that less than 700 HAFA sales had been completed since April 5th of 2010 when the program began. That embarrassing news started a ripple effect of closed-door meetings with the Treasury Secretary Timothy Geithner, NAR’s Distressed Property Task Force, mortgage servicer representatives, and an assortment of other short sale industry insiders. Supplemental Directives 10-18 and 11-02 have both been released since December 2010, and each bring with them several new and positive changes (with the exception of SD 11-02′s extension of the servicer’s timeline to respond to HAFA requests…but that’s a whole different blog topic).

For the last several months, Realtors, servicers, and homeowners have been hard at work trying to make the best of this program. I have personally closed eight HAFA sales, and each one has a horror story to go with it! Needless to say, it has been challenging. Many Realtors don’t know this, but the major servicers ALL run every submission through a HAFA underwriting process before a negotiator is even assigned. Servicers are seemingly motivated to send short sale submissions down the HAFA stream as often as possible. Presumably it has something to do with a.) being publicly shamed, or b.) the $1,500 – $2,200 incentive for closed HAFA transactions. HAFA is no longer a long shot. One way or another, the servicer or the homeowner will bring it up. And, you’d better be ready to have an intelligent conversation about it when that opportunity presents itself.

So, what was the good news about HAFA? Simply that in one month’s time, HAFA closings surged by 73.7% in April according to the Treasury’s latest report. The actual numbers were 1,666 in April versus 959 in March of 2011. Wow! It is hard to imagine that this trend won’t continue. Is it possible that this program is finally picking up steam? There are almost 8,000 more HAFA transactions that have been started that may close sometime in the next 120 days.

What does all this mean? Well, for Realtors it means that HAFA is proving to be a program worth becoming more than a little familiar with. The Realtors that have been on the fence with acquiring formal HAFA education might want to rethink their strategy. If HAFA is anything like its bigger, older brother HAMP, we can look forward to more improvements, tweaks, and increased closings in the next 18 months. HAFA may not be a game changer yet (inside joke), but it definitely is changing the rules of short sales…

John Lautner Turns 100 : Events in Los Angeles

Time to get your Lautner groove on. There are many events events in Los Angeles scheduled to celebrate John Lautner turning 100.

There is going to be a home tour on July 23, 2011 from 10am to 6pm. The tour will include Harpel House (1956), Jacobsen House (1947), Schwimmer House (1982), and the Sheats/Goldstein House (1963/1989).

Tickets are $100.

http://makcenter.org/MAK_Exhibitions_Upcoming.php#

July 16, 2011 at 2pm

Stayin Alive: The Legacy of John Lautner

http://www.lacma.org/event/lautner-discussion-reception

This panel, featuring architects and critics Michael Rotondi, Craig Hodgetts, and Sylvia Lavin, will look at Lautner’s work, assessing its impact on the thinking and practice of architecture. It will be followed by a conversation on architectural preservation, featuring Frank Preusser, LACMA’s Conservation Scientist, and Christopher Carr, Vice President of The John Lautner Foundation. The conversation will be moderated by Nicholas Olsberg, archivist, cultural historian, and co-curator of the 2008 exhibition Between Earth and Heaven, the Architecture of John Lautner. A special Birthday Reception to officially commemorate “John Lautner Day” will follow the discussion at 4:30 pm. Brown Auditorium | Free, tickets required and available one hour before the program | Space is limited Image: Don Higgins © The John Lautner Foundation

Default and Short Sale News – November 2010

It was a pretty active week in the default space. We will shot gun a few of the larger stories and then I’ll add my closing commentary. Now more than ever, it is important to keep your finger on the pulse with what is happening at the government level, as well as at the street level in our space.

Depression Era Decline

The first major story we’ll cover is the fact that some daunting statistics came out this week. During the Great Depression era (5 year span from 1929-1933) home values plummeted by a record breaking 25.9%. This was during a massive unemployment state where millions ate their meals at government sponsored soup kitchens to survive. We’ve all seen the pictures and remember the stories from history class. Well….Zillow’s value index report conveys a scary reality. Since values peaked nationally in Q1 2006, values have declined an astounding 25% nationally. What is worse is that we are arguably far from the bottom given the $470B in shadow inventory that has yet to hit the market/MLS. This is number to keep an eye on moving forward. Some areas like Las Vegas Nevada which have the highest percentage of homeowners underwater(severe negative equity) weighed in at 80.2%. That means 80 out of 100 homeowners in Las Vegas are upside down on their home. Values have far exceeded a 25% downturn in similar markets. Yeowwwch!!!

Mortgage Insurance Challenges Grow

Want more bad news? Ambac Financial Group has filed Ch 11 bankruptcy. Ambac is one of the nation’s largest bond insurers. The New York based company insured billions in subprime mortgage securities during the heyday of housings boom years, but has taken a major hit since the market collapsed. So how does this affect us? Well, Ambac is the insurer on many of the subprime loans we will perform short sales on and the jury is still out on how the Ch 11 will affect the mortgage insurer’s ability to approve a short sale in a timely fashion. Most of us know how complicated it can be to negotiate a short sale with mortgage insurance and/or mortgage pool insurance. The question is…how will these insurance companies’ collapse affect us in our day to day business. I guess we will soon see. Speaking of mortgage insurance, we found out today that Bank of America is suing Old Republic’s mortgage insurance division for wrongfully holding on to hundreds of millions of dollars in mortgage insurance claims on home equity loans that have defaulted.

Numbers Released of Homes Represented in Shadow Inventory

Lastly, Fitch Ratings has stuck their neck out and issued actual numbers of homes that are represented in the $470B shadow inventory. Credit rating agencies and other statistical companies have been hesitant to release their research on how many homes are represented in the massive shadow inventory numbers. It was much easier to simply state the amount of mortgage debt represented. Well, here it is, the moment we have all been waiting for. Fitch says the shadow inventory represents 7 million homes!!!!!!! And it will take an estimated 40 months to clear through that inventory. That is nearly twice the estimation given by some other statistical companies. Depending on your bent, this may be bad or good news. But the bottom line is that a commission will be earned on most of those 7 million properties. There are around 1 million active Realtors, and only around one third are full-time active. You do the math.

Are you ready?

The key moving forward is positioning. Are you properly positioned to participate in this shadow inventory once it hits the market? Are you setting your sights on REO again? You should be? Are you ramping up a short sale division in-house? You should be. Is your website up with useful information about foreclosure relief options? It should be. Prepare for the storm before the rain starts to fall. The dark clouds are forming, and moving closer than ever.

Stay Connected

A final reminder to keep in touch with us in the members forum. Share with other premium members your short sale struggles, victories, and challenges. Start the conversations that need to heard. We are empowered to help each other and ultimately, the industry as a whole. Keep your heads up! You are well positioned…

Big Mortgage Servicers Coming Apart at the Seams?

Did you happen to see the monstrous default numbers released on DSNews.com this morning? In a nutshell, BofA, Wells Fargo and CHASE each have more than $20B in severely defaulted loans and foreclosed loans. The number of delinquent loans (more than 30 days) is even more staggering. Here are the actual numbers:

CHASE – $21.7 billion in foreclosure or foreclosed, $43.4 billion delinquent

Bank of America – $20.3 billion in foreclosure or foreclosed, $54.6 billion delinquent

Wells Fargo – $20.5 billion in foreclosure or foreclosed, $48 billion delinquent

Most default servicing insiders were not shocked by these numbers, but they are staggering to most real estate agents. Especially if you were under the false assumption that the market was finally starting to get better. The fact is that the band aid that was used to cover this gaping wound has lost its stick and is finally falling off.

Quote from DSNews article – “In addition to the volume of bad mortgages, the vulnerability of each bank to the foreclosure crisis depends on the capital and loan loss reserves it has set aside to cover losses and other factors such as its earnings, liquidity, reliance on less-stable deposits, and the quality of its overall loan portfolio.

Among banks with $1 billion or more of mortgages already foreclosed or in process of foreclosure, Wells Fargo has the greatest exposure to bad mortgages in proportion to its capital. For each dollar of Tier 1 Capital, the bank has 75.4 cents in bad mortgages, or a ratio of 75.4 percent.”

These three major mortgage servicers were giver “D” or lower ratings by Weiss Ratings indicating their vulnerability to financial difficulties and instability if conditions continue to deteriorate. What if the big servicers could no longer do business? We haven’t even begun to scratch the surface of the magnitude of this mortgage crisis.

How does this affect the short sale market? LIQUIDATION! The servicers and investors will more than likely need to raise capital to survive this mess and that can be done fairly quickly with streamlined, top-down short sales and REO sales of existing foreclosed assets. Loan mods are a long term fix…the estimated 35% that don’t re-default after the first year. The bottom line is that short sales will not be short lived and PartnerFirst premium certified members are well positioned to be a huge part of the solution to this crisis.

Foreclosure Moratorium Facts (real time)

No doubt you’ve heard the news recently that a number of major banks have volunteered to temporarily suspend foreclosures in 23 states and Bank of America is temporarily suspending foreclosures nationwide. What does this mean for the short sale market? Will this delay help short sales or contribute to the already increasing mentality of distressed borrowers to simply wait it out before reaching out to their servicer or a real estate agent for help?

While this situation is changing daily, I want to tell you what we currently know to answer any questions you may have. (sourced from N.A.R. – Realtor.org)

In late September and early October some lenders and servicers began voluntarily halting foreclosures in select states while they reviewed their foreclosure processes.

The lenders and servicers that have placed their foreclosure moratorium on properties in the 23 states where courts are involved in the foreclosure process include: Goldman Sachs Group Inc’s Litton Loan Servicing, Ally Financial Inc.’s GMAC Mortgage unit, JPMorgan Chase, and PNC Financial.
These lenders/servicers have only temporarily halted their foreclosures while they review their foreclosure process. This is in response to findings that questioned whether some lenders/servicers were following the correct procedures to foreclose on a property.
This halting of foreclosures is a voluntary action taken on the part of these lenders/servicers and has not been mandated by either the states or the federal government (yet).
Some members have begun to report the immediate impact of this moratorium on transactions that involve foreclosed properties. Delays in escrow and the removal of listed foreclosures are temporary results of this moratorium.
The immediate impact on the market will be the slowing of home sales, which could put upward pressure on home prices in the short term. The long-term effect on the market is uncertain at this point as it depends how long the moratorium remains in place.
Assuming the moratorium is lifted in the next month, the flow of REOs to the market should resume, but the uncertainty created by the moratorium may cause hesitation on the part of buyers.
Federal agencies, including the Office of the Comptroller of the Currency, the Federal Housing Administration, and the conservator of Fannie Mae and Freddie Mac, have asked lenders and servicers to review their foreclosure processes.
The participating lenders and servicers believe their internal review processes should take anywhere from a few weeks to 30 days to complete.
Some industry insiders believe this was a calculated effort to forestall foreclosures through the holidays and the end of the year. Then it will be business as usual after. If that is true, this would be the third year in a row that some type of moratorium has delayed foreclosures at the end of the year. The problem is, the water cooler conversations going on nationally are bound to cause more homeowners to sit on the fence as the government, servicers, investors, and attorneys duke it out.

As far as I am concerned, it is yet more confirmation that short sales will move to the forefront of foreclosure relief options – especially with loan modification re-default rates rising. What say you???????????????