May 21, 2012

Bank of America Short Sales – Changing for the Better?

Posted by martikilby under Bank of America, Experienced Short Sale Realtor, Short Sale | Tags: , , , |
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A couple of weeks ago I was invited to attend a seminar sponsored by Bank of America which was designed to help agents who negotiate short sales better understand the new systems they have instituted.  And in fairness, I do believe that the banking giant is trying to streamline the chaos we’ve been dealing with for the past several years….I’m just not sure it’s really working.

I have recently been involved with three B of A short sales, two as the listing agent and negotiator, and one as the buyer’s agent.  Short sale listing #1 was a Cooperative Short Sale, similar to the HAFA program.  It was managed through Equator but took nine months to close.  It was a total nightmare. Listing #2 is a VA first mortgage that is NOT handled through Equator and requires a separate secure email system, (this one has also taken way too long).  And finally, the short sale purchase has a B of A equity line that also does not use Equator or any system, and in fact was moved to three different offices.

So what I’ve learned is that there is no ONE system that is used by B of A, and it totally depends on the loan type.  Now I’m no systems analyst, but it would just seem to make sense to me that ALL short sales should be introduced into Equator as pretty much all the same documents and forms are required.  The file could then be assigned a negotiator in a particular department depending on the loan type, but at least ALL files would be in the same system.

The one good thing that came out of the seminar was that it qualified me to receive access to their new online escalation tool.  So now when I seem to be getting nowhere, and have exhausted the phone and email protocol, I can escalate the file and receive a response to my concern within 24 hours.

If you live in San Diego County and have questions about a short sale, and want to know if it’s right for you, please don’t hesitate to give me a call for a confidential consultation.

 

April 23, 2012

3 Ways to Kill a Short Sale

Posted by martikilby under Experienced Short Sale Realtor, Short Sale, Short Sale Negotiation | Tags: , , , , , |
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Short sales are tricky at best, and negotiating a successful resolution can try the patience of even the most experienced agent.  With the foreclosure clock often ticking, it’s important that the listing agent keep the transaction on track. Here are a few things agents should avoid that can be real deal killers:

  1. Accepting the wrong  offer.  If you know that the property has termite issues, doesn’t have a working heater, or has other significant repair issues, look carefully at the type of financing  the buyer will use.  VA will not allow the buyer to pay for repairs and it is unlikely that the lender will  pay.  FHA also has fairly stringent rules about the condition of the property, unless it’s a rehab loan.  If there are issues with the condition,  selecting a buyer that is using conventional financing, or cash and agrees  to buy the home “As Is” will improve your odds of success.
  2. Failing to  communicate.  As we all know, short sales are anything but short in terms of the time it takes to close.  Having a buyer that stays the course and doesn’t wander off to buy a different property is critical.  The listing agent should be in touch with the buyer’s agent at least twice a week and provide  updates as soon as they are available.    I also have the buyers deposit their earnest money into escrow within 3 days of acceptance of their offer by the sellers – we don’t wait for short sale approval.  Buyers that have put their money into escrow and receive regular progress reports tend to be much more committed to completing the purchase.
  3. Assuming….anything!  Just because you faxed in your seller’s tax returns, doesn’t mean that they were received and made it  into their file.  For most banks, allow 48 hours for items faxed to the loss mitigation department to be  posted into your seller’s file, then call and confirm.  Failure to provide documents when requested can kill the deal.  Also, don’t assume that the 2nd lien holder will accept whatever  pay-off, the 1st lien holder offers.  Don’t wait for the 1st to be  approved to start negotiating the 2nd .  Better to know what they want early in the game.

The list could go on and on, as each sale has its own peculiarities that could spell trouble.  The key to short sale success is a combination of patience, education, organization, tenacity and a crazy instinct to anticipate obstacles and leap over them before the deal dies.  Good luck out there!

For a no-obligation consultation regarding a short sale inSan Diego County please give me a call at 619-846-9249.

 

April 14, 2012

Is Lazy Worth $200?

Posted by martikilby under Bank of America, Experienced Short Sale Realtor, Short Sale Negotiation | Tags: , , , , , |
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I attended a webinar on Tuesday that was presented by the Charfen Institute, all about the changes that are occurring in short sale processing at Bank of America, effective tomorrow.  As I currently represent the sellers in two B of A short sales, and the buyers in two other B of A short sale transactions, I logged-in wanting to see if there was anything I had missed in reading the information at their short sale resource center.

The information in the webinar was well presented, including a slick commercial for the Charfen Institute CDPE (Certified Distressed Property Expert) Designation Course.  However, I didn’t really learn anything new….

But the thing that really got me steamed was the marketing “call to action”.  If I signed-up to take the CDPE course before 5:00 p.m. Thursday, I would receive $900 in FREE Resources – a CDPE short sale success bundle.  Here is one of the items included:

“Bank of America Add-On Kit ($200 value) – Get the five newly-required documents that MUST be submitted with all short sale offers, effective April 13.”

My problem with this is that the list and actual documents available for download are offered for FREE at the Bank of America short sale site….so how is this a $200 value??? 

And the other two items valued at an additional $700 and included in the “success bundle” are all things that are available online from the various lenders, or with a phone call – all at no charge.

Now I’m all for free enterprise, understand incentives, and the take-away tactic in sales.  And I am not knocking the CDPE course, of which I’ve heard good things.  But come on!  I just don’t think it’s right to assign a dollar value to something that is not under your copyright, that is free, readily accessible, and a necessary component to our job representing clients in a short sale.  Why not just share the links?  I would have been more impressed. Is the $200 value assigned because of convenience to the agent?  In my book, if an agent is too stupid or lazy to figure out how to get lender forms, they shouldn’t be doing short sales, with or without any certification!

 

 

 

March 25, 2012

Discrimination Against VA Buyers?

Posted by martikilby under first-time buyers, mortgage, VA loans | Tags: , , |
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I live and work in San Diego County, which is a big military town for the Navy, Marine Corps and Coast Guard.  Over the years I’ve had the opportunity to work with many active military and veteran buyers using a VA loan to purchase a home.  But lately, I’m struggling to help my VA buyers complete a purchase as they are facing what I see as a marketplace that discriminates against them.

Most of my VA buyers are young, first-time buyers who have steady income, but not necessarily much money saved for a down payment.  As a VA loan offers 100% financing, this would seem to be a perfect solution and a great opportunity.  However, here are the obstacles they face:

  • The price point for many of the young VA buyers in San Diego Countyis relatively low, so when bidding on a house they are often competing with cash buyers.
  • As the buyer is  not allowed to pay certain closing costs on a VA transaction, and most VA buyers need a considerable concession, the seller in this competitive market is more likely to select a buyer that doesn’t ask for closing costs.  Even if the VA buyer comes in with a  higher offer to allow the seller the same net profit, there is the risk  that the property won’t appraise at the higher value and the deal won’t go through.
  • The VA also requires a termite clearance, and the buyer is not allowed to pay for it.  So, this pretty much rules out every short sale as the seller is not going to pay for an inspection, repairs or clearance, and it is highly unlikely that the seller’s bank will pay.
  • The properties themselves often pose the biggest challenge in this market of REOs.  According to VA guidelines, the home      must be habitable with a working stove and heat source, floor coverings, no large holes in walls, or missing window trim or baseboards, no mold or  mildew, and plumbing that does not leak.       So buying a fixer is out of the question as the VA buyer is not  allowed to pay for any repairs.

I would like to think that sellers might choose to actually make an effort to sell to a member of our military, but I think the VA itself has made it unnecessarily difficult.  I understand the VA’s desire to reduce the financial burden for the military buyer, and make sure they are protected in the transaction, but from where I stand, I see that the rules that are meant to protect them are actually hurting their chances of successfully buying in this market.

 

March 13, 2012

The Bank of America Un-Cooperative Short Sale

Posted by martikilby under Bank of America, Short Sale, Short Sale Negotiation | Tags: , , , , |
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Last March, I participated in a Bank of America webinar where they introduced their Cooperative Short Sale Program.  I remember being cautiously optimistic because the speaker promised that the Bank would respond to offers in 10 days.  Well, it’s now been five, yes five months since I uploaded an offer for the Cooperative Short Sale purchase of one of my listings.  We are finally in escrow and set to close on April 6th, but this has been, to say the least, a rocky road and not what I would call a “cooperative” negotiation.  Here are a couple of the low points:

  • The amount that B of A was offering to the 2nd lien holder was incorrectly communicated to  me.  They offered one amount and  then later came back with a much lower figure. I had to escalate the issue  and get pretty angry to make them stick to the original amount offered.
  • Shortly after finally getting  an approval in the first week of February, our buyer lost her job and we had to substitute her husband as the buyer.  Same transaction, no changes except the loan and sale were now going to be in the husband’s name.  It took over a month to get a new approval, and that was after I again had to escalate the issue.

Here is what I see as a big problem with the whole system:  Although the Equator platform is supposed to keep all parties in communication, it really doesn’t work that way.  Bank of America farms out the work of negotiating their Cooperative Short Sales to Asset Management Outsourcing, Inc., AKA, AMORecoveries.  So during the whole “negotiation” portion of the short sale, the agent for the seller is only in communication with a case worker at this company.  If you do need to escalate a matter to B of A directly, they might not be in the communication loop as far as the file and Equator are concerned.  Additionally, I find communicating through Equator sketchy at best.  Every step of the process is a “task” that gets accepted, completed or denied, and let me tell you, a short sale is simply not that black and white.  The only way I really got anything accomplished was when I could actually speak to someone.

Once you finally get an approval, the file becomes the responsibility of a “closing specialist” back at B of A.  So the person you’ve been dealing with throughout the whole process is now out of the picture.  When we had to substitute the new buyer, the file went from our “closing specialist” at B of A, back to AMORecoveries, to a different negotiator who thought it was an entirely new file!  I thought I was going to tear my hair out!

So I’m not a fan of the Bank of America system or the Cooperative Short Sale program that was supposed to streamline the approval process.  And I know that without going up the food chain and fighting for my seller this deal wouldn’t be closing.

 

Got a tough short sale in San Diego County?  Give me a call!

 

 

 

March 8, 2012

FHA Loan after Short Sale: Bet You Didn’t See This Coming!

Posted by martikilby under Experienced Short Sale Realtor, FHA, Loan qualification, Short Sale | Tags: , , , , , , |
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A couple of days ago one of my favorite loan officers shared some information about a problem facing many would-be buyers who are trying to get approved for an FHA mortgage after a short sale.  Here’s a couple of surprising things I learned that could squelch some dreams.

Most of us probably know that FHA requires a 3 year wait from the date of the short sale, (conventional 4 years), but here is the kicker:  Did you know that for DU underwriting it is actually 3 years from the reported date?  That means that if the 1st or 2nd lien holder didn’t report the account as closed until 10 months after the close of escrow, a buyer would not qualify until 3 years and 10 months after closing!

And it’s not just short sales.   FHA looks at a short sale, deed-in-lieu, foreclosure, and loan modification, (YES, even a loan mod) as the same derogatory event, and as noted above they require a 3 year wait from the reported date.  Approval for an FHA loan is normally based on running the application through the Desktop Underwriter (DU) automated underwriting program.  The DU program reads the dates entered on the credit report so if that is incorrectly reported, the loan will be denied.  In the case of a short sale, it might be helpful to find a lender who agrees to manually underwrite the loan so that the correct dates are used.

Besides the date, the other item that could trip up a buyer is how the old mortgage debt is reported.  If the account is reported as closed, but still shows the amount not paid off in the short sale as a balance on the account, the reported balance will probably disqualify them in DU by calculating a payment and inaccurately increasing their debt-to-income ratio.

Advice from my loan officer:  Following a short sale, borrowers should check their credit report from all 3 reporting agencies about 6-8 weeks after closing.  If the sale is not reported, and/or it does not show a zero balance they should contact their previous lender to get it corrected. Then, get a DU or manual underwriting approval well before shopping for a home.  It may mean the difference between buying again in 3 years versus facing an unanticipated and disappointing wait!

 

 

 

February 13, 2012

An Interesting Twist on Principal Reduction

Posted by martikilby under loan modification, Principal reduction, San Diego Home Values, Strategic Default, Underwater homes | Tags: , , , , , , , , |
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For most of the 22 million homeowners who owe an average of $40,000 – $65,000 more than their home is worth, the recent $25 billion dollar settlement with the banks will bring no relief. According to Robert Menendez, Chairman of the Senate’s housing subcommittee, “When you owe more than your house is worth, relief can be hard to come by.”   Among borrowers whose homes have dropped in value through no fault of their own, many choose to simply walk away, which according to Menendez, “Only exacerbates the problem.”

Menendez has introduced a bill that provides an interesting twist on the idea of principal reduction.  The Preserving American Homeownership Act would encourage lenders to write down principal balances by allowing them to share in the home’s appreciation at a later date.  The principal balance would be written down in increments over a three year period to 95% of the current value, so long as the homeowner remains current on their payments.

In exchange for the write-down, the lender would receive a fixed percentage of any future appreciation when the home is either sold or re-financed.  That share could not exceed 50%.  So if a principal balance was reduced by 25%, the bank would receive 25% of any future appreciation.

The Act would apply to primary residences only, but any homeowner could apply.  Borrowers who are in default or even in foreclosure could qualify, but would be required to make their reduced mortgage payment on time in order to remain in the program.

The article in DSNews where I read about the bill did not indicate if the Act would apply to all types of loans or whether or not the modified loans would be re-written at today’s lower interest rates. Presuming so, this Act could provide enough incentive to many underwater homeowners to persuade them to stay in their home versus initiating a strategic default.

As a fan of principal reduction, I like this idea as it seems to be a win-win situation for both homeowners and the banks.  Banks don’t take as big a hit as they would with a short sale or foreclosure, and the write-down is taken over a three year period, AND homeowners get to keep their homes with reduced payments and principal.  Even the opponents of principal reduction might find something to like about this plan!

 

February 6, 2012

Before You Call Your Lender, Be Prepared!

Posted by martikilby under Experienced Short Sale Realtor, loan modification, Short Sale, Underwater homes | Tags: , , , , , |
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If you owe more than your home is worth, and are having difficulty making your payments, you may be a good candidate for a loan modification or a short sale.  The important thing to realize is that this problem won’t go away on its own and the sooner you attempt to deal with it, the better your opportunity for a positive outcome.

However, before you pick-up the phone to call your lender, be prepared!  The person on the other end of the call is going to do a phone interview during which they will ask very detailed questions about your income and expenses.   In order to be ready you will need the following items:

  • A completed financial worksheet which outlines ALL of your income and monthly expenses. Make sure that the income you state matches the deposits to your bank accounts!
  • Last 2 months pay stubs or year-to-date profit and loss statement if self-employed.
  • 2 most recent bank statements for all accounts
  • Hardship letter
  • Last 2 years federal tax returns

This initial interview is a sort of triage, where they try to determine, what program, (if any), might work for your situation.  The more information you have available, the quicker you will be able to move to the next step.  Even if the interview doesn’t include questions related to your tax returns, these are the items they will want you to send to them so it’s best to gather everything before you get started.  When you do send or fax, make sure that your name, phone number, email and loan number are on a cover sheet with a list of the items included.  For the initial packet of information it may be best to send with a delivery confirmation so that you have proof of mailing and delivery.

Your hardship letter should clearly explain why you can no longer afford your mortgage payments.  You obviously could afford them at the time the loan was originated, what happened to change that?  Job loss?  Death of a spouse? Divorce?  This should be a heart-felt letter addressed To Whom It May Concern and be no longer than a couple of paragraphs.  Just state the facts.  It is helpful to write the letter before you call so that you have an answer ready when the interviewer asks.

On this initial interview, and all subsequent phone conversations keep a log, noting the date, time, who you spoke with and the key points of your conversation.  Always ask about the time frame for the next steps and be prepared to follow-up!  Never assume that something is happening….chances are good that your paperwork may become lost, so be ready to re-send it.  And if you don’t feel like you’re getting anywhere, ask to speak to a supervisor.  But remember that the folks working in the loan workout department are probably over-worked, and a nice comment and a polite “thank you” will make the process less stressful for everyone involved. 

Best of luck! Don’t hesitate to call or email with any questions. I also have a great Excel Financial Worksheet that I’m happy to share.  Just send me a request to marti@kilby.com.

 

 

January 31, 2012

Video – How to Buy a Foreclosure

Posted by martikilby under Buying a Foreclosure, foreclosure, Loan qualification | Tags: , , , , , |
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San Diego real estate broker Marti Kilby describes the precuations you should take when buying a foreclosed property.


 

 

January 27, 2012

Much Needed Changes to HAMP Announced Today

Posted by martikilby under HAMP, loan modification, Underwater homes | Tags: , , , , , |
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It was just announced that the Obama Administration is making some significant changes to the Home Affordable Modification Program (HAMP). I noted 3 key points:

1. Homeowners who are struggling financially will be eligible for a 2nd evaluation with a less stringent debt-to-income ratio.
2. The program will be extended to include investor owned properties that are used as rentals.

And ….(drum roll)…

3. The  Administration will triple incentives for lenders who write down principal balances for underwater homeowners, AND they are extending this principal reduction incentive to Fannie Mae and Freddie Mac!

It’s this last item that has me excited as I’ve been a proponent of principal reduction for a long time, as noted in my blog post back in 2010. What impact all of this will have of course depends on how quickly the new rules can be put into effect and how well all participating lenders adhere to the new guidelines.

All that being said, I’ll take any good loan modification news that we can get!

 

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