With each new short sale case, there are new revelations and connections to be made. We’re finding that lenders are filing Notice of Default with less and less “notice” these days, sending homeowners into a spin of panic. A homeowner recently called us and said he had 1 week until his foreclosure date. With Wells Fargo, this foreclosure stop is many times doable, but with this one the road block ended up to be the “waiting” for investor approval, which ended up being Freddie Mac. So, Wells Fargo got our short sale package quick, but when it hits the desk of Freddie Mac we WAIT to hear. Well, on our team, we can’t stand waiting – so our short sale manager, Edson (on his day off), called and hounded Freddie until someone would help him. He actually started with the 800# and worked his way through the loop. The Freddie Mac rep gathered tons more info from him and then we had to wait again to get approval from the “trustee” directly. In this case, having a law firm involved made a big difference, in that Freddie Mac called our attorneys we partner with first – and then our team. With 5 hours to go – the clock was stopped! Congrats to the homeowner on Cox Neck Rd in Chester, MD on this first step. We’re working on the next hurdles as we speak. Now, as for the Freddie Mac angle, news just hit the wire concerning the trends of increased Freddie Mac short sales:

June 30, 2010 – Freddie Mac CEO Ed Haldeman said the company has seen the number of its short sales increase 600% from 2008 as lenders look to dampen the impact of foreclosures hitting the marketplace.In a statement put out this week, Haldeman said Freddie Mac is doing everything it can to prevent more foreclosures, and that short sales are becoming an ever-popular tool in situations where foreclosure is imminent and modifications have failed. That number could increase as the Home Affordable Foreclosure Alternatives (HAFA) program takes hold. The Treasury Department launched it in April to provide cash incentives to servicers for conducting short sales and deeds-in-lieu of foreclosure.

Another Short Sale SOLD by the Jennifer Young Homes team on Ivakota in Clifton, VA (Fairfax County Short Sale). This short sale client bought in the height of the market and was able to sell for much less than he/she owed. The client bought in 2004  and had 2 loans equaling almost $1 million. The client owed over $800K and sold for $550K. Suntrust also waived the deficiency, which means they’ve agreed NOT to go after the homeowners for the amount of the mortgage that was not paid off. To read more about this homeowners approval process, click here . Congrats to our client and good luck with your move. Let Jennifer know if she can help YOU or someone you know too – jennifer@jyhteam.com (703) 774-9572.

New Chase Short Sale Listing on Kristy Dr. in Manassas Park, VA

(Manassas Park City)

Homeowner bought their townhome during the height of the market and has faced a hardship. It’s a   2bed/1.5 Bath townhome listing for $175K. We’ll keep you posted on the approval process and closing!

Another condo SOLD on Liberty Bridge Rd in Fairfax, VA. This short sale involved another client who bought in the height of the market sold for less than he owed. The client bought in 2006 for $441K, but owed $475K because of a negative ammortization loan. His payment at first was $1400 a month, but jumped to $3100 a month before he started to get into trouble. He tried a loan modification for 3 months, but was turned down because of his high income. His hardship was the fact that he had a mandatory relocation with the military and HAD to move. Renting it out would not work either, since the mortgage payment was MUCH higher than what he could get in rent. Considering all this, the lender – American Home Mortgage – agreed to short sell. The client owed $475 and the condo sold for $300K. Congrats to our client and good luck with your move. Let Jennifer know if she can help YOU or someone you know too – jennifer@jyhteam.com (703) 774-9572.

Owner bought this condo on Liberty Bridge Rd, Fairfax, VA in 2007 for $390,000, but owned much more on 2 trusts (Chase and PNC – National City Mortgage). He had a 5 year ARM with a payment of over $2500 a month. Our client tried for 3 months to get a loan modification and he was 3 months behind on his mortgage by the time he reached out to Jennifer Young Homes. He SOLD his condo and received a waiver of deficiency and was proactive about protecting his security clearance. Let us know if you are in a similar situation – we can help you or someone you know too! Jennifer@jyhteam.com (703) 774-9572

There are always a lot of questions when we go to sign listing agreements with new short sale clients. One big one is – “Do we have to pay the real estate commission if the bank is not willing to pay it in full?” Here is my answer to a recent client with this same question:

…This is always paid by the lender and we take whatever they give us and never ask you for the difference  and we put that in writing through  the ‘3^rd party approval’ in the listing agreement. Basically if the 3^rd party doesn’t agree to our commissions, the list price, etc.. then they will counter us and we always take whatever they give us. They often reduce our listing and the buyer agent’s 3% commission in short sales but we start at %6 so we have negotiating room when they do ask for a reduction. We also do not have any administrative fees or retainer fees. Jennifer  (703) 774-9572 jennifer@jyhteam.com

New America’s Servicing and GMAC Short Sale Listing on Millwood Dr. in Springfield, VA (Fairfax County)

Homeowner bought their townhome during the height of the market and has faced a hardship. It’s a   3bed/2 full bath/ 2 half bath townhome listing for $375K. We’ll keep you posted on the approval process and closing!

New Bank of American and M&T Short Sale Listing on Rainwater Cir. in Manassas, VA (Prince William County)

Homeowner bought their townhome during the height of the market and has faced a hardship. It’s a 3bed/3 bath home listing for $250K. We’ll keep you posted on the approval process and closing!

New Wells Fargo Short Sale Listing today on Cox Neck Rd. in Chester , MD 21619. Wells Fargo is working with Freddie Mac to postpone the foreclosure date currently set:

4bed/2.5 bath home listing for $249,900. The homeowner has a foreclosure date set for 6/25/2010 and we’re fighting hard to get it postponed so we can move forward. Freddie Mac is the investor backing the original loan and the short sale package is in their hands thanks to fast work by our negotiation team and Wells Fargo Loss Mitigators. We’ll keep you posted on this case!

RISMEDIA, June 18, 2010–Allison Rinehart’s best hope for saving her home isn’t the massive federal effort to stem foreclosures. She’s been denied, possibly in error, for that plan so she’s banking on an alternative mortgage modification to keep her Charlotte townhouse. “This is the only thing my daughter and I have,” said Rinehart, who is 45. “I am a single parent, no child support, working as many jobs as I can take on.”
The taxpayer-funded Home Affordable Modification Program, or HAMP, is the centerpiece of the nation’s foreclosure prevention effort. But it doesn’t work for many people.
For example, Bank of America estimated in April that more than half its 1.44 million delinquent mortgage customers weren’t eligible for HAMP. Wells Fargo says about 80 percent of its roughly 500,000 modifications are non-HAMP. Combined, the two banks serve nearly 40 percent of U.S. mortgages.
HAMP also has seen a surge in homeowners failing the three-month trial period, and a decline in new trial enrollments. Critics blame servicers for the declines, saying they’re doing a poor job and unfairly bouncing people from the program. Servicers acknowledge there were problems, especially early on. They also say homeowners aren’t complying with payment agreements or document requirements.
Whatever the reason, the problem isn’t going away. The number of struggling homeowners nationwide is expected to remain high because job growth remains sluggish and millions of people are out of work. That means alternative modifications are likely to become even more important tools for preventing foreclosure.
“The goal is just to get to affordability … whether that happens through a modification through HAMP or outside of HAMP,” said Tom Goyda, a Wells Fargo spokesman.
There are many reasons property owners can’t qualify for the federal program.
For example, they might have refinanced or bought after HAMP’s Jan. 1, 2009, cutoff. They might not meet income or debt requirements. HAMP modifications, subsidized by taxpayer dollars, also aren’t available for investment property, vacation homes and high-end homes.
In April, Bank of America finalized more than 23,000 HAMP modifications and had more than 210,000 in the pipeline. The Charlotte bank also has been averaging about 13,000 alternative modifications a month this year, said spokesman Dan Frahm. Most are for customers with mortgages issued after the cutoff or above the HAMP limit or on properties that aren’t their principal residence.
“HAMP is at the center of our modification efforts at Bank of America,” Frahm said. “It’s also important to recognize that no one solution or program can address the … issues facing homeowners, who are experiencing hardship as a result of prolonged recessionary impacts.”
President Barack Obama announced the HAMP program in February 2009, well into the financial crisis. Prior to that, lenders and mortgage servicers were already doing modifications so it’s natural there are more of those. Many HAMP applicants also are still working through the slow, cumbersome process.
Servicers participating in HAMP must first consider homeowners for loan aid under that program. If that doesn’t work for customers, servicers can consider them for their own programs.
Goyda said Wells is doing alternative modifications for about 60 percent of customers who reach HAMP’s trial phase but don’t ultimately qualify. About 10 percent find other solutions, and the balance are probably headed for foreclosure.
Of HAMP, he said: “It’s only one part of our overall efforts to help customers find affordability.”
Consumer advocates, while sharply critical of mortgage servicers for poor modification service, generally endorse HAMP’s intent and its standardized approach.
“It’s a useful template,” said Julia Gordon, senior policy counsel with the Center for Responsible Lending in Washington. “It’s by no means some kind of gold standard.”
For example, a recent HAMP change eliminates unemployment benefits as a qualifying source of income for modifications.
“That’s just crazy,” she said.
Gordon cautiously welcomes alternative plans because they can potentially help more people. She’s concerned homeowners won’t have a consistent way to know what’s available and how to qualify. She and others have seen instances where payments are actually higher under non-HAMP plans — not a workable solution for a struggling borrower.
She also frets about the lack of federal oversight for in-house plans. The U.S. Treasury oversees HAMP, but has been criticized for not penalizing servicers for mistakes.
Gordon urges people to review any modification offer carefully. What’s the new payment? Has the principal been reduced if the loan balance exceeds the value of the house? How long does the modification last?
“It is conceivable you could have a proprietary product that’s better,” she said.
Under HAMP, the government pays servicers and homeowners for successful modifications. For homeowners who make all their payments on time, that can amount to $5,000 paid toward their loans.
Those incentives aren’t available under alternative plans.
Al Ripley, with the nonprofit N.C. Justice Center, has been critical of HAMP’s cumbersome nature. He’s also concerned about the lack of consistency and transparency in alternative plans. He says all servicers should be required to disclose their guidelines and processes for all modifications.
“It would be very helpful for homeowners to have more predictability when applying for a modification,” Ripley said.
Allison Rinehart’s budget was tight in late 2004 when she paid about $136,000 for her Charlotte townhome.
She put $4,000 down on the home and took a 30-year mortgage at nearly 9 percent. Her monthly payments were $1,111. Rinehart and her daughter, Sydnea, now 15, got by on the roughly $30,000 a year Rinehart made as a longtime, self-employed hairdresser and middle-school coach.
Last spring, she noticed business dropping off more sharply as her clientele struggled in the downturn. In July, she asked for a modification from Select Portfolio Servicing, the Utah firm handling her mortgage. She received an unusually speedy offer of a trial plan, which is supposed to last three months.
Rinehart was told to make the first payment on Sept. 1 at her original amount. Subsequent trial payments were cut to $685. She made those payments through March, when she received a letter saying she was denied a HAMP modification. Soon after, she contacted McClatchy Newspapers.
“This has caused me sleepless nights, depression and anxiety,” said Rinehart, who also works in her church’s office and has been a nanny. “My 15-year-old doesn’t know whether or not she will have her home the next day or not because of this.”
SPS offered another trial, with monthly payments at an even lower $456. Rinehart started the payments in April but worried it was a delaying tactic and she’d be denied again. Meanwhile, she received notices from SPS saying that to keep her house she had to repay the thousands of dollars that hadn’t been paid during the trials.
“It really scared me,” she said. And angered her. If she had the money, she wouldn’t have asked for help.
“It was a slap in the face.”
In May, McClatchy Newspapers began contacting SPS, asking about Rinehart’s case. After several weeks of messages and e-mails, the company said it would send Rinehart a response.
In that letter, SPS said Rinehart didn’t qualify for HAMP because she failed to send documents by a certain date. Rinehart said that’s not true, that she has copies and certified mail receipts proving she sent everything requested, on time.
The May 27 letter, which Rinehart provided the newspaper, confirmed Rinehart made the first two trial payments. The letter said once she made the third payment, due last week, “SPS will complete the modification process and you will receive the final modification agreement which requires your signature.
“Once this is received, SPS will permanently modify the terms of your note and bring your account current.”
Her June payment cleared her bank shortly after the 1st of the month. On June 10, she arrived home to find the promised paperwork. She believes that happened only because she went public.
Last week, she was reviewing the papers and reflecting on what sustained her.
“I relied on my faith.”

***This blog was posted morning of 6/17…update same day at bottom of article…

The mad rush to get under contract before April 30th in order to get the $8,000 tax credit is behind us…but the stress has continued for those buyers who put in a contract on a short sale which can sometimes take 6 months or more to close. Under the original tax credit rules, those buyers who got ratified before April 30th had only until June 30th to close on their new home. Well, with June 30th right around the corner and lender backlogs, the Senate decided to vote yesterday to extend the closing date requirement to September 30th. This is good news for those buyers who have been very patient during the short sale process. We certainly thank our buyers for their patience – we’re working hard to make things move quickly.

Also, I wanted to share with those buyers who seem to be getting no where with their lender these days…one of our local lender partners, Mike McBride of Wells Fargo, is offering other incentives equal to the tax credit if you’re running out of time or you did not meet the April 30th deadline. He can offer qualified buyers lender credits up to 2% of the loan amount, which can equal what you wanted to gain from the tax credit. If you’d like to talk with Mike, you can contact him be emailing mike.mcbride@wellsfargo.com or call him at 703-801-4771.

***Update: The June 30 closing deadline has not been extended…but it was accepted as an amendment to the Tax Extenders Bill. Under the amendment, borrowers who signed purchase contracts by April 30 would be given three extra months to close their loan and still qualify for the homebuyer tax credit. The new deadline would be September 30, 2010. In a budget “point of order” vote taken this morning, the Senate actually voted against the bill that contains the homebuyer tax credit extension amendment. This forces the Senate Finance Committee, chaired by Senator Max Baucus, to rework the overall proposal before another vote is taken.

We’re finding that when borrowers are REALLY in trouble, even with a foreclosure date already set, they find us…and we’re having great success stopping the process in its tracks. Lenders are becoming more receptive to the Short Sale market and they’re becoming much more flexible by the day, especially when it comes to deficiency waivers.

Recently we’ve found that when it comes to stopping foreclosure dates fast, no lender has been more responsive in terms of speed and results than Wells Fargo (Wachovia). Just in the last 2 weeks, we’ve managed to stop 3 fast moving foreclosures:

Brynwood in Herndon, VA…Broadfield in Spotsylvania, VA…Downing in Annandale, VA – Foreclosure dates on the homes you see here have all been postponed with the borrowers’ lender, Wells Fargo (Wachovia), while our team finishes negotiating the short sale. While it seems like common sense for lenders to help the homeowners in this market, it is actually very typical for banks to be aggressive with foreclosure dates while, at the same time, their loss mitigation department begins working through the short sale. The fact is, the departments involved in both actions don’t talk to each other like you’d think and we see foreclosure dates set on short sale files all the time. Wells Fargo has been one of the best to work with in postponing foreclosure dates when we can get a complete short sale package in to them ASAP and we keep the communication lines open. We hope to have these three short sales approved and closed soon and will keep you posted. As for other lenders, we’re seeing lots of success with them too. Call anytime for more information at (703) 774-9572 or email jennifer@jyhteam.com.

Homeowner has 2 loans on this home equaling almost $1 million. Suntrust Bank has approved the short sale of the home for over $400K less than what’s owed. In this case, the homeowner took out an equity line of credit to make improvements on the home and the homeowner was able to establish that the money “was” used for improvements and Suntrust has agreed to take a short payoff on both loans. Notice in both letters that Suntrust has agreed to a Waiver of Deficiency for the remaining balances: “…those amounts will be considered a partof the settlement and forgiven”.  Also shown in yellow – the verbiage used to describe how the payoff will show on the borrowers future credit history report: “Settled in Full for Amount Less than Owed.” Both short sale approval letters can be seen below.

***This is a case where the homeowner could not possibly qualify for a loan modification (HAMP) or the new government backed short sale program (HAFA) because of the amount owed on the home – it is higher than the cut off of $729,750 to qualify for assistance.  If you know someone in this situation or something similar, let us know by emailing me or calling Jennifer at (703) 774-9572. More blog posts like this can be found at virginiashort2.wpengine.com .

New Indymac (One West Bank) Short Sale Listing Today in Manassas, VA (Prince William County)

Homeowner bought their townhome during the height of the market and has faced a hardship. It’s a 2bed/2.5 bath home listing for $180K. We’ll keep you posted on the approval process and closing!

(VIRGINIA)  June 14, 2010 – Local real estate agent, Jennifer Young of Keller Williams Realty, this month completed her team’s Pre-Foreclosure Specialist Certification, or PSC, training through PartnerFirst, LLC. This groundbreaking certification is the first homeowner-centric  designation specifically aimed at avoiding foreclosure and/or completing a short sale. A short sale is when a lender agrees to take a loss on a particular property loan, allowing the homeowner and borrower a dignified way out and getting a new homeowner into the house, as opposed to foreclosing on the property and having it sit vacant for months.

 “I obtained this certification with the community in mind,” Jennifer Young said. “When faced with a possible foreclosure, I’ve seen many homeowners make decisions based on fear, even walking away from their homes without so much as attempting to contact their lender or real estate agent. Most of these borrowers had no idea about the options available to them.”

 “I want to help struggling homeowners in Virginia and Maryland make informed decisions about what to do when faced with possible foreclosure or when they’re behind on their mortgage.”

Jennifer Young of Jennifer Young Homes is the latest certified agent with PartnerFirst’s PSC designation, which is sweeping the country and making real estate agents everywhere a vital resource to their community and homeowners.

 Son Nguyen, co-founder and COO of PartnerFirst, based in Corona, California, said that too many homeowners in foreclosure or behind on their mortgage payments are moving forward without assistance of any kind.

 “PSC Certified Agents are helping distressed homeowners understand that there are alternatives to foreclosure,” Nguyen said. “Jennifer Young has been trained to help homeowners avoid foreclosure with a full host of options, advanced training, and a homeowner-first method that will make her and her team a vital resource to their community.”

 The PSC designation provides real-estate professionals with the latest in cutting-edge training on everything regarding short sales, including the most up-to-date information on government legislation such as HAMP and HAFA as well as advanced negotiating and marketing techniques. PSCs are quickly becoming an important fixture in any community where foreclosure is looming over homeowners.

For more information on Jennifer’s team, visit www.HomeRescueVirginia.com.

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According to Realty Trac’s U.S. Foreclosure Market Report^TM for May, a total of 322,920 properties nationwide were the subject of a foreclosure filing during the month compared to 333,837 in April.  This is one in every 400 U.S. housing units. The new figure represents a 3 percent decrease in foreclosure filings vs. April and a 1 percent increase over the filings reported in May 2009.

This report incorporates documents filed in all three phases of foreclosure:

1. Notice of Default (NOD) and Lis Pendens (LIS). This is the first legal notification from a lender that the borrower on a mortgage loan has defaulted under the terms of their mortgage and the lender intends to foreclose unless the loan is brought current.
2. Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); If the borrower does not catch up on their payments the lender will file a notice of sale (the lender intends to sell the property). This notice is published in local paper and contains information pertaining to the date, time and subject property address.
3. Real Estate Owned or REO properties : “REO” stands for “real estate owned” and typically refers to the inventory of real estate that banks and mortgage companies have foreclosed on and subsequently purchased through the foreclosure auction if there was no offer higher than the minimum bid.

Notices of Default and Lis Pendens were received on 96,462 properties, a decrease of 7 percent from April and a 22 percent decline vs. May 2009. This is good news as it implies less borrowers are falling behind on their payments.

New Foreclosure auctions were scheduled on 132,681 properties. This represents a 4 percent decrease from April, a 1 percent decline vs. May 2009, and a 16 percent improvement from the peak of 158,105 seen in March 2010. This is also good news but possibly a factor of the expiration of the homebuyer tax credit.

Bank repossessions (REOs) were carried out on 93,777 properties in May. This is 1 percent worse than April and a 44 percent increase vs. May 2009. This is the second month in a row where bank reposessions hit a new record high.  All 50 states reported year-over-year increases in bank repossessions. This is bad new as it implies more homeowners are being forced out of their home and bank balance sheets are filling with distressed housing inventory. This is shadow inventory being converted to actual inventory!

The fact is – sometimes it just pays to foreclose and banks will do so if no one stops them.

We’ll keep watching the latest news to pass on…

Another new scenario homeowners are looking for more info on. What if you took out an equity loan on your primary residence or investment property when the market was hot, but now the mortgage is too high? If so, you’re not alone. We have many clients call with this problem and we’re now seeing how banks prefer to handle that type of situation. Take this home that we just received short sale approval on from Bank of America. The home is an investment property on Glenister Drive in Springfield, VA. The borrowers pulled equity out of the home and now the home is worth less than they owe the two banks involved: 1st trust is PNC Bank and 2nd is BofA. We were able to get a good contract on this home, which was enough to pay off the 1st trust, but left BofA without full payment. In this case, we were able to get BofA to agree to accept the proceeds left over from the sale of the home after PNC was paid, which turned out to be only 10% of the 2nd trust amount. This was great news, but because the homeowner could not show that they used the equity loan to improve the investment home (proof of improvements are typically shown during appraisal), BofA would not agree to accept the 10% as full payoff. They agreed to allow the sale of the home and they are sending the unpaid amount to their collections department and the sale will show up on the borrowers credit report as “Charged Off”. These are not the numbers, but I thought I’d give an example of how the money side of it worked out – and the approval letter for your review is below that:

Borrower Owes:
$250,000 1st Trust to PNC
$115,000 2nd Trust to BofA Equity Loan

Home Sells for:
$275,000 (which pays off the first trust, with $25,000 in proceeds for 2nd trust)

BofA takes the proceeds and sends the rest to collections due to no clear indication of equity loan reinvestment into home the equity was pulled from. In the example above, $90,000 will still be owed in some form to BofA. The good news is, the homeowner avoided foreclosure and the ongoing late payment hits to their credit score/history. Here is the approval letter from BofA:

The U.S. Department of Veterans Affairs (VA) has issued new guidelines for modifying VA-guaranteed home loans. The new procedures are effective immediately, and
give servicers the authority to restructure distressed loans in accordance with the administration’s Home Affordable Modification Program (HAMP) if other loss mitigation options have been exhausted.

“The intent of these instructions is to ensure that veteran borrowers receive the opportunity to be considered for affordable loan modifications when other home retention loss mitigation options are not feasible,” the VA’s notice to servicers reads.

VA says it expects servicers to exert all reasonable efforts to assist veteran borrowers in retaining ownership of their homes or mitigating losses by pursuing alternatives to foreclosure. The department’s new guidelines lay out a “priority of review” for servicers going forward. Before considering HAMP-style modifications, servicers must first evaluate defaulted mortgages for traditional loss mitigation actions, such as repayment plans, special forbearances, and proprietary loan modifications. If the payments are affordable, then the traditional loss mitigation option will be used. If none of the traditional home retention options provide an affordable payment, the servicer must then evaluate the loan for a HAMP-style modification prior to deciding that the default is insoluble.

The VA HAMP-style modification authority can be utilized only if the following three requirements are met: 1) borrower does not qualify for traditional home retention loss mitigation, 2) the property is the borrower’s primary residence, and 3) the VA HAMP modification is agreed upon prior to the HAMP expiration date of December 31, 2012.

While the U.S. Treasury restricts HAMP modifications to loans originated on or before January 1, 2009, VA says it will allow servicers to use HAMP-style modifications on any VA-guaranteed loan, subject to the requirement that prior VA approval is obtained if less than 12 payments have been made since the loan closed. VA says it expects servicers to complete all loss mitigation activities, including review for HAMP-style modifications, expeditiously, since interest on any claim under guaranty on an unsuccessful case is limited. Standard VA servicer incentives apply for any completed modifications. VA-guaranteed home loans are not eligible for the HAMP incentives issued by the Treasury at this time. VA will not pay servicer incentives for any modification completed on a current loan, and will not pay the borrower incentives for remaining current on the modified loan.