Thousands of foreclosures were canceled or postponed in June 2010 according to ForeclosureRadar. Researchers at the company received varying answers as to why the cancellations are up. The best answer came from one unnamed REO professional. According to the source, the Home Affordable Foreclosure Alternatives (HAFA) program had the most to do with the cancellations. The Treasury Department launched HAFA in April to provide incentives to servicers for conducting short sales and deeds-in-lieu of foreclosure to homeowners who fail the Treasury’s Home Affordable Modification Program (HAMP).

“Now that servicers have systems in place to administer the program they are removing delinquent loans from the foreclosure pipeline to allow a reasonable short sale time period,” the source told ForeclosureRadar. “Predictably (also my opinion) the period would be expiring just after the November elections so there would be less political blow back as those properties that don’t conclude with a successful short sale are taken to foreclosure and ultimately, REO.”

NEW Short Sale listing! Fantastic Townhouse/Condo with garage on Rosebay Ter. in Aldie, VA, 3 bedroom/ 2.5 bathroom listed at $254,900.  Homeowner bought their townhome during the height of the market and has faced a hardship.  We’ll keep you posted on the approval and closure of this Short Sale!  Call (703) 774-9572 or email Jennifer@jyhteam.com if you or someone you know needs help.

Whenever we receive a new approval letter, we like to post them so you can see the language the banks like to use. This short sale approval is for a short sale listing on Cobble Pond in Manassas, VA where the homeowner is expected to sell with the bank taking a loss of over $101, 000. You’ll want to check out the highlighted language though, since this is another way of the bank trying to hold onto the right to come after the homeowner for the deficiency at a later date. The big thing is, First Tennessee has used the language “charged off”. This is what will appear on the homeowner’s credit report instead of “foreclosed”. Now, the language also says “this short sale transaction should not be deemed as a waiver of any rights or claims…” The fact is, this is typical language, but we have not to this date seen a bank come after one of our clients for the remaining balance unpaid on their mortgage. Call me with questions (703) 774-9572 or email me at jennifer@jyhteam.com.

ick on link here to see approval letter: First Tennessee Bank Approval 7.12.10

NEW SHORT SALE listing…Bright and Open townhouse on Prairie Willow Ln.  in Centreville, VA 3 Bed/2.5 Bath listed at $399,900.  Both 1st and 2nd trusts are with Wells Fargo Home Loans.  We’ll keep you posted on the approval and closure of this Short Sale!  Call (703) 774-9572 or email Jennifer@jyhteam.com if you or someone you know needs help.

When homeowners are working against the clock to stop a foreclosure date, knowing who backs your loan can make ALL the difference! In the case of Freddie Mac backed loans, we find ourselves explaining to potential clients why it can take time to get the clock stopped. It’s because of how the system is set up.

Here’s how it works for Freddie Mac residential single-family mortgages: 1) A homeowner sends the monthly payment to the lender or a mortgage servicer that manages the payments, 2) the servicer keeps a small fee for managing the borrowers’ payments and sends the rest of the monthly payment to Freddie Mac, 3) Freddie Mac passes through the remainder of the mortgage payment to investors who hold its mortgage securities.

So, if your loan is backed by Freddie Mac, investors gave Freddie Mac the funds so you could get your mortgage. That means the servicer/lender (like Chase, Wells Fargo, etc) have to take your short sale package and pass it on to Freddie, who then passes it to the original investors involved to have EVERYONE agree to postponing the foreclosure date. Here are some links to help you find out if your loan is backed by government interests…

Does Freddie Mac Own My Loan?

Does Fannie Mae Own My Loan?

Homeowners in the Red Cedar and surrounding neighborhoods in Leesburg, VA bought in the height of the market and some are now having trouble making their payments due to ARM loans adjusting and/or hardships they’re facing. This is a Wells Fargo customer who owes much more than what the home can sell for. This listing is a stunning 4/BD/4.5BA home with many upgrades. We’re hoping to get the client a $3,000 cash incentive payment at closing from Wells Fargo – we’ll let you know how things are going once we have the home under contract. For more info call (703) 774-9572 or email jennifer@jyhteam.com.

New short sale listing hitting today…condo on Bellforest Ct in Vienna, VA. 2 BD/2BA listed for $315,000. Both 1st and 2nd trusts are with Wells Fargo Home Loans. We’ll keep you updated. We closed 8 short sales in June and the approvals keep coming. Let us know if we can help you or someone you know. Call (703) 774-9572 or email jennifer@jyhteam.com .

We brought you the story of the HAFA short sale that was still headed to foreclosure even though the owner was approved for the new government short sale program. Well, the foreclosure was stopped just a day before foreclosure and now Wells Fargo has sent in the short sale approval letter and we’re scheduled to close on August 16th. So, the homeowner has time to make the transition and the closing will happen within 3 months total for the new buyers. Now, the item that is starting to becomea trend with Wells Fargo is their demand for cash at closing from the seller. If it had been a direct loan backed by Wells Fargo, that would not be requested by Wells. But this loan was backed by an investor, so Wells Fargo has asked for $5,000 cash from the seller at closing. Of course, we’re still working on negotiating this down and we’ll keep you posted. The biggest news for the seller is – they’re waiving deficiency and they’re not asking for a promissory note for the amount not paid off. Here is a copy of the approval letter:

For additional info on this case, here is the first article written on this short sale:

http://virginiashort2.wpengine.com/hafa-short-sale-approved-but-quickly-hits-a-snag-wells-fargo-short-sale-in-herndon-va

It’s was a last minute scramble to close this deal yesterday to help the buyers to meet their tax credit deadline…thanks to our short sale client for his ability to respond quickly. What some people asking about short sales is that fact that there are NUMEROUS deadlines to meet and if you miss a closing date, it can be costly and the deal could fall through all together! This home was located on Palmetto Bay Ct in Centreville, Virginia. The home owner bought in the height of the market in 2005 for $382K. The home sold yesterday for $261K…the bank took a loss of $121, 000. The homeowner was able to find a new rental home and start over fresh. This was the 3rd short sale closing this week for the Jennifer Young Homes team!! Congrats to my hard working group and to this homeowner on the successful short sale of his home…. jennifer@jyhteam.com (703) 774-9572.

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!

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 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!

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:

Recent market data highlight a pressing need to deal with Home Affordable Modification Program loopholes and systemic problems that are costing homeowners their homes and preventing servicers from being efficient in their efforts to cope with the foreclosure crisis.

Insiders say large servicers are not set up to perform loan modifications and HAMP is not making it any easier for them.

The National Consumer Law Center in Boston is calling for mandated loan modifications before a foreclosure and additional third-party supervision of servicers. The nonprofit says it is necessary to create needed incentives so servicers pursue an effective loan modification instead of a foreclosure.

Currently, according to a new NCLC study, it is more cost effective for residential servicers — including the nation’s largest holders of receivables — to foreclosure on delinquent homeowners rather than to offer them loan modifications.

Modifications still are not happening at significant numbers because Congress, the Securities and Exchange Commission, investors and credit rating agencies “have failed to provide servicers with the necessary incentives to reduce foreclosures and increase loan modifications,” says Diane Thompson, an attorney with NCLC and author of “Why Servicers Foreclose, When They Should Modify and Other Puzzles of Servicer Behavior.”

“The report tears apart the different ways servicers get paid. And it’s pretty clear that servicers are more certain to recover their money and thereby make a profit better, if they foreclose, than if they modify.”

For example, data from one of the country’s largest servicers, Ocwen Financial Corp., West Palm Beach, Fla., and at least another six servicing agreements show that it is more profitable to go into foreclosure for servicers that own affiliates or management companies that get paid for all the foreclosure fees. (Ocwen reported it completed 44.6% of all of the HAMP permanent modifications.) “They are generating income from the defaults.”

In addition, according to Ms. Thomson, this type of business structure creates opportunity for fee padding. “In the report we cite the case of Wells Fargo testifying that they charged the homeowner, and ultimately the investor, $125 for a service that they actually paid out only $50 on. Ocwen’s annual report shows both how much money it collects from its main servicing operation and its asset management company. The difference is substantial.” Similarly, reviews from IndyMac, Chase and a few other banks, she said, “point to the fact that servicers get most of their income from the servicing fee and recover their expenses off the top in a foreclosure.”

The report reveals systemic problems, including lack of clear HAMP guidance and how they should get their money in a modification. Credit rating agencies do not provide much guidance either, Ms. Thomson says, and where given, it does not make sustainable modifications as attractive as foreclosures, “because it slows down” the recovery of their financial advances, which for servicers is one of their major costs other than staffing.

“There is an infrastructure that is set up to process foreclosures, and that is detaxed, but there isn’t an infrastructure that large servicers have set up to process modifications. So there’s a huge initial outlay for staffing, training, getting all the computer programs and the platforms going. Plus a lot of institutions have inertia to get there and move it along.”

These findings indicate that all loan modifications should have the same requirements applied on the FHA modification program.

“Until servicers are mandated to do a modification, modifications simply don’t happen. It is key because it shifts the incentive. We’re not saying: Do a loan modification no matter what. Do it when the net-present-value analysis shows that investors will make more money from a loan modification than from a foreclosure.”

That inquiry should be done first since it helps keep costs down for all parties involved.

“We looked at publicly available documents and previous studies from different sources to see how HAMP works. We don’t have hard numbers from most servicers,” Ms. Thomson said. Asked whether she tried to get data from other servicers she admitted of not even trying. “That’s because the goal was to understand what the incentives were from a macro perspective.”

The report is based on data from loans in foreclosure from 1995-2009. Recommendations include requirements to fund quality mediation programs, provide for principal reductions on existing loans through HAMP and bankruptcy reform, increase automated and standardized loan modifications for borrowers in default, ease loan modification accounting rules to facilitate standardized review, and enhance servicer recovery of the expenses incurred in performing a modification.