Here is a blog entry from Ben Curry.. who is associated with us…

Question from Agent: Do you have any contact info for Bank of America Senior Management, VP or someone who has Intelligence? I have two files I am working on with issues.

1. I am the buyer’s agent on a short sale and BofA has approved the sale but gave us a rediculous closing of 20 days including weekends because they have a sale date of July 28th (refusing to extend) and per contract we have until 30th… lender needs every day of that to get the loan done. Your advice would be appreciated

I have given the listing agent ideas on what to say but she has been told that senior management has denied an extension which I highly doubt the negotiator even asked for it.

2. GMAC is the first lender who we have approval from with a closing of Aug 16th (second buyer on this home..first buyer walked) and BofA is the second. BofA previously approved receiving $3000 but is starting their approval over with the new buyer screwing up our closing time frames because we are waiting on them. Bofa is now approved to get $10,000 but will get nothing with a sale date of Aug 19th. They are ordering another valuation on the home (What’s the point?). We need approval today to get this escrow done by 16th.

These banks like to shoot themselves in the foot!!! Laura Baron

My answer: Ten grand is a lot of munney! I could go on a nice vacation with that. I have never heard of a 2nd ordering an appraisal.

Man, I am just sick of this BOA bularky! I can get my files approved, but I get story after story after story from agents, just like this. It gets on my nerves!

Here is the real problem. The employees at the lenders are making up their own rules. They are taking ego trips (without realizing they are putting 200k at risk.) Any person who races at 120 mph in his boss’s expensive sports car is going to get fired. But not at BOA.

Agents, what is the problem? Let’s take off the kid gloves and start holding these lenders accountable. If they play games and put their investor’s munney at risk, let those investors know. If they make stupid financial decisions, then let the public know.

If you went to court, would you want a weak lawyer representing you? Do you think the judge is going to decide the case based on who is nicer? No! You want a lawyer who makes a strong case on why the judge should agree with them.

The reason these lenders push agents around so much is because they don’t stand up for themselves. If most agents stood up for themselves, things would change. Remember, what these lenders are doing is not a victimless crime. Every single investor who loses munney, will tell other investors.

And other investors will stop investing in mortgage backed securities. So in a round-about way, these lenders are hurting the housing market, by taking mortgage munney out of the market. Less mortgage munney means less house sales. Which means there is less opportunity for you.

Here is what I would do.

File #1: Threaten to picket the local office. Or just picket the local office. Don’t let the weak listing agent tell you to stop. In fact, maybe they should join you!

File #2: Call your local BOA branch and tell them you will picket with a sign that says “Bank of America lost their investor $10,000 thru sheer incompetence. How do think they will handle your money?” Give that branch manager a deadline to approve the short sale, or you will be out there “educating the public.” That is not blackmail. You are simply holding them accountable to doing their job.

Or, you can picket today and hold a sign that says: “Bank of America risks losing their investor $10,000, because of sheer incompetence. How do think they will handle your money?”

I have to tell you that this is pretty lonely. I like to get files approved, because it makes the owner of the loan more munney and helps the housing market and economy. But, all I ever get are e-mails about how these strategies are unethical.

It’s not a big deal, because I don’t depend on other people to validate me. But, sometimes you still wonder. Is there a silent majority out that agrees with me? If so, then let me know.

Got questions about short sales? Just ask.

Ben & Chris Curry

I love the new book by Chris Farrell, “The New Frugality.”  He hits it on the head.

If your someone who’s considering short selling or having trouble justifying your “old way of thinking house payment,” you are feeling the trigger of something new arising inside of you.

You’re letting go of an old reality.

This lifting of the “hegemony” or “matrix” way of thinking that we have to have A LOT of SPACE to feel important, is loosening its grip on us all.  I am seeing it everywhere.

SUV=not cool

Small cars that are cheap = cool.

If you are exploring these changes in your way of thinking, and noticing it in the subtle shifts around you.  Happiness = less expenses.  Please go out and buy the book.  Better yet, get it at the library (I went to the library for the first time because it was about not buying stuff, I actually went down town, got a library card and checked it out).

Farrell talks about the new age that we are in.

There is a silver lining to this great recession.

I have been thinking about the silver lining to this great recession.
For all of us, it’s in how we respond.  If we grow bigger and get bigger as a nation.  As a family.  As a community, and a person.

Who will you be as a spender now?

What will you do with your money now?

What will you do with your time?

What about the false promises we made about working more = having more = happiness?  Do you have any of those to clean up?

I look back to the houses people bought with me and the way that we thought in masterminding their purchase.

It is so different than the buyers’ of today.

The buyer of today is engrained in the mindset of monthly payment and long term freedom more than ever before.  They will NOT make a mistake buying.

Fewer people are buying a condo where they “rent” or assessment is thrown away and something they can’t control.

More people are open to or asking me about the magic buildings for freedom “multi-units”.

You can buy a three flat for $500k or less with 3.5%  down (Using an FHA loan) and live for under $2000 a month for thirty years, in many great neighborhoods in Chicago now.  Versus buying a showy condo and living with a housing expense of $2750 or $3100.
The “popular” choice is now the “cheaper” route.
It’s the “free” route and the “safe” route now.
With job insecurity, why not have a job called “manage 2 units under me and collect rent,”

That big suburban house that is 4500 square feet that I felt guilty moving Carl, one of my first clients in 2002 into (he had NO kids).
He just wanted that big house.
Well I can’t imagine that choice being made anymore.
Move to Orland Park for a McMansion like that and get saddled with heat and electricity bills that are in excess of $300 a month!

Those old big homes are not energy efficient either.  That’s a whole new page.  The less it is to operate a home the more it is a part of our future.

Wells Fargo just made $3 billion in the last quarter.
That San Francisco bank is really on the ball right?

It fails logic to my experience here at “street level” in the trenches.

Wells Fargo is the first lien holder on a short sale of mine on Division avenue.  It’s a luxury condo in Wicker Park.  Client owes $750k on it.  It’s one of those showy units that everyone used to want before the “Age of Frugality” kicked in.

I had it under contract last August (again, last AUGUST 2009) after doing a sold in a week auction and getting 52 people to come and 13 bids at $460,000.

At that time that was the right price.

The deal was under contract 8 months.  All winter we waited for file escalation after escalation and kept faxing in paperwork and pay stubs and whatever Wells Fargo elfs asked for.

Didn’t get final approval.

Now, the market dropped, and I have another buyer as we are down to the wire and about to go to auction.

The bank sent an appraiser and called the value at $410k recently. I had $460k for them for 8 months under contract over the winter, and they didn’t accept it.

It will most likely go to auction and they will get maybe $350 or $320k by the time they recover their asset and sell it in the open market.

I have been wondering if they have the best and brightest over there, but it seems they do.  It turns out they just pulled in over $3 billion in profit.

I guess losing $100,000 on a deal here and there just somehow doesn’t matter to a bank this big.

What doesn’t make sense is my client in this case is really a solid candidate for shorting. He’s not a strategic defaulter.  He’s BK chapter 7.  They are not getting a dime from him.  He’s been living there free all the while.

The building is going to be hurt by this.  The bank will be hurt.
I and the other buyer’s Realtor will never get paid.
All for what?

Wells Fargo could have had a deal last September for $460,000!!!

The small bank down the block that I am doing a short sale with, where the President of the bank actually gets on the phone with me, his name is John.   I think he’ll get a kick out of the way Wells Fargo let that $460k buyer just go and took the $350k or so instead, and still profited $3.06 billion!!

I think I’ll call him and tell him this story next week.

If the Fannie Mae guidelines say that a ample letter laying out that the Mom to be will have adequate income upon return to the job, they should be okay.  Okay?  So that whole issue of Pregnant Moms not getting loans should just go away!

I was outraged when I read the stories yesterday and the reactions.

But a lot of Moms are finding that being pregnant is a reason for a lender to DISCRIMINATE against them and deny them the HOUSE (NEST) to have the baby in.

How nice this is, to see the full extent of the lending industry’s risk averse execution of the hatchet upon families.

They are so worried about having to buy back those loans they originate, that lenders are frozen and digging past where the guidelines even ask them to, that is my read on what is going on.
It causes delays.  It creates caution clouds over buyers or “would be” buyers who are now pregnant.  I am sorry.  I don’t like it.

I don’t like anything to do with pregnancy disqualifying anyone for a home purchase.  It’s antithetical.

Hey, I wonder if the right to lifers will come out and jump on the lenders on this one?  Let’s start a Right of Moms to buy a home rights campaign!  Let’s go.

Would someone get outraged at this please!

Everyone, from the Wall Street Journal, to the NYT is reporting on this like it’s so logical.  Oh, of course the lender is in their right to assess their risk because this is a potential gap in the families income and the probability that the Mom might not come back to work is there.. yadda yadda… etc etc.. and are well within their right.

Would someone stand up.  Starting a family should be a decision that is supported and conditions made more suitable for. Find a way to back off, lay off and make this issue a NON issue for a Mom who is expecting to buy a house.

How about favoring the family with a reduced ratio for families because they are the fabric of the nation.

Something.  Figure it out. You’re the experts.

How about finding a way that the issue is like “don’t ask don’t tell.”  Okay, off the short sale subject which this blog is about, I have to just lay into how silly this is.

How can a bank take the fact that you a pregnant and then infer that you are on maternity and might not come back to work and then deny a loan based on that little fiction they inferred?

Read up, say that you are approved for a loan.  You accidentally email your Loan officer that you are going on maternity leave the week of closing… OUCH.. that email should not have gone to the BANK.

The bank now knows your pregnant and that you are — oh no — going to take 12 weeks off with your little girl.

How dare you.

No house for you.  No home. No nest.  Keep renting.

They can’t discriminate because she’s pregnant, but can they relating to any and all issues relating to her pregnancy.  She gets her maternity leave.  She is expected to come back to the job.  Any insinuation otherwise is illegal.  Period.  Any inference otherwise is illegal.  Period.

Before you ever stop making payments, if you are thinking of it please consult your attorney.

But let’s probe the question and pro’s and con’s of stop making payments during a short sale…

First of all let’s lay out the truth.  You do NOT need to be in default with your lender in order to do a short sale.  It is not true.

Do many Realtors think it is?  Yes, from my experience.  Does it make you more likely to be successful if you are behind on payments based on my personal experience?  Yes.

Many Realtors tell their clients that that if they have not and will not miss payments, they will not be successful in a short sale.  But, this is not true, it’s just not as common.

A good attorney I know advised a client this way:
You don’t have to miss payments, but will most lenders act quicker on a file that is not current (behind on payments)?  Yes.

Then he said:  Some client’s don’t have a choice due to financial hardship.  If they have decided to “let go”of the property for economic reasons, I have heard an attorney say, “why would you keep putting money into it.”  That money could go toward your health care, your food, your job hunt or your rent at your next apartment.

Negatives of not making payments:
It negatively impact to your credit score.
There will be a negative impact of short selling on your score anyway.  Broadly your score seems to drop 100 to 200 points on average after a short sale (from an informal survey I did of clients who shorted recently).  A foreclosures is a 200 to 300 point hit from my research online.

According to Fannie Mae guidelines you will not be given a conforming loan to buy a home for at least 2 years and potentially up to 5 years.  One of the problems is that Fannie sees all short sales as the same.  Meaning if you had a “good” reason to short sale or a “bad” one, you’re still in the same category and it will be hard to get a loan for 2 to 5 years.

If you miss payments, you can end up in foreclosure.  If you’re paying (by your attorney’s advice) during the short sale process and the bank rejects (says no) to the sale offer, we would find you/buyer’s offer… you could end up losing the home to foreclosure. Obviously.. .this would happen anyway if you couldn’t pay the loan anyway.

According to the attorney, here are the reasons you would want to make sure you would make payments during the short sale:
If you can afford it, it helps you, because more than likely you will be able to get an FHA loan in the future if you were not late on any of your mortgage payments.  Reading over the Fannie Mae guidelines issued in August of 2008, it turns out that you are also supposed to be able to get a conventional loan if you do not have to pay back the lender the “short fall” and did not become delinquent during the short sale.  Even though this is in the guidelines, many lenders don’t interpret it this way.  But you might find one who will go along with the positive interpretation.

If you keep making payments, it does help protect your credit to some extent, although the lender can still report your short sale which will effect your FICO score.  This is recognized as Credit Score Factor Code #22.

If the short sale is not successful, you will still be current and not in jeopardy of losing the home.

Emotionally it is much easier to short if you have not fallen behind in your mortgage payments.  The guilt trip that the lenders are laying out on cable tv by creating the issue into an emotional one instead of a business one is effective.

Ok, so to wrap up, you have heard some of the positive and negatives to encourage you to process it and consult your attorney.  If you would like a referral to specialists please give me a call.

-Phil Buoscio, Broker Better Living Realty — Buoscio Brokerage Inc.

FORECLOSURE CAN LEAD TO HUGE DEFICIENCY JUDGEMENTS PLUS INTEREST SHORT SALES CAN LEAD TO NONE.

The guilt trip laid out on cable tv day after day, of bank talking heads stating the “unethical” actions of defaulters is not working.  So now sharper strategies are coming out.  This is an effort to stop the estimated 1 in 5 defaults on loans that are supposedly “strategic.”  A strategic default is when a borrower stops making payments on a debt despite having the ability to keep making the payment.  Banks are becoming more aggressive about going after the owners of foreclosed properties and owners that strategically default on their loans.

One such strategy the banks use on foreclosed owners is to literally “sue” (get a judgement via the courts) for the amount unpaid, plus interest and penalties after a foreclosure.  Ok.  What does that mean?  Let’s say you owe $500,000. Value of the home at auction is $300,000. You can get a deficiency judgement for $200,000.  Ouch.  Chapter 7 anyone?

What’s the alternative?  Short selling is one option.

If you short sold… You could have listed the property and “responsibly” attempted to repay the debt by short selling the property.   This forces a negotiated settlement, showing the courts and the lender you are trying to repay your debt. This results in a increased likelihood of not getting a deficiency on the $200,000 that was still owed on your home.  Just in June we closed three Short sales and all 3 received a no deficiency judgement, although the second lender on one received a small right to try to recover a small amount of the debt.
So foreclosure can lead to HUGE deficiency judgements.  Short Sales can lead to NONE.  This is pretty severe difference.

The deficiency judgement is a  weapon that many institutions use as a tool  to combat strategic defaults.  You are the enemy if you are a “strategic defaulter.”  How dare those people walk away from their home and let us have it back!!!!  The bank says, “they paid us interest for many years and now they are broke and lost their job, but must continue to pay.”

The person who is thinking of just walking away and letting a property foreclose, should take heed to this point.

Let’s review this again.  A deficiency judgment happens when the bank has not only taken the home back, but has also sold the home (i.e. at an auction where they get “bottom” dollar) because it’s usually marketed in a “bare bones, boarded up” way.

The sharks come in and feed on your old home and pay pennies on the dollar for it (in a short sale we market it much better and get much more usually).   However, the proceeds of the foreclosure sale (the banks sale of your home after they took it back) were not enough to cover the full amount of the original mortgage. Of course it wasn’t because they boarded it up first, then took the picture and said, “as is sale/no survey/cash buyer’s preferred.”  What did they expect!

That difference between the foreclosure sale, and the original mortgage, is often referred to as the deficiency.  If a bank, such as Bank of America, suspects that the borrower simply walked away from the mortgage despite having the financial capacity to pay, the bank will likely have an increased incentive to pursue the borrower and seek recovery of the deficiency by way of a deficiency judgment.  It should be emphasized that if a deficiency judgment is properly recorded, it could remain in effect for up to 20 years depending on where you live.  That means that the bank could have up to 20 years to recoup each and every penny, plus interest, on the deficiency judgment.

It becomes important to consult with a foreclosure attorney (call us for referrals) and loan modifier to exhaust your options first.  Then it’s important to consider Short Selling before going the foreclosure route.

Phil Buoscio 312-953-6725

FANNIE MAE’s “Blacklist” on Short Sellers.

Why are lenders targeting strategic defaulters?  Is it because they are educated and making good decisions for their families welfare?  Did you know that the short sale rate of the “rich” is at a 50% higher rate than that of the “non – rich”!  Ok.  That tells you something.  The New York Times published an article on this recently.

If you are having trouble making ends meet.  If you need mobility for the sake of your job or family and cannot sell. What are you to do?  Rent the home out and lose 30% a month and then hope it eventually goes up in value?  What are the consequences to a short sale?

I get this phone call and this question from homeowners weighing these stressful trade offs very often.

Trouble is that Fannie Mae has a one size fits all policy – imposing a strict penalty on potential borrowers who have undergone a short sale or a foreclosure.  Fannie Mae (in 2008) extended their 4 year “blacklist” period to 5 years saying, “the presence of a prior foreclosure action in the borrower’s credit history is evidence of significant derogatory credit and increases the likelihood of future default. The lender should consider the presence of a foreclosure as an added risk element that represents a significantly higher level of default risk. The greater the number of such incidences and the more recently they occurred, the higher the credit risk.”  Read more on this at the following blog www.bayarearealestatetrends.com/2009/10/stop-blacklisting-strategic-defaulters

There is no distinction of economic reasons for the default clarified.

Literally there are really good reasons for default, here are just 3:

1. To move for a job opportunity when one is unemployed
2. To move due to healthy reasons (ie. stairs, elderly)
3. To move due to a loss of equity and inability to make payments (economic reasons)

This is something we need to change. There should be categorization for “legitimate” short selling. The National Assocication Of Realtors should get into lobbying on this.  You would think opening the pool of buyers again would be in everyone’s interest as well.
Under the current Fannie Mae guidelines, the timeframe to buy again on the best “conforming” loan terms would hold a buyer off from buying on the best terms until 2015.

So when you go to short sale, if you do, you need to take all the variables into consideration. Will you be able to rent for that time and/or buy with a co-signor etc.

If you need help in reviewing your options please give me a call. I and the legal counsel I associate with can help you if your family is in need of a sober look at the business of your loan. We can help you STOP foreclosure action. We can stand up for your rights.

Phil Buoscio 312-953-6725

Thinking about short selling?

There was a very interesting front page article in the New York Times last Friday. It turns out that the rich think and act on short selling at a much higher rate than the middle class. The rich are walking away from their homes at a 50% higher rate than homes in lower price ranges.

The New York Times said “The Rich are Different. They are more Ruthless.”

Key thought here. Ruthless?? I don’t agree. I think those with money are very educated… not Ruthless. They know their rights. They know this is not a debate about “right” and “moral” and “ethics” the way the banks talking heads have spouted on cable tv.

It serves the banks for you to think you’re “bad” for not paying them interest on a house continually without question even if and when the home is upside down and you need to sell. The more guilt they can spread the more they keep the gravy train going for themselves.

The more guilt they spread over cities, the less mobility people have. Homeowners will continue to pay on condos and homes that have payments based on 2006 values, even when they need to move.

The first short sale I closed was a savvy business owner a few years ago. I guess they would be classified as “rich” even though I don’t think of them as that way. They are a normal thoughtful family. They trusted me and my specialty training in short sales: I got a $2,100,000 loan written down to $1,600,000 with no deficiency!! A half million dollar “discount” that allowed me to sell the home and kept them moving on with their lives.
That was the right decision. They didn’t have a stain of foreclosure on their credit. Nor did the bank foreclose and sell the home at auction for say $1.2 million and sue the family for the “deficiency” which would have forced them to Chapter 7 bankruptcy.

If you are in a home with a payment that does not make sense for you, STOP and think. Ask, why am I playing along? What’s best for us? Then call me. I have found that banks in all price ranges will do a short sale.

It is so much easier to start over without a huge debt on an upside down home.

Education is so important when selling short sales. Critical thinking outside of the way banks want you to think, “that you are unethical” or “immoral” for considering a short sale. We, as taxpayers, just bailed out the banks. Was the fact that they over did it, packaged and rated mortgage backed securities in manipulative and shady ways good business ?

Well your families needs come first in my book. The only reason somebody should stay in a home is if it makes financial sense and fulfills their needs to empower their lives. That is what the rich know.

Call me if you need to short sell a property or you know someone that needs my help. 312-953-6725