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B of A to Offer Principle Reductions??

Bank of America to Offer Mortgage Principle Reduction to 200,000 Borrowers

As a result of a recent $25 billion settlement agreement with the U.S. Department of Justice and the state attorneys general (allegations of abuses over the handling of foreclosures) Bank of America committed $11 billion toward a mortgage principal reduction program aimed at approximately 200,000 delinquent mortgage holders.

B of A has dabbled in a trial modification program since March, 2012 which included some 5,000 owners. They claim the program delivered a collective $700 million in savings for their borrowers.

There is currently an estimated 5.6 million U.S. loans that are delinquent or in the process of foreclosure of which 1 million of those are serviced by Bank of America. The balance are loans owned by Fannie Mae and Freddie Mac.

B of A says it has begun to send out 200,000 certified letters to potential candidates for this program and they estimate it will complete the staggered priority mailings by the end of the third quarter of this year.

Bank of America has suspended any foreclosure actions against these borrowers until the process of qualifying the 200,000 is complete.

Executives say borrowers receiving the letters are eligible for the modification, but they still have to prove they qualify. If the buyer qualifies, Bank of America will bring the monthly mortgage payment to 25% of the borrower’s gross income. In some cases this could mean principle forgiveness well over $100,000 because there is no limit to the amount of the mortgage. A successful modification could result in a 35% reduction in savings on their monthly mortgage payment.

The eligible candidates were determined after the bank performs a net present value test on each loan. This was done to determine if the principle reduction modification would net Bank of America or the investor who owns the loan more than foreclosing on the home.

Ron Sturzenegger a Bank of America executive says “If you can afford to make your monthly payment and are choosing not to, you will not get this principal modification”.

B of A spokeswoman Jumana Bauwens outlined the following criteria as primary qualification for this program.

• The program extends only to homeowners whose loan is held by Bank of America or an investor who has agreed to participate (excludes Fannie Mae, Freddie Mac or FHA-backed loans.
• The homeowners must owe more than the property is currently worth (underwater).
• The borrower must have been at least 60 days delinquent on payments AS OF JANUARY 31 OF THIS YEAR.
• Their combined monthly payment including insurance, taxes association fees along with principal and interest, must total more than 25% of their gross household income.

After qualifying, the homeowners have to make three on-time payments to make the reductions permanent.

It is important to note that according to FICO spokesman Anthony Sprauve that “There is no published direction on how to report principal reduction under the DOJ agreement at present”. In other words it is unclear whether the principle reductions will affect homeowners’ credit scores. B of A spokeswoman Bauwens further adds that it’s possible credit scores may be affected.

If you’re a home seller on the fence, you had better SEIZE THE MOMENT!

Talk to any busy Realtor in our Auburn, CA, or anywhere in Placer County for that matter, and you will no doubt hear that houses are selling over asking price, and with multiple offers.

Properties in Placer County are being listed and bombarded with multiple offers in a matter of days. And I’m not just talking in the affordable price range of $200,000 or under.

Cases in point:

1. A house in Meadow Vista in the $600K range had two offers–one buyer was disappointed.
2. My listing in Ophir, that did not attract an offer in January until the listing price went below $500K.  I received 2 offers the first day after it was relisted at the bank’s countered price of $520,000 (first buyer had to cancel), with two other buyers who were late to the party.
3. Another listing of mine in Ophir received 5 offers the first week, and I receive calls about it almost every day.
4. I listed a house in Wheatland on Saturday morning and had a cash offer by Saturday afternoon.

So what’s going on? In a nutshell, inventory is severely low.

The old rule of Supply and Demand

In September of 2007, during the decline, we had 10 months of inventory! What do you think was happening to home prices? Bingo, they were sliding downward. Now the reverse is true.

The perfect storm.

Sellers, you have a window of opportunity. We have heard the tale of “shadow inventory,” the homes in default that will eventually be hitting the market as bank owned. We have been hearing this for a very long time. If you need to sell, and sell quick, there hasn’t been a better time in a long time, and we don’t know how long this window will stay open.

Upside-down?

If you are upside-down in your home, there are options for you too. As an agent specializing in helping homeowners sell their upside down homes through short sale in Auburn, CA, and Placer County, my team can get your home sold on you on your way to getting back into this great market sooner as opposed to later.

Contact me to learn more about selling your home.

Short Sales: 10 steps you can take to make sure it closes.

Short Sales are not going away soon, and with inventory down, a short sale listing is where you might find your dream home.

As a Realtor who specializes in helping my clients through their short sales in Auburn, CA, I come across people every day who have misconceptions about them. One person’s bad experience with their attempt to purchase a short sale property takes on a life of its own. On the other hand, the predominance of short sale listings handled by experienced and diligent agents do actually close, and in a reasonable period of time. The key is to have a Realtor on your side who knows how to properly evaluate the short sale for its likelihood of closing before writing an offer.

When representing a buyer on a short sale, here are the questions I ask, and why:

1. How many loans are there against the property?

If there is one loan, the likelihood of approval is good. If there is a second loan with the same bank, there is still a good chance of approval. If the second loan with a different lender, they may ask for a substantial payoff, sometimes 30% of the unpaid balance. If they don’t receive it, they may not approve the short payoff which will keep the short sale from closing, forcing the first lender to foreclose.

2. Who are the banks?

Some banks are better than others for sure, and some lenders actually pay their borrowers to short sale!

3. Does the seller have a hardship (although this isn’t as important as it used to be)?

A financial hardship must exist, and can be anything from job loss, reduction in pay, divorce, illness, and even an adjustable mortgage that suddenly adjusts, increasing monthly payments beyond your ability to pay them.

4. Is the listing agent experienced in successfully closing short sales?

Does the listing agent know how to properly process a short sale? Have they priced the property according to market value? Are they using an experienced escrow company who can help facilitate the short sale? Are they on top of the transaction and updating your agent weekly?

5. What is the listing agent’s policy on submitting other offers?

Contractually, I make sure my client’s offer, if accepted by the seller, is the only one submitted to the bank. Otherwise they may be disappointed when another higher offer is submitted to the bank which knocks theirs out of contention.

6. Is the seller cooperating by submitting necessary financial and hardship paperwork?

A short sale requires that the seller provide extensive financial information, and then resubmit updated information throughout the process. If the seller is uncooperative, the short sale will drag on even longer, and may be rejected by the bank for seller non-performance. Ask your agent to be sure the seller is cooperating and is as committed to closing the transaction as you are.

7. Is the listing agent using a title company experienced in facilitating short sales?

Many title companies are now providing “enhanced” escrow services which includes assistance with short sale processing. When you have a title company involved that has extensive experience with various banks, the process is that much smoother.

8. Is the property priced reasonably, according to market value, so as to have a chance to be approved by the bank?

It’s bad enough when agents list overpriced properties, but even worse is when they list properties well under market value, creating a feeding frenzy of interested buyers. What these buyers don’t know is that the bank will conduct an independent evaluation of market value of the property and will expect an offer reasonably close to it.

9. Are there unpaid HOA dues, liens or PMI (private mortgage insurance) against the property?

Understand upfront if the seller is continuing to pay the HOA dues. The bank will likely not pay them, and the seller is usually not in a position to pay them off. In addition, if the preliminary title report shows any liens against the property, these must be extinguished prior to closing for your lender to agree to fund a loan. The PMI company can make or break a deal.

10. Finally, is your agent experienced representing BUYERS on short sales?

There is an art to thoroughly examining a short sale to be sure the the chance of approval is high. Be sure your agent is helping you by being sure you have the best possible chance of closing and moving into your new home.

If you stay current, you may be able to buy a home immediately after short sale.

Under the right circumstances, you don’t have to wait to buy your next home!

Recently I learned about a new loan program from my favorite lender, Roland Benson. He is with iMortgage, a direct lender, who has access to many loan programs that the big banks do not.

Through this particular program, you may be able to complete a short sale on your home and immediately move into your next home, avoiding the typical 3-year wait that most homeowners must endure.

There are some very specific requirements to qualify for this program:

1. Your present home is financed through a conventional loan.
2. You are current on your mortgage payments.
3. You are current on all other debt.
4. The NEW HOME must MAKE SENSE for your family (i.e., you are not selling just because you don’t want to keep your upside-down home), for example:
• The price is lower
• The payment is lower
• The home is closer to work
• There is an increase in room count
• Bottom line, it is the right decision for your family

To see if you might be a candidate for this program, contact me, or call Roland directly at (916) 768-1578.

Loan Modification: Should you waste your time?

Why you shouldn’t hold your breath for your bank to modify your loan.

For the past several months my Auburn CA Short Sale Team and I have been holding free community workshops for homeowners who are upside down in their homes and are unsure of their options. Our local attorney in Auburn, CA, Richard Hall, who specializes in this area of law, gives a great presentation which helps people understand what their options are.

A repeated theme is that our attendees tell us about the nightmare of their attempted loan modification, and include some or all of the following details:

1. It’s been 2 years and they still haven’t modified our loan.
2. They lost my paperwork over and over again.
3. I was assigned a new negotiator repeatedly.
4. One hand doesn’t know what the other hand is doing.
5. A notice of foreclosure sale was posted on my house!
6. My modified payment is higher than it was before I started the process.
7. They told me they wouldn’t work with me until I missed my mortgage payment.
8. And finally, “you don’t qualify.”

Do any of these scenarios sound familiar? Frustrating, right?

The reality is:

1. Approximately 1% of borrower-initiated loan modifications are ever granted.
2. Almost never is there a reduction of principle balance owed.
3. Even if your interest rate is modified, you will likely not be able to pay off your upside-down property in your lifetime.

The other thing that most consumers aren’t aware of is that the path to foreclosure keeps marching on. When the bank finally declines your loan modification, your options become very slim because time is about up.

There are more options than you might think, including the possibility to buy a new home, at today’s value, immediately after closing escrow on your short sale. Contact me to learn more.

Upside-down in your home? You may be able to qualify to buy another.

Many upside-down homeowners have found a way to take advantage of this incredible buyer’s market!

I talk to people daily who express frustration about the fact that they must continue to make payments on a home that is significantly upside-down. They watch as their neighbors abandon properties, either due to hardship, or because they are simply sick of paying for a home that will possibly never be worth what it once was. Then they watch helplessly as new buyers come in and buy the abandoned home at a deep discount, further submarining their property value. 

So, why don’t they follow suit? For many, walking away from their responsibility is not something they can comfortably do.

What is an upside-down homeowner to do?

Many homeowners decide that the best strategy is to call their bank and try a loan modification. Unfortunately, the reality is that 96% of loan modifications fail. Typically, as a condition of being considered for a loan modification, they are told by their lender that they must miss payments, which causes havoc to their credit score. And in many cases where the modification is granted, the new payment ends up being higher due to the fact that the accumulation of missed payments is lopped onto the new loan balance.

You may be like these frustrated homeowners who don’t want to ruin their credit by defaulting on a loan. You may not qualify for a short sale. Or you may not feel right about walking away. However, you wish you could take advantage of the best buying market in decades.

Guess what? You may be able to!

What?! I can buy an investment property?

Quite possibly. I had lunch today with my favorite lender, Roland Benson, with iMortgage (916) 768-1578. He said that while most large banks will not fund this type of loan, iMortgage is a direct lender and does NOT impose extra restrictions. Because of this freedom, Roland’s company has success getting these loans funded and closed!

Here’s how it works:

1. Find a property you would like to buy. If you don’t have an agent, I can help you. Contact me.
2. Contact Roland Benson with iMortgage (916) 768-1578.
3. Most properties in this market can cover their own mortgages through rental income.
4. As long as your credit is intact (i.e., you have not missed payments by attempting a no-win loan modification), you are likely good to go.

Many people have no idea that this is an option. I sure didn’t until I talked to Roland today. Take advantage of this great market and go buy an investment property today!

When can I buy a home after Bankruptcy, Foreclosure or Short Sale?

Here is a quick guide for required waiting periods after going through Bankruptcy, Foreclosure or Short Sale

The waiting periods for each type of distress situation are dependent upon the type of loan you will be pursuing going forward.

For Conventional Loans:

• Chapter 7 Bankruptcy – 4 year waiting period from the discharge/dismissal date
• Chapter 13 Bankruptcy – 2 year waiting period from the discharge date, or 4 years from the dismissal date
• Multiple Bankruptcies – If within a 7 year period, the waiting period is 5 years from the most recent discharge/dismissal date
• Foreclosure – 7 year waiting period from the completion date
• Deed-In Lieu or Preforeclosure (Short Sale) – Minimum 2 year waiting period

For FHA or VA Loans:

• Chapter 7 Bankruptcy – 2 year waiting period from the discharge/dismissal date
• Chapter 13 Bankruptcy – 1 year of the payout must have elapsed and the borrower’s performance must have been paid as agreed. Document that the borrower’s current situation is not likely to recur. The court must grant permission to the borrower to enter into a mortgage transaction.
• Foreclosure/Preforeclosure (Short Sale) – 3 year waiting period
• VA Loans ONLY – 2 year waiting period on Foreclosures.

Information provided by iMortgage, Roland Benson, 916-746-8412

This information should not be deemed as legal or financial advice. Please consult the appropriate professional to assess your particular situation.

For short sale assistance, contact Noel.

More about short sales…

What goes in your short sale package?

When can I buy after a short sale?

How can I repair my credit after short sale?

Short Sale Basics

What is a Short Sale?

The basics of how to do a short sale is found here. Call or text me for more information: 530-305-8509

What is a short sale?

• When a homeowner owes more on their mortgage than their home can sell for in the current market (a.k.a, upside-down), the homeowner can try to avoid foreclosure by negotiating with the lender to accept a “short” payoff.

Are you a candidate for a short sale? Ask yourself this question:

• Do you have a true hardship that is keeping you from making your payments?
• Think job loss, job transfer, illness, or other challenge. Discuss your particular situation with your lender. Loss in value due to market condition does not qualify as hardship.

What do you need to do to prepare for a short sale?

• First, find a Realtor® who is experienced with the short sale process, who knows how to negotiate with banks, and will be your partner to get the transaction closed.
• With the help of your Realtor®, compile your hardship letter and other necessary documentation which comprises the Short Sale Packet.

What goes in your hardship letter?

• In your own words (and in your own handwriting is best), describe the circumstances that have caused you to be unable to make your monthly mortgage payments.
• Be personal and sincere about your situation, and include as much detail as possible. We want them to want to help you.

What goes into the necessary Short Sale documentation packet?

• Proof of income & assets, including:
  • Bank Statements
  • Pay Stubs
  • Assets (investment accounts, stocks, CDs, other properties)
• Proof of hardship, which might include:
  • Bills
  • Unemployment Records
  • Death certificates
  • Divorce papers
• Preliminary net sheet, prepared by your Realtor®, reflecting the price you hope to get, less the cost of the sale. Include a comparative market analysis, prepared by your Realtor®.

Prepare your home for sale

• With the help of your Realtor®, price your house to generate an offer
• Prepare your home for sale
• If you do not get showings and/or an offer in the first 2-3 weeks, lower the price.
• Keep lowering the price until you receive an offer.

Submit offer to the bank along with the short sale package

• Your experienced Short Sale Realtor® will take it from here
  • They will submit the packet to the bank
  • They will follow up to make sure it has been received
  • They will be assigned an asset manager with whom they will communicate throughout the short sale negotiation
  • If all goes well, they will follow the transaction through to a successful close

More about short sales…

What goes in your short sale package?

When can I buy after a short sale?

How can I repair my credit after short sale?

Short Sale Basics

6 must-haves for your short sale package.

In order to have a successful short sale, the following items must be assembled asap upon deciding to list your home as a short sale.

1. Recent mortgage statements for all loans.
2. Copies of your most recent tax returns (last two years ) with W-2′s and 1099′s.
3. Copies of your last two pay check stubs (husband & wife).
4. Copies of your most recent bank account statements.
5. A letter, written in your own words, outlining the facts associated with the hardship that caused your financial distress (hardship letter).  
6. Completed financial disclosure, a form usually provided by the lender. Include copies of credit card statements, financial obligations, divorce decrees, physician letters, or anything else that shows you are having difficulty making payments.

Once an offer is received, your Realtor® will submit these items to your lender(s), along with the other documentation necessary for a succesful short sale!

For more information, feel free to contact me.

Is your Loan Modification Company legitimate?

5 Tips to Avoid Being Scammed - from the Office of the Attorney General of California (visit site)

I found these tips o the Office of the Attorney General’s website and thought they might be valuable to readers who are considering or are in the midst of loan modification. The website provides the capability to search for trustworthy resources.

1. Don’t pay up-front fees. Foreclosure consultants are prohibited by law from collecting money before services are performed.
2. Don’t ignore letters from your lender or loan servicer. Responding to those letters is your best bet for saving your house.
3. Don’t transfer title or sell your house to a “foreclosure rescuer.” Beware! This is a scam to convince homeowners they can stay in the home as renters and buy their home back later. It might also be part of a fraudulent bankruptcy filing. Either way, a scammer can then evict the victim and take the home.
4. Don’t pay your mortgage payments to anyone other than your lender or loan servicer. Mortgage consultants often keep the money for themselves.
5. Never sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them.

For further information visit the site. There you can enter the name of your Loan Modification company to see if they are a registered foreclosure consultant. Also, you can search for HUD-approved agencies here. If you have questions, feel free to contact me.