Archive for the 'Ask the "Specialist"' Category
5 Stages of Grief in a Short Sale
March 1st, 2010 categories: Ask the "Specialist", For Sellers, Short Sales
As a former Social Worker I am reminded of Elizabeth Kubler-Ross book “On Death and Dying’ and the five stages a terminally ill patient goes through when informed of their life threatening illness.
The five stages she identifies in her book are:
- Denial ( this isn’t happening to me!)
- Anger( why is this happening to me?)
- Bargaining ( I promise I’ll be better person if…)
- Depression ( I don’t care anymore)
- Acceptance ( I’m ready for whatever comes)
As I reviewed these five stages and relate them to Sellers I have worked with or am currently working with I am drawn to how these same stages are exactly what sellers go through when selling their home in a short sale.
Stage 1 Denial:
Many sellers who are falling behind in their mortgage payment often do not get help or seek help because they are in total denial. They often think nothing is going to happen to them even after the bank has sent them the Notice of Default letter.
Stage 2 Anger:
This is a very difficult stage. Many homeowners remain angry through the Short Sale/Foreclosure process. Reports of homes being trashed and appliances missing are usually the signs of people who have a lot of anger and direct this anger onto the property.
Stage 3 Bargaining:
This is the stage where sellers exhibit a lot of ambivalence. They do not want to loose their home and will do almost anything to keep it. Some sellers will contact their lenders and try to negotiate a loan modification while you are doing a short sale. You have to be aware of your seller in this stage because they are very vulnarble and will sabotage any efforts you have initiated because they have not truly accepted the need to sell their home.
Stage 4: Depression:
Sellers in this stage just stop caring about the house and will withdraw from you as their agent. It is important to maintain contact with your sellers during this stage and give them support and assure them that what they are doing is in their best interest.
Stage 5 Acceptance:
This is when you see your seller come out of their shell and begin to prepare for a life after the Short Sale.
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INDY MAC VIDEO
February 15th, 2010 categories: Ask the "Specialist"
A friend of mine sent me this video about Indy Mac. I think everyone who is involved negotiating a Short Sale with a Bank should watch this video.
http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1556915
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Home Affordable Foreclosure Alternative (HAFA) Explained
February 11th, 2010 categories: Ask the "Specialist", For Sellers, Short Sales
Home Affordable Foreclosure Alternatives (HAFA) will begin April 5th of 2009.
What is HAFA?
It is a new Foreclosure prevention program designed to streamline the Short Sale and Deed-in-lieu of foreclosure process.
- Those homeowners who are not eligble for the Home Affordable Modification Program (HAMP) can apply for the HAFA program. Those who do not qualify for HAMP and wish to avoid foreclosure can do so by applying for the HAFA program.
Who is Eligible for HAFA?
- Home owners who are delinquent or in default on their mortgage on their principal residence.
- Loan must have origination date January 1, 2009 or sooner.
- Amount of loan cannot exceed $730,000
- Current mortgage exceeds 31% of homeowners gross income.
What are the Steps?
Borrowers expresses interest in HAFA program.
Servicer has 14 days to determine Net Proceeds they will accept in Bank Directed Short Sale. This amount is expressed as a :
- % of current market value;
- % of list price;
- fixed dollar amount.
Step 2:
A Short Sale Agreement is put into action with a written agreement between lender/servicer and borrower. This agreement shall include:
- List Price/ Allowable Net proceeds to lender
- Guarantee 120 days or greater before lender can pursue foreclosure.
- Homeowner must agree to pay 31% of gross income while Short Sale is being considered
- Maximum Real Estate Commission of 6%. Realtor must also agree that out of the real estate commission a % or $ amount will be paid a third party vendor.
Step 3:
Borrower must provide evidence within 14 days of Short Sale Agreement (effective date)
- A signed copy of a Broker Listing Agreement at Approved List price.
- Information regarding any Subordinate Liens.
- Market the property 120 days or greater
- 3 business days to submit all offers
- Servicer has 10 days to approve all offers.
- Buyer has 45 days to get financing and close
- Borrower has 45 days to move out of the house from date contract has been acccepted.
HAFA Agrees to the following Payments :
- B orrower to receive $1,500.00 for moving expenses.
- Servicer to receive $1,000.00 for processing costs.
- Investor to receive a $1,000.00 back on maximum $3,000.00 paid to all subordinate liens.
Advantages to HAFA:
- No hidden administrative fees can be asked from borrower from servicer.
- The investor must waive all rights to seek a deficiency judgement.
Disadvantages of HAFA:
- Subordinate liens may not agree to $3,000.00 maximum payment.
- Investor owned property does not qualify.
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HAFA Program Explained …
January 19th, 2010 categories: Ask the "Specialist", Just "My" Opinion, Short Sales
The HAFA program is a logical addition to the HAMP program.
My friend Jafer Hasnain of Lifeline Assets has written an article on the HAFA program and I am glad to share his article here on my website.
Thank you Jafer…
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Mortgage Foreclosure Policy: Past, Present, and Future
December 22nd, 2009 categories: Ask the "Specialist"
This is a follow up to a recent Foreclosure Seminar I attended at the Federal Reserve Bank of Chicago on December 9th and 10th
The two day Seminar was quite impressive and the discussions were even more interesting.
THE PAST:
Home ownership was considered the American Dream. As desire to own a home increased the building boom soon followed. As new homes were being build, new buyers entered the housing market.
New Buyers created a demand for new mortgage products.
The rapid appreciation of home values fed the the second boom in housing demand.
As more buyers entered the market, mortgage lenders competed with one another and tried to attract these buyers with exotic mortgage products ( sub-prime, Adjustable Rate, Intrest only, 100% financing) with teaser rates.
The combination of new buyers, higher risk loans, and higher risk capital all created a very competitive housing market.
Loan originators had no risk because they did not hold onto the loans. They pooled and sold these mortgages to the Secondary Mortgage Market.
There became a market demand to bundle these high risk loans as security instruments and sell them to investors on Wall Street.
Private-Labeled securitzation fueled the demand for high risk lending. Sub-prime and Alt-A2 mortgage backed securities increased from $98 billion in 2001 to $814 billion by 2006.
Investors who bought and sold these securities felt home values would compensate for any risk associated with the loans. If a loan went into default the homes value would more than cover the cost of the loan.
PRESENT:
More homeowners are falling behind. One in four homeonwers are delinquent on their mortgage.
Foreclosures are at an all time high and home values are declining as a result.
The Government program to modify loans “Making Home Affordable Modification Program” (HAMP) has been a failure to date.
Only a fraction of the mortgages on a national basis have been permanently modified.
Nationally there are over 9 million homeowners in default and to date there are only 728,000 active modifications. Only 31,282 mortgages have been permantly modified across the nation. This means a majority of the modifications remain as trial mortgages.
It is predictated that most of these mortgages will re-default.
Finally, more homes are just being abandoned and left vacant. These vacant buildings cause more crime, continue to lower home values for neighborhoods.
Future
Most of the experts predict the foreclosure crisis and larger financial crisis to continue well into 2010 .
New Option Arm Loans are due to reset next year, and unemployment will cause more homeowners to fall behind on their mortgage.
Home values will continue to decline and more people will owe more money than their home is worth.
As more people go into foreclosure neighborhoods, cities, and regions are impacted.
Vacant buildings that are neglected cause siginificant concern for most city officials. Not only is crime a problem, but the cost to cure the problems is a major concern.
To address this problem communites are using Neighborhood Stabilization Program (NSP) dollars to buy up foreclosures in the community, demolish homes that are not salvagable, and rent and sell homes to qualified buyers.
It was recommended and generally accepted by most people who attended the seminar that it was best to keep homes occupied.
More effort is needed to modify loans and keep people from loosing their homes to foreclosure.
The current “Extend and Pretend” policy of lenders needs to be abandoned. As home values continue to decline current mortgages should be re-set at the current market values.
Lenders will be required to write-off the difference between what is owed and the current market value in order to keep people in their homes.
Until this happens, communites most affected will have to find ways to assist people and keep them in their homes.
Better foreclosure prevention programs need to be developed.
Pilot programs like Annette Rizzo’s court in Philadelphia, where homeowners and lenders are forced to negotiate in a court room, needs to be explored and reviewed to see if it really does help people and stop foreclosure.
Better Credit counseling programs need to be developed where people are taught how to save more money.
Creating New Zoning ordinances and Urban design to help families work and live and prosper together.
| Discussion: 4 Comments »
2009 Foreclosure Data: Impact on 5 Counties in Illinois
December 5th, 2009 categories: Ask the "Specialist", Market Data
On Wednesday December 9 and Thursday December 10, 2009 I will be attending a Mortgage Foreclosure Conference in Chicago. This event is being sponsored by The Federal Reserve Bank of Chicago, The Chicago Community Trust, John D and Catherine T. MacArthur Foundation, Neighborhood Housing Services of Chicago, and the Woodstock Institute.
The conference event is titled ” Mortgage Foreclosure Policy: Past, Present, and Future”. The conference will discuss the evolution, current impact, and likely outcomes of foreclosure on homeowners, lenders, housing counselors, secondary mortgage market, and local governments.
As I prepare for this conference I decided to do a little review of the foreclosure market from a point of view as a realtor. I decided to do research on five counties ( Cook, Lake, McHenry, Dupage, Will, and Kane) in Illinois. I plan to bring along and discuss this data at the convention.
The information is deemed to be reliable and comes from both my local MLS and Record Information Services of Illinois.
Single Family Home Sales data from January 1, 2009 through December 3, 2009:
| County | Total Sales | Total # Foreclosure Re-Sales | Total # of Short Sales | Distressed Sales expressed as % of Total Sales | |
| Cook County | 20,730 | 6,761 | 2,098 | 43% | |
| Lake County | 4,362 | 1,073 | 459 | 35% | |
| McHenry County | 2,023 | 451 | 307 | 37% | |
| Dupage County | 4,865 | 782 | 527 | 27% | |
| Will County | 4,409 | 1,170 | 529 | 39% | |
| Kane County | 2,973 | 671 | 414 | 36% |
The table above shows foreclosures are dominating the Real Estate Market in terms of total sales. Foreclosures out number the number Short Sales in every county.
Single Family Foreclosure from January 1, 2009 through December 3, 2009
| County | Total #of Foreclosures | Total # Foreclosure Re-Sold | Remaining # to be Sold |
| Cook County | 12,553 | 6,761 | 5,792 |
| Lake County | 1,841 | 1,073 | 763 |
| McHenry County | 1,243 | 451 | 792 |
| Dupage County | 2,368 | 782 | 1,586 |
| Will County | 3,095 | 1,170 | 1925 |
| Kane County | 2,368 | 671 | 1,697 |
The table above is showing total number of foreclosures in each county and then subtracts the number of foreclosures put back on the market and re-sold to new buyers and the number of remaining foreclosures unsold to date. As the data suggests there are more foreclosures that are going to be coming onto the market for re-sale.
Single Family Pre-Foreclosures from January 1, 2009 through December 3, 2009
| Cook County | Total # of Pre-foreclosure Notices | Total # Unsold Foreclosures | Total # Potential Foreclosures 2010 | Total# Home Sold in 2009 |
| Cook County | 23,629 | 5,792 | 29,421 | 20,730 |
| Lake County | 3,344 | 768 | 4,112 | 4,362 |
| McHenry County | 2,123 | 792 | 2,915 | 2,023 |
| Dupage County | 3,758 | 1,586 | 5,344 | 4,865 |
| Will County | 4,984 | 1,925 | 6,909 | 4,984 |
| Kane County | 4,008 | 1,697 | 5,705 | 2,973 |
The Table above shows the number of homes who have received some sort of Pre-foreclosure Notice.
Typically a homeowner has to be 90 days past due or delinquent on their mortgage to receive such Notice of Default (NOD).
While many of these homeowners may be trying to modify their mortgage with their lender and never go to foreclosure there are many homeowners unable to modify their mortgage because they are unemployed.
As the data suggests if these pre-foreclosures do become foreclosures and are added to the already unsold foreclosure on the market the combined total will exceed the total sales of single family homes for 2009.
As a realtor it is difficult to see how the real estate market is going to keep pace with the number of foreclosures. There isn’t enough buyers out there to absorb the number of homes that could potentially come on the market in 2010.
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What Do You Do When A Fellow Realtors Name Appears on Foreclosure List?
December 1st, 2009 categories: Ask the "Specialist"
What should you do when you see a fellow realtors name appear on a foreclosure list and you notice they have the property listed for sale with the proper disclosure of being owned by a realtor but not be marketed as a pre-foreclosure Short Sale?
As a realtor who specializes in Short Sales and Foreclosures I realize that not all realtors are alike nor do they possess the knowledge to be successful in marketing, negotiating, a short sale particularly when they are a principal in the tranaction.
So what do you do. Do you call the agent or not? That is a dilemma I am currently faced with and I am pondering over my decision to call or not call the person.
I know as a Realtor we are no different than other sellers who are faced with the decision to sell a home rather than go into foreclosure.
So how do you reach out to someone who is a professional like yourself and offer advise if nothing else. I feel kind of compelled to help but should I stick my nose where it should not go?
Something should be done and done with some tact but I find the more I work with sellers and buyers in this market there only a handful of people who you can really help. Some people refuse to listen, accept the help, or in denial.
Its almost as if you have to go through the stages of loss according to Kubler-Ross. First stage is anger and then acceptance. Those people who are willing to accept the loss of a home can be helped, while those who remain angry, can never be helped.
Anyway, I have gone off a little bit and want to get some opinions from people about what they would do in this situation?
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Have You Paid Your Cook County Real Estate Taxes?
October 22nd, 2009 categories: Ask the "Specialist", Local Markets
Have you paid your Cook County Real Estate Taxes?
No! Because Residents of Cook County have not received the second installment of their Real Estate Taxes for the 2008 Tax Year.
Taxes in Cook County are paid in arrears. That means taxes paid in 2009 are for the 2008 tax year.
Taxes in Cook County are paid two times a year. The first installment is due in March and the second installment is due in November of each year.
As of October 22, 2009, Cook County residents have not received a tax bill for the second installment of their 2008 Real Estate taxes.
Much of the County Revenue comes from Real Estate Taxes. At a time when the County is struggling to provide services to the community it amazes me why the tax bills have not been mailed.
Cook County Facts
| Quick Facts | Cook County | Illinois |
| Population 2008 estimate | 5,294,664 | 12,901563 |
| # of Housing Units 2007 | 2,172,658 | 5,246,005 |
| # of Households 2000 | 1,974,181 | 4,591,779 |
| Persons per Household 2000 | 2.68 | 2.63 |
| Median Value of Owner Occupied 2000 | $157,700 | $130,800 |
| Median Household Income 2007 | $52,554 | $54,144 |
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Illinois Association of Realtors Talk about Foreclosures
August 26th, 2009 categories: Ask the "Specialist"
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Top 5 Reason You should not hide from your lender.
July 31st, 2009 categories: Ask the "Specialist"
Top 5 Reasons You Should not Hide from Your lender
1. The problem will not go away.
2. Your lender does not want to own your Home.
3. There is a solution to your problem other than Foreclosure
4. Your credit can be repaired.
5.You can be helped only if you want to be helped.
“Yes it is safe to come out from hiding”
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