Let’s face it there is Good Advise and Bad Advise

I recently met with a Short Sale client of mine and was upset to hear my client recently received what I call Bad advise from two different people.

Both people told my client they should let their home go to foreclosure. I think telling a client to let their home go to foreclosure is terrible advise. I would never tell my clients to do when I think a foreclosure can be prevented.

A foreclosure would be the last thing I would like to see happen to one of my clients and therefore would never suggest to them to give up and let the bank foreclose on their home when I know a Short Sale would be successful.

Even if I did not have an offer I to negotiate with a bank I would still try to do a Deed in Lieu of Foreclosure with one of my clients.

A foreclosure would be the last resort so I say to people Giving Advise “Watch what you Say” and just because its FREE doesn’t mean you do have responsibilities.

More than 700 days after putting up for sale the home they owned for three decades, a Glen Ellyn couple says they’d received multiple offers on the home, but couldn’t get any answers from their mortgage company.

Gus and Fran Trantham owed more on their home than its market value, so they were a “short sale,” industry lingo for selling a home for less than is owed.  Bank approval is needed for this type of transaction, as the loss is shouldered or shared by the mortgage holder.

But the two year struggle put the couple on the verge of bankruptcy.

“I never dreamed I would have a house this beautiful,” Fran Trantham said of the custom-built, 4,000 square foot home she and Gus built.

They now rent a condo in Woodridge, not far from the home they say they have been trying to sell for so long, and they blame JPMorganChase for failing to offer them any assistance in their efforts to avoid foreclosure and complete a short sale.

“We had a house we thought was worth the money to carry us through,” Gus Trantham said, questioning why Chase ignored three contract offers the couple received on the home. “They are obviously making so much money… two-and-a-quarter billion in a quarter.  They are not looking down at the bottom of the feeding scale to the houses of Americans.”

The team of professionals working with the Tranthams say they were also at a loss to explain why Chase wouldn’t even answer the potential buyers’ offers.

ReMax agent Joel Adams said he and his clients never got any answers when they submitted the first three contract offers.

“Never one. Nope, not one. They never responded in any formal way. Never,” he said.

The Tranthams’ agents said it’s a lose-lose proposition and a problem that is not unique to Chase: the bank never answers and the prospective buyers almost always walk away.

“If you can imagine being a buyer, thinking you are going to buy a house and waiting four or five months for an answer, you have to go out and buy another house,” said ReMax Suburban Vice President James R. Nelson.

To try to save the deal, their lawyer Joseph Horwitz said he took a more direct route.

“It’s unbelievable, to put it mildly,” Horwitz said.  “We wrote letters begging for an answer and it never came. So the date came and went and those people finally left.”

Meanwhile, the couple said the price of their home, along with the market, kept dropping.

With so many homeowners in the same boat — owing more than their home is worth — the Obama Administration recently offered incentives to get banks to complete more short sales.  But is anyone keeping track on whether the banks are actually doing that?

After repeated requests for information, a spokesperson for the US Department of Treasury, which oversees foreclosure alternative programs, said the agency is tracking the number of short sales completed by banks. But, he said, it is too early for the department to report those numbers.

For its part, Chase also won’t say how many short sales it has completed in recent months, but a spokeswoman said that last year the company was focused on loan modifications and keeping families in their homes.

Spokeswoman Christine Holevas said the company is now turning more attention, and adding more staffing, to short sale transactions.  She said Chase does not keep transcripts of conversation with its customers, but that its internal notes do indicate Chase representatives responded to the early offers on the Trantham home.

She said the notes indicate the offers were too low and that the bank countered.  The Tranthams, their lawyer and their realtor all dispute that. 

Eight days after NBC Chicago’s call to Chase to raise the Tranthams’ questions, their short sale offer was approved.

Gus, 79, Fran, 78, said they had very different plans in mind for their golden years and are hoping for a new beginning.  But say they had to wait for at Chase to say the word.

“It’s just an unbelievable situation. The system isn’t working. This should have been taken care of a year ago,” said Gus Trantham.

Source: http://www.nbcchicago.com/news/business/Chasing-Chase-96513319.html#ixzz0r5RrfJBW ]]> http://ilrealestatespecialists.com/2010/06/16/channel-5-news-report-on-chase-bank/feed/ 4 http://ilrealestatespecialists.com/2010/04/08/5-personality-types-people-when-dealing-with-stress/ http://ilrealestatespecialists.com/2010/04/08/5-personality-types-people-when-dealing-with-stress/#comments Thu, 08 Apr 2010 21:36:50 +0000 Jack Lewitz http://ilrealestatespecialists.com/?p=1303

Family Therapist Virginia Satir identifies 5 personaliy types when people are in a stressful situation. 

I would say working with homeowners in a Short Sale is definately a stressful situation so I suggest you become aware of these 5 personality types as you will most likely be confronted with them if you are a Short Sale Specialist.

• The Placater:

The Placater will do almost anything to avoid stress.  Placaters tend to be a little narcissistic and are concerned about themselves and making a good impression. They feel uncomfortable in stressful situations and will ignore any situation that causes them discomfort. Direct confrontation is most likely not the approach you will want to do with a Placater.

• The Blamer:

The Blamer feels all alone in the world and tend to look to others as the reason for their misfortunes. When Blamers are confronted with stress they tend to feel more isolated, and will often take look to take charge of the situation and bluff their way out of a situation as a way to over compensate for their feelings of helplessness. It is important to make sure your client does not feel alone and to give and share some empathy with a blamer.

• The Computer:

The Computer does not like to show emotions and when confronted with stress will resort to logic and appear to be in control of their emotions when they are really churning mad on the inside. Beware of any explosions or melt downs when working with Computers.

• The Distractor:

The Distractor gets easily confused during stressful situations and will grasp for straws when looking for answers to their stress. You know you are working with a distractor when you scratch your head and ask yourself “Who is this Person”. They often will become someone your are not familiar with and so you must be aware that they too are not sure who they are.

• Leveller:

The Leveller is the ideal person to deal with stress. They like it when they are told things as they are without minimizing the situation. They are comfortable with who they are and can usually manage ambiquous situations. It would be nice if we all had clients who were Leveller’s during a Short Sale.

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.

 Will Hafa be a success or failure?

The National Association of Realtors has new numbers on existing home sales for the month of January and they are not good.

The First Time Home Buyer program is due to expire April 30, 2010. How many more months will it last. If home sales are down with the stimulus what will happen when the stimulus is no longer available to new home buyers.

FHA guidelines are changing and many people looking to buy are not going to qualify for FHA loans.

Unemployment continues to be the number 1 problem. If people do not find jobs more mortgage defaults are learching around the corner

Pre-foreclosure (Short Sales) and Bank owned (REO’s) represent 34-39% of all  home sales.  Yet buyers, agents that I talk to are all frustrated because pending sales are taking too long.

Short Sales can take anywhere from 6 months to a year to close.

On April 5, 2010 HAFA will go into effect. The question is “How many lenders will participate in the program?”  Will it streamline the process of Short Sales and Deed in Lieu or just be another beurocracy created by government.

We will have to wait and see if the glass is “HAFA” full or “HAFA” empty.

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.

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…

Following is an email I recently received from one such client..

Hi Jack,

Things are actually going pretty well for me.  “The Short Sale was the best thing that happened ” .

I am living in my own apartment with my dog in the city. I had a hard time buying a new car because of my credit not my income but my family was able to give me a loan and I am paying them back.

I don’t have any major debts, outside of a student loan and Ihave a comfortable life within my means. Overall, things are as they should be.

I will definitely pass your name if given the opportunity.

Good luck with the blog and I hope you have an enjoyable Thanksgiving…