News Impacting the Mortgage Default Servicing Industry
HARDSHIP* FINANCIAL RECOVERY*
PEACE OF MIND
PEACE IN THE MIDST OF THE STORM
MAY WE FIND PEACE...
DO I NEED AN ATTORNEY TO DO
A SHORT SALE?
It is up to you to decide if you would like to have your own attorney to do
a short sale. So you need to understand, before spending any money for attorney
fees that a short sale can be accomplished without an attorney. Most short sale
specialist provide an in-house attorney
or a professional loss mitigation negotiator to work on your behalf to get a
short sale approval for the sale of the house.
Now I am not an attorney, and you as seller can choose not to seek legal
advice, but it is always encouraged to seek advice before you make a decision.
Let’s get one thing straight, this is NOT a legal advice column. I am a
licensed REALTOR, not an attorney. The purpose is to alert you to the risks,
and why you need to do everything you have to in order to protect yourself. A
successful short sale has two goals. The first is what most people focus on,
getting rid of the house and the payment. The second goal, and almost as
important, to free oneself from as much debt as possible, including the portion
known as the loss.
Some states are known as a deficiency State. Unlike California and other
States, lenders here, who suffer losses due to foreclosure and short sales,
have the ability to try and recoup some of those losses by obtaining a
deficiency judgment via the courts. Essentially, your former lender sues you,
and if they win, you still owe them money. The lender can then try and collect
the money, try and settle the debt with you directly, or worse, sell off the
judgment to a third party debt collector; can you say hello to spending the
next few years dodging debt collectors?
The whole point of a short sale is to
come to a resolution, not endure sequels to this horror.
REALTORS also need protection and advice so they often will seek answers you
need by calling our title company or the attorney in your best interest. We are being forced into areas of real estate
fraught with unwanted liabilities, yet distressed sellers need the
representation and we need the work, so some of us professionals have taken on
the challenge. My real estate short sale team recognized the need to bring in
experienced real estate professionals to help guide us as REALTORS as well as
representing the sellers against their banks with these short sales.
It takes a strong and experienced team
to successfully complete a short sale and represent a client. You need an
entire group of experienced short sale specialist such as, the right agent, the
right lender, the right title/escrow company etc. Now, if you are doing a short
sale in my opinion, you also need the right tax advice, so be prepared to fork
over a little bit to do the deal right.
We make it cost free when you choose our short sale specialist group to get
you through the short sale. You won’t have to spend a dime in fact, most of the
time when we find you a buyer of your property they will include concessions with their offer which
includes attorney fee, and sometimes liens and judgments so the closing can
happen more quickly. We understand your desperate financial situation and look
to make the majority of legal fees directly from the lender including the closing
cost which is deducted off the sale price.
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Oct 4, 2010
Washington Mutual Found Guilty Fraud – Claim
Home Loan Modification
I share this important information with you to encourage everyone to be on your guard! The banks are taking chances to put the borrower, that means me and you in a terrible financial mess. Here is what I recently read in the Wall Street Journal about Washington Mutual and I want you to read also.
Why? Because of helping the borrower with the realization, that the banks are Not on our side. They are still performing deceptive practices according to investigators. We really need a professional that knows how to corner these culprits.
Can you imagine going to a doctor for an operation on your arm that you have been suffering with for a long time, and finding out the doctor operated on the wrong arm because he could of cared less? Now, in knowing what position you are in, you decide your gonna go back to him to operate on the arm he should of operated on in the first place? You home and family is a very serious matter that you cannot afford to try to do yourself. It saddens me to see and hear the hundreds of cases I have witnessed become double trouble. READ ON.....
The mortgage lending operations of Washington Mutual, the biggest U.S. bank
ever to fail, were threaded through with fraud and the bank's own inquiries
were unable to stop the deceptive practices, according to a report by Senate
investigators.
The investigators said the bank's pay system rewarded loan officers for the
volume and speed of the subprime mortgage loans on which they closed. Bonuses
even went to loan officers who overcharged borrowers or levied stiff penalties
for prepayment, according to the report being released Tuesday by the
investigative panel of the Senate Homeland Security and Governmental Affairs
Committee.
Chairman Carl M. Levin (D-Mich.) said Monday that the panel will decide
after hearings this week whether to make a formal referral to the Justice
Department for possible criminal prosecution. Justice, the FBI and the
Securities and Exchange Commission opened investigations of Seattle-based
Washington Mutual soon after its collapse in September 2008.
The report said that the company's 's top producers -- loan officers and
sales executives who made high-risk loans or packaged them into securities for
sale to Wall Street -- were eligible for the bank's President's Club, with
trips to swank resorts.
Fueled by the housing boom, Washington Mutual's sales to investors of
packaged subprime mortgage securities increased from $2.5 billion in 2000 to
$29 billion in 2006. The 119-year-old thrift, with $307 billion in assets, was
seized by regulators in September 2008 and was sold to J.P. Morgan Chase for
$1.9 billion in a deal brokered by the Federal Deposit Insurance Corp.
Jennifer Zuccarelli, a spokeswoman for J.P. Morgan Chase, declined to
comment on the subcommittee report. WaMu was one of the biggest issuers of
so-called option-ARM mortgages, which allowed borrowers to make payments so low
that loan debt actually increased every month.
The Senate subcommittee investigated the Washington Mutual failure for a
year and a half, focusing on the thrift as a case study for the financial
crisis that brought the recession and the loss of jobs or homes for millions of
Americans. The panel is scheduled to hold hearings Tuesday and Friday to take
testimony from former senior Washington Mutual executives, including former
chief executive Kerry Killinger, and former and current federal regulators.
Washington Mutual "was one of the worst," Levin told reporters
Monday. "This was a Main Street bank that got taken in by these Wall
Street profits that were offered to it."
Investors who bought mortgage securities from Washington Mutual were not
informed of the fraudulent practices, the Senate investigators found. The
company "dumped the polluted water" of toxic mortgage securities into
the stream of the U.S. financial system, Levin said.
In some cases, sales associates in Washington Mutual offices in California
fabricated loan documents, cutting and pasting false names on borrowers' bank
statements. The company's own investigation in 2005, three years before the
bank collapsed, found that two top-producing offices -- in Downey and
Montebello, Calif. -- had levels of fraud exceeding 58 percent and 83 percent
of the loans. Employees violated the bank's policies on verifying borrowers'
qualifications and reviewing loans.
Washington Mutual was repeatedly criticized over the years by its internal
auditors and federal regulators for sloppy lending that resulted in high
default rates by borrowers, according to the report. Violations were so serious
that in 2007, Washington Mutual closed its big affiliate Long Beach Mortgage as
a separate entity and took over its subprime lending operations.
Senior executives of the bank were aware of the prevalence of fraud, the
Senate investigators found. In late 2006, Washington Mutual's primary
regulator, the U.S. Office of Thrift Supervision, allowed the bank an
additional year to comply with stricter guidelines for issuing subprime loans.
According to an internal bank e-mail cited in the report, Washington Mutual would
have lost about a third of the volume of its subprime loans if it applied the
new requirements.
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How To Write A Hardship Letter For A Loan Modification
or Short Sale To Stop Foreclosure
June 9, 2010
If you are requesting a Loan Modification or restructuring financial hardship letter explains to your lender why you are in financial trouble and requests a specific remedy to help you through the crisis. There are different reasons for writing a hardship letter, but the most common these days are:
The hardship letter is a primary requirement in loan modifcation application process because this is how you will convince the bank that you are really and truely enduring a difficult time. Your loan modification specialist will ask you to submit it along with your other financial documents, so that they can evaluate your situation and present a strong case to your lender.
When writing a hardship letter for a Home loan modification, keep in mind that the lenders really want to see why you have fallen behind with your mortgage payments. It should be clear, honest, and contain just the right amount of detail. The way you write it can literally spell the difference between keeping and losing your home. Here’s how you can write a hardship letter that puts your point across and gets you the best loan modification deal.
Begin by being humble and express an apology. You should know that a typical lender can only spend five minutes reading your letter. Always start the letter by stating the purpose (whether it’s a loan modification or a short sale), so that the reader knows outright what to expect. Basically, it should say “I need you to buy my home/restructure my mortgage/give me a lower interest rate,” in a way that
compels them to find out why. You can use the succeeding paragraphs to explain it in more detail.
BE BRIEF! Explaining your hardship to the point might be something like, Illness and medical expenses, death of a family member or co-borrower, divorce, separation, or other legal expenses, or even ,milItary services. It really doesn’t have to be one of these things, of course. Each lender has its own standards, and the letter’s purpose is to give them a more personal look into your situation. Once you’ve established your hardship, provide details that will help strengthen your case. Make sure to tell them how you got into the situation and why it’s out of your control.
Finally, end your letter by reiterating your purpose, in slightly different words. Ideally, your previous paragraphs should explain that it’s the only way to stop foreclosure. Make it clear that you intend to get back to making regular monthly payments once the loan has been modified.
One thing you should never do is imply that your situation is your lender’s fault. Instead of pinning the blame on anyone, simply tell things as they are and leave the judgment to your reader. Finally, thank them in advance and mention that you’re looking forward to continuing business with them.
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What is a short sale and the short sale process?
Dec 23,2009
Author Renee Dumont
So, you are wondering what exactly is a short sale? Even though foreclosure's have been happening for quite somtime now, many are still wondering what a short sale is and the process. Many home owners are still wondering why a mortgage company would agree to take less than what is owed on the mortgage.
To make it simple to understand, mortgage companies often get stuck with foreclosed properties leaving them with having to pay closing costs, auction fees, taxes, repairs and liens on. Since a mortgage company is in the business of making money and lending out money, a foreclosed property makes alot more work for the bank to deal with. Can you imagine having to take back a house you sold or lended to someone in need of your money? Not a good thing...
If you’ve missed multiple mortgage payments and you’re facing foreclosure, the bank or lender won’t automatically offer a short sale. You need to prove that your situation is difficult for a short sale, which typically involves providing documentation that proves you are indeed in dire straits, with no other viable options. And even if your situation fits, the bank or lender must still decide if your particular situation works for them financially.
If a homeowner has not paid the bill for a few months, due to hardship, double mortgages or abandonment of the property, it is likely that property will become a foreclosure. In this case, the bank will have to sit on that property for months, will have to pay repair and auction costs. This means they will essentially lose money on the property.
When a borrower approaches the bank stating that they cannot pay back the full price of the loan, then the lender will usually agree to forgive the rest of the loan, this would be considered a short sale. In the world of real estate, short sales are the purchase of pre-foreclosure sales.
In the case of a pre-foreclosure sale, a seller is trying to sell the home in order to avoid the bank foreclosing on their home and having this affect their credit rating. If the seller has tried to sell the house through a real estate agent and the mls , they will often take a short sale in order to accomplish getting rid of the loan amount due, before foreclosure.
The most common reason for the bank to accept a pre-foreclosure sale is because of hardship. Another reason why they may also consider this option if the home has sat on the market for a long period of time without being able to sell the property. In many cases, the owner is no longer able to make mortgage payments during such an long period of time to make a sale. A mortgage company may be willing to forgive a portion of the loan, but it isn’t likely unless the home has been sitting on the market for a substantial period of time and the homeowner can prove they were not able to pay.
Even if a home owner is currently facing foreclosure, the lender will have to determine if your less than full payment would be worthwhile. Depending on your lending institution, some will require that you pay off the remaining amount of the loan, while others will require a repossession of other items to make up the difference.
If you come upon a mortgage lending company that is willing to forgive your loan, be sure that you understand the amount given is not totally free. In some cases, , the IRS will consider the amount forgiven as taxable income that will need to be taxed and included in your end of the year tax return report.
Remember as well that if an investor is only willing to pay you 20-30% less than market value for you home, they should make concessions to take on the property “as is.” This means that you should not have to go through the normal route of negotiating repairs. A pre-foreclosure sale is meant to relieve you of the burden of your home and should not come with added stress.
Though short sales can be a blessing to some homeowners, as they don’t do nearly as much credit score damage as a foreclosure, and you should not pay no money at all. A short sale should still be treated as a final option before foreclosure. Have you looked into other options to stop the bank from taking your house? Do you really want to get rid of the property? Are you willing to walk away without making a profit? Are you looking to make a responsible decision?
If you speak with a loan modification consultant they’ll likely point out other alternatives. Ultimately banks and lenders want to cut their losses, and they’ll do what’s in their financial interest first and foremost. If you do decide to pursue a short sale, expect to make a strong case for yourself and your situation or you’ll likely be denied. Also, expect to provide your short sale specialist with all the documents needed for the completion of the short sale process.
Though volume of short sales is picking up, it won’t always be an option. Make sure you always consider all of your options before making a huge decision concerning the sale of your property. So, If you are unsure about a short sale, we always encourage the home owner to consider discussing it with a real estate attorney before you get rid of the property.
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Some reasons why banks reject the Short Sale Offer
Unless the bank has agreed in advance to accept a short sale, referred to as a “short sale approval, no one knows for certain. Not the agent, and not the listing agent nor the seller. So only time will determine if a short sale offer will be accepted or rejected by the bank. Simply because a listing is advertised as a short sale does not mean it is a short sale. It means the listing agent and seller “only hope” it will sell as a short sale and the bank will take the offer.
When striving to short sale home generally has very little bearing on the actual price a bank may accept. The list price may be too high to attract an offer or too low for the property wasn’t fairly evaluated by the BPO to make an acceptable. Some agents advertise short sales at unrealistic prices, in hopes the buyer doesn’t know enough to follow market values. In addition, the buyer doesn’t have enough knowledge to work numbers that go into the expenses to submit an offer. Moreover, just because the seller may accept the offer does not mean the bank will agree to take a short sale.
- The Buyer Does Not Qualify
- A desire to buy a home and the financial means to afford a mortgage payment does not mean a buyer qualifies to buy a home. A buyer's lender will examine credit history, length of time on the job, debt ratios, and a host of other criteria to determine a borrower's qualifications. To gain credibility with the seller's bank, buyers need to submit a loan pre-qualification letter along with the offer, but a loan pre-approval letter carries more weight.
- Tip: Send a pre-approval letter and a copy of a sizable earnest money deposit that adequately reflects the buyer's ability to obtain a mortgage and intent to close the transaction. Bonus, if you have a buyer willing to pay CASH, the offer is more easily and readily accepted.
- Short Sale BPO Too High
- Banks will request an appraisal, sometimes several appraisals, and may also order a BPO. When the listing agent must influence the bpo when submitting the short sale offer. The agent should also include a pictures of the property whenever possible and include the comparative market analysis that justifies the price in the short sale offer. A good negotiator will try to discourage the bank from believing that they can make more money by taking the property through foreclosure proceedings and sell at auction.
- Tip: Be prepared to argue with a rejection and show comparable sales that support the short sale offer price.
- The Short Sale Package is Incomplete
- If you have little experience , you may ask your realtor to consider working with a team of short sale specialist. You'll hear horror stories of how banks lose documentation. In some cases, it doesn't matter how many times the package is expressed overnight or faxed, the bank might of just put down in the wrong pile. So, just know that if documents do not get to be in the right file, and without every single required document, the sale will not be granted. The banks are a little more cautious when the package if submitted by a short sale expert/attorney.
- Tip: Ask the bank for a list of documents, make copies, and send complete packages.
- The Seller Does Not Qualify
- If the seller is asking for debt forgiveness, the bank will want to see a hardship letter from the seller that explains why the seller cannot afford to pay back the shortfall difference. Sellers who have taxable assets are at a disadvantage if the sellers are unwilling to work out a repayment plan with the bank.
- Tip: Prepare a hardship letter, profit and loss statement and monthly budget that show the seller has little or no assets and no disposable income
When you need a real estate short sale specialist. to stop foreclosure.
Our services include a forensic loan audit, loan modification, debt help and short sale programs NATIONWIDE and are the experts in the industry.