In this crazy market I feel many agents have the attitude of their sellers, when in a short sale position, being somewhat disposable. Just a means to an end. The end being their paycheck.
We have a company here in town which will offer to purchase a home from a seller who is in distress. The investor then takes over the negotiations with the bank. Now, what i gladly admit is that they are amazing at negotiating. They are able to have people on staff who just sit and dial the phone all day, something many or even most Realtors are just not able to do. We don't have the time.
While this company is negotiating with the bank to get the short sale approved they list the home on RMLS with the same agent and start looking for an "end buyer". While on the surface this may seem illegal, the reality is many lawyers have reviewed this and find it 100% acceptable. Where we see a gray area is the fine line between legal, moral and ethical.
If the seller is going to be subject to any sort of deficiency judgment wouldn't it serve them best to have the end buyer be their buyer? If the investment company in the middle is making a clean profit of $20,000 for their work and if the end buyer is willing to pay the higher amount, shouldn't the seller be receiving the benefit of the higher price?
These companies are everywhere, in every major city, and they are likely not leaving anytime soon.
Here is where it gets clearly unacceptable from my point of view and it comes down to one word. The word is: AGENCY.
AGENCY:An expressed contractual relationship which can be created in writing or orally in which a principal authorizes and empowers the agent to act on behalf of the principal in dealing with third parties.
Really absorb that paragraph. It says somebody is trusting somebody else to act on their behalf, which means best interest. If you are a the Realtor and allow this third party to come in and negotiate with the bank on behalf of the seller is that third party in essence acting as the seller's agent? I think they are.
I will be most interested to see the aftermath of this most amazing time in real estate history. It hink our courts might see a very large backlog of cases.
Wednesday, February 24, 2010
Tuesday, February 23, 2010
House Bill 3610-A....Still Researching
Today the House passed 3610-A. What it will mean for homeowners is yet to be seen and believe it or not I don't have an opinion yet. I know, I know, big surprise there, as I normally do have an opinion.
One thing I do like is the bill requires the "lender" to give the borrower REASON why their loan modification is denied. There is a lot of ambiguity around this right now and requiring an actual reason seems to be a great idea.
It also requires the "lender" to file an affidavit stating their compliance with federal regulations and the reason the modification was denied.
I have copied and pasted some relevant portions which you might find interesting to read:
(b) If the beneficiary denies a request made under paragraph (a) of this subsection, the
beneficiary or the beneficiary’s agent in the notice shall provide the grantor with an expla-
nation of how the beneficiary or the beneficiary’s agent calculated that the grantor was not
eligible for a loan modification.
(a) If a grantor returns the form identified in [section 20 (6), chapter 19, Oregon Laws
2008,] ORS 86.737 (6) to the lender by the date specified on the form, the beneficiary or an agent
of the beneficiary shall review the information the grantor provided in the form and, in good faith,
shall process the grantor’s request. The beneficiary or the beneficiary’s agent, as soon as reasonably
practicable but not later than 45 days after receiving the form, shall notify the grantor
(4) Subsections (1) and (2) of this section do not apply to a beneficiary that determines in good
faith, after considering the most current financial information the grantor provides, that the grantor
is not eligible for a loan modification, provided that the beneficiary [informs] or the beneficiary’s
agent notifies the grantor in writing that the grantor is not eligible. In the notice, the benefi-
ciary or the beneficiary’s agent shall describe the basis for
It will be very interesting to see where this goes. Let's hope we see some change from this legislation.
One thing I do like is the bill requires the "lender" to give the borrower REASON why their loan modification is denied. There is a lot of ambiguity around this right now and requiring an actual reason seems to be a great idea.
It also requires the "lender" to file an affidavit stating their compliance with federal regulations and the reason the modification was denied.
I have copied and pasted some relevant portions which you might find interesting to read:
(b) If the beneficiary denies a request made under paragraph (a) of this subsection, the
beneficiary or the beneficiary’s agent in the notice shall provide the grantor with an expla-
nation of how the beneficiary or the beneficiary’s agent calculated that the grantor was not
eligible for a loan modification.
(a) If a grantor returns the form identified in [section 20 (6), chapter 19, Oregon Laws
2008,] ORS 86.737 (6) to the lender by the date specified on the form, the beneficiary or an agent
of the beneficiary shall review the information the grantor provided in the form and, in good faith,
shall process the grantor’s request. The beneficiary or the beneficiary’s agent, as soon as reasonably
practicable but not later than 45 days after receiving the form, shall notify the grantor
(4) Subsections (1) and (2) of this section do not apply to a beneficiary that determines in good
faith, after considering the most current financial information the grantor provides, that the grantor
is not eligible for a loan modification, provided that the beneficiary [informs] or the beneficiary’s
agent notifies the grantor in writing that the grantor is not eligible. In the notice, the benefi-
ciary or the beneficiary’s agent shall describe the basis for
It will be very interesting to see where this goes. Let's hope we see some change from this legislation.
Now Don't Get Too Excited About HB3656
The Oregon Senate voted to expand HB3656 today. The expansion regards the lender's right to pursue a borrower on a second mortgage after the home has been foreclosed upon.
Now before everyone gets all excited and thinks this just gives more people the right to walk away from their financial responsibilities because they were duped into obtaining the loan, let's read the details.
1. This only applies AFTER the home has been foreclosed. So if the borrower has stopped paying and the second is written off but the first is still being paid, this does not apply.
2. If the borrower does a short sale, this does not apply. This is AFTER a foreclosure.
3. The second mortgage (or note and trust deed) must have been created on the SAME day and in the same purchase as the first. Read that as an 80/20 loan scenario.
4. Now here is where it gets REALLY limited. The second to which this law is referring has to have been originated by or currently owed to the SAME lender who is foreclosing.
So really......I know of VERY few people who took out an 80/20 or a 90/10/10 with the SAME lenders.
What really amazes me is this statement made at one time by Senator Suzanne Bonamici (D-NW Portland/Washington County):
"It is no secret that many Oregonians were targeted with complicated loans that trapped them with high payments. This bill ensures a little more fairness if they lose their home."
How complicated is this: 80% of the purchase price of your home is being loaned by this bank. Another 20% is being loaned by this bank. The rate on the 20% is higher because of the increased risk to the lender by being in a second position. In addition, after 24 months the interest rate on your loan MAY adjust. If it does it will adjust no more than this percent every month and no more than this much every six months.
This is not complicated. What is complicated is that now that property values are no longer appreciating at the speed of light, people don't want to pay their debts. That is complicated!
Now before everyone gets all excited and thinks this just gives more people the right to walk away from their financial responsibilities because they were duped into obtaining the loan, let's read the details.
1. This only applies AFTER the home has been foreclosed. So if the borrower has stopped paying and the second is written off but the first is still being paid, this does not apply.
2. If the borrower does a short sale, this does not apply. This is AFTER a foreclosure.
3. The second mortgage (or note and trust deed) must have been created on the SAME day and in the same purchase as the first. Read that as an 80/20 loan scenario.
4. Now here is where it gets REALLY limited. The second to which this law is referring has to have been originated by or currently owed to the SAME lender who is foreclosing.
So really......I know of VERY few people who took out an 80/20 or a 90/10/10 with the SAME lenders.
What really amazes me is this statement made at one time by Senator Suzanne Bonamici (D-NW Portland/Washington County):
"It is no secret that many Oregonians were targeted with complicated loans that trapped them with high payments. This bill ensures a little more fairness if they lose their home."
How complicated is this: 80% of the purchase price of your home is being loaned by this bank. Another 20% is being loaned by this bank. The rate on the 20% is higher because of the increased risk to the lender by being in a second position. In addition, after 24 months the interest rate on your loan MAY adjust. If it does it will adjust no more than this percent every month and no more than this much every six months.
This is not complicated. What is complicated is that now that property values are no longer appreciating at the speed of light, people don't want to pay their debts. That is complicated!
Saturday, February 20, 2010
I am Growing Very Frustrated with Everyone Blaming the Banks
Today on the CDPE (Certified Distressed Property Expert) website. Another Realtor made a comment about how it would serve the banks right if everyone defaulted on their mortgages (or note depending on the state in which you reside). I was very distraught by her comment. Right now anyone who doesn't want to continue to make payments on a home with negative equity thinks they can just claim they have a hardship, dump the house, and just move on. Well guess what? WAKE UP WORLD, this DOESN'T work long term.
For your reading pleasure I am going to copy and paste the response I posted on the thread. The names have been changed to protect the somewhat innocent (yet obviously highly misguided!)
Jane Doe,
I am very disturbed by your comment that it would serve the banks right. Yes, they could have lessened the extent of the damage by not adjusting the rates once they saw what was happening, and many other times through the last couple years. But here is the biggest thing....the home owners promised to pay. And while some have hardships and legitimate issues, many people just don't want to pay for a house which isn't worth what they feel it should be.
To say it would serve the banks right if everyone defaulted is short sighted and you should think that through. If everyone defaulted and went into foreclosure then to whom would you sell homes?
Currently, in my market people have no shame about being on the default list, going to foreclosure, doing a short sale or filing bankruptcy. It is at a point where it is nearly trendy, as if it is a badge of honor to manipulate your bank out of as much money as possible. This impacts EVERYONE, our communities, society in general.
We need to STOP blaming the banks and require people take responsibility for the choices THEY made. Nobody forced them to take out these loans, nobody.
If people took more pride in their lives, more responsibility for their actions a lot of these short sales would be prevented. But in general, I see people just not caring. And what happens? People keep having their values dropped. People like me, who have been making the payments, working through trying to do our own modifications, and watching our neighbors just give up, fabricating "hardships", so they can go rent something nicer for less money. It is crazy.
For your reading pleasure I am going to copy and paste the response I posted on the thread. The names have been changed to protect the somewhat innocent (yet obviously highly misguided!)
Jane Doe,
I am very disturbed by your comment that it would serve the banks right. Yes, they could have lessened the extent of the damage by not adjusting the rates once they saw what was happening, and many other times through the last couple years. But here is the biggest thing....the home owners promised to pay. And while some have hardships and legitimate issues, many people just don't want to pay for a house which isn't worth what they feel it should be.
To say it would serve the banks right if everyone defaulted is short sighted and you should think that through. If everyone defaulted and went into foreclosure then to whom would you sell homes?
Currently, in my market people have no shame about being on the default list, going to foreclosure, doing a short sale or filing bankruptcy. It is at a point where it is nearly trendy, as if it is a badge of honor to manipulate your bank out of as much money as possible. This impacts EVERYONE, our communities, society in general.
We need to STOP blaming the banks and require people take responsibility for the choices THEY made. Nobody forced them to take out these loans, nobody.
If people took more pride in their lives, more responsibility for their actions a lot of these short sales would be prevented. But in general, I see people just not caring. And what happens? People keep having their values dropped. People like me, who have been making the payments, working through trying to do our own modifications, and watching our neighbors just give up, fabricating "hardships", so they can go rent something nicer for less money. It is crazy.
Monday, February 15, 2010
So, you think you are ready to buy a short sale....
Today I thought we should talk about short sales from the buyer's point of view. It seems so simple when we go shopping for the new house.
.
From the onset I make sure to warn buyers of the potential struggles of purchasing a short sale. In fact, if they are first time buyers I give them the option, but highly discourage them from even taking a look.
.
First, time. The seller may "accept" your offer to purchase, but that means nothing!! He could accept it in ten minutes, and in ten months you could still be waiting for your new dream home. Why? Because even though the seller is the owner and has the right to sell, the bank has to approve the loss they will be taking. And the bank doesn't do that without a lengthy process and many bumps along the way.
.
I have listings right now which have been in the negotiation stage for over seven months! When you are wanting to move to your new home, seven months seems like an eternity.
.
Second, condition of property. What buyers must understand is the seller has no real vested interest in selling this house. Foreclosure is just as simple and by time they get to the point of letting the house go, a few more credit points doesn't matter to them. There is no money to do a list of repairs. Either the buyer needs to do them, or they need to accept the property as it is.
.
Third, the offer you wrote and the offer the seller accepted may not be the final terms of the deal. Sure, you agreed and the seller agreed, but remember, the bank has to agree to take the loss. You could have waited five months, six months, even longer and then the bank can come back and say they want $10,00o more.
.
Lastly, I have no control. Though I am very experienced at short sales from a listing perspective I can't talk to the bank or tell the listing agent what to do. What I can do is only show the buyer properties listed by competent listing agents. Yes, I do have a list of questions I ask the listing agent and if she doesn't have the right answers we will avoid the property.
.
If you are in the market for a new home and are considering a short sale, give it a lot of thought. Many buyers think they are up for the wait and then sit by and watch all these other great homes go up for sale, accept offers, and close....while they are still waiting. The love they feel for the house they wrote on slowly starts to dissolve. So think hard and find a good buyer's agent.
.
I can be reached at 541-606-2954.
.
From the onset I make sure to warn buyers of the potential struggles of purchasing a short sale. In fact, if they are first time buyers I give them the option, but highly discourage them from even taking a look.
.
First, time. The seller may "accept" your offer to purchase, but that means nothing!! He could accept it in ten minutes, and in ten months you could still be waiting for your new dream home. Why? Because even though the seller is the owner and has the right to sell, the bank has to approve the loss they will be taking. And the bank doesn't do that without a lengthy process and many bumps along the way.
.
I have listings right now which have been in the negotiation stage for over seven months! When you are wanting to move to your new home, seven months seems like an eternity.
.
Second, condition of property. What buyers must understand is the seller has no real vested interest in selling this house. Foreclosure is just as simple and by time they get to the point of letting the house go, a few more credit points doesn't matter to them. There is no money to do a list of repairs. Either the buyer needs to do them, or they need to accept the property as it is.
.
Third, the offer you wrote and the offer the seller accepted may not be the final terms of the deal. Sure, you agreed and the seller agreed, but remember, the bank has to agree to take the loss. You could have waited five months, six months, even longer and then the bank can come back and say they want $10,00o more.
.
Lastly, I have no control. Though I am very experienced at short sales from a listing perspective I can't talk to the bank or tell the listing agent what to do. What I can do is only show the buyer properties listed by competent listing agents. Yes, I do have a list of questions I ask the listing agent and if she doesn't have the right answers we will avoid the property.
.
If you are in the market for a new home and are considering a short sale, give it a lot of thought. Many buyers think they are up for the wait and then sit by and watch all these other great homes go up for sale, accept offers, and close....while they are still waiting. The love they feel for the house they wrote on slowly starts to dissolve. So think hard and find a good buyer's agent.
.
I can be reached at 541-606-2954.
Monday, February 8, 2010
Let's Thank the Cheaters and Liars for Another Round of Paperwork.
Rumor has it ....new rules for claiming the home buyer tax credit. If you want to obtain the credit, you will have to file your taxes the old fashioned way...by mail, on paper! Oh, say it isn't so. WELL, I can't because it is so........you can't efile.
.
Can you guess why? That is right............FRAUD!!!!!
.
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Can you guess why? That is right............FRAUD!!!!!
.
Those claiming the credit must complete a new Form 5405 and include with their 2009 tax returns proper documents, including:
• A copy of the settlement statement.
• For mobile-home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract.
• For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy is required.
.
Saturday, February 6, 2010
The Sweet Deal One West Bank has in Indymac Loans
Jul 11, 2008
Based on the deal they got, do you think they would prefer to modify a loan or just take the house? Let's do some fun math.
I wonder if there will be any retribution for these losses?
- FDIC regulators took over Indymac bank as it was going down.
- This was the largest bank failure since 1984
- Fourth largest bank failure in U.S. history
- OneWest was born from the remnants of Indymac.
- FDIC and OneWest created a shared loss agreement
- OneWest would purchase all first mortgages at 70% of the current balance
- OneWest would purchase Line of Equity Loans at 58% of the current balance
- In the event of foreclosure, the FDIC would cover from 80%-95% of losses, using the original loan amount, and not the current balance
Based on the deal they got, do you think they would prefer to modify a loan or just take the house? Let's do some fun math.
- Original loan amount was $150,000.
- With missed payments and added fees, the balance is now up to $165,000
- OneWest buys the loan for 70% of value, or $115,500
- The house is foreclosed upon and sells at $135,000.
- The loss to OneWest is calculated by the FDIC to be $15,000 (original loan amount less sales price.)
- If the FDIC were to cover 85% of the loss of this loan, OneWest would receive $12,750
- However, OneWest only paid $115,500 for the loan, so there was no actual loss, instead they received a $12,750 bonus for foreclosing!
I wonder if there will be any retribution for these losses?
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