a. Seller's hardship letter
b. Seller's financial statement
c. Supporting documentation for hardship (latest 2 paystubs, latest 2 bank statements, latest 2 tax returns, doctor's verification of disability, lay-off or termination letter...etc.)
d. Authorization/release forms
e. BPO (Brokers Price Opinion) click link for more info
f. Option Purchase Agreement
g. Proof of Funds Letter thru Home Seller Assist program
h. Estimated HUD-1
Saturday, January 31, 2009
Tuesday, January 27, 2009
Claims of Illegal Foreclosures
It appears that different companies besides legal aid groups and public interest law firms are trying to uncover what they call illegal foreclosures. In more and more instances, they are claiming that the lender cannot prove it has legal standing to execute a foreclosure and is not the legal owner of the note. If the lender doesn’t own the note, it can’t foreclose on it.
Because some companies charge to do title reports, there is debate over whether these companies really want to help defaulted borrowers and foreclosed homeowners or simply profit from today’s growing foreclosure problem.
As a result, lenders have to step up their performance, even if they are 90% comfortable that they own the loan. More than anything, these cases focus most on the procedural aspects of the business and at what point during the process, the lender has to prove ownership of a loan and by what paper trail.
According to industry insiders, it used to be that about 90% of foreclosures were completely unopposed. As a result of that, a lot of foreclosure professionals did business in bulk and fairly quickly. No one really asked anyone to show a detailed chain of title. It was not necessary nor was it required.
Because some companies charge to do title reports, there is debate over whether these companies really want to help defaulted borrowers and foreclosed homeowners or simply profit from today’s growing foreclosure problem.
As a result, lenders have to step up their performance, even if they are 90% comfortable that they own the loan. More than anything, these cases focus most on the procedural aspects of the business and at what point during the process, the lender has to prove ownership of a loan and by what paper trail.
According to industry insiders, it used to be that about 90% of foreclosures were completely unopposed. As a result of that, a lot of foreclosure professionals did business in bulk and fairly quickly. No one really asked anyone to show a detailed chain of title. It was not necessary nor was it required.
Wednesday, January 21, 2009
News broke today that...
... Foreclosures are up 81% this year and it's only going to grow.
Join me on a Webcast as we take you through our Asset Finder Program, step by step.
Banks are over-run with REO's and we have a Hedge Fund that wants to buy these assets.
You get paid for making the introduction.
Watch it now
Saturday, January 17, 2009
Horton to hold 'short' sale
D.R. Horton of Las Vegas has gone Hollywood with its new Builder Short Sale promotion, featuring the 2-foot, 8-inch actor Verne Troyer. The 40 year old is famous for his portrayal of Mini-Me in the Austin Powers films.
The sales event is planned for Jan. 24 and 25. D.R. Horton will not publish new pricing prior to the event, however, sales agents are promising something special, according to director of sales for the company, Jeff Ward.
"Throughout the holiday season we have been very busy realigning our business for the new year," he said.
"We have thoroughly examined and renegotiated our construction costs. These refinements in conjunction with our commitment to remain the valley's best-selling home builder, have allowed an emergence of fabulous new prices and incentives for 2009."
Ward said the promotion will include price reductions in all 30 of D.R. Horton's Las Vegas Valley neighborhoods, as well as five subdivisions in Laughlin.
The neighborhoods will be identified by eye-catching signage showcasing Troyer's likeness.
D.R. Horton also has recently published a Single Story Portfolio of their homes and a Las Vegas home-finding map, which have become a resource for valley Realtors.
Home shoppers may request these items through the Builder's Concierge by calling 501-6301, or online at DRHorton.com/lasvegas.
"Pricing for this event may very well signal the bottom of the market," Ward said. And investors can take advantage of the new 1% financing from Home Seller Assist to purchase these short sales.
"We have started construction on hundreds of homes in the past months to satisfy home shoppers who have grown weary of viewing and bidding on abandoned, foreclosed and bank-owned properties."
f
Dave Reid, a broker for CH Realty, agreed. "It doesn't take long for home shoppers to realize that purchasing a distressed property is a difficult, time-intensive and frustrating experience.
"There are some great deals out there, but the majority of them are best suited for investors that have the experience and cash reserves to bring a home back to living standards," he said. "Many of our recent clients have done the 'value equation' for themselves and have recognized the merit in purchasing a spotless new home which is warranted, and includes living landscaping and isn't burdened with hidden costs."
In mid-December, a new report from Massachusetts' forecasting company, IHS Global Insight, and Ohio bank holder National City Corp. showed substantial undervaluation in local housing prices. Specifically, that report indicated that home values in Las Vegas fell 18.8 percent below what market fundamentals would justify.
"For consumers, undervaluation should signal purchasing opportunities, said Richard DeKaser, chief economist of National City.
"History shows that markets experiencing significant undervaluation provide a strong likelihood that buyers will be rewarded over the longer term. ... Real estate is now a good buy in Las Vegas."
Prospective homebuyers and Realtors who are interested in attending the Builder Short Sale may obtain information at any D.R. Horton neighborhood in Las Vegas and Laughlin, or online at BuilderShortSale.com, or by contacting the D.R. Horton Concierge.
The sales event is planned for Jan. 24 and 25. D.R. Horton will not publish new pricing prior to the event, however, sales agents are promising something special, according to director of sales for the company, Jeff Ward.
"Throughout the holiday season we have been very busy realigning our business for the new year," he said.
"We have thoroughly examined and renegotiated our construction costs. These refinements in conjunction with our commitment to remain the valley's best-selling home builder, have allowed an emergence of fabulous new prices and incentives for 2009."
Ward said the promotion will include price reductions in all 30 of D.R. Horton's Las Vegas Valley neighborhoods, as well as five subdivisions in Laughlin.
The neighborhoods will be identified by eye-catching signage showcasing Troyer's likeness.
D.R. Horton also has recently published a Single Story Portfolio of their homes and a Las Vegas home-finding map, which have become a resource for valley Realtors.
Home shoppers may request these items through the Builder's Concierge by calling 501-6301, or online at DRHorton.com/lasvegas.
"Pricing for this event may very well signal the bottom of the market," Ward said. And investors can take advantage of the new 1% financing from Home Seller Assist to purchase these short sales.
"We have started construction on hundreds of homes in the past months to satisfy home shoppers who have grown weary of viewing and bidding on abandoned, foreclosed and bank-owned properties."
f
Dave Reid, a broker for CH Realty, agreed. "It doesn't take long for home shoppers to realize that purchasing a distressed property is a difficult, time-intensive and frustrating experience.
"There are some great deals out there, but the majority of them are best suited for investors that have the experience and cash reserves to bring a home back to living standards," he said. "Many of our recent clients have done the 'value equation' for themselves and have recognized the merit in purchasing a spotless new home which is warranted, and includes living landscaping and isn't burdened with hidden costs."
In mid-December, a new report from Massachusetts' forecasting company, IHS Global Insight, and Ohio bank holder National City Corp. showed substantial undervaluation in local housing prices. Specifically, that report indicated that home values in Las Vegas fell 18.8 percent below what market fundamentals would justify.
"For consumers, undervaluation should signal purchasing opportunities, said Richard DeKaser, chief economist of National City.
"History shows that markets experiencing significant undervaluation provide a strong likelihood that buyers will be rewarded over the longer term. ... Real estate is now a good buy in Las Vegas."
Prospective homebuyers and Realtors who are interested in attending the Builder Short Sale may obtain information at any D.R. Horton neighborhood in Las Vegas and Laughlin, or online at BuilderShortSale.com, or by contacting the D.R. Horton Concierge.
Wednesday, January 14, 2009
Negative Equity the Driving Force Behind Subprime Defaults
In the past, payment shocks such as job loss, health catastrophes or divorce have historically been identified as the primary drivers of default, CreditSights says in US Mortgage Outlook Part 1: State of Subprime. This lack of negative-equity-induced defaults is usually explained by ‘transaction costs’ - which encompass the greater difficulty of gaining credit in future, sentimental attachment to one’s property, moral qualms and moving costs.
“However, most subprime borrowers are already financially stretched even without higher monthly payments. This financial overburdening may mean that the continuing falls in house prices prompts borrowers to wonder whether the sacrifices of paying towards a depreciating investment is economically sensible. Given that it is almost certainly cheaper to rent an equivalent property and that subprime borrowers are unlikely to be losing much in the way of credit score from a default, it is increasingly difficult to see how ‘transaction costs’ can provide much of an argument against defaulting.”
As a result we believe negative equity is playing a progressively more important roll in determining whether borrowers are defaulting. And is the driving force behind the ever increasing Home Seller Assist program created by John Alexander which enables investors to buy properties using 1% funding.
“In fact, evidence that negative equity is playing a more important roll in borrowers’ default decisions may be suggested by a dramatic rise in realized losses. In September 2007, realised losses on first-lien loans in the ABX indices were roughly 25%.”
“However, most subprime borrowers are already financially stretched even without higher monthly payments. This financial overburdening may mean that the continuing falls in house prices prompts borrowers to wonder whether the sacrifices of paying towards a depreciating investment is economically sensible. Given that it is almost certainly cheaper to rent an equivalent property and that subprime borrowers are unlikely to be losing much in the way of credit score from a default, it is increasingly difficult to see how ‘transaction costs’ can provide much of an argument against defaulting.”
As a result we believe negative equity is playing a progressively more important roll in determining whether borrowers are defaulting. And is the driving force behind the ever increasing Home Seller Assist program created by John Alexander which enables investors to buy properties using 1% funding.
“In fact, evidence that negative equity is playing a more important roll in borrowers’ default decisions may be suggested by a dramatic rise in realized losses. In September 2007, realised losses on first-lien loans in the ABX indices were roughly 25%.”
Sunday, January 11, 2009
Where Short Sales Stumble
By Elizabeth Razzi
Here's what's really happening with short sales: All too often, they fall short of the finish line.
A short sale means a sale that falls short of the amount owed on the mortgage. They happen only when the seller can't come up with the cash to pay off the difference. Most important, though, is that they can happen only when the lender agrees to accept the shrunken payoff. There are now sources that offer 1% funding to buy short sales like the Home Seller Assist program created by John Alexander.
Desperate sellers pursue them to avoid a foreclosure, which would be even more damaging to their credit history. Buyers pursue them in hope of snagging a home at a deep discount.
Before you waste your time, and possibly your money, on a short sale that stands little chance of getting the bank's approval, gather some intelligence about the sellers, their financial situation and the real estate agent they have hired. You will save a lot of frustration by focusing only on deals the bank is willing to make.
Lenders aren't in the business of accepting less than they are owed, and their paperwork machinery isn't even set up to work that way efficiently. Their approval of a short sale is always slow in coming -- if it ever comes at all. You need to find out if the bank even has a clue that the seller is trying for such a deal.
Too often, sellers and their agents are calling a listing a "short sale" or saying that "offers are subject to third-party review" without even having talked with the lender. They plan to get a live fish on the hook before they try to tempt the lender.
Do you want to be that fish?
It's important to distinguish between "upside-down" sellers and short sales. If sellers are upside-down on their loan, owing more than the home is worth, they are still expected to make monthly payments. Even if they would like to move, most upside-down owners are stuck until prices recover enough to make a sale profitable.
If an upside-down owner must sell, even at the reduced price, he's expected to take money out of savings, cash in the 401(k), borrow from the in-laws or otherwise pay off the mortgage.
But what happens when the homeowner simply cannot come up with the cash? At this point, the homeowner's pain becomes the lender's problem. The lender's options are either to agree to a short sale and forgive the unpaid debt, or to foreclose on the home and re-sell it. Remember, the lender gets to make that choice, not the seller.
There are lots of things that can derail a short sale. For example, although lenders lose a lot of money when they foreclose, the payout from private mortgage insurance could reduce that loss enough to make the lender choose foreclosure.
Lenders holding second mortgages, such as home-equity lines of credit, can also kill the sale. Second-mortgage lenders are supposed to be at the back of the line to collect loan payoffs, but they can nix a proposed short sale if they don't think they're getting enough out of it.
Frank Borges LLosawho owns the FranklyRealty.com brokerage in Arlington, has analyzed multiple-listing service data for Northern Virginia and estimates that of every 20 short-sale listings that draw a contract from a buyer, only one actually makes it to closing. "I call them fake listings," he said.
Before he will submit a buyer's purchase offer, LLosa sends the listing agent an e-mail questionnaire to measure the prospects for a successful deal. Mostly, he wants to know whether the sellers and their agent have already started the approval process with the lender.
LLosa asks whether the sellers and their agent have submitted a "short-sale package" to the bank. That includes a letter explaining why the sellers face a financial hardship, such as a job loss, and cannot pay what is owed. It also includes details of their finances to demonstrate that they don't have savings or investments that could be liquidated to pay the debt.
Glenn Kelman, chief executive of Redfin, an Internet-based brokerage, cited a number of indicators that a listing advertised as a short sale will really make it to closing. You might be a wasting your time unless you see these signs:
· Only one bank has to approve the sale. "If two banks have to approve the deal, one will get the short end of it, and approval is unlikely," Kelman said. You also don't want to see that there are other lien holders, such as unpaid contractors.
· The seller has stopped paying the mortgage and has already received a notice of default. If the lender is still collecting monthly payments, that lender has no incentive to approve a short sale.
· The bank is ready to deal. Someone at the bank has already approved a short sale, or has at least confirmed receipt of that short-sale package, including a document showing the lender what it would net after taxes and fees, and a market analysis or appraisal that demonstrates that the home is being sold for a reasonable price. "Ask the listing agent who his contact at the bank is, by name and title, and confirm that the paperwork is complete," Kelman said. "Many won't even know what you are talking about."
· The listing agent has experience completing short sales and responds to your inquiries. "To make a deal happen, you need a listing agent pounding on the table with the bank," Kelman said. "But many banks pay the listing agent peanuts, so the agent may be busy with better-paying work."
· And, finally, foreclosure is at least six weeks away. Kelman said it takes at least that long to get a short sale approved, so a foreclosure any time sooner could sweep your deal away. Plenty of time to line up your 1% funding for short sales.
Unfortunately, foreclosure dates aren't always easy to nail down. Several troubled borrowers I have spoken with over the years have told me they couldn't find out exactly when the foreclosure would happen. And buyers who have succeeded at a short sale have told me they could only guess at the looming foreclosure date.
If you try to buy a home through a short sale, be prepared for the deal to fall apart. Don't spend money on appraisals or inspections until you have received some sort of commitment from the bank. You certainly don't want to give notice to your landlord too early. And keep looking for other, easier deals, just in case.
And if you want to make money tellin others about the new 1% funding to buy short sales, you should visit http://homesellerassist.synthasite.com now and make 2009 your best year ever.
Here's what's really happening with short sales: All too often, they fall short of the finish line.
A short sale means a sale that falls short of the amount owed on the mortgage. They happen only when the seller can't come up with the cash to pay off the difference. Most important, though, is that they can happen only when the lender agrees to accept the shrunken payoff. There are now sources that offer 1% funding to buy short sales like the Home Seller Assist program created by John Alexander.
Desperate sellers pursue them to avoid a foreclosure, which would be even more damaging to their credit history. Buyers pursue them in hope of snagging a home at a deep discount.
Before you waste your time, and possibly your money, on a short sale that stands little chance of getting the bank's approval, gather some intelligence about the sellers, their financial situation and the real estate agent they have hired. You will save a lot of frustration by focusing only on deals the bank is willing to make.
Lenders aren't in the business of accepting less than they are owed, and their paperwork machinery isn't even set up to work that way efficiently. Their approval of a short sale is always slow in coming -- if it ever comes at all. You need to find out if the bank even has a clue that the seller is trying for such a deal.
Too often, sellers and their agents are calling a listing a "short sale" or saying that "offers are subject to third-party review" without even having talked with the lender. They plan to get a live fish on the hook before they try to tempt the lender.
Do you want to be that fish?
It's important to distinguish between "upside-down" sellers and short sales. If sellers are upside-down on their loan, owing more than the home is worth, they are still expected to make monthly payments. Even if they would like to move, most upside-down owners are stuck until prices recover enough to make a sale profitable.
If an upside-down owner must sell, even at the reduced price, he's expected to take money out of savings, cash in the 401(k), borrow from the in-laws or otherwise pay off the mortgage.
But what happens when the homeowner simply cannot come up with the cash? At this point, the homeowner's pain becomes the lender's problem. The lender's options are either to agree to a short sale and forgive the unpaid debt, or to foreclose on the home and re-sell it. Remember, the lender gets to make that choice, not the seller.
There are lots of things that can derail a short sale. For example, although lenders lose a lot of money when they foreclose, the payout from private mortgage insurance could reduce that loss enough to make the lender choose foreclosure.
Lenders holding second mortgages, such as home-equity lines of credit, can also kill the sale. Second-mortgage lenders are supposed to be at the back of the line to collect loan payoffs, but they can nix a proposed short sale if they don't think they're getting enough out of it.
Frank Borges LLosawho owns the FranklyRealty.com brokerage in Arlington, has analyzed multiple-listing service data for Northern Virginia and estimates that of every 20 short-sale listings that draw a contract from a buyer, only one actually makes it to closing. "I call them fake listings," he said.
Before he will submit a buyer's purchase offer, LLosa sends the listing agent an e-mail questionnaire to measure the prospects for a successful deal. Mostly, he wants to know whether the sellers and their agent have already started the approval process with the lender.
LLosa asks whether the sellers and their agent have submitted a "short-sale package" to the bank. That includes a letter explaining why the sellers face a financial hardship, such as a job loss, and cannot pay what is owed. It also includes details of their finances to demonstrate that they don't have savings or investments that could be liquidated to pay the debt.
Glenn Kelman, chief executive of Redfin, an Internet-based brokerage, cited a number of indicators that a listing advertised as a short sale will really make it to closing. You might be a wasting your time unless you see these signs:
· Only one bank has to approve the sale. "If two banks have to approve the deal, one will get the short end of it, and approval is unlikely," Kelman said. You also don't want to see that there are other lien holders, such as unpaid contractors.
· The seller has stopped paying the mortgage and has already received a notice of default. If the lender is still collecting monthly payments, that lender has no incentive to approve a short sale.
· The bank is ready to deal. Someone at the bank has already approved a short sale, or has at least confirmed receipt of that short-sale package, including a document showing the lender what it would net after taxes and fees, and a market analysis or appraisal that demonstrates that the home is being sold for a reasonable price. "Ask the listing agent who his contact at the bank is, by name and title, and confirm that the paperwork is complete," Kelman said. "Many won't even know what you are talking about."
· The listing agent has experience completing short sales and responds to your inquiries. "To make a deal happen, you need a listing agent pounding on the table with the bank," Kelman said. "But many banks pay the listing agent peanuts, so the agent may be busy with better-paying work."
· And, finally, foreclosure is at least six weeks away. Kelman said it takes at least that long to get a short sale approved, so a foreclosure any time sooner could sweep your deal away. Plenty of time to line up your 1% funding for short sales.
Unfortunately, foreclosure dates aren't always easy to nail down. Several troubled borrowers I have spoken with over the years have told me they couldn't find out exactly when the foreclosure would happen. And buyers who have succeeded at a short sale have told me they could only guess at the looming foreclosure date.
If you try to buy a home through a short sale, be prepared for the deal to fall apart. Don't spend money on appraisals or inspections until you have received some sort of commitment from the bank. You certainly don't want to give notice to your landlord too early. And keep looking for other, easier deals, just in case.
And if you want to make money tellin others about the new 1% funding to buy short sales, you should visit http://homesellerassist.synthasite.com now and make 2009 your best year ever.
Wednesday, January 7, 2009
New Mortgage Bankruptcy Bill Does Not Address Real Problem
The plight of homeowners delinquent on their mortgages has been the focus of much debate lately and proven extremely profitable for the Home Seller Assist program created by John Alexander and also known as We Provide The Cash
There have generally been two major lines of thinking:
The best course is to let free market principles apply. If homeowners cannot afford the mortgage payment, the old fashioned remedy of foreclose should take place, turning an overburdened homeowner into a renter.
Those more inclined to assess the loss of a home in terms of human suffering rather than as an economic equation have sought to provide relief to struggling homeowners by modifying the terms of the original mortgage.
As the number of mortgages in default grew, the situation attracted the attention of politicians. Their viewpoint seemed to focus on helping the homeowner stay in the home, regardless of cost.
The governments’ efforts to encourage the banking industry to cure the foreclosure problem through voluntary participation in loan modifications was a failure. For a variety of reasons the loan mods were not working. Data from the Comptroller of the Currency shows that over 50% of modified loans re-defaulted within 6 months. With many loan mods, payments went up for the borrowers and principal was hardly ever reduced. The loan mods actually left many borrowers in a worse position than when they started. In addition, most of them had negative equity before and after the loan mod. The negative equity position locked them into the house, unable to sell or refinance.
Today, from Washington, a new solution - giving bankruptcy courts the power to alter the terms of the original mortgage.
Lawmakers Set New Mortgage Bankruptcy Bill
WASHINGTON (Reuters) - Legislation designed to stem foreclosures by allowing bankruptcy judges to erase some mortgage debt will be introduced by Congressional Democrats on Tuesday, and hopes are high that it will pass after a similar plan failed last year.
“Economic conditions have only worsened since we last debated this plan,” said Rep. Brad Miller, a member of the House Financial Services Committee who plans to introduce a bankruptcy reform bill on Tuesday. “Until we stop the slide in foreclosures and falling home prices, the economy will get worse still.”
The legislation change would allow bankruptcy judges to modify home loans in the same way that they currently may modify other unsettled obligations, such as credit card debt.
The lending industry has said that allowing bankruptcy judges to modify mortgage obligations would change how they weigh risk. Currently a lender knows that it has recourse to foreclosure if a borrower fails to meet mortgage payments, but the lender does not have to factor in the possibility that the payments it receives could be decreased by a judge.
What will be the impact of allowing bankruptcy judges to discharge (cram-down) mortgage debts? Some of the issues and questions to be considered include the following.
Interest rates are correlated to risk - that’s the way things work in a free market. If a mortgage loan is made with the risk of principal impairment by bankruptcy, this risk has to be priced into the loan rate. Reducing mortgage principal by legislative fiat may bring unintended adverse consequences.
According to The Mortgage Bankers Association:
It is our position that if this proposal were to become law, mortgage rates would increase by at least one and a half points. In addition, lenders will be forced to require higher down payments and charge higher costs at closing. All these increased costs would be necessary to account for the new risks that lenders will face when judges decide to change how much borrowers owe on their mortgages.
Since total mortgage delinquencies are less than 10% and not all of these cases will wind up in bankruptcy, cram downs might help less than 5% of mortgaged homeowners. If the MBA is correct and mortgage rates rise significantly due to cram downs, expect a significant backlash from the other 95% of mortgaged homeowners who will wind up paying for the losses through higher interest rates.
According to The Housing Wire, 50% of Americans oppose bailing out troubled homeowners. “These findings indicate that there are significant political barriers to proposals now being drafted in Congress.”
The bankruptcy discharge of a mortgage balance will be viewed by many as the ultimate bailout. The final compromised bill may result in contorted regulations that ultimately benefit few homeowners.
The free market has a solution for “troubled homeowners” which is known as foreclosure. Does the free market solution lose all merit merely because the number of foreclosures increased dramatically due to imprudent borrowing and lending?
According to Rep. Brad Miller, “Until we stop the slide in foreclosures and falling home prices, the economy will get worse still.” Rep. Miller is confusing a symptom of the disease as the cause. Falling home prices did not cause our economy to weaken. The housing asset bubble that burst was due to reckless lending, fueled by a government providing easy credit and obsessed with making everyone a homeowner. Political interference in economic matters usually delays a solution by impeding the free market forces that will ultimately prevail anyways.
If the mortgage cram down bill is passed, it will drive many homeowners to bankruptcy, lured by the promise of wiping out mortgage debt. The loan modification program allowed the banks to pretend that the amount they were owed would still be repaid over time. When the loan gets reduced in bankruptcy, this illusion will be gone. More write offs by the banks could lead to a self defeating cycle of tighter credit, stricter mortgage underwriting, weaker housing prices and further bailouts.
How many homeowners that are incapable of handling the burden of home ownership will be allowed to remain in their homes, only to face foreclosure again at a later date?
Continued massive government support of the mortgage market will be necessary since investor demand for mortgage securities is likely to remain low due to collapsing housing prices and the risk of mortgage debt being discharged by bankruptcy. How does an investor properly price a mortgage security where the asset value underlying the security is declining and also face the risk that the principal investment may be impaired by court decree?
The Fed is now expected to absorb virtually all of the new mortgage backed securities this year. With the Fed extending its purchases into virtually every asset class, a question comes to mind. As the Fed assumes the losses of all failing economic entities in the country, at what point does the US Government begin to share the credit quality of those being bailed out?
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