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B of A changed Short Sale Rule Jan 11, 2012

B of A just shortened the time frame of how long a seller has to submit a backup offer if the first buyer backs out.  As of last fall B of A created a 14 day window to swap out buyers without starting the short sale process over.  The 14 day window has been reduced to 8 days effective immediately.

I always recommend keeping a back up offer in place from the beginning.  8 days is a very short period of time to find a new buyer.

6 Ways to Save Your Underwater Home

Link to full article on saving your underwater home – GREAT IDEAS!

Finding a New Normal for Real Estate in 2012

Finding a New Normal for Real Estate in 2012

Interesting article from Inman News about what to expect in real estate in 2012

Foreclosure Reports Driven Higher by Bank of America

Foreclosure Report From www.ForeclosureRadar.com  Foreclosure filings and sales increase throughout most of our coverage are in August. Foreclosure starts jumped significantly, reversing what had been a declining trend over the past several months. Investors bought more properties on the courthouse steps in August than in July everywhere except in Washington. The number of properties Sold Back to Bank jumped significantly in Oregon, and also rose in California and Nevada. Foreclosure starts (the first notice filed, either a Notice of Default or Notice of Trustee Sale depending on the state) rose in every state. This appears to have been primarily driven by Bank of America and related entities, where we saw an overall 116 percent increase from July to August. Wells Fargo and US Bank also saw an increases in foreclosure start filings, while filings by JP Morgan Chase and Citibank were essentially flat. “Bank of America appears to be primarily responsible for the surge in foreclosure starts this month,” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “Since their average time to foreclose has recently increased to more than a year, it is unclear that these foreclosure starts will lead to an increase in foreclosure sales anytime soon.” Arizona Notice of Trustee Sale filings, up 15.0 percent from the prior month, reversed a four-month downward trend. Properties Sold Back to Bank (REO) continued a five-month decline, with an 8.0 percent drop from July to August, and a 42.8 percent drop from this time last year. Investors were more active in August, with properties Sold to 3rd Parties up 4.9 percent month-over-month and up 38.7 percent year-over-year. Time to foreclose in August was flat from July at 175 days but 15.0 percent longer than a year ago. View all Arizona stats by state, county, city or ZIP California Notice of Default filings increased 69.5 percent to the highest level in a year. Notice of Trustee Sale filings were up more moderately, rising 6.0 percent month-over-month, but down 23.6 percent year-over-year. Cancellations were nearly flat, up just 1.9 percent from July. Activity on the courthouse steps increased in August. Properties Sold Back to Bank (REO) increased 12.3 percent from the prior month. Properties Sold to 3rd Parties rose 9.9 percent month-over-month, and 10.8 percent year-over-year. Time to Foreclose increased to 333 days in August, which is 49 days longer than a year ago. View all California stats by state, county, city or ZIP Nevada Notice of Default filings jumped 44.2 percent month-over-month, but fell 13.6 percent year-over-year. Notice of Trustee Sale filings slipped for the fifth consecutive month, dropping 9.9 percent month-over-month, and 43.4 percent year-over-year. Investor activity increased in August. Properties Sold to 3rd Parties rose 19.8 percent from July, and 27.8 percent from last year. Cancellations declined for the fourth straight month, dropping 9.0 percent in August to the lowest level in 15 months. Time to Foreclose jumped 14.3 percent in August from July, reaching a new record of 368 days. The Time to Resell increased month-over-month for both Banks at 179 days and 3rd Party Investors at 108 days. View all Nevada stats by state, county, city or ZIP Oregon Notices of Default were up in August over July by 35.6 percent, but filing activity remains 45.8 percent below this time last year. Properties Sold Back to Bank (REO) rose dramatically, up 243.3 percent month-over-month, as Recontrust, a subsidiary of Bank of America, began to clear the 2,800 foreclosures it started in April. Properties Sold to 3rd Party investors were up as well, 46.0 percent month-over-month and 17.4 percent year-over-year. The Time to Foreclose dropped in August for the second month in a row, down 9 days from July to 150 days. View all Oregon stats by state, county, city or ZIP Washington Washington saw a 3.4 percent increase in Notice of Trustee Sale filings in August from July, which reversed four months of consecutive declines. Activity on the courthouse steps slowed as foreclosures Sold Back to Bank (REO) dropped 29.4 percent month-over month, and foreclosures Sold to 3rd Parties, typically investors, were down 33.3 percent. Time to Foreclose was nearly flat in August at 104 days. View all Washington stats by state, county, city or ZIP State Notice of Default Notice of Sale Back to Bank Sold to 3rd Party Arizona n/a + 15.0% - 8.1% + 4.9% California + 69.5% + 6.1% + 12.3% + 9.9% Nevada + 44.2% - 9.9% + 1.2% + 19.8% Oregon + 35.6% n/a + 243.3% + 46.0% Washington n/a + 3.9% - 29.4% - 33.3%

See foreclosure trends for any State, County, City or ZIP we cover. Arizona Stats & Trends California Stats & Trends Nevada Stats & Trends Oregon Stats & Trends Washington Stats & Trends Homeownership Rates Are Lower Than You Think Foreclosure Delays Stretch Imagination Sacrificing Sacred Cows: The Mortgage Interest Deduction For Good or For Bad: Further Foreclosure Delays Likely to be Caused by California SB 729 Top 10 lenders for short sales Will the IRS exercise its right to redeem following trustee sale? Can a home bought at auction be sold back to the former owner? Evicting a former owner after trustee sale Advice for the first time auction bidder Can a homeowner stop a trustee sale by joining a class action against the lender?

Should the Mello Roos in Lincoln Crossing Deter Buyers?

After a ton of research I can officially say it should not be a deterent.

I will be the first to admit I have avoided taking clients to Lincoln Crossing because of the high mello roos tax.  Now that inventory is so low I conducted research into Lincoln to see if it’s in my client’s best interest to look there.

Facts about Lincoln Crossing Mello Roos…

1.  Mello Roos amount is based upon the square footage of the home (See link for break down

http://app4.websitetonight.com/projects2/3/3/7/0/860733/uploads/Lincoln_Crossing_Mello_Roos_Breakdown.pdf )

2.  There are 2 mello roos bonds in Lincoln Crossing (1 for schools and 1 for the city)

3.  They are both set to expire in 2034 (without the option of renewal)

4.  They can be “prepaid” which results in paying about 50% less than paying the monthly amount for the next 23 years!!!! (This could be a negotiating tool with the seller)

5.  Over 20% of homes in Lincoln Crossing have already prepaid all the mello roos bonds.  (therefore homes for sale may not even have a mello roos bond tied to them)

My client was looking for a home around 4000 sq feet anywhere in Roseville, Rocklin, Granite Bay and Folsom.  They wanted to keep their purchase price under $400K though.  What did we find (in July/Aug 2011)?:

Granite Bay, Folsom, East Roseville would only get them about 2500 sq feet for $400K (too small)

West Roseville had homes large enough between $400K-450K but most were bank owned and needed about 15K worth of work.

West Rocklin had homes in Whitney Ranch for about $450K for that size.

Lincoln Crossing had homes for $315K-$360K for the same size.

Lets do the math quickly….You get the same size home in Lincoln Crossing for $100K less than West Roseville or Whitney Ranch and it’s virtually impossible to find 4000 sq feet for $400,000 anywhere else.

Ok but what about the taxes????? I pulled properties in every subdivision that was built since 2000 in all the surrounding areas.  I did a random pull of homes my clients also liked to compare all the taxes on a monthly bases. I found when I took the base price of 1% + mello roos (which are present in most newer home subdivisions)+ misc taxes, Lincoln Crossing wasn’t that much higher for a monthly tax amount.

Almost ALL newer subdivisions had higher taxes (on average 1.4-1.8% of sales price).  In the end a buyer in Lincoln Crossing was only paying an additional 100-200/month for a home that was upgraded to the max (should be a custom luxury home in Catta Verdera) AND they had the ability to pay the mello roos up front which reduced their future tax bills in half.  The future tax bills would be significantly lower than all surrounding newer neighborhoods.

On top of it all Lincoln Crossing has great community facilities not available in most newer subdivisions!!!

To sum it up – I think Lincoln Crossing is a great avenue for buyers in our current market from a financial perspective!

URGENT – SB 458 PASSED – California short sales will no longer have any deficiency judgments!

LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED

In a major victory for REALTORS®, Governor Brown signed into law July 15, 2011, a
C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short
sale for one-to-four residential units, regardless of whether the lender is a
senior or junior lienholder.  Effective immediately for transactions closing
escrow from this day forward, both senior and junior lienholders cannot require
a borrower to owe or pay for a deficiency in a short sale.  This law also
prohibits any deficiency judgment to be requested or rendered for senior or
junior liens after a short sale of one-to-four residential units.  Any purported
waiver of this rule shall be void and against public policy.

Although a lender cannot require a borrower to pay any additional
compensation in exchange for a short sale approval, the new law does not
prohibit a borrower from voluntarily offering a monetary contribution to a
lender in hopes of obtaining a short sale.  A lender is also permitted under the
new law to negotiate for a contribution from someone other than the borrower,
such as other lenders, agents, relatives, and the like.

Exceptions to the new law include a lender seeking damages for a borrower’s
fraud or waste; a borrower that is a corporation, LLC, limited partnership, or
political subdivision of the state; a lien secured by a bond as specified; a
public utility lien; and additional rules apply if a note is
cross-collateralized by more than one property.

This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov.

Article from: California Association of Realtors

B of A Short Sales Important Change – Substitute Buyers Without Starting Over!

Now You Can Substitute a New Buyer for One Who Walked Without Restart

As an example of our commitment to improving the short sale process, Bank of America now allows real estate agents to submit a backup offer on a transaction if the original buyer has walked away from the sale.  This means you will no longer have to initiate a new short sale; instead, you can continue with the original transaction in Equator and still work with your same short sale specialist.  This change will save you time by not having to repeat a number of process steps. When a Backup Offer Is Ready You should send a message to your short sale specialist via Equator when the original buyer is no longer interested in the property.  Your short sale specialist will then respond to you within two business days and ask if you have a backup offer ready to submit.  If you have another buyer prepared to make an offer, the short sale can proceed without having to repeat the short sale initiation steps.  The short sale status in Equator will change to “Marketing,” and you will be directed to complete the following tasks within 14 business days:    ·         Complete the “Listing Data” task. ·         Provide the marketing description. ·         Review the marketing plan. ·         Upload the offer.  (To do this in Equator, locate “My Properties,” then “Offers” and select “Place New Offer.”) If the “Listing Data” task is not completed and the new offer is not uploaded within 14 business days, the file will be closed. When No Backup Offer Is Ready This new process applies only if there’s an available backup offer when a buyer walks.  If you do not have a backup offer ready to be submitted, the short sale will be declined.  In that case, you should return to marketing the property and initiate a new short sale in Equator once you receive another offer.

Unemployed FHA borrowers to get year of forbearance | Inman News

Unemployed FHA borrowers to get year of forbearance | Inman News.

The Latest Information from B of A and Wells Fargo Regarding Short Sales

In June, David Sunlin, Sr Vice President for Short Sales at Bank of America and Abel Fregoso, National Field Short Sale Manager for Wells Fargo were on a panel at the CDPE (Certified Distressed Property Expert) Conference in Florida. I sat in on a conference call that highlighted some of the important information shared in Florida.

Highlights of the information shared at the conference:

 

Causes of Short Sales from 2006-2012

·                     2006-2008 short sales caused by poor lending practices

·                     2008-2011 short sales caused by unemployment (for every 6 jobs lost, at least 1 foreclosure)

·                     2012 may start the 3^rd waive of short sales because of the adjustable arms that are going to readjust.  The 3^rd waive of foreclosures are anticipated to have a higher price point

 

Current Status of Short Sales:

·         3 years of shadow inventory (This is inventory they already have in their pipeline and it will take 3 years to close everything). 

·         Banks claim they won’t flood the market with foreclosures. 

·         Some banks anticipate the end of short sales in 2014 if the 3^rd wave doesn’t hit (B of A and WF anticipate 2017-2018).  Those are all internal factors, not external factors

·         Most loans taken after 2008 are working correctly b/c ratios and income documentation got stricter

 

Bank of American & Wells Fargo’s new Short Sale Processes

 

1.      B of A & Wells Fargo’s New Streamline Process:

a.       95% of time – if financial hardship is legitimate and the borrower’s credit score is under 570 then NO documentation (tax returns, bank stmts, pay stubs, etc) needed. 

b.      Both banks claim this new process will be extremely efficient with quick closings.

c.       For Wells Fargo loans, 2 payments must be missed to qualify for the streamline process.

d.      If it qualifies, full settlement language will be given and the deficiency will be waived.  (If the credit score is high they won’t waive the deficiency judgment).

 

2.       Processing Short Sales:

a.       Both banks are moving to a single point of contact so you always talk to the same person

b.      Agents can now start the short sale process as soon as they take the listing.  They no longer need to wait for an offer.

c.       Wells Fargo adopted the Equator system the last week in June 2011. 

d.      In the fall of 2011 Equator 2.0 will be launched.  This new system will give three avenues for processing short sales; with an offer, without an offer or HAFA.

e.       By the fall both banks will help agents establish a market value upon taking the listing.

f.       Wells Fargo is adopting Wachovia’s model.  Wachovia’s current system has a representative come to the property upon taking the listing to establish the value.  When an offer comes in it is looked at very quickly and escrow is usually open within a week. 

g.      Delegated Vs. Non-Delegated Short Sales.  Delegated – the bank can make the decision on the short sale.  Non-delegated the investor must approve it.  If the loss is too high of a % (usually over 50%) then the investor will need to approve it. 

h.      A streamline delegated short sale will be the fastest process possible.

i.        Sellers will soon need to call the bank at the start of the short sale to state whether they want to do a HAFA short sale or not.

 

3.      Potential Short Sale Fraud?

a.       How are banks determining fraudulent short sales? 

                                                          i.      If the borrower’s credit score is high (over 680) and financial hardship suspect then they may have a walk away by someone who can afford their home.  Banks have high powered people investigating these scenarios.

                                                          ii.      Banks believe people who have high credit scores are “strategic defaults”. 

                                                          iii.      People who are buying a new home with the “intention” of leasing their current home then bailing is now considered fraud.  B of A believes they have recourse down the road.

4.       Misc Facts:

a.       In 2008 B of A only had 258 people processing short sales.  In 2011 they have over 3000.

b.      B of A and WF process 60-70% of all short sales.

c.       Chase has a very hard stance on questionable hardships but they aren’t far behind following B of A and WF.

d.      PNC – as of April 2011.  The verbiage in their short sale deficiency agreement which must be signed to close the short sale states that the borrower agrees to repay PNC any money not paid by the short sale regardless of recourse or non-recourse money.

e.       2^nd lien holders are asking for higher cash contributions.  For lower priced homes the 1^st is often giving more money.  For higher priced homes it often comes from the buyer & seller. 

f.       82% of all homes in some stage of foreclosures are not on the market.  WF agreed it was similar.

g.      Banks save 20% on a sh sale over a foreclosure.  Investors are now giving the banks more latitude

Redesigned website, new Facebook and an updated blog!

Hello again!

The great news is I was so busy the last 3 years I didn’t have time for all my marketing endeavors and blogging seemed to get lost in the shuffle.  My husband and I spent the spring in Europe for his job which allowed me to dedicate time to revamping my website, creating a facebook page, https://www.facebook.com/#!/pages/Kia-Sundberg-Realtor/159127037486750 and redesigning my 2008 blog page.  I have yet to brave the world of Twitter but I am embracing the social media aspect of real estate!  Please check out my redesigned website, www.KiaKapci.com  that now has a ton of updated content.  Either tell me you love it or offer good advice for what you think I should add or change.