Having worked through over 100 short sales since 2007, I first hand experience the chaos and unfair processes which the banks put homeowners through.  I think its important for us to know that, as consumers, there is something/someone in place to ensure that lending practices are done properly.  From one homeowner to another, this was information that made me feel better…a little.

I will call my “fictional” family the Smith Family. Mr. Smith was out of work for over a year and they fell behind on their mortgage. Mrs. Smith had a good job but did not bring in enough money to cover all of their monthly expenses. When Mr. Smith did find a job he was not making as much money as he was in his prior position. They fell further behind in their mortgage payments.

After trying for a loan modification which did not work out…they called me  hoping to get the home sold on a short sale. If you are not familiar with how the short sale process works please read this blog detailing a short sale. After about ten weeks the bank finally approved the short sale. Sadly, when the buyers were told that they were free to move forward and proceed with the purchase they had changed their minds and decided to NOT move forward. By this time we were up against a foreclosure date within ten days. We tried to procure another buyer but in that short time were unable to do so. The bank would not extend the date without a viable offer and proceeded with the foreclosure.

The Smith’s were understandably upset and very scared. We had already talked about the potential of this very thing happening and had located a suitable rental property. The problem was that the home was occupied and it would be a couple of weeks before the Smiths could take possession.

In this particular situation the investor (actual owner of the home) was FANNIE MAE. The home was purchased at the trustee sale by the bank and they then hired a Realtor to check out the property and see if it was occupied, what condition it appeared to be in…and so on.

So, two days after the foreclosure date the Smiths got a knock on the door from the Realtor. They were asked if they were aware the foreclosure had happened to which they replied they were. They were then asked if they had plans to move. Mr. Smith told the agent that they indeed did have a place to move to but it would not be available for another two weeks.

The agent said that he was authorized to offer them $2090.00 if they would be out within two weeks and leave the property in “broom swept’ condition. They took this to mean that they need to remove all the debris and personal property and sweep the floors.

The day before their two week deadline they were moved and had turned the utilities off. I accompanied them to the meeting with the REO agent as I was interested to see the process. The agent was very nice and sympathetic. He looked over the property and with the exception of a pile of bricks on the side of the house which they had failed to move…he was pleased. They agreed to move the bricks and loaded them up then and there.

While they were doing this I spoke to the agent and asked him a few questions. He explained his experience with FANNIE MAE has been this:

1. He visits the property a day or two after the bank has been through the trustee sale process and has officially foreclosed on the property. He shared with me that MORE THAN 50% of the time, if the owners are still occupying the property, they DO NOT KNOW IT HAS HAPPENED as they were working on a short sale or a loan modification.

2. If the (now former) owners are still in the home he visits with them about their plans and is able to offer them assistance with funds in order to help with moving expenses. This is typically NOT given to them at this time. He sets up the expectation of how the property needs to be left in order for FANNIE MAE to contribute moving funds. He tells them they need to leave attachments and built-in appliances, remove all trash and debris and leave the property in broom swept condition. he further explains there is somewhat of a sliding scale of payment. Roughly, it goes like this. Be out in two weeks and receive $2090.00. If it takes three weeks…the payment drops to around $1500.00. Between 3-4 weeks they still might agree to a small payment…but after four weeks they will proceed with forcible detainer action and the sheriff will move them if necessary. (as a side note…if the occupants are renting the property they are offered the opportunity to stay in the property with no deposits or credit checks…where FANNIE MAE is now their landlord)

3. He then calls them a day or two prior to the two week deadline and sets up a time to meet them and complete paperwork and inspect the property. If all is well he will submit a request for payment to FANNIE MAE. He explains that the check will take ten days to two weeks to process and will go to him. He then meets the former owners and delivers the check personally.

It was an interesting experience for me as I have not been involved in the REO listing side of the business as much as he has…so I learned a bit more about FANNIE MAE’s policy. I do want to state here however that if the owners loan is NOT owned by FANNIE MAE I have heard many different scenarios on the way they handle the process. Some may not off any assistance at all. Some folks claim they were offered assistance but never received the check. Still others I have heard of are still occupying the home and have not even been contacted by the bank or an agent!

We can only do the best we can do to help folks get past this with as less stress as possible…and get on with their lives!

If you are looking for a GREAT agent to help with your real estate needs please e-mail me atAdele@GreaterPhoenixHomes.com or give me a call (or text) at 602-504-3898 or 888-897-7821 x 114. Plus, I have a GREAT search tool on my web site that gives you the ability to search the entire MLS…just like agents do. Very COOL!  Go to Metro Phoenix Homes and check it out! YOU can create and save as many searches as you would like.

THIS IS THE BEST MOST ACCURATE SEARCH OF OUR LOCAL MLS WHERE YOU CAN SEARCH JUST LIKE AGENTS DO

The explanation for this reduction in credit score is that the request for the loan modification paperwork is the first indicator that they’re at risk which means a credit score ding.    Consumer Data Industry Association, a trade group in Washington which represents the credit bureaus, says that people would not be asking for help unless they were having sever money troubles.  “The consumer is going into the program because they’re in a financial bind; other lenders would need to be aware of that”. (Norm Magnuson, spokesman; Yahoo Finance 2010).

So, as you’re making decisions about what to do with a mortgage that you’re not happy with, make sure you speak to someone who has experience with not only loan modifications but also short sales to get all questions about credit scores and your options answered.  Go to www.BethAHickey.com for more information on distressed property transactions.

Sales volume was down 6% from August while average pricing is also down 2.5% (price per square foot down 3%).  If you look at sales from Septeber ’09, sales were down 13% and pendings down 22% from last year.  Although this sounds bad, month to month pendings have been increasing about 4% so it seems buyer activity is keeping somewhat dependable and this will positively keep inventory moving if it can be sustained.  The supply on the market increased 2.7% from August, primarily by properties <$200k.  With this price range being attractive for investors, both for flipping and buy&hold, we could see an increase in buying activity by this sector of our market and since inventory is increasing, prices should remain favorable for quite some time.  Foreclosure notices are holding steady, which would which lends to increasing inventory (and hence maintaining favorable buying prices).

For my full Market Trends Report, please go to www.BethAHickey.com for a request.  I will not contact you outside of this report unless requested.

As a real estate agent, whether you list short sales or not, if you don’t think you need to know what HAFA is, you may need to think again.

If you aren’t familiar with the Home Affordability Foreclosure Alternative (HAFA), this program was announced in November 2009 and took effect on April 5, 2010. This is the fourth program from the US Treasury created to help homeowners, the first three to aid the homeowner in retaining the home and an attempt to avoid foreclosure and the last program, HAFA, to help sell the home as a foreclosure alternative.

Why do you need to know about HAFA, OR ANY OTHER PROGRAM FOR THAT MATTER? According to the HAFA Short Sales, The Complete Course class I recently attended and offer by the Hogan School of Real Estate, the REALTOR Code of Ethics contains numerous Articles and Standards of Practice which gives supporting evidence of the importance.

Below are a few quotes from the Code of Ethics, but not limited to:

“…REALTORS continuously strive to become and remain informed on issues affective real estate…” (Preamble)

“…REALTORS pledge themselves to protect and promote the interests of their client.” (Article 1)

“REALTORS shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to…the transaction.” (Article 2)

“The services which REALTORS provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage…” (Article 11)

“Realtors shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client.” (Article 11)

“The obligations of the Code of Ethics…shall be interpreted and applied in accordance with the standards of competence and practice which clients and the public reasonably require to protect their rights and interests considering the complexity of the transaction…” (Standard of Practice 11-2)

So before you think you don’t need to know this information, you may want to think again. Are you doing what’s in the best interest of your client by not knowing? Whether you work short sales or not, are you putting yourself and your client at risk by not knowing the options? Iif you list a short sale, but don’t disclose to your client the HAFA option, could this be potential liability in the future?

If you haven’t taken a class on HAMP, HARP & HAFA, I HIGHLY recommend you do so and the sooner the better.

If you are in the state of Arizona, I highly recommend the Hogan School of Real Estate’s 6 hour class of HAFA Short Sales, The Complete Course. This class was jampacked with great information. For more information, visit their website at www.HoganSchool.com.

Whether you are in the state of Arizona or not, if you would like to recommend another class you attended, please feel free to make comments!

Please feel free to comment on any Ah-Ha given. I don’t have all the answers, but we can learn things together and collaborate to make things better!

Home Buyers & Sellers: Have you considered buying or selling a home in the Scottsdale/Phoenix area? I have a great passion to help my clients in buying and selling one of their greatest assets. If you are looking for an agent with integrity, dedication & great customer service, please email me Jamie@TickledPinkHomes.com or call/text 480-734-1971. I would love the opportunity to help you in this exciting journey!

SPECIAL BONUS: How would you like to search the entire MLS, JUST LIKE ME?! Go to Scottsdale Arizona Homes For Sale and get started. It’s the same tool that I use and it gives you LIVE & MOST ACCURATE RESULTS. You’ll love it!!

SEARCH THE MLS HERE

Cell/Text: 480-734-1971
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