National Closing Center

Posts Tagged ‘foreclosure’

Join us for a Webinar on December 8!

Before you sell a short sale property, you need to sell a concept of a short sale to a qualifying homeowner. In order to be able to counsel homeowners on the best exit strategy, every successful agent must have sufficient legal ammunition at his/her disposal.

Robert Blinstrubas, one of the leading short sale attorneys in Illinois, will offer a much sought-after legal advice, while representatives of National Closing Center will talk about new tools that can provide a higher rate of closed leads.

The webinar will be followed by a Q&A.

Among topics discussed

• What is a short sale and when does it occur?
• The importance of a short sale package.
• Understanding a short sale procedure.
• How to approach short sale leads?
• How to keep buyers engaged?
• How to list more short sales, stay organized and in control?

Title: Converting Short Sale Leads to Listings: Legal Advice from a Top Short Sale Attorney
Date: Thursday, December 8, 2011
Time: 11:00 AM – 12:00 PM CST

After registering you will receive a confirmation email containing information about joining the Webinar.
System Requirements
PC-based attendees
Required: Windows® 7, Vista, XP or 2003 Server
Macintosh®-based attendees
Required: Mac OS® X 10.5 or newer
Space is limited.
Reserve your Webinar seat now at:

https://www3.gotomeeting.com/register/968737534

This is going to be one of the most valuable webinars we’ve ever done. With short sales being as hot and ubiquitous as ever, tax consequences is the big question that prevents many homeowners from pursuing this exit strategy. Attorney and CPA Paul Horn will address tax related issues and advise real estate agents on how to help homeowners avoid liability to lenders.

You can learn more about Paul and his excellent team here.

Although the webinar primarily focuses on California, real estate agents and brokers in any state will benefit.

The webinar will be followed by Q & A. Please see the information below and REGISTER!

Short Sales and Tax Consequences: LIVE Webinar with CA Attorney and CPA

Join us for a Webinar on December 29

Short sale is a numbers game. If you’re looking to position yourself as a real expert in front of homeowners, you better know your numbers (and laws!) well.

During this live webinar National Closing Center is proud to present you with the powerful legal ammunition, courtesy of attorney and CPA Paul Horn.

• What are the tax consequences in a short sale?
• Does the homeowner owe the bank anything in a short sale?
• Can you do a short sale while the homeowner is in a bankruptcy?

Learn California deficiency law in a short sale and understand how to help homeowners avoid liability to lenders. Find out how homeowners can eliminate the 2nd mortgage. Learn about a new short sale rule that can help dramatically increase the amount of your short sale listings. Plus, see new tools that are guaranteed to provide a higher rate of closed leads.

Title: Short Sales and Tax Consequences: LIVE webinar with CA attorney and CPA
Date: Tuesday, December 13, 2011
Time: 1:00 PM – 2:00 PM PST

After registering you will receive a confirmation email containing information about joining the Webinar.

System Requirements
PC-based attendees
Required: Windows® 7, Vista, XP or 2003 Server
Macintosh®-based attendees
Required: Mac OS® X 10.5 or newer
Space is limited.

Reserve your Webinar seat now at:
https://www3.gotomeeting.com/register/452991846

As concluded by Standard & Poor’s (S&P), the volume of distressed residential properties is the primary factor hindering a full recovery in the country’s housing market.

This is more than well known by servicers, agents and everybody in real estate business.

According to S&P report, given the pace of defaults during the housing downturn, the market’s inability to quickly absorb the excess volume has created a large “shadow inventory”. The latter is defined by S&P as outstanding properties whose borrowers are 90 days or more delinquent; properties currently or recently in foreclosure; and properties that are owned by the lender but have not yet been resold, or REO.

S&P also factors in 70 percent of properties on which the mortgage delinquency has recently been cured through a modification. Diane Westerback, managing director at S&P, explained that these properties are included in the agency’s shadow inventory equation because based on historical performance trends, S&P expects 70 percent of modified loans to eventually re-default and again become part of the industry’s distressed property supply.

Again, this is a very well known fact. This is why we’ve always been very skeptical about most of government’s efforts to encourage loan modifications. Majority of supposedly “modified” laons sooner or later end up as foreclosures or, if the owner seek better ways out, as short sales.

Solutions for the “shadow inventory”?

1. Foreclose what’s inevitable as quickly as possible.

2. Push short sales more aggressively. Both education of real estate agents as well as education of homeowners is crucial, so short sales (and foreclosures) are done the right, meaning the lawful, way.

3 Educate responsible buyers on the benefits of homeownership and purchasing real estate now.

4. Banks should lower prices of REOs even more if needed.

The last suggestion is very unpopular and very painful. However, the quicker market clears out the clutter of properties, the more likely prices are going to get back to normal.

MSNBC ran a lead story this morning, titled “More people see walking on mortgage as a viable plan.”

According to the article, nearly half f homeowners with a mortgage said they would consider walking away from their home if they owed more on it than it was worth, according to a Harris Interactive survey released this month.

Just six months ago, a similar survey indicated that only 41 percent of consumers would consider walking if they were underwater on their mortgages.

The article quotes a woman named Chris Kelly, who made a decision to leave her house in the suburbs of Seattle after divorce.

According to Ms. Kelly, she faced a tough decision: Leave the house while she still had decent savings, or pay until she’d emptied out all her accounts and then enter foreclosure.

And this is where we have to disagree. The decision is rarely like that.

The woman could have easily stopped paying her mortgage and started negotiating with her lender a short sale. It’s not a secret that most homeowners who are in the process of negotiating a short sale live in their house mortgage and rent free.

While some might say this is unethical or even plain wrong, we are not here to judge. Besides, if one wants to play a moral paragon, isn’t walking away on mortgage is more wrong and reckless than settling with the bank?

“The Florida-Times Union” has published an article that illustrates a common scenario from a lender’s playbook. It seems surreal and outrageous to homeowners involved, however, this is so common, that all you need in order to have another valid story is just to replace names and locations involved.

James Kowalski, a Jacksonville attorney who’s been defending mortgage cases, said he’s seen a lot of confusion from lenders. Homeowners follow the instructions of one department at a bank, he said, only to find out they’re being foreclosed by another.

“It’s a very common refrain from the folks who are trying to go through one of the three solutions: Short sale, deed in lieu (of foreclosure) and loan modification,” he said. “What happens is the servicer will set up a department that will be taking the short sale application and that department does not talk to the default department.”

“The homeowner has to go to court just to undo what shouldn’t have happened in the first place.”

And go to the court they must! Recently National Closing Center has been working with a wonderful team of real estate attorneys. We have found out that going to court does pay off. However, all of the parties involved, including your Realtor, short sale negotiator and the attorney must be experienced and know what they are doing.

In most cases, working with a team of professional short sale processors will result in homeowner being in the know and prevent such situations from happening. That being said, some lenders are so disorganized and their departments are so disconnected from each other that sudden notices of foreclosure in the middle of negotiating a short sale do happen.

According to Mortgage Servicing News, after three consecutive years of declining remodeling activity, a key indicator of future spending on new kitchens, remodeled baths and other home improvement projects is finally pointing upward.

Substantive growth in remodeling spending seems likely next year, according to the Leading Indicator of Remodeling Activity, which is published quarterly by the Joint Center for Housing Studies at Harvard University. The model is calling for spending to pick-up to a double-digit pace through the first half of 2011.

It’s very tempting to attribute this growths to increase in short sales. Home buyers have been exclusively looking for bargain properties, short sales being their primary choice. Considering low interest rates and bargain prices of short sales, qualified buyers after the closing must have some cash to spare, which they are spending on remodeling.

Also, short sale properties do need much more remodeling than so called regular sales, which leads to our conclusion that short sales are fueling remodeling indeed. The latter leads to the second conclusion, that overall short sale is the best option to fuel activity in the market.

Of course, low prices and super low interest rates are not great, but short sale still is the best option that saves home owner underwater from foreclosure and further embarrassment, gives lenders a little bit better slice of the pie than selling the same house as REO and, hopefully, gets the property into the hands of people who are ready to be homeowners and who will invest their money in the property.

I’ve seen this article that talks about real estate situation in Nevada. It suggests that short sales are hurting economic recovery, because it takes so long to process them.

According to the article, short sales are starting to act more like foreclosures, and it is just delaying what will inevitably happen.

This is what housing market analyst Dennis Smith had to say:

If there are going to be foreclosures, then why are they letting them lag for 12 months to only deny the short sale,” Smith said. “If we need to correct the system, why not take the hit and move on or do you want this housing recession for another five years or it to take three years.

Well, Mr. Smith has a point. However, the matter is much more complex and system will not correct itself. First of all, a tsunami of foreclosures does not mean that banks are going to release all these REOs instantly. Actually, during the past year banks have been holding back their inventory. So even if a considerable amount of potential short sales become foreclosures, there are no guarantees they will speed up the clean-up process.

Secondly, the problem is not short sales, but the way they are processed. Banks are understaffed and many employees are not properly trained. On the other hand, many real estate agents are not prepared or simply lack time and resources to deal with short closures efficiently.

It is debatable, what is easier and more feasible: fixing the way short sales are handled or forcing homeowners underwater into a foreclosure.

Mia Saini of Forbes recently expressed her (quite controversial) opinion basically stating that the government should encourage foreclosures and short sales:

My solution is that the government should encourage banks, borrowers, and underwater homeowners to quickly foreclose their homes. Banks will be reluctant to do this because they will be taking a loss when the home sells at a lower price, but in the long term the housing market cannot move forward until all the foreclosures have been cleaned up. Foreclosures are a perfectly appropriate exit tactic given our budget deficit and the previous round of lackluster tax credits. (Read more.)

This has been sort of a tabu in a real estate world, however, this particular opinion is being expressed more and more often. Yes, the stimulus worked to a certain extent, but do we really need to spend more money on tax credits? It’s a trillion dollar question, but probably less and less people are comfortable answering it with a firm “yes.”

A massive industry cleanup might be exactly what we all need. Yes, there are going to be significant losses; but they just might be less painful in the long term as opposed  to a huge debt we are getting ourselves and our children into.

Ms. Saini did not mention short sales as part of the cleanup. I do, however, think that short sales might, in many cases,  be as beneficial as a tool invigorating the market, as foreclosures. Maybe even more so. There is only one condition: they got to be closed in a lightning speed.

Properly orchestrated short sales would be an incentive for near-underwater sellers to sell and bargain-hungry buyers to buy. There is no question that almost an short sale is in better condition that REO. If we could get short sales moving faster, we might not need any kind of credits and other incentives. Banks would get more of their money and sellers in trouble would recover faster to enter the market again, hopefully, as more responsible buyers.

While success rate for HAMP hasn’t been what the government or servicers hoped, changes that made along the way will help improve it, but the continuous changes are also part of the frustration in trying to manage the program, said Mark D. Spangler, assistant vice president, section manager, with Huntington Home Savers Group. The group is part of Huntington National Bank.

Longterm, HAMP “wasn’t meant to be an end-all, be-all” and there are many other programs out there to assist borrowers, Brewer said.

It’s clear that HAMP is something servicers are stuck with and they are reluctant to call it a failure as there is very unlikely anything better is going to emerge any time soon. However, the biggest problem is the conspicuous fact that many borrowers even after the loan modification canno afford their loans.

In many cases loan modification only delays the real solution for the problem, that is a short sale or even a foreclosure. Even if short sale still quite often gets a bad rap in the press, it obviously is a better solution than foreclosure.