My name is Jason Stone and I originally purchased my condo in 2006. From the onset it was a pain in the ass.
The market turned shortly thereafter, I had ongoing problems with my tenant and after burning through a big chunk of my cash reserve I decided to put the property on the market in February 2008. The first agent that I had was knowlegable and experienced and got the property in escrow 3 times. During all 3 attempts we had no success dealing with the banks in either securing a loan for the buyer, or negotiating with the bank.
After a year of unsuccessful escrows I attempted to do a deed in lieu with the bank to make the drama end. Once again, the incompetence of Bank of America shown through and this also failed.
Nat Ferguson took over as the listing agent several months ago. I told him what an uphill battle it was and he laughed and said that he could get it done. With great skepticism and no expectations I signed our listing agreement.
He spent a lot of time assessing the property and working on a strategy to get the condo sold. Nat was also able to get multiple offers and put the property in escrow. After the first buyer bailed on the offer, then the second buyer bailed on the property. Our third buyer agreed to stick it out, we had preliminary approval from the bank, and we were 30 days away from closing…then Bank of America decided that after 2 years they had waited long enough and decided to foreclose on the property. Most people would logically think that after 2 years the bank, after agreeing to accept the short sale, wouldn’t immediately turn around on themselves and try to foreclose, but that’s how bad the finacial mess has screwed up the banks. The negotiator that works with Nat was diligent and relentless in making sure that all of the hard work and time hadn’t been wasted, and past the 11th hour, when everything looked doomed, pulled the deal out of the fire and we were able to close escrow after two and a half years!!! Nat pulled off what I thought was the impossible and got it done.
I would recommend Nat to anyone that feels like they don’t have a way out of this housing debacle or is just ready to make the best out of this bad financial situation. There is an answer and it’s NAT FERGUSON, the Short Sale Pitbull.
Rich are biggest defaulters
According to the real estate analytics firm CoreLogic, more than 1 in 7 homeowners with mortgage loans in excess of a million dollars are seriously delinquent. Whether it’s their residence, a second home or a house bought as an investment, the rich have stopped paying mortgages at a rate that greatly exceeds the rest of the population. By contrast, homeowners with cheaper housing are much more likely to keep on top of their mortgage. Only about 1 in 12 mortgages below the million-dollar mark is delinquent. CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment. “The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months. The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent. With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.
Posted
on June 30, 2010, 11:39 am,
by admin,
under
Uncategorized.
Freddie Mac Short Sales Up 600% from 2 Years Ago
Freddie Mac CEO Ed Haldeman said the company has seen the number of its short sales increase 600% from 2008 as lenders look to dampen the impact of foreclosures hitting the marketplace. In a statement put out this week, Haldeman said Freddie Mac is doing everything it can to prevent more foreclosures, and that short sales are becoming an ever-popular tool in situations where foreclosure is imminent and modifications have failed. That number could increase as the Home Affordable Foreclosure Alternatives (HAFA) program takes hold. The Treasury Department launched it in April to provide cash incentives to servicers for conducting short sales and deeds-in-lieu of foreclosure.
RealtyTrac, an online foreclosure marketplace, is even preparing a short sale report to go long with its usual foreclosure report every month. It won’t be available until the end of 2010 however. “Foreclosure alternatives like short sales and deeds-in-lieu help borrowers to avoid the stigma of foreclosure, shorten the waiting period before they can buy a new home, and may inflict less damage on their credit reports,” Haldeman said.
While short sales still add to the housing supply and can put pressure on local home values, they often avoid the lack of maintenance or damage foreclosed homes often display. Since the middle of 2008, Freddie Mac reported total losses of $84.4bn, according to its quarterly reports. The company’s plight has forced a directive from the Federal Housing Finance Agency (FHFA), its conservator, to de-list its and Fannie Mae’s common stock from the New York Stock Exchange.
Most borrowers who have had their mortgages modified through a government-sponsored program will redefault within 12 months, according to a report released Wednesday. Between 65% and 75% of loans that are modified through the Home Affordable Modification Program(HAMP) but not backed by the federal government are likely to go bad, according to the report released by Fitch Ratings, a N.Y.-based credit-rating agency. The main reason these borrowers continue to struggle is that HAMP does nothing to solve the rest of their debt problems, the report added. ”Many of these borrowers still have very heavy levels of other debt,” said Diane Pendley, a Fitch managing director, “auto loans, credit cards and other expenses.
The HAMP modifications reduce housing expenses down to 31% of income but do not touch these other obligations.” Currently, according to the Fitch report, about half of prime borrowers who lose their homes now do so through foreclosure. The other 50% go through short sales, in which they sell their homes for less than what they owe the bank, or deed-in-lieu, a transaction where the bank takes back the property directly and forgives the outstanding balance. The servicers have been encouraged to rev up their short sale engines by the Treasury Department, which runs HAMP and its sister program, Home Affordable Foreclosure Alternatives (HAFA), which provides cash incentives to the parties who agree to short sales.. Now, when borrowers re-default on HAMP mods or other bank workouts, banks are much more likely to offer help to execute a short sale or deed-in-lieu.
Economists, during an annual meeting of the National Association of Real Estate Editors, shared that continuing foreclosures and an “overhang” in housing inventory will likely prolong the housing slump for several more years. Home values in many markets are still in decline, said Stan Humphries, chief economist for online real estate search and information company Zillow. And housing demand may not see a normal balance with new household formation and housing starts until 2013, said Doug Duncan, chief economist for secondary mortgage giant Fannie Mae.
The “overhang or shadow supply” of housing inventory has a lot to do with the drawn-out recovery for the housing market, he noted. Zillow also forecasts a bottom in home prices during the third quarter. The “tremendous amount of shadow inventory,” which Humphries defined as properties that are in foreclosure and not yet on the market or are seriously delinquent and not yet in foreclosure, is definitely a contributor to the stalled real estate recovery, he said.
Negative equity, combined with high unemployment is the other key factor. The federal tax credit programs offered to first-time and existing homebuyers do not appear to have had a major impact in driving sales, he also said Humphries. Also, the tax credits appeared to just be “stealing demand” ahead in time, and July and August are the months to watch out for.
Foreclosures are going upscale across the Bay Area. Nearly 1,000 homes valued above $730,000 were repossessed by banks in the nine-county region in each of the past two years, according to a Chronicle review of public records compiled by MDA DataQuick, a San Diego research firm. Back in the real estate boom year of 2005, just 42 Bay Area homes valued above $730,000 went into foreclosure; in 2006, the number was 80. Even more striking is the growth of mortgage defaults – the first step in the foreclosure process – in affluent ZIP codes. Mortgage distress has moved upstream in part because of economic conditions such as unemployment and stock losses. Also in play is a different type of risky loan called option ARM (adjustable rate mortgage) that’s just beginning to cause problems.
Experts emphasized that the foreclosure numbers don’t fully reflect the extent of distress at the high end, because for expensive homes, banks are more likely to pursue short sales, in which the homeowner stays put while marketing the home for less than is owed on the mortgage. ”Banks take the time on the high end to short-sale properties because they get a higher return and better valuation,” said Pat Lashinsky, CEO of Emeryville’s ZipRealty, a nationwide brokerage. Buyers of high-end homes during the real estate boom years often relied on option ARMs, which allowed them to start off paying just the interest – or even less than the interest, thus adding on to their mortgage balance. Most option ARMs had an initial period of five years before loans recast, causing payments to soar.
Want a loan modification? Get your paperwork ready.
Your woes do not end with delinquency. You now need to get better at your paper work too, if you want to avail the administration’s mortgage modification program. With effect from June 1, New Treasury Department guidelines require loan servicers to verify applicants’ income and financial hardship before placing them into trial modifications. This will make it much tougher to get temporary relief from unaffordable mortgage payments. But if you make it into a trial modification, you’re more likely to get long-term assistance, providing you send in your check on time. Of the 1.2 million people who’ve started trial modifications, fewer than 300,000 have received permanent assistance. Another 278,000 have washed out of the program either because they didn’t send in timely payments, hand in the required documents or meet the eligibility criteria.
Paperwork has caused all sorts of problems for the president’s signature foreclosure rescue program. In order to get the effort off the ground quickly, administration officials allowed servicers to place people in trial modifications before verifying that they were indeed eligible for the program. Many homeowners have been stuck in trial modifications for months and months while they wrestle with servicers over the documentation requirements. The financial institutions say that borrowers aren’t sending in the needed forms; homeowners contend the servicers are losing them.
Many loans didn’t require much documentation when they were originated, which makes gathering the paperwork during the modification process that much more difficult, said Paul Koches, executive vice president at Ocwen. The pace of people entering trial modifications has already slowed as servicers have started requiring the paperwork in advance. Only 47,160 trials were started in April, down from more than 72,000 in February. Among the documents Chase and other servicers require are hardship affidavits, two recent pay stubs, a bank statement, a tax return, proof of occupancy and a 4506T-EZ form.
With distressed borrowers increasingly turning to short sales as an alternative to foreclosure, the proportion of damaged foreclosure properties, otherwise known as REO, sold during April plunged, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. The survey found that short sales represented the largest portion of the distressed property housing market in April, accounting for 17.9 percent of all transactions. And as short sales surged, the portion of damaged REO transactions fell to 12.8 percent in April from 15.4 percent in March. According to the survey, first-time buyers accounted for 43.4 percent of April’s home purchase transactions, a significant drop from March’s figure of 48.2 percent.
This early departure was unexpected, as these buyers had until the end of April to sign a home purchase contract to qualify for an $8,000 tax credit. But a National Association of Realtors practitioner survey showed a different story. According to this survey, first-time buyers purchased 49 percent of homes in April, up from 44 percent in March. The survey also found that investors accounted for 15 percent of transactions in April, down from 19 percent in March, and the remaining sales (36 percent) were to repeat buyers.
Mortgage Rates Hit New Lows in Two Weekly Surveys
Mortgage rates dropped again this week, setting new records in two weekly surveys, the result of investor flight from European investments. The Freddie Mac weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 4.84% with a 0.7 origination point for the week ending May 20, down from last week’s average of 4.93%. A year ago, the 30-year FRM averaged 4.82%. The 25-year-old Bankrate.com weekly survey of large banks and thrifts put the average rate for a 30-year FRM at 4.96% with a 0.5 origination point, the lowest in the history of the survey.
Despite the end of the Federal Reserve mortgage-backed securities (MBS) purchase program, mortgage rates are at their lowest point all year. As Europe responds to the Greek debt crisis, the euro is plummeting compared to the dollar. Investors are turning to American investments that, for the moment, seem safer. However, some argue that debt levels in the US are also as risky as in Europe. “People rush to us for ’safety,’ although we’re Greece — we just haven’t gotten there yet,” Anthony Sanders, distinguished professor of real estate finance at George Mason University, told Bankrate.com. Sanders added US interest rates will rise once European and Chinese economies recover. Freddie said the 15-year FRM averaged 4.24% with an average 0.7 point, down from last week’s average of 4.3% and a year ago, when the average was 4.5%. Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.91% with a 0.6 point, down from last week’s average of 3.95% and a year ago, when it averaged 4.79%. It’s the lowest average rate for the product since October 2004, when it averaged 3.96%.
Dropouts Rise In Gov’t Loan Modification Program
The Treasury Department’s latest report reads like a dashboard of the problems in the Obama administration’s $75 billion program. While officials summarize it as a helping hand that can help the housing market turn around, critics see that as something that merely delays an inevitable surge of foreclosures. The critics seem to be right, as there is growing evidence that the number of homeowners dropping out of main mortgage assistance program is almost equal to the number who have received permanent relief.
And the drop outs are on the rise. More than 299,000 homeowners had received permanent loan modifications as of last month, Treasury said. That’s about 25 percent of the 1.2 million who started the program since its March 2009 launch. They are paying, on average, $516 less each month. However, the number of people who started the process but failed to get their mortgages permanently modified rose dramatically in April.
To complete the program, borrowers must make at least three payments on time. About 277,000 homeowners, or 23 percent of those enrolled, have dropped out during this trial phase. That’s up from about 155,000 a month earlier, or a 79 percent increase. The many reasons for the failure include, borrowers’ inability to complete the process and tough bureaucracy. Treasury officials acknowledge that long delays have been a problem. “Homeowners are waiting. We want them to get answers as rapidly as possible,” said Herbert Allison, an assistant Treasury secretary.
Treasury officials have now directed lenders to shift to a new system. Starting with loan modifications that go into effect June 1, they are required to collect two recent pay stubs at the start of the process. Many borrowers who don’t get help will end up losing their homes. That can happen through foreclosure or short sales. Mortgage companies will now have to set their minimum bid before the house is listed for sale.
If the offer is above that, the lender must accept it.
But, generally, lenders calculate the money only after they have an offer on hand, which can lead to more delays. The new program is expected to boost short sales this year, but 80 percent of distressed sales this year are still likely to be foreclosures, estimates Celia Chen, senior director of Moody’s Economy.com.
