Wednesday, July 11, 2012

The transfer of loan servicing from one entity to another is certainly nothing new. However, there seems to be a new wave of transfers. Aurora has transferred to NationStar mortgage and CITI has transferred to Carrington Mortgage. As a side note, Carrington is a new servicer there is no history to guide us. I have noticed a number of blogs and questions on websites about how the transfer of servicing can affect a short sale and/or a foreclosure sale date. There seems to be a lot of panic, but the servicing transfer may be a good thing for you. The first thing to do is to contact the new services and be nice and polite. They have not done anything wrong (YET). LOL! If you explain that you initiated a short sale with the prior servicer, and that you need more time, just ask!! More often than not they will grant more time. Also note that even in non-judicial foreclosure states, there are statutes that govern adjournment of sheriff or trustee sales. If this does not result in additional time, then politely explain what the other servicer did wrong (multiple document submissions, etc). You can also point out the positive highlights of the short sale offer such as offer close to BPO etc. My process is that I first try and ‘kill them with kindness. If that does not work, I resort to financial common sense of why extending the sale date may be a good thing for the servicer and the investor on the loan. If that fails, I “go Jersey” on them LOL. For example, you can point out that the transfer of servicing may not have been effectuated properly. For example, I have notices that NationStar has not been particularly diligent about advising homeowners of the transfer of servicing. As I write this blog, I have been on hold with them for 30 minutes, so I am multi-tasking!! I will conclude with a concept. You probably were not getting very far with the prior servicer (they certainly knew in advance of the transfer and probably sis little on the file). A new servicer is probably a good thing. Padraic Deighan J.D. Ph.D

Monday, July 2, 2012

New Documents Intended to Simply and Clarify Settlement Procedures

Well the Dynamic Duo without a Clue-o, Barney Frank and Chris Dodd are at the center of more changes in real estate. The Dodd-Frank bill established the Consumer Financial Protection Bureau (CFPB). The CFPB developed new settlement statements and other changes soon to take effect in our world. I blogged previously about that Dodd Frank changes that will increase closing costs and loan costs to consumers. Previous changes were made to the Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedure Act (RESPA). I had an opportunity to review the new proposed forms that were intended to SIMPLIFY and CLARIFY the settlement procedure. Naturally, as only the government can do, in my opinion, the proposed changes only serve to make a relatively clear and simple procedure more convoluted. The HUD-1 was pretty clear and easy to understand and it was only two pages. Since it was a government document, it made most sense when you read the second page first and the first page second!! LOL The new HUD-1 will be known as the “Loan Estimate and Settlement Disclosure Form”. So, it fine government fashion, it makes sense to replace a tow page document with one that is 5 or 6 pages. Remember, this new document is intended to clarify and simplify the process. I reviewed the document and it is easy to understand, but it is a bit overwhelming. There appears to be SOOO much on it. Therefore, it hardly qualifies as an improvement and as I mentioned, it is a bit overwhelming if in nothing else but sheer volume of information. In all likelihood, buyers and sellers will end up paying more in settlement costs as this new document is not without new expenses that are sure to be passed on to buyers and sellers. I cannot help but think about the old adage: “if it ain’t broke, don’t fix it.” Paddy Deighan J.D. Ph.D

Realty Trac Announces List of Best Short Sale Lenders

Realty Trac announces list of best Short Sale Lenders. There certainly is a lot of negative press about short sales and the lenders that participate in them. There never seems to be any positive input and the realty Trac announcement sounds positive. However, according to the RealtyTrac findings, some banks have found that by courting short sale buyers, short sale sellers benefit as well. The data firm recently released a list of its “best major banks to work with when buying short sale homes,” and many analysts believe that these banks are also the best to work with when trying to sell those homes. RealtyTrac named PNC Financial Group the best major bank to work with thanks to an average transaction time of 151 days and an average percent discount of 40 percent. Government entities like Fannie Mae, Freddie Mac, and HUD came in second. They had an average turn-around time of 154 days for the transaction and an average percentage discount of 42 percent. Rounding out the top three, Ally Financial offered an average 35 percent discount with 188 days from start to end of the transaction. These seem like positive numbers and the percentage of discount seems healthy. However the turn-around time seems atrocious to me, especially considering the healthy discounts. If the GSEs can turn around properties that quickly then it seems reasonable to conclude that non-government lenders and servicers should be able to do it more quickly. Chase, Bank of America and Wells Fargo have all introduced new programs so let’s see what happens in the coming months. There is certainly a lot of hype that the markets are improving and I find little credence to it, but we can all work hard and get as many deal completed as we can!! Paddy Deighan J.D. Ph.D