Fast Short Sale Approval?? Ask if the Servicer is Delegated

Fast Short Sale Approval?? Ask if the Servicer is Delegated. When home owners pay their mortgage payments to Bank of America, Wells Fargo, or any of the other "lenders" these entities are actually servicers for the investor that owns the note. In most cases, even though they lent the money they have subsequently sold the loan to an Investor. At this point, all they do is collect the payment, take a fee for this and then transfer the remaining funds to the holder of the loan...the Investor. The investor could be Fannie Mae, Freddie Mac, Pension funds, Insurance companies etc... When you are requesting a Short Sale the request is almost always made to the Servicer. If the Servicer is delegated then they have the authority to accept the Short sale without asking the investor for approval. Usually this delegation is based on certain parameters. For example: The Investor may tell their Servicer that they can accept any short sale as long as the loss is less than 35%; the Borrower (Seller) is at least 30 days delinquent on their payments, live in the property and the current payment is more than 31% of their gross income. If the Short Sale fits within these parameters then the Servicer can issue the approval. The parameters vary from investor to investor. Here's why it is important to know whether the Servicer is delegated. If the Servicer is able to approve the Short Sale without going to the investor, it saves a lot of time. It can easily cut the Short Sale time for approval in half. An example of why this knowledge is relevant: Recently it was discovered that a Servicer was delegated. There was a purchase price that netted the investor about $1,000 less than what would fit within this particular Servicer's delegation authority. At this point, there are two options: 1. the file could be submitted to the investor for approval, or 2. the purchase price could be raised $1,000 to get the approval quickly. The Buyer was perfectly happy to pay an additional $1000 (presumably in exchange for a faster approval). The Short Sale approval was received the next day. Accordingly, always ask the Servicer if they are delegated for the file you are working. If they are try to see if the Short Sale you have submitted fits their parameters. They may not always tell you but it certainly is worth asking. Knowing the answer can save you a lot of time. Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Call it What it Is…Quiet Title is Not as Advertised

Call it What it Is…Quiet Title is Not as Advertised. Hardly a day goes by that someone mentions a “Quiet Title” action. From everything that is stated, it appears to be a dream come true for distressed home owners. First of all, what is being marketed as “Quiet Title” is not really an action to quiet title. The term quiet tile refers to legal court matters in which the actual title to a property is disputed among several different claimants. This can happen in a variety of settings, but it is most common in inheritance battles or battles between business partners that each claim title to a property. This type of action does not apply to the vast majority of distressed home owners. What my colleagues in law and I have been successfully been doing is to argue (successfully) in Court that the lender is not the real party n interest since they assigned their rights to the mortgage and/or note. This occurred because the lender (or servicing agent) does not properly “perfect” their interest in the property or they do not otherwise properly assign their interest. This creates a legal challenge to the foreclosure action. It also may be the basis for a separate cause of action to strip away the mortgage and thus make the remaining debt an unsecured obligation. This can be a very valuable asset to distressed home owners, but let’s call it what it really is…it is a defense to a foreclosure action or an independent cause of action to strip away the mortgage from the note. It is not a “Quiet Title” action. To me, this dilutes the value of the various people that are marketing “Quiet Title” actions. If they do not even call it by its proper names, do they really know what they are doing?? Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Borrowers of Bank of America May Have Something to Smile About

Customers of Bank of America may have something to smile about finally as 200,000 delinquent Borrowers to Receive Principal Write-Down Offers. Bank of America is wasting little time in getting one of the most popular terms of its recent settlement with the federal government underway. Bank of America sent out more than 200,000 letters this week to delinquent borrowers who where “thought to be eligible for principal-reducing modifications.” The requirements are simply that the homeowner owe more on the mortgage than the property is worth and have been at least 60 days behind on payments at the end of January 2012. If monthly housing costs turn out to be more than a quarter of the homeowner’s gross household income, then they could qualify for savings of 30 percent according to Bank of America estimates. The lender has been working since March on trial modifications that hold the potential to forgive more than $700 million in mortgage debt. However, the trial modifications require three “timely trial payments” before a modification is eligible to become permanent. This has become customary in the industry anyway, so it is not much of a hurdle. There is one major caveat to this initiative, however: if your loan is serviced by Bank of America but held by Fannie Mae, Freddie Mac, the Federal Housing Administration (FHA), or the Veterans Administration (VA), then it is not eligible for a write-down under the terms of the foreclosure fraud settlement. That represents a lot of loans, but this is still good news for many borrowers. I have several clients in the program, so we will see what happens. Bank of America committed to forgiving $11 billion in total mortgage debt under that settlement, but if all homeowners who receive these letters – and others like them in Q3 2012 – were to receive permanent loan modifications, the actual number might be closer to $30 billion. We can all believe it when we see it!! Paddy Deighan J.D. Ph.D http://www.homesavers.pro

Another Review of Non Judicial Foreclosure

Another review of Non Judicial Foreclosure. I have written previously that it is time to review the non-judicial foreclosure process in light of the many valid defenses to foreclosure that exist today. The deprivation of one’s home is the greatest personal financial loss that a person can have and how can we allow non-judicial foreclosure when there are so many home owners that have been harmed by their lender? Said another way, why should we allow banks to get away with the massive fraud that they are perpetrating on the public? In judicial foreclosure, the distressed home owner has defenses and counter claims that can be heard as part of the foreclosure process. In a judicial foreclosure state (meaning the matter is heard before a judge), if a promissory note or recorded assignment naming the plaintiff is not attached to the complaint, the defendant can file a response stating the plaintiff has failed to state a claim. This can be followed with a motion called a demurrer to the complaint. Different forms of demurrers can be found in legal form books in most law libraries. In essence the demurrer states that even if everything in the complaint were true, the complaint would lack substance because it fails to set out a copy of the note, and it should therefore be dismissed. Ordinarily there is no need to cite much in the way of statutes or case law other than the authority reciting the necessity of showing the note proving the plaintiff is entitled to relief. However, in non-judicial foreclosure states (such as California) foreclosure is done by a trustee without a court hearing, so the procedure is a bit trickier; but standing to foreclose can still be challenged. If the homeowner has filed for bankruptcy, the proceedings are automatically stayed, requiring the lender to bring a motion for relief from stay before going forward. The debtor can then challenge the lender’s right to the security (the house) by demanding proof of a legal or equitable interest in it. A homeowner facing foreclosure can also get the matter before a court without filing for bankruptcy by filing a complaint and preliminary injunction staying the proceedings pending proof of standing to foreclose. A judge would then have to rule on the merits. A complaint for declaratory relief might also be brought against the trustee, seeking to have its rights declared invalid. Paddy Deighan J.D. Ph.D http;//www.homesavers.pro

Homeowners and Real Estate Agents Paying for Questionable Services

Homeowners and real estate agents are paying money for questionable services. Virtually every day I receive a solicitation for “forensic audits” “quiet title” actions (frequently performed by non-attorneys and this is unquestionably the “unauthorized practice of law” in all 50 states), “mortgage or note trail,” etc. Many of these services provide a legitimate service and they actually produce the results that they promise. The problem is……how will this help a distressed homeowner or real estate agent?? Let’s suppose that an investigation is conducted into all phases of the distressed homeowner’s acquisition and loan of their property. We can further assume that the investigation reveals serious violations of the Truth in lending Act (TILA), Real Estate Settlement and Procedures Act (RESPA), the Home Ownership and Equity Protection Act (HOEPA), the Uniform Commercial Code (UCC) or various state laws. So now what?? First of all, violations such as those stated above are not going to stop a foreclosure sale. They are valid and legitimate Affirmative Defenses or a Counter Claim to a foreclosure action. The point in all of this is that the investigative information provided by many of the firms that perform this type of service is 100% accurate and informative and 100% useless unless the homeowner is filing an Answer or Counter Claim to a foreclosure complaint or the homeowner is willing to file a separate cause of action against the lender. However, the mere filing of a separate lawsuit for such violations will not automatically stop the foreclosure or foreclosure sale process. The only action that automatically stops foreclosure is a bankruptcy petition. Accordingly, in order for a distressed homeowner to achieve value out of a forensic audit or other service indicated above, they must be willing to file a cause of action against the lender or include the alleged violations as part of an Affirmative Defense or Counter Claim. Additionally, the distressed homeowner will have to have sufficient time prior to a foreclosure sale to utilize the information in a productive manner. If they do not have time (six months minimum – prior to sale), the filing of such actions is frequently useless. The distressed homeowner’s rights may not survive after the foreclosure sale as they may lose standing to maintain such an action since they are no longer the owner of the home. Paddy Deighan, Esq http://www.homesavers.pro

Always Helps to Read the Fine Print

Always helps to read the fine print. This is especially true with government documents. For example, on a HUD-1, we typically read the second page first!! LOL I wanted to point something out that is frequently overlooked in HAFA (Home Affordable Foreclosure Alternative) programs.
The fine print in a HAFA transaction typically reads that if the lender rejects the HAFA short sale offer, the transaction AUTOMATICALLY converts to a Deed in Lieu (DIL)! For this reason, I have sellers execute a HAFA opt out form that is dated at the time of the purchase contract but not tendered unless or until I need it. The terms of a Deed in Lieu are typically not in the best interests of the seller and there will be no financial incentive to move or waiver of deficiency. The timing of the Deed in Lieu is also typically not conducive to a smooth transition for the home owner. It probably also goes without saying that there is no real estate commission paid either. The terms of the DIL are not specified but you can pretty much bet that they are not as favorable (or at least not as unfavorable) for the home owner.
HAFA has helped many home owners move on from a bad situation. For many, it is a tremendous program. However, for others, it has been a nightmare because of the Deed in Lieu. This situation also warrants great care in the submission on the short sale offer because you do not want to get the offer rejected (although a counter offer is fine).
As with many government programs, you have to be careful with proceeding under a HAFA program. The government required that lenders participate in the program but the lenders did manage to get certain concessions. The Deed in Lieu conversion on a rejected short sale in one such concession.

Paddy Deighan Esq
http://www.homesavers.pro

Time for a Review of Listing Agreements

Time for a Review of listing Agreements
Time for a review of listing agreements. It seems that no one every talks about them and that they are largely taken for granted. However, some recent developments have placed emphasis on them and we should discuss the issues that relate to them.
Listing agreements form the basis of a relationship between the home owner and a real estate agent. For years, they have contained substantially the same information. However, I have noticed a marked increase in the variance of the terms of such agreements as well as a tendency to forget certain aspects of them.
Recently, I have encountered listing agreements with TWO year terms. No one should want that. If the home has not sold in a reasonable period of time, the home owner will want to work with someone else. Similarly, if the agent is unable to get an offer, they may not want to work with the owner either because the disconnect will probably be over the home owner’s reluctance to lower the price. We all know that price is the issue. If priced appropriately, almost anything will sell.
Please make the term within reasonable industry guidelines. Six months is certainly acceptable, and 12 months seems too long to me.
I have also encountered provisions which enable the agent to capture a commission TWO years after an introduction of a potential buyer. This seems too long as most agreements call for 6-12 months as a “look back” period.
Additionally, I have noticed commission rates creeping up. Lately, I have noticed compensation percentages of 8-10%. The norm is 6% and many lenders are unwilling to pay even that in a short sale. Home owners will be very angry when they discover that the norm is 5% or 6% and you signed them to a higher fee. Sometimes the higher fee is justified…so state that in the agreement.
Finally, I want to illustrate and interesting aspect of Listing Agreements. In many jurisdictions, they are INSTANTLY binding. There is no attorney review; there is no three day right to rescind or cooling off period. This is unlike a sales contract. It is easier to terminate a sales contract than a listing agreement. I personally feel that there should be strong warnings on the agreement to the home owner about this. However, it would be prudent to explain this to the home owner since doing so make avert negative feelings in the future.
Paddy Deighan
http://www.homesavers.pro