Archive for the 'Real Estate Ramblings' Category
If you haven’t seen this video about the IndyMac Bailout by the FDIC in June 2008 then take a look. As an agent who works with short sales (representing both buyers & sellers) I understand the frustration that comes with the lack of responsiveness to offers and the often ridiculous counter-offers that arrive from the negotiators.
If this math is accurate it shows how broken the system really is.
Thanks to the team at Think Big Work Small for putting this together.
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Spelunking-Its Not Just for Exploring Caves Anymore
February 7th, 2010 Categories: Real Estate Ramblings
Back in my college days I used to do a little spelunking. Not serious enough to need loads of equipment but I did have a head lamp and developed an appreciation for how dark caves can be. We won’t talk about bats and other creatures that also enjoyed being in the caves. Suffice it to say guano is not cool.
These days my spelunking adventures seem to be on a different track. It isn’t about finding a new cave to explore but finding a Northern Virginia foreclosure where the lights are on. In the winter it is dark before more people manage to get off work. As a result unless a buyer can wait until the weekend to look for a house, most of the time we are fumbling around in the dark.
It is a mystery to me as to why lenders think the way to sell a home is to make it difficult to see. I understand turning off the water to avoid freezing pipes or to keep people who don’t understand the basics of personal hygiene from using the bathrooms but pitch black?
This past week my clients and I almost took a tumble down a broken staircase in a foreclosure and we are talking about a house in a upscale Northern Virginia neighborhood. It made me wondered if any prospective buyers or agents have sued lenders over accidents in dark houses?
Perhaps there is a method to the madness of leaving the lights off but after almost 2 years of showing houses in the dark I’m over it. I’m putting away the head lamp and waiting for more daylight before I risk a broken neck because the lender won’t pay for a few months worth of electricity.
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Watch this video all the way through.
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Finally we have reached 2010. No more listening to news broadcasters saying Two Thousand OH nine. Last time I checked OH was not a number. So here is to Two Thousand Ten and a year of hearing the same news broadcasters saying Twenty Ten.
Really is it that tough to say number correctly?
Regular real estate blogging will now resume.
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Headed out the door at 9am to wander around Belmont Bay (Woodbridge VA) this morning. Since this will be called the Blizzard of 2009 or as it has already been nicknamed “Snowpocalypse” the least I could do was get out and take a video of what my neighborhood looked like. Now I have a greater appreciation for crazy weather forecasters out on location.
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New Short Sale Guidelines Pushed by the US Treasury
December 1st, 2009 Categories: Real Estate Ramblings
In a move that could win the It’s About Time Award the government has once again stepped in to provide guidelines and incentives to lenders to get short sales closed in a more timely fashion. The new guidelines of the Home Affordable Foreclosure Alternative (HAMP) for completing short sales or deed-in-lieu of foreclosure deals include:
Borrowers would receive $1,500 from the government in relocation expenses.
Servicers receive $1,000 from the government per transaction.
Second liens holders can receive up to $3,000 of the sales proceeds for releasing their liens.
First lien investors can receive $1,000 from the government for signing off on payments to subordinate lien holders.
Borrowers must be fully released from any further liability.
One of the biggest holdups with completing a short sale is the second lien holder. The new guidance caps the proceeds to subordinate lien holders at $3,000.
I’ve been involved in deals where the second lien holder refused $5000 and insisted they get 10% of the total amount of the loan or a large promissory note which ended up sending a home into foreclosure.
When a home ends up in foreclosure the second lien holder ends up with nothing. For second lien holders the phrase “Greed is Good” doesn’t work. Take that Gordon Gecko!
One of the new guidelines prohibits servicing companies from reducing real estate commissions on a short sale. I’ve just put two new short sale listings on the market in Woodbridge (Belmont Bay) so it will be interesting to see if there is any noticeable difference in dealing with the lenders and whether at the 11th hour the lender says cut your commission or the deal is dead still happens.
Hopefully the new guidelines will allow borrowers to submit an offer on a short sale and expect a response in less than 4 months.
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Welcome to “Flopping” the Latest Short Sale Flipping Scheme
November 19th, 2009 Categories: Real Estate Ramblings
The FBI, Fannie Mae and fraud experts agree, the new short sale flipping scheme popping up around the country is on the rise and will cost banks millions of dollars.
The premise is quite simple. Make a low offer on a short sale and convince the bank that the offer is “market value”. Close the deal and within 24 hours sell the property to a second buyer at a profit. The second buyer has no clue that the home is under contract for far less than what they are offering and of course the lender has no idea that the value of the property is thousands more than they are accepting.
So how does this happen? According to the FBI, it takes a less than ethical real estate agent, a lender and BPO (Broker Priced Opinion) that reflects a lower value. Since many banks depend on the BPO to determine the value of the property versus a full appraisal making it easier to manipulate a lower value on a short sale than you might believe.
In some areas lenders and title insurance companies are starting to get wise to this scheme and are making changes to try and discourage the practice. Most short sales I’ve been involved in require that everyone involved in the transaction complete an “arms length transaction certification” stating that we have no interest in the property of will profit in any way from the sale of the property.
It is interesting to see real estate news from other areas of the country and the Sarasota (FL) Herald Tribune recently published an article on how “flopping” impact the market in two local counties. They found 250 properties that sold multiple times at higher prices in 2009 and 50 of those were within 24 hours. The conservatively estimated based on questionable sales, banks netted $3.2 million less than what the properties sold for a few weeks later when they were flipped.
If you take that number and multiple nationwide you can begin to see that as taxpayers (lets face it we are the ones who are paying for this) are being swindled out of millions, excuse me make that billions of dollars by this latest flipping scheme. Somehow this starts to have a taste of some of the tactics that got the real estate market into trouble just a few short years ago.
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The New Deed for Lease Program Hits a Neighborhood Near You
November 8th, 2009 Categories: Real Estate Ramblings
Back in August 2009 I pondered Should a Distressed Homeowner Get to Rent Their Home Back from the Lender? when the first hints of the proposed “Deed for Lease “ program were announced.
This week Fannie Mae formally issued the “Deed for Lease” (D4L) program guidelines which allows qualifying homeowners facing foreclosure the opportunity to voluntarily turn in the deed to their home in exchange for the chance to stay in the property as renters.
Per Fannie Mae : “The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.”
Now anyone who keeps up with the news regarding loan modifications knows that the lenders have not been responsive to the “Making Home Affordable Program.” In fact a CNN report states: “Bank of America has only offered 4% of eligible homeowners trial modifications under the plan. Wells Fargo doesn’t fair much better at 6%. JP Morgan Chase is doing a bit better. Chase has provided 20% of eligible mortgages trial modifications, but when you think about it, saying 20% is better is actually pretty bad. That means 80% of eligible homeowners are not getting trial modifications.”
Think about this for a minute.
If one of the qualifications for the new D4L program is that homeowners have not been able to get a loan modification from their bank, does this mean that Fannie Mae is going to become the landlord for 80% of current distressed homeowners? Since this program is government backed it seems to me that every taxpayer in the US is about to become a part of the largest property management firm ever.
Recently my clients were considering offers on two short sales, when I asked the agent about the status of the process, the agents stated the homeowners were trying to work out a loan modification with their lenders. If they are unsuccessful will they now qualify for the new progam and stay in their homes versus completing the short sale? This could have an interesting impact on our local inventory and I wonder how many short sales may now be pulled off the market while more homeowners try to qualify for the new D4L program?
It seems we are only delaying the inevitable release of D4L properties back on the market as foreclosures. With the recent extension of the tax credit for buyers into April 2010 the timing of the D4L program makes no sense. Instead the homes will come on the market in 2011 when the tax credit is gone and the government will have to come up with yet another incentive to figure out of how to deal with a new glut of inventory.
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