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The real truth behind selling your home for less than what you owe

By: Emil Hartoonian

I would like to begin a long overdue series of informative blogs around the mystery of what almost every homeowner has discussed in some shape or form within the walls of their property, short sales.

Let me first emphasize the fact that many agents, both seasoned and new take the liberty of discussing what a short sale is, how it works and what, if any, ramifications are out there. To set the record straight, it’s truly one thing to talk about and give advice about short sales, it’s another to have actually completed them and dealt with the countless challenges each uniquely entails.

I myself have completed nearly 100 short sale transactions, including those of my own clients and those that co-agents have brought me in to deal with the banks and ensure the transaction is handled with knowledge and experience. I can confidently state that no two transactions have ever been completely alike. Having dealt with every major captive and private lender known to have originated or serviced mortgage loans at some point, it is at the heart of this blog to insist that every individual who feels a short sale is an option consult with the highest level and proven track record of experience. One would never commit their health to second best care, neither should one treat their real estate representation any different.

A short sale is in fact no different than any real estate sale transaction with the one contingency that the price must be approved by the lender(s) holding interests in your property. The owner on record remains as involved with the transaction and sales process as a traditional sale. The difference is the seller is not allowed to net any proceeds in a short sale while the bank accepts to take a loss of their balance owed.

Simply stated, the successful short sale lies in the product of a few key elements: Can the seller walk away from the property without being held liable for any balances owed to the lender; can the seller avoid the damages of a foreclosure on their credit profile successfully; can the seller walk away without being responsible for closing costs including commissions, escrow or title insurance costs?

Although it may seem like a short sale transaction entails some general procedures and in fact it does, no two short sale negotiations have ever been similar. Fact is every file is different based on the fact that every borrower’s financial circumstances and hardship is also unique. I take great care in structuring financial packages and short sale requests to account for the homeowner’s personal situation. This in itself is a very critical layer of the short sale process and requires experience and great attention to detail. It is for this reason, I have successfully accomplished the closings for many transactions, not to mention having built a reputation with many lenders as one who understands both the dynamics of short sale processing and the real estate sales transaction.

In the next several discussions, I will review some specific experiences around the largest banks and short sale process. Until then, have a wonderful and safe holiday.

EwingSIR does not guarantee information contained in this blog, readers are encouraged not to rely solely on this information and to do their own independent research of facts contained herein. Blog information was obtained from independent sources that we do not endorse, and we do not investigate this information for accuracy.

Posted by Emil Hartoonian on December 21st, 2010

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What happened to the $71 billion?

By: Sam Pompeo

The Obama administration’s signature foreclosure prevention program will help only 700,000 Americans save their homes, according to a scathing report released Tuesday by the Congressional Oversight Panel (COP).

The group’s assessment falls far short of the 3 to 4 million homeowners that the president pledged would receive more sustainable mortgage loans when the Home Affordable Modification Program (HAMP) was launched in March of last
year, and is well below the 8 to 13 million foreclosures COP says are expected by 2012.

Treasury initially committed $75 billion of Troubled Asset Relief Program (TARP) funds to the HAMP initiative, which pays incentives to servicers, investors, and homeowners for each loan that is successfully modified. COP, which is charged with overseeing the use of TARP money, says it now appears Treasury will spend only $4 billion on HAMP incentives. The big question is, what happens to the unused $71 Billion?

“Absent a dramatic and unexpected increase in HAMP enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. As a result, an untold number of borrowers may go without help,” the report said.

The members of the congress appointed panel went so far as to call the government’s loan modification program “ineffective,” and they said Treasury’s reluctance to acknowledge HAMP’s shortcomings has had “real consequences.”

Since COP’s last report on HAMP eight months ago, the panel noted that Treasury has made “minor tweaks” to the program, but COP says the changes have not resolved its core concerns.

Treasury’s authority to restructure HAMP ended on October 3, when TARP expired, and COP says because the deadline has come and gone for any major overhaul, “the program’s prospects are unlikely to improve substantially in the future.”

“Many of the problems now plaguing HAMP are inherent in its design and cannot be resolved at this late date,” the panel said in its latest report. “Other problems, however, can still be mitigated.”

This has created a huge opportunity to buy luxury home short sales. We have never seen the amount of opportunities in distressed residential and commercial real estate than right now.

EwingSIR does not guarantee information contained in this blog, readers are encouraged not to rely solely on this information and to do their own independent research of facts contained herein. Blog information was obtained from independent sources that we do not endorse, and we do not investigate this information for accuracy.

Posted by Sam Pompeo on December 17th, 2010

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Some good new for distressed homeowners

By: Sam Pompeo

Remember we discussed the foreclosure time line in my previous blog; well here is some exciting news for all you homeowners in distress. Fannie and Freddie have once again elected to give everyone in default a big Christmas gift. They have stated that they will not foreclose on any homeowner between now and January 3^rd 2011. They did however state that they will continue to process loans in default during the holiday season and move them through the system on the back end all the way to the point of Trustee Sale, but they will schedule NO sales until after the Christmas Holidays; “Merry Christmas!”

What does this really mean? Well it simply means they are further delaying the inevitable. The pipeline will continue to swell with homes slated to be sold at Trustee Sale and we will see a marked increase of sales following January 3^rd. This is a temporary reprieve and one that Fannie and Freddie adopted last year. Maybe they believe they are creating good will by delaying the foreclosure sale? All they are actually doing is ramping up the number of foreclosures to be delivered in the first quarter of 2011.

Problem with this approach is that when instructed by the Feds to cut 10% from the principle balance on all loans that are underwater they simply said NO. Interesting that the Feds would pass a bill and sign it into law and Fannie/Freddie simply thumb their nose at it. Then they throw out this crumb and expect everyone to swoon over their generosity. Who is in charge here anyway? The HARP, HAMP, and other bailout programs launched by the Feds have all failed to hit the mark helping less than .01% of homeowners in distress. Statistics show that since the launch of the HARP and HAMP less than 13,000 homeowners nationwide have actually benefited by the programs. These are Billion dollar programs and I for one want to see an accounting of where all the money went..

EwingSIR does not guarantee information contained in this blog, readers are encouraged not to rely solely on this information and to do their own independent research of facts contained herein. Blog information was obtained from independent sources that we do not endorse, and we do not investigate this information for accuracy.

Tags: fannie and freddie, information on fannie and freddie, sam pompeo, short sale advice san fernando valley

Posted by Sam Pompeo on December 10th, 2010

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From missing mortgage payments to Foreclosure, what is the REO timeline?

By: Sam Pompeo

Historically a foreclosure in the state of CA has always taken approximately 180 days. During the first 90 days you are simply delinquent on your payment and the banks only remedy is to charge you a late fee and pester you with phone calls. After 90 days the bank may instruct the Trustee to record a “Notice of Default”. The NOD is public notice that you are delinquent and this information must be published prior to taking the next step. During this notice of default period you may pay the back payments including late fees and reinstate your loan on its original terms. If you fail to do this and an additional 90 days lapse, the bank may then instruct the Trustee to record a “Notice of Trustee Sale”. Once the NOTS is recorded the bank is no longer required to take back payments and may at their discretion call the loan due in Full with the addition of penalties and foreclosure fees. The Trustee sale or foreclosure sale as it is commonly called typically follows within a month of recording the NOTS.

As a data point it is important to recognize that the model I described above has been in place for well over 100 years. Today a typical foreclosure takes the banks well over 400 days. The timeline has swelled because of the sheer numbers of homeowners in default. It is not uncommon for a homeowner to tell me that they are a year behind in Mortgage payments and the bank has not yet recorded the NOD. The system is currently overwhelmed and banks are exploring other options to help mitigate the influx of REO. Some of the measures currently in place include “Loan Modification” and “Short Sale”.

My next blog will explore the differences between a Short Sale and a standard sale…

EwingSIR does not guarantee information contained in this blog, readers are encouraged not to rely solely on this information and to do their own independent research of facts contained herein. Blog information was obtained from independent sources that we do not endorse, and we do not investigate this information for accuracy.

Tags: sam pompeo realtor, san fernando valley short sale rules, short sale timeline, short sales

Posted by Sam Pompeo on December 9th, 2010

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What is REO and how does a property become REO?

By: Sam Pompeo

REO is an acronym that banks like to use for properties that have been foreclosed on and they now own. You must understand that banks are not in the business of owning homes rather they are in the business of lending money and collecting interest on the loan. When a borrower defaults on the mortgage payment, the bank, after performing its legal due diligence may foreclose upon the property (we will discuss this process in detail later). Once duly foreclosed upon the bank now owns the home. Hence the term Real Estate Owned or REO, as it is commonly called.

Lets explore the foreclosure process as it was designed. In a typical scenario there are 3 parties involved in the making of a home loan. There is the borrower (buyer), there is the lender (bank), and there is the Trustee (Neutral 3^rd party selected by the bank). The trustee does nothing unless and until the borrower defaults; they are simply there to act as a buffer between the bank and the borrower. If the borrower makes timely payments they may never even know the Trustee exists. It is upon default by the borrower that the bank notifies the trustee to spring into action. First course of business is to record a Notice of Default (NOD) this typically comes after 90+ days of non payment. Everything the bank instructs the trustee to do must be accompanied by an openly recorded document. After the NOD has been recorded and made public the trustee may then proceed with the next step of the process; the recording the Notice of Trustee Sale (NOTS). The NOTS is a simple document stating the amount of the unpaid balance, the delinquent amount of the borrower and the date and location at which the Trustees Sale will take place. The bank actually does not foreclose; it is the Trustee that handles the dirty work of recording documents and moving the property to sale. A trustee sale happens day on the steps of the courthouse in various locations depending on which county the home is in. That’s right there is a Trustee sale every day of the week and there are a multitude of properties being sold at each location daily.

The trustee’s sale is an interesting event and a typical scenario looks like this. It is a pure auction and it is a Cash sale. It is open to the public and the properties being sold that day are advertised prior to the sale in various trade publications online and in print medium. If you want to buy a home at the trustees’ sale auction all you need to do is show up with a pocket full of cash or cashiers checks and some basic knowledge about the home you want to buy. Homes are sold sight unseen; you get whatever is there and whoever is there. Meaning many times the home may still be occupied when sold and often times they are in distressed condition. Savvy investors spend weeks even months prior to the sale date tracking a property, visiting it like a private investigator might, trying to learn as much as they can about the property prior to the sale date. Remember that the sale is absolute, all cash and takes about 5 minutes on the steps of the courthouse so you don’t have much time to waffle or decide. The bank will send a representative to every auction to protect their interest. Like any auction the property will go to the highest bidder, but here is where it gets interesting. The bank representative or Trustee is there simply to make an opening bid (keep in mind the bank already owns the debt or loan). Example: Property ABC has a loan of 250,000 and is being sold at Trustee Sale, the bank may make an opening bid of 200,000 if nobody else bids then the bank effectively bought the property back and no money trades hands because the bank already owns the loan. At that moment the property becomes REO.  If another party bids 205,000 or 210,000 or whatever the number ends up being the auction is completed and the property never made it to REO status. The bank rep or Trustee signs a “Trustees Sale Deed” similar to a Grant Deed and having the same effect.

EwingSIR does not guarantee information contained in this blog, readers are encouraged not to rely solely on this information and to do their own independent research of facts contained herein. Blog information was obtained from independent sources that we do not endorse, and we do not investigate this information for accuracy.

Tags: Foreclosures, reo information by sotheby's, REO's, sam pompeo, woodland hills realtor

Posted by Sam Pompeo on December 6th, 2010

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Welcome to Calabasas. This is your first post. Edit or delete it, then start blogging!

Posted by on May 13th, 2010

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