The recent economic climate is providing awesome opportunities for savvy investors. Right now there is an ample supply of empty, under-priced and foreclosure listings of properties in nearly every city in the United States. These properties are available at every price level and in every condition.
Real estate markets will go in cycles. Right now we are really seeing the downward cycle and many foreclosure listings but this trend will sooner or later reverse and the prices will start to rise again. It’s inevitable. If you follow the investors maxim of “buy low, sell high” then now is the time to buy homes and foreclosure listings because prices are so low.
There are a few ways to purchase these under-priced properties and foreclosure listings. Right now there are homeowners who are essentially “upside-down” on their mortgage. In a pre-foreclosure sale a lender will allow a homeowner who is delinquent on their payments to sell the home and pay the proceeds back to the lender. If the home will only sell at a price that is less than what the homeowner owes on the note the case is called a “short sale”. There are many short sale opportunities available right now. Look at your local MLS or contact a realtor.
Another thing you can do to find great deals in foreclosure listings is to look for foreclosure auctions. The foreclosure auction is most often held at the local courthouse of the county of the property. Just like any auction the property is taken by the highest bidder. Usually the price you can get these foreclosure listings at is very reasonable as there are not often many bidders. The homes are sold “as is” though so be aware that you may have to pay for some repairs before selling or renting the property.
If the bank has to take the home back into foreclosure they will want to get the property off of their books as soon as possible. Therefore they are often very motivated and will lower the price on these foreclosure listings until they are gone. Most often they will use a realtor so check your local MLS. Occasionally they will do some repairs but sometimes they will sell the property “as is”. Do your due diligence inspections before you purchase.
Unlike the stock market when you buy real estate no matter what happens to the economy you will still have the property and it will still have some value. Real estate will never lose all of its value and the value will eventually go back up. People will always need a place to live. Because of this, real estate and especially foreclosure listings can be a savvy investment in these uncertain economic times.
When you invest in foreclosure listings, it is crucial to make sure that you do all of the same inspections and due diligence that you would do if you were purchasing the property to live in. You will be responsible for any repairs. It is also important to have your funds in order be it cash or bank financing.
But now is an an opportune time to invest in real estate and foreclosure listings in almost any market in the United States because the prices are low and the opportunity for profit is very good.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Property Search
Thursday, April 30, 2009
Techniques on Financing Foreclosures.
Charlottesville and Central Virginia Short Sales, Foreclosures, and Real Estate Explained
Techniques on Financing Foreclosures.
Financing foreclosures is the part of this business that people are worried about most. Most people automatically assume that you have to have money to invest in foreclosures, which is what keeps them from investing. You will be happy to learn that you don't have to have money to start investing. Obviously everyone is in a different financial situation, so not every technique we share with you will work. You just need to find one that works for you and go with it. Even those with bad credit, no money, or no job may capitalize on foreclosure opportunities. In fact, financing foreclosures is the easier part when it comes to buying foreclosures, finding them can be the biggest challenge, unless you know where to look. These are all great techniques which we discuss more in depth in our best selling foreclosure ebooks.
The following are 10 techniques used in financing foreclosures.
Technique No. 1 Assume Seller's Obligations
Technique No. 2 Borrow Against Life Insurance Policy
Technique No. 3 Use Small Amounts of Money From Different Banks
Technique No. 4 Home Improvement Loans
Technique No. 5 Home Equity Loans
Technique No. 6 VA Loans
Technique No. 7 Find a partner
Technique No. 8 Hard Money Lenders
Technique No. 9 Use Banks and other lending instutions
Technique No. 10 Take over "Subject To" existing financing
These are just a few options you have when financing foreclosures. There are many more ways to creatively finance these properties.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Techniques on Financing Foreclosures.
Financing foreclosures is the part of this business that people are worried about most. Most people automatically assume that you have to have money to invest in foreclosures, which is what keeps them from investing. You will be happy to learn that you don't have to have money to start investing. Obviously everyone is in a different financial situation, so not every technique we share with you will work. You just need to find one that works for you and go with it. Even those with bad credit, no money, or no job may capitalize on foreclosure opportunities. In fact, financing foreclosures is the easier part when it comes to buying foreclosures, finding them can be the biggest challenge, unless you know where to look. These are all great techniques which we discuss more in depth in our best selling foreclosure ebooks.
The following are 10 techniques used in financing foreclosures.
Technique No. 1 Assume Seller's Obligations
Technique No. 2 Borrow Against Life Insurance Policy
Technique No. 3 Use Small Amounts of Money From Different Banks
Technique No. 4 Home Improvement Loans
Technique No. 5 Home Equity Loans
Technique No. 6 VA Loans
Technique No. 7 Find a partner
Technique No. 8 Hard Money Lenders
Technique No. 9 Use Banks and other lending instutions
Technique No. 10 Take over "Subject To" existing financing
These are just a few options you have when financing foreclosures. There are many more ways to creatively finance these properties.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
3 Stages of Buying Foreclosures
Charlottesville and Central Virginia Short Sales, Foreclosures, and Real Estate Explained
3 Stages of Buying Foreclosures
The strategy of buying pre-foreclosures is to create a situation where everyone wins. This type of strategy involves just you, the homeowner, and in some cases the lender. Because the homeowner has been delinquent on his or her mortgage payments, they are now in a position to entertain offers made by investors. Keep in mind, you may not be the only investor looking at this property. However, when buying pre-foreclosures, you can expect very little competition.
When buying pre-foreclosures like this and in turn make a profit, you must do some research on these types of properties. The following are some basic guidelines:
Buying foreclosures at the auction is a great way to purchase a property under market value. Most properties are auctioned on the courthouse steps. The property is auctioned off to the public and the highest bidder walks away with the property. This can be very rewarding to those who are in a position to buy the property within a short amount of time and can be devastating to those who bid without proper financing in place. Most auctions require a small deposit down of the purchase price on the spot and the remaining balance usually within 1-30 days. So make sure You have you deposit ready and your financing is in order before you bid. If you are unable to get financing within the allotted time, you will most likely lose your down payment, and they will auction the property off again. Buying foreclosures at the auction is also the riskiest place to pick up a foreclosure. You are buying the property in "As Is" condition so it's very important to do your homework before you just go to an auction and bid on a property.
When buying foreclosures at the auction, we recommend you:
Buying foreclosures that are REO primarily involves the lender. REO just means the lender reclaims the property and establishes control over it to minimize its losses. Buying foreclosures that are REO is by far the easiest way to pick up a distressed property. Lender's are always listing properties that come back from the auction, because they don't like excess inventory. They are in the lending business, therefore it is quite easy to find these types of properties. Most of the time they will hire a broker or real estate agent to handle the REO's just because there are so many of them. Lender's in this situation are very motivated, especially if they have a large number of them. These properties are considered to be a huge expense which need to be eliminated. This gives the investor numerous ways to creatively negotiate with the lender on a purchase price. One disadvantage when buying foreclosures that are REO, is that you will pay close to market value for these properties because the lenders will have paid off any outstanding liens, taxes, and other expenses. This is good for you though, because most of the time you will find these types of foreclosures with clear titles.
Rob Alley, Realtor
Virginia Real Estate Solutions
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
3 Stages of Buying Foreclosures
The strategy of buying pre-foreclosures is to create a situation where everyone wins. This type of strategy involves just you, the homeowner, and in some cases the lender. Because the homeowner has been delinquent on his or her mortgage payments, they are now in a position to entertain offers made by investors. Keep in mind, you may not be the only investor looking at this property. However, when buying pre-foreclosures, you can expect very little competition.
When buying pre-foreclosures like this and in turn make a profit, you must do some research on these types of properties. The following are some basic guidelines:
- locate loans in default,
- evaluate each property by comparing and contrasting location, price, and property condition
- narrow your selections to a few
- inspect the properties
- determine the property owner's needs, his motivation and flexibility
- determine the market value of the property, fix-up costs, potential sales price and profits
- arrange default work out by negotiating with the owner and the lender
- close on the property, fix it up, and flip it quickly
Buying foreclosures at the auction is a great way to purchase a property under market value. Most properties are auctioned on the courthouse steps. The property is auctioned off to the public and the highest bidder walks away with the property. This can be very rewarding to those who are in a position to buy the property within a short amount of time and can be devastating to those who bid without proper financing in place. Most auctions require a small deposit down of the purchase price on the spot and the remaining balance usually within 1-30 days. So make sure You have you deposit ready and your financing is in order before you bid. If you are unable to get financing within the allotted time, you will most likely lose your down payment, and they will auction the property off again. Buying foreclosures at the auction is also the riskiest place to pick up a foreclosure. You are buying the property in "As Is" condition so it's very important to do your homework before you just go to an auction and bid on a property.
When buying foreclosures at the auction, we recommend you:
- first visit a local auction to get a feel for the bidding procedure, find out how much is required as a down payment and when the rest is due
- get proper financing in order
- research properties and do your homework prior to the auction date
- calculate potential profits
- determine the most you will bid for the property
- follow the property to the auction and participate
Buying foreclosures that are REO primarily involves the lender. REO just means the lender reclaims the property and establishes control over it to minimize its losses. Buying foreclosures that are REO is by far the easiest way to pick up a distressed property. Lender's are always listing properties that come back from the auction, because they don't like excess inventory. They are in the lending business, therefore it is quite easy to find these types of properties. Most of the time they will hire a broker or real estate agent to handle the REO's just because there are so many of them. Lender's in this situation are very motivated, especially if they have a large number of them. These properties are considered to be a huge expense which need to be eliminated. This gives the investor numerous ways to creatively negotiate with the lender on a purchase price. One disadvantage when buying foreclosures that are REO, is that you will pay close to market value for these properties because the lenders will have paid off any outstanding liens, taxes, and other expenses. This is good for you though, because most of the time you will find these types of foreclosures with clear titles.
Rob Alley, Realtor
Virginia Real Estate Solutions
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
How to Find Foreclosure Properties
Charlottesville and Central Virginia Short Sales, Foreclosures, and Real Estate Explained
How to Find Foreclosure Properties
There are a plethora of places to look when you want to find foreclosure properties. The key is finding them before someone else does. You can find foreclosure properties on the web, newspapers, lis pendens lists, seminars, direct mail, word of mouth, friends, real estate agents, real estate offices, and lending institutions just to name a few.
The internet is a good place to search for foreclosure properties. Several foreclosure listing companies actually search out notifications of default and sell a subscription to those who are willing to pay for this information. Just remember, this is the easiest way to find properties, so beware of competition. Also beware that some of these subscriptions are just a way to make money and provide little or outdated information on these foreclosure properties. If you decide to test one out, make sure they give you a free trial period so you can see how current the listings are.
Newspapers are another great way to find foreclosure properties. All states are required by law to post a public notice of auction in a newspaper for all foreclosure properties. You can look up these notices and send a letter to them, call them or stop by. Another option, you have as a creative investor, might be to place an ad in the newspaper yourself to attract those who are in foreclosure. Believe me, if you have a good ad, your phone will begin ringing off the hook. You see, sooner or later the homeowner finally realizes they cannot save their home. Then when time runs out, they have no choice but to call, and during this time they are very motivated.
Direct Mail is one of the best ways to find the "GOOD" foreclosure properties. This is because you can talk to a person who is still in the pre-foreclosure stage and negotiate a nice discount on the property. There will be fewer investors that even know about the property, however, there is more work involved these kind of foreclosure properties.
Real Estate Agents are a good way to find foreclosure properties. Normally, banks that end up with foreclosure properties will hire an agent to represent them. Banks are not in the foreclosure business, they are in the lending business, so they too are very motivated to sell. Agents have connections and can get a list of some "bank-owned" properties.
Word of mouth is a technique that all the good investors use. Let it be known to everyone you come in contact with that you are a real estate investor who specializes in foreclosure properties.
You should make some business cards as well that say "I specialize in foreclosure properties" and hand them out to everyone you know. You will be amazed what this will do for you. You may get a call from your friend's, friend's, sister's, friend who needs help avoiding the public auction.
There are so many excellent ways to find foreclosure properties. In fact there are many more than what are listed here. The idea is that it's a numbers game. You've always got to be working to find more deals. Find out which methods of finding works for you and go with it.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
How to Find Foreclosure Properties
There are a plethora of places to look when you want to find foreclosure properties. The key is finding them before someone else does. You can find foreclosure properties on the web, newspapers, lis pendens lists, seminars, direct mail, word of mouth, friends, real estate agents, real estate offices, and lending institutions just to name a few.
The internet is a good place to search for foreclosure properties. Several foreclosure listing companies actually search out notifications of default and sell a subscription to those who are willing to pay for this information. Just remember, this is the easiest way to find properties, so beware of competition. Also beware that some of these subscriptions are just a way to make money and provide little or outdated information on these foreclosure properties. If you decide to test one out, make sure they give you a free trial period so you can see how current the listings are.
Newspapers are another great way to find foreclosure properties. All states are required by law to post a public notice of auction in a newspaper for all foreclosure properties. You can look up these notices and send a letter to them, call them or stop by. Another option, you have as a creative investor, might be to place an ad in the newspaper yourself to attract those who are in foreclosure. Believe me, if you have a good ad, your phone will begin ringing off the hook. You see, sooner or later the homeowner finally realizes they cannot save their home. Then when time runs out, they have no choice but to call, and during this time they are very motivated.
Direct Mail is one of the best ways to find the "GOOD" foreclosure properties. This is because you can talk to a person who is still in the pre-foreclosure stage and negotiate a nice discount on the property. There will be fewer investors that even know about the property, however, there is more work involved these kind of foreclosure properties.
Real Estate Agents are a good way to find foreclosure properties. Normally, banks that end up with foreclosure properties will hire an agent to represent them. Banks are not in the foreclosure business, they are in the lending business, so they too are very motivated to sell. Agents have connections and can get a list of some "bank-owned" properties.
Word of mouth is a technique that all the good investors use. Let it be known to everyone you come in contact with that you are a real estate investor who specializes in foreclosure properties.
You should make some business cards as well that say "I specialize in foreclosure properties" and hand them out to everyone you know. You will be amazed what this will do for you. You may get a call from your friend's, friend's, sister's, friend who needs help avoiding the public auction.
There are so many excellent ways to find foreclosure properties. In fact there are many more than what are listed here. The idea is that it's a numbers game. You've always got to be working to find more deals. Find out which methods of finding works for you and go with it.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
What is Trust Deed Foreclosure?
Charlottesville and Central Virginia Short Sales, Foreclosures, and Real Estate Explained
What is Trust Deed Foreclosure?
Trust Deed foreclosure is different than that of a mortgage foreclosure because there are no courts involved. Simply put, most investors refer to trust deed foreclosure as a third party action.
Investors use different terms when dealing with a trust deed foreclosure. The borrower is called the trustor, the lender is called the beneficiary, and the third party representative (the one who is holding the title) is called the trustee. The trustee, who represents the lender or beneficiary, is brought on for the sole purpose of holding the title of the property as a security measure against the debt.
Because there is no court action involved, the trustee has the authority to sell the property for the beneficiary in the event the trustor fails to make his monthly mortgage payments. As with any trust deed foreclosure, first the trustee will issue a Notice of Default (NOD) to the delinquent borrower and records it. Usually the trustor has 90 days to cure the loan and pay all the penalties. Once that time is up, they don't play Mr. Nice Guy anymore. They will post a notice of sale on the front door of the property, the sale of the property is advertised in the newspaper to attract the biggest investors, and after a 3 week publication, the property is auctioned off on the courthouse steps. The highest bidder walks away with the property.
Obviously, most lenders like the trust deed foreclosure process better, because they don't have to wait 6 months to even years before they can begin the foreclosure process. Time is money.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
What is Trust Deed Foreclosure?
Trust Deed foreclosure is different than that of a mortgage foreclosure because there are no courts involved. Simply put, most investors refer to trust deed foreclosure as a third party action.
Investors use different terms when dealing with a trust deed foreclosure. The borrower is called the trustor, the lender is called the beneficiary, and the third party representative (the one who is holding the title) is called the trustee. The trustee, who represents the lender or beneficiary, is brought on for the sole purpose of holding the title of the property as a security measure against the debt.
Because there is no court action involved, the trustee has the authority to sell the property for the beneficiary in the event the trustor fails to make his monthly mortgage payments. As with any trust deed foreclosure, first the trustee will issue a Notice of Default (NOD) to the delinquent borrower and records it. Usually the trustor has 90 days to cure the loan and pay all the penalties. Once that time is up, they don't play Mr. Nice Guy anymore. They will post a notice of sale on the front door of the property, the sale of the property is advertised in the newspaper to attract the biggest investors, and after a 3 week publication, the property is auctioned off on the courthouse steps. The highest bidder walks away with the property.
Obviously, most lenders like the trust deed foreclosure process better, because they don't have to wait 6 months to even years before they can begin the foreclosure process. Time is money.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
What is Mortgage Foreclosure?
Charlottesville and Central Virginia Short Sales, Foreclosures, and Real Estate Explained
What is Mortgage Foreclosure?
Mortgage foreclosure simply means the deed can only be foreclosed through court action. Mortgage foreclosure is usually referred to as a judicial foreclosure.
A mortgage is a security document that allows the borrower to keep title of the property while using the property as security or collateral for a loan. The lender then places a lien on the property in the event the owner does not pay the agreed payment. When the borrower pays off the loan, the lender gives the borrower a satisfaction of mortgage that removes the lien from the property. About half the states in the U.S. use mortgage foreclosure as the means of satisfying the loan balance.
As with most mortgage foreclosure lawsuits, it starts with a summons and a complaint is issued to the borrower and any other parties with inferior rights in the property. Usually the lenders attorney is the one who issues the notice. The complaint is usually filed in the court where the trial is to be held. Here is the interesting part. Once the borrower has been notified, he or she has 20 days to respond back to the court challenging them on the mortgage foreclosure lawsuit. Once this occurs, the court now has 40 days to respond back to the borrower. Keep in mind that each correspondence must be legit and deal with some specific part of the complaint. This process may go back and forth as long as the borrower finds something erroneous with the complaint. This slows a mortgage foreclosure greatly because it must go through the court system. It may go as long as a year if needs be or even longer. Bottom line, you as the investor needs to contact the borrower or homeowner during this time and negotiate a purchase of the distressed property. This is when the homeowner is greatly motivated and must make a decision quickly.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
What is Mortgage Foreclosure?
Mortgage foreclosure simply means the deed can only be foreclosed through court action. Mortgage foreclosure is usually referred to as a judicial foreclosure.
A mortgage is a security document that allows the borrower to keep title of the property while using the property as security or collateral for a loan. The lender then places a lien on the property in the event the owner does not pay the agreed payment. When the borrower pays off the loan, the lender gives the borrower a satisfaction of mortgage that removes the lien from the property. About half the states in the U.S. use mortgage foreclosure as the means of satisfying the loan balance.
As with most mortgage foreclosure lawsuits, it starts with a summons and a complaint is issued to the borrower and any other parties with inferior rights in the property. Usually the lenders attorney is the one who issues the notice. The complaint is usually filed in the court where the trial is to be held. Here is the interesting part. Once the borrower has been notified, he or she has 20 days to respond back to the court challenging them on the mortgage foreclosure lawsuit. Once this occurs, the court now has 40 days to respond back to the borrower. Keep in mind that each correspondence must be legit and deal with some specific part of the complaint. This process may go back and forth as long as the borrower finds something erroneous with the complaint. This slows a mortgage foreclosure greatly because it must go through the court system. It may go as long as a year if needs be or even longer. Bottom line, you as the investor needs to contact the borrower or homeowner during this time and negotiate a purchase of the distressed property. This is when the homeowner is greatly motivated and must make a decision quickly.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
What is Foreclosure?
Charlottesville Real Estate, Charlottesville Short Sales and Charlottesville Foreclosures Explained
What is Foreclosure?
Foreclosure is to shut out, to bar, to extinguish a mortgagor's right of redeeming a mortgaged estate. It is a termination of all rights of the homeowner covered by a mortgage. Foreclosure is a process in which the estate becomes the absolute property of the lending institution.
Foreclosure numbers are growing daily. Of the one hundred twenty or so million homes in America, more than 4% or roughly 4.8 million of them are facing foreclosure. Some of these homeowners are able to work their way out of foreclosure, however, according to MBA there were about 500,000 homes that went through foreclosure last year. Foreclosure threatens these homeowners because they are late or seriously behind on their mortgage payments.
The Foreclosure process begins when the homeowner fails to make payments of the money due on the mortgage at the appointed time. This may be due to several reasons. Unemployment, divorce, medical challenges, terms of the loan, sick of property management, and even death.
Foreclosure is applied to any method of enforcing payment of the debt secured by a mortgage, by taking and selling the estate. Borrowers and lenders now face a challenging situation. Both seek a compromise that permits a win-win outcome. The borrower to keep his home or business, the lender to keep receiving mortgage payments.
Foreclosure proceedings typically start with a formal demand for payment which is usually a letter issued from the lender. This letter of notice is referred to as a Notice of Default (NOD). Depending on your state, the lender will issue this notice when the homeowner has been 3 months delinquent on the mortgage payments. Keep in mind that the notice is a threat to sell your property, terminate all your rights in that property and evict you from the premises.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
What is Foreclosure?
Foreclosure is to shut out, to bar, to extinguish a mortgagor's right of redeeming a mortgaged estate. It is a termination of all rights of the homeowner covered by a mortgage. Foreclosure is a process in which the estate becomes the absolute property of the lending institution.
Foreclosure numbers are growing daily. Of the one hundred twenty or so million homes in America, more than 4% or roughly 4.8 million of them are facing foreclosure. Some of these homeowners are able to work their way out of foreclosure, however, according to MBA there were about 500,000 homes that went through foreclosure last year. Foreclosure threatens these homeowners because they are late or seriously behind on their mortgage payments.
The Foreclosure process begins when the homeowner fails to make payments of the money due on the mortgage at the appointed time. This may be due to several reasons. Unemployment, divorce, medical challenges, terms of the loan, sick of property management, and even death.
Foreclosure is applied to any method of enforcing payment of the debt secured by a mortgage, by taking and selling the estate. Borrowers and lenders now face a challenging situation. Both seek a compromise that permits a win-win outcome. The borrower to keep his home or business, the lender to keep receiving mortgage payments.
Foreclosure proceedings typically start with a formal demand for payment which is usually a letter issued from the lender. This letter of notice is referred to as a Notice of Default (NOD). Depending on your state, the lender will issue this notice when the homeowner has been 3 months delinquent on the mortgage payments. Keep in mind that the notice is a threat to sell your property, terminate all your rights in that property and evict you from the premises.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
How Short Sales Work
Charlottesville Real Estate, Short Sales and Foreclosures Explained
How Short Sales Work
Short Sales are one of the most effective techniques for discounting loans in real estate. Short sales create huge investment opportunities and are a must if you want to be competitive in this market. One of the most important steps in the short sales process is getting the deed. Too many times, beginning investors will skip this vital step. Why do we want to get the deed from the homeowner(s)? Because all too often, homeowners change their minds, or want to back out of deals because they are scared, or they want to re-negotiate. Without the deed, they can back out of the potential short sale even after you have spent hours working on their property. This only has to happen once and I guarantee it will never happen again. I lost $30,000 on one deal because I failed to get the deed. That was a costly mistake. When the homeowner signs the deed over to you, now you control the property and you can go to work by calling the bank.
There is a certain process for calling the bank when your doing short sales. Banks can usually tell if you've never done this before. When you call the bank, you never want to tell them you are an investor. This one of the biggest mistakes rookies make and will almost always result in the lender not accepting short sales. Therefore, when you call the lender to request the short sales packet, you can either tell them you are the buyer or you represent the homeowner. Sometimes they may ask if you are a real estate attorney. Just restate what you told them before. Then you'll want to request the "short sales packet" or "workout packet". When the packet arrives it will explain exactly what you need to make this short sales deal successful.
The lender will usually request a hardship letter. A hardship letter is telling the lender why the homeowners are not making their mortgage payments. Sometimes they will request bank statement, pay stubs, income statements, and so on. Be prepared to send them everything they ask for because if you don't it will not be accepted. They will almost always ask for a HUD-1 and a real estate purchase and sales agreement. Do not waste any time! Send everything the lender asks for back ASAP. It usually takes 3 weeks or more to get an answer back from the lender, so you can't afford to wait. If the auction is approaching, you can ask to extend the auction which in most cases they will, if they know it is a legitimate offer.
Next in the short sales process is the BPO. This stands for Brokers Price Opinion. Basically a real estate agent will come out and give their opinion on what the house is worth. The key to short sales is the BPO. You want to try everything you can to influence the BPO to come in as low as you can. The lower the better. It takes a few times to get good at this, but once you do, I guarantee you will try to get short sales on every real estate foreclosure you encounter. You will also receive larger profits when you invest in a more expensive home. This is because you are able to get bigger discounts from the lender on properties over $500,000. The great thing about this is that it will cost you about the same no matter what the property is worth.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roroballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
How Short Sales Work
Short Sales are one of the most effective techniques for discounting loans in real estate. Short sales create huge investment opportunities and are a must if you want to be competitive in this market. One of the most important steps in the short sales process is getting the deed. Too many times, beginning investors will skip this vital step. Why do we want to get the deed from the homeowner(s)? Because all too often, homeowners change their minds, or want to back out of deals because they are scared, or they want to re-negotiate. Without the deed, they can back out of the potential short sale even after you have spent hours working on their property. This only has to happen once and I guarantee it will never happen again. I lost $30,000 on one deal because I failed to get the deed. That was a costly mistake. When the homeowner signs the deed over to you, now you control the property and you can go to work by calling the bank.
There is a certain process for calling the bank when your doing short sales. Banks can usually tell if you've never done this before. When you call the bank, you never want to tell them you are an investor. This one of the biggest mistakes rookies make and will almost always result in the lender not accepting short sales. Therefore, when you call the lender to request the short sales packet, you can either tell them you are the buyer or you represent the homeowner. Sometimes they may ask if you are a real estate attorney. Just restate what you told them before. Then you'll want to request the "short sales packet" or "workout packet". When the packet arrives it will explain exactly what you need to make this short sales deal successful.
The lender will usually request a hardship letter. A hardship letter is telling the lender why the homeowners are not making their mortgage payments. Sometimes they will request bank statement, pay stubs, income statements, and so on. Be prepared to send them everything they ask for because if you don't it will not be accepted. They will almost always ask for a HUD-1 and a real estate purchase and sales agreement. Do not waste any time! Send everything the lender asks for back ASAP. It usually takes 3 weeks or more to get an answer back from the lender, so you can't afford to wait. If the auction is approaching, you can ask to extend the auction which in most cases they will, if they know it is a legitimate offer.
Next in the short sales process is the BPO. This stands for Brokers Price Opinion. Basically a real estate agent will come out and give their opinion on what the house is worth. The key to short sales is the BPO. You want to try everything you can to influence the BPO to come in as low as you can. The lower the better. It takes a few times to get good at this, but once you do, I guarantee you will try to get short sales on every real estate foreclosure you encounter. You will also receive larger profits when you invest in a more expensive home. This is because you are able to get bigger discounts from the lender on properties over $500,000. The great thing about this is that it will cost you about the same no matter what the property is worth.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roroballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
What is a Short Sale?
Charlottesville Real Estate, Short Sales and Foreclosures Explained
What is a Short Sale?
A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan. This is a short sale. Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.
At the time of this writing, foreclosures are at an all time high, which basically translates into more opportunities for you. Since foreclosures are increasing, this is the perfect time to jump into this because there will be more and more lenders discounting properties. It is safe to say that most lenders will accept a short sale, however, you may come across one or two lenders who will not discount. If the numbers work out for the lender they will do it.
It is best to do a short sale when the property is in the pre-foreclosure state. Yes, you can perform a short sale when the bank owns the property, however your profits will more than likely be smaller. There are two stages within pre-foreclosure. The first stage being those individuals who are behind on payments and the second stage are those who are behind on payments with a notice of default. In order for this to work properly and for you to successfully get a short sale, you must find the homeowners who are in the second stage of pre-foreclosure or more than 3 payments behind on their mortgage. Once the notice of default has been recorded, banks become motivated as well, so you are more likely to get a discount. Until that time, very rarely will a bank ever discount a mortgage that soon. Why would they? The homeowners still have time to cure the loan and make up the back payments.
It does not matter what type of house or condition it's in, all mortgages can be discounted. The best properties to perform a short sale on are the houses that need lots of work and repairs because lenders will give you a bigger discount if they see they are "don't wanters". Properties that are over leveraged are also prime candidates. Most rookie investors who see a house over leveraged with an upside-down mortgage may think there is no hope for this property. On the other hand, this is a sweet deal to the savvy investor. Properties with large 2nd mortgages are also treated as gold because the 2nd mortgage is wiped out at the foreclosure auction. Lenders with a 2nd and 3rd mortgage position would rather have something than nothing.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
What is a Short Sale?
A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan. This is a short sale. Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.
At the time of this writing, foreclosures are at an all time high, which basically translates into more opportunities for you. Since foreclosures are increasing, this is the perfect time to jump into this because there will be more and more lenders discounting properties. It is safe to say that most lenders will accept a short sale, however, you may come across one or two lenders who will not discount. If the numbers work out for the lender they will do it.
It is best to do a short sale when the property is in the pre-foreclosure state. Yes, you can perform a short sale when the bank owns the property, however your profits will more than likely be smaller. There are two stages within pre-foreclosure. The first stage being those individuals who are behind on payments and the second stage are those who are behind on payments with a notice of default. In order for this to work properly and for you to successfully get a short sale, you must find the homeowners who are in the second stage of pre-foreclosure or more than 3 payments behind on their mortgage. Once the notice of default has been recorded, banks become motivated as well, so you are more likely to get a discount. Until that time, very rarely will a bank ever discount a mortgage that soon. Why would they? The homeowners still have time to cure the loan and make up the back payments.
It does not matter what type of house or condition it's in, all mortgages can be discounted. The best properties to perform a short sale on are the houses that need lots of work and repairs because lenders will give you a bigger discount if they see they are "don't wanters". Properties that are over leveraged are also prime candidates. Most rookie investors who see a house over leveraged with an upside-down mortgage may think there is no hope for this property. On the other hand, this is a sweet deal to the savvy investor. Properties with large 2nd mortgages are also treated as gold because the 2nd mortgage is wiped out at the foreclosure auction. Lenders with a 2nd and 3rd mortgage position would rather have something than nothing.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
Monday, April 27, 2009
Virginia Foreclosure Laws
Charlottesville Real Estate, Short Sales and Foreclosures Explained
Virginia Foreclosure Laws
Virginia Foreclosure is Non-Judicial.
Virginia Foreclosure Timeline :
Virginia Foreclosure Day 1
Review of file, acknowledgment of receipt of referral and preparation and forwarding of Substitution of Trustee to lender for execution. With Absolute Wireless the referral acknowledgment the client will be advised of any missing documentation. Virginia foreclosure law requires that the Trustee receive a written request from the lender to proceed with foreclosure. The Trustee needs (1) the original note and copy of the deed of trust, (2) copy of default/breach letter and (3) the tide insurance policy. Note: If the original note has been lost a copy with a lost note affidavit will suffice, but the lender, prior to the institution of the foreclosure, must give the obligor(s), including the property owner, written notice that the original note is unavailable and that a request for sale by the Trustee will be made upon expiration of 14 days from the date of the notice. This notice must be sent certified mail, return receipt requested, to the last known address of the obligor(s) and must include the name and address of the Trustee and must further advise the obligor(s) that if he believes that he may be subject to a claim by a person other than the lender to enforce it he may petition the circuit court of the city or county wherein the property lies for an order requiring the lender to provide adequate protection against any such claim. The Trustee cannot proceed to sale without either the original note or the lost note notice (with the return receipt or returned envelope).
Virginia Foreclosure Days 2-14
Examination and review of title. The lender and title insurer are advised of any title defects and appropriate steps are undertaken to clear any title defects.
Virginia Foreclosure Days 15-20
Preparation of foreclosure notices to owners of record title and any others liable on the note. The minimum notice is 14 days prior to the date of the sale. Additionally, if there are IRS liens, homeowners' or condominium association liens or junior deed of trust, lien notice must be given to these lien holders as well. Simultaneously, with the foreclosure notice, the newspaper advertisement of sale is prepared and forwarded to the appropriate newspaper for publication. The language of the deed of trust usually controls the advertising required. The minimum advertisement required for a Virginia foreclosure is, if weekly, once a week for 2 successive weeks, or if daily, once a day for 3 successive days. If the deed of trust is silent on the number of publications then it must be advertised once a week for 4 successive weeks. However, if the property lies within a city or in a county contiguous to a city, daily publication for 5 days, which may be consecutive, is deemed adequate.
Virginia Foreclosure Day 50
The Virginia foreclosure sale is held. The Trustee conducts the sale. Virginia foreclosure law allows the lender to submit to the Trustee a written one-price bid in advance of the sale. The Trustee cannot bid actively on behalf of the lender but can open the bidding at the one-price bid of the lender. A bidder's deposit of 10% of the successful bid is required at the time of sale. If the lender is the successful bidder this is waived. The lender is advised of the sale results immediately following the sale.
Virginia Foreclosure Days 51-65
Assuming the lender is the successful bidder, the proposed foreclosure deed, a copy of the proposed accounting, a "receipt" for the net sale proceeds and an invoice for the expenses of sale, including the cost of recording the foreclosure deed, is submitted to the lender. Upon receipt of the requested funds and the "receipt" the deed is recorded and costs are paid. At this point, except for the accounting, the foreclosure is complete. Except for the IRS lien situations, there is no right of redemption in Virginia. If a third party is the successful bidder the Trustee coordinates the settlement with the bidder's attorney and proceeds to closing. If the successful bidder defaults, the bidder's deposit is used to pay the expenses of the Virginia foreclosure with the excess funds forwarded to the lender and the process begins again.
Virginia Foreclosure Days 90-100
The Trustee is required to file an accounting of the sale with the Commissioner of Accounts within 6 months of the date of the Virginia foreclosure sale. Included in this report is the accounting, copies of the canceled checks for all sale expenses, the original note (or lost note affidavit and lost note notice with receipts) and a copy of the recorded foreclosure deed.
Insurer/Guarantor Requirements
FHA and VA regulations set forth specific time requirements for the institution and completion of the foreclosure process which must be met by the servicer in order to maintain the loan guaranty. The typical "time-line" previously set forth well exceeds these requirements. Daily monitoring of all pending foreclosures allows the firm to be ever cognizant of its time and reporting responsibilities.
How Virginia Foreclosure Deed of Trust Construed
Every deed of trust to secure debts or indemnify sureties is in the nature of a contract and shall be construed according to its terms to the extent not in conflict with the requirements of Virginia's foreclosure law. Unless otherwise provided therein, it shall be construed to impose and confer upon the parties thereto, and the beneficiaries thereunder, the following duties, rights and obligations in like manner as if the same were expressly provided for by such deed of trust:
1. The deed shall be construed as given to secure the performance of each of the covenants entered into by the grantor as well as the payment of the primary obligation.
2. The grantor shall be deemed to covenant that he will pay all taxes, levies, assessments and charges upon the property, including the fees and charges of such agents or attorneys as the trustee may deem advisable to employ at any time for the purpose of the trust, so long as any obligation upon the grantor under the deed of trust remains undischarged.
3. The grantor shall be deemed to covenant that he will keep the improvements on the property in tenantable condition, whether such improvements were on the property when the deed of trust was given or were thereafter placed thereon.
4. The grantor shall be deemed to covenant that no waste shall be committed or suffered upon the property.
5. The grantor shall be deemed to covenant that in the event of his failure to meet any obligations imposed upon him then the trustee or any beneficiary may, at his option, satisfy the same. The money so advanced, with interest thereon as provided in the deed of trust, shall be a part of the debt secured by the deed of trust, in the event of sale to be paid next after the expenses of executing the trust, and shall be otherwise recoverable from the grantor as a debt. In addition, to the extent not otherwise covered, the grantor shall be deemed to covenant that amount advanced or incurred by the trustee or any beneficiary under a deed of trust (i) with respect to an obligation secured by a lien or encumbrance prior to the lien of the deed of trust or (ii) for the protection of the lien secured by the deed of trust, together with interest as provided in the deed of trust, shall be a part of the debt secured by the deed of trust, to be paid next after expenses of executing the trust.
6. A covenant to pay interest shall be deemed a covenant to pay interest on the principal balance as such rate may vary or be modified from time to time by the parties under the original instruments or agreements or a written agreement of modification whether or not recorded, and all the interest on the principal secured by the deed of trust shall be on an equal priority with the principal debt secured by the deed of trust, in the event of sale to be paid next after the expenses of executing the trust.
Any covenant, otherwise authorized by law, that the lender shall be entitled to share in the gross income or the net income, or the gross rent or revenues, or net rents or revenues of the property, or in any portion of the proceeds or appreciation upon sale or appraisal or similar event, shall be on an equal priority with the principal debt secured by the deed of trust, in the event of sale to be paid next after the expenses of executing the trust, and shall be specified in the recorded deed of trust or other recorded document in order to be notice of record as against subsequent parties.
7. In the event of default in the payment of the debt secured, or any part thereof; at maturity, or in the payment of interest when due, or of the breach of any of the covenants entered into or imposed upon the grantor, then at the request of any beneficiary the trustee shall forthwith declare all the debts and obligations secured by the deed of trust at once due and payable and may take possession of the property and proceed to sell the same at auction at the premises or in the front of the circuit court building or at such other place in the city or county in which the property or the greater part thereof lies, or in the corporate limits of any city surrounded by or contiguous to such county, or in the case of annexed land, in the county of which the land was formerly a part, as the trustee may select upon such terms and conditions as the trustee may deem best.
8. If the Virginia foreclosure sale is upon credit terms, the deferred purchase money shall bear interest from the day of sale and shall be secured by a deed of trust upon the property contemporaneous with the trustee's deed to the purchaser.
9. The party secured by the deed of trust, or the holders of greater than fifty percent of the monetary obligations secured thereby, shall have the right and power to appoint a substitute trustee or trustees for any reason and, regardless of whether such right and power is expressly granted in such deed of trust, by executing and acknowledging an instrument designating and appointing a substitute. When the instrument of appointment has been executed, the substitute trustee or trustees named therein shall be vested with all the powers, rights, authority and duties vested in the trustee or trustees in the original deed of trust. The instrument of appointment shall be recorded in the office of the clerk wherein the original deed of trust is recorded prior to or at the time of recordation of any instrument in which a power, right, authority or duty conferred by the original deed of trust is exercised.
Notices Required before Sale by Trustee to Owners
A. In addition to the advertisement, the trustee or the party secured shall give written notice of the time, date and place of any proposed sale in execution of a deed of trust by personal delivery or by mail to (i) the present owner of the property to be sold at his last known address as such owner and address appear in the records of the party secured, (ii) any subordinate lien holder who holds a note against the property secured by a deed of trust recorded at least thirty days prior to the proposed sale and whose address is recorded with the deed of trust, (iii) any assignee of such a note secured by a deed of trust provided the assignment and address of assignee are likewise recorded at least thirty days prior to the proposed sale, (iv) any condominium unit owners association which has filed a lien, (v) any property owners' association which has filed a lien, and (vi) any proprietary lessees association which has filed a lien. Written notice shall be given pursuant to clauses (iv), (v) and (vi), only if the lien is recorded at least thirty days prior to the proposed sale. Mailing of a copy of the advertisement or a notice containing the same information to the owner by certified or registered mail no less than fourteen days prior to such sale and to lien holders, the property owners association or proprietary lessees' association, their assigns and the condominium unit owners' association, at the address noted in the memorandum of lien, by ordinary mail no less than fourteen days prior to such sale shall be a sufficient compliance with the requirement of notice. The written notice of proposed sale when given as provided herein shall be deemed an effective exercise of any right of acceleration contained in such deed of trust or otherwise possessed by the party secured relative to the indebtedness secured. The inadvertent failure to give notice as required by this subsection shall not impose liability on either the trustee or the secured party.
If a note or other evidence of indebtedness secured by a deed of trust is lost or for any reason cannot be produced and the beneficiary submits to the trustee an affidavit to that effect, the trustee may nonetheless proceed to sale, provided the beneficiary has given written notice to the person required to pay the instrument that the instrument is unavailable and a request for sale will be made of the trustee upon expiration of fourteen days from the date of mailing of the notice. The notice shall be sent by certified mail, return receipt requested, to the last known address of the person required to pay the instrument as reflected in the records of the beneficiary and shall include the name and mailing address of the trustee. The notice shall further advise the person required to pay the instrument that if he believes he may be subject to a claim by a person other than the beneficiary to enforce the instrument he may petition the circuit court of the county or city where the property or some part thereof lies for an order requiring the beneficiary to provide adequate protection against any such claim. If deemed appropriate by the court, the court may condition the sale on a finding that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means. If the trustee proceeds to sale, the fact that the instrument is lost or cannot be produced shall not affect the authority of the trustee to sell or the validity of the Virginia foreclosure sale.
Failure to comply with the requirements of notice contained in this section shall not affect the validity of the sale, and a purchaser for value at such sale shall be under no duty to ascertain whether such notice was validly given.
In the event of postponement of sale, which may be done in the discretion of the trustee, no new or additional notice need be given pursuant to this section.
Advertisement Required before Sale by Trustee
A. Advertisement of sale by a trustee or trustees in execution of a deed of trust shall be in a newspaper having a general circulation in the city or county wherein the property to be sold, or any portion thereof; lies pursuant to the following provisions:
1. If the deed of trust itself provides for the number of publications of such newspaper advertisement, which may be done by using the words "advertisement required" or words of like purport followed by the number agreed upon, then no other or different advertisement shall be necessary, provided that, if such advertisement be inserted on a weekly basis it shall be published not less than once a week for two weeks and if such advertisement be inserted on a daily basis it shall be published not less than once a day for three days, which may be consecutive days, in the same manner as if the method were set forth in the deed of trust. Should the deed of trust provide for advertising on other than a weekly or daily basis either of the foregoing provisions shall be complied with in addition to those provided in such deed of trust. Notwithstanding the provisions of the deed of trust, the Virginia foreclosure sale shall be held on any day following the day of the last advertisement which is no earlier than eight days following the first advertisement nor more than thirty days following the last advertisement.
2. If the deed of trust does not provide for the number of publications of such newspaper advertisement, the trustee shall advertise once a week for four successive weeks; provided, however, that if the property or some portion thereof is located in a city or in a county immediately contiguous to a city, publication of the advertisement five different days, which may be consecutive days, shall be deemed adequate. The Virginia foreclosure sale shall be held on any day following the day of the last advertisement which is no earlier than eight days following the first advertisement nor more than thirty days following the last advertisement.
B. Such advertisement shall be placed in that section of the newspaper where legal notices appear or where the type of property being sold is generally advertised for sale.
C. In addition to the advertisement required by subsection A above, the trustee shall give such other further and different advertisement as the deed of trust may require and in addition may give such additional advertisement as he may deem appropriate.
D. In the event of postponement of sale, which postponement shall be at the discretion of the trustee, advertisement of such postponed sale shall be in the same manner as the original advertisement of sale.
E. Failure to comply with the requirements for advertisement contained in this section shall, upon petition, render a sale of the property voidable by the court.
Contents of Advertisements of Virginia Foreclosure Sale
The advertisement of sale under any deed of trust, in addition to such other matters as may be required by such deed of trust or by the trustee, in his discretion, shall set forth a description of the property to be sold, which description need not be as extensive as that contained in the deed of trust, and shall identify the property by street address, if any, or if none, shall give the general location of the property with reference to streets, routes, or known landmarks. Where available, tax map identification may be used but is not required. The advertisement shall also include the time, place and terms of sale and shall give the name or names of the trustee or trustees. It shall set forth the name, address and telephone number of such person (either a trustee or the party secured or his agent or attorney) as may be able to respond to inquiries concerning the sale.
Powers and Duties of trustee in event of sale under a deed of trust
A. In the event of sale under a deed of trust, the trustee shall have the following powers and duties in addition to all others:
1. Written one-price bids may be made and shall be received by the trustee from the beneficiary or any other person for entity by announcement of the trustee at the sale. Any person other than the trustee may bid at the Virginia foreclosure sale, including a person who has submitted a written one-price bid. Upon request to the trustee or trustees, any other bidder in attendance at a foreclosure sale shall be permitted to inspect written bids. Whenever the written bid of the beneficiary is the highest bid submitted at the sale, such document shall be filed by the trustee with his account of sale. The written bid submitted pursuant to this subsection may be prepared by the beneficiary, its agent or attorney.
2. The trustee may require of any bidder at any sale a cash deposit of as much as ten per centum of the sale price (unless the deed of trust specifies a higher or lower maximum, which may be done by the words "bidder's deposit of not more than... dollars may be required," or words of like purport) before his bid is received, which shall be returned to the bidder unless the property is sold to him, otherwise to be applied to his credit in settlement or, should he fail to complete his purchase promptly, to be applied to pay the costs and expense of sale and the balance, if any, to be retained by the trustee as his compensation in connection with that foreclosure sale.
3. The trustee shall receive and receipt for the proceeds of sale, no purchaser being required to see to the application of the proceeds, account for the same to the commissioner of accounts and apply the same, first, to discharge the expenses of executing the trust, including a reasonable commission to the trustee; secondly, to discharge all taxes, levies, and assessment, with costs and interest if they have priority over the lien of the deed of trust, including the due pro rata thereof for the current year; thirdly, to discharge in the order of their priority, if any, the remaining debts and obligations secured by the deed, and any liens of record inferior to the deed of trust under which sale is made, with lawful interest; and, fourthly, the residue of the proceeds shall be paid to the grantor or his assigns; provided, however, that the trustee as to such residue shall not be bound by any inheritance, devise, conveyance, assignment or lien of or upon the grantor's equity, without actual notice thereof prior to distribution; provided further that such order of priorities shall not be changed or varied by the deed of trust.
B. Upon discharge (other than by sale by the trustee) of all debts, duties and obligations imposed by the deed upon the grantor, including any expenses incurred preparatory to sale, then upon the grantor's request the trustee shall execute and deliver a good and sufficient deed of release at the grantor's own proper costs and charges.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
Virginia Foreclosure Laws
Virginia Foreclosure is Non-Judicial.
Virginia Foreclosure Timeline :
Virginia Foreclosure Day 1
Review of file, acknowledgment of receipt of referral and preparation and forwarding of Substitution of Trustee to lender for execution. With Absolute Wireless the referral acknowledgment the client will be advised of any missing documentation. Virginia foreclosure law requires that the Trustee receive a written request from the lender to proceed with foreclosure. The Trustee needs (1) the original note and copy of the deed of trust, (2) copy of default/breach letter and (3) the tide insurance policy. Note: If the original note has been lost a copy with a lost note affidavit will suffice, but the lender, prior to the institution of the foreclosure, must give the obligor(s), including the property owner, written notice that the original note is unavailable and that a request for sale by the Trustee will be made upon expiration of 14 days from the date of the notice. This notice must be sent certified mail, return receipt requested, to the last known address of the obligor(s) and must include the name and address of the Trustee and must further advise the obligor(s) that if he believes that he may be subject to a claim by a person other than the lender to enforce it he may petition the circuit court of the city or county wherein the property lies for an order requiring the lender to provide adequate protection against any such claim. The Trustee cannot proceed to sale without either the original note or the lost note notice (with the return receipt or returned envelope).
Virginia Foreclosure Days 2-14
Examination and review of title. The lender and title insurer are advised of any title defects and appropriate steps are undertaken to clear any title defects.
Virginia Foreclosure Days 15-20
Preparation of foreclosure notices to owners of record title and any others liable on the note. The minimum notice is 14 days prior to the date of the sale. Additionally, if there are IRS liens, homeowners' or condominium association liens or junior deed of trust, lien notice must be given to these lien holders as well. Simultaneously, with the foreclosure notice, the newspaper advertisement of sale is prepared and forwarded to the appropriate newspaper for publication. The language of the deed of trust usually controls the advertising required. The minimum advertisement required for a Virginia foreclosure is, if weekly, once a week for 2 successive weeks, or if daily, once a day for 3 successive days. If the deed of trust is silent on the number of publications then it must be advertised once a week for 4 successive weeks. However, if the property lies within a city or in a county contiguous to a city, daily publication for 5 days, which may be consecutive, is deemed adequate.
Virginia Foreclosure Day 50
The Virginia foreclosure sale is held. The Trustee conducts the sale. Virginia foreclosure law allows the lender to submit to the Trustee a written one-price bid in advance of the sale. The Trustee cannot bid actively on behalf of the lender but can open the bidding at the one-price bid of the lender. A bidder's deposit of 10% of the successful bid is required at the time of sale. If the lender is the successful bidder this is waived. The lender is advised of the sale results immediately following the sale.
Virginia Foreclosure Days 51-65
Assuming the lender is the successful bidder, the proposed foreclosure deed, a copy of the proposed accounting, a "receipt" for the net sale proceeds and an invoice for the expenses of sale, including the cost of recording the foreclosure deed, is submitted to the lender. Upon receipt of the requested funds and the "receipt" the deed is recorded and costs are paid. At this point, except for the accounting, the foreclosure is complete. Except for the IRS lien situations, there is no right of redemption in Virginia. If a third party is the successful bidder the Trustee coordinates the settlement with the bidder's attorney and proceeds to closing. If the successful bidder defaults, the bidder's deposit is used to pay the expenses of the Virginia foreclosure with the excess funds forwarded to the lender and the process begins again.
Virginia Foreclosure Days 90-100
The Trustee is required to file an accounting of the sale with the Commissioner of Accounts within 6 months of the date of the Virginia foreclosure sale. Included in this report is the accounting, copies of the canceled checks for all sale expenses, the original note (or lost note affidavit and lost note notice with receipts) and a copy of the recorded foreclosure deed.
Insurer/Guarantor Requirements
FHA and VA regulations set forth specific time requirements for the institution and completion of the foreclosure process which must be met by the servicer in order to maintain the loan guaranty. The typical "time-line" previously set forth well exceeds these requirements. Daily monitoring of all pending foreclosures allows the firm to be ever cognizant of its time and reporting responsibilities.
How Virginia Foreclosure Deed of Trust Construed
Every deed of trust to secure debts or indemnify sureties is in the nature of a contract and shall be construed according to its terms to the extent not in conflict with the requirements of Virginia's foreclosure law. Unless otherwise provided therein, it shall be construed to impose and confer upon the parties thereto, and the beneficiaries thereunder, the following duties, rights and obligations in like manner as if the same were expressly provided for by such deed of trust:
1. The deed shall be construed as given to secure the performance of each of the covenants entered into by the grantor as well as the payment of the primary obligation.
2. The grantor shall be deemed to covenant that he will pay all taxes, levies, assessments and charges upon the property, including the fees and charges of such agents or attorneys as the trustee may deem advisable to employ at any time for the purpose of the trust, so long as any obligation upon the grantor under the deed of trust remains undischarged.
3. The grantor shall be deemed to covenant that he will keep the improvements on the property in tenantable condition, whether such improvements were on the property when the deed of trust was given or were thereafter placed thereon.
4. The grantor shall be deemed to covenant that no waste shall be committed or suffered upon the property.
5. The grantor shall be deemed to covenant that in the event of his failure to meet any obligations imposed upon him then the trustee or any beneficiary may, at his option, satisfy the same. The money so advanced, with interest thereon as provided in the deed of trust, shall be a part of the debt secured by the deed of trust, in the event of sale to be paid next after the expenses of executing the trust, and shall be otherwise recoverable from the grantor as a debt. In addition, to the extent not otherwise covered, the grantor shall be deemed to covenant that amount advanced or incurred by the trustee or any beneficiary under a deed of trust (i) with respect to an obligation secured by a lien or encumbrance prior to the lien of the deed of trust or (ii) for the protection of the lien secured by the deed of trust, together with interest as provided in the deed of trust, shall be a part of the debt secured by the deed of trust, to be paid next after expenses of executing the trust.
6. A covenant to pay interest shall be deemed a covenant to pay interest on the principal balance as such rate may vary or be modified from time to time by the parties under the original instruments or agreements or a written agreement of modification whether or not recorded, and all the interest on the principal secured by the deed of trust shall be on an equal priority with the principal debt secured by the deed of trust, in the event of sale to be paid next after the expenses of executing the trust.
Any covenant, otherwise authorized by law, that the lender shall be entitled to share in the gross income or the net income, or the gross rent or revenues, or net rents or revenues of the property, or in any portion of the proceeds or appreciation upon sale or appraisal or similar event, shall be on an equal priority with the principal debt secured by the deed of trust, in the event of sale to be paid next after the expenses of executing the trust, and shall be specified in the recorded deed of trust or other recorded document in order to be notice of record as against subsequent parties.
7. In the event of default in the payment of the debt secured, or any part thereof; at maturity, or in the payment of interest when due, or of the breach of any of the covenants entered into or imposed upon the grantor, then at the request of any beneficiary the trustee shall forthwith declare all the debts and obligations secured by the deed of trust at once due and payable and may take possession of the property and proceed to sell the same at auction at the premises or in the front of the circuit court building or at such other place in the city or county in which the property or the greater part thereof lies, or in the corporate limits of any city surrounded by or contiguous to such county, or in the case of annexed land, in the county of which the land was formerly a part, as the trustee may select upon such terms and conditions as the trustee may deem best.
8. If the Virginia foreclosure sale is upon credit terms, the deferred purchase money shall bear interest from the day of sale and shall be secured by a deed of trust upon the property contemporaneous with the trustee's deed to the purchaser.
9. The party secured by the deed of trust, or the holders of greater than fifty percent of the monetary obligations secured thereby, shall have the right and power to appoint a substitute trustee or trustees for any reason and, regardless of whether such right and power is expressly granted in such deed of trust, by executing and acknowledging an instrument designating and appointing a substitute. When the instrument of appointment has been executed, the substitute trustee or trustees named therein shall be vested with all the powers, rights, authority and duties vested in the trustee or trustees in the original deed of trust. The instrument of appointment shall be recorded in the office of the clerk wherein the original deed of trust is recorded prior to or at the time of recordation of any instrument in which a power, right, authority or duty conferred by the original deed of trust is exercised.
Notices Required before Sale by Trustee to Owners
A. In addition to the advertisement, the trustee or the party secured shall give written notice of the time, date and place of any proposed sale in execution of a deed of trust by personal delivery or by mail to (i) the present owner of the property to be sold at his last known address as such owner and address appear in the records of the party secured, (ii) any subordinate lien holder who holds a note against the property secured by a deed of trust recorded at least thirty days prior to the proposed sale and whose address is recorded with the deed of trust, (iii) any assignee of such a note secured by a deed of trust provided the assignment and address of assignee are likewise recorded at least thirty days prior to the proposed sale, (iv) any condominium unit owners association which has filed a lien, (v) any property owners' association which has filed a lien, and (vi) any proprietary lessees association which has filed a lien. Written notice shall be given pursuant to clauses (iv), (v) and (vi), only if the lien is recorded at least thirty days prior to the proposed sale. Mailing of a copy of the advertisement or a notice containing the same information to the owner by certified or registered mail no less than fourteen days prior to such sale and to lien holders, the property owners association or proprietary lessees' association, their assigns and the condominium unit owners' association, at the address noted in the memorandum of lien, by ordinary mail no less than fourteen days prior to such sale shall be a sufficient compliance with the requirement of notice. The written notice of proposed sale when given as provided herein shall be deemed an effective exercise of any right of acceleration contained in such deed of trust or otherwise possessed by the party secured relative to the indebtedness secured. The inadvertent failure to give notice as required by this subsection shall not impose liability on either the trustee or the secured party.
If a note or other evidence of indebtedness secured by a deed of trust is lost or for any reason cannot be produced and the beneficiary submits to the trustee an affidavit to that effect, the trustee may nonetheless proceed to sale, provided the beneficiary has given written notice to the person required to pay the instrument that the instrument is unavailable and a request for sale will be made of the trustee upon expiration of fourteen days from the date of mailing of the notice. The notice shall be sent by certified mail, return receipt requested, to the last known address of the person required to pay the instrument as reflected in the records of the beneficiary and shall include the name and mailing address of the trustee. The notice shall further advise the person required to pay the instrument that if he believes he may be subject to a claim by a person other than the beneficiary to enforce the instrument he may petition the circuit court of the county or city where the property or some part thereof lies for an order requiring the beneficiary to provide adequate protection against any such claim. If deemed appropriate by the court, the court may condition the sale on a finding that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means. If the trustee proceeds to sale, the fact that the instrument is lost or cannot be produced shall not affect the authority of the trustee to sell or the validity of the Virginia foreclosure sale.
Failure to comply with the requirements of notice contained in this section shall not affect the validity of the sale, and a purchaser for value at such sale shall be under no duty to ascertain whether such notice was validly given.
In the event of postponement of sale, which may be done in the discretion of the trustee, no new or additional notice need be given pursuant to this section.
Advertisement Required before Sale by Trustee
A. Advertisement of sale by a trustee or trustees in execution of a deed of trust shall be in a newspaper having a general circulation in the city or county wherein the property to be sold, or any portion thereof; lies pursuant to the following provisions:
1. If the deed of trust itself provides for the number of publications of such newspaper advertisement, which may be done by using the words "advertisement required" or words of like purport followed by the number agreed upon, then no other or different advertisement shall be necessary, provided that, if such advertisement be inserted on a weekly basis it shall be published not less than once a week for two weeks and if such advertisement be inserted on a daily basis it shall be published not less than once a day for three days, which may be consecutive days, in the same manner as if the method were set forth in the deed of trust. Should the deed of trust provide for advertising on other than a weekly or daily basis either of the foregoing provisions shall be complied with in addition to those provided in such deed of trust. Notwithstanding the provisions of the deed of trust, the Virginia foreclosure sale shall be held on any day following the day of the last advertisement which is no earlier than eight days following the first advertisement nor more than thirty days following the last advertisement.
2. If the deed of trust does not provide for the number of publications of such newspaper advertisement, the trustee shall advertise once a week for four successive weeks; provided, however, that if the property or some portion thereof is located in a city or in a county immediately contiguous to a city, publication of the advertisement five different days, which may be consecutive days, shall be deemed adequate. The Virginia foreclosure sale shall be held on any day following the day of the last advertisement which is no earlier than eight days following the first advertisement nor more than thirty days following the last advertisement.
B. Such advertisement shall be placed in that section of the newspaper where legal notices appear or where the type of property being sold is generally advertised for sale.
C. In addition to the advertisement required by subsection A above, the trustee shall give such other further and different advertisement as the deed of trust may require and in addition may give such additional advertisement as he may deem appropriate.
D. In the event of postponement of sale, which postponement shall be at the discretion of the trustee, advertisement of such postponed sale shall be in the same manner as the original advertisement of sale.
E. Failure to comply with the requirements for advertisement contained in this section shall, upon petition, render a sale of the property voidable by the court.
Contents of Advertisements of Virginia Foreclosure Sale
The advertisement of sale under any deed of trust, in addition to such other matters as may be required by such deed of trust or by the trustee, in his discretion, shall set forth a description of the property to be sold, which description need not be as extensive as that contained in the deed of trust, and shall identify the property by street address, if any, or if none, shall give the general location of the property with reference to streets, routes, or known landmarks. Where available, tax map identification may be used but is not required. The advertisement shall also include the time, place and terms of sale and shall give the name or names of the trustee or trustees. It shall set forth the name, address and telephone number of such person (either a trustee or the party secured or his agent or attorney) as may be able to respond to inquiries concerning the sale.
Powers and Duties of trustee in event of sale under a deed of trust
A. In the event of sale under a deed of trust, the trustee shall have the following powers and duties in addition to all others:
1. Written one-price bids may be made and shall be received by the trustee from the beneficiary or any other person for entity by announcement of the trustee at the sale. Any person other than the trustee may bid at the Virginia foreclosure sale, including a person who has submitted a written one-price bid. Upon request to the trustee or trustees, any other bidder in attendance at a foreclosure sale shall be permitted to inspect written bids. Whenever the written bid of the beneficiary is the highest bid submitted at the sale, such document shall be filed by the trustee with his account of sale. The written bid submitted pursuant to this subsection may be prepared by the beneficiary, its agent or attorney.
2. The trustee may require of any bidder at any sale a cash deposit of as much as ten per centum of the sale price (unless the deed of trust specifies a higher or lower maximum, which may be done by the words "bidder's deposit of not more than... dollars may be required," or words of like purport) before his bid is received, which shall be returned to the bidder unless the property is sold to him, otherwise to be applied to his credit in settlement or, should he fail to complete his purchase promptly, to be applied to pay the costs and expense of sale and the balance, if any, to be retained by the trustee as his compensation in connection with that foreclosure sale.
3. The trustee shall receive and receipt for the proceeds of sale, no purchaser being required to see to the application of the proceeds, account for the same to the commissioner of accounts and apply the same, first, to discharge the expenses of executing the trust, including a reasonable commission to the trustee; secondly, to discharge all taxes, levies, and assessment, with costs and interest if they have priority over the lien of the deed of trust, including the due pro rata thereof for the current year; thirdly, to discharge in the order of their priority, if any, the remaining debts and obligations secured by the deed, and any liens of record inferior to the deed of trust under which sale is made, with lawful interest; and, fourthly, the residue of the proceeds shall be paid to the grantor or his assigns; provided, however, that the trustee as to such residue shall not be bound by any inheritance, devise, conveyance, assignment or lien of or upon the grantor's equity, without actual notice thereof prior to distribution; provided further that such order of priorities shall not be changed or varied by the deed of trust.
B. Upon discharge (other than by sale by the trustee) of all debts, duties and obligations imposed by the deed upon the grantor, including any expenses incurred preparatory to sale, then upon the grantor's request the trustee shall execute and deliver a good and sufficient deed of release at the grantor's own proper costs and charges.
Rob Alley, Realtor
Virginia Real Estate Solutions
Keller Williams Charlottesville
434-975-9000
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.charlottesvilleshortsale.com/
MRIS to Add More Foreclosure Data!!
Searching for additional information on pre-foreclosures, foreclosures and auctions in the Richmond/NOVA MLS system is about to get easier. Or at least that is what the latest news flash from MRIS says. A new partnership with First American’s Realist will provide MRIS subscribers with access to a Foreclosure Activity Search Tool (FAST) directly linked to the system. Per the MRIS site the tool will provide us with access to: “Pre-foreclosure – identifies homes on which lenders or other parties have begun the default against delinquent property owners. This can help you locate short sale opportunities.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Tuesday, April 21, 2009
New Policy on Short Sales Could Reduce Foreclosures
Trying to cut its losses, Bank of America Corp. has changed its policy on short sales, making it easier for borrowers to sell their homes instead of going into foreclosure.
Until a month ago, B of A and its Countrywide Financial Corp. had required that 10% of a home's sale price go toward paying off home equity lines of credit before they would agree to a short sale. But Terry Francisco, a spokesman for the Charlotte company, said Monday that it changed its policy last month, agreeing to accept 5% of the sale price when there is no equity available to holders of the first or second liens.
The new policy "is based on the assumption that it is in the best interest of all parties involved to accept a short sale, as opposed to proceeding to a foreclosure," Francisco said. "We believed that the previous policies set an arbitrary amount that did not take into account the savings derived from proceeding with a short sale."
B of A expects the change to increase the number of short sales, he said, and even though it is releasing the liens, it reserves the right to pursue deficiency judgments against borrowers.
With foreclosure moratoriums being lifted in the past month, bankers are looking for ways to deal with an anticipated flood of distressed properties and are trying to determine which borrowers will get loan modifications and which will go into foreclosure.
Experts on short sales say they have been difficult to negotiate with lenders that are often reluctant to accept discounted payoffs when a home is sold for less than the balance due on the mortgage. But losses on foreclosures can be as much as 30% higher than on short sales, and housing prices are still falling, so servicers are slowly starting to change their policies, experts said.
One critical issue is second liens, particularly home equity lines of credit; these lenders are even more loath to permit a short sale, knowing that the primary lien will likely receive almost all the sale price, leaving little or nothing for holders of secondary notes.
Raffi Tal, chief operating officer at IShortSale Inc. in Woodland Hills, Calif., said holders of second liens are often offered payoffs of $1,000 to $3,000 in short sales, and many such deals are held up because the lenders refuse to accept these payoffs.
"The banks are holding short sales hostage," Tal said. "They don't care that a year from now they will have to take over the property and sell it for 30% less when they could have sold the property in a short sale in 30 to 90 days."
Experts have long complained that the largest lender-servicers — B of A, Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. — are also the largest holders of second liens.
The four largest banking companies own 52% of residential revolving lines of credit, or $441 billion of loans in the second lien position, according to Laurie Goodman, senior managing director at Amherst Holdings LLC's Amherst Securities Group LP. That includes $92.6 billion of second liens on their balance sheets, she said.
Tom Kelly, a spokesman for Chase Home Finance, said it has a "disciplined process" for handling short sales with HELOCs.
The process includes determining if the offer is at fair market value, which may require a new appraisal, requiring that borrowers submit hardship information to determine their ability to contribute to the shortfall and investigating for misrepresentations and "non-arm's-length transactions," Kelly said. "This doesn't happen overnight."
Norm Miller, a professor of real estate at the University of San Diego's Burnham-Moores Center for Real Estate, said 77% of foreclosures in California have second mortgages, most of them HELOCs, which often scuttle short sales.
There are other factors holding up short sales, including the commissions paid to real estate agents and mortgage insurance.
Some servicers have cut real estate commissions on short sales from the standard 6% to 3% or less, experts said. To combat that practice, Fannie Mae adopted a policy March 1 saying the sales "may not be conditioned upon a reduction of the total commission" paid to real estate agents.
Matt McCabe, the president of Loan Resolution Corp., a Scottsdale, Ariz., company that helps lenders resolve defaulted loans, said servicers "put themselves in a position" to get a short sale rejected. "Some realtors were shying away from short sales because it takes so long and commissions were being cut, even though it saves lenders a lot of money."
Rich Rollins, the president and chief executive of National Quick Sale LLC, a Jacksonville, Fla., start-up that specializes in short sales, said mortgage insurance companies also are holding up the process, because the insurers take the first 25% loss on a short sale.
Experts agree that many servicers are ill-equipped to handle the negotiations that typically involve several lenders, a defaulted borrower and a willing buyer, who typically waits months before a package is approved. In some cases, short sale offers are rejected because the calculation for the property's fair net value does not match the buyer's offer — even if that offer is higher.
"Short sales have always been the last tool that servicers ever use, because they have to coordinate with too many stakeholders in the loan, and it takes a lot of follow-up," said Cheryl Lang, the president of Integrated Mortgage Solutions, a Houston consulting firm.
Servicers typically have a small staff with knowledge of short sales working out of the loss mitigation department, which is separate from real-estate owned specialists with expertise valuing properties. Many servicers "just don't have the technology and infrastructure to deal with short sales," Lang said.
Because the majority of short sales involve multiple lien holders, a buyer often waits at least 90 days before getting a response from a lender on an offer. In a rapidly changing housing market where prices are falling every month, many buyers are unwilling to wait that long and often walk away.
"The banks really need to get short sales done faster," McCabe said.
Some specialists said the government should not have given the largest lender-servicers money through the Troubled Asset Relief Program, because they were then unwilling to accept short sale offers and are waiting for the housing market to recover.
Tony Renzi, the president of GMAC Mortgage and chief operating officer of Residential Capital LLC, said servicers are starting to see "more flexibility from second lien holders," largely because of the sheer volume of foreclosures expected. "There's more of a recognition, given that the second lien would rather take something than see the property go through liquidation and have the second lien charged off. Getting something is better than nothing."
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Until a month ago, B of A and its Countrywide Financial Corp. had required that 10% of a home's sale price go toward paying off home equity lines of credit before they would agree to a short sale. But Terry Francisco, a spokesman for the Charlotte company, said Monday that it changed its policy last month, agreeing to accept 5% of the sale price when there is no equity available to holders of the first or second liens.
The new policy "is based on the assumption that it is in the best interest of all parties involved to accept a short sale, as opposed to proceeding to a foreclosure," Francisco said. "We believed that the previous policies set an arbitrary amount that did not take into account the savings derived from proceeding with a short sale."
B of A expects the change to increase the number of short sales, he said, and even though it is releasing the liens, it reserves the right to pursue deficiency judgments against borrowers.
With foreclosure moratoriums being lifted in the past month, bankers are looking for ways to deal with an anticipated flood of distressed properties and are trying to determine which borrowers will get loan modifications and which will go into foreclosure.
Experts on short sales say they have been difficult to negotiate with lenders that are often reluctant to accept discounted payoffs when a home is sold for less than the balance due on the mortgage. But losses on foreclosures can be as much as 30% higher than on short sales, and housing prices are still falling, so servicers are slowly starting to change their policies, experts said.
One critical issue is second liens, particularly home equity lines of credit; these lenders are even more loath to permit a short sale, knowing that the primary lien will likely receive almost all the sale price, leaving little or nothing for holders of secondary notes.
Raffi Tal, chief operating officer at IShortSale Inc. in Woodland Hills, Calif., said holders of second liens are often offered payoffs of $1,000 to $3,000 in short sales, and many such deals are held up because the lenders refuse to accept these payoffs.
"The banks are holding short sales hostage," Tal said. "They don't care that a year from now they will have to take over the property and sell it for 30% less when they could have sold the property in a short sale in 30 to 90 days."
Experts have long complained that the largest lender-servicers — B of A, Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. — are also the largest holders of second liens.
The four largest banking companies own 52% of residential revolving lines of credit, or $441 billion of loans in the second lien position, according to Laurie Goodman, senior managing director at Amherst Holdings LLC's Amherst Securities Group LP. That includes $92.6 billion of second liens on their balance sheets, she said.
Tom Kelly, a spokesman for Chase Home Finance, said it has a "disciplined process" for handling short sales with HELOCs.
The process includes determining if the offer is at fair market value, which may require a new appraisal, requiring that borrowers submit hardship information to determine their ability to contribute to the shortfall and investigating for misrepresentations and "non-arm's-length transactions," Kelly said. "This doesn't happen overnight."
Norm Miller, a professor of real estate at the University of San Diego's Burnham-Moores Center for Real Estate, said 77% of foreclosures in California have second mortgages, most of them HELOCs, which often scuttle short sales.
There are other factors holding up short sales, including the commissions paid to real estate agents and mortgage insurance.
Some servicers have cut real estate commissions on short sales from the standard 6% to 3% or less, experts said. To combat that practice, Fannie Mae adopted a policy March 1 saying the sales "may not be conditioned upon a reduction of the total commission" paid to real estate agents.
Matt McCabe, the president of Loan Resolution Corp., a Scottsdale, Ariz., company that helps lenders resolve defaulted loans, said servicers "put themselves in a position" to get a short sale rejected. "Some realtors were shying away from short sales because it takes so long and commissions were being cut, even though it saves lenders a lot of money."
Rich Rollins, the president and chief executive of National Quick Sale LLC, a Jacksonville, Fla., start-up that specializes in short sales, said mortgage insurance companies also are holding up the process, because the insurers take the first 25% loss on a short sale.
Experts agree that many servicers are ill-equipped to handle the negotiations that typically involve several lenders, a defaulted borrower and a willing buyer, who typically waits months before a package is approved. In some cases, short sale offers are rejected because the calculation for the property's fair net value does not match the buyer's offer — even if that offer is higher.
"Short sales have always been the last tool that servicers ever use, because they have to coordinate with too many stakeholders in the loan, and it takes a lot of follow-up," said Cheryl Lang, the president of Integrated Mortgage Solutions, a Houston consulting firm.
Servicers typically have a small staff with knowledge of short sales working out of the loss mitigation department, which is separate from real-estate owned specialists with expertise valuing properties. Many servicers "just don't have the technology and infrastructure to deal with short sales," Lang said.
Because the majority of short sales involve multiple lien holders, a buyer often waits at least 90 days before getting a response from a lender on an offer. In a rapidly changing housing market where prices are falling every month, many buyers are unwilling to wait that long and often walk away.
"The banks really need to get short sales done faster," McCabe said.
Some specialists said the government should not have given the largest lender-servicers money through the Troubled Asset Relief Program, because they were then unwilling to accept short sale offers and are waiting for the housing market to recover.
Tony Renzi, the president of GMAC Mortgage and chief operating officer of Residential Capital LLC, said servicers are starting to see "more flexibility from second lien holders," largely because of the sheer volume of foreclosures expected. "There's more of a recognition, given that the second lien would rather take something than see the property go through liquidation and have the second lien charged off. Getting something is better than nothing."
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Thursday, April 16, 2009
Market Comment and Indicated Rates 4/16/2009
Conventional 30 4.750 0 + 1
Conventional 15 4.500 0 + 1
FHA/VA 30 4.875 0 + 1
FHA/VA 15 5.000 0 + 0
"There was mixed economic news this morning, as Housing Starts and Building Permits came in below expectations and showed that new home construction remains weak.
But on the positive side, there was some good news from the Labor Department as Initial Jobless Claims came in quite a bit below expectations. The past two weeks' improvement in Initial Jobless Claims is encouraging. And there was more good news from the financial sector as JPMorgan Chase reported better than expected earnings for the 1st quarter of 2009 on surging investment banking profits and fixed income trading revenue.
Currently, Bonds continue to trade near a key support level. I recommend floating for now, but I will let you know if things change."
Posted by Leonard Winslow of Dominion Trust Mortgage
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Conventional 15 4.500 0 + 1
FHA/VA 30 4.875 0 + 1
FHA/VA 15 5.000 0 + 0
"There was mixed economic news this morning, as Housing Starts and Building Permits came in below expectations and showed that new home construction remains weak.
But on the positive side, there was some good news from the Labor Department as Initial Jobless Claims came in quite a bit below expectations. The past two weeks' improvement in Initial Jobless Claims is encouraging. And there was more good news from the financial sector as JPMorgan Chase reported better than expected earnings for the 1st quarter of 2009 on surging investment banking profits and fixed income trading revenue.
Currently, Bonds continue to trade near a key support level. I recommend floating for now, but I will let you know if things change."
Posted by Leonard Winslow of Dominion Trust Mortgage
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Foreclosures rise 9% in the First Quarter
Ris Media published a news story stating that Foreclosures have Risen 9% in the First Quarter of 2009. This is a real problem in the country and Charlottesville is starting to catch up quickly. It appears as if Charlottesville is a year behind Northern Virginia, which 50-75% of their market is driven by Short Sales, Foreclosures, and Bank Owned Properties. The foreclosure wave is heading our way fast.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
123 Foreclosure Notices In Charlottesville
There are currently 123 posted foreclosure notices in Charlottesville and the surrounding area right now. We have seen this number grow consistently over the last several months. Its time to stop thinking that Charlottesville is insulated from the foreclosure problem.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Friday, April 10, 2009
Charlottesville REO Properties - Currently Available by Freddie Mac April 10, 2009
Here are the current active Charlottesville REO properties from Freddie Mac:
1.)Loan: 373521804
Address: 100 HARTFORD COURT, CHARLOTTESVILLE, VA
Rooms: 8 Bed: 3 Bath: 2.0
Price: 144,087.00
Offered By: LONG & FOSTER RE
2.)Loan: 328861340
Address: 194 BROOKWOOD DR, CHARLOTTESVILLE, VA
Rooms: 11 Bed: 3 Bath: 2.5
Price: 344,900.00
Offered By: LONG & FOSTER RE
Zip Code: 22963
3.)Loan: 422232033
Address: 860 JEFFERSON DR E, PALMYRA, VA
Rooms: 6 Bed: 4 Bath: 2.0
Price: 131,900.00
Offered By: REAL ESTATE III INC
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
1.)Loan: 373521804
Address: 100 HARTFORD COURT, CHARLOTTESVILLE, VA
Rooms: 8 Bed: 3 Bath: 2.0
Price: 144,087.00
Offered By: LONG & FOSTER RE
2.)Loan: 328861340
Address: 194 BROOKWOOD DR, CHARLOTTESVILLE, VA
Rooms: 11 Bed: 3 Bath: 2.5
Price: 344,900.00
Offered By: LONG & FOSTER RE
Zip Code: 22963
3.)Loan: 422232033
Address: 860 JEFFERSON DR E, PALMYRA, VA
Rooms: 6 Bed: 4 Bath: 2.0
Price: 131,900.00
Offered By: REAL ESTATE III INC
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Wednesday, April 8, 2009
Charlottesville Short Sale Experts
My group and I have successfully closed a perfect 21/21 short sales in the last year. The average in the state of Virginia is only 25% of short sales are successful. Call the Avery Group if you need help to avoid foreclosure. 540-250-3275 (cell)
roballey@roywheeler.com (email)
434-975-9000 (office)
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
roballey@roywheeler.com (email)
434-975-9000 (office)
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Indicated rates and market comment
Conventional 30 4.875 0 + 1
Conventional 15 4.500 0 + 1
FHA/VA 30 5.000 0 + 1
FHA/VA 15 5.000 0 + 0
"Bonds are modestly higher in early trading this morning, while Stocks are sinking due to more negative talk about the financial system.
In the news today, the International Monetary Fund will reportedly release new forecasts that suggest toxic assets in the US could reach about $3 Trillion, which is $1 Trillion more than the forecast three months ago. Also adding selling pressure to Stocks is word from hedge fund giant George Soros that the US banking system is insolvent and that the economy won't recover in 2009.
With Stocks under selling pressure currently and Bonds holding above a floor of support, I recommend floating for now. If the situation changes, however, I will let you know."
Submitted by Leonard Winslow of Dominion Trust Mortgage
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
Conventional 15 4.500 0 + 1
FHA/VA 30 5.000 0 + 1
FHA/VA 15 5.000 0 + 0
"Bonds are modestly higher in early trading this morning, while Stocks are sinking due to more negative talk about the financial system.
In the news today, the International Monetary Fund will reportedly release new forecasts that suggest toxic assets in the US could reach about $3 Trillion, which is $1 Trillion more than the forecast three months ago. Also adding selling pressure to Stocks is word from hedge fund giant George Soros that the US banking system is insolvent and that the economy won't recover in 2009.
With Stocks under selling pressure currently and Bonds holding above a floor of support, I recommend floating for now. If the situation changes, however, I will let you know."
Submitted by Leonard Winslow of Dominion Trust Mortgage
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/
Tuesday, April 7, 2009
Re-Defaults Still Rising
The Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) released their Mortgage Metrics Report for the fourth quarter of 2008 on Friday, which showed that re-default rates following loan workouts to help homeowners avoid foreclosure are still escalating.
Consistent with last quarter’s findings, the federal agencies reported re-default rates on modified mortgages were high and progressively rose during the first three quarters of 2008, with loans modified in the third quarter showing the highest re-default rates. The percentage of modified loans that were seriously delinquent (60 or more days past due) after eight months was 41 percent for loans modified in the first quarter and 46 percent for loans modified in the second quarter. The report noted that this trend appears to continue for loans modified during the third quarter as well.
In addition, the federal agencies said that credit quality continued to decline in the fourth quarter of 2008. At the end of the year, just under 90 percent of mortgages were performing, compared with 93 percent at the end of September 2008. This decline in credit quality was evident in all loan risk categories, with subprime mortgages showing the highest level of serious delinquencies.
However, the biggest percentage jump was in low-risk prime mortgages, which accounts for nearly two-thirds of all mortgages serviced by the reporting institutions. At the end of the fourth quarter, 2.4 percent of prime mortgages were seriously delinquent, more than double the 1.1 percent recorded at the end of March 2008.
The agencies said home retention actions—loan modifications and payment plans—increased by more than 11 percent in the fourth quarter. Although the number of modifications increased in the fourth quarter, they declined as a percentage of all new home retention actions, from 52 percent in the second quarter, to 43 percent in the third quarter and 40 percent in the fourth quarter. The report noted that this declining percentage may have resulted from the growing prevalence of trial modifications reported as payment plans.
Although the OCC and OTS have asked lenders to submit additional details on their loss mitigation efforts to better evaluate the effectiveness of workouts, the fourth quarter report said the reasons for rising re-default rates are not clear. As noted in the previous quarter’s report, the agencies said, high re-defaults could be a result of the worsening economy, excessive borrower leverage, or poor initial underwriting.
The report does, however, provide insights into the extent that changes in levels of monthly payments affect re-default rates. For this quarterly report, the OCC and OTS gathered re-default data on modifications in four categories: ones that (1) reduced monthly payments by more than 10 percent; (2) reduced monthly payments by 10 percent or less; (3) left monthly payments unchanged; and (4) increased monthly payments.
Overall for 2008, about 42 percent of modified loans resulted in reduced payments, 27 percent in unchanged payments, and 32 percent actually increased payments. Workouts that reduced payments increased significantly in the fourth quarter, the agencies pointed out, to more than 50 percent of all modifications.
According to the report, servicers cited several reasons for mortgage modifications that did not result in reduced payments. For example, a servicer could freeze an adjustable rate mortgage’s interest rate when the borrower faced the risk of imminent default, rather than allowing it to reset to the higher rate stated in the loan contract. Some modifications resulted in higher monthly payments because missed principal and interest payments were capitalized and added to the loan, which in more benign economic times could result in more sustainable modifications.
Servicers also said their flexibility to reduce payments was in many cases constrained by servicing agreements with the GSEs and other private investors that defined the type and the amount of modification permitted. Recent changes in some government agency and private label servicing standards, however, should afford servicers more flexibility.
The data gathered by the OCC and OTS demonstrated that re-default rates were consistently lower for modifications that resulted in lower monthly payments. When modifications decreased monthly payments by more than 10 percent, only about 23 percent of the loans became seriously delinquent six months later. By contrast, 51 percent of the loans in which payments remained unchanged were seriously delinquent after six months. And loan modifications in which payments increased, the number was 46 percent.
Comptroller of the Currency John C. Dugan, said, “This new data shows that, in the current stressful environment, modification strategies that result in unchanged or increased mortgage payments run the risk of unacceptably high re-default rates. They should only be used on a case-by-case basis where borrowers and servicers can have confidence that the modification is likely to be sustainable.”
Dugan continued, “The data also showed that modifications that reduced monthly payments significantly had much lower re-default rates. That result is fully in line with the approach taken in the administration’s Making Home Affordable program, which is based on lowering monthly payments as the means to achieve sustainable modifications.”
OTS Acting Director John E. Bowman noted that the types of loan modifications proving to be the most sustainable increased significantly from the third quarter to the fourth quarter. These modifications, which reduced homeowners’ monthly payments the most and resulted in fewer re-defaults, rose to more than 37 percent of all modifications, from 26 percent in the previous quarter.
“The trend toward lowering payments to make home mortgages more affordable is moving in the right direction,” Bowman said. “The continuing decline in credit quality underscores the need for mortgage servicers to increase their efforts to modify home mortgages. Sustainable and affordable mortgages is a goal we all share for keeping more Americans in their homes.”
Based on the results of the report, the OCC and OTS directed each of the banks and thrifts that provide data for the Mortgage Metrics report to assess their 2008 loan modifications – particularly those that increased monthly payments or left them unchanged – to ensure that criteria applied to those loans, and to loans modified in the future, result in modifications that are “affordable and sustainable.”
The quarterly Mortgage Metrics Report released jointly by the OCC and OTS covers mortgages serviced by nine large banks and four thrifts, constituting approximately two-thirds of all outstanding mortgages in the United States.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Consistent with last quarter’s findings, the federal agencies reported re-default rates on modified mortgages were high and progressively rose during the first three quarters of 2008, with loans modified in the third quarter showing the highest re-default rates. The percentage of modified loans that were seriously delinquent (60 or more days past due) after eight months was 41 percent for loans modified in the first quarter and 46 percent for loans modified in the second quarter. The report noted that this trend appears to continue for loans modified during the third quarter as well.
In addition, the federal agencies said that credit quality continued to decline in the fourth quarter of 2008. At the end of the year, just under 90 percent of mortgages were performing, compared with 93 percent at the end of September 2008. This decline in credit quality was evident in all loan risk categories, with subprime mortgages showing the highest level of serious delinquencies.
However, the biggest percentage jump was in low-risk prime mortgages, which accounts for nearly two-thirds of all mortgages serviced by the reporting institutions. At the end of the fourth quarter, 2.4 percent of prime mortgages were seriously delinquent, more than double the 1.1 percent recorded at the end of March 2008.
The agencies said home retention actions—loan modifications and payment plans—increased by more than 11 percent in the fourth quarter. Although the number of modifications increased in the fourth quarter, they declined as a percentage of all new home retention actions, from 52 percent in the second quarter, to 43 percent in the third quarter and 40 percent in the fourth quarter. The report noted that this declining percentage may have resulted from the growing prevalence of trial modifications reported as payment plans.
Although the OCC and OTS have asked lenders to submit additional details on their loss mitigation efforts to better evaluate the effectiveness of workouts, the fourth quarter report said the reasons for rising re-default rates are not clear. As noted in the previous quarter’s report, the agencies said, high re-defaults could be a result of the worsening economy, excessive borrower leverage, or poor initial underwriting.
The report does, however, provide insights into the extent that changes in levels of monthly payments affect re-default rates. For this quarterly report, the OCC and OTS gathered re-default data on modifications in four categories: ones that (1) reduced monthly payments by more than 10 percent; (2) reduced monthly payments by 10 percent or less; (3) left monthly payments unchanged; and (4) increased monthly payments.
Overall for 2008, about 42 percent of modified loans resulted in reduced payments, 27 percent in unchanged payments, and 32 percent actually increased payments. Workouts that reduced payments increased significantly in the fourth quarter, the agencies pointed out, to more than 50 percent of all modifications.
According to the report, servicers cited several reasons for mortgage modifications that did not result in reduced payments. For example, a servicer could freeze an adjustable rate mortgage’s interest rate when the borrower faced the risk of imminent default, rather than allowing it to reset to the higher rate stated in the loan contract. Some modifications resulted in higher monthly payments because missed principal and interest payments were capitalized and added to the loan, which in more benign economic times could result in more sustainable modifications.
Servicers also said their flexibility to reduce payments was in many cases constrained by servicing agreements with the GSEs and other private investors that defined the type and the amount of modification permitted. Recent changes in some government agency and private label servicing standards, however, should afford servicers more flexibility.
The data gathered by the OCC and OTS demonstrated that re-default rates were consistently lower for modifications that resulted in lower monthly payments. When modifications decreased monthly payments by more than 10 percent, only about 23 percent of the loans became seriously delinquent six months later. By contrast, 51 percent of the loans in which payments remained unchanged were seriously delinquent after six months. And loan modifications in which payments increased, the number was 46 percent.
Comptroller of the Currency John C. Dugan, said, “This new data shows that, in the current stressful environment, modification strategies that result in unchanged or increased mortgage payments run the risk of unacceptably high re-default rates. They should only be used on a case-by-case basis where borrowers and servicers can have confidence that the modification is likely to be sustainable.”
Dugan continued, “The data also showed that modifications that reduced monthly payments significantly had much lower re-default rates. That result is fully in line with the approach taken in the administration’s Making Home Affordable program, which is based on lowering monthly payments as the means to achieve sustainable modifications.”
OTS Acting Director John E. Bowman noted that the types of loan modifications proving to be the most sustainable increased significantly from the third quarter to the fourth quarter. These modifications, which reduced homeowners’ monthly payments the most and resulted in fewer re-defaults, rose to more than 37 percent of all modifications, from 26 percent in the previous quarter.
“The trend toward lowering payments to make home mortgages more affordable is moving in the right direction,” Bowman said. “The continuing decline in credit quality underscores the need for mortgage servicers to increase their efforts to modify home mortgages. Sustainable and affordable mortgages is a goal we all share for keeping more Americans in their homes.”
Based on the results of the report, the OCC and OTS directed each of the banks and thrifts that provide data for the Mortgage Metrics report to assess their 2008 loan modifications – particularly those that increased monthly payments or left them unchanged – to ensure that criteria applied to those loans, and to loans modified in the future, result in modifications that are “affordable and sustainable.”
The quarterly Mortgage Metrics Report released jointly by the OCC and OTS covers mortgages serviced by nine large banks and four thrifts, constituting approximately two-thirds of all outstanding mortgages in the United States.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Mortgage Industry Warms to Obama's Foreclosure Relief Plan
Cities across the country say they are seeing a disturbing new practice when it comes to foreclosures – more and more, banks are opting not to take possession of foreclosed properties because the costs of maintenance, repairs, and legal fees outweigh the still-declining value of the property.
According to a New York Times report published over the weekend, these bank walkaways, as they are being called, are spreading through cities across the nation, from Jacksonville, Florida, to South Bend, Indiana, and Kansas City, Missouri.
In Buffalo, New York, the Times reports that the problem has reached “epidemic” proportions in recent months. In fact, the city of Buffalo has brought a lawsuit against 37 different banks, the newspaper said, claiming they are responsible for the deterioration of more than 57 abandoned homes because they “walked away” from taking ownership of and maintaining the properties following foreclosure proceedings.
Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law, told the Times, “It [bank walkaways] is what some of us think is the next wave of the crisis.”
According to the Times, experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.
While a walkaway may be the most cost-effective option for banks in today's market – given the fact that lenders can lose up to 50 percent of their investment in a foreclosure – it offers little assistance to the homeowners, who are still on the title and therefore legally responsible for the property's upkeep under city ordinances. In addition, the homeowner is usually unaware of the bank's decision not to repossess the home until after the home has already been sitting vacant, leaving it vulnerable to vandalism and contributing to neighborhood blight.
Larry Rothenberg, a lawyer for creditors' rights firm Weltman, Weinberg & Reis, explained to the Times, “Oftentimes when the foreclosure starts out, it’s a viable property, but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
According to a New York Times report published over the weekend, these bank walkaways, as they are being called, are spreading through cities across the nation, from Jacksonville, Florida, to South Bend, Indiana, and Kansas City, Missouri.
In Buffalo, New York, the Times reports that the problem has reached “epidemic” proportions in recent months. In fact, the city of Buffalo has brought a lawsuit against 37 different banks, the newspaper said, claiming they are responsible for the deterioration of more than 57 abandoned homes because they “walked away” from taking ownership of and maintaining the properties following foreclosure proceedings.
Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law, told the Times, “It [bank walkaways] is what some of us think is the next wave of the crisis.”
According to the Times, experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.
While a walkaway may be the most cost-effective option for banks in today's market – given the fact that lenders can lose up to 50 percent of their investment in a foreclosure – it offers little assistance to the homeowners, who are still on the title and therefore legally responsible for the property's upkeep under city ordinances. In addition, the homeowner is usually unaware of the bank's decision not to repossess the home until after the home has already been sitting vacant, leaving it vulnerable to vandalism and contributing to neighborhood blight.
Larry Rothenberg, a lawyer for creditors' rights firm Weltman, Weinberg & Reis, explained to the Times, “Oftentimes when the foreclosure starts out, it’s a viable property, but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
M&I Extends Foreclosure Moratorium
Milwaukee, Wisconsin-based Marshall & Ilsley Corporation (M&I) announced this week that it is extending its foreclosure moratorium through June 30, 2009. M&I's initial 90-day moratorium was announced on December 18, 2008, as part of the lender's Homeowner Assistance Program.
In addition to the freeze on foreclosure proceedings, M&I's Homeowner Assistance Program features streamlined assistance for potentially distressed homeowners who the bank identifies as being at-risk and initiates contact to offer assistance. The program also offers several refinancing options, including term extensions and reduced rates, that can be used to reduce homeowners' monthly payments.
Mark Furlong, president and CEO of Marshall & Ilsley Corporation, said, "Through our Homeowner Assistance Program, M&I bankers are available to assist homeowners who may be experiencing financial stress, with the ultimate goal of helping them stay in their homes as they recover from their economic challenges. Our objective is to proactively work with our customers, including offering guidance to families before they are faced with the possibility of foreclosure."
Mayor of Milwaukee Tom Barrett commended M&I for its home retention efforts. "M&I, through this important program, is making noteworthy progress in keeping many families in their homes," Barrett said. "We applaud them for extending the moratorium so even more families can benefit during this challenging economic time."
M&I's foreclosure suspension applies to all owner-occupied residential loans for customers who agree to work in “good faith” to reach a successful repayment agreement. The moratorium covers applicable loans in all M&I markets.
Founded in 1847, Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 193 offices across the state. M&I also has locations throughout Arizona, Minnesota, and along Florida's West Coast and Central Florida. The bank also has a presence in Indianapolis, Kansas City, St. Louis, and Las Vegas.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
In addition to the freeze on foreclosure proceedings, M&I's Homeowner Assistance Program features streamlined assistance for potentially distressed homeowners who the bank identifies as being at-risk and initiates contact to offer assistance. The program also offers several refinancing options, including term extensions and reduced rates, that can be used to reduce homeowners' monthly payments.
Mark Furlong, president and CEO of Marshall & Ilsley Corporation, said, "Through our Homeowner Assistance Program, M&I bankers are available to assist homeowners who may be experiencing financial stress, with the ultimate goal of helping them stay in their homes as they recover from their economic challenges. Our objective is to proactively work with our customers, including offering guidance to families before they are faced with the possibility of foreclosure."
Mayor of Milwaukee Tom Barrett commended M&I for its home retention efforts. "M&I, through this important program, is making noteworthy progress in keeping many families in their homes," Barrett said. "We applaud them for extending the moratorium so even more families can benefit during this challenging economic time."
M&I's foreclosure suspension applies to all owner-occupied residential loans for customers who agree to work in “good faith” to reach a successful repayment agreement. The moratorium covers applicable loans in all M&I markets.
Founded in 1847, Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 193 offices across the state. M&I also has locations throughout Arizona, Minnesota, and along Florida's West Coast and Central Florida. The bank also has a presence in Indianapolis, Kansas City, St. Louis, and Las Vegas.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Gov. Agencies Crack Down on Foreclosure Rescue Scams
The U.S. Department of the Treasury, the U.S. Department of Justice, the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC), and the Attorney General of Illinois announced the launch of a new initiative on Monday aimed at foreclosure rescue scams and loan modification fraud.
In a press briefing and conference call with the media, government officials had harsh words for those companies they say are preying on vulnerable homeowners, wielding such derogations as “unscrupulous,” “cheating,” and “lying” to describe supposed mortgage modification and foreclosure relief companies out to make a quick buck with their deceptive schemes.
According to Treasury Secretary Timothy Geithner, these marauders “callously rob Americans of their savings and potentially their homes,” and with the announcement of the government's nation-wide homeowner assistance plan, Geithner says they have begun intensifying their tactics.
The multi-agency anti-fraud initiative intends to align responses from federal law enforcement, state investigators and prosecutors, civil enforcement authorities, and the private sector to protect homeowners seeking assistance under the administration’s Making Home Affordable program from criminals and their predatory plots.
Geithner announced two specific actions as part of the crack down on fraud. First, he said, Treasury’s Financial Crimes Enforcement Network, known as FinCEN, is issuing an advisory to help financial institutions spot and report questionable loan modification schemes. The advisory provides “red flags” for financial institutions that may indicate a loan modification or foreclosure rescue scam.
Second, Geithner said, is the launch of a targeted effort - to be coordinated by FinCEN - to deter fraudulent activity and combat fraudulent loan modification schemes. FinCEN, working with partners from the law enforcement and regulatory communities, will utilize information provided by the financial industry, along with other information supplied by participating agencies, to identify possible loan modification fraud suspects for civil and criminal investigations. FinCEN will also help law enforcement agencies streamline and coordinate their efforts so that the resources of multiple investigative and prosecutorial agencies are efficiently utilized and remain focused.
Geithner said, “What today’s announcement means for American homeowners is this: We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar. And we will increase our knowledge of how these companies operate, enhancing our efforts to identify and prosecute every individual involved in a mortgage rescue scam.”
Geithner said he was “especially pleased” that Illinois Attorney General Lisa Madigan had joined the inter-agency team for the announcement, demonstrating the federal-state partnership to target mortgage loan modification and foreclosure relief scams.
Madigan has fought hard against such schemes targeted at distressed homeowners and has prosecuted 24 different companies for foreclosure relief fraud in her state. According to Madigan, so-called foreclosure rescues and mortgage consultants who demand money before rendering services are “almost always a scam.” Madigan warned that up-front fees, which are strictly illegal in many states, should serve as an immediate warning of a probable scam.
Often these suspect organizations bear official-sounding names that give the impression they are associated with new federal mortgage programs or government-related organizations. At the press briefing announcement on Monday, FTC Chairman Jon Leibowitz specifically called out Northridge, California-based Federal Loan Modification Law Center as one of the companies in his sights for investigation. Leibowitz said the company, which has recently launched a massive national radio ad campaign, has no affiliation with the federal government and is a prime example of the type of fraudulent organization the inter-agency taskforce plans to go after.
The FTC has already issued warning letters to 71 companies it says are running suspicious advertisements and has filed official complaints against Federal Loan Modification Law Center, as well as Newport Beach, California-based Bailout.hud-gov.us and Clearwater, Florida-based Home Assure LLC.
Last month, the FTC filed suits against two other companies – Hope Now Modifications LLC and New Hope Modifications LLC – for falsely representing that they were aligned with the government-sanctioned HOPE NOW Alliance and erroneously claiming they secured loan modifications for all clients.
HUD Secretary Shaun Donovan, stressed that free foreclosure assistance and counseling is available to help homeowners take advantage of the government's mortgage relief program. Donovan said, literature outlining legitimate foreclosure assistance is being distributed, starting Monday, to HUD-related partners, including HUD field offices, state housing agencies, and non-profit HUD-approved counselors, among others.
In addition, NeighborWorks, a nonprofit housing and foreclosure counseling group, has plans to launch a $6 million outreach program to alert homeowners of foreclosure rescue scams. And government officials told reporters that several banks, including Chase and SunTrust, are distributing fraud education flyers through their home retention centers and local branches to raise awareness among homeowners.
According to Attorney General Eric Holder, the FBI currently has about 2,100 mortgage fraud cases under investigation, a 400 percent increase from five years ago.
In the press briefing Monday morning, Geithner acknowledged the efforts of Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP). Geithner said Barofsky has been actively working with the Office of Financial Stability to build fraud protections into the government's relief programs, including the Making Home Affordable program.
Geithner noted that Barofsky has a history of successful mortgage fraud prosecutions, and said the Treasury has already adopted Barofsky's recommendation that every modification package include a cover sheet containing fraud warnings and a reference to the special inspector general’s fraud hotline, through which Barofsky's office stands ready to receive any referrals concerning fraud related to the TARP program.
“American homeowners have been through enough over the past two years,” Geithner concluded. “The last thing they need now is to be taken advantage of as they try to hold on to their homes. Today’s announcement underscores that this administration is doing everything we can to prevent that from happening.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
In a press briefing and conference call with the media, government officials had harsh words for those companies they say are preying on vulnerable homeowners, wielding such derogations as “unscrupulous,” “cheating,” and “lying” to describe supposed mortgage modification and foreclosure relief companies out to make a quick buck with their deceptive schemes.
According to Treasury Secretary Timothy Geithner, these marauders “callously rob Americans of their savings and potentially their homes,” and with the announcement of the government's nation-wide homeowner assistance plan, Geithner says they have begun intensifying their tactics.
The multi-agency anti-fraud initiative intends to align responses from federal law enforcement, state investigators and prosecutors, civil enforcement authorities, and the private sector to protect homeowners seeking assistance under the administration’s Making Home Affordable program from criminals and their predatory plots.
Geithner announced two specific actions as part of the crack down on fraud. First, he said, Treasury’s Financial Crimes Enforcement Network, known as FinCEN, is issuing an advisory to help financial institutions spot and report questionable loan modification schemes. The advisory provides “red flags” for financial institutions that may indicate a loan modification or foreclosure rescue scam.
Second, Geithner said, is the launch of a targeted effort - to be coordinated by FinCEN - to deter fraudulent activity and combat fraudulent loan modification schemes. FinCEN, working with partners from the law enforcement and regulatory communities, will utilize information provided by the financial industry, along with other information supplied by participating agencies, to identify possible loan modification fraud suspects for civil and criminal investigations. FinCEN will also help law enforcement agencies streamline and coordinate their efforts so that the resources of multiple investigative and prosecutorial agencies are efficiently utilized and remain focused.
Geithner said, “What today’s announcement means for American homeowners is this: We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar. And we will increase our knowledge of how these companies operate, enhancing our efforts to identify and prosecute every individual involved in a mortgage rescue scam.”
Geithner said he was “especially pleased” that Illinois Attorney General Lisa Madigan had joined the inter-agency team for the announcement, demonstrating the federal-state partnership to target mortgage loan modification and foreclosure relief scams.
Madigan has fought hard against such schemes targeted at distressed homeowners and has prosecuted 24 different companies for foreclosure relief fraud in her state. According to Madigan, so-called foreclosure rescues and mortgage consultants who demand money before rendering services are “almost always a scam.” Madigan warned that up-front fees, which are strictly illegal in many states, should serve as an immediate warning of a probable scam.
Often these suspect organizations bear official-sounding names that give the impression they are associated with new federal mortgage programs or government-related organizations. At the press briefing announcement on Monday, FTC Chairman Jon Leibowitz specifically called out Northridge, California-based Federal Loan Modification Law Center as one of the companies in his sights for investigation. Leibowitz said the company, which has recently launched a massive national radio ad campaign, has no affiliation with the federal government and is a prime example of the type of fraudulent organization the inter-agency taskforce plans to go after.
The FTC has already issued warning letters to 71 companies it says are running suspicious advertisements and has filed official complaints against Federal Loan Modification Law Center, as well as Newport Beach, California-based Bailout.hud-gov.us and Clearwater, Florida-based Home Assure LLC.
Last month, the FTC filed suits against two other companies – Hope Now Modifications LLC and New Hope Modifications LLC – for falsely representing that they were aligned with the government-sanctioned HOPE NOW Alliance and erroneously claiming they secured loan modifications for all clients.
HUD Secretary Shaun Donovan, stressed that free foreclosure assistance and counseling is available to help homeowners take advantage of the government's mortgage relief program. Donovan said, literature outlining legitimate foreclosure assistance is being distributed, starting Monday, to HUD-related partners, including HUD field offices, state housing agencies, and non-profit HUD-approved counselors, among others.
In addition, NeighborWorks, a nonprofit housing and foreclosure counseling group, has plans to launch a $6 million outreach program to alert homeowners of foreclosure rescue scams. And government officials told reporters that several banks, including Chase and SunTrust, are distributing fraud education flyers through their home retention centers and local branches to raise awareness among homeowners.
According to Attorney General Eric Holder, the FBI currently has about 2,100 mortgage fraud cases under investigation, a 400 percent increase from five years ago.
In the press briefing Monday morning, Geithner acknowledged the efforts of Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP). Geithner said Barofsky has been actively working with the Office of Financial Stability to build fraud protections into the government's relief programs, including the Making Home Affordable program.
Geithner noted that Barofsky has a history of successful mortgage fraud prosecutions, and said the Treasury has already adopted Barofsky's recommendation that every modification package include a cover sheet containing fraud warnings and a reference to the special inspector general’s fraud hotline, through which Barofsky's office stands ready to receive any referrals concerning fraud related to the TARP program.
“American homeowners have been through enough over the past two years,” Geithner concluded. “The last thing they need now is to be taken advantage of as they try to hold on to their homes. Today’s announcement underscores that this administration is doing everything we can to prevent that from happening.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
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