Short Sale Blog

Here is the latest short sale news at Seattle Short Sales. We assist hundreds of Seattle area homeowners with short selling their home and avoiding foreclosure.

Dual-Tracking: Can my Lender Continue Foreclosure Proceedings While I Negotiate a Short Sale?

Seattle Short Sales - Thursday, March 07, 2013

The National Mortgage Settlement of February 2012 provides for relief and compensation to borrowers who lost their homes to foreclosure, and for some borrowers who are threatened with foreclosure. However, it does not have provisions to help everyone. One common misunderstanding of what the terms of that mortgage settlement mean is with respect to dual-tracking: where lenders continue with foreclosure proceedings even while a loan modification or short sale is being negotiated.

The National Mortgage Settlement has a provision in it that forbids lenders from dual-tracking - but this provision applies only to loan modifications. Banks may not foreclose on a homeowner while they are under consideration for a loan modification. However, there is no proviso that prohibits banks from proceeding with foreclosure while the homeowner is working on negotiating a short sale.

The wording is confusing - the "no dual-tracking" provision may make it sound like this also applies to short sales - so some lenders have been working to clear up any confusion. In January, Bank of America sent a notice out to short sale agents specifying: “As of January 15, 2013, there will no longer be a temporary foreclosure hold during the Cooperative Short Sale property marketing phase. We may begin or continue the foreclosure process up until a submitted offer to purchase the property is approved by all relevant parties.”

The terms of the Settlement state only that the lender/servicer may not proceed with foreclosure if the short sale has been approved by all parties. Two cautionary notes here are:

  • this means that they may proceed with foreclosure even while a short sale is being negotiated
  • this provision only applies to the five servicers who are party to the National Mortgage Settlement: Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo.

Other lenders may still continue to dual-track foreclosure proceedings, even though a short sale is being negotiated and is close to approval - or even approved and about to close! For example, this short sale approval that we negotiated in February with Ocwen, a lender that is not party to the National Mortgage Settlement, states in its first paragraph “Ocwen will NOT postpone a scheduled foreclosure sale, even if there is a pending sales contract.”

The take-away is to be efficient with short sale negotiation: do all that you can to make the process move forward quickly. A lender’s foreclosure department may not even be in contact with their short sale department - so pay attention to any foreclosure notices, such as demand letters or Notice of Trustee Sale communications, even if you have a short sale in the works. If there is a Trustee Sale scheduled, make sure that your short sale will close before that sale date.

Seattle Short Sales has a team of experienced and successful real estate specialists dedicated to working with distressed homeowners. We close, on average, 12% of all short sales per month in King County. In the last 24 months, we have negotiated over 756 short sale approvals, and discounted over $81 million of mortgage debt for distressed homeowners.

In addition to our short sales negotiators, our team includes dedicated professionals advising and advocating for homeowners in the fields of: loan modifications, bankruptcy, debt settlement and collection defense. As part of our service, we offer unlimited attorney and CPA consultations.

If you are a homeowner who is struggling to make ends meet, and would like to learn more about the options available to you, please go to: http://seattleshortsales.com/homeowners/
 

Cash Incentives and Relocation Assistance for Short Sales: A Guide to Government and Lender Programs

Seattle Short Sales - Wednesday, February 20, 2013

Only a few years ago, struggling homeowners who wanted to get out of their underwater mortgages had a tough time convincing their lenders to approve a short sale. However, things have turned around completely since then. Lenders now realize that, in most cases, approving a short sale costs them far less than pushing the homeowner into foreclosure. In fact, many lenders are now actually paying borrowers cash - as incentive payments or relocation payments - for completing a short sale!

There is a lot of information about the various government short sale incentive programs out there. But it's harder to find information about cash incentive progams run by the banks, and some people may be wondering if the stories they have heard, for example of cash payments of $20,000 or more to underwater homeowners, are true.

Well, they are! We have worked directly with most of these programs, and they really do exist! Here is a brief overview of the various government and lender programs that pay cash incentives, as well as samples of real approval letters that we have obtained, to show exactly how much cash was paid to each homeowner for completing their short sale:

Government Programs:

FHA Pre-foreclosure Sale Program: If the loan is FHA-insured and the short sale is approved, HUD will pay the borrower between $750 and $1000 towards relocation costs.

This Maple Valley homeowner received $1000 towards relocation on his FHA short sale: 6.23.12 - MetLife - 1st Lien - 79k Deficiency - Debt Settled - Short Sale Approval

VA Compromise Sale Program: If the loan is VA-insured, VA will pay up to $1500 in relocation assistance to borrowers who complete a short sale with a VA compromise claim. This temporary cash incentive program was brought into place in January 2011, and is currently set to expire on December 31, 2013.

This GMAC short sale approval letter for a VA loan allows a Spanaway homeowner $1000 in relocation assistance: 11.16.12 - GMAC - 1st Lien - 92k Deficiency - Debt Settled - Short Sale Approval

HAFA: Short sales that are processed through the federal government’s HAFA program pay a $3,000 cash relocation incentive to the seller. If the home is not owner-occupied, the payment goes to the occupant, not the owner. The incentive is not paid if the home is unoccupied.

This Sammamish homeowner received $3,000 in relocation assistance by processing her Wells Fargo short sale through the HAFA program: 3.14.12 - Wells Fargo - 1st Lien - 146k Deficiency - Debt Settled - Short Sale Approval

FHFA “Standard Short Sale” Program: This new program replaces the HAFA program if the investor is Freddie Mac or Fannie Mae. It also offers up $3,000 in relocation costs to the borrower - but it's important to understand that this amount is a maximum total relocation costs. For example, if the borrower receives other relocation contributions, e.g. from their employer, that amount is subtracted from the $3,000.

Lenders’ In-House Programs:

Bank of America Cooperative Short Sale Program: Available to select homeowners who apply for it before submitting a short sale offer through BofA’s Equator system. Cash incentives to borrowers range from $2,500 to $30,000, and are offered at BofA’s discretion.

This Seattle homeowner received $27,388 in relocation assistance through the B of A Coop program: 12.13.12 - Bank of America - 1st Lien - 110k Deficiency - Debt Settled - Short Sale Approval

This Arlington homeowner received $5,000 in relocation assistance from B of A (incentive itemized on HUD, but not listed in the approval letter): 11.19.12 - Bank of America - 1st Lien - 45k Deficiency - Debt Settled - Short Sale Approval

Wells Fargo: Cash incentives reportedly range from $3,000 to $20,000, and are offered at Wells Fargo’s discretion.

Chase: Cash incentives of up to $35,000 have been offered to select homeowners by invitation from Chase.

This Snohomish homeowner received a $20,000 relocation incentive for doing a short sale of his home: 9.12.12 - Chase - 1st Lien - 105k Deficiency - Debt Settled - Short Sale Approval

And this homeowner received a $25,000 “relocation incentive” for selling his Enumclaw home - even though the home that he sold was a rental! 12.13.12 - Chase - 1st and 2nd Lien - 161k Deficiency - Debt Settled - Short Sale Approval

In some cases, cash incentives may be “doubled up.” For example, a borrower offered a cash incentive from their lender may also be eligible for HAFA’s relocation incentive of $3,000.

This Kirkland homeowner received $2,000 from her lender, Bank of America, in addition to the HAFA $3,000 relocation assistance - for a total of $5,000 in cash for selling her home: 10.26.12 - Bank of America - 1st Lien - 122k Deficiency - Debt Settled - Short Sale Approval

Seattle Short Sales has a team of experienced and successful real estate specialists dedicated to working with distressed homeowners. We close, on average, 12% of all short sales per month in King County. In the last 24 months, we have negotiated over 756 short sale approvals, and discounted over $81 million of mortgage debt for distressed homeowners.

In addition to our short sales negotiators, our team includes dedicated professionals advising and advocating for homeowners in the fields of: loan modifications, bankruptcy, debt settlement and collection defense. As part of our service, we offer unlimited attorney and CPA consultations.

To find out what short sale cash incentive programs you may be eligible for, contact us for a no-obligation, no-fee consultation: http://seattleshortsales.com/homeowners/

New Bank of America Short Sale Approval Letter: Homeowner in Vancouver, WA, Receives $276,000 Loan Discount, Deficiency Waived!

Seattle Short Sales - Wednesday, December 19, 2012
This Vancouver, WA, homeowner avoided foreclosure through a short sale. He owed over $612,000 on his Bank of America mortgage, but his home was valued at only $405,000.

Bank of America has just issued their approval letter for the short sale, accepting $361,399 net proceeds on the $612,000 principal balance owing (not including arrears) - for a total discount of $276,000. The short sale approval letter waived the Vancouver homeowner of ever having to repay that deficiency.

You can read the Bank of America short sale approval letter here: 11.30.12_Bank_of_America_1st_Lien_276k_Deficiency_Debt_Settled_Short_Sale_Approval.pdf

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

Lender Financial Incentives for Short Sales: B of A and Chase

Seattle Short Sales - Tuesday, June 26, 2012

We've had a number of people ask us about the Bank of America and
Chase Incentive programs. The reality is that there isn't a ton of specific
information available on either program.

Here's what we know, from our personal experience:

CHASE:

We've had a number of homeowners receive a letter from Chase,
letting them know that they were eligible for a $20,000 incentive.
It's our understanding that these are only for the old WAMU loans.

Here is a recent Chase Case Study:

10.1.11 - Homeowner is six payments behind, owes $302k, arrears of $16k

10.4.11 -  Homeowner receives $20k Chase letter. Click here to download

12.21.11 - Homeowner lists home for $315k

2.15.12 - Homeowner and listing broker receive Chase letter instructing
them to lower price to the pre-approved amount of $247,500

3.15.12 - Offer received

6.11.12 - Approval received. Click here to download. Includes $3k for HAFA,
the $20k incentive payment, $8,500 for jr. liens, and a full 6% commission
for just one broker!

BANK OF AMERICA:

The BofA program pays between $2,500 and $30,000. It is a program only
available to homeowners who apply prior to submitting an offer via Equator.
(Therefore, if you are working with us on your short sale, be sure to send in
the DocPac either prior to, or at the time of listing, so that we can apply for
the program.)

BofA is grandfathering short sales into the program that are already in
progress. We have recently had two deals in the last two weeks that received
the new incentive.

Here is a recent BofA Case Study:

Homeowner was scheduled to receive the $2,500 coop bonus. Three days
before closing, approval letter re-issued, adding a $6,626.35 homeowner
incentive!

The revised approval letter did not spell out the new incentive. It can only
be seen on the worksheet, which you can download here.

BOTTOM LINE:

  1. You can't apply for the $20k Chase incentive.
  2. You need to pre-apply for the new BofA incentive.

If you have a listing appointment with a homeowner with a BofA loan,
offer to find out for them what incentive they qualify for. There is no risk
to them, and it doesn't commit them to sell their home. The incentive may
be the trick that gets them to list with you!

We would love to help you with your short sale, or help you find out what
your homeowner qualifies for. To learn more about our program, you can
download our S3 DocPac right here.

Please let me know if you have any questions, or if there is anything else
we can do for you!

To your success,

Ross Kilburn
Seattle Short Sales, Inc.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

New Chase Short Sale Approval Letter: Homeowner in Bellevue, WA, Receives $374,000 Loan Discount, Deficiency Waived!

Seattle Short Sales - Friday, May 25, 2012
This Bellevue, WA, homeowner avoided foreclosure through a short sale. He owed $687,000 on his first mortgage with Chase, and another $72,000 on his Chase second mortgage - a total of three quarters of a million in debt! But his home was valued at only $350,000.

Chase has just issued their short sale approval letter for the first mortgage, accepting $313,000 net proceeds on the $687,000 mortgage balance owing - a discount of $374,000.

And the best news is that Chase’s short sale approval letter waived the Bellevue homeowner of ever having to repay that $374,000 deficiency!

You can read the Chase short sale approval letter here: 5.9.12_Chase_1st_Lien_374k_Deficiency_Debt_Settled_Short_Sale_Approval.pdf

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

New BofA Short Sale Approval Letter: Snohomish Homeowners Receive $203,000 Loan Discount, Deficiency Waived!

Seattle Short Sales - Monday, May 21, 2012
These Snohomish, WA, homeowners avoided foreclosure through a short sale. They owed over $460,000 on their Bank of America first mortgage, and $108,000 on their Bank of America second mortgage - a total of $568,000 of debt. But the purchase offer they received for their home was for only $425,000.

BofA has just issued their approval letter for the short sale. Since both mortgages were with the same lender, the mortgages were processed together. BofA accepted net proceeds of $366,000 on the $568,000 debt, for a discount of nearly $203,000.

Since the short sale was processed through HAFA, the Snohomish homeowners were waived of ever having to repay that deficiency.

You can read the BofA short sale approval letter here: 3.13.12_Bank_of_America_1st_and_2nd_Lien_203k_Deficiency_Debt_Settled_Short_Sale_Approval.pdf

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

Buyer Walked From Your Short Sale? Bank of America Now Allows You to Substitute a New Buyer

Seattle Short Sales - Thursday, July 14, 2011

Here is one more step in the continuing trend of both lenders and government working to streamline the short sale process: Bank of America will now allow the substitution of a new buyer to a short sale request.

Previously, if a buyer rescinded their offer to purchase, the seller (along with their real estate agent and short sale negotiator) would have to resubmit an entirely new short sale request, listing the new buyer. An original buyer might walk away from the deal for a number of reasons, such as:

  • not being able to obtain financing
  • not being satisfied with the home inspection
  • becoming frustrated if the short sale application is taking too long.

In many cases, however, the seller does have a back-up offer from another interested purchaser ready to go. Under the old rules, the short sale application would have to be restarted from scratch, causing further delays to the process. With this new policy, the new buyer can be substituted in the same application package.

This change from Bank of America applies only to cases where there already is a back-up offer to purchase on file. If there is no available back-up offer when the buyer walks, the property will have to be relisted for sale, and a new short sale application initiated when a new purchase offer is received.

Bank of America’s initiative here is great news for homeowners, and yet another sign that lenders have realized that short sales are in their own best interest as well.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

Big Banks Now Proactive About Short Sales, Even Approaching Homeowners With Cash Incentives

Seattle Short Sales - Friday, July 08, 2011

My, how things have changed in a year or two!

It was not so long ago that struggling homeowners had to beg lenders to approve them for a short sale. But now, some of the major lenders are making the first move - contacting the sellers themselves to propose a short sale, and even offering cash incentives to homeowners!

These short sale incentive programs are not widely publicized, and they are considered to be “by invitation.” As banks realize that they may recover more of their losses by allowing a short sale than by pushing to foreclosure, they are targeting homeowners who are at risk of defaulting - often, before they are even in mortgage trouble.

The lenders proactively contact these homeowners, suggesting that they undertake a short sale, and often offering a hefty cash payment to the homeowner upon completion of the short sale. These cash payments are reported to range from a few thousand dollars to up to $35,000.

Some of the lenders implementing these incentive programs, and the reported incentives, are:

Bank of America Cooperative Sale Program - upon completion of the short sale, the homeowner receives a $2,500 to $3,000 relocation payment, and the real estate agents receives a 6% commission.

Citi Proactive Short Sale Program - according to the HousingWire, the average cash payment to sellers this year was $12,000

Chase - offers cash payments up to $30-$35,000 to sellers

GMAC - there are reports of cash incentive payments to sellers of up to $1,600

Litton - reportedly offers cash incentives to sellers of $3,000 to $5,000

Wachovia/Wells Fargo
- offers cash payments of 1% of the sales price (minimum $2,500) for sellers.

Although these programs are considered “invitation only” - meaning that the lenders contact the homeowners, rather than homeowners applying for them - there are some reports of short sales negotiators successfully requesting that the homeowners they represent be considered for incentive programs.

But the big take-away from this story is that lenders no longer merely consider short sale requests - but that they are now proactively initiating short sales. This means that they are far more likely to consider and approve any short sale offer put to them than they were a year or two ago.

As Citi’s senior vice president of loss mitigation told the HousingWire, "We're not going to turn anybody away if the short sale meets the net requirement we're looking for." This means that the lenders are no longer looking for stories of exceptional hardship in order to approve a short sale. As long as the short sale represents the best way for the lender to maximize their recovery on a distressed asset, they will approve it.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

Bank of America Splits Loan Servicing Departments

Seattle Short Sales - Wednesday, March 16, 2011

As reported by the HousingWire, Bank of America has split its mortgage servicing department into two: one for performing loans, and one for loans that are in default.

The home loan division, headed by Barbara Desoer, will service performing loans as well as originate new loans. The new “Legacy Asset Servicing” department will be led by Terry Laughlin, and will oversee loan modification programs and foreclosure programs.

Many regulators and industry players have been pushing servicers to divide their mortgage departments into separate sections that deal with performing and nonperforming loans. Bank of America’s move to do so may be seen as a move towards a new national servicing standard, which would work towards standardizing payment structures between loan servicers such as Bank of America and GSEs Freddie Mac and Fannie Mae.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

Bank of America Now Issuing No Deficiency Short Sale Approvals

Ross Kilburn - Wednesday, August 25, 2010
Seattle Short Sales has just wound up negotiations with Bank of America (as both 1st and 2nd lender) that have resulted in the lender waiving all deficiency rights.

This means that the borrowers are not required to pay back all of the money they borrowed when the house sells at a loss. But, even more significantly, in this case the lender has agreed not to pursue the borrowers at a later date for the loss, or “deficiency.”

In this case, the couple who owned the home ran into trouble because of falling house prices, which resulted in the value of their home being less than the amount of money they owed on it. When the wife was laid off work, the couple could no longer afford to pay their mortgage payments, and were forced to sell the home at a loss.

Seattle Short Sales assisted in the negotiations. Both first and second mortgages were held with Bank of America. The total that the couple owed was $284,000, but they were only able to sell the home for $179,200. After closing costs and commissions, the amount paid back to Bank of America on the two loans was $159,000.

The remainder owing on the two mortgages was $119,000 - $45,000 of that deficiency being on the second mortgage, which the lender could choose to pursue. Seattle Short Sales helped the couple reach a no-deficiency agreement with the bank, where they paid the bank a total of $10,000 to forever relieve them of having to pay back the money owing - saving them over $35,000. This is the first time that Bank of America has ever completely released a deficiency.

Read this complete Case Study: Bank of America Case Study: No-deficiency judgment relieves sellers of loss

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