National Mortgage Standards are Encouraged
January 5, 2011
A group of investors together with academics has proposed a national standards system be created for Mortgages. The goal would be for such standards to be implemented as early as this spring.The group believes such standards could diminish conflict between servicers and investors, help avoid investor favoritism by servicers and set a standard for securities that avoids the pitfalls of the past thereby improving lending practices and investments in the national economy.
California October Foreclosures are Down
November 12, 2010
RealtyTrac, has reported that 66,475 properties foreclosed in California this October. That is down nearly 12% from September and 22% from last October. However even with the drop in overall reported foreclosures, Modesto and Stockton still remain in the top 5 cities nationwide for foreclosures. Although this downward trend has been consistent over the past many months, it is likely to slow down over the winter which is a traditionally slow time for real estate sales.
HUD Secretary - Foreclosure Problems Aren’t Systemic
October 22, 2010
In the Federal Task Force meeting on Wednesday, the Secretary of Housing and Urban Development, Shaun Donovan said they have been aware of violations with certain servicers for some time and they will “take actions”. However, he stopped shy of identifying any systemic problems instead citing isolated non specific problems. More details could become available when the FHA probe is completed in about nine weeks. The Federal Task Force investigation has now shifted to determining whether there was “criminal intent to take a home” “robo-signing” or fraud. Any mortgage servicers found guilty of these actions could face hefty fines or lose their ability to work with the Federal Housing Administration at a minimum. It is still too early to tell which lenders may face charges and what effect any such charges would have on the lending industry as a whole.
Federal Task Force Investigation into Foreclosure Fraud Could Lead to Criminal Charges
October 20, 2010
According to CNN, White House Press Secretary Robert Gibbs the Federal Housing Administration and Financial Fraud Enforcement Task Force are in the process of an investigation into foreclosure regulations and they will expect any bank that violated the law to be fully accountable for those actions. The Task Force is meeting on October 20, 2010 at the Department of Housing and Urban Development. They are planning to determine whether civil or criminal charges will be enforced. There should be a White House briefing after the meeting concludes.
Understanding Deficiency Clauses
September 30, 2010
Recently a seller let an approved short sale go to foreclosure over a deficiency clause. This is a situation where everybody loses, the seller, the buyer, their agents, the servicers and the lenders all who spend their time and money to negotiate the approval. All wasted over two little sentences.
“BAC Home Loans Servicing, LP and/or its investors may pursue a deficiency judgment for the difference in the payment received and the total balance due, unless agreed otherwise or prohibited by law, if the short sale closes on the loan referenced above. In addition, if this loan is covered by mortgage insurance, the mortgage insurance company may reserve the right to pursue the seller for the deficiency based on the terms of the mortgage insurance policy.”
Initially the servicer, Bank of America, claimed that if there was Mortgage Insurance (MI) or a second lien on a file they couldn’t remove a deficiency clause. However, there was no MI on the loan and the second lien holder was a different lender who had already accepted the terms of approval. The seller consulted an attorney who advised him that unless the deficiency clause was removed from the approval, that he should go ahead and let the property foreclose. This would protect the seller from owing the deficiency since California is a nonrecourse state. Hoping to salvage the deal, the seller offered to pay a promissory note in lieu of the deficiency clause. This should have been a reasonable offer to Bank of America considering that according to an article by Jason Opland on Aug. 17, 2010
Bank of America’s previous Senior Vice President of Credit Loss and Loss Mitigation, Mr. Jack Schakett, stated that if a borrower proves he can no longer pay the mortgage and has a few or no assets, Bank of America will waive it’s right to a deficiency judgment during the processing of the short sale deal. But, if a borrower can afford to pay or has assets, the bank will try to negotiate a set fee for the borrower to pay at closing. “We want to help customers who legitimately can’t afford to make payments, but we don’t want the one’s who have a bunch of money to just be able to walk away. These individuals will have to share some of our loss.” Mr. Schakett acknowledged that short sales in which the bank agrees to accept less for the home than the balance of the loan are less expensive to process than foreclosures, and thus they want to encourage more homeowners to pursue this course by making it clear they do not intend to pursue homeowners for deficiency judgments.
However Bank of America didn’t get to make that decision because Freddie Mac who held the note would not allow it. The negotiator responded saying the investor would not accept the promissory note and refused to remove the deficiency clause. They pointed out that the approval letter states the deficiency clause can be enforced “unless agreed otherwise or prohibited by law” and that California won’t allow it. This isn’t entirely true. The current statutes prohibiting deficiency judgments only pertain to foreclosures, not short sales. SB 931 which would prevent deficiencies on short sales, has not been signed into law by the governor. He has until September 30, 2010 to do so. Even then, we don’t know when the law will take effect, likely after January 1, 2011. This means if the seller had completed the short sale with the deficiency clause intact he would’ve been at risk of Bank of America coming after him for the deficiency until the statute of limitations had passed (about four years). Based on this information the seller decided to follow the advice of his attorney and let the property foreclose and be protected from the lender pursuing the deficiency judgment.
Posted via email from www.Homes-In-Stockton.com Posterous
The Good News and the Bad News for San Joaquin
September 16, 2010
Real estate market analysts have been hard at work crunching the latest round of numbers but what does it all mean? Wednesday the news looked optimistic for San Joaquin when it was reported that the area experienced a second quarter decline in foreclosures despite the fact that Stockton still remained 96th in the nation for foreclosures. However on the heels of that report it was announced that US home seizures had reached a new record and are now 25% higher than a year ago and that California accounted for 1/5th of the national total. UCLA economists predicted that California is on the road to recovery, but it will be slow stating that unemployment is not likely to fall below 10% until late 2012. This is something to look forward to for San Joaquin county which currently ranks 99th in the nation for employment and housing prices.
Posted via email from www.Homes-In-Stockton.com Posterous
Legal Chart Quick Reference for California Deficiency Judgments
August 26, 2010
The attached document provides a quick reference to assist distressed sellers in determining if a lender would have the right to collect on a deficiency resulting from foreclosure in the State of California. It is intended only for reference. I recommend strongly that a seller facing foreclosure or pursuing a short sale consult with an attorney and CPA. Pat Holkesvig & Your Home Team specialize in:
Stockton Short Sales,
Lodi Short Sales,
Lathrop Short Sales,
Manteca Short Sales,
Elk Grove Short Sales,
Mountain House Short Sales,
Tracy Short Sales,
Ripon Short Sales and
Tracy Short Sales.
If you have any real estate related questions please contact Pat Holkesvig at (209) 471-6516 or complete our Contact Form.
No New Ideas From Mortgage Summit
August 24, 2010
On August 12th in the post Could This Be The End of Short Sales? we wrote about how On August 17th the Treasury was going to be holding a hearing regarding the future plans for Fannie Mae and Freddie Mac. It was rumored that the Obama administration was about to order the government-controlled lenders to forgive a portion of the mortgage debt for Americans who are underwater.
At the end of the day, no new ideas came out of the August 17th summit and it is most likely that there will be little change to Freddie Mac and Fannie Mae for the short term. However, that means the government could continue to bail out the banks. It also leaves open the possibilities that Freddie and Fannie could go as far as writing off all remaining debt or at least refinance all existing troubled loans to current low interest rates.
Posted via email from www.Homes-In-Stockton.com Posterous
The Impact of HR 5872 & 5891 on the Stockton Real Estate Market
August 12, 2010
HR 5872, which passed the House of Representatives last week, increases FHA’s commitment authority for its multifamily insurance programs by $5 billion for the remainder of the fiscal year. While HR 5891, which passed the House of Representatives July 30, will permit FHA to increase its single family annual premiums, raising the statutory cap from 0.55 percent to 1.55 percent. Essentially, HR 5872 saved the ability for FHA to issue commitments for the remainder of the current fiscal year. Although HR5891 will cost more money to the single family consumer, it is believed this increase will perpetuate FHAs ability to become self sustaining and help to stabilize the housing market. At this time it is unclear what specific impact these changes will have on the Stockton real estate market and the number of future Stockton short sales.
Posted via email from www.Homes-In-Stockton.com Posterous
A Glimmer of Hope
August 5, 2010
According to a recent report on CNBC, Stockton’s luck may be changing. More properties that would have previously been lost to foreclosure are instead becoming short sales. According to the report, San Joaquin County foreclosures have fallen from 85 to 68 percent and defaults fell 43 percent in the second quarter of 2010. However due to the tax breaks expiring, the number of perspective buyers has dwindled. With an unemployment rate hovering around 25 percent, Stockton could take a long time to permanently recover
