steve's White Mountain Blog

Ridiculous BPO software defaults may bottleneck short sales.

Two recent announcements may bring hope to shortening the short sale process. It has been reported that the “robo signing” issues have been worked out and much of the back logged short sales will be allowed to move forward. Also it was announced that the short sale process guidelines will require lenders to make a decsion on offers with in a 30 –to- 60 day window starting by mid-June…GREAT !!

But here are some of the issues we will have with a BPO (broker price opinion) that will be required prior to making the aforementioned  DECISION !!

The latest BPO requirement of the week…Date Stamped Subject pictures. My last BPO was returned as there was no time/date stamp on the subject photos…in an explanation from the company I was told “most cameras have a setting that allows you to add a date stamp” Well folks mine doesn’t and I refuse to get rid of the $400 camera I purchased with my own money…to buy one that has this function – so I can do $45/ BPO’s.

For those that don’t do BPO’s or the general public reading this post…who can’t understand “WHAT IS THE HOLD UP?” let me give you a few other examples of why some opinions are rejected !!

#1) one or more of the listing – or closed comparables is too great of a distance from the subject.

#2) one or more of the “comps” is not in a similar size range as the Subject.

#3) one or more of the “comps” is not in a similar age of construction as the subject.

#4) One or more of the closed comps – occurred too long ago, the listing comp has been on the market too many days.

#5) aside from the date stamp…the pictures can be rejected for not having: A house number, A street view, a rear picture, or a side picture.

#1- #4…Issues? I can’t manufacture sold comps – what has closed is what I have to work with…this isn’t rocket science. If the only closed sales with in a town or less than 10 miles are…bigger, smaller, older, newer – they are what they are, and the same goes for current listing – they are what they are. I am trying to provide closed sales comps in some cases from towns with a population of under 1,000 people…how many sales are there in less than 6 months ?...Sometimes NONE!

#5… Issues? These are obvious…some houses don’t have street numbers, some you can’t physically get beside or behind to take a photo…and let’s face it for $45…I am not interested in an upset property owner questioning me on what the heck I’m doing in their yard!!

Accelerating the Short sale process…sure thing good luck with that.

When no one can satisfy the BPO requirement or wants to do them due to the level of frustration…the process with come to a grinding stop.

A 3.5% Mortgage Rate offered By New Hampshire Housing has been made available through a new Bond program with the U.S. Treasury. This program is to stimulate home sales and is being offered to first time home buyers (the 3.5% rate requires payment of one point, a 3.95% rate is available to those that qualify with no points.) these rates are expect to apply through 2011 based on the housing and economic recovery act guidelines, and the new issue bond program.  This Government program allows New Hampshire sell bonds to Fannie Mae & Freddie Mac to finance mortgages for first time home owners. The Bonds will be then sold to the U.S. Treasury, and then they will be sold publicly to other investors. The program will provide New Hampshire Housing with up to $300 million in funds, and will support up 2,000 mortgages for income qualified first time home buyer.

Each state housing finance authority (HFA) that chooses to participate in the New Issue Bond Program pays a fee to access the program and cover the costs to the Treasury Department and taxpayers. New Hampshire Housing Finance Authority is a self-supporting, public benefit corporation established by the state legislature.  More information about its programs can be found on the agency's website at www.nhhfa.org. or 800-649-0470 or email: ownership@nhhfa.org

   Down payment assistance is also available, check with the NH finance authority to check on seller contribution in a first time purchase, you may find the point charged at closing for the 3.5% rate can be paid as a seller closing cost contribution. The NH housing authority want you to know that the rates may change during the program, and can vary with the bond issues. So don't wait, prices are historically low, and these rates are subject to change.

I wake up thinking today will be different!....Cue Sonny & Cher...It's Groundhog day

But, when I place the short sale call, make it through the automated voice mail maze and finally get to talk to a live person I realize I'm at the same place I was yesterday. And no matter what I do tomorrow I'll be no further ahead.

Some of the common customer service answers (they can choose from if they don't want to help).

#1) I don't see the authorization form allowing us to talk to you.

#2) before we can have any further discussion I'll need your Tax I.D.# (in writing and recorded)

#3) The Conference call authorization was only good for that one time, You'll need a new authorization to talk to  us again.

#4) I don't see the Buyers pre-approval letter  *so we can't go any further till we have that.

#5) We are waiting on the sellers (pick one)..hardship letter, 1099, W2, Tax Return, Bank Statement, list of            assets  *so we can't go any further till we have that.

#6) We don't have the appraisal back yet (and can't tell you if it's been ordered, by who or who's been hired).

#7) No we have everything we need, but my supervisor will have to write up a letter of recommendation and send it back to the mortgage department for review.

#8) We sent the recommendation letter today...we'll let you know in 6 to 8 weeks!

#9) Nothing yet it looks like it's been about 6 weeks...they must still be reviewing the file?

#10) If you can get the buyer to sign an addendum to pay $5,000 more for the property, and convince the association to take half of the condo fees that are due, and you drop your commission by 50% we'll get you an approval letter soon.

Oh thank you bank from Hell...it's been 12 weeks since we started this deal...I'll be happy to do it for free after all the daily calls to you and from the buyers bank, the buyer, the buyers title company , owners association, seller, seller's children, and every Realtor I know waiting for a closed comp was fun and Magical for me. Why should I get paid on these deals they are easy, educational...and down right entertaining.

I think I'll learn French, start playing the piano, take a CPR class, ice sculpture, and hope I see my shadow Tomorrow.

I should buy some life insurance!!

A decline in current market value doesn’t qualify you for a short sale, you may have a case for a loan modification (if your ARM is about to go up) but just because you can’t sell the property for enough to pay off the note, wouldn’t in and of itself allow you to negotiate special treatment.

Here is a recent conversation I had with a seller (not a real name)

Client Keith: Hi Steve, thanks for bringing me the offer so soon after reducing the price to current market value…what do I do next?

Broker Steve: You have requested a short sale status from your lender right? And you have authorized the lender to speak with me about the transaction right? And you have a contact person I can begin to work with right?

Keith: Steve I know you told me to do all those things when we first listed the property, and I know they sent you my pay off statement. But no I have never asked them for a short sale status on the property…I was hoping you could do all that.

Steve: I can’t do anything until you request authorization for the lender to speak with me, and they will do nothing to help you without a hardship letter and full financial disclosure.

Keith: Well I’m really busy and I thought you were getting paid a commission to close the deal…why can’t you call my bank and do everything?

It’s just not that easy, you qualified for the note when you purchased the property and help isn’t given to those that have means to continue to pay.

The words “the sale is subject to the sellers lender accepting a short sale transaction” in the purchase agreement may keep you from being sued for specific performance…but it doesn’t guarantee the lender will let you off the hook.

Your Mortgage Company is going to want to review your tax returns, retirement funds, income, assets, bank accounts, stocks, bonds and any other properties you may own to determine if you have a case for hardship. And the decline in value to a level below what you owe on the note has no bearing on your ability to continue to pay or to liquidate other assets to come up with your own shortfall.

Owing more than your property is worth doesn’t qualify you for a short sale.

These transactions may be all the rage where you live but they are not a free pass to get out of paying what you agreed when you borrowed the money.

Hell if I were a stock holder in that bank I would want you to pay back the money you borrowed from "Us".

Steve Loynd, your white mountain N.H. real estate expert.

steve@alpinelakes.com / 800-926-5653

www.steveswhitemountainblog.com