Short Sale Blog

New Wells Fargo Short Sale Approval Letter: $141k Deficiency Waived for this Seattle Homeowner!

Wed, 23 May 2012 17:15:00 GMT

Great news for this Seattle, WA, homeowner! Not only did he avoid foreclosure through a short sale, he also had the $141,000 deficiency balance waived.

He owed over $215,000 on his Wells Fargo mortgage, as well as another $31,910 in arrears - a total of $247,000 of debt. But his home was valued at only $124,000.

Wells Fargo issued an approval letter for the short sale, accepting $106,000 net proceeds on the $247,000 mortgage balance owing - a discount of $141,000. However, the approval letter did not waive the deficiency - which means that down the road, debt collectors could pursue our Seattle homeowner to repay that deficiency.

We had our lawyer write a letter to Wells Fargo, explaining to them that if they did not waive the deficiency balance, they would end up owning the home outright (and have to absorb all of the costs of marketing it) - either by the homeowner declaring bankruptcy and not having to repay the deficiency, or through foreclosure.

Wells Fargo promptly reissued the short sale approval letter, waiving the Seattle homeowner of having to repay the deficiency balance.

You can read the original Wells Fargo short sale approval letter here: 4.25.12 - Wells Fargo - 1st Lien - 141k Deficiency - Lien Release - Short Sale Approval

You can read the revised Wells Fargo short sale approval letter, waiving the deficiency, here: 5.16.12 - Wells Fargo - 1st Lien - 141k Deficiency - Debt Settled - Short Sale Approval

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!

Mon, 21 May 2012 23:59:00 GMT

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/

How to Force Your Lender to Grant a Deficiency Waiver in a Short Sale

Fri, 18 May 2012 03:44:00 GMT

The homeowners in Renton were under severe financial pressure. One had been laid off, and the other had been diagnosed with cancer.

They owed $377,000 on their first mortgage with PHH, and $125,000 on their second mortgage with Sound Credit Union. (Read the entire Case Study here).

While owing over $500,000, the best offer on their home only came in at $349,000. This would only allow them to pay $308,000 to PHH and $6,350 to Sound Credit.

PHH issued an approval letter for the short sale - but that short sale approval letter did not explicitly waive the sellers of having to repay the $69,000 deficiency balance. And that’s where our lawyer came in.

Our attorney wrote a letter to PHH’s short sale negotiator, requesting that they reissue the short sale approval with a full written deficiency waiver. She informed them that if the deficiency waiver was not issued, there were only three possible outcomes:

the sellers would file for bankruptcy, and PHH would end up with the property and nothing else,
the sellers and PHH would move into mediation pursuant to WA’s Foreclosure Fairness Act, where PHH would have to either show that the beneficiary of the promissory note would have a higher financial return owning the home in foreclosure with no right to collect the deficiency rather than accept the short sale proceeds currently being offered, or
the sellers would terminate the short sale, and PHH would own the home in foreclosure with no right to collect the deficiency balance

Since Washington is a non-recourse state, a foreclosing first lien-holder can only take title to the property; they may not collect on the promissory note. So any of the three outcomes above would end up with PHH owning the property (and then taking on all of the costs associated with foreclosure, and marketing and selling the property) and with no right to collect the deficiency balance.

PHH saw the light. As more and more lenders are realizing, in most cases lenders make more money from a short sale (and they make it more quickly) than they do from foreclosing. PHH reissued the short sale approval letter, clearly stating “deficiency waived” (page 1, point #3) - not only a better solution for our Renton homeowner, but also a better solution for PHH.

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 Seterus Short Sale Approval Letter: Homeowner in Everett, WA, Receives $183,000 Loan Discount, Deficiency Waived!

Mon, 14 May 2012 19:44:00 GMT

This Everett, WA, homeowner avoided foreclosure through a short sale. She owed over $294,000 on her Seterus mortgage. But the purchase offer on her home was for only $125,800 - not even half of what she owed.

Seterus has issued their approval letter for the short sale, accepting $111,500 net proceeds on the sale - for a discount of $182,500.

This means that this Everett homeowner paid off only 38% of the amount due on her Seterus mortgage - and the best news is that the short sale approval letter waived her of ever having to repay that deficiency balance!

You can read the Seterus short sale approval letter here: 4.19.12_Seterus_1st_Lien_183k_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/

Mortgage Delinquencies Drop Nationally - But Still Rising Here in WA

Thu, 10 May 2012 15:47:00 GMT

Good news on the national front regarding mortgage payment delinquencies - but, as usual, the Seattle area and Washington state seem to be lagging behind the national trends.

According to a new report by TransUnion, as published in the Silicon Valley Mercury News, the percentage of homeowners who are 60 or more days delinquent on their mortgage payments dropped in the first quarter of 2012. The nation-wide delinquency rate is now at its lowest level since 2009.

But that drop is small. The national delinquency rate was 5.78% for the first three months of this year - down from 6.19% a year ago. Before the housing crash, the delinquency rate was about 2%, and it peaked at nearly 7% in late 2009.

Throughout this housing crisis, though, Washington state seems to lag behind national trends. As the national delinquency rate declines, there are only eight states where the delinquency rate is still increasing: we in Washington are one of those eight.

The regions that were hit hardest and earliest by the financial crisis and high foreclosure rates are showing very strong signs of recovery. A report published this week by HousingWire, using figures published by Move Inc., lists the regions that show the “top turnarounds.” These are the towns showing the highest level of housing market recovery, as reflected by declining inventory and increasing house prices. Those top turnaround towns include Phoenix-Mesa in Arizona; Orlando, Florida; and Oakland and San Jose in California - all of which have already been hit hard by foreclosures.

We are confident that Washington state and the Seattle real estate market will also follow those same trends and see recovery in the housing market. We just seem to continue to be a year or two behind the national trend.

As delinquency rates are still on the rise here, homeowners who are struggling to make their mortgage payments will continue to look for solutions such as short sales, in order to avoid foreclosure and the negative affects that mortgage payment delinquency will have on their credit rating.

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 Edmonds, WA, Receives $239,000 Loan Discount, Deficiency Waived!

Sun, 06 May 2012 15:48:00 GMT

This Edmonds, WA, homeowner avoided foreclosure through a short sale. He owed over $440,000 on his Suntrust first mortgage, and $259,000 on his Chase second mortgage - a total of $700,000 of debt. But his home was valued at only $429,000.

Chase has just issued their approval letter for the short sale, accepting $20,000 net proceeds on the $259,000 mortgage balance owing - a discount of $239,000. The short sale approval letter waived the Edmonds homeowner of ever having to repay that deficiency.

You can read the Chase short sale approval letter here: 3.7.12_Chase_2nd_Lien_240k_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/

First Quarter 2012 Report: We’ve Relieved Distressed Homeowners of Nearly $12 Million of Mortgage Debt Through Short Sales This Year!

Mon, 30 Apr 2012 20:57:00 GMT

Spring and fall are the busy times for us, and spring 2012 is no exception to that. Short sales are booming - as we reported to you earlier this month, short sales have now outpaced foreclosures. We have just finished putting together the figures for last month: in March, 2012, we managed to negotiate $3,951,000 of loan discounts from lenders for our short sale clients.

The discount, or deficiency, is the difference between what the homeowners owes on the mortgage, and how much she or he is able to pay back on that loan following the short sale. Many homeowners whose home is now worth less than the balance owing on their mortgage may worry that they will never be able to get out of debt. But this March, sixteen of the thirty short sales we negotiated were for loan discounts of over $100,000. And nearly all of those homeowners - twenty six out of the thirty - had the deficiency balance waived. This means that that loan discount is permanent: the lender has put it in writing that they will never pursue the seller to pay it back.

Total debt discounts that we negotiated through short sales in January was $3,370,000, and in February was $4,390,000. Adding March’s $3,951,000 to those figures brings us to a total of $11,711,000 of mortgage relief that we have negotiated for distressed homeowners through short sales for this first quarter of 2012.

All of our short sale approval letters are posted on line: http://seattleshortsales.com/approvals.htm. Here you can see what a real approval letter looks like, what each loan discount is, and how different lenders word a deficiency waiver.

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/

Short Sales Now Outpace Foreclosure Sales!

Fri, 20 Apr 2012 22:39:00 GMT

Two different groups that compile data on the housing market have released reports this week that indicate that short sales have now surpassed foreclosure sales in America.

Lender Processing Services (LPS), as reported by Bloomberg on Tuesday, indicates that in January, short sales accounted for 23.9% of home purchases. By comparison, 19.7% of sales were foreclosures that month. A year ago, only 16.3% of home sales were short sales, and 24.9% were foreclosures.

And Realtor Mag reports similar numbers released by RealtyTrac, which indicate that short sales increased by 33% from January 2011 to January 2012. Short sales increased over that period in 32 states.

These numbers reflect the reality that a short sale is often the best solution for both homeowner and lender, when the homeowner finds himself or herself “under water” - where they owe more on the mortgage than their home is currently worth, and are struggling to make their monthly mortgage payments.

Daren Blomquist, vice president at RealtyTrac, told Realtor Mag that he believes that 2012 could be a record year for short sales. With short sales on the upswing, and lenders working at shortening their response time for short sale requests, we think so too!

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/

More Good News For Short Sales: New Guidelines from Freddie Mac and Fannie Mae Push Loan Servicers to Provide Decisions on Short Sales WIthin 30 to 60 Days

Fri, 20 Apr 2012 00:37:00 GMT

Under direction from the Federal Housing Finance Agency (FHFA), Freddie Mac and Fannie Mae have issued new guidelines to their loan servicers about minimum response times for short sales. Starting June 15th, servicers will be required to provide a response to a short sale request within 30 days of receiving a completed Borrower Response Package requesting short sale consideration, or of receiving a purchase offer.

In cases where a decision has not been reached within 30 days, the servicer may take an additional 30 days to reach a decision - but they must notify the borrower within the initial 30-day time limit that the case is still under review. They must also then provide weekly status updates that include an explanation of why the decision is still pending.

These guidelines apply regardless of whether the short sale is being processed through HAFA or through Freddie’s or Fannie’s own short sale program.

Servicers also must promptly acknowledge receipt of documents. They must acknowledge to the borrower that they have received the Borrower Response Package within 3 days. If any items are missing from that package, they must inform the borrower of that within 5 days of receiving it.

These guidelines are similar to those proposed in Senate Bill 2120, which, if passed, would require lenders to make a decision on a short sale request within 75 days, with a possible extension of a further 21 days. Senate Bill 2120 has so far been read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

The majority of conventional mortgages are backed by Freddie and Fannie, so their stricter guidelines (of 30 to 60 days) will apply to most short sales. Although the guidelines come into effect on June 15, servicers are encouraged to start implementing them as soon as possible.

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/

Good News, Especially for Seattle: House Prices Up, Inventory Way Down!

Wed, 18 Apr 2012 19:50:00 GMT

Could it be that things are finally starting to look up? There is some good news this week from Realtor.com - especially for Seattle. Stats from March indicate that the nationwide median list price for homes has increased by 5.56% over March 2011. And the inventory of homes listed for sale has dropped by 21% nationwide over the same period.

But the numbers for Seattle-Bellevue-Everett are even better! Median home prices have increased by 4.98% over the past 12 months - only slightly less than the national average increase. But inventories here have dropped dramatically - by more than 39% compared to a year ago.

The median age of our inventory here in the Seattle area has also dropped by 31% over the last year, to 53 weeks. This is also much better than the national average, where the median age of inventory is 89 weeks, a 20% drop from the previous year.

These numbers are all very promising indicators that the housing market is beginning to recover - nationwide, but even more so here in Seattle. The remarkable drop in inventory here can be expected to tighten the market, create more competition and, consequently, raise home prices.

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/

State of Washington Senate Bill 6337: A Bill that will Make No Difference, Provided that your Original Short Sale Approval is Negotiated Well

Sat, 10 Mar 2012 19:17:00 GMT

A revision of Senate Bill 6337 (companion to House Bill 2718) was passed last month. The aim of the bill is to protect homeowners who short-sale their homes from being pursued by their lender for the deficiency.

The deficiency is the shortfall owed to the lender after a home is sold short. For example, if a homeowner owes $200,000 on their mortgage but, following the short sale, can pay the lender back $120,000 on the loan, the difference - $80,000 - is the deficiency.

This bill sounds great in theory. But, for the majority of homeowners who process their short sale here through Seattle Short Sales, Inc., this bill will make no difference at all.

Why? Because the majority of our approvals - in fact 93% of all short sale approvals we negotiated last month - already come with a clear wording that waives the homeowner of ever having to pay back the deficiency. Our homeowners already have the protection that this bill would offer.

The new bill applies only to short sales for which the lender has issued a Form 1099 to the borrower: the homeowner to whom the debt was forgiven. Lenders are required to issue a 1099 any time that they forgive a debt of over $600. This means that the borrower must declare the forgiven debt, and they may have to pay tax on it as if it were income. It also means that the lender may write off the bad debt as a loss, which means that they may get a tax break on that loss.

So, really, what Bill 6337 does is prevent a lender from both writing off the bad debt as a loss, and also pursuing the borrower to pay back that debt. They must choose one option or the other. (Which - really - should be the case for whenever a 1099 is issued, not only in the case of short sale deficiencies).

And that seems only fair.

But, as we pointed out, 90% or more of our recent approval letters already specify that the lender will not pursue the deficiency. Here are some sample stats showing how our track record of obtaining deficiency waivers with short sale approvals has increased over the past two years:

(A quick point here, in case you were wondering why we’ve only shown stats for a few months over the past two years: We could not afford the time to go through all of the hundreds of short sale approvals we have negotiated over that time period. So we used the March 2010 and March 2011 stats, which we had already gone through for our blog post on deficiency waivers. And then, starting last July, we changed our file-naming system so that whether the deficiency was waived (“Debt Settled”) or not waived (“Lien Release” only) is in the file title, so we selected the two months at the beginning of that period as well as the last two months. You can review our complete short sale approval letter database here).

So two years ago, back when the majority of short sale approvals did not explicitly waive the deficiency, this bill might have made a difference. But now that lenders have realized that short sales are in their best interests, too, and are willing to write into their approval letters that they will waive the homeowner of ever having to repay the deficiency… well, Bill 6337 won’t do anything. They have already said they will not pursue the deficiency.

For the minority of our short sale approval letters where the lender does not explicitly waive the deficiency… well, even then, Bill 6337 will not change much. According to the wording of the bill, the lender is only prevented from pursuing the deficiency if they have issued a 1099. But if they don’t issue that 1099, again, the bill won’t prevent them from chasing borrowers up for that deficiency down the road - or to selling that loan on to debt collectors.

The take-away here is that the protection for homeowners who are considering a short sale is that Bill 6337 will not likely protect you. Your security lies in the wording of your original approval letter. Make sure that the negotiators who are working on your behalf work towards clear and unambiguous wording about waiving the deficiency balance - and then you will know that your future is safe, Bill 6337 or not.

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/

Seattle Home Prices Predicted to Drop by Another 6.9% this Year - A Rate Nearly Twice the National Average

Mon, 27 Feb 2012 01:11:00 GMT

According to a news clip from CNN (click Play below, of view here), summarizing information provided by the National Association of Realtors and by Zillow, home prices in Seattle could drop by nearly 7% more in 2012.

Home prices in the USA are the lowest they have been in a decade. Currently, the median home price nationwide is $154,700, less than half of what it was in 2007. Housing prices are expected to drop across the country by a further 3.7% this year.

But the report goes on to break out home prices by region. Some cities, such as Washington, Los Angeles and Phoenix, have already passed through the worst of the foreclosure crisis and are even expected to show small gains in home prices this year.

However, many regions have not yet seen the worst, and are expected to show price drops that are worse than the national average for the coming year. Seattle, not having been hit as hard by the crisis so far, fits in this category.

The prediction is for home prices in Seattle to drop by another 6.9% over 2012 - a rate nearly twice that of the national predicted price drop. The only two cities with more dire forecasts than Seattle are Atlanta (8.5% drop) and Chicago (7.6% drop).

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 Senate Bill 2120 Would Require Lenders to Make Prompt Decisions Regarding Short Sale Requests

Mon, 20 Feb 2012 22:41:00 GMT

Last Thursday, a new Senate Bill was introduced by Sen. Lisa Murkowski (Republican) of Alaska. Senate Bill 2120 would require lenders to make a prompt decision when a borrower makes a written request for a short sale.

We have found that times for loan servicers to process short sales have improved considerably over the past several years. In many of our cases, once we have a purchase offer in hand and have submitted the necessary financial and legal documents to the servicer, we are now receiving decisions from lenders within just a few weeks.

But we also see cases where lenders or servicers drag these cases on and on. They misplace paperwork, or claim that they have never received the paperwork. And they frequently change negotiators on us in the middle of the case - meaning that we must make contact with someone new mid-transaction, and then wait for that person to get up to speed with the file. In these cases, our case managers often end up spending weeks, or longer, making repeated follow-up phone calls to the lender, simply to make sure that someone over there is paying attention to the case!

What Bill 2120 will do is provide limits on lenders’ response time. It will give lenders up to 75 calendar days, following receipt of a request from the borrower (in writing) to short sale the home that secures the loan. Lenders must, within that time period, either approve, or deny, or approve with specified changes, the short sale request. Lenders may also, within that time period, extend their decision date by up to 21 calendar days - but they may only do this once.

An interesting angle to this Bill is that it outlines the compensation a lender must pay a borrower if they fail to respond within that timeline: lenders must pay the borrower $1000 per violation, plus reasonable attorney’s fees, or “such higher amount as may be appropriate in the case of an established pattern or practice of such failures.” Although a homeowner would have to file a court action in order to receive this compensation, hopefully the simple fact that this law exists would be enough to encourage lenders to meet those timelines.

Another bill, which was introduced nearly a year ago to expedite short sale requests, has made it only as far as the committee level. House Bill 1498 proposed that, if a lender did not respond to a short sale request within 45 days, that short sale would automatically be approved.

On the whole, the length of time for approval of short sales is improving. The majority of our short sales are approved in well under the 75 days that this bill specifies. However, Bill 2120 would help in pushing along those few lenders who do still drag their feet when dealing with short sale requests.

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/

Home Prices Now 33% Lower Than 2006: Expected Further Drop of 1% This Year Before Recovery Begins in 2013

Mon, 30 Jan 2012 18:24:00 GMT

As reported today in The HousingWire, home prices are now a full one third lower than their peak in 2006.

Home prices continued to slide through 2011, dropping 3.9% by the end of the third quarter of 2011, relative to one year earlier.

The Case-Shiller Indexes released today predict that home prices will continue to fall another 1% this year before bottoming out. According to this index, prices are expected to then rise 3.8% in 2013.

However, Yale University Professor Robert Shiller, in an interview with Yahoo!Finance published today, treats these predictions with caution. He notes the challenges that economists face in making accurate predictions when there are not previous similar examples to study and learn from.

According to Shiller, today’s low interest rates probably don’t matter much in determining home prices. What seems to influence prices more is momentum. “So if it's been going up it will continue going up and if it's been going down it will continue going down,” Shiller says. “By that model, which is the most successful forecasting model for home prices, prices will keep going down.”

What seems clear is that the end to the price slide is probably not quite in sight. Shiller also notes that it is difficult to determine what, exactly, is appropriate pricing for housing today, given that we are heading from a period where homes were overpriced. “I don't know exactly where the middle is but it's not like we're overpriced anymore. Now the question is whether we'll overshoot, which is a common thing that happens after bubble burst.

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/

Home Price Drops in 2011 Worse Than Predicted - Seattle Prices Fall More than National Average

Wed, 28 Dec 2011 18:39:00 GMT

Bloomberg reported this week that U.S. home prices fell even more than forecast for the one-year period October 2010 to October 2011.

According to the Bloomberg report, the median prediction of 27 economists surveyed last year was for home prices to fall by 3.2% over 2011. But the figures now in show that home prices actually fell by 3.4% (according to the S&P/Case-Shiller index of property values in 20 U.S. cities).

That difference may not seem much - but the damage here in Seattle is much worse. As reported by the Puget Sound Business Journal, home prices in Seattle have fallen by 6.2% from a year ago - a drop that is nearly twice the national average. Home prices in Seattle fell by 1% between September and October alone, and by 1.1% the previous month.

The one good side to the drop in home values is that it may turn renters into potential home buyers - bringing new players into the real estate market. As homes become more affordable, some renters may choose to take advantage of the twin opportunities: low home prices and low mortgage rates, and enter the housing market.

There is still a lot of inventory available at present, and it may take time before an increase in buyers is reflected by actual rising home prices - but more buyers is a necessary early step towards any eventual recovery in the real estate market.

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/