Tempe Gardens HOA causes short sale to become foreclosure

When you do a lot of short sales, every now and then you are going to run into a situation where a foreclosure happens and there is not much more you could have done to prevent that. Luckily that does not happen much, but when it does we like to tell about it here because there is usually a lesson to be learned.

We had Tempe condo we took the listing on earlier this year. When we took the listing, the condo development, Tempe Gardens, was FHA approved. We accepted an offer that was an FHA offer.

When we got the approval the buyer started to go through their loan process and we discovered that the Tempe Gardens had allowed their FHA certification to expire just a couple weeks before we got our approval and we now had an issue where we needed to get it recertified.

Now this is not an impossible task. The lender was working with us and the buyer to get this thing closed and we believed that we could do it. We made the request for paperwork from the HOA board at Tempe Gardens and they told us to talk to their management company. So the lender went to the management company who took forever to respond. Finally after many requests the management company sent over documentation. The problem was, it was only partially the documentation requested and even some of the documents they sent were not complete.

The management company told us they had provided everything they had from the HOA board at Tempe Gardens. So we went back to the HOA board and of course they once again said said talk to the management company. After many weeks of back and forth with both organizations, and calls from the angry homeowner who had paid close to $200/mo to this HOA board over the last few years, the buyer realized it was not going to happen.

We had been informing the servicer all along what was going on, and they had even granted us an extension to allow time to complete the process. But after dozens of hours, there was nothing we could do and the servicer nor the investor would allow us another extension and this condo, even though receiving approval for a short sale, went to foreclosure.

What should be really frustrating to the homeowners in Tempe Gardens is this unit was going to sell for $75,000 as a short sale is going to end up selling for much less than that as an REO property. Shouldn’t the HOA be helping to increase property values?

So I guess the lesson learned is not only check if your condo development is FHA approved when you take a listing, find out when it is expiring and if they are planning on renewing it.

Short Sale promissory notes: Can I say no?

What if the bank asks for a promissory note to approve your short sale? Can you say no? No may be the difference between a short sale or foreclosure.Of course there are some cases where a promissory note will be required, but your agent is going to need to feel the bank out and use their experience.

We had an agent Cathie VanWert join us a few months back. Cathie had a listing at her old brokerage that her Broker would now allow to transfer over with Cathie. Instead the Broker assigned the file to another agent at their office. Cathie would find out later from her former client that the deal was not going through because they could not get the bank to agree to the short sale and the brokerage was canceling the listing.

Well the lender on this file calls Cathie a couple of days ago, as she was still a 3rd party authorized agent, and tells Cathie the bank just wants to sell it and they will waive the $25,000 promissory note and won’t require any contribution from the homeowner.

Come to find out, the agent who had the listing told the homeowner the bank was requiring a $25,000 contribution. Did he want to pay it, or allow it to go to foreclosure.

The homeowner made the right decision based on the information he had, but the agent did not. The right move would have been to say no and see what the bank said. At worst they could have most likely negotiated it way down, but as we now know, they would have taken $0.

Make sure you are working with a short sale agent who has been through these scenarios before and remember…. The difference between a short sale and foreclosure can sometimes be as simple as one word… NO.

Short sale advice: Dont argue with non-decision makers

One lesson I have learned from all of my short sale negotiations is don’t argue with a negotiator. A negotiator is not a final decision maker. They can not make any decisions without checking with upper management. When that negotiator tells you it cannot be done, or tells you this is the only way they do it, and you know that is not true because you did it last week on another file, stop arguing with them and look for a decision maker who can fix the problem.

Sure sometimes it may be fun to just argue a little and give them a few pokes, but as my partner Kristin always says, you catch more with honey.

When you are on the phone discussing your short sale file keep in mind they person you are talking to most likely does not have the authority to make the changes you want. Stop arguing with them about what their policies may or may not be and use your contacts to find someone who can help  you out.

Dentist and short sales

An upcoming dentist appointment reminds me why you shouldn’t put off dentist appointments – or short sales – because you are afraid. One thing about both bad teeth and underwater homes – they don’t get better until you do something about them.

 

What is better? Foreclosure or short sale… watch out for the sharks

Short sale or foreclosure? You are getting ready to make a decision on your Gilbert or Chandler home, should you let it go back to foreclosure or do a short sale? Well just like many questions it depends, a real estate attorney can look at your loan documents and tell you what is the best option. Kevin Hardin of Thomson Law did a video for us a few months ago and he said it is almost always better to do a short sale over a foreclosure, but not always.

Sometimes home owners get so frustrated they just want to say “bite me, here are your keys back.” But saying bite me to a bank can be like saying bite me to a great white shark. Banks have been working over the last couple of years to go through all the legal statutes and all the loopholes that may be available that will allow them to squeeze out a few more dollars from Phoenix East Valley home owners.

If you walk away from your house and let it go to foreclosure you are relying and hoping the bank does not come after you. There are plenty of people in court right now defending themselves from the bank in these cases. Even if the bank doesn’t have the right to come after you, that doesn’t mean they won’t at least try.

A short sale allows you to go to your lender and work out a deal where you can get it clearly written in writing that the bank will not come after you for any money after the transaction is complete.

Here in Arizona we have some anti-deficiency laws that protect homeowners who to got foreclosure. But if you think those laws are going to protect you from the bank at least trying to squeeze a few more bucks out of a home owner you are sadly mistaken. We have seen it happen. East Valley Team co-owner Kristin LaVanway herself has had it happen to her.

If you were a defendant would you have the prosecuting attorney represent you too?

If you were a defendant in a court case, would you hire the prosecuting attorney to represent you? Of course not. So why would you do the equivalent in real estate.

Dual agency is illegal in some states, and if it were up to me it would be illegal everywhere. How can one agent really represent and give the best advise to both sides of the transaction? Sure there are some good agents, some good friends of mine, who practice dual agency. I am not saying they are doing anything wrong, but I don’t think the consumers are really thinking about it.

I used to think dual agency in short sales was alright because really it was the buyer and the seller against the bank. But then I saw things go wrong. We do not, and will not practice dual agency. In a short sale there are many things that can go wrong for the seller with approvals, contributions required, deficiency language, all things that you need to make sure your agent is looking out for your best interest.

Just think of this scenario for a moment. You are considering short selling your home and interviewing agents, as you should. One of the agents comes up to you and says they work with an investor who will put an offer in on your house day one. You don’t need to worry about showing, you don’t need to worry about the buyer sticking around and you don’t need to worry about the house going to foreclosure because a buyer cannot be found.

Sounds great right?

now step back a moment and think about it some. This agent has this investor he works with. They probably have offers on dozens of houses and there is a good chance after the investor buys this house they will use the agent to list and sell the house. If there is a gray issue, who do you think the agent is really going to look out for the most. Do you think the agent is likely to do anything that may upset this investor who does dozens of deals with?

Now things may go smoothly, but in the end if I were short selling my house I would want someone I know was loyal to me.

We currently have three houses under contract where the current buyer came to us and asked us to write the offer. We declined and all three are currently represented by another agent. We could have taken the full commission, but we think it is more important to make sure without a doubt we are doing everything we can can for our client, the seller, to fully represent them.

Two reminders about short sales, one being they lie

This past week was a good reminder on a couple of short sale lessons that we all know, but sometimes need to be reminded of.

Quick background on June 15th LBPS sent us a counter offer on a 70k Tempe short sale where they stated that the MI company was requiring the seller sign a $12,000 promissory note or they would decline the short sale.

On June 16th our seller told us he was unable and unwilling to do that as his liability would be zero if it was foreclosed on and he had a financial hardship that would not allow him to do that. So on the 16th I passed that information to LBPS.

The following week I put in a message to the negotiator on the file and would continue doing this for the next few weeks. Each time I inquired I was told it was still being reviewed, which is pretty standard so far.

On July 7th I was not happy with the lack of response I was getting from my negotiator so I called in on the general short sale phone number for an update. The support person checked the file and said there was a letter in the file from MI dated June 17th that said the offer was approved with no contribution from the seller and they were not sure why the letter was never sent to me. They were going to message my negotiator and tell them to send it off and I should have it in a few days.

A few days later I check with my negotiator and once again she stated that the MI company needed a promissory note and the information I received was wrong. My next step, hang up the phone and call back into customer service.

I get someone else and they are able to verify the same thing, the letter is indeed there and they are not sure why we did not have it yet.

By now I was just pissed, the negotiator was obviously just trying to milk more money out of the deal instead of getting it closed and was lying to me.

I email the negotiator and cc her manager then left a voicemail for her manager. Wouldn’t you know it, the very next day I get an email from my negotiator apologizing and saying there was a miscommunication and she would get the letter to me.

So two reminders, if your negotiator is saying they need something, that does not always mean they do and second if you are not getting the answers you want, hang up and call someone else.

Why short sales are better than foreclosures

So the most common question we probably get when discussing short sales is, “Are short sales really any better than foreclosures?” The answer is absolutely and I think even we who deal with them day-to-day in Arizona forget.

There was recently a file where the homeowner decided to let their home go to foreclosure because they did not want to deal with the headaches of the short sale. The home had a first and a second, both purchase money so they are protected under the Arizona anti-deficiency laws in the state.

Well just because they had no right to come after the homeowner did not mean they wouldn’t come after them. As a matter of fact about eight months after the home was foreclosed on the homeowner started receiving calls from debt collectors.

Sure enough the bank sold off the bad debt and a debt collection agency was coming after them for some money.

Now you are reading this so you understand that the homeowner was protected and will win this case, but how many others out there never talked to an attorney and would just assume they needed to pay the money.

When you do a short sale, you control the process and you can get the language to guarantee your protection written into the agreement letter.

 

 

 

Short sellers may want to avoid investors

http://www.youtube.com/watch?v=4wdNu528kus&feature=channel_video_title

There was a time, not that long ago, when we were comparing offers from buyers on our short sale listings that the investor would often have the advantage over a home owner. The reason we used was the investor did not have to live in the property by a certain time frame and may be more willing to stick around while you negotiated the deal with the servicer.

This no longer seems to be the case. We have increasingly seen over the last few months that when we get an approval letter in or a very reasonable counter offer from the bank that investors are no longer there. What appears to be happening is they are putting in offers all over the place looking for the best deals, saying they are willing to work with you. Then when it comes time, they are gone.

If an investor puts in multiple offers, then a month later puts an offer in on your listing, there is a good chance at least one or two of the earlier offers will be approved and then you are left as the seller facing foreclosure. I don’t think people realize how they are messing with the homeowners lives by doing this.

I am not saying never accept an offer from an investor, I am just saying give it careful consideration and don’t assume just because they are an investor they may be willing to stick around longer. It may be the opposite.

Primary home owners maybe your best chance to get a deal closed, if they really want to live in the property they may be willing to stick around and give the process a better chance to work out. Also $1,000 earnest money from a homeowner maybe a much bigger sting to their pocket than it is for the investor.

Let us know what you are seeing.

Nationstar continues questionable practices

About a hear and a half ago I did a video post on Nationstar and how they were bordering the line on ethics by trying to strong arm my buyer into using them to purchase a Nationstar REO even though my buyer was the high bidder. Well their questionable practices have not changed at all since then and based on recent activity I would never use them personally to purchase a house. While I have many issues with big banks, Nationstar is the most consistant one I have problems with.

I recently had a short sale I was working with Nationstar and had many issues from the beginning with the file. Just 72-hours from the foreclosure date Nationstar came back to me and said they needed some updated docs for the MI company. Within an hour I provided the missing material to Nationstar. The next day I called for an update and I was told the MI company was reviewing the file. I consistently made calls for the next two days and was told by the negotiator that if I could close before the foreclosure date (48-hours away) that the MI company was willing to issue approval. Well seeing this was a finance deal, that was not going to happen.

I immediately got on the phone with the MI company and tried to make inroads with them. The morning of the foreclosure I get someone with authority to make a decision on the phone at the MI company and they told me they were still waiting for the documentation from Nationstar that I had provided a few days ago. I was furious and sent it to the MI company right away. They did a quick review and issued approval 30 minutes before foreclosure. Nationstar refused to work with me and foreclosed anyways and despite my efforts for three days after refused to rewind the foreclosure.

Now I hear about a new issue with Nationstar that mirrors what they were doing with their REO properties. I had a local guy email me after finding my earlier video on Nationstar and tell me about a short sale Nationstar was servicing. He was purchasing the short sale and was requesting closing cost assistance, nothing out of the ordinary. He was told by Nationstar that they would approve the assistance, but only if he used them for the deal.

This is a short sale right? Isn’t the idea to avoid foreclosure and to assist the investor on the loan from losing more money by preventing foreclosure? I wonder how the investor would feel if they knew Nationstar was playing these games? I am guessing not to happy.