Urban Life

HAFA, Short Sales and Government Koolaid

There has been a lot of talk about HAFA,  Home Affordable Foreclosure Alternatives Program (HAFA). For those who don't know, HAFA, is a government program touting to reform short sales, making them more streamline and doable. In truth it is government Koolaid at its finest.

Personally, I had high hopes for this bit of policy until the reality of it came to light. It is so full of loopholes, opt-outs and poor thinking that it would be funny if it didn't give false hope to so many who need the real thing. Let's look at some of the BIg Problems as I see them.

• The guidelines are simply that, guidelines. It is not law, only a suggestion on how banks and loan servicers should handle short sale applications. Since it is not law, there is no requirement to play. Gutless and non enforceable language is how I see it.
• Homeowners have to attempt a loan modification and be denied before the guidelines can kick in. This is a real BIG problem as loan mods are expensive, time consuming, frustrating and seldom granted. According to one expert, most people can't afford a loan modification and when denied are days or weeks away from foreclosure.
• The guidelines have little if any upside to the banks, lenders and investors. Since it is an opt-in program, they have little motivation to participate. I don't know about you, but I haven't seen too many articles touting the compassionate nature of the banking industry. To the contrary, they are generally bottom liners and the HAFA guidelines do not favor their bottom line.

Our advise, as short sale knowledgeable real estate guys, is to work with an attorney who really knows short sales and a realtor with a lot of knowledge. We believe you should have your attorney help you submit your short sale package to the lender and handle all conversations. NOTE: Make sure the firm you hire has a dedicated short sale division and a strong track record. Short sales are not for the inexperienced or weak at heart. They demand a lot of knowledge and skill sets many do not possess.

If you want to learn more about short sales, we have a web site dedicated to short sales, www.short-sale-phoenix.com, that includes a FAQ section, numerous articles and referrals to qualified legal counsel who can help negotiate your short sale.

That concludes this rant about short sales. Hope it helps and please, please don't drink the government koolaid on this one. It may help some senators and congress people get votes, but it is unlikely to help get your short sale done.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

www.UrbanTeamAZ.com
www.Short-Sale-Phoenix.com
www.UrbanConnectionRealty.com

The Failure of HAMP and Loan Modifications

There was a great article in Inman News discussing problems with the government's HAMP program. Steve Bergsman authored the piece and it illustrates the weak link causing most of the problems…failure of the loan servicing companies.

We’ve talked about the the problems with short sales and loan mods in previous posts, Steve Bergsman’s article gives even more insight.

HAMP's failure is quite evident. As of January, more than 900,000 homeowners were in "temporary" trial loan modification plans, but mortgage servicers had managed to convert only about 63,000, or 7 percent, of the temporary modifications to permanent modifications, reported the Treasury Department.

Here is a link to the Inman News piece for you to learn a bit more from a top industry expert’s perspective.

Enjoy…

Gene Urban
The Urban Team at Realty Executives
602-234-5777

The BIG IndyMac Bank Swindle... You have got to see this one.

The gang at ThinkBigWorkSmall.com have put together a startling video that is a must see by all Americans. If you aren't OUTRAGED by their findings I'd be more than surprised. Below is a link to the article. Go there now and send the link to anyone you think will want to hear this story.

http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1533767

Pass it on...

Gene Urban
The Urban Team at Realty Executives
602-234-5777

Short Sale, Bankruptcy, Walk Away. What should I do with my home?

I received a copy of this article from my friend Lisa Capes at Chicago Title. It is written by two Phoenix area attorneys who practice real estate and bankruptcy law. I thought the information was both topical and thoughtful. I called Stuart and we had a nice chat about the issues homeowners face today. Below, and with permission, we are posting their article. If you have questions, please contact Stuart or Robert. Their contact info is at the bottom of this post.

House Underwater? Possible Courses of Action
by Stuart Pack and Robert Nagle

Many homeowners today are faced with the situation where their homes are worth less than what they owe on their mortgages. In fact, the issue has reached the national media, with the New York Times and National Public Radio both presenting articles on this issue this week alone.

This article briefly explores some options a broker or attorney can discuss with a homeowner who is considering the sale of their home.

There are 4 viable alternatives for homeowners to consider: the first is to continue to make the monthly mortgage payments. This is what most homeowners do. For numerous reasons and regardless of whether the payment can be afforded, homeowners feel obligated to repay their loans, even though it may not be in their financial interest to do so.

The second alternative is loan renegotiation. Many homeowners who have requested their lender to renegotiate their loan have discovered that their lending institution is reluctant to modify the terms of the loan and when their lender is even willing discuss a renegotiation, numerous hurdles must be overcome before the loan can be renegotiated. It is generally rare for a lender to agree to actually forgive any of the principal of the loan.

The third option is to find a buyer for the home and negotiate a "short sale". As with asking a lender to renegotiate a loan, many homeowners find the short sale process to be extremely frustrating, time consuming and ultimately an unsuccessful endeavor. This is not to say that a successful short sale is impossible, but it is frequently a difficult process.

Last and newest is the "Strategic Default." More and more homeowners are electing to walk away (i.e., intentionally default) from their mortgages and let their lender foreclose. These homeowners have reached the conclusion that the financial reasons to walk away outweigh the reasons to continue to make the monthly payments to the lender. There are several viable reasons to consider a Strategic Default.

Arizona has long established "anti-deficiency" laws with respect to home loans. What is a deficiency? A deficiency is the difference between the principal balance due on a home loan and the amount that the lender receives at a foreclosure sale. Thus, if the loan balance is $500,000 and the lender receives $200,000 at the foreclosure sale, there is a deficiency of $300,000. "Anti-deficiency" laws are generally intended to protect homeowners from the lender collecting the difference. In fact, lenders making loans in Arizona are aware of the inherent risk to them of the anti-deficiency laws, and typically price their loans accordingly.

There are many criteria used to qualify under Arizona's anti-deficiency statutes. Each situation is unique and upon review, an attorney who specializes in real estate transactions can determine whether the property would qualify.

Finally, a Strategic Default may not have as great an impact on your credit score as the lending community would have you believe. Many commentators think that a borrower's credit scores will take the same hit (e.g., 200 to 300 points, depending on overall credit conditions) through a short sale or foreclosure, and both remain on a person's credit report for seven years (bankruptcies remain for 10 years).

Being informed about the options available to a homeowner will help establish your credibility as not only the right person to assist with a potential home sale but also as an advocate for the best interests of the homeowner.

These are complicated issues that should be discussed with competent counsel familiar with real estate law and bankruptcy law. For more information, please contact Stuart Pack or Robert Nagle at (602) 595-6951 or email them at stuart.pack@naglelaw.com or robert.nagle@naglelaw.com.

How to Avoid Loan Modification and Foreclosure Scams

It is kind of sad I have to write this article. It doesn't say much for humanity when there are people out there scamming people who are facing foreclosure. However, they are out there and if this post saves just one family I will be happy. It it puts a few of the scammers behind bars I'll be overjoyed.

That said, let's look at the problem, a few of the red flags. some common foreclosure scams and a few ways you can protect yourself. Most of the information I am passing on is from the Arizona Attorney General's office... a great team trying hard to protect the public.

THE PROBLEM:

Scam artists are preying on the frustration and fear people facing foreclosure feel. They make big claims of help... for a fee of course.

 They act professional and often appear to have a good plan. They collect an upfront fee and vanish like Houdini.

RED FLAGS:

• They guarantee to stop the foreclosure process no matter what your circumstances are.
• Instruct you not to contact your lender, attorney or credit counselor.
• Collect their fee prior to provide services.
• Accept payment by cashier check or wire transfer only.
• Instruct you to transfer your property deed or title to them or one of their agencies.
• Offer to fill out all the paperwork for you.
• Offer to buy your home for cash at a fixed price that is not set by the housing market at the time.
• Tells you to make your mortgage payment to them rather than you lender.

COMMON SCAMS:

The Phony Counseling Service:
They tell the borrower they will negotiate with their lender if the borrower pays an upfront fee. Then they provide little if any service.

The Lease or Buy-Back Scam:
Homeowners are conned into signing over the deed to their home to the con artist and they can stay in the home until such time they can afford to buy it back. Often, the terms of the buy-back are so extreme the homeowner can not afford to buy the home back and are eventually evicted from the property.

Bait & Switch Scam:
Homeowners believe they are signing documents for a new loan to make the mortgage current but they are actually signing over the deed and left holding the mortgage for the home they no longer own.

Refinance Fraud:
Same as the bait and switch. Usually the con artist poses as a mortgage broker or lender.

HOW TO PROTECT YOURSELF FROM SCAMS:

DO NOT pay money to people who promise to work with your lender to modify your loan. There are exceptions to this rule, generally we advise clients to use reputable, well known attorneys or firms. The Attorney General's office or Maricopa Bar Association can help you.

DO call your lender yourself. Many are being much more agreeable these days and have staff in place to help you.

JUST because they seem nice and helpful doesn't mean they are. Scam artists are actors.

DO NOT sign over or transfer your deed as a part of the foreclosure avoidance transaction. You should only sign over a deed when selling your home for a fair price. We advise talking with a reputable real estate attorney if you have any questions.

DO NOT pay your mortgage payment to anyone other than your lender, even if the person promises to pass on the pay on your behalf.

DO have an attorney review any documents before signing. Many homeowners think they are signing new loan documents when in fact they are transferring ownership to the scam artist.

If it sounds to good to be true, it probably is. Report suspicious schemes to the Arizona Attorney General's office to help others, as well as yourself.  They can be contacted at 602-542-5763.

WHERE CAN YOU GET HELP?

The Arizona Foreclosure Prevention Help-Line is a good place to start. You can call them tool free at 1-877-448-1211.

We hope this post is of help. Please pass this information on to anyone you know who is facing foreclosure. Together we can keep each other safe from the bad guys.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

If you are considering a short sale and would like more information, our Short Sale Web Site has lots of answers. www.Short-Sale-Phoenix.com

What You Need To Know About Loan Modifications... the real truth

One of the information sources we subscribe to is Inman News. Its a great real estate news site with loads of information. An article in today's feed caught our eye. It has to do with the Federal Government backed loan modification program. What was interesting is what they called The Ticking Time Bomb. 

Most people are not aware of a balloon payment often added to the back side of your loan after modification. Isn't there is always a hook with a government back program?

Rather than summarize the article by noted columnist Marcie Geffner, we thought we'd just give you a link. If you or someone you know is considering loan modification, this is am important read... don't pass it up!!

Here is a link the the Inman News article on loan modifications. 

If you have any question or need a referral to an honest loan modification specialist, please let us know. In addition, we wrote an article on the subject you may want to read as well. Below is a link to our article on loan modifications.

Loan Modifications... what they are and how to do them.

Hope you have a great day and thanks for spending time at Urban LIfe. Come back often to see what's new on the real estate front.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

FTC & Several States Go After Mortgage Modification & Rescue Scams

We get a few calls a week from people asking who to turn to for help with loan modification. We ended up writing a post on the subject of loan modification help. Here is a link to the article on loan modifications.

However, we've also heard about many people being taken advantage of by companies promising help, yet delivering none. Personally, I think such pond scum should be given lethal injections... how can you take advantage of people who are in trouble, scared and reaching out for help? Just makes me crazy.

Anyway, the Federal Trade Commission in a coordinated effort with many state attorney generals are going after these low-life scoundrels. Below is a partial list of companies who have been identified by the FTC as alleged rip-off artists.

• US Foreclosure Relief
• Lucas Law Center
• Loss Mitigation Services
• Apply2Save
• Lighthouse Services
• Pacific Shore Financial
• California Foreclosure Services
• HE Sevice Company
• Safe Harbor
• Pomery & Associates
• Homeowners Legal Assistance
• Future Financial Services, LLC
• Synergy Financial Management Corp. dba Direct Lender
• Home Relief Services
• US Homeowners Assistance
• RMR Group Loss Mitigation
• United First

A couple of months ago we were contacted by one firm who offered us up to $1500.00 for every referral we sent their way. Naturally, we declined the offer and let the firm know we did not feel they had the client's best interest in mind. As I recall we told them we considered their tactics as predatory and evil.

If you are considering a loan modification or mortgage help and assistance, be careful and wise. Below is a little video from the FTC that may help you avoid being scammed.

Gene Urban
the Urban Team at Realty Executives

Media Says Foreclosures Down Due to Government Plan... Is that the real truth?

Many of you probably saw the story on AZCentral touting the government's Homeowner Affordability and Stability Plan (HASP) as the reason for foreclosures being down and banks responding to homeowners in trouble. Personally, I believe it has much less to do with the plan and more to do with banks finally having the infrastructure to deal with the problem.

The AZCentral article is an example of a reporter being too lazy or ignorant to understand an issue. The result is an article that simply does not reflect the facts. Judging by the 10+ pages of comments from readers, I don't think I am alone in these feelings.

The HASP has been helpful, but it is not the main reason banks are being more responsive to troubled homeowners. I do believe Obama's message opened the eyes of people facing foreclosure and helped prompt some into action.

I believe much of the change has been due to the banks finally having sufficient staff and systems in place to handle the work load. Look at it from a business standpoint.

Let's say you operate a car repair shop and suddenly your business increases 20% in two months. You probably respond by working your staff harder and trying to handle the load within the systems you have in place. Then the work load increases another 300% in the next 6 months. Your waist-deep in work now. You can't keep up with the work and you don't have the time to find solutions. This is what the banks faced in 2008.

At one point, bank management recognized the severity of the problems and started tackling them. Banks, traditionally, are not rapid responders. The problem has to be studied, departments have to learn to share data, solutions need to be evaluated, reviewed by attorneys, reevaluated and so on. It's a slow process and the solutions were often outdated before being implemented... a bit like our freeway system updates. In late 2008, new systems are in place, additional manpower hired/trained, computer systems bought, software reconfigured and they, the banks, are in a position to better serve their customers.

In February 2009 the politicians step in, create pretty policy and announce how they will get to the bottom of this problem and solve it. 

As Realtors we witnessed the change in bank performance regarding the sale of foreclosure properties. Last Fall it we often waited as long as three weeks to get a response to an offer made on an REO home. Today, the response time is 24-48 hours. The reason is simple... they have systems and personnel in place that can better handle the workload. They are still underwater but not like they were  a few months ago.

In conclusion, let's give credit where it's due. The Government's policy would have had little effect if the banks had not put in place the people and procedures to better serve the public.

Gene Urban
The Urban Team at Realty Executives
602-234-5777

Loan Modifications, What They Are, How to Do Them, and HopeNow.Com

Jim Murphy, a Phoenix-based real estate attorney with Carmichael & Powell PC, spoke at our office meeting this morning. He discussed a number of issues including loan modification. I thought I’d pass on some of his wisdom, as well as our thoughts on the subject.

Let’s say you find yourself unable to pay your current mortgage payment. Maybe the interest rate went up, your employer cut your hours… something changed. One of your options is to seek a loan modification from your lender.

Simply stated, a loan modification is exactly what it sounds like.. a modification to the terms of your loan.

• Your lender may agree to extend the payment period and re-amortize the loan.
• The lender can lower the interest rate.
• The lender may tack any amounts in arrears to the principle balance and re-amortize the loan.
• Sometimes, not often, lenders reduce the actual loan amount.

In other words, you and the lender try to find a way to make the payments affordable and keep you from defaulting on the loan.

How do you proceed with a loan modification? There are a few ways: