JPMorgan Chase  completed short sales on 61% of its delinquent mortgage liquidations in 2011, the most of any servicer, according to data compiled by the bank’s securities research group.

As the robo-signing freeze put a hold on the foreclosure process, the largest servicers turned to short sales over REO. By the end of last year, servicers were completing short sales on more than half of their inventory of home loans more than 60 days delinquent or in foreclosure, according to the report. In 2008, short sales took roughly 25% of all liquidations.

According to Chase analysts, short selling a property resulted in an average 56% loss on the loan, roughly 15% lower than an REO sale.

A recent story [4] in Bloomberg detailed how short sales peaked even as a percentage of overall home sales in January.

Analysts at Chase, using the same Lender Processing Services data, broke down which servicers were doing the most.

Following Chase, Bank of America completed short sales on 52% of its liquidations. Ally Financial and Wells Fargo  both did short sales on more than 41% of their resolutions.

Even firms not involved in the robo-signing investigation from the attorneys general turned to short sales. While still under Goldman Sachs  ownership, 43% of Litton Loan Servicing liquidations were short sales, followed by 43% atIndyMac and 39% of American Home Mortgage Servicing, according to the report.

Fannie Mae and Freddie Mac will hold  servicers to stricter short sale timelines beginning in June. The AGs and federal prosecutors installed  similar short sale standards in the $25 billion foreclosure settlement as well. A recent report from RealtyTrac showed 2012 could lead to even more short sales.

Chase analysts project servicers will have to liquidate roughly 2 million loans either through short sale or REO every year for the foreseeable future.

“Given that liquidation is inevitable for so many borrowers, investors in distressed assets should look to servicers who are more aggressive about pursuing short sales, where severities are lower,” analysts said in the report. “In general, there has been a trend of increasing short sales, and the percentage of all liquidations that goes through short sales is over 45% now.”

At this point, most agents will pause, take a deep breath and think of all the reasons why this is the worst idea possible.  Having the seller present during an open house or showing of their property is almost always a bad idea. Here are three reasons why.

1. The seller’s presence will make buyers feel awkward.

Home buyers need to feel as comfortable as possible when looking at a potential new home. It’s a big investment, and they should feel welcome to open closets, look in cabinets, look behind the couch, or put their ears up the walls or windows. A serious buyer of a property needs to do whatever they can to learn about the home.

In the presence of a seller, the buyer may feel like a guest in a stranger’s home, a patron at a museum, or something in between. They spend too much time being cautious and not enough time really delving into the property. When buyers don’t feel completely comfortable to explore, they may miss the intricacies of a property. Or they might not give the home a fair chance. This means a missed opportunity for both the buyer and the seller.

2. Sellers tend to talk too much.

Honesty is always the best policy, of course. But don’t forget that this is a “sales” process, and that less is usually more. Let’s say a potential buyer asks the seller about the neighbors. “Oh, we love our neighbors!,” the seller answers. “They drop by our house all the time and we do the same. They’ve got high school-age kids, too, who are a lot of fun. It’s one big, constant block party!” While some might like this idea, others who value their privacy will be turned off.

3. Sellers can get hurt feelings, which can cost them money.

A seller may experience hurt feelings from questions or comments that buyers ask. This could lead to a negotiation that starts off on a bad note.

For example, a buyer touring a home with dark colored walls, floors and heavy window coverings asked his agent what it would cost to refinish the floors and paint the place. The seller, who preferred the dark, was insulted by the questions and immediately went on the defensive. When the low offer came in from that buyer, the seller couldn’t help but think that they were trying to discount the price to pay for those cosmetic changes. The seller refused to budge on price.

In this instance, emotions got the best of the seller. Ultimately, the seller lost a buyer and a good offer. The final sales price came in less than that offer by $7,500.

Exceptions to the rule

Every once in a while it helps for the seller to be present during an open house or showing.

After weeks on the market without any offers, especially with a property that needs serious cosmetic or staging work, it might be helpful for the seller to attend the open house anonymously. They can hear directly from buyers that the paint job is off-putting, how the place feels too much like a bachelor pad, and so on. The real estate agent may have been trying to tell the seller these things all along, but sometimes, independent confirmation is needed before the seller will take action.

As an example, a seller’s home was at the top of a hill. There was a steep walk from the driveway to the front door, which proved to be a major objection among potential buyers. The seller, a triathlete, just couldn’t grasp why buyers would object, and he wouldn’t budge on the price. By being present (briefly) at one open house, the seller witnessed buyers arriving breathlessly, saying snide comments like, “If I bought this home, I could cancel my gym membership.” He got the message and agreed to drop the home’s price significantly.

Fannie Mae and Freddie Mac will require loan servicers who need more than 30 days to make a decision on a short-sale offer to provide weekly status updates and give a thumbs-up or thumbs-down no later than 60 days after receiving an offer.

The new short-sale timelines, announced this week by Fannie and Freddie’s regulator, the Federal Housing Finance Agency, take effect in June as the first step in a broader effort to “develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure.”

FHFA said it expects additional changes to be in place by the end of the year that address borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.

Freddie Mac issued more specifics on its new short-sale timeline, which applies not only to offers on properties in Freddie Mac’s traditional short-sale program, but to requests from borrowers to be considered for a short sale or deed-in-lieu of foreclosure under the Home Affordable Foreclosures Alternatives (HAFA) program.

Although Freddie Mac expects loan servicers to make a decision within 30 days, it recognizes that servicers may need more time to obtain a broker price opinion or approval from a private mortgage insurer before accepting a short-sale offer or approving a HAFA borrower response package (BRP).

If a loan servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response.

So…here are the numbers:

Short sale volumes may not have experienced the boom many predicted, but they’re certainly moving up.

Late last week, the Office of the Comptroller of the Currency issued a report on year-end loss mitigation activity for most of the mortgages serviced by the nation’s largest banks.

The 227,570 new short sales completed in 2011 was a 12% increase from one year ago and more than double the 112,000 measured in 2009, according to the report.

As the robo-signing freeze thaws, and new requirements under the attorneys general settlement are enforced, short sales may continue upward in 2012.

By: Esther Cho 03/27/2012

The full implementation of the revamped HARP 2.0 program, which was initially announced by President Obama in late October of 2011, has taken several months to come to fruition.  And while in recent months it has been available on a manual basis and limited to just the homeowner’s current servicer, the series of changes that the computerized version of the program is undergoing this weekend, will dramatically increase the volume and speed of applications processed (think flying 100 people across the ocean versus 100 people swimming across it).

To be eligible for a HARP refinance, you can either use this HARP eligibility calculator with detailed eligibility explanations or follow the general guidelines below:

1. Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac. If you are unsure, you can check both Fannie Mae and Freddie Mac’s websites or you can call their toll-free number for confirmation.

• Fannie Mae: http://www.fanniemae.com/loanlookup/ 1-800-7FANNIE (8 am to 8 pm ET)
• Freddie Mac: https://ww3.freddiemac.com/corporate/ 1-800-FREDDIE (8 am to 8 pm ET)

2. You must have closed your current loan on or before May 31, 2009.

3. You must not have made a late payment within the past six months and have had no more than one late payment within the past 12 months.

4. Your loan must fall under the current conforming loan limits. If you are unsure, you can find out here: http://themortgagereports.com/loan-limits/

If you met the general guidelines, what’s next?

Zillow’s Director of Mortgages, Erin Lantz, recommends you start by contacting your current loan servicer to see if you are eligible. “You current servicer should be able to tell you if your loan qualifies for a HARP refinance and can help you apply for it. However, just like a regular mortgage program, it makes sense to shop around and compare rates, fees and lender service levels. So start with your current servicer, but it is also a good idea to check out at least one other lender.”

HARP Program specific contact information for major mortgage servicers with whom you already have a mortgage through (not for new loans or shopping for a new servicer):

Bank of America: 1-800-846-2222
Wells Fargo: 1-877-937-9357
Chase: 1-800-848-9136
Citi: 1-800-283-7918
US Bank: 1-866-932-0462

Mortgage servicers are slowly easing into the Nevada foreclosure process again.

Notices of default, the first step in the foreclosure process, plunged in October after a new law passed requiring servicers to file a copy of the deed of trust, the mortgage note and each assignment of the note.

Servicers filed roughly 5,000 default notices in September, then the new law went into effect, forcing new filings down to less than 40 statewide, said Verise Campbell, deputy director of the Nevada foreclosure mediation program, at a House subcommittee hearing Thursday.

But new foreclosure filings did increase to 400 in February, according to the most recent data from Campbell.

And servicers are planning to reboot the process soon, she said.

“Bank and beneficiary representatives have indicated in recent weeks they will soon begin filing notices of default again in Nevada after a review of their documentation and the announcement of the federal agencies and state attorneys general historical mortgage servicing settlement in February,” Campbell said.

Various reports surfaced this week, one in particular fromForeclosureRadar, which said foreclosure starts in Nevada werestill dropping by as much as 14% from January.

RealtyTrac showed foreclosures in Nevada were down 89% from February 2011. The state has held the highest foreclosure rate in the country for 62 straight months.

Janis Grady, director of the Nevada Association of Mortgage Professionals, testified about the state’s still grim outlook. Where there were 2,200 mortgage broker shops at its peak, there are now roughly 161 licensed brokers today. More than 60% of Nevada homeowners are underwater with some in as much as 200% negative equity, meaning they owe twice as much on the loan than the house is worth.

Mortgage Bankers Association numbers released in February showed the amount of homeowners turning 90 days or more delinquent was growing, a sign the market was in serious need of a foreclosure restart.

According to Leonard Chide, of the nonprofit Neighborhood Housing Services of Southern Nevada, servicers will still need time to adapt to new requirements both under old federal programs and the wider foreclosure settlement guidelines.

Negative equity is so bad in the state, Chide said, modifications without principal reduction were no longer enough to keep borrowers from walking away.

“When the clients are informed the lender will not provide a principal reduction, they opt for a short sale instead of a modification,” he said.

jprior@housingwire.com

@JonAPrior

Senators are taking note and are taking charge with this Short Sale Bill to expedite the short sale process for homeowners that  are upside down on their home values…  This will bill will help to expedite the Short Sale process…this bill is very important!

By: Esther Cho 02/20/2012