I found some great information on a blog post today from the OC Register. The story was focused on the Orange County area, but clearly shows the degree and areas that were hard hit with unsavory loans in the Inland Empire.

The loans that shook the financial world started small.

In 2004, the first year that the Fed’s Home Mortgage Disclosure Act database tracked high-priced subprime loans, subprime was a bit player in the California home market.

But a Register analysis of HMDA data shows that subprime quickly grabbed market share in lower middle-class neighborhoods up and down the state in 2005 and 2006. In 2007, as subprime giants like Orange-based Ameriquest and Irvine-based New Century downsized or shut down, subprime again became a bit player.

These maps show the spread and retreat of subprime loans in Orange County and neighboring counties from 2004 through 2007. Another set of maps below describe a similar pattern statewide.

These maps represent what we’re calling the subprime penetration rate, the percentage of total home loan volume in each census tract that was high-priced. Yellow on the map indicates that subprime accounted for 15 percent or less of total loan volume; green is for 15 percent to 25 percent; light blue for 25 percent to 35 percent; dark blue for more than 35 percent.

A caution: The industry defines subprime using credit scores; the Fed defines high-priced loans as those that cost at least 3 percentage points higher than a Treasury bill of comparable maturity. The two terms don’t match, but the Fed’s high-priced category appears to capture most subprime and some alt-A loans.

In 2004 there are just a few pockets where subprime lenders grabbed more than 15 percent of the market: most notably in central Los Angeles between the I-110 and I-710 freeways, and in the Inland Empire, especially along the I-10 corridor.

In 2005 and 2006, however, the picture changed dramatically. Suddenly the subprime guys and gals were making more than 35 percent of home loan volume in a huge swath of LA and the Inland Empire. They also started doing big business in Orange County, where many of them were headquartered. Look at the I-5 corridor and especially at Anaheim, Garden Grove and Santa Ana.

By 2007, business was cooling down almost everywhere outside central L.A. and portions of San Bernardino County.

For many Southern Californians, the desert and the San Joaquin Valley are windshield territory — places best crossed at high speed on the way to someplace else. But there’s a remarkable economic story to be told here: These regions are adding new residents by the tens and hundreds of thousands, drawn by cheap housing and new jobs.

Subprime lenders played a big role in financing the valley’s and the desert’s growth. The proof is in the maps.

Watch the spreading blue zone — the tracts where subprime accounted for at least 35 percent of total home loan volume. In 2004, it’s isolated to a few patches in the desert and the southwestern corner of Tulare County in the San Joaquin Valley.

By 2005 the entire valley from Bakersfield north to Stockton is blue. The bluest areas are along State Highway 99, which connects the valley’s urban centers. And subprime is now spreading north to Sacramento and to the farm counties above it.

In 2006 the urban parts of the San Joaquin Valley are solid subprime turf. Today cities in this zone including Merced and Stockton have some of the highest foreclosure rates in the nation. Note too how subprime spread to virtually the entire high desert, from Lancaster and Palmdale in northern L.A. County to Victorville in San Bernardino County.

That was subprime’s peak year. In 2007 the map shows far fewer blue areas, though subprime continues to be common in most of the San Joaquin Valley. The largest blue areas, by the way, are lightly populated tracts — the vicinity of Death Valley National Park in Inyo County on the state line, and the Santa Barbara County back-country.

Today I was talking to a fellow that called me to find out about how a Short Sale works.  I realized after talking with him for nearly an hour that there are a lot of people (real estate agents) that give out conflicting and incorrect information.  I don’t believe that it’s intentional in any way, but scary for the person that needs to be informed correctly regarding this very important subject.

Some of the topics that were of interest and concern to him….

The loan modification he was offered was not going to help him enough per month on his payment and he was going to have to keep all of the principal balance.  The payments he was currently making were taking nearly 3/4 of his pay per month.  So, he had basically depleted his savings and was now having to look for a new place to rent for a while, but found he was lacking the money it was going to take for deposit and first month’s rent to move…not to mention moving costs.

I assured him that as long as we had the home listed for sale, and it was able to be shown to clients, his lender  would not be ask him to leave the home even if he was not making his payments.  As I explained, it’s like an ordinary sale in most ways.  The main factor in a Short Sale is that the “bank” is really now the seller and as real estate agents now negotiate with the bank instead of him.

For some people, doing as little damage to their credit is very important.  So I would say to those of you that fit this category…if your able, stay current on all of your financial obligations.  If your like most of us that are facing mortgage payments that are increasing at the speed of light and it’s just not possible to make those payments, don’t.  But get your home listed for Short Sale as soon as possible and stay current on as many of your financial obligations as you can.

One last little tip, if you live in a home that has an HOA (Home Owners Association) do what ever you can to not let those get behind.  HOA’s hold quite a bit of power, and will slap a lien on the property in a heart beat!  And that lien will have to be paid before the sale of the home.

Hope this information is useful, as always, please email us if you have any questions!

It appears that their is something coming to California Homeowners that have Counrywide loans. We will find out more today concerning the specifics. We will keep you posted.

Countrywide mortgage pact may be worth $3.5 billion to California loan holders
Bank of America Corp. agrees to nation’s largest mortgage-workout program to settle charges of lending abuse.
An estimated 125,000 Californians who are struggling with risky mortgages from Countrywide Financial Corp. may get their loans modified and payments reduced under a program to be announced today.

In a pact that could save mortgage holders billions of dollars, Countrywide owner Bank of America Corp. has agreed to the nation’s largest loan-modification program to settle charges of lending abuse brought by California and other states.
The program could reduce payments to Countrywide borrowers and provide other benefits to total as much as $8.7 billion nationwide. It would examine nearly 400,000 loans across the nation — about 125,000 of them in California — to see how they could be reworked and made more affordable. That could include switching customers to fixed-rate loans or reducing the interest or principal.
Bank of America said Countrywide mortgage-servicing employees would be trained to carry out the program by Dec. 1 and would then begin reaching out to eligible customers. The plan includes a foreclosure freeze for borrowers who are likely to qualify until Countrywide has determined their eligibility, the bank said.

But officials acknowledged that some borrowers were beyond help and said these customers would need the cooperation of investors who owned the loans. Such assistance was not always forthcoming in the past.

The settlement includes a program for California borrowers who are behind on their Countrywide mortgage payments or are having their homes foreclosed by the lender.

The total value of the benefits could reach $3.5 billion to California homeowners who took out risky, adjustable-rate loans from Countrywide, California Atty. Gen. Jerry Brown said.

The program, to be announced today by Brown, applies to mortgages made before this year. It had been endorsed by at least nine states as of Sunday, including California, Florida and Texas, where Countrywide wrote the most loans.

Its central thrust — changing the terms of subprime and other risky loans — was to be applied across the country, even in states that might not accept the overall settlement, California and Bank of America officials said.

“It’s not perfect,” Brown said Sunday, “but we have some money for people who already have been kicked out of their homes, and we have money for people who may get foreclosed on later. And there are some very significant payment reductions for people. This will allow them to stay in their homes.”

According to Brown’s office, the settlement could save borrowers up to $8.7 billion nationwide, nearly all of it through interest rate and principal reductions. There was no word on how much people whose homes had already been foreclosed would receive.

The $8.7-billion estimate assumes that all eligible borrowers participate and that investors in mortgage securities cooperate with the loan workouts.

Those are big ifs, said Robert Gnaizda, general counsel of San Francisco’s Greenlining Institute, a fair-lending advocate. “There’s no way of saying how much borrowers are going to save on this. The talk of $8 billion is pure speculation,” Gnaizda said after reviewing a description of the plan. “All that being said, I believe this is a very important first step.”

The agreement almost certainly would rank as the largest predatory-lending settlement in history, dwarfing the nationwide $484-million settlement with Household Finance Corp. in 2002 and a $325-million settlement with Ameriquest Mortgage Co. in 2006.

Those settlements involved payments to borrowers, however, not loan modifications.

Bank of America officials said the settlement costs would not exceed those anticipated when it acquired Countrywide in July for $2.5 billion in stock.

Although numerous lawsuits and federal investigations continue against Countrywide, ex-Chairman Angelo Mozilo and other former executives, the settlement helps Bank of America shed liability for the aggressive lending that helped trigger the current global financial crisis and left hundreds of thousands of Americans stuck in loans larger than the value of their homes.

Under BofA ownership, Countrywide has stopped making the types of adjustable-rate loans that caused the most problems, officials said.

Countrywide’s prior lending practices put families into loans they couldn’t understand and ultimately couldn’t afford, according to Brown, who said the settlement sought to compensate the borrowers.

According to the agreement, borrowers assisted by the loan workouts would not be precluded from joining private class-action lawsuits against Countrywide or pursuing their own claims.
Barbara Desoer, president of Bank of America’s mortgage and insurance operations, said: “We are confident that together with the attorneys general we have developed a comprehensive program that provides more solutions than ever before to assist troubled borrowers and put them back on the path to sustained home ownership.”

The states of California, Illinois and Florida took the lead in the settlement, said Benjamin Diehl, a California Department of Justice attorney specializing in lending abuse. The three states had sued Countrywide and its subprime unit, Full Spectrum Lending, in June, alleging they maximized short-term profit by deceptively marketing risky loans with low starter rates to borrowers who didn’t understand that their payments would one day “explode.”
The program will first identify customers who have fallen behind on their mortgages by more than 60 days or are likely to do so because of loan features such as rate or payment increases, Diehl said. These customers will be contacted by Countrywide starting Dec. 1.

Various options will be considered for eligible customers, with employees handling the workouts instructed to first consider refinancing into a fixed-rate Federal Housing Administration loan, Diehl said.

The options on subprime mortgages also include keeping the initial rate for five or 10 years, having the borrowers pay interest only and reducing the interest rate to as low as 3.5%, Diehl said.

For pay-option loans, many of which now amount to more than the borrower’s house is worth, the options include writing the principal down to 95% of the home’s current appraised value and lowering the interest rate to 3.5%, he added.

In addition to California, Florida and Texas, the states that signed the settlement are Connecticut, Washington, Arizona, Ohio, Illinois and Iowa.

Brown said he believed most of the investors who owned the loans would accept the modifications rather than foreclosure at this point.

“It’s not exactly what they wanted, but it’s better than default,” he said. “In this environment of people talking about us heading for a depression, I think having a predetermined fixed amount coming in will be attractive to them.”

Countrywide mortgage aid

The total value of the benefits in California could reach $3.5 billion. The plan calls for:

* Loan modifications, mostly through reduced interest payments, and in certain cases reductions of loan balances

* Suspension of foreclosure on delinquent loans while loan modifications are being reviewed

* Waived late fees

* Payments to delinquent borrowers or people whose homes have been foreclosed

* Waived prepayment penalties for borrowers whose loans are modified, paid off or refinanced

* Additional payments to borrowers who can’t afford their monthly payments after loan modifications and who lose their homes to foreclosure in the future

Source: California attorney general’s office

This is for our clients…you have been wonderful to work with! Thanks for letting us share.

Like most of our clients, the ***** family were no longer able to make their mortgage payments. Their home had a sale date set in less than two weeks from them contacting us. It was a little complicated, they were also going through a chapter 7 and the lender had gone to court to get a “relief from stay” allowing the lender to foreclose even though they were protected by chapter 7.

We put the home up for sale immediately and within a few days had several very good offers. The first lender, AHMSI, American Home Mortgage (servicing company for Option One Mortgage) was quick to respond and postponed the sale date.

Three weeks into the negotiations we get a call from Ryan at AHMSI. Ryan requests the second lien holder, in this case, Bank of America accept $1000 to release their lien. Then the sale would be approved.

Unfortunately Bank of America has implemented new criteria for short sale acceptance. The criteria states that Bank of America will accept no less than a 10% payoff of a debt balance being charged off as collectible. Well, you can see the issues with this request. I was able to discuss in detail the chapter 7, and the demand from the primary mortgage holder with a Ms. Kelly, (has the pull to say yes).

Getting to Ms. Kelly and getting the approval for acceptance of $1000 took a little over 2 weeks. So, from the time we took the listing till this point has been about 45 days. Not bad for getting both approvals under the circumstances.

One thing happened along the way, we lost the buyer to the lengthy process, oh and the other few we had as back-up were still around but placed new “lower” offers to meet the declining value of the area.

From this point I will just insert the chain of emails for all to read.

Hello Ryan,
I am sending a new offer on the property. Escrow is completing the HUD with all of the required changes resulting from our last conversation/offer. I did not send in an updated HUD on that offer due to the buyer backing out. The issue with this property has been the second lien holder, BofA as I explained to Mr. Kellty. They were not willing to release for $1000, which is your policy. We have remedied that. When I called in today, to find out if you had received this new offer I was told it was too low and I would need to counter, With a sale date set for tomorrow I don’t have time to get back to the buyers agent. This home has been discharged in a Chapter 7, we have interest in the property. When I spoke to Mr. Kelly he told me he would work with us to help the ****** family avoid foreclosure. Could I request that you order an interior BPO on this home? The offer that we are providing to you today is in line with recent sales as you will see. The property must be able to appraise for the lender to fund, according to all information, this offer is at the high end.

Hi Ryan,
I am Kim’s partner. We received your email this morning and we understand a business decision.
You mentioned that you had an appraisal done. When was the appraisal completed? The declines in this market are staggering. We are seeing declines of over 6% per month in Rancho Cucamonga.
I would be remiss in not fighting for our clients best interest. We have reviewed the recent listings both “Active” and “Closed” in this gated community. There are no recent sales and 7 active listings in this very small gated community. The average days on market is 46.8 and of the 7, 7 are distressed properties i.e. Bank owned, short sales, or pending Trustee’s.
In today’s climate of declining sales, another home on the market is a “coal on the fire.”
Rancho Cucamonga, while a lovely city, is suffering from a tremendous volume of distress properties. There are currently 761 Homes on the market. 378 are marked as “Distress” sales in MLS. That is over 50% of the homes in Rancho Cucamonga. And that is assuming that the Agent remembered to check the “Distress” category of the listing. My thoughts is that there are many more.
According to Commonwealth Title, The International Title agency, there were 408 Notices of Default and Trustee Sales filed for Rancho Cucamonga from 08/08/2008 – 09/08/2008. That is staggering and this is your competition for resale when you enter the market with another Foreclosure.
These figures, while staggering are simply a sign of the times and according to a Department of Economic Studies at UCLA recent study, they reported that Southern California has a minimum of 2 more years of decline.
Again, we appreciate your companies decision, however, with these staggering declines, your client is more than likely to suffer a great loss over the next 6 months as this property is not sold at Foreclosure and is placed back on the market in 2 months at a lower price than currently listed.
Thank you again for your consideration.
Best,
Kris Darney
714-615-7605

Ryan discussed an appraisal with me that was done at the onset of the filing of the Chapter 7. This would be at minimum a 4 month gap to time of request for the BPO. A few years ago this would not have been so significant. …but this is the Inland Empire….October 2008. Prices are declining monthly!
I’m not sure how a servicing company is paid. It would seem by this transaction that it’s not based on retention. This is one of the most disgusting business practices I’ve ever experienced! The servicing company has most likely spent more money on foreclosure costs than this home will eventually sell for by the time it’s back on market in about 3 months.

It’s being called a rescue package for our financial system. Obvious goal is to slow down the foreclosures. Keep people in their homes….Let’s take a look at the specifics of this $700 Billion “rescue Package”.

How does the bailout plan help homeowners facing foreclosure?
The plan provides the Treasury secretary as much as $700 billion to buy troubled mortgages, and securities tied to these mortgages that are held by banks and other large investors. When these assets come under government control, federal officials are required to “implement a plan that seeks to maximize assistance for homeowners” and use their authority to minimize foreclosures.

Is this rescue package different from what government & lenders are already doing?
Federal officials have already been encouraging lenders to modify loan terms whenever possible. Mortgage industry experts say most lenders are willing to make modest changes to payment plans to avoid the time and expense of foreclosure but are reluctant to do so if they determine that the borrower lacks the income to make even modified payments or if their losses would be too great.
Does anyone see real help for homeowners here?

There are different opinions on that. Steven Adamske, spokesman for the House Financial Services Committee, believes that the government — by becoming an investor in mortgage-backed securities — will have new clout to demand that loan servicers modify mortgages. “If servicers are an impediment [to loan workouts] we can take another look at the industry next year and see if there are other actions we can take to remove roadblocks,” he said.

Unlike a private investor or lender, “the government is here to help. We want to rebuild neighborhoods from the ground up,” Adamske said.

But Paul Leonard, California director of the Center for Responsible Lending, a nonprofit advocacy group, thinks the measure really won’t help many homeowners. He believes the only way to ensure people stay in their homes is to allow bankruptcy judges to modify or forgive loan terms in bankruptcy cases, which he said could have prevented 600,000 foreclosures. Such a measure has been opposed by mortgage lenders, who say it would discourage banks from making loans.

Families facing foreclosure….Hold on tight!

Nearly 2 million mortgages are delinquent by 60 days or more, putting them at risk of foreclosure. Industry experts say there have been more than 900,000 foreclosures since 2007.

Loan Modification….

Foreclosure prevention is centered on two programs, both of which have “hope” in their name.

A new federal loan workout program called Hope for Homeowners begins this month, targeting those unable to pay their mortgages. It is for homeowners who bought their homes before 2008 and now have monthly payments exceeding 31% of their income.

Under the program, banks would in many cases write down mortgages to 90% of a home’s current value. Such a provision would be important in California, where many recent home buyers have mortgages that now greatly exceed their property values.

The new 30-year fixed-rate loan would be insured by the Federal Housing Administration and could not exceed $550,440.

An existing voluntary effort to prevent foreclosures has been in place since last year. Called Hope Now, the program is a joint effort by lenders, mortgage servicers and nonprofit housing groups to help troubled homeowners renegotiate their mortgages. Through this program, borrowers have been able to defer or reschedule monthly payments or reduce their loan principal.

How will I know whether the government owns my loan?

This has yet to be determined. The Treasury secretary will have 45 days to implement a plan, and presumably these details will become available at that time.

Tom Deutsch, deputy executive director of the American Securitization Forum, a financial industry group, said that in many cases the loan servicer won’t change even if the government has taken over a mortgage. You can ask your loan servicer who owns your mortgage, but if the government was one of many investors in a mortgage-backed security into which your loan is packaged, you might not be able to tell.

Deutsch said the government might also set up a method for borrowers to inquire about that holds their loans.

Consumer advocates say you should first contact your lender to see whether you can adjust the terms to make the payments more affordable.

For those of you, who don’t fit the guidelines for this homeowner bail out, please consider a Short Sale. There are options for you other than a foreclosure that will haunt you for 10 years.

Important Information about Title IV of H.R. 3221 Foreclosure Prevention Act of 2008 - HOPE for Homeowners

For many homeowners the dream of owning a home has become a nightmare. An option that has received a lot of attention is the FHA Housing recovery bill of 2008.

Title IV of HR 3221 This program claims to serve approximately 400,000 home owners.

HOPE for Homeowners Program - The bill establishes a new program entitled the HOPE for Homeowners Program. The program will be overseen by a Board made up of the Secretary of HUD, the Secretary of the Treasury, the Chairman of the Federal Reserve Board, and the
Chairman of the Federal Deposit Insurance Corporation (FDIC). The Board will have the authority to develop standards within the framework of the legislation.

Eligible Borrowers - Only owner-occupants who are unable to afford their mortgage payments are eligible for the program. No investors or investor properties will qualify. Homeowners must
certify, under penalty of law, that they have not intentionally defaulted on their loan to qualify for the program and must have a mortgage debt to income ratio greater than 31 percent as of March 1, 2008. Lenders must document and verify borrowers’ income with the IRS.

New Loan Amount - The FHA refinancing program will let borrowers who have defaulted on their existing mortgages to refinance into FHA-guaranteed loans. Lenders must write down the principal balance of the loan to no more than 90 percent of the current value (and in some
circumstances less), and put the borrower in a 30-year fixed rate mortgage. Loans up to $550,000 are eligible. FHA is not allowed to charge insurance premiums sufficient to cover the risk of these borrowers, so it will result in a cost to the government, which will be paid for at first by funds from the Housing Trust Fund.

Equity & Appreciation Sharing -In order to avoid a windfall to the borrower created by the new 90 percent loan-to-value FHA-insured mortgage, the borrower must share the newly-created equity and future appreciation equally with FHA. This obligation will continue until the
borrower sells the home or refinances the FHA-insured mortgage. Moreover, the homeowner’s
access to the newly created equity will be phased-in over 5 years.

Existing Subordinate Liens - Before participating in this program, all subordinate liens must be extinguished. This will have to be done through negotiation with the first lien holder.

Qualified Safe Harbor - The legislation provides loan servicers with an incentive to participate in the program by offering a safe harbor against legal liability.

Program Size - The program is authorized to insure up to $300 billion in mortgages and is expected to serve approximately 400,000 homeowners.

Program Sunset - The program will begin October 1, 2008 and sunset on September 30, 2011.

The biggest challenges many folks will find with this program are the strict guidelines for qualifying. It is important that you completely understand this program when assessing your options.

In the borrower qualification guidelines issued by the Department of Housing and Urban Development on July 24, 2008 you will find even more restrictions….Here are some of the highlights:

* Borrower must certify that they have not intentionally defaulted on the eligible morgage or on any other debt (false statement = fine and/or 5 years in prison)
* Current lender must voluntarily forgive balance of existing loan to 90% of current market value.
* No pre-payment penalties can exist
* No subordinate financing (2nd mortgages) can exist. Subordinate lien holders must forgive liability.
* Requires borrowers to share equity and any future appreciation in the value of the property with the Federal Government.

It does seem that this program is a viable option for those that do not plan to ever move or refinance (due to having to pay the Federal Government 50% of all future equity) and can qualify for an FHA loan using full income tax returns, pay stubs and asset documentation.

Loan modification is another option for folks that are looking for temporary to permanent payment relief and even buy some time to figure out what is best for you and your family. This can also be a confusing process due to an increase in loan modification Scams that are beginning to rear their ugly heads in these difficult times.

We have already seen the “tactics” these new loan modification companies are using. It seems that as quickly as sub-prime lenders where going out of business, new loan modification companies are opening up to prey on the folks that they took advantage of the first time! We received a call from a home owner just about ready to either have to list the home for Short Sale or face certain foreclosure asking us about this new “help”. The homeowner was approached by a loan modification program that was supposedly going to get him a loan modification and allow him to stay in his home. The cost $$$, quite expensive, and no guarantee he would qualify. They did tell him that if the loan modification was not possible they would list his home for Short Sale!

Just a quick vent session and I will get back to the wacky world of Short Sales! I’m not a genius, but as I listen to CNN discussing the bank crisis…..I have to ask myself this question: Who are these people that are making the call at our lenders to foreclose rather than accept fair market value?  What type of rigid interview process and criteria were they put through to have the power to ultimately affect our economy, families that are trying to salvage their dignity: while moving their family to who knows where not to mention their own Bottom Line?

Each day is a new experience working with lenders, some very good and some not so good.  Kris and I work very hard for our clients.  It’s important to them as well as our community to avoid more foreclosures in our neighborhoods.

Today I was checking in on one of our Short Sales for a family that was unable to keep their home of 13 plus years due to life circumstances and a serious increase in monthly mortgage payments.

After daily faxes and calls to the lender, I was told the offer was finally received.

To be professional and disguise my real feelings here, we will refer to the person I spoke to at the bank as the “The Guy”.
I was very calm, and simply asked if I could speak to the negotiator for the file. “The Guy” felt compelled to ignore my request and continue to waste both of our time.
“The Guy” completed his bad grammar with the broken sentence with “Oh, you have to counter that offer if you want to speak to the negotiator”.

I took a deep breath…and asked politely about the sale date set for tomorrow, October 1?
“The Guy”
responded that he was not a negotiator and could not help me with that. Again…I asked if I could speak to the negotiator?
“The Guy” reading from the script on the back of his hand told me that I have to counter the offer, it is too low, and it will take up to 72 hours for the bank to recognize the new offer…so I should call in a few days….!

Trying to talk to the “The Guy” at the bank was useless! 

I tried to dummy it up and explained that the offer was actually higher than the recent home sales for the same size homes in the area.  I asked him if there had been a bpo ordered, anything to understand why the offer was deemed too low…?

“The Guy” told me this is how they do business and if I wanted my offer to be considered I must counter with a higher offer.

So, can you see the circle here???? I appeased him and said sure, I’ll counter, but can you hold the sale for a few weeks and allow for the new offer to be reviewed? 

“The Guy”
Answer: A swift ” You have to counter this offer, it is too low”
I said, ok….will you hold the sale? 
“The Guy”
“I’m not a negotiator, you would have to talk to a negotiator for that”.

Getting a little frustrated about now….still asking to speak to the negotiator….!

“The Guy”
“you can’t talk to the negotiator, your offer is too low, it’s been rejected”. “You have to counter this offer, it is too low”  

My last few words to
“The Guy” before I hung up…Sure, I will counter, are you going to put a stay on the sale? 

Can you guess what he said?

“The Guy” “Mam, you have to counter this offer, it is too low”

Ok I’m feeling more frustrated now than when I started this!  I faxed a nice note to the negotiator, and the negotiators supervisor. We will see what happens tomorrow, hope to avoid such an unnecessary foreclosure.

Bottom line…CNN…Housing Crisis…Change…Federal Bank Takeovers…

This is an internal issue with most of our lenders, no matter the Politics involved, we have idiots at most of these banks calling the shots. It’s not just the families that are loosing their homes to foreclosure that are being affected. It’s every last one of us that live here in America. Somewhere down the line maybe a genius will step up and STOP allowing these banks to run themselves into the ground, then have the government come to the rescue.

It’s all about the bottom line….or is it?

Foreclosure notices fell nearly 90% in California with the implementation of state bill 1137 on September 8th. I found a great chart that shows the huge decline in Notice of Defaults and Trustee Sales here in the state of Ca. Here’s the staggering fact! We went from 3k to 4k notices PER Day to just a few hundred PER day…

This is only temporary…

NOD is the first stage of foreclosure after a borrower misses three to four mortgage payments. Notice of Trustee Sale is the second stage of foreclosure that gives the borrower notice their home will be sold at Trustee sale shortly thereafter. Timeline for NTS comes about 120-150 days following the NOD or about 8-10 months after the borrower misses their first payment, depending on the efficiency of the lender. From NTS the home is sold at Trustee Sale in about 14-days or so.

As you can see from the chart below, the week following Sept 6th when the new law was enacted NOD and NTS activity falls off of a cliff, down 90% from the week prior. (data in partnership with Foreclosure Radar)

Notice the day before the law went into effect, the banks sent out two times the number of notices…hmmm. We see data anomalies like this all of the time, especially around end-of-quarter…BANKS!!!

This new law requires the foreclosing entity to perform significant due-diligence ahead of sending out foreclosure notices in the future. What this does, however, is simply postpone the problem a month or so if your looking at this from the lenders point of view.

Now, if you’re a homeowner that’s facing foreclosure….look at it as that extra time you need to figure out how you are going to avoid immanent foreclosure. If loan modification is not an option, it’s time to learn about Short Sales. Banks doing business here in California are being forced to find alternatives to foreclosure.

That is a very good thing for all of us.
Short Sales are becoming more accepted, major lenders have Streamlined the process…can you believe it! Our last Short Sale with Countrywide was a total of 3 weeks from taking the listing to getting approval from their new Short Sale department. Amazing, the lender that used to turn down offers, now has added employees to staff this “Special devision”.

Ok, back to the chart:

This will have a positive effect on the September monthly foreclosure numbers when they are reported the second week of October by Realty Trac and other data providers. Remember, CA makes up roughly 40% of all US foreclosure activity. However, it will make for a dramatic rise in the November numbers once they get caught up and in compliance.
Banks and servicers are doing all they can to quickly comply with the law and resume sending NOD’s and NTS’. These notices are required by law before their take back their collateral so rest assured, they did not want to stop sending these out and being on record. When they begin to stream out again we will know in real time.

Kris and I live in the “Inland Empire”; one of the hardest hit areas of the country. Being Real Estate Agents, our decision to become Short Sale experts was an easy one. Our lives are touched daily with calls from people that are loosing their homes. Using everything we’ve learned during our training and experiences that we deal with daily….trying to help people that truly want to avoid foreclosure…however, nothing to date has hit me like this news.

As of 9/1/2008 Bank of America has implemented new criteria for short sale acceptance. The criteria states that Bank of America will accept no less than a 10% payoff of a debt balance being charged off as collectible. The criteria also states that Realtor commissions shall not exceed 4%.
Here’s proof BofA is sticking to the new criteria…
bofadecline1

What’s going on in America? The state of California passed a bill that becomes effective on or around September 8th SB1137 ordering all lenders doing business here in California to find alternatives to foreclosure
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Bank of America beat the law makers here in California by 8 days! Their new criteria became effective September 1, 2008.

A piece of information that we’ve learned over the past year; when dealing with mortgage lenders that hold the first lien on a property…most if not all, allow only 3% of the sales price to go to subordinates, some cap at a maximum pay-off of $1000. Way to go BofA, do you share this decision making information with shareholder? The shareholders that will soon feel sharp declines in stock prices…due to this stupid “un-thought” process

I’ve found some fuel to add to this fire that BofA has started and will most likely let burn ’till it hurts many.

Foreclosures accelerated to the fastest pace in almost three decades during the second quarter as interest rates increased and home values fell, prompting more Americans to walk away from homes they couldn’t refinance or sell.

New foreclosures increased to 1.19 percent, rising above 1 percent for the first time in the survey’s 29 years, the Mortgage Bankers Association said in a report today. The total inventory of homes in foreclosure reached 2.75 percent, almost tripling since the five-year housing boom ended in 2005. The share of loans with one or more payments overdue rose to a seasonally adjusted 6.41 percent of all mortgages, an all-time high, from 6.35 percent in the first quarter.

Tumbling home prices are making it difficult for even the most creditworthy owners with adjustable-rate mortgages to sell or get a new loan as their financing costs rise, said Jay Brinkmann, MBA’s chief economist. Prime ARMs accounted for 23 percent of new foreclosures and subprime ARMs were 36 percent, he said.

“People chose the lowest payment option to get into some of the very expensive housing markets and now that prices are coming way down, they can’t sell and they can’t afford the higher payments,” Brinkmann said in an interview. The unadjusted rate for new foreclosures was 1.08 percent, also a record, he said.

Foreclosures started on prime mortgages rose to 0.67 percent from 0.54 percent and the foreclosure inventory increased to 1.42 percent from 1.22 percent, the report said. The share of seriously delinquent prime mortgages was 2.35 percent, up from 1.99 percent.

Existing home sales fell to a 10-year low in the second quarter and the median price for a single-family house dropped 7.6 percent, according to the National Association of Realtors in Chicago.

Sales of previously owned homes rose 3.1 percent in July to an annualized pace of 5 million, boosted by foreclosures that accounted for about a third of all transactions, the National Association of Realtors said in an Aug. 25 report.

Some content from Bloomberg.com