The Short Sale
In 2009, I wrote my first blog on short sales and it’s amazing how much the short sale transaction has changed. We had the most success with short sale transactions dealing with Wachovia Bank since we closed an escrow in about 60 days from offer to closing; alternatively, it took me a year to close a pretty easy Bank of America short sale — a short sale that had no seconds, only a Bank of America purchase money First T.D. Why did it take Bank of America one year to close a simple short sale? I still ask myself that question so it’s no wonder why Real Estate agents don’t want to touch this type of transaction.
Maybe the biggest issue with the short sale is the loan modification. For over a year, the banks allowed property owners to stay in their homes without making payments while the world watched in shock. Then came the HAMP and then the HAFA. If you are not aware of these Treasury Department recommendations, these volunteer programs have had very little success within the scheme of things. While in Washington D.C. the week of March 28-31, 2011 with CAR Leadership for the CAR “Officers’ Congressional Appointments” meetings, I had the opportunity to meet with members of Congress, Freddie Mac, Fannie Mae, the Treasury Department, the Federal Trade Commission, and HUD, I see why everyone is so confused and everyone has a different solution. In 2010 Fannie Mae closed about 190,000 REO’s and about 75,000 short sales. Since their losses were greater on the REO side, they admitted that the short sale is their preference because it saves the company money. If Bank of America, Wells Fargo Bank, CitiMortgage, Chase Bank and every mortgage banker can give you a DU or do a loan approval subject to an appraisal and close in 20 to 30 days, then why does it take so long to determine if a homeowner can qualify for a loan modification? There are very few mortgage principal write downs — generally only where fraud appears or special circumstances occur. After sitting in the Capitol Committee hearings on Fannie Mae and Freddie Mac in Washington DC and listening to Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency, testify to the committee, I would be surprised if Fannie or Freddie start the process of principal write downs any time in the near future. Most loan modifications are not HAMP modifications and most short sales are not HAFA short sales, mainly because they are both volunteer programs offered by the Treasury Department. No wonder the program does not work. Each bank uses its own set of guidelines, using the HAMP and HAFA guidelines only as a model.
Currently, I have several short sale transactions in process and my newest agent is having a lot of success working short sale listings. Even though we are not doing loan modifications, now we need to worry about the new MARS rule, our disclosures, and our record keeping. What a life for the professional Real Estate agent!
AUTHOR: LeFrancis Arnold, CAR 2011 President-Elect, LACBOR Past President — http://www.LeFrancisArnold.com
