First of all, is this legislation a direct challenge to MERS? (the Mortgage Electronic Registration System). An explanation of that system follows below and has been copied directly from their web-site:

MERS is an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.

Simply put, MERS allows banks and investors to exchange mortgages without the typical title and escrow work we’re all familiar with when we buy, sell or refinance our homes. While your home may have stayed with you all these years, your mortgage has likely changed hands many times. This system has served the banks well for many years. However, at this point bankers are clearly lacking in confidence when it comes to risking a felony offense.

Secondly, this will no doubt have an affect on housing inventory in Nevada. At some point in the near future the inventory of available bank owned homes will drop dramatically. Short sale home sellers may delay their plans. Why rush to sell short if the lender isn’t going to rush to foreclose? I’m very concerned that this will create a false sense of demand in the market. Prices may rise due to scarcity but there’s no doubt reality will roar into the market someday soon.

Last but not least, why would any bank want to lend in Nevada? Let’s think about this… High unemployment, declining home values, state mandated foreclosure mediation and now this. Seriously, I’m no big fan of the banks but common sense would seem to dictate that Nevada is not a great place for banks to do mortgage business. Home financing is already tough in our market. No doubt this will only make things tougher in the long run.

Let’s hope our legislators do a little more homework before they pas the next round of laws intended to protect us all.

The 203 (k) is a HUD/FHA guaranteed loan that provides funds to help buyers both purchase and renovate a home.  These loans may be particularly attractive to buyers looking to purchase homes in areas hit hard by the foreclosure crisis.  A 203 (k) loan requires a 3.5 percent down payment and follows standard FHA guidelines and loan limits, which, which range from $271,000 to $729,750 for 15 or 30 year mortgages.

The FBI reported a jump of 71% in mortgage relief fraud investigations from 2008-2009, and expects this number to have grown in 2010. 

That’s why it’s my duty to educate homeowners in my community on the cautions they need to take, and what the government has recently done to protect you from unscrupulous individuals and companies who want to take advantage of their desperate situations.

What you need to watch out for if you are looking for mortgage relief assistance:

1.  Upfront fees—just don’t pay them! In fact, they are now illegal!
2. A request to sign over your deed (this only spells trouble)
3. Lots of paperwork without the opportunity for review
4. The claim of government-affiliation

These are just a few red flags you need to be wary of. I’ve created a free report on the homepage of my website that details more of what you need to watch for.

I f you are struggling with an unaffordable mortgage and are looking for help, educate yourself. These scammers can be very shrewd and will say almost anything to steal your money.

The Federal Trade Commission has required disclosures of anyone offering mortgage relief services. If you’d like to see an example, check out any of the pages of my website. If a company you are dealing with has not provided these disclosures, please ask why they are not compliant, and proceed with caution!

As a CDPE and a Dickson Realty agent, you can trust that I have the tools to be in full compliance of FTC regulations, and will always work with your best interests at heart.

CLICK HERE FOR FORECLOSURE ALTERNATIVES

Now that more than one in four American homeowners is “underwater,” I feel that it’s important for the community to know the truth about strategic default.

The truth is the foreclosure process carries with it credit issues, current and future employment challenges, issues with security clearance and possible debt collections.

That’s why it is vital to explain the 3 reasons why the term “strategic default” is misleading:

1. There’s nothing strategic about defaulting on purpose, especially when you have options like short sales, mortgage modifications, and refinance (just to name a few) that may keep you from foreclosure.
2. The waiting periods to apply for a new mortgage loan are at least five years less in a short sale vs. a foreclosure.
3. A foreclosure will show up on your credit report every time you apply for a home loan, car loan, new job, etc., and will affect your financial situation for many years to come.

Foreclosures in Washoe County increased by 16% in January 2011 over December 2010, and up 23% over January 2010. 

If you are underwater and can no longer afford your mortgage payments, you need to create a genuine strategy to avoid foreclosure, helping to provide stability for you and our community.

If you have any questions about what steps you or someone you care about should take next, contact me today – 775.813.2387! 

I offer a free report at http://www.KevinBown.com

From the bank’s perspective, the homeowners who are delinquent have the most immediate need to receive their assistance.   In addition, if you are able to continue making your payments they may request a cash contribution or promissory note from you at the closing of the short sale in order to approve the short sale.   Your lender will consider your entire financial situation when making this determination. 

There is an exception.  If you have an FHA loan on your home and you want to do a short sale you will be required to be 31 or more days delinquent at the closingof the short sale.  You do not have to be delinquent at the time you apply to the FHA Pre-Foreclosure Sale Program. 

Working with an knowlegable short sale listing agent is key.

The benefits is that once a buyer has made an offer they no longer will wait 60-90 days to get an answer as the underlying approval process was completed prior to listing the property for sale.   This will greatly increase the stigma that has been placed on short sales and make these listing more attractive to buyers. 

There are several other programs that follow a similar model.  The HAFA program designed by the US Treasury is available to borrowers who qualify and provides for an upfront approval.  Also, if your mortgage is FHA insured the FHA Pre-Foreclosure Sale Program requires homeowners to get approved into the program and sets the list price prior to the marketing/listing of the property. 

The key for homeowners in the Reno-Sparks market is to contact an experience agent who can make you aware of all your options when facing a possible foreclosure.  When a short sale is the best solution for a homeowner, hiring an agent who is knowledgable about all the programs available to them is crucial. 

For more information on the Bank of America Cooperative Short Sale please contact me.

In looking at the Tahoe Donner subdivision in Truckee, which comprises the largest percentage of the sales in the overall area, the statistics are similar. A total of 222 single family homes sold in the subdivision (5 less than in 2009), at a median price of $520,000, a decrease of 8% from 2009, and a total decrease of 32% over that subdivision’s high of $765,000 in 2005. The 86 homes currently on the market within Tahoe Donner is only a 4.6 month inventory.

The sale of distressed properties increased in 2010, no surprise. Of the 858 homes sold, 151 were REO (investor owned) and 108 were Short Sales, an increase of 22% over the number of REO/Short Sales sold in 2009. We anticipate this distressed property activity to continue in 2011, as homeowners and their real estate agents/representatives continue to negotiate short sales where loan modifications/refinances are not an option, and lending institutions continue to sell their inventory of homes taken back in foreclosure.

A bright light for Buyers, and Sellers too, for that matter: Frank Nothaft, chief economist for Freddie Mac, says he expects long-term mortgage rates to hold below the 5% threshold throughout 2011, as key macroeconomic drivers provide a backdrop that supports a continued, albeit gradual, housing recovery. Turning to home prices, Nothaft says markets that have large inventories of for-sale homes and REO properties will continue to see home-value weakness in 2011, but he believes price indexes for the U.S. as a whole are close to bottoming out.

In this mountain paradise we love to call home, that’s great news. We look forward to another successful year, helping buyers and sellers realize their dreams!

Consider the following prior to purchasing a foreclosure or REO property:

AS IS – what this means to a bank is just as written. Most banks have no interest in providing repairs even if they are safety and health issues. If the property you are considering appears to have problems make certain you get the appropriate inspections.  Often times utilities are turned off at bank owned properties but sometimes you can get the utilities turned on for inspections by asking the listing agent or paying for this yourself.

DISCLOSURES – In the course of a standard sale, the sellers are required to provide you with all information regarding the property that they are aware of, as is the listing agent.  The bank has no such obligations and most of the time might not be aware of any problems, so again, get the utilities on and get the property inspected.

CONTRACTURAL OBLIGATIONS – Contracts written by banks do not necessarily protect you from losing your deposit as in a standard sale. Be certain your real estate agent understands the timeframes in the bank contract so your deposit is safe should you decide to back out of the purchase.

EXPECT SOME CHAOS – Typically banks like to work with their own escrow and title companies and might hurry you on deposits and then take what seems like forever to get the necessary signatures on documents for you.  Again, make certain your real estate agent understands the system and will always be prepared for the unexpected to keep the deal on track.

Above all, be patient and know your buyer agent is doing everything to close the escrow for you.

Here are the key changes:

1. Monthly Gross Income Requirements- Servicers are no longer required to verify any financial information to determine if the borrower’s total monthly mortgage payment exceeds 31% of the borrower’s monthly gross income.  This being said, the servicer is still required to verify the borrower’s hardship and may request financial documents to evaluate the hardship.
2. Vacant Property Requirements – Properties can now be vacant or rented up to 12 months prior to the Short Sale Agreement as long as the borrower can prove that the residence was their primary residence and they have not bought another home in that time.  Relocation no longer is limited to work related relocation and the relocation distance requirement has been removed.
3. Release of Subordinate Liens (Paying Off Second/Junior Liens) -  the 6% cap to pay off junior liens has been eliminated.  The servicer determines the percentage going to each junior, but the $6,000 cap is still in place.
4. Timing For Issuance of Short Sale Agreement – now for both HAFA short sales initiated by the servicer  and those requested by the borrower, the time line for the servicer to respond to the borrower is 30 calendar days. (Please note that many servicers are not adhering to this guideline simply because of the volume of HAFA requests.  There does not appear to be any penalty to the servicer for not meeting this timeline.)
5. Timing For Response To Alternative Request For Approval of Short Sale – if the borrower submits an executed sales contract, Alternative RASS and signed Hardship Affidavit or RMA, the servicer must communicate approval or disapproval, or a counter within 30 calendar days. 
6. Real Estate Commissions – the 6% cap remains, but servicers must now include a statement in the Short Sale Agreement that they will not deduct 3rd party vendor fees from any agent commission.
7. Alternative Deed-In-Lieu (Deed for Lease) Programs – these programs did not previously qualify for the borrower to receive relocation incentives.  They now are included but only when the DIL is final.
8. Borrower Notices – Servicers can now consider a borrower for HAFA while the borrower is considering HAMP.

Servicers are not required to, but may re-evaluate borrowers who were previously ineligble before the guideline were changed. 

For more information contact me for the full Supplemental Directive 10-18.