Myth #2

Myth #2: That it is okay to wait until a buyer writes an offer to notify them that it might be a possible short sale

Reality: While you avoid the risk of running a possible buyer away you open yourself (and the brokerage firm) to the strong possibility of a complaint or lawsuit for failure to disclose. There appears to be wide misunderstanding about Federal privacy laws and I repeatedly hear that you can’t disclose because of the seller right to privacy. What the Federal privacy actually states is that you can not disclose certain personal information “without the seller’s knowledge and consent.” It is imperative that licensees understand the vast difference between the two statements, get appropriate permission from the seller (in writing) so they do not run afoul of state law and ethical concerns.

Reason: Both the seller and the agent are obligated to disclose a possible foreclosure; the seller by seller disclosure law, the agent by ethical guidelines. The “SELLER DISCLOSURE LAW” provides for a buyer to be informed of anything which might impact their decision to write an offer on a particular house. It would be a significant “failure to disclose” to not mention a little detail like ‘possible foreclosure.'

© Copyright 2007, Home Ownership Matters, LLC. All Rights Reserved.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

Q&A: Stay or Go?

Stay or go? How do I know?

Q: I am behind on my mortgage and while I would like to keep my home I can’t possibly see any way for me to make the payments since my interest rate jumped and my payments skyrocketed. The person at the bank “implied” I should just go ahead and move if I can’t make my payments. A couple of friends are also encouraging me to move now. I am not sure who to listen to. When is the best time to move if you are facing foreclosure?

A: Listen to me. First, please understand that you have the ‘Right of Possession” of your home until either, you voluntarily relinquish it (see abandonment—Jan 24) or that right has been severed. Depending on the foreclosure statues in your states usually you have the right of possession until the sheriff’s sale. Even though you are not making payments, the lender must still adhere to the guidelines in your mortgage note or deed of trust—in compliance with applicable state laws—before you can be forced from your home. Don’t speed the process up by vacating when you are not required to. You still need to use common sense—if the foreclosure has already occurred and you expect the sheriff’s auction, followed for forceful eviction to occur in February in Connecticut you might want to move in November.

In my personal situation back in 1991, I moved out on a Monday in March–BEFORE the sheriff’s sale, which was scheduled for that Saturday. My now ex-husband did some fancy lying and got the sheriff’s sale postponed—until July. There are two ways to look at this: I avoided the humiliation of being there at the time of the sale for myself and my kids but I also incurred housing expenses several months before I would have HAD to do so. You will have to make a judgment call, based on your personal situation.

Perhaps your situation will change—prior to the actual auction. The new administration may implement some guidelines which make your situation workable, there could be a moratorium of either foreclosures or auctions in your area—any number of things could change the situation for the better. Make an informed decision about what works best for you. I’m rooting for you.

Bottom line is, you have the right of possession until the fat lady sings. In foreclosure issues the FAT LADY is the sheriff’s sale.

© Copyright 2009, Home Ownership Matters, LLC. All rights Reserved. "Answer Book in a Foreclosure Climate" by Mildred Wilkins, available in 2009 from www.DovePublishingHouse.com.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments, or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

WORD: Cash-for-Keys

The WORD for Today is: Cash-for-Keys:

Cash-for-Keys is a common practice utilized by representatives of lenders or guarantors who are attempting to facilitate the vacating of a recently foreclosed property. A sum of money ($500-$1000 is common) may be offered to the former owner of the home or a tenant who has not left the property by the date of the sheriff’s sale. They will usually be asked to sign an agreement to leave the home totally empty, state a specific date and is binding only if signed by both parties.

Has become a common practice in the foreclosure business where a REALTOR or other representative of the servicer who is processing a home which has been lost through foreclosure will offer to pay the consumer (still residing in the house) an amount of cash to vacate and turn over the keys after cleaning out the house. There are occasions when cash-for-keys may be offered to a tenant who is the occupant. This practice generally benefits the lender or servicer by helping them to gain possession faster than they would by utilizing a forceful eviction as well as the financial benefit of having the consumer agree to leave the property clear of all personal belongings and debris. The consumer benefits by having an additional sum of money to help them with expenses needed to move or pay a deposit on their next residence. A consumer might expect between $500.00 to $1000.00 depending on their circumstances, the part of the country where the home is located and the particulars of this specific file. There is no automatic. They will usually be asked to sign an agreement to leave the home totally empty, state a specific date and amount being offered. Such an agreement is not binding unless it is written and signed by the lender or the representative-agent-who is operating on their behalf. It is always in your best interest as a consumer to get such an offer in writing.

© Copyright 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Fast Fact #1 & #2

Fact 1: You can legally list a house—for less than the mortgage payoff—with proper disclosure.

Fact 2: The commission is determined by the lender—usually 5-7 days before the closing.

Short, sweet, and to the point, no?

© Copyright 2007, Home Ownership Matters, LLC. All Rights Reserved.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

Myth #1

Myth #1: That the lender/servicer is obligated to pay you a commission if you have procured a possible buyer through your marketing efforts

Reality: The servcier may change the amount of commission which you will receive at any time, including just before and up to the time of the closing.

Reason: The lender/servicer is NOT a party to the listing contract. They are not legally bound to pay the brokerage firm anything and since they are agreeing to accept a short payoff they are not in the mood to pay full commission. You can understand that, right?

© Copyright 2007, Home Ownership Matters, LLC. All Rights Reserved.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

Q&A: Foreclosure Workout "Trickeration"

Q: I was behind on my mortgage and did all the right things, contacted my lender, gave them all the information they requested and cooperated with arrangements for a workout. When they finally set an amount for a repayment plan not only was the monthly payment 1½ times my regular payment but they also required an initial payment of $3,000 (I am behind by 8K). Why would they demand I agree to an arrangement that obviously my current income cannot support? This makes no sense to me.

A: The sad answer is that it is what my urban friend in Indianapolis calls “trickeration”. Trickeration is a nasty little concept where I appear, on the surface to, to being looking out for your best interests, working with you with you in a spirit of mutual respect and cooperation, while in reality I am “tricking’ you into some kind of agreement or arrangement which not only totally benefits me but I get you to agree so you can’t later say I didn’t work with you. Nor can you say it was my fault because you agreed.

Lenders/Servicers will be angry at this answer, it is nonetheless the truth. Many of the workouts which they propose and/or implement either:

1. were not based on the financial reality of the borrower at the time they were implemented, or
2. the lender/servicer demonstrated a lack of good faith and was not genuinely committed to a sustainable workout, or
3. frequently there is a deliberate attempt to set the borrower up to fail in the workout SO THE LENDER CAN THEN MOVE FORWARD WITH FORECLOSURE. Unsustainable workouts are frequently just another step in the ritual leading up to foreclosure, and/or
4. may simply be a smokescreen so the lender can assure the mortgage insurer (the ultimate risk holder) that, YES, we do have a workout in place on this loan. YES, we did our best to avoid foreclosure. Too bad you, the sucker, can’t keep up with the arrangement which you were forced to agree to.

Workouts which do not have a snowball’s chance are common practice. There is no point of you signing one IF you recognize that it is not feasible. Recommendation: try to speak with a supervisor about the terms being proposed. You will be better prepared to argue for a REALISTIC workout if you have done your homework, know what loss mitigation options are available and then cooperate fully and sincerely to reach a sustainable solution to your delinquency. Best of luck.

© Copyright Home Ownership Matters, LLC, 2009 “Answer Book in a Foreclosure Climate” by Mildred Wilkins.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have. We appreciate all feedback and comments, and especially your questions!)

From the Desk of..."REALTOR at the Crossroads"

You’re a

REALTOR at the Crossroads

This is not a time for ‘dabbling’ in real estate. If you’re not a BIG DOG or prepared to become one, you really must stay on the porch. If you’re a little ‘soft around the edges’ and cry at scary movies, now would be a good time to non-renew your license.

Challenging Times

We are hard pressed to remember a time which has been harder for the housing market, and consequently, for real estate professionals in the past 25-30 years. If you are still trying to decide whether or not to renew your license, then read on. I have been warning that we were headed for just this situation since 2002. Mostly, I have been laughed at for my trouble or asked “Are you serious?” I was serious and correct. Everybody else is adequately covering the challenges now that we are actually in the midst of them. I have chosen always to understand my environment and figure a way to become at peace with it. So, let’s fast forward to the best of times.

Best of Times

This is the best of times to seize the opportunities being presented by today’s challenging real estate market. If you have lived a few years past, say, 30, you know that inherent in all difficulties lies the potential for new opportunities. This really is the best of times to take stock of both your personal and professional lives and decide—AGAIN—what you want to become when you grow up. While traditional real estate sales, for the average REALTOR, have become difficult at best, YOU are not average. You decided to read this article hoping to find insight and perhaps direction since you recognize you are at a crossroads.

Today’s Reality

No matter what city or state you happen to call home the challenges facing real estate professionals today are remarkably similar. There are more properties available for sale, a somewhat (or perhaps extreme) smaller pool of traditional buyers, tighter guidelines for financing, more REOS and a multiplicity of factors pushing property values down. Did I describe your market pretty accurately? There are exceptions, of course, but your market is likely described above. Today’s reality. Your success depends very little on what is going on in your market. Instead, your success is tied to how you respond to the market and whether or not you position yourself to be one of the agents who not only survives---but thrives—during this turbulent market. A concentrated, committed, full-time effort will almost guarantee success.

Specialization in Expanding Fields

The successful real estate professional two years from now will be able to look back and tell you with clarity exactly when they stood at the crossroads and made a choice which took their career to a new level. Specialization in one of those areas which are expanding because of the downturn will allow you to become one of those future success stories.

What Might a Career Shift Look Like?

• REO sales person—representing lenders/servicers by selling bank owned property. ( I am a former Fannie-Mae Broker specialist.) Can you imagine the volume of listings I would have now if I still represented them?
• Trash-out Specialist—handling all the details needed to trash-out and prep homes which have been foreclosed
• Locksmith—again—working for lenders to re-key when properties are vacated prior to foreclosure and again after the sheriff’s sale for placement on the open market as an REO
• Reverse Mortgage Specialist—working for a company which sells reverse mortgages to seniors who have equity in their homes as a way to avoid foreclosure/enhance their lives
• Foreclosure Intervention Specialist—(FIS)–starting a business as a consultant to offer foreclosure intervention counseling/representation, especially in upper end markets/areas
• Investor—in rental property you expect to hold for the duration of this down economy
• Property Manager—for single or multi-family—WARNING—not a simple as saying you can.
• Short Sale Specialist—again-not as simple as saying you can. Agents who have learned to be proficient at the strategies for successfully completing a short sale will be in demand. You would have more business than you could handle—IF YOU KNEW the secrets to successful short sales.
• Default Counselor—not the same as a foreclosure intervention specialist at all. You would most likely work for a non-profit agency doing counseling or you might start your own firm
• Real Estate Attorney–who decides to represent consumers who are struggling with their mortgage payments. You would also receive referrals from REALTORS, default counselors, and foreclosure intervention specialist when legal help was needed—WHICH IS CONTINUALLY.
• Lawn Care Company—not very glamorous---but definitely a business with a strong demand. As more foreclosures occur lenders are increasingly under the gun to keep properties which they own maintained. They’d rather pay you than the city.
• Show Home Franchisee Owner—finding qualified tenants for upper end properties while they remain listed. It’s a different class of property management. Great income—thriving in some markets.
• Property Valuation—using professional BPO forms ( such as the Fannie Mae BPO long form) and skills which include making adjustments for individual components of the property. Your most likely employer: lenders and servicers. Additionally, I believe consumers would be willing to pay for fairly accurate assessment of their property’s current resale value in order to help with their difficult choices in this climate. (I’m sorry guys, the traditional BPO or CMA is not thorough enough for today’s market.)

Dare to Re-Define Yourself

Trust me, time is on your side. The current wave will be rolling for the next 5-7 years or more. Get ready for the next ‘stage’ of your real estate career. Since I entered real estate in 1993, I have gone from buyer’s agent for entry level homes to listing agent to Fannie Mae Broker-Specialist to becoming a national trainer on foreclosure issues. Life is about ‘stages.’ Get un-stuck, buckle up and hang on!!.

You’re a REALTOR at a crossroads; which path meshes with your skills and interests?

Observations From the Desk of Mildred Wilkins,
President and Founder of Home Ownership Matters, LLC.

© Copyright 2008, Home Ownership Matters, LLC. All rights reserved.
(FIS) is a registered trademark of Home Ownership Matters, LLC.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Abandonment

The WORD for Today Is:

Abandonment–means you have voluntarily left the mortgaged property. If the borrower assumes another housing payment, say rent, they are demonstrating the ability to continue making house payments, even if the amount would have been reduced. Loss mitigation rights are nullified by abandonment. While a lender may CHOOSE to still work with you; they are not OBLIGATED to do so even on government loans. See default trigger event.

Refers to the voluntary relinquishing of ownership rights by failure to use the property. Abandonment usually requires two things:
a. failure to use the property (not being physically present for an extended period of time).
b. coupled with the intent to give up your interest in the property (the actual removal of your possessions from the property which would signify you have no further interest).

It is important to understand what constitutes abandonment because a borrower’s rights could be on the line. A lender has the right to aggressively move forward with foreclosure action under the “abandonment clause” in most mortgage notes. As an author/trainer I travel extensively and may be away from my residence for 2-3 weeks at a time (do not use the property). That does not constitute abandonment since my belongings are still in place and look as though someone plans to return eventually. Therefore, there is no intent to give up my interest in the home just because I am away for an extended period of time. A borrower who removes most or all of their possessions from their home while in default is usually guilty of abandonment and should expect foreclosure action to follow.

© Copyright 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Abandon

The WORD for Today is:

Abandon–to voluntarily leave your home, thereby relinquishing your rights to the property (through failure to use the property). It is a serious misstep for a consumer who is in default to abandon. Lenders are usually less willing to engage in loss mitigation if you do not reside in the home. For government backed loans, your RIGHT TO LOSS MITGATION is tied to your continued residence in the house. The lender has the legal right to accelerate foreclosure by virtue of your abandonment, which is in violation of the mortgage note. DON’T DO IT. STAY AND WORK WITH LOSS MITIGATION.

© Copyright 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Welcome!

Welcome to Home Ownership Matters’ Blog!

Why write this blog? Quite simply because the time is right. Because I understand where you’re coming from. I have been urged by many students in my training sessions to start a blog for several years. It seemed like a daunting task until I hired my current Marketing Assistant, Heather Meade. Her training and expertise has made this possible at a time when the housing crisis has made it more important than ever that consumers be given basic information to help them make informed choices about so many of the challenges associated with real estate today.
Who is Mildred Wilkins?

I am a foreclosure intervention and loss mitigation trainer, a speaker. I am a consumer advocate who also happens to write. Most importantly, I’m a person, just like you, who has had hopes and dreams and inspirations blow up in my face. I have grown and survived DESPITE those blow-ups. I have lived—therefore I teach.

Writing is our most basic and clearest form of communication. The internet, via such tools as this blog (and website; www.HomeOwnershipMatters.com) has made it possible to reach thousands of folks in real time. I invite you to share my real estate lessons. I love to tell my students; “I’ve already taken the class and paid the price for this lesson. You can listen and avoid having to take it yourself.” I have benefited in other areas of my life from listening to the folks who already did it the wrong way so I could avoid their pitfall. I had no such teachers in real estate, so I had to learn the hard way—MYSELF.

I’ve gone from being born Black and poor to uneducated parents in southern Alabama, to graduating with honors from college, to middle income with a position at Purdue University, to a stay-at-home mom, to a divorcee with two children. I did my 6 months on welfare.

I’ve done most of the wrong things related to home ownership—and survived to tell the story. I’ve purchased several homes. I’ve built a new home ---and walked away at closing leaving thousands in a deposit on the table. I’ve bought without an inspection—leading to disastrous problems being uncovered a few months later. I’ve gone through foreclosure—and ended up with the deficiency judgment to prove I was there. Miraculously, I had not filed bankruptcy until AFTER the judgment for the deficiency on the car ($8 K and the house $28 K were recorded). I filed bankruptcy, started over and rebuilt my credit. I’ve lost a child, gone into depression and destroyed my credit again.

Professionally, I worked as a full-time REALTOR for 10 years in Indianapolis; I’ve helped others to buy their dream home. As a Broker-Specialist for 2½ years for Fannie Mae I sold their foreclosed properties. I was required to participate in the forceful eviction process as a representative for Fannie Mae. I was in charge of clearing out the remains of homes abandoned by folks in desperation when time ran out and the sheriff’s sale was imminent. I’ve written a weekly newspaper column on real estate to address the common concerns and complaints of consumers who don’t know where to turn. I’ve received professional training on Loss Mitigation. I’ve spent hundreds of hours studying laws, regulations, guidelines, pending legislation—all relating to predatory lending, mortgage fraud, foreclosure, bankruptcy, fair housing, appropriate disclosure and other subjects which directly impact our housing issues.

What will be included in this blog?

Each day we will share with you information we consider relevant to home ownership. For the first month or so most of the entries will be related to today’s more urgent housing issues—all those components connected to struggling to make your mortgage payment. We will eventually move on to home maintenance, taxes, insurance, and all sorts of other things, so continue to log on. Read and share. You could be just the answer someone needed today.

Contents:

• Today’s WORD—Will be an attempt to help you learn how to ‘talk bank’. Regular folks seldom know what the bank people are talking about. You hear the words, you may even know the words, but what the words MEAN is a whole other thing. It’s hard to communicate when you don’t know the lingo—Hence, Today’s WORD. Read it, learn it, share it.
• Fast FACTS—It is a basic fact that when you are making decisions, not just when you are purchasing a home, but ALL decisions relating to your finances become housing decisions. For instance, filing for bankruptcy impacts your future housing options. We’ll share some pearls of wisdom related to housing. We’ll make a diligent effort to give you FACTS which are relevant for most of the country. We encourage you to hold them close; treat them like the pearls they are.
• Myths and Misunderstandings—One of life’s cruel realities is that it does not matter how sincere you are—IF YOU ARE MISTAKEN. Too many folks across the country today honestly believed they could refinance out of a variable rate loan before the rate increased. They believed because they were ASSURED by a broker that they could. They believed that the broker was: working in their best interest and regulated by the banking industry. They were wrong on both counts and now they can’t afford the home they love. They misunderstood how brokers and banking work. They did not know the meaning of the word—prepayment penalty. We’ll shed some light on some common myths—clear up a few misunderstandings and prepare you to make better choices. Pass it on!
• Articles from the desk of . . .—will be included about once each week. These articles are slanted toward real estate professionals and many have appeared in REALTOR magazines or Broker-Agent somewhere in the country. Taking a course on the subjects discussed is the best way to become more competent in dealing with today’s transactions but reading any or all of these articles will certainly have a positive impact on your business. There is an ARCHIVE of articles available, FREE, upon request. For the complete list, please e-mail Heather at homeownershipmatters@gmail.com.
• Did You Know?—I didn’t think so. Well, anyway, I thought should share. There are tidbits—mere tidbits—of information which can dramatically change how we operate and therefore, dramatically change our outcomes. I am ecstatic when someone shares such a tidbit with me. Whether ordinary or extraordinary, if I didn’t know then I could not incorporate it into my life. Even if they say “Millie, every body knows that” I will happily say, “I didn’t, until now”. Knowledge is truly a powerful thing–I have always had an immense respect for knowledge. I revel in trying to attain more. I humbly share any I have. Embrace knowledge–whatever the source. Use it—Share it. Benefit from it.
• “Your Real Estate Advisor”—will be resurrected and added to the mix within the next two months. That was the name of the real estate advice column I wrote in Indianapolis for 5 years back in the 90’s. (It is also the name of my second book). We’ll talk about EVERYTHING housing: buying, selling renovating, building, maintaining, remodeling, and losing. Don’t be selfish—share the info—with family, friends, maybe even somebody you don’t particularly like. Make them wonder.
• Give me a “Q”—we’ll take a commonly asked question and provide an answer. Please keep in mind that the answer will be MY answer. By that I mean that what you will get is my opinion. That’s because it’s my blog. I expect you to have different opinions and encourage you to share those. Unlike the “FACTS” section we can have lots of answers to a single question. I am promising neither a rose garden nor THE answer. I promised you AN answer. You mustn’t yell at me. I’m sensitive.

Enjoy the blog. It is intended to educate while keeping your attention. The words are all mine. Heather is responsible for everything else. You may reach her by commenting on this blog, or e-mailing homeownershipmatters@gmail.com