WORD: Eviction, Forceful Eviction

The WORDS for Today:

Eviction—a court action to remove someone from a property which is owned by another. Eviction is frequently required after a lender has been forced to foreclose against a homeowner who has become unable to make the house payments, and then refuses to vacate the property after notification of the pending sheriff’s sale.

Forceful Eviction—the use of legal recourse by the lender to gain possession of the residence. If the property is occupied by the owner of record in a fee simple title, then the owner has the right to continue to live in the home, rent free, until the foreclosure sale. Once the sale has occurred, the lender is entitled to possession and may then take steps to force the consumer out.

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.)

Myth #5

Myth #5: There should be no ethical concern if you inform the co-op agent at the time the lender approves a short sale that there isn’t enough money there to pay the percentage of commission which your brokerage firm advertised.

Reality: If you have advertised a co-op fee to promote the sale of a home, then you should be prepared to pay whatever you advertise. If you do not do so, you are begging to be taken before the Ethics committee.

Reason: You have promised to abide by the NAR ethical standards, one of which states you will deal fairly with your fellow agents. Is it fair to promise me (through your advertising) $4,700.00 if I bring a ready, willing and able buyer for your listing and then tell me at the last minute you made a little mistake and I will only be getting $3,200? While the lender is controlling what commission they will ALLOW on the short sale, they do NOT control what you advertise, what is to be paid to my brokerage firm, nor what your client agreed to pay for the service of having their home listed and sold. I understand the short sale game; that does not change the fact that I am legally and ethically entitled to receive the amount of commission you advertised. As a buyer’s agent my relationship is with you and your brokerage firm. I am not a party to, nor do I care what contractual concerns or restrains are involved, on the listing side of the transaction. It would be extremely helpful if real estate boards got some clarity about WHY lenders can control the amount of commission paid from proceeds and then made the necessary accommodations to address the new reality. Changes to commission policy, mls guidelines for advertising, data input sheets, and training for practitioners are sorely and urgently needed to address this matter.

Copyright © 2008, 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!)

WORD: Default

The WORD for Today is:

Default—When a person does not have the ability to make their mortgage payment as scheduled. A default begins on the date when the mortgage payment should have been made. This date should not be confused with the grace period. Once the consumer has gone into default, the lender has the option of accelerating payments, demanding payment in full and/or other action leading to foreclosure. If the lender fails to declare the existence of default, in keeping with the terms of the note and mortgage, they may be deprived of the right to accelerate repayment of the debt.

Default means failing to meet the requirements of an agreement or failing to perform a legal duty. Most often the term is used to indicate that someone has failed to make the required payments on their mortgage. It is important to note that you may also be “in default” due to failure to maintain insurance as required, or failure to keep the collateral in good condition.

“Default”—[as used in the PROMISSORY NOTE] means that a regularly scheduled payment has not been made, in full, on the date it was due to be paid. Many folks miss both the simplicity and the essence of this very short paragraph. Notwithstanding the allowance for a grace period, you are legally in default on a mortgage when the scheduled payment is not in the lender’s possession, in full, on the 1st of the month. While allowances are made for late payments and a grace period exists, there would be no need for “grace’ if you were not already in default.

Default Action Plan—Should include the following, as a minimum. As a consumer you should:

1. Identify the cause of the default. Is the cause temporary or permanent? Can you provide documentation that the reason for the missed payments was either a reduction in your income or an increase in your expenses. In either case, most often you will be required to demonstrate a circumstance which was beyond your control. Voluntarily leaving a job or reducing your hours are considered under your control. Moving from your home to another city, even for a better job opportunity is considered under your control.

2. Design a plan for catching up missed payments. The plan should be feasible based on your current income or realistic expectations of future income (a definite job commitment or date of return from layoff or disability) and include consideration for other expenses which must be carried on at the same time you are resuming payments. Seldom is a 1½ payment realistic and such an arrangement is strictly prohibited on FHA backed loans under Mortgagee Letter 00-05 (See HUD's Website — You will need to click on the letter "00-5" in order to download it).

3. Get in touch with the lender’s loss mitigation shop (also called the work-out department). Your best hope for a good resolution is to speak to the head of this department. Customer service does not typically offer loss mitigation options or work outs that extend past a couple of months of default.

4. Explain the problem. You must be prepared to explain your situation in detail and you should expect to be asked to provide documentation of both the cause of the inability to make payments as well as the detailed information about your current finances as a way to gauge what options might be considered.

5. You should plan to be part of the solution by not only asking for help, but by understanding the different options which are possible, when each might work and under what circumstances. You should see February 24th's entry, where Hardship, Hardship Letters, and Hardship Packages were discussed (here).

6. You should always return phone calls.

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.)

Q&A: Real Party of Interest

Q. I had been making payments for more than a year to Company X and fell behind on my mortgage payments by a couple of months. Today I got what looks like a foreclosure notice from a company I have never heard of before. The amount they say I owe is wrong and they are claiming that I have not made payments for the past 8 months. I don’t want to lose my home over some mistake but I can’t afford an attorney. Is there some way that I can figure out how to keep my home on my own?

A. There is a strong possibility that you may be able to block the foreclosure long enough to figure out what is going on. Your first step is to file an “answer” (see here) to all the correct parties.

Let’s cover some basics about the “real party of interest.” The real party of interest is the only entity or individual who can be the plaintiff in a lawsuit. Concerning your mortgage or deed of trust, the real party must either have purchased or otherwise have acquired legal ownership of the collateral in order to sue you as a plaintiff for non-payment of the debt. There is also a provision for a servicer who has been granted servicing rights “with assigns” to be the named plaintiff as well, since such a arrangement grants all rights to the holder as though they were the rightful owner. “Servicing rights only” does NOT grant one the power to sue for payment as a plaintiff in a foreclosure action.

In all cases, the named plaintiff should be able to provide documentation that they have the legal right to pursue you for payment. Send a qualified written request and demand that they provide such documentation. The documentation you need is a copy of the transfer of your note/deed of trust. Or proof that a transfer of servicing rights “with assigns” was made prior to the filing of the foreclosure. With so many lenders making transfers of files all the time, they have gotten really sloppy about these little details. Many times servicers are identified as plaintiffs in a foreclosure action when they have no legal right to do so. Challenge the validity of the action, not the truthfulness of your default. Additionally, dispute the amount declared to be in default and request documentation of all funds paid by you on the account.

Essentially I am saying that many foreclosures are processed and completed, folks lose their homes when the lawsuit was filed by someone who was not, in fact, the “real party of interest.” A consumer borrowed money from Bank X, who transferred the loan to Bank Y, who was then bought by Bank Z. Bank Z owned Bank Y, but your note is still held by Bank Y. Bank Z cannot legally be the plaintiff until there is a transfer of your SPECIFIC note to Bank Z.

It’s a simple concept once you think about it. Use an attorney if you don’t feel competent doing it yourself; but I think you could handle this yourself once you fully understand.

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: Hardship Package

Hardship Package—is a very comprehensive package of information used by the lender to determine which loss mitigation option is warranted based on the borrower’s circumstances. It will (at a minimum) include a request for
a) bank statements,
b) last year’s tax records,
c) a letter of explanation of the cause for the current hardship,
d) a budget and
e) recent pay stubs.

A hardship package will be required by any lender who is considering a loss mitigation option. This package basically requests the same information you supplied when you took out the loan. That would include income (wages, support, disability), expenses, W2’s, savings or other investments income/holdings, verification of employment status and a letter explaining the circumstances leading to your default.

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 #9 and #10

Fact #9. The “HARDSHIP PACKAGE” is a critical element of the short sale. How can you be sure it’s prepared effectively?

Fact #10. You can be fairly competent to handle an upside down listing IF you take Day One and Day Two of the FIS training.

© 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!)

WORD: Disclose (and derivatives)

The WORDs for Today are:

Disclose—means to reveal or make known something of importance. In real estate there are many, many times when one party is required by legal practices, federal law, state statute or other legal requirement to provide information which is deemed important to other parties involved in the transaction. Failure to disclose completely and in a timely manner could be the basis of a lawsuit.

Disclosure—refers to the forms used to facilitate a required disclosure. Disclosure forms are generally created by the party who must disclose some information but some disclosure forms are created by an act of law (i.e. IRS forms, seller disclosure forms, W-2 forms). Most disclosure forms are not called disclosure forms, which may be a reason many consumers fail to appreciate their significance. Most disclosure forms require a signature from the person who receives the form as a way of documenting (acknowledgement) the receipt of certain important information. More simply stated, your signature says you were told. It is unfortunate you didn’t understand WHAT you were told or the long-term implications of that information. For an expansive list of disclosures related to real estate transactions, along with a pdf copy for your review AND an explanation of the form, log on to www.homeownershipmatters.com. Look for “Disclosures: Clear as Mud.” Good luck!

Disclosure Statement—a term commonly used to refer to the document which explains loan terms as required by the Truth in Lending Act. Broadly, a disclosure statement may be any document used by one party to convey important information to another party. Most often, by signing the document both parties are acknowledging the presenting and receipt of the information included within the disclosure. There is no proviso, most often, for understanding the disclosure. However, recent laws related to predatory lending, foreclosure consultants and mortgage brokers have begun to include language which states “the presenter must disclose and the borrower must understand” certain pertinent information. This information may include things such as fees being charged and rescission rights.

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.)

Your Real Estate Advisor: Buyer Beware

Buyer Beware!
Be Careful—Don’t Borrow Trouble

1. Regular Banks and Credit Unions are your safest bet to avoid predatory lending practices. Federal regulations prohibit them from charging excessive fees, etc.
2. Choose reputable lenders, established in your city or state. Reputation is a powerful deterrent to unscrupulous practices.
3. If you have decided to use a mortgage broker, do so with care. Be sure you know how much you are borrowing to pay the broker fees, points, and closing costs, and/or other junk fees.
4. Insist that you get a “Good Faith Estimate” of all the costs associated with the loan within 3 days. It’s the law! Do you understand all the costs? Are they reasonable?
5. Remember: all real estate transactions that require a loan (purchase) will result in a lien being placed against your home.
6. Comparison shop at least two or three lenders. Use the “Good Faith Estimate” to determine who is really offering you the best deal. Rate is not the best way to tell. What are the actual costs of the loan? What are you paying in up-front prepaid finance charges? Is there a prepayment penalty?
7. Avoid single premium insurance. It is seldom a good idea.
8. Beware if the loan includes “yield spread premium.” This is actually an additional payment to the broker for getting you to accept a high cost loan.
9. Our economy is fragile. Fixed rate payments which include taxes and insurance will offer you the most stability in your housing budget. Be extremely cautious in considering a variable rate or a 2-1 buydown product. You are only delaying higher payments.
10. Review all the documents before you go the actual closing. Ask questions until you understand what you are signing.
11. Consider having an attorney (cost is very reasonable) to review your closing documents and/or attend closing with you for any real estate transaction: purchases, building, second mortgages, lines of equity, or refinancing.
12. Lastly, study the Disclosures section of the HOM website (www.homeownershipmatters.com), to help understand what the documents you sign at closing actually mean, and what rights you surrender when you sign them.

Copyright © 2009, HOM, LLC. All Rights Reserved.
“Your Real Estate Advisor” the column, by Mildred Wilkins

(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.)

Q&A: Miscommunication—Papers Served

Q. I have not made my mortgage payments for the past six months but the lender had said they would try to do a modification and make the payments lower so I could afford them since I am back at work. Today I received a notice with the word “summons” on it indicating that the lender has filed for foreclosure. It says I have 20 days to respond. I have no idea what to do. Who do I respond to? What do I tell them? Do I need an attorney to do this? Please give me some answers—FAST.

A. First, calm down and let’s take this one step at a time. You do not need an attorney to handle this. (Yes, an attorney can do it but one is NOT necessary.) The “summons” is a notification from the court that the lender has filed legal action against you because you are defaulted on the loan. How much time you have to respond will be determined by your local state foreclosure laws and the terms of your mortgage note or deed of trust. Take a few minutes to check your state statues to be sure you respond within required timeframe or you lose any rights you would have had.

Second, you need to provide an “answer”. An answer will notify all interested parties that you do not plan to lose your home to foreclosure.

An answer will give you time—a valuable commodity--

• time to verify that the plaintiff is the ‘real party of interest’ (if not, this is GREAT news for you)
• time to get your disability claim finalized and start to receive payments
• time to work out a modification, short sale or other option
• time to complete a reverse mortgage and get current
• time to get back to work and resume payments

It is important that you provide an answer to all interested parties: the party who sent the summons/notice (usually the clerk of the courts), the attorney representing the plaintiff as well as the lender themselves. I suggest all copies be sent with return receipt requested and that they require a signature. It is crucial that you keep this information so you can prove (if need be) that you provided the answer within the legal time frame.

An “answer” can be crucial to buying you the time necessary to save your home. However, there is little point in using this option if you have already determined that you simply cannot afford the home.

Do some research on-line or go for it. I am confident you can do it.

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: Chapter 13 Bankruptcy

The WORD for today is:

Chapter 13 Bankruptcy—type of bankruptcy which results in a court order budget in order to help a consumer get on sound financial footing. The advantage to the consumer might include relief from late charges, past due fees or other add-on fees. Additionally, since payments are made through the court the consumer no longer has to deal with unpleasantness from the creditor. This court-ordered budget typically extends for a 3 year term.

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 #7 & #8

Fact #7. The consumer can end up with a deficiency judgment AFTER a deed-in-lieu

Fact #8. You have access to all the rules and regulations on government and government backed loans so you can know EXACTLY what the lender can and CANNOT DO.


© 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!)

WORD: Predatory Lending

The WORD for today is:

Predatory Lending—the intended victim is always the CONSUMER. The transaction requires only two participants to be successful, the mortgage broker who markets, initiates, processes, underwrites, and closes a loan transaction. The other necessary party to this transaction is an appraiser who is willing to inflate the appraisal sufficiently to cover the added costs dictated by the mortgage broker.

You may remember seeing this word in the February 14th post: here. You also saw it in the February 8th post: here.

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.)

Community Service Announcement—Bank Overdraft Fees

The Federal Reserve Board is inviting consumers to share their opinions on costly, out of control, unfair bank overdraft practices. Visit http://ga3.org/campaign/no_gotcha_fees to voice your opinion today! They won't be taking comments after March 30, 2009, so let your voice be heard today.

Voice your opinion on whether the Fed should adopt an "opt-in" policy to make banks get your permission before signing you up for costly overdraft protection services. These overdraft services ok overdrafts with no notice to the consumer, and can cost up to $35 each time you overdraft.

Visit http://ga3.org/campaign/no_gotcha_fees/explanation for more information today!

(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 #4

Myth #4: That you are entitled to the amount of commission which is stated on your listing contract, even when the home is being sold as a short sale.

Reality: Maybe you are; maybe you’re not. Most importantly, can the person who signed the listing contract afford to pay the commission if the new purchaser does not offer enough to cover all closing expenses, including commission.

Reason: If there is the need for a short pay-off, most often EVERYTHING which can legally be compromised will be; including commission.

Copyright © 2008, 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!)

Your Real Estate Advisor: Avoiding Loan Sharks

Happy Valentine's Day, readers!!
Today, we bring you:

Avoiding Loan Sharks

Twenty five or thirty years ago, we called them loan sharks. Everyone knew exactly who “they” were and what practices were being described. Loan sharks have not only survived, but thrived because they serve a need. Then, as now, there were a substantial number of consumers who needed money for the everyday necessities, who could not qualify for a loan with reasonable terms from one of the traditional prime lenders. These prime lenders did not make loans to people unless they had unblemished credit, stable and substantial employment and a savings account. It was frequently stated (and frequently true) that you couldn’t qualify for a loan unless you didn’t need the money.

That was then and this is now. Now we have email, internet, and predatory lenders. The name is so fancy that most people don’t realize it’s the modern name for an old practice: loan sharking. The approach today is ultra modern, offering the ultimate in direct marketing and customer service. For an added touch, many add the spectra of religion, either by their name or the off-quoted “God wants us to prosper.” They conveniently drop the rest of that verse which states, “As our souls prosper.” We can sometimes identify who the modern day “loan sharks” are, but unfortunately, many times we cannot. Many of them have on business suits or business dresses. They all have business cards. Many of them have very nice offices. In a modern twist, the company name will sometimes be a subsidiary of a prime lender whose name you recognize and know has been in business for a long time. An increasingly large number of prime lenders have created sub-prime lending affiliates who participate in modern loan sharking a.k.a. predatory lending. They are very savvy business entities. They have attorneys and lobbyists; they contribute lots of money to political campaigns. They have survived and thrived at the expense of consumers who did not understand the loan terms they agreed to, frequently did not realize they stood to lose their home.

There are the direct victims; they took out the loan. At the least their finances are now more stretched than before; at the worst, they lose their house to foreclosure. There are thousands of these victims in any state. A much larger group of people are the indirect victims; they just happen to live in a neighborhood with increased foreclosure rates and resulting vacant houses. These indirect victims are left to deal with rate, roaches, and higher incidences of vandalism and violence. Most homeowners have experienced increased costs in their homeowner’s policies because of losses incurred by the insurance companies.

Increased numbers of foreclosures directly translate into lower property values for home in the immediate vicinity. Equity is eroding while frustration increases when homes stay on the market for extended periods of time.

Buyer BEWARE!
“We’re really in this thing together”

Copyright © 2009, HOM, LLC. All Rights Reserved.

(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: QWR

Qualified Written Request (QWR)—is a very important tool for anyone who is in default. Under RESPA (Real Estate Settlement Procedures Act, codified as Title we USC & 2605 and Regulation X. 24 CFR & (TILA) 15 U.S.C. & 1601, et seq. The statutes provide penalties and fines for non-compliance or failure to answer your questions. You have the right to ask the lender to conduct an examination of your loan, perform an audit, and to provide complete and accurate documentation of everything related to payments you have made and how all payments have been applied. Lender must respond within 60 days, in writing to your request.

Is a wonderful tool to help you if you are in default on your loan. Under Federal regulations a lender must respond to a request from the borrower to give specific details about how the payments, which have been made, have been applied. It is not necessary that the request is in a specific format or that it contains specific language. It must however: 1) be written 2) include the correct name for borrower(s) 3) include account number. It should be sent certified mail and should be sent to any assignees and/or attorneys who have been affiliated with your account. You may simply ask for an accounting of all payments/disbursements, which have ever been made, or you may choose to use the detailed request provided. Or anywhere in between.

Look for more information on this coming soon to the HOM website: www.HomeOwnershipMatters.com.

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.)

Q&A: Lender Approval Required

“Lender approval required”

Q. I am a first time buyer and it seems to me that quite a few of the listings which I am interested in have the words “lender approval required.” My real estate agent has said it is no big deal, nothing to be concerned about. My gut tells me it must be important or they wouldn’t have it in there. Can you explain what those words mean to a potential buyer like myself?

A. First, we should thank God for guts. Our gut has a remarkable way of warning us when we are in danger, even when we can’t see it. You are absolutely correct to be concerned that the phrase must be important. It is. Either your agent does not understand the implications of the phrase (lots of agents do not) or is so worried about getting you to write an offer that he/she is willing to ignore their fiduciary responsibility to explain to you how a short sale purchase is dramatically different from a traditional listing.

”Lender approval required” means that the home cannot be sold until the lender who is holding the mortgage for the seller agrees to all the terms and conditions for the sale. Almost always the seller is in default and the home cannot be sold for as much as the amount owed. The lender must look at the seller’s finances, consider the current value of the property and lots of other things before they make a decision on any offer which may be presented. This process will typically take several MONTHS.

In the meantime, the seller may decide to file bankruptcy (home is then unavailable). Or the lender may speed through the process of foreclosure, which also means the home becomes unavailable. Or the borrower might decide to process a deed-in-lieu of foreclosure in order to avoid having a foreclosure on their record. A number of things could happen so there is no home to buy. Or the lender may not be able to agree to the amount that you wish to pay because the two of you cannot come to an agreement on the current value.

Most important, perhaps, is the uncertainty for an extended period of time until the lender is able to make a decision. Consider yourself warned—proceed with caution if these words are included in the listing of a home you especially like. There is no reason to avoid a short sale listing—as long as you know the real deal. Trust your gut—continue to consult with it as you move through your housing purchase

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!)

Did You Know? Avoid that Deficiency

Avoid that deficiency

FYI: In today’s market a lender accepts a property via deed-in-lieu (lets you give it back); grants permission for a short sale or sells a home they have acquired through foreclosure there is the possibility of a deficiency. A deficiency simply means that the lender receives less than the full amount which was owed on the property. You should not assume that because they accepted the deed-in-lieu or granted the short sale that they will not come after you legally of the shortage. This is business, more importantly, this is bank business.

What to do? Try to avoid the impact of the deficiency. You should attempt to negotiate with the lender PRIOR to the approval of a short sale or deed-in-lieu to agree wot waive their right to a deficiency judgment. If they agree, it must be written into the final documents that they have agreed to accept either the return of the deed or the funds from the short sale as settlement in full for the indebtedness.

If you do not feel confident to do this yourself or you have tried without success, it is definitely worth the investment to engage an attorney (who has expertise in this area) to help facilitate getting such an agreement. It could save you thousands of dollars.

P. S. Don’t ask me where to find such an attorney.
I’m smart but I am not the Wizard of Oz.

(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: Deed-in-lieu

The WORD for today is:

Deed-in-Lieu—is an option for avoiding foreclosure. The consumer is allowed to voluntarily relinquish the home when they have not been able to make payments as a last ditch effort to avoid foreclosure. While the consumer will not be able to stay in the house this is still a better option for them than a foreclosure. When the lender eventually resells the home, if the amount they net is less than the amount of the mortgage the lender is very likely to file for a deficiency judgment against the consumer.

Literally means to return the deed to the lender in lieu (instead of) forcing the lender to take back control of the property through foreclosure action. It will be reported as a deed-in-lieu to credit reporting agencies which is much better than a foreclosure and perhaps slightly worse than a “short sale.” When the loan is an FHA backed loan the borrower is entitled to $500.00 when they sign the deed-in-lieu and vacate the home as agreed. The borrower may still incur a tax liability for some or all of the debt which has been forgiven. It would be wise to talk with a tax accountant before agreeing to this relinquish of the property in this manner.

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 #5 & #6

5. Lender is required to response in 5 business days on FHA backed loans, by Federal regulations

6. If the consumer has already filed bankruptcy, there is nothing you can do until trustee has discharged the file

Just thought you'd like to know.

© 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!)

From the Desk of..."Is the Sky Really Falling?"

Feels like the sky is falling …

Well, maybe that was a piece of the sky you just hit in the middle of the road. Just be glad you are a REALTOR… everyone knows real estate agents don’t have a retirement account to worry about so you haven’t lost anything with the market going crazy. Or have you? I suspect that upon closer examination you’ll discover that, in fact, you’ve lost a great deal. No, the sky isn’t really falling but a few stars are missing. Have you heard of Fannie, Freddie, AIG and Nehman? Life will be different, but different does NOT necessarily mean doomed.

My Sky is Fine

We’re happy for you. Jealous (and suspicious) but grudgingly happy. It’s true that real estate is a local market. Consequently, there are isolated pockets around the country which have not been hard hit with the broad economic issues and the housing meltdown. We all await a return to the time—only two years ago (seems like twenty)—when the sky was up there where the sky is suppose to be and not falling on our heads in chunks. If you’ll excuse me, I think that was another star I saw fall up ahead.

Had a CLOSING lately?

You know, those events where people sign papers at the end of a real estate transaction and everybody leaves the room happy, including two REALTORS with checks in their hot little hands. You haven’t? It’s probably because some tight-fisted lender changed the rules at the last minute and did not approve the buyer after all. Or maybe the buyer’s money from the 401-K which they had planned to use for a down payment just evaporated. E-V-A-P-O-R-A-T-E-D, I tell you. Or the retiree clients you were so excited to get because they actually have CASH are now too scared to move in case their dwindling retirement account keeps shrinking. Or maybe the last honest appraiser in your town came back with an honest valuation so far below the agreed purchase price that everybody freaked. (It could happen). Needless to say, CLOSINGS are becoming a reason to pop a cork and declare a special holiday.

What’s a REALTOR to do?

A good starting place would be to read the article “REALTORS at a Crossroads”. If you missed it, send a quick email to: HomeOwnershipMatters@gmail.com to request a copy.

This is an excellent time to critically analyze whether real estate sales (or real estate period) is what you need to embrace as a career, at this time. Taking stock is always appropriate. Making changes requires self-awareness, recognition of shifts in your personal needs, changes in market dynamics and the courage to create a new road map. The major difference between an enthusiastic adventure into the future and devastating fear is whether you walked---or got pushed. Let’s assume you wish to be the master of your fate. Read on. . .

Guidelines for becoming an EXPERT

If you’ve decided to make a change, then aim high. Do your research, know your competition, make a business plan. Yes, even you folks who have been in business since Jesus was a baby. Experts build on their natural skills and experience, plus education . I encourage you to plan too become the in leader in your chosen arena, in your area. There is no better time than now to use your down time to create a vision for a successful future.

Resources to get you there

You can do it; these will help.

• dsnews.com (that’s default servicing news)—This is the trade magazine for lenders and servicers. (sign up for their FREE online newsletter)
• NeighborWorks America—nti.org (that’s National Training Institute) You specifically need to take their 3 day loan servicing class.
• Home Ownership Matters Training Institute—the source for this news article and (FIS) Foreclosure Intervention Specialist training and other specialized courses
• National Consumer Law Center—resource for invaluable materials and classes related predatory lending, bankruptcy and other legal options to challenge foreclosure
• Center for Responsible Lending—terrific resources on lawsuits and challenges to existing practices associated with lending which frequently increase the chances of default
• “Your Real Estate Advisor”—a real estate resource which will help you to understand the terms, laws and forms which are most frequently used in the practice of real estate. This educational book is written in easy to understand language so you’ll be able to apply the valuable knowledge it provides. It is available at www.DovePublishingHouse.com.

The Sun Will Shine Again. . .

It always does. Life guarantees death and taxes. It creates for us unlimited possibilities wrapped up in opportunities. Even the exodus of agents from the business ushers in the opportunity for those remaining to work at differentiating themselves, excelling in their chosen arena and succeeding. The choice remains yours. The tools are available. Today’s consumers need real estate professionals who are experts at what they do. There is a great need for agents who have the ability to educate consumers about the various choices related to their home, especially if the borrower is in default. The ability to facilitate implementation of difficult transactions is, likewise, more urgently needed today than ever before.

Are you prepared for the challenge?

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.)

Myth #3

Myth #3: That bank-owned property is always free of any undisclosed liens or other encumbrances.

Reality: Many of the homes being purchased as REO or bank-owned properties are being transferred with liens already attached or the possibility of liens becoming attached.

Reason: The kind of title policy which is used for REO sales is a special, limited coverage policy. The holder of REO properties makes no warranties about possible clouds on the title prior to their acquisition through foreclosure or deed-in-lieu. Title is transferred using a special warranty deed or a sheriff’s deed and most importantly all the documents which the purchaser has signed states that they understand these facts.

Copyright © 2008, 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: Short Sale Dickering

Q: The phone call was from an acquaintance, who had her friend on the line to discuss what to do about a proposed short sale which was stalled. The REALTOR seemed unsure what to do and both women felt he was looking out for the bank’s interest. Her problem: the lender wanted her to sign a promissory note for the deficiency—$25,000 on a $120, 000 loan in order for them to approve the short sale and let her go to closing. They agreed, after some haggling, to accept $6,000. She was frustrated because she felt they should just approve the short sale; further, if they didn’t she was considering just letting them foreclose. She had already moved out of the house and quite frankly, just wanted this to be over with. The question: What is a short sale suppose to do anyway? I thought it was to wipe out what I owed and the bank wrote that off as a loss.

A: There is NOT a simple answer to the issues raised in the above phone call. I will address what a short sale is (and isn’t) and then address a couple of other issues from the query above. First, short sale means that the lender permits a defaulted borrower (under certain circumstances) to close on the sale of the mortgaged property for less than the full amount allowed. There is a broad misconception that a short sale will be without conditions. Nothing could be further from the truth. The lender has the right, under the terms of the mortgage note (or the deed of trust), to pursue the consumer for the deficiency when less than the full amount due is received from a new buyer. The lender has several options to cover the deficiency: a. submit a claim to the insurer (when applicable, subject to certain restrictions) go for a deficiency judgment against the borrower (can be used to get a wage assignment) ask the borrower to sign an unsecured note for all or a portion of the shortage some other alternative I have not heard of yet

If the borrower does not agree to the ‘conditions’ for the approval then the lender has the sole right to reject the proposed offer and move forward with foreclosure.

Foreclosure is an option the borrower should try to avoid in almost all situations. Pretty much the only time foreclosure has limited power to hurt you is: if you are much older (say 70) never plan to buy a house again, you have NO ASSETS (no savings, no retirement, nothing) and you are judgment proof. Otherwise, you need to work something out. Try to negotiate a lower amount on the promissory note ($6,000 is an excellent compromise). She should take it, run get it signed and notarized and thank the Lord for helping her avoid the full impact of the deficiency. It is important that the document state that the payment of the note “satisfies the indebtedness in full” and is signed by someone of authority at the lender’s shop.

The ‘friend’ from this phone call has several other extenuating circumstances which made the decision to advise her to negotiate and agree to the lowered amount very easy. She is younger (early 50’s), wishes to purchase again, is currently employed, already vacated the house (abandonment, which was discussed on Jan 23-24—here and here) has a significant retirement account and for all those reasons she is not in a strong position to refuse to cooperate with a lender whom she owes $120,00 with an offer of $90,000 on the table. She agreed to repay the full amount, with interest. Circumstances such as her escalating variable rate do not alter the terms of the initial contract. Please understand that I empathize with the situation but must still give you the best answer I can, based on your overall situation. Look to save yourself to fight another day by protecting your financial future with each choice that you make.

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!)

What's That Mean?! (A-N)

You know how sometimes you see some letters jumbled together, and they just don't make a single bit of sense to you? Well, maybe this list of acronyms and abbreviations will help.

A.B.A.—American Bar Association

ALTA—American Land Title Association

A.P.R.—Annual Percentage Rate

ARM—Adjustable Rate Mortgage

BAPCPA—Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

BPO—Broker Price Opinion

CAIVRS—Credit Alert Investigation Verification Response Systems.

C.D.—Certificate of Deposit, see page

CDC—Community Development Corporation.

CMA—Comparative Market Analysis

C.P.M.—Certified Property Manager

C.T.A.—Cum Testamento Annexo (with the will attached. See Administrator C.T.A.)

CRV—Certificate of reasonable value.

DBA—Doing Business As.

DOM—Days on Market, see page #??

ECOA—Equal Credit Opportunity Act

EEM—Energy Efficient Mortgage

EIC—Earned Income Credit

EPA—Environmental Protection Agency.

ERTA—Economic Recovery Act of 1981.

FDC—Fair Debt Collection law

FDIC—Federal Deposit Insurance Corporation

FHA—Federal Housing Administration

FHLMC—Freddie Mac

FICO—See credit score.

FIS—Foreclosure Intervention Specialist

FSBO—“For Sale by Owner”

FTC—Federal Trade Commission

GFE—Good Faith Estimate

GNMA—Ginnie Mae

HECM—Home Equity Conversion Mortgage

HELOC—Home Equity Line of Credit

HOEPA—Home Owner Equity Protection Act--

HUD—Housing and Urban Development

HUD-1—See Settlement Statement.

IRA—Individual Retirement Account

LIHEAP—Low Income Home Energy Assistance

MERS—Mortgage Electronic Registration System

MIC—Mortgage Insurance Case Number

NAR—National Association of REALTORS

NSF Fee—Non-Sufficient Fund Fee. See Return check fee.

If you have any questions about these, you should always feel free to leave us a comment, or e-mail us.

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

You can find more helpful definitions of Acronyms and Abbreviations 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: Trickeration

Today's WORD is:

Trickeration—that is trick-e-ration, a new concept (word) you must learn to recognize and understand. I wish I could take credit for coining the word, but I must give credit where credit is due. My good friend T.J. (that’s Thomas Jefferson Griffins, to you) introduced me to the concept. Trickeration is a concept, which means someone takes advantage of your thoughts, feelings or desires by convincing you to take some action you would not have taken had you not been “under the influence.” Trickeration is like “black magic” or “fairy dust.” Someone sprinkles in a few words here, changes the meaning of a couple of things, builds on your hopes and expectations and turns a housing situation into an advantage for them, ALAS, a disadvantage for you. I admit to experiencing trickeration first hand (experience is always the best teacher). Trickeration is REAL and usually legal. Seldom will you have recourse against the tricker since ultimately you went along, signed a disclosure saying you understood and that everything was above board. You are left feeling used (you were) and stupid (you are NOT) when you later uncover how gullible you have been.

You might remember having seen this word previously, maybe you want to re-read that post and think again on what it might mean? Click here to do that now...

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.)

Did You Know? Guidelines for Loss Mitigation

Guidelines for Loss Mitigation

FYI—Guidelines for the loss mitigation options which are available on government backed loans are public information—available on the internet. Whether you have an FHA, VA, USDA, Fannie Mae or Freddie Mac loan, the regulations which determine what options are available and the factors which need to be considered for each are hidden in plain sight—on the web.

I’m telling you they are there—I am not saying they are easy to find or easy to understand. Nor am I saying that lenders/servicers abide by them even half the time. Do the research, get some clarity and figure out what YOU think will work for you.

The most important thing is to know that they exist and where to find them.

FHA loans: We recommend Mortgagee Letters 00-05 and 08-43 (Click here to go to a page with a listing of HUD's mortgagee letters.

(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!)

Fast Fact #3 and #4

3. The lender may not counter the original offer until a few days before the closing.

4. The commission paid will almost always be less than full commission AND can be a little as 0%-1%.

Just thought you'd like to know.

© 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!)

From the Desk of..."The Party's Over"

Party’s Over...Now for the Clean-up

I’ve always enjoyed entertaining. Fact is, I’d rather have 20 folks over than 5 and if 50 came for dinner—why that would be awesome. Everyone comes expecting to get their personal favorite —WHATEVER—and I aimed to please. The menu was always extensive. No one was required to bring anything to the table and surprisingly—almost no one did.

Dinner is over. Everyone had too much of everything, stuffed extra in a plastic bag and they’re out the door. I am exhausted—but happy because I gave them what they wanted. They’re happy because they:

• got what they wanted
• didn’t have to work too hard for it
• got “extra” for another day

What’s Wrong With This Picture

For starters, I am now financially depleted, exhausted and the house looks like the scene of a train wreck. Only a couple of people even offered to help with the clean-up before taking off. Fifty people can eat a lot and leave a substantial mess in their wake. Dovie, my daughter, pointed out that while I might be having fun, I was setting a bad precedent. It amazes me how long it took me to change the party rules and request contributions and help with the clean-up. My budget has improved and the house was clean when the last ten folks left. I enjoyed my parties more---can you imagine that?

Lessons Learned

Financing the entire event is expensive. It deprives others of the satisfaction of participation. It’s an amazing human phenomen—when folks don’t pay for or help to prepare food they have enormous appetites, little sense sharing fairly and unilaterally take more than they can consume. The host budget is gradually depleted and eventually the parties must cease. 100% financing is a close parallel. The real estate bubble bursting is a prime example of national over-indulgence.

Oh, What a Tangled Web We Weave . . .

Alan Greenspan in recent testimony concerning our current financial meltdown has admitted to being totally blindsided by the financial collapse. No disrespect intended, but how could the former head of the Federal Reserve believe that financial institutions would self regulate appropriately when the business model for creating mortgage securities begged you—literally begged you-to mix bad apples with good apples. After all, they were being shipped overseas tomorrow; NEXT DAY EXPRESS, early delivery guaranteed. The United States has woven a tapestry of bad appraisals, “liar loans” and no collateral into a housing market which threatens to unravel the world economy.

Party House—Closed for Repairs

Builders, mortgage brokers, large insurance firms, government backed loan program participants, Wall Street investment firms and the rest of the party givers are, shall we say, “down on their luck right now.” Based on the latest news regarding bailouts, acquisitions and financial institutions in the intensive care unit, things are not looking too good.

There are no parties scheduled for the foreseeable future. Maybe there will be a few small get-togethers for a limited number of truly qualified buyers/sellers but the orgies are a thing of the past. Sometimes the hangover is so bad that the participants swear off alcohol for the rest of their lives. Me thinks Americans have decided enmasse to go on the “lending wagon” and become, albeit by necessity, responsible partakers of mortgage financing. Likewise, I believe that financial institutions which have operated as though they could be irresponsible forever since they were selling almost all the junk they allowed to be funded have discovered that having your accounts balanced right under Wall Street’s nose is bad for business.

The Intensive Care Unit

There are so many institutions checking into the unit that it is hard to keep up. If you are not familiar with the Implod-0-meter this is a great time to check out their website at The Law Blog. The mere existence of this business is another indicator of someone who has seized an opportunity borne of this housing crisis to create a niche for themselves. The articles are timely; the information is invaluable. You have to ability to check the “condition” of the financial institutions which impact your day-to-day business. I strongly recommend that it rates a bookmark as a favorite. This site has become a personal favorite for the real deal on those institutions which are continuing to shape the real estate market. An old farm analogy: “If you forget what kind of peas you planted, just wait until they come up”. Sowing and reaping is a universal principle which applies equally as well to mortgages as it does to farm crops.

Push Your Sleeves Up . . .

Clean up requires a stiff upper lip. Let’s focus on the mortgage mess. Instead of trash bags full of refuse we have:

• tightening credit requirements
• decent interests only available with higher credit scores
• large down payment (okay, as opposed to NO down-payment)
• stricter valuation of the collateral
• verification documentation of income and assets

Truth is, none of these clean-up strategies are unreasonable. Further, had they been in place back in 2005, we wouldn’t be up to our hips in mortgage debris.

The American Challenge

We have just elected a new president. Election fatigue is finally over. The celebration party was astonishing. However, the reality is that the US is facing arguably its most difficult challenge in its history as a country. Each of us as an individual must find the strength and ingenuity we have in our genes to weather the storm ahead. We would be foolish and ill-prepared for the journey if we assumed we were headed on a pleasure trip—or off to another big bash. As our forefathers before realized, we are headed for a “New Land.” Let’s each put our shoulder to the wheel and find our inner strength to support our individual communities and our country as a whole.

Our greatest president, John F. Kennedy, said it best for all times, “Ask not what your country can do for you? Ask what you can do for your country?”

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.)