Showing posts sorted by relevance for query liability. Sort by date Show all posts
Showing posts sorted by relevance for query liability. Sort by date Show all posts

March 16, 2009

Fast Fact: Release of Liability

Release of Liability

FACT: This is a very important paragraph in your mortgage or deed of trust. Tricky, how the things you don’t pay much attention to can come back and bite you in the proverbial butt. This is one of them.

The reason we are discussing it here is because it comes into play if you decide to let someone assume the mortgage on your home. This is further complicated by the fact that the bank may agree to allow someone to assume the mortgage on your behalf; yet you are still legally obligated to pay the mortgage should THEY become unable to keep up payments.

How could that be? It’s called "release of liability.” Read the section in your note. It clearly says that unless the lender specifically grants a "release of liability" you are still on the hook for all payments until the loan is paid in full. My son said when he was 13, “you better ask somebody." Consider yourself warned: contact an attorney and have him to prepare a "release of liability" to be signed by the lender, PRIOR to agreeing to allow anyone to assume your mortgage. You’ve already agreed to this arrangement when you took out the loan; you need someone to get you “off the hook.”

**This also applies to rental car contracts. You are on the hook for the time and amount you promised no matter what side deal you cook up after you leave the dealership. (In fact, you are prohibited from legally making any side deals). Yes, I know it happens all the time. Consider yourself warned. I am trying to look out for you.

Copyright © 2009, 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 comments and feedback, so please don't be shy.)

May 12, 2009

Word: Orphan Houses

Today’s word is “orphan houses”, a new concept and a direct consequence of the dramatic increase in foreclosures across the country. There are numerous ones in your town and we hope your home doesn’t become one.

What’s an “orphan house” anyway? Unfortunately, it is a home which has been lost as a consequence of foreclosure or was voluntarily relinquished by the homeowner via a deed-in-lieu in order to avoid foreclosure. As if that were not bad enough, the insurer has neglected to transfer the title into their name which can cause major problems for the former owner down the road. 

As long as the title remains in the borrower's name, then any and all liability fall upon that borrower—who remains the owner of record. Thus the name “orphan house”, you lost it, and they have chosen not to legally claim it.

Now why would they do that? Obviously you are smart enough to know that when financial institutions do (or fail to do) something it usually is associated with saving them money. The catch this time is liability.  Whomever owns the property (has the title legally recorded in their name) bears the risk or liability for anything which occurs at or on the property.  If there is a fire and the vacant house burns, the insurer does not have a risk, it is NOT in their name. If the local municipality mows the 4 feet high grass and processes a bill for that address, it will have the former borrower name attached to it. (No new deed has been recorded). The homeowner’s association may continue billing in the name of the former borrower (that would be you) and those bills can be attached to the property as liens. 

As a practical matter, if there has been a foreclosure there is a clear date when the ownership rights in the property ended. That is very murky when you mailed off paperwork to process a deed-in-lieu. Lenders are very willing lately to let you walk, complete the simple form and leave the property (within some guidelines of course). I am simply telling you that they are covered, YOU, however, are not.

How do you avoid an “orphan house” in your future? The best advice is to seek legal counsel about the aftermath of a foreclosure or deed-in-lieu. A competent attorney should be able to help you work through the details so you don’t end up with an unpleasant surprise down the road.

Yes, it is definitely worth the legal fee you will incur to avoid possible financial risk down the road.

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.)

September 22, 2009

Q&A: Deed-in-Lieu Dilemna

Q: My wife and I are behind on our first mortgage. The lender has sent us paperwork which says they are willing to consider taking the house back and would like to ask for a deed in lieu of foreclosure. My question is: what would happen to our second mortgage?

A: This is a question which a lot of people who are struggling with their mortgage payments need to consider.

First, the lender will make a decision as to whether or not they will ACCEPT a deed-in lieu (which allows voluntarily relinquishing the house instead of foreclosing on you) based on whether or not you have a second. Most often, when there is a second mortgage involved, they will decline accepting the deed-in-lieu because their claim to ownership of the property would be encumbered by your second. Essentially, they can say, we don’t want your troubles. This is especially likely to be the case if you took out the second during the past few years and paid off credit card and other debt. In such a case, not only did you convert consumer, unsecured debt, into secured, mortgage debt but you also created a scenario where the investor who is actually carrying the risk on your home does not want to be held responsible for the portion of liability which they did not insure.

Why the lender might still choose foreclosure

Let’s discuss the second thing. Most states’ legal process will allow the 1st mortgage holder to be relieved of any responsibility for the second lien holder’s loss IF THE FIRST FORECLOSES. This caveat means your lender may decide, purely as a business decision, that foreclosure against you is their best option.

As a practical matter, even when a lender has sent you paperwork or indicated that a deed-in-lieu might be an option or you decided to request such resolution to your problem, there is no automatic RIGHT to do this. You will still be required to complete an extensive hardship package to determine whether or not you qualify for the ‘option to give back your house’. In addition to the difficulties tied to having a second loan the lender is required to be sure that you have exhausted all efforts and resources to try to meet your obligation to them.

Deed-in Lieu Warning

While the process is very simple (signing and notarizing a single page document) there are significant risks associated with your future LIABILITY if you do not have an attorney to both prepare the deed-in-lieu document and facilitate a transfer of the property.

Specific risks:
  1. Documents never reaching the lender
  2. Lender’s failure to record the transfer of the deed in a timely fashion (or ever)
    (becoming very common and a major problem for you if it happens)
  3. Possible insurance liability if something happens on the property while
    it is still in your name (Nasty possibility)
  4. On-going bills for maintenance or citations from the local health and
    hospital board for health hazards, weeds, etc
  5. On-going on home owners’ association dues which could be very costly.
Deed-in-lieu is a slightly better option than foreclosure but should be handled with care and the professional services of an attorney who will address the risks I mentioned above.

FOREWARNED is FOREARMED.

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 comments and feedback, so please don't be shy.)

December 30, 2009

WORD: Assumption of Mortgage


And the WORD for Today Is...

Assumption of Mortgage – refers to an agreement by a new buyer to take over, or assume, an existing note, which is secured by a mortgage or deed of trust. It is also called simply ‘an assumption’. The transaction usually requires lender approval of the new borrower in order to release the seller from further liability.

Assumption of mortgage means a new buyer agrees to take over or assume the financial liability under an existing note which is secured by a mortgage or deed of trust. Most notes in force today do not have a provision for an assumption. If the lender does agree to allow an assumption they will almost always insist on the submission and processing of full credit application on the new borrower. The assumption cannot be completed without the lender’s approval. The granting of the approval to assume does NOT release the original borrower from their financial obligation unless the lender also signs a release of liability. A consultation with your attorney is advisable.

It is crucial that a borrower who decides to consider an assumption be aware of the assumption clause which basically states that while they allowed another borrower to take over payments on the mortgage, they have not released the original mortgage holder from their obligation. A consultation with an attorney is strongly advised prior to the completion of an assumption, even with lender approval.

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.)

December 31, 2009

WORD: Assumable Mortgage (With Approval / No Approval)


And the WORD for Today Is...

Assumable Mortgage – is a mortgage which has a clause; which means the lender is willing to let a new borrower assume the loan. If the lender approves the assumption then the old borrower has no more liability for the payments. However, if the mortgage holder and the new buyer make an agreement WITHOUT THE APPROVAL OF THE LENDER and the assumption has not been recorded then the original borrower still has the responsibility for the payment. A release of liability would have protected the original borrower in case the new buyer does not continue to make payments in a timely fashion. Protect yourself; get a release signed.

a. Assumable-No Approval
b. Assumable-With Approval

Assumable Mortgage-No Approval – means the lender will not do a credit check on the purchaser and the two parties may make the agreement between themselves.

Assumable Mortgage-With Approval – means the lender will require that the new buyer apply for a mortgage and go through the regular application process before the lender allows the assumption to be processed.

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.)

June 26, 2010

Q&A: Strategic Default


Strategic Default

Q. My house is worth considerably less than what my mortgage payoff is currently. My husband and I are still working and can manage the payment but it just does not make sense to keep making a payment every month when we are so upside down. I have heard the phrase ‘strategic default’ which seems to mean the people just decided to walk away and leave the house. Is this something we should consider?

A. The issue of strategic default has not been addressed in this blog at all until it was mentioned recently in the jingle mail blog. First, let’s get some clarity about what is being called a strategic default. As the phrase is being used currently it most often refers to someone who:

  1. Has the financial means to keep making the mortgage payment
  2. Has determined that the balance is significantly higher than the value of the property to the point that no turnaround is likely in the foreseeable future
  3. Has been unsuccessful in getting the lender to renegotiate for a reduced principal balance
  4. Has consciously made the decision to forgo additional mortgage payments and let the chips fall where they may (including the most likely outcome being foreclosure)

Now that I have provided clarity on when it might be considered, I will answer that question you asked, which is, should you consider it. My answer is that ONLY you can decide if you are willing to accept the consequences which are likely to occur as a result of a strategic default. I would not presume to try to move you one way nor the other. I will give you a glimpse of possible consequences to help you in the decision.

Possible consequences include:

  1. Foreclosure—very likely—almost a given
  2. Deficiency judgment—depends on your state foreclosure laws, highly likely where permitted
  3. Additional expenses incurred due to vandalism to the property after you abandon and before the lender/guarantor puts the property into their name. Scary thought if they never do. (or if it is six months or a year from now and the value of the home has continued to decrease.)
  4. Lender or Guarantor may be successful in going after assets you have to satisfy the deficiency mentioned above
  5. Negative impact on the possibility of a future home purchase (kind of like a separation, you left but you can’t marry anybody else until you get the divorce)
  6. Possible liability should someone be injured or killed on the property while you are still the title holder and the party responsible for insurance (even though you have not paid it)
  7. Possible tax liability for the shortage, once that has been determined
  8. I could mention a few more but you get the picture


While there is the compulsion to walk away from this really, really difficult situation you need to weigh the pros and cons carefully...then ask yourself...what is the worst thing that can happen?

Can you live with that, whatever that is? If you can, then move forward knowing that you considered the options and made an informed decision. Best of luck, whatever you decide.

"Remember, knowledge can be empowering!"

Mildred

October 7, 2009

Q&A: Can they Take my Second House?

Q: If I have two houses and I lose one, will they take the other one too?

A: The short answer is that the lender can not just “take” your second home.

The complete answer is that you still need to be concerned about protecting your second home from liability as well as protecting yourself from future liability related to the foreclosure on the first home.

Future Risk

If the lender does not receive enough from the sale of the home after they complete the foreclosure and sell it as a bank-owned property, many states will allow them to go into court and request a “deficiency judgment”. In order for them to receive such a judgment they will need only to demonstrate that you agreed to repay a certain amount for the home and they got less than that.

Let’s say $276,000 was your mortgage amount and they only got $213,000 from the eventual sale of the property. There is a loss of $63,000. In addition, the terms of your note or deed of trust will grant them permission to also ask to be reimbursed for attorney fees and other allowable costs, based on the terms of your mortgage document and your state’s foreclosure laws.

A crafty lender might end up changing a $63,000 shortage into a request for $89,000 as a deficiency judgment request. If you do not challenge this and a deficiency is granted, the lender/insurer then has the leverage to:

a. Use a wage assignment to garnish paychecks
b. Have judgment recorded on credit reports
c. Possibly intercept income tax refunds
d. Collect from anything you earn, marry, inherit
e. Attach judgment to any other real property you own, (second home) or later acquire

Having said all that, the short answer: they can’t TAKE the second home but they sure can make your life miserable. You are wise to consider the implications for a second home and need to seek legal advice to help you determine what is your next step to protect your investment in the second home, if that is possible. I’m betting that it is, but I am a writer, not an attorney. Yell for help. It’s attorney time.

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 comments and feedback, so please don't be shy.)

December 14, 2009

...From the Desk of..."Are You Ready to Intervene?"



Twenty Questions for Today’s Real Estate Professional

I was recently asked by the Charleston Trident Board of REALTORS® to differentiate the (FIS) Foreclosure Intervention Specialist certification from other short sale certification programs. Please know that the Board has offered both the (SFR) (Short Sales and Foreclosure Certification) and the (LMC) (Loan Modification Certification) certifications which are excellent programs.

Both have been widely attended in Charleston and I strongly encourage you to sign up for one or both at the next opportunity. Every single licensee should avail themselves of a basic short sale class so they have a rudimentary understanding of this ‘new’ transaction which is dominating the market in many parts of the country.

(FIS) will be offered for the first time in South Carolina beginning March 2010, courtesy of a FPR (Foreclosure Prevention and Response) grant from NAR. I think the operative word of distinction is ‘basic’ as compared to ’comprehensive’. This 30 hour program is designed for the agent who has decided to commit to getting an in-depth understanding of the various facets of handling these intricate transactions—the relationship connection, the Law, the Ethics, property valuation, the process, the negotiating, getting to the closing table, the downside, the resources needed, community partnerships, the self-study to continue to grow and much, much more.

Why offer (FIS)? Because hundreds of students who had taken either the 4 or 8 hour basic short sale training classes offered by Home Ownership Matters beginning in 2003 demanded more. More time, more expansive, more details. The course evolved and in 2005, the (FIS) certification was introduced in Ohio. Since then (FIS) has been approved for CE credit in six (6) states and there are graduates from twelve (12) states. States approved for CE include: Ohio, Indiana, Kansas, Nebraska, Colorado and Oklahoma.

30 hours, 700+ pages of material.

Tried and true methodology coupled with sound philosophy
from a former Fannie Mae Broker-Specialist

Updated regularly and state specific (Law section)

I decided the easiest way to say what you’ll learn is to pose the questions which will be addressed.

Are you ready to intervene?

1. Do you know how to distinguish a ’frozen customer’ from a potential short sale client? Do you currently use an intake form to determine who is a viable candidate for this type transaction and who is just not prepared for the commitment? Can you screen OUT the 60% of folks whom you should not list as short sales?

2. Are you prepared to analyze/distinguish the many HATS which may be required to help someone who is in default: the social worker, medical counselor, marriage counselor, human resources helper, spiritual advisor, budget counselor, salesperson extraordinaire, valuation expert, etc.

Are you real clear on what role you can and/or should play? Are you connected to/familiar with the community resources to address those needs which are outside of your scope of expertise? Do you currently utilize a referral form for this purpose? Can you see the potential for a fair housing complaint (or other complaint) without some standardized referral policy/form?

3. Do you know how to ‘handle’ the law while avoiding the ‘practice of law’? Do you clearly understand that it is necessary to understand some components of the law (and be able to explain them to your client) as part of a short sale attempt or an REO purchase?

4. Do you understand the impact of the seller filing bankruptcy on a potential short sale? The increased likelihood of a deed-in-lieu? Do you currently discuss this at the onset with your customer since it could/should end your relationship if they file later?

5. Are you familiar with the new Treasury guidelines for short sale—other than the fact that the commission cannot be reduced below 6%? Have you studied the guidelines? Do you understand them?
6. Are you familiar with the foreclosure law in your state? Is it a judicial or non-judicial process? What difference does it make? The guidelines for service on a defaulted borrower? Familiar with what the customary forms are and what they look like? Are you aware that violation of state foreclosure law can work in a borrower’s favor to gain extra time which could be used to facilitate a short sale? Or a reverse mortgage?

7. Do you have the expertise to accurately determine the value of a property in today’s declining market? Are you familiar with the professional BPO which is used as the industry standard (fanniemaebpo.com)? Could you complete one and do you understand why it can be much more accurate than the more commonly used CMA or market analysis? Are you clear on why accurate property valuation, from the beginning, plays such a critical role in the success or failure of your short sale effort?

8. Do you feel you clearly understand the unique protocol for short sales, not to be confused with REO and traditional sales? Who signs what? When? Presentation of offers? To whom?

9. Have you figured out what to disclose? To whom? And when?
Are the guidelines set by your Broker consistent with both Federal and state requirements/prohibitions on disclosure? Are you clear on the Who? What? When? HOW?

10. Are you familiar with your Board and Broker’s position on:

a. Disclosure—Who? When? How?
b. Commission—Who? What? When? How?
c. Signing of offers/amendments/price reductions—Who? When?
d. Presentation of offers—To whom? When? Signatures? Why?
e. Multiple offers—that is a whole other 20 questions

11. Does your brokerage utilize a set of disclosure forms which have been customized for the use with short sale scenarios? Are you familiar with them? Do you understand the protection that you may gain from covering the special risks associated with short sale transactions? Are you interested?

12. Do you understand the tax implications for a borrower who has completed a short sale? Please don’t tell me that you thought they were off scot free because the short sale was approved. (They are not) Do you have a referral to a tax accountant?

13. Have you read your state’s Seller Disclosure Law? Have you studied the state disclosure form? Does it include a reference to “threatened or pending litigation“? Or perhaps “notices from any Government or quasi-governmental agency”? Any “challenge to the title”? Are you clear on why any/all of these could forestall a short sale approval and therefore need to be disclosed?

14. Do you have clarity on the impact of a foreclosure on your customer’s ability to purchase down the road? Was that part of your discussion about the reason to consider a short sale in the first place? Have you discussed operating ‘in good faith’ as vital to the ability to keep the house on the market?

15. Is there a 2nd (or 3rd) mortgage? Are there other potential liens against the home (home owners’ association, taxes, personal judgment) which must be dealt with? Got a plan for how you are going to handle those? Do you know where to start?

16. Do you clearly understand the role of the Guarantor and/or the investor in determining whether or not a specific short sale can be approved? For that matter, do you know that the Servicer is merely a go-between hired to facilitate the administration of the loan but is NOT a decision maker? Who is? How can you find them? What are THEIR guidelines? Are they the same from Guarantor to Guarantor? Available in public records?

17. Are you familiar with the Qualified Written Request—backed by Federal Law (RESPA, no less) and the impact it can have as a ‘tool’ in delaying the foreclosure process if well-prepared? Used effectively and in a timely manner, you can gain valuable time to complete the short sale. We’ll cover that.

18. Has your firm/Broker created a “hold harmless” document which covers the scenarios which you cannot be responsible for with the clear understanding from your client that you will have no liability? Since the risk of lawsuit is pretty high with this new type of transaction, getting some understanding of what should be included and why should be paramount, I would think.

19. Have you identified as an agent/brokerage/Broker those scenarios which will require you to end the relationship? Have you established a policy concerning the need for a unilateral (not mutual) release? Under what circumstances, with what notice?

Certainly advance disclosure would be required: I would recommend at the inception of the agency relationship. We cover in detail during (FIS) training what I call the “Divorce Decree”. What happens if the client abandons? Files Bk? Enters into a deed-in-lieu? Refuses showings? Fails to cooperate in other ways? Policies should drive practices and both help to minimize liability.

Proper training and thorough understanding on each of these issues is paramount in order for you to be both effective at processing a short sale from beginning to end AND avoid the various opportunities to get yourself or your client into serious trouble along the way.

Short sales are the new reality for many markets around the country. They have become a major part of the market (along with REO’s) and becoming intimately familiar with how to process them successfully is paramount for any agent who wishes to thrive in today’s market.

If you do not already have clarity on ALL the issues which have been addressed in this article, then you are a prime candidate for the (FIS) certification program. Each of these will be explored and addressed during this 30 hour training program. You will leave with clarity on every single point covered here and will have the expertise to feel confident that you are representing your client with strong tools which have prepared you to be successful in getting the result you hope for and they deserve. YOUR knowledge base is a key component of your professionalism. Your success as a REALTOR® is tied directly to the caliber of your information.

Don’t miss an opportunity to learn, explore and interact with one of leading instructors on this timely topic. Her experience actually doing short sales, her time with Fannie Mae as a Broker-Specialist and expansive training (HUD, Fannie Mae, NeighborWorks, Legal Services, and National Consumer Law Center) can be invaluable to you.

Sign up today! Coming soon to a classroom near you!

Final Question

Is there someone in your office to whom you can refer a customer who needs short sale help? Within your firm? Maybe you can/should become that ‘Referral agent’ if you do not have the expertise today.

Are you Ready to Intervene????

*(FIS) is a registered trademark of Home Ownership Matters, LLC.

Other Foreclosure Resources

3. www.HomeOwnershipMatters.com — Calendar and Foreclosure/Loss Mitigation sections
4. www.nti.org — NeighborWorks America — Training Institute
5. www.consumerlaw.org — National Consumer Law Center


Mildred Wilkins
President of Home Ownership Matters
Author of “Your Real Estate Advisor”
Toll-free 1 (866) 507-5105

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 comments and feedback, so please don't be shy.)

December 7, 2009

HOM Proud to Announce a New Class of (FIS) Graduates

NEWS RELEASE
FOR IMMEDIATE RELEASE – December 7, 2009

Contact: Mildred Wilkins at 1 (866) 507-5105
mildredwilkins@HomeOwnershipMatters.com
Christie Bevington (402) 323-6506

Home Ownership Matters announces 1st Foreclosure Intervention Specialists (FIS) class graduates in Nebraska

Indianapolis, IN. December 7, 2009—HOM President and Founder Mildred Wilkins joins Christie Bevington of the Nebraska REALTORS® Association in announcing graduates of (FIS) the foreclosure certification program offered for the first time in the state of Nebraska. Sixteen licensees completed the certification program on November 10, 2009 in Omaha, Nebraska. The Foreclosure Intervention Specialist Program (FIS) has additionally been approved by Real Estate Commissions in Kansas, Colorado, Ohio, Oklahoma and Indiana. The program will be launched in South Carolina in March 2010 and has been offered in Florida without CE credit to attendees from a number of states. NAR provided funding for this critical training in Nebraska and is also providing funding for the training in South Carolina.

This certification program was developed by Mildred Wilkins, president of HOM, LLC headquartered in Indianapolis, Indiana. The program provides 30 hours of material in a classroom setting designed to prepare attendees to become knowledgeable about the options available to consumers who are in default on their home loans. Included in the course are components which address the foreclosure process, ethics, fair housing, the short sale process as well as options for keeping the home. Real estate professionals need a broad knowledge base to make appropriate recommendations when a default has occurred. (FIS) training provides that broad base.

The practice of real estate has evolved rapidly as foreclosures have increased dramatically, creating a need for a new field of knowledge. Foreclosure is frequently avoidable, but unfortunately, consumers have limited opportunities to learn what options are available. Nor is there a way for consumers to identify professionals who have the ability to help them.

The Foreclosure Intervention Specialist (FIS) certification will set apart those agents who have taken extensive training to be prepared to handle the challenges associated with transactions when the consumer owes more than the property is worth on the open market. The training can alter the outcome of mortgage default when a consumer chooses an agent who is an (FIS) specialist. The completion of this program will also help licensees avoid liability while helping them to work more effectively to avert foreclosure.

Ms. Wilkins is a former Fannie Mae Broker-Specialist who sold foreclosed properties for their disposition department out of Dallas, Texas. She has received loss mitigation training from NeighborWorks America, Fannie Mae and HUD. Since founding HOM in 2002, her work has been featured in the New York Times and BusinessWeek, she has also appeared on MSNBC and NPR. In addition, foreclosure related articles she has written have been published in REALTOR magazines around the country.

Wilkins has been a faculty member for Graduate REALTOR Institute (GRI) since 2004. She is also a member of the faculty of NeighborWorks America as a trainer in Foreclosure Intervention. She is regularly a speaker or trainer at numerous state/regional conferences on foreclosure intervention, predatory lending, loss mitigation and/or mortgage fraud. She is widely recognized as a leading expert on these subjects. HOM has been certified as a continuing education provider for real estate professionals in Colorado, Nebraska, Kansas, Ohio Indiana, Kentucky, Tennessee, Oklahoma, Iowa and Alabama. Wilkins is an approved instructor for attorneys in Indiana and Ohio.

The next (FIS) training is scheduled in Florida the week of Feb 22-26. Combine education and vacation. Or register for the course in Charleston, South Carolina scheduled to begin March 15th. To schedule an (FIS) training series in your area, contact Mildred directly.

www.HomeOwnershipMatters.com for registration/more information.

Email: mildredwilkins@homeownershipmatters.com

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

(FIS) is a 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.)

December 10, 2009

WORD: "Borrower not Released; Forebearance by Lender not a Waiver"


And the WORD for Today Is...

“Borrower not Released; Forbearance by Lender not a Waiver” – [as used in the MORTGAGE document] means any extension or modification to either the amount of payments or the scheduled time of payments does not release the Borrower from their liability under the mortgage, nor does it mean the Lender/Servicer relinquishes any rights they have. In the event they choose to move forward with legal action at a later date, due to this occurrence of default, they reserve the right to do so since the granting of forbearance does not constitute a waiver.

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.)

October 31, 2009

Q&A: Mutual Release

Q. It seems to me that the seller of a property is protected from the buyer changing their mind and not moving forward with the transaction because of the earnest money which has been put down on the house. What protects the buyer from buyer remorse?

A. Contracts are legally binding

Terms of the contract cover whether or not the buyer can walk away due to inspection issues or if they fail to get mortgage approval or if the property does not appraise for a figure high enough to satisfy the buyer’s lender.

Earnest money as a deterrent

While the earnest money may be a deterrent to the buyer wanting to walk away from a transaction, the earnest money is being held in escrow and will not be released to either party unless both parties agree OR a court has made a determination of which party is entitled to the earnest money. So… in effect, both buyer and seller are protected unless and until they enter into a mutual release.

Multiple Purpose document

The mutual release is a wonderful, multi-purpose document. Its primary purpose is to get people out of a contractual agreement with the assurance that all parties are satisfied (enough) and will not bring any kind of legal action against any other party to the contract. We will all go home, forget we were ever involved in a contract with you and we will NOT call our attorneys next week (or ever).

Many real estate firms will use two specific mutual release forms; one tailored to things associated with the listing and one tailored to the purchase side of the transaction. It is also possible to use a GENERIC mutual release which has boxes so the appropriate reason can be selected from a list or a space for the specific reason in this case to be printed in.

Common Mutual Release Scenarios

The mutual release in real estate may be used to end the agreement when:

a. Inspection issues cannot be resolved, the transaction is stalled, agreement cannot be reached and closing is no longer desired. This is a very common occurrence in real estate transactions.

Form—Mutual release to the Purchase agreement

b. Seller needs to withdraw the property, for good reason, such as a family emergency.

Form: Mutual release to the Listing agreement

c. The buyer’s financing has fallen through, therefore, they are unable to close

Form: Mutual release to the Purchase agreement

A declaration of what happens to the earnest money would be stipulated in the mutual release.

A mutual release is a protection for all parties from future liability. I strongly recommend that you make every effort to reach a compromise and then translate that agreement into a mutual release—Signed by all parties to the transaction.

Good luck on dealing with the issues which are currently more pressing!

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 comments and feedback, so please don't be shy.)

January 5, 2010

Press Release: HOM Announces (FIS) Course in South Carolina


NEWS RELEASE
FOR IMMEDIATE RELEASE – January 5, 2010

Contact: Mildred Wilkins at (866) 507-5105
Lora Able at (843) 760-9400 x125

Home Ownership Matters announces 1st Foreclosure Intervention Specialists (FIS) course offering in South Carolina

Indianapolis, IN, January 5, 2010—HOM President and Founder Mildred Wilkins joins Lora Able, Director of Education, Charleston-Trident Association of REALTORS®, in announcing that (FIS), a comprehensive foreclosure certification program, will be offered for the first time in the state of South Carolina. Registration was officially announced during a live webcast with Ms. Wilkins on December 15th. More than 27 REALTORS® have already registered; capacity is set at 75. The Foreclosure Intervention Specialist Program (FIS) has additionally been approved for CE credit by Real Estate Commissions in Colorado, Kansas, Ohio, Oklahoma, Nebraska and Indiana. The program has been offered in Florida without CE credit to attendees from a number of states. NAR provided funding for this critical training.

This certification program was developed in 2005 by Mildred Wilkins, president of HOM, LLC headquartered in Indianapolis, Indiana. The program provides 30 hours of material in a classroom setting designed to prepare attendees to become knowledgeable about the options available to consumers who are in default on their home loans. Included in the course are components which address the foreclosure process, ethics, fair housing, the short sale process as well as options for keeping the home. Real estate professionals need a broad knowledge base to make appropriate recommendations when a default has occurred. (FIS) training provides that broad base.

The practice of real estate has evolved rapidly as foreclosures have increased dramatically, creating a need for a new field of knowledge. Foreclosure is frequently avoidable but unfortunately consumers have limited opportunities to learn what options are available. Nor is there a way for consumers to identify professionals who have the ability to help them. (FIS) addresses that need by empowering REALTORS® to be prepared to handle borrowers in default with increased knowledge and professionalism.

The Foreclosure Intervention Specialist (FIS) certification will set apart those agents who have taken extensive training to be prepared to handle the challenges associated with transactions when the consumer owes more than the property is worth on the open market. The training can alter the outcome of mortgage default when a consumer chooses an agent who is an (FIS) specialist. The completion of this program will also help licensees avoid liability while helping them to work more effectively to avert foreclosure.

Ms. Wilkins is a former Fannie Mae Broker-Specialist who sold foreclosed properties for their disposition department out of Dallas, Texas. She has received loss mitigation training from NeighborWorks America, Fannie Mae and HUD. Since founding HOM in 2002, she has been quoted in the New York Times, BusinessWeek and the Huffington Post. She has appeared on MSNBC and NPR. In addition, foreclosure related articles she has written have been published in BAS and REALTOR® magazines around the country.

Wilkins has taught for Graduate REALTOR® Institute (GRI). She is also a member of the faculty of NeighborWorks America as a trainer in Foreclosure Intervention. She is regularly a speaker or trainer at numerous state/regional conferences on foreclosure intervention, predatory lending, loss mitigation and/or mortgage fraud. She is widely recognized as a leading expert on these subjects. HOM has been certified as a continuing education provider for real estate professionals in Colorado, Nebraska, Ohio, Indiana, Kentucky, Tennessee, Oklahoma, Iowa and Alabama. Wilkins is an approved instructor for attorneys in Indiana and Ohio.

Today’s challenges require more expanded knowledge than ever before. The next (FIS) training is scheduled in Florida the week of Feb 22-26. Combine education and vacation. Get the edge you need!

Or register for the course in Charleston, South Carolina scheduled to begin March 15th. Education directors who are interested in auditing the first 3 days or scheduling an (FIS) training series in your area may contact Mildred directly. Funds from NAR’s FPR grants could make this certification a viable option for your membership. Call today!

www.HomeOwnershipMatters.com for registration/information.
Email: MildredWilkins@HomeOwnershipMatters.com

April 1, 2010

Press Release: HOM Announces (FIS) Foreclosure Intervention Specialist Training Underway in Charleston

Home Ownership Matters announces (FIS) Foreclosure
Intervention Specialist training underway in Charleston
Indianapolis, IN–April 1, 2010 — HOM President and Founder Mildred Wilkins is pleased to announce the overwhelming positive response from attendees of (FIS) the foreclosure certification program being offered for the first time in the state of South Carolina. Approximately sixty licensees began the 5 day certification program on March 15th, 2010 in Charleston. The Foreclosure Intervention Specialist Program (FIS) has additionally been approved by Real Estate Commissions in Colorado, Ohio, Oklahoma, Nebraska, Kansas and Indiana. It is expected that the program will be launched in Pennsylvania in early summer and has been offered in Florida without CE credit to attendees from a number of states. NAR provided funding for this critical training through their Foreclosure Prevention and Response (FPR) grant.

This certification program was developed by Mildred Wilkins, president of HOM, LLC headquartered in Indianapolis, Indiana. The program provides 30 hours of material in a classroom setting designed to prepare attendees to become knowledgeable about the options available to consumers who are in default on their home loans. Included in the course are components which address the foreclosure process, ethics, fair housing, the short sale process as well as options for keeping the home. Real estate professionals need a broad knowledge base to make appropriate recommendations when a default has occurred. (FIS) training provides that broad base. The practice of real estate has evolved rapidly as foreclosures have increased dramatically creating a need for a new field of knowledge. Foreclosure is frequently avoidable but unfortunately consumers have limited opportunities to learn what options are available. Nor has there been a way for consumers to identify professionals who have the ability to help them. Within the last two years professionals have sought to differentiate themselves with a short sale certification for this reason.

The Foreclosure Intervention Specialist (FIS) certification will set apart those agents who have taken extensive training to be prepared to handle the challenges associated with transactions when the consumer owes more than the property is worth on the open market. The training can alter the outcome of mortgage default when a consumer chooses an agent who is an (FIS) specialist. (FIS) is the oldest certification (offered first in 2005) and the most comprehensive of the programs available to agents. The completion of this program will also help licensees avoid liability while helping them to work more effectively to avert foreclosure for their clients.

Ms. Wilkins is a former Fannie Mae Broker-Specialist who sold foreclosed properties for their disposition department out of Dallas, Texas. She has received loss mitigation training from NeighborWorks America, Fannie Mae and HUD. Since founding HOM in 2002, her work has been featured in the New York Times and BusinessWeek, she has also appeared on MSNBC and NPR. In addition, foreclosure related articles she has written have been published in REALTOR magazines around the country.

Wilkins has been a faculty member for Graduate REALTOR Institute (GRI). She is also a former member of the faculty of NeighborWorks America as a trainer in Foreclosure Intervention. She is regularly a speaker or trainer at numerous state/regional conferences on foreclosure intervention, predatory lending, loss mitigation and/or mortgage fraud. She is widely recognized as a leading expert on these subjects. HOM has been certified as a continuing education provider for real estate professionals in Colorado, Nebraska, Kansas, Ohio Indiana, Kentucky, Tennessee, Oklahoma, Iowa, South Carolina and Alabama. Wilkins is an approved instructor for attorneys in Indiana and Ohio.

This (FIS) training session is scheduled for completion May 19 and 20. Registration is restricted to current enrollees. To schedule an (FIS) training series in your area, contact Mildred directly (866) 507-5105.

Copyright © 2009, 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 comments and feedback, so please don't be shy.)

April 24, 2009

Q&A: Crisis Budget

Q. We have been in our house for several years and did not refinance or get a second mortgage like so many people seem to have done over the past few years. We have managed to make our payments on time and things were fine until they cut back my hours at work six months ago. We struggled but we were still getting by until my husband was laid off two months ago. He cannot find a job even though he is trying really hard. We have already talked to the bank about trying to work with us on the mortgage but they can’t with the little bit of income we have. I don’t even care about the house any more. What can we do to try to keep food in the house until we have to move? We need help just to survive. Can you make any suggestions? We will try anything.

A. For many people today the truth is that they, like you, are in survival mode. I will not address any possibilities for saving your home since your focus is survival of your family. First, you should be applauded for looking at the survival issues as being more urgent than your housing issue.

I would encourage you to immediately adapt a crisis or survival budget. I will cover a whole list of things to do, some I am sure you’ve already thought of but some which you might not have considered. Here goes.

1. Household necessities—food and medicine
  • Cook at home—no fast food
  • Switch to store brands, minimize food purchases when possible by using simpler dishes (spaghetti instead of lasagna)
  • Use coupons and watch for store specials
  • Check again to see if you NOW qualify for food stamps
  • See if the “Angel Food Ministries” is available in your area
  • Look for short dated meats which are dramatically reduced (use immediately or freeze)
  • For prescriptions—switch to generics and/or ask your doctor for samples
2. Car expenses
  • Can you switch to a lower car payment? Use public transportation?
  • Get rid of a second car? Carpool?
  • Reduce the number of miles you drive, saving on gas
  • Increase the deductible on your insurance to get a lower monthly premium
  • Barter for an oil change but DO NOT delay when one is needed
3. Minimize household expenses
  • Get rid of cable and minimize the expenses with a land line if you also have a cell phone
  • Go to a minimal package with your cell phone company
  • Reduce personal care expenses for haircuts, nails (can you barter for the hair or do it at home?)
  • Change entertainment to free park or other community events instead of movies, bowling etc
  • Cut out playing the lottery or other gambling
  • Give up cigarettes or drinking (big saving on 1 or both of these)
4. Look for ways to generate income such as:
  • Selling items on eBay
  • Holding a garage sale
  • Taking items to a consignment shop
  • Take in a roommate—be upfront with them about your mortgage situation
  • Sell items you don’t need at a flea market
  • Look at your skills to see if anyone will pay you for a skill you have (mowing lawns, painting, childcare, fixing items, any one of 50 things)
  • Do you have a hobby which could generate income (cake decorating, sewing)
5. Other possibilities
  • If the car is paid off, reduce the insurance coverage to liability only
  • Change the number of dependents on your W-2’s
  • Use conservation methods to reduce your utility bills
6. Housing
  • Apply for government subsidized housing (Section 8), even if there is a long waiting list
  • Consider moving in with someone (family/friend) for a period of time
  • Use techniques for “buying TIME” to stall foreclosure until your situation improves
This is typically called a crisis budget, you can get the definition, and more information, here.

Please share any suggestions you are already using which are not included in the list above. We’ll use them in a future blog and you can help someone else to make it over the hump. We really are all in this together. (You can either leave a comment here, or send an email to Heather at homeownershipmatters@gmail.com).

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 comments and feedback, so please don't be shy.)

June 8, 2009

Q&A: Selling "Short"

Q: My house is not worth nearly as much as we owe on it and think they trying to do a ‘short sale’ is what we need to do. Will we still owe the rest of the money that we agreed to pay if the lender lets us do a short sale? Any information you can provide would be helpful.

A: First, your lender would have to approve such a sale (normally called a short sale). It is important that the terms of that agreement stipulate that they will not come after you for the difference (called a deficiency). Whether or not they will waive their right to legally pursue you for the deficiency will depend on several things, including what kind of loan you have, whether or not they are likely to be able to collect on an eventual judgment, how much of the shortage will be covered by the insurance policy they have on the home, whether or not you had demonstrated that you had a hardship which made making payments impossible, etc. In other words, there are a lot of variables.

Most important for you is that the agreement for short sale include a waiver of deficiency judgment and that you have this, in writing, prior to signing closing documents. This is one of those times when a good attorney is just what the doctor ordered to avoid addition financial liability down the road.

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 comments and feedback, so please don't be shy.)

February 10, 2009

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.)

September 15, 2009

WORD: Current Liabilities

And the WORD for Today is:

Current Liabilities – refers to your short-term financial obligations. Your mortgage does not fall into this category even though the payment is due monthly and must be considered as part of your current budget, it is categorized as a long-term obligation (liability).

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 atwww.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.)

April 1, 2009

Myth #9

Myth #9: Processing a deed-in-lieu of foreclosure is such a simple process that there is no need to involve an attorney and pay their high fees.

Reality: While the deed-in-lieu process is exceedingly simple (the consumer simply signs the one-page document produced/presented by the lender, gets it notarized and sends it back) the process has MAJOR, POSSIBLY DISASTROUS consequences for the borrower. Therefore, it is never a good idea for a consumer to relinquish a property via deed-in-lieu without adequate legal and insurance counsel. Real estate professionals should have nothing to do with this simple, disaster-prone activity.

Reasons:
  1. Any number of things could happen between the time the borrower MAILS notification of a title transfer to the lender/servicer and the time when that transfer is, in fact, recorded. The Ohio Attorney General’s Office has shared with me that the office has received numerous complaints of the lender’s failure to do so for MANY months. In the meantime the borrower remains responsible for any damages, costs, injuries, etc associated with the property.
  2. Lender/servicer may claim to never have received the MAILED deed-in-lieu if the problem which has arisen is a particularly expensive one.
  3. Acceptance of the title to the home does not absolve the consumer of the financial obligation for the full indebtedness; i.e. possible deficiency judgment.
  4. Additionally, there is always the possibility of a tax liability associated with eventual transfer to a new purchaser if the home sells for less than full pay-off plus costs.
The risks are substantial: Hiring a competent attorney is the only smart thing to do. REALTORS, you are advised to keep your nose out of this.

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 comments and feedback, so please don't be shy.)