WORD: Release Letter

And the WORD for Today is...

Release Letter – is a letter or statement prepared to indicate that one party is granting permission for the release of information (usually personal) to a third party. In real estate, such a release letter is frequently needed to allow a lender to divulge financial information. In the case of a borrower who is in default, a release letter should be signed by the mortgage holder before a default or foreclosure counselor could intervene and talk directly to the servicer on the borrowers’ behalf. Federal privacy laws protect consumers from the risks associated with unauthorized parties being given personal information. If there are two borrowers (co-borrowers) then both should sign such a release.

Federal privacy laws forbid the sharing of certain types of information (financial, medical, etc.) without express written permission being granted. A release letter is a method of protecting both the individual whose information will be shared and the organization which is providing personal information to a third party. For real estate purposes, the release would certainly be needed if a borrower were in default and either, a) used the services of a counselor or consultant to intervene and attempt a workout (release supplied to lender) or b) needed to list their home with a real estate agent. The agent would also need to supply the lender with a release letter in order to facilitate a sale. In addition, the borrower must grant permission for a real estate salesperson to disclose, in advertising, that the sale will be a short sale or will require lender approval. Either statement would allow someone to presume (accurately) that the borrower is in 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.)

WORD: Fair Debt Collection Practices Act

And the WORD for Today is:

Fair Debt Collection Practices Act—enforced by the Federal Trade Commission and is another strong consumer protection measure designed to prohibit abusive practices. Such practices might include overcharging, harassment with repeated calls or calls at inconvenient times. It is also a violation of the Fair Debt Collection Act to disclose any information related to your debt to a third party. A third party would include your mother, your spouse, your employer, your roommate, anyone who is NOT YOU. It would be appropriate for you to make a complaint to the Federal Trade Commission against that creditor if they were to violate your consumer rights in this way. The Act prohibits certain specific abusive communications including:

a. At unusual times (before 8am or after 9:00pm)

b. Repeated phone calls or excessive manner

c. At any place which is inconvenient for the consumer

d. At work if the employer does not allow personal calls

e. Directly to the borrower if they have already notified the creditor that they have an attorney.

f. By postcard or any other method which allows for the display of information about the debt to appear on the outside of the envelope.

g. After the borrower has made it clear they do not intend to pay the debt.

For additional information on the Federal Trade Commission, log onto: 

http://www.ftc.gov/index.shtml. 

Additional acts prohibited include:

a. Communicating with anyone other than the borrower except to secure location information

b. Misrepresenting the amount of the debt

c. Misrepresenting the legal status of the debt

d. Misrepresenting what actions the lender may or may not take as a consequence of the unpaid debt

e. Telling the consumer that their failure to pay the debt is a crime (it is NOT)

f. Threatening action which will not or cannot be taken legally against the borrower

g. Threatening to harm the borrower physically

h. Using language which is vulgar or abusive.

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

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

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

WORD: Garnishment/Wage Garnishment

And the WORD for Today is:

Garnishment – means that a creditor has received permission through legal court action to seize property (most often income or wages) which is being held by a third party. The third party must honor official garnishment requests when they are accompanied by a bona fide court order.

Wage Garnishment – refers to the legal process of taking the wages of someone who owes an obligation to satisfy that debt.

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.)

FYI: Fannie Mae Confirms Short Sale Commissions Policy

Thought this might be helpful to some of you:

Fannie Mae Confirms Short Sale Commissions Policy.

In discussions between NAR and Fannie Mae, Fannie Mae has reconfirmed its short sale commission policy and established a process for REALTORS® to follow if issues arise. On February 24, 2009, Fannie Mae sent Announcement 09-03 to its servicers instructing them not to negotiate commissions on short sales below the amount negotiated by the listing agent, unless the commission exceeds 6 percent. The Announcement reminded servicers that third party approvals (i.e., private mortgage insurers) may be required and can affect commissions. In response to concerns raised by NAR that some servicers of Fannie Mae loans are unaware of this policy or believe it is not binding, Fannie Mae has established a process for NAR members when short sale commission issues arise.

Step 1: Determine whether the loan is owned or guaranteed by Fannie Mae. Only the holder of the loan is allowed to do this, so do so in the presence of your client or after obtaining their written permission. Use this website: www.fanniemae.com/loanlookup, or If you don’t have convenient internet access, call: 1-800-7FANNIE (8am to 9pm Eastern Time)

Step 2: If the servicer is unaware of or disagrees with the policy, provide a copy of Announcement 09-03 to the servicer and negotiate an appropriate commission based on the listing agreement (up to 6 percent).

Step 3: Contact Fannie Mae if the dispute is not resolved directly with the servicer. Be prepared to provide the property address, name of owner, and Fannie Mae loan number (if available):

Call: 1-800-7FANNIE (8am to 9pm Eastern Time), or

Email: Resource_center@FannieMae.com.

Fannie Mae Announcement 09-03 (2/24/09)

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0903.pdf

National Association of REALTORS® Government Affairs Division
500 New Jersey Avenue, NW, Washington DC, 20001

REALTOR® is a registered collective membership mark which may be used only by real estate
professionals who are members of the NATIONAL ASSOCIATION OF REALTORS®
and subscribe to its strict Code of Ethics

WORD: Buy-Down

The WORD for Today is:

Buy-Down—a sum of money paid to the lender at closing to reduce the borrower’s out-of-pocket monthly mortgage payment. Buy-downs are usually temporary. In the last several years it has been common for the amount of the buy-down to be added to the purchase price for the house so that in effect the buyer is borrowing the reduction. This is a dangerous practice for several reasons: it adds to the indebtedness by inflating the mortgage/appraisal and causes the borrower to be upside down.

Buy-Down is also an inducement to a lender to reduce the interest rate on a loan during the early years of a loan. The buy-down payment to the lender may come from the seller, buyer, a third-party or a combination of these. The buy-down may be for the first 1-5 years of the loan; most common is the 2-1 buy-down. Buy-down sounds good but in a practical way it is seldom helpful to the borrower. If the borrower is not very strong financially and able to pay the buy-down totally out of pocket then it will be financed into the loan, which hurts them over the long haul. An artificially reduced rate now only means you have to catch up later. The lender is entitled to, and must receive, a certain rate of return. There really is NO FREE LUNCH.

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: Deal or No Deal?

This catchy title from a popular game show has increasingly become a weekly nightmare for real estate professionals. In a market where an alarming number of clients are behind on their mortgage AND upside down, many agents are finding themselves sitting for ever increasing amounts of time—sometimes months—waiting for the lender in some distant city to notify the interested parties that, “Yes, we have a workable deal”. Now, get it closed in short order (7-10 days is not uncommon) and “No, we will not allow any contributions toward the buyer’s costs”.

Common practices (seller concessions) are not part of this transaction. Local real estate agents negotiating with a distant third party who does not, in fact, own the real estate (lenders’ loss mitigation department) has become a new reality for many real estate professionals. This practice will continue and become more commonplace as more consumers find themselves in a position where they are unable to make their mortgage payments and the local market will not support the full amount needed to cover mortgage payoff and the expenses associated with the sale. It’s called a “short sale” and the rules of the transaction are markedly different from how you used to sell homes.

“DEAL” means yes, we will allow the closing to occur. You must close quickly or we will change our minds. Seldom will any seller concessions be allowed. Worse yet, seldom will full commission be allowed. Frequently, the lender will notify all parties of a counter offer only after an extended period of time of complete silence. Then you are basically in a “take it or leave it” situation. It is critical that you get an actual letter of confirmation which includes ALL terms of the transaction from a representative of the financial institution, so that you know that the deal can be finalized with a closing and exactly which terms are acceptable.

“NO DEAL” means the lender/servicer has determined that the offer(s) is not workable for them or their insurer. There are a number of reasons why this might be true, but in essence you have been told they will not allow the closing and will most likely move forward with completing foreclosure action against the current owner of the home. There are a few options for intervention, but unless you have been trained in foreclosure intervention this an excellent time to utilize a mutual release. “NO DEAL” usually means go home—whether you’re on a game show or trying to sell real estate.




Mildred Wilkins, founder and president of Home Ownership Matters, LLC. She is the trainer for the (FIS) Foreclosure Intervention Specialist certification program. Visit her website www.HomeOwnershipMatters.com or call toll free (866) 507-5105.

Copyright © 2007. 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.)