Bank of America Short-Sale Process Revamped, Improved

Bank of America made some changes to its short-sale procedures which are supposed to shorten decision times on short-sale offers to 20 days, down from 45 days or longer.

Bank of America’s short-sale management platform, Equator, was revamped and now enables short-sale negotiators to conduct tasks like document collection, valuations and underwriting simultaneously. In addition, when buyers walk/back out of their contract, agents will have 5 days instead of 14 days to submit a backup offer.

As part of the change in their short-sale approval process, Bank of America is requiring a new third-party authorization form for short sales initiated as of April 14, 2012. In addition, there are now 5 specific documents which are required to process short sales initiated with an offer. Once these five specific documents have been submitted, Bank of America should have a decision made on the short-sale in 20 days.

If you’re a homeowner thinking of doing a short-sale or a buyer considering purchasing a short-sale, I’d be happy to give you the details and chat more about the short-sale process - click here to contact me.

Negative Equity, Not Sub-Prime to Blame; New 125% Refi LTV

Two interesting discussions are going on right now over at VAR buzz (Disclosure: I wrote one of the posts). The first is about the Home Affordable Refinance Program (HARP) increasing their loan-to-value (LTV) limits from 105 to 125 percent. The second is about how it’s negative equity loans, not subprimes or “liar loans” that are to blame for the foreclosure crisis.

HARP’s new 125% LTV ceiling

Regarding HARP’s new LTV ceiling… Some think that HARP is a horrible solution and that the new LTV ceiling will leave homeowners “stuck” in their home. I disagree and here’s why:

If homeowners were allowed to borrow more than what they currently owned, HARP would be horrible solution because it puts people further into debt. But HARP does not allow people to borrow 125% of their home value unless they owe that much already. It is a refinance – not a new purchase nor “cash out.”

“Upside-down” homeowners are already “stuck” in their home whether they refinance or stay in their current mortgage. Their property will still be worth $X, they will still owe $Y on their mortgage and their LTV will still be at 125% whether they refinance through HARP or not.

As Sweth (one of the commenters on the post) said, this is not the Home Affordable Modification program - that’s a different program - nor a neg am loan. This is simply a way to refinance the same amount you currently owe into a fixed rate mortgage at a potentially lower interest rate.

If homeowners were allowed to borrow more than what they currently owned, HARP would be horrible solution because it puts people further into debt. But HARP does not allow people to borrow 125% of their home value unless they owe that much already. It is a refinance – not a new purchase nor “cash out.”

Negative equity loans, not subprimes to blame

The other post is about how it’s negative equity loans, not sub-primes or “liar loans” that are to blame for the foreclosure crisis.

I can see where the author is coming from. Homeowners that took “zero down” or even “103 percent financing” (aka negative equity loans) had no financial stake in the property from the start. Many bought a house with less than $100 out of their own pocket. Heck, some even got money back! If you have no stake in something, you’re much more willing to let it go especially when you’re looking at a 10, 20, 40+ percent “loss” if you sell it.

And as property values fell, people were continuously counting how much money there were “losing” - the more they “lost”, the more willing they were to just walk away and be foreclosed on. If property values didn’t fall as much or were increasing, people would think twice before being foreclosed on because the may “make money on their home.” Primarily only those who were truly facing financial hardship would be foreclosed on because they wouldn’t be able to pay the mortgage regardless.

But this may very well be a, “Which came first, the chicken or the egg?” type of discussion.

What do you think?

Are the Foreclosure Floodgates About to Open?

At the end of last year, many banks and financial institutions including Fannie Mae adopted some sort of “foreclosure moratorium” and they did the same thing again this year at the request of the Obama administration. The moratorium halted foreclosure proceedings on many who were facing foreclosure or in the process of getting foreclosed on.

Fast forward to April 1, 2009…

The moratoriums have pretty much all been lifted and the banks are back at it - foreclosing and eventually putting those properties on the market. Based on how long foreclosure proceedings take in Virginia and how long banks take to process everything before listing the property, we should start seeing many of these recently foreclosed properties hitting the market sometime this summer to the end of the year.

I’ve also heard rumors and talk about Fannie Mae and other banks thinking about taking an “let’s get rid of it all as fast as we can” approach to their foreclosure inventory (anyone else hear/know anything about this?). If Fannie and other banks release their inventory onto the market all at once, I think we’ll be in trouble. Yes, they’re only rumors and I hope that they stay stay only rumors. But what if there is a flood of foreclosures hitting the market?

These moratoriums have artificially deflated real estate inventory across America. In the Northern Virginia/Washington, DC metro area, housing inventory is down to 2003/2004 boom-market levels. In fact, the housing supply numbers in Loudoun County are indicative of a seller’s market.  We’re seeing multiple offer situations on many almost every property on the market priced below market value (feel free to ask any buyer or agent in my area to confirm that).

It was inevitable that the foreclosure moratoriums would just delay the foreclosure proceedings and eventual bank-owned market inventory. The question is when and how all those bank-owned properties will hit the open market and how great of an impact that influx of inventory will have. If all of these foreclosure properties hit the market at relatively the same time, inventory will go up and we’ll see downward pressure on prices. That would not be good.

Do I think all these foreclosures will hit the market at the same time? Personally, I doubt it - especially if the government has anything to do with it.

Bloggers for Good Meet-Up & Charity Event

There's a new grass-roots group called "Bloggers for Good" that is having their first ever meet-up and charity event at O'Faolain's Irish Restaurant in Sterling, VA on February 19.

The meet-up will be a chill, fun way to grab some food and drinks and hang out with fellow local bloggers while raising money for charity. If you're a blogger in the area, I hope to see you there.

Here's the official press release including more details about the group and the event next month:

Bloggers for Good is a new, grass-roots group that leverages local blog communities to help people meet, greet, and give to a good cause. BFG events provide a chance to gather in a fun, social setting with a common interest and a bigger purpose.

BFG “meetups” are designed to be low-key, interesting, and enjoyable. There is no cover charge or advance signup required; bloggers, their readers, and the general public are encouraged to attend.

Some of the attendees include Erica Garman of the Washington Post’s Loudoun Extra website, author/blogger Tammi Marcoullier of the blog InsideOut, and Dan Sousa of LoudounPrepSports.

The first BFG meetup will take place on February 19, 2009 from 6-8 p.m. at O’Faolain’s Irish Restaurant in Sterling, VA. Proceeds will benefit Loudoun Interfaith Relief; including a percentage of restaurant sales, raffle sales, canned food collection and direct donations.

BFG events are primarily publicized through "word of blog." Supportive bloggers and their fans support the event by posting the BFG logo graphic/badge on their blogs, writing about the event, and attending the meetup.

With your help, another BFG event will be coming soon to a place near you!

For more information, visit www.BloggersforGood.org.

Loudoun Foreclosure Article in Washington Post Features Danilo Bogdanovic

Yes, this is shameless self-promotion so cover your ears or click "back" if you'd like…

The Washington Post ran an article entitled "2008 Foreclosures Mostly in Sterling, Leesburg" both, online and in last Sunday's Loudoun Extra print edition. The article talks about how most of the foreclosures and bank-owned properties in Loudoun County are in Sterling and Leesburg.

The piece features myself as well as data and a foreclosure map discussed at the Dulles Area Association of Realtors Economic and Housing Forecast Summit, which took place last month. 

If you haven't seen it, here's the online version of the article over at Living in LoCo/LoudounExtra.com.

Fannie Mae Suspending Foreclosures Through January 2009

Fannie Mae just announced that it will be suspending foreclosure sales through January 9, 2009 in order to focus on its streamlined modification program, which it announced on November 11. 

Here's an excerpt from the press release:

"The temporary suspension of foreclosures is designed to allow affected borrowers facing foreclosure to retain their homes while Fannie Mae works with mortgage servicers to implement the streamlined modification program scheduled to launch December 15. Foreclosure attorneys and loan servicers will be instructed to use the additional time to reach out to borrowers who have defaulted on their loans and continue to pursue workout options. The initiative applies to loans owned or securitized by Fannie Mae.

The streamlined modification program is aimed at the highest risk borrower who has missed three payments or more, owns and occupies the primary residence, and has not filed for bankruptcy.

Fannie Mae will be working with foreclosure attorneys and servicers to reach out to the more than 10,000 borrowers the company estimates would be affected during this period. Borrowers who have Fannie Mae loans that are scheduled for foreclosure between November 26, 2008 and January 9, 2009, will be contacted directly by the attorney handling the foreclosure. If the home is occupied, Fannie Mae has instructed servicers and attorneys to suspend the foreclosure."

This is good news for the most troubled of home owners with Fannie Mae loans. This is also good news for the future of the foreclosure real estate market should some of these folks work out their loans and avoid foreclosure because it will help diminish some of the future bank-owned/foreclosure real estate market inventory. Though how much of an effect it will truly have is yet to be seen.

Hat tip to RealEstateZebra.

Loudoun Foreclosure Assistance Barely Makes a Dent

In July, Congress approved $4 billion to be distributed to the nation's hardest-hit communities when it comes to foreclosures. Of that $4 billion, $46 million is being sent to Virginia. Of that $46 million,  $38.7 million will be channeled through housing officials in Richmond with $4.1 million going to Prince William County and $2.8 million going to Fairfax County. 

It seems that Loudoun County has not yet applied for any of that money so the amount being sent Loudoun's way has not been set. But people are estimating that Loudoun County should be receiving an amount somewhere in between that of Prince William and Fairfax.

The extra money is great in theory. But if you consider the average price of a foreclosure property in Loudoun County and the number of foreclosures in the county, three or four million dollars won't get Loudoun very far. It'll barely make a dent.

With Northern VA being hit so hard and contibuting the overwhelming majority of tax revenue for Virginia, I'm wondering why more of that $46 million isn't coming our way.

Housing officials in Northern Virginia and Richmond met this week to talk more about how to allocate $46 million of that emergency federal aid. Hopefully, the amounts will go up for this area and Loudoun will apply for some of that aid in the process.

Loudoun County To Help Employees Buy Foreclosed Homes

Loudoun County officials are currently working on a program that will help Loudoun employees buy foreclosed homes. The program would provide $5000 in grants to county and school system employees in order to purchase foreclosed property in Loudoun County.

Loudoun County officials are currently working on the proposal which will go before the Board of Supervisors next month.

This comes after the Loudoun County board last month approved a program that would low-interest loans to those making up to $99K per year.

Loudoun has been hit hard by foreclosures and the county is trying to be a part of the solution as well as make it more affordable for county employees to actually live in the county they work in. This is definitely a step in the right direction.

Related Articles

Loudoun County Considering Foreclosure Program For County Employees

Source: WUSA9.com and The Washington Post

In Case You Didn’t Know About LoudounScene.com…

In case some of you did not know, I also write a sister blog - LoudounScene.com - that covers the general Loudoun County real estate scene, market statistics and more. If you haven't checked it out yet, please do so when you have a moment. Would love to hear your feedback and comments about either/both.

Thanks!

Danilo

House OKs $300B Mortgage Rescue Plan, Backs Up Fannie and Freddie

The House just ok’d a $300 billion (yes, with a "b") mortgage rescue plan that includes backing up Fannie Mae and Freddie Mac. The plan is aimed at rescuing troubled homeowners and backing up Fannie and Freddie to help ease the housing meltdown (aka foreclosure, mortgage and credit crisis).

There are many proponents of the plan and an equal number of critics. Either way, it looks like the legislation will go through - President Bush said he’d sign it and the Senate is likely to approve it (though the Senate is not sure when).

"This isn’t a perfect solution by any means," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. But, he added, it enjoys support from a broad and unlikely coalition, including bankers, housing advocates, governors and mayors struggling with the foreclosure crisis.

For more on the story, click here, here and here.

UPDATE: Senate ok’s the mortgage rescue plan today. President Bush set to sign off on it soon.

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