We are so grateful to the Keller Williams Concord, MA team for their kindness. We were welcomed to a team of extremely knowledgeable and thoughtful agents. We are also grateful to Anita Hill for providing the CEU’s to the agents. They sat through a lengthy two our overview of short sales with Nick and I. This short sale negotiator class was originally developed for a Massachusetts Continuing Legal Education and we presented with CATIC and has helps countless people understand short sales and the intricacies of navigating through different short sales including FHA, Fannie/Freddie, Reverse Mortgage Short Sales, and the HAFA non-GSE sales.
We are thankful to Heidi Benson who hosted the class, Lisa Hales who invited us to the class and Keller Williams and we were very happy to see Keith Shaw who we have closed multiple sales with.
Thanks to all for an amazing class this month and we hope we can do it again next year!
Maryann & Nick Aalerud
Short Sale CLOSERS
Your Massachusetts Short Sale Negotiators
My favorite line when I speak to a new homeowner is to state there is nothing short about applying for a short sale. Short sales are LONG!! They are paperwork heavy. They are tedious and many lenders just restart, and restart the process (Chase) and even though the CFPB (Consumer Protection Finance Bureau) and even some investors like Freddie and Fannie have touted rules and regulations, for servicers and lenders to shorten the process, it’s still lengthy and cumbersome. The problem is, there is no true enforcement or regulation of the time frames. I have literally filed a complaint with the CPFB to show that a servicer did NOT acknowledge the sale within the 5 day window of submission, like they are supposed to, and watched that same servicer BACKDATE an acknowledgement letter to the 5th day. It’s sickening. Anyways, my point, is that short sales are LONG enough without adding a extra time.
This brings me to Ocwen and how MUCH extra time they add to their short sales. Specifically their HAFA short sales. HAFA stands for the Home Affordable Finance Alternative that the Treasury enacted to assist struggling borrowers. Initially, I didn’t like the program much, but after the kinks were out of it, it grew on me. Now I like it. It has been revamped several times too. Most borrowers can apply for a HAFA short sale so long as their loan was originated before 2009, or is Freddie/Fannie/FHA backed. There are other program requirements, but those are the main ones. Ocwen Freddie backed sales are much better, but I digress.
Each servicer (Ocwen) has a HAFA matrix which outlines their program to their borrowers. Interestingly, at the publication of this article Ocwen has removed their matrix. I can only assume it is being removed, so their NEW guidelines can be published. The problem with both the OLD and (ASSUMED NEW) HAFA matrix is the valuation accountability. There are two fundamental issues with their short sales. I will tackle the valuation issue first, and the HUBZU issue second.
The old matrix says they are required to do the following, pertaining to the valuation, when evaluating a borrower for a HAFA short sale:
NMLS #: 1852 (see here)
During a HAFA Short Sale review, Ocwen requires a recent assessment of the market value of the subject property by Brokers Price Opinion (BPO). The assessment should be within 150 days of the review (to be obtained by Ocwen). The market value must exceed $20,000.
If the borrower(s) or realtor(s) wish to dispute the value, they must submit a copy of the Comparative Market
Analysis (CMA) form to Ocwen at Email: firstname.lastname@example.org
The estimated evaluation timeline will be approximately 10 business days
The issue with the old matrix and NEW matrix is the loose language regarding the BPO – it does not specify INTERIOR BPO – It does not specify, even better, an appraisal of the property. Now, I cannot necessarily fault Ocwen entirely because the TREASURY gives the servicers a wide range when developing their matrix. They do not specify that valuations should be INTERIOR valuations or appraisals, so what servicer in their right mind would PAY MORE to get a valuation on a property, when in essence they can do a drive by BPO, and get a valuation to comply with Treasury guidelines?
The reason this process is a waste of time is that drive by BPO’s are, in my opinion, are NEVER EVER accurate. The agent may not see that pipes are burst, or mold is growing, or heating systems don’t work, or structures are unstable. These are some of the bigger issues that could greatly impact the valuation of a property. Not unsurprising, the value comes in too high, which then has to be disputed. All of this sucks up time. Ocwen now wants comps, repair estimates, etc to allow for the dispute. This too takes time and again, the borrower is subject to the valuation ghost at Ocwen. People say the valuation department exists, but I’ve never spoken to anyone in it. It never seems to spit back an accurate reading of a dispute, nor exterior bpo, so then your sale will fail and you have to remarket the property.
This is where I fault the Treasury AND Ocwen. If they were to just order an interior BPO then you may have a CHANCE of having a more accurate valuation out of the gate, so as not to waste time. Even better, servicers should be MANDATED to order appraisals, which are in my humble opinion again even MORE accurate. Certainly much more accurate than a drive by BPO which is all that the servicers are required to do.
It’s hypocrisy at its best. When a borrower APPLIES for a loan, is reviewed for a loan, wants credit to buy the house and signs a note, the lender MUST have an appraisal done, however, when a borrower is losing a home, and the borrower is reviewed for loss mitigation options which most must be reviewed for, the lender only has to do the bare minimum to meet government requirements.
No wonder investors are losing their shirts in the housing market. You have servicers not really trying to get the most money for a property, but seeing how long they can milk the servicing before eventually foreclosing. I won’t even go into the ghost valuations. Most borrowers don’t get to SEE their valuations, unless they are HUD backed. Again, when they apply for a loan, and are required to meet loan requirements by getting the property appraised, that appraisal is then seen by the borrower, however, when the same borrower needs a valuation for loss mitigation purposes, that valuation is RARELY if ever seen by the borrower, and yes, the valuation fees are charged to the borrower on the loan.
I suspect Ocwen’s NEW HAFA matrix once published will read as follows:
Valuation is obtained based on an EXTERIOR Broker Price Opinion.
1.Borrower/Agent needs to provide the negotiator supporting
3-5 comparables with complete MLS Sheets as well as agent comments and photos
Comparable properties should be current and in close proximity to the subject property
Work orders or repair estimates with photos
2.The review will take 5-10 business days and a response will be provided to borrower/agent
Because of this cumbersome, unrealistic valuation process almost everyone loses. The borrower loses because they are likely to lose a qualified buyer, and spend more months and time reapplying for a new short sale tacking on more missed payments. The buyer loses, because they will never be able to offer the unrealistic exterior BPO value, so they have just wasted time and money trying to purchase something that the seller’s lender doesn’t want to fix. The investor of the loan loses for the same reason. More missed payments, mean a bigger loss for the investor, however Ocwen and the servicers are the big winners. Keep in mind they are being paid to service the loan.
Let’s go to my SECOND reason that the Ocwen HAFA (or any short sale) can be a big HUGE waste of time. It’s called the HUBZU requirement, and in Massachusetts if you are an agent with MLS you cannot comply with it.
Ocwen has a requirement that most of their interior loans also be placed on their auction site called HUBZU, via Altisource. They have a ridiculous slew of additional paperwork (see here) for the borrower to read and agent to sign. This paperwork essentially allows Altisource and Hubzu to insert themselves into the current transaction and listing and requires the listing agent to then MARKET the property on MLS and point additional purchasers to Hubzu. They use the MLS platform to then advertise the property on HUBZU, which MLS shouldn’t like, nor do they. The agent will violate MLS regulations if they comply with the Ocwen/Hubzu/Altisource process. I have spoken with reps at MLS and as an agent in Massachusetts you CAN NOT comply with this process. The following was published on MLS on 5/15/2015:
FROM OUR MLS SYSTEM: 5/15/2015 An Important Reminder on Auction Listings As a reminder,
>>> you may list a property for sale at auction in the MLS only if both (1) you as the listing broker are ultimately responsible for the auction, subject to your “Exclusive Right to Auction” agreement directly with the seller; and (2) you list the property in MLS as an Auction Listing, with the type of listing agreement specified as Exclusive Right to Auction.
>>> An auction may be listed in the MLS service only by a participant or subscriber that is a licensed broker or auctioneer. Please note that MLS PIN does not accept listings in which the seller has directly engaged a non-participant auctioneer to sell the property at auction
I also spoke directly to a rep at MLS who emailed me the following:
Below are the requirements to list an Auction listing within our system:
questions on the requirements for advertising or selling property at auction, you may wish to speak with legal counsel or contact the Massachusetts Division of Standards.
Any way you slice is, taking your short sale and TRYING to comply with the Altisource requirement is going to waste more time.
Even when Altisource and HUBZU allow you to just negotiate the sale through Ocwen, it can still take an additional 1-3 weeks for them to sort through sending the file back to Ocwen to negotiate.
It’s a nightmare for any homeowner or borrower trying to do a short sale.
Anyways, our firm does work through all of these issues and we have had multiple successful Ocwen short sales, but they are not short, nor easy. Any buyer, seller or agent should be aware of the time it takes to work through the Ocwen Short Sale process.
It’s unfortunate that to save a few dollars ordering an interior BPO, months of time must be wasted. I can only assume investors of these loans lose hundreds of thousands of dollars, and it seems we all just have to suck it up as the Treasury just didn’t care enough to require servicers to at bare minimum to order INTERIOR valuations. You can’t fault Ocwen for that. They are winning all around.
Want to understand a little bit more about what lenders look for to approve Massachusetts short sales? See my new video below
Why are we so good at Short Sale Negotiation in Massachusetts and New Hampshire??? Because we KNOW the forms you need!
So what’s the difference between all the financial forms from your lender?!?!? This quick video will show you the two major financial forms used by most lenders today.
Oh and if you want the link to the Wells Fargo RMA 10 page form click HERE
Hot off the press. Senate afirm’s two-year extension for Mortgage Debt Relief Act
The Senate Finance Committee voted 23-3 in favor of extending a package of business and individual tax provisions known as “tax extenders,” including one that will ensure that mortgage debt that has been forgiven by a lender will be excluded from the borrower’s personal income.
Under current law, taxpayers who have mortgage debt canceled or forgiven after 2014 may be required to pay taxes on that amount as taxable income. Under this provision, up to $2 million of forgiven debt is eligible to be excluded from income through tax year 2016. This provision was created in the Mortgage Debt Relief Act of 2007 to shield taxpayers from having to pay taxes on cancelled mortgage debt stemming from mortgage loan modifications through 2010. It was extended through 2013 by the Emergency Economic Stabilization Act of 2008. The extension would be through 2016. A two-year extension of this provision is estimated to cost $5.122 billion over 10 years.
Also included in the package taken up by the Finance Committee was a mortgage insurance provision that would treat mortgage insurance premiums the same as interest, allowing a borrower to deduct the cost of the premiums from income taxes. This extension would also be through 2016.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Nick and I are your MASSACHUSETTS SHORT SALE NEGOTIATION CLOSERS! Call us today to find out more about a SHORT SALE OPTION for underwater homeowners. If the bank is knocking, we want to speak to you.
Nick Aalerud and Maryann Little
So what does that mean? In most short sales we work on in Massachusetts, we are working directly with the servicer of the loan. Servicers usually have delegated authority for an investor, and sometimes you can never find the investor. I have a short sale I’m working on in the Cape, in which the servicer has a very high value. Anyone in this business knows when a value is high, that pretty much dooms your sale, unless you can show the servicer why that property will not fetch that amount, e.g. a value dispute.
We did the value dispute on this property and it came back at the same amount we were quoted, so we knew something was wrong. They SENT us their reconciled value and low and behold, it was the amount the buyer was offering, so something is even more wrong. After MULTIPLE left messages for the Director of Loss Mitigation at Specialized Loan Servicing, and faxes, we felt we had to direct to the investor of the loan:
Good Morning James,
I’m writing today regarding the above property located in Massachusetts, which is a default property serviced by SLS.
Your company is listed as the investor on this loan, and before you tell me SLS has delegated authority, I just want to understand how a value reconciliation done on this property by SLS showing the value of $225,000, is denied and countered at an unrealistic value of $270,000. I have tried calling in several times to show them this error, and were are being told this is the number the investor wants.
This number will seal the homeowner’s fate to foreclosure, which he has been trying to avoid for some time now.
I am unsure what to do as I notified Darren Bronaugh several times via fax and email and still have yet to hear back. I also reached out and left voice mails for Christophoer Chavez (SLS loss mitigation supervisor) and emails, none of which were returned.
I would imagine that investors have some threshold for the authorization of a short sale. I can imagine if a property value came back at $400,000 and the offer was $300,000 it may make more financial sense to send that property to foreclosure, but I’m trying to understand how a property value of $225,000 with an offer of $225,000 is being denied and countered as too low.
I don’t often reach to an investor directly as there is no need because we can usually work smoothly with a servicer, but considering no one in management has addressed this issue even though I have reached out multiple times, I wanted to go to the investor.
Please let me know what I can do to help or assist and if there is anything that can be done on this property. Thank you.
Maryann Little, VP Short Sale Mitigation
Short Sale Mitigation, LLC
AA Premier Properties, LLC
500 West Cummings Park
Woburn, MA 01801
The information in this email is confidential and may be legally privileged. It is intended solely for the addressee(s). Access to this e-mail by anyone else is unauthorized. This email does not in any case constitute a binding offer, and any price or other contract term contained in this email is subject to written approval by the parties entering the contract. Short Sale Mitigation, LLC is a Massachusetts based loss mitigation company assisting homeowners and Realtors through the arduous Short Sale Process. Short Sale Mitigation, LLC is not associated with the government, and our service is not approved by the government or your lender. We are in no way affiliated with any government entity. We are an independent 3rd party negotiation services company. – Short Sale Mitigation, LLC is under the direction of AA Premier Properties, LLC in New Hampshire License # 066518
Today I’m patiently waiting for someone from SLS to respond, however am losing hope on this sale. Poor valuations PLAGUE the short sale market and unfortunately there is no oversight to this. How does the investor truly KNOW they will get more for the property if they foreclose? They are basing their decision on a valuation. Anyways, say a prayer for this homeowner as we patiently wait out and see what happens. I was told the investor was reaching to SLS and would ask SLS to respond to us.
Yes. Started the day with a HUGE complaint to the CFPB over a valuation from a company called MCS Valuations, that we believe tampered with one of our short sale valuations. My poor homeowner has been through enough. I’m going to advocate this one all the way up to a director at the CFPB if I have too. I’m thinking of putting a complaint into the Treasury too as the loan is Freddie backed….although I love my Freddie gang, this is blatant tampering by the valuations company and no one wants to actually LOOK at what happened. They all just say, “well that’s the value I see on the screen” – NUMBERS ARE INPUTTED WRONG all the time, and many homeowners lose their homes over it. Sorry, I’m not standing for this. My poor lady lost her husband on Christmas day!!!! http://shortsalemitigation.myproptrackr.com/