Our loss mitigation efforts in Brockton, Massachusetts finally paid off. This sale came in while I was away and Nick did the intake. I called this woman when I was back because I became highly aware she had an auction scheduled on her property. The property was listed with Keith Shaw out of Keller Williams. I called Keith immediately and asked him to firesale price the property, which is tough on any property backed by Fannie Mae. Fannie out of any investor has unrealistic opinions of short sale values and tends to want more than a property is worth. This many times can send a homeowner right to foreclosure. The problem with this particular property is we couldn’t get more even if we had tried.
This property in Brockton Massachusetts had been on the market two additional times with other Realtors and overall had been on the market over 800 + days over the span of three years. Unfortunately Fannie does not look at this information so this was going to be an uphill battle.
Bank of America was the servicer. If anyone has worked with BOA you know that their processes are SO cumbersome and slow things down to a crawl. Most short sales an be submitted and approved in less than 60 days, but with BOA, the paperwork is a noose around your neck. Just to INITIATE a short sale with Bank of America you need a minimum of about 8-10 pages including a realtor certification form, buyer certification form, 4506T, listing agreement, and authorization. Most of the paperwork is not necessary to start a sale. To start a sale, servicers should just need an authorization, but that’s how Bank of America rolls.
Unfortunately, BOA prolonged collecting the required documents for months and we had kept track. This forced the woman to another auction date that up until the day before we were fighting to get cancelled. I’m SO grateful for the help of Will over at the Massachusetts Attorney General’s office. Without his help, this short sale could not have gotten approved nor, reviewed. All loss mitigation efforts on this short sale had slowed to a crawl with this servicer.
The homeowner ended up not on writing to the CEO of Fannie, but also the CEO of BOA. This sale was the epitome of poor communication and progress and unfortunately BOA’s Equator system only hinders their document collection process. Especially when we are asked for the same certification 3X being told it’s illegible, when it was clearly legible to all parties on our side of the transaction. The worst about BOA and Fannie is we have to do double the effort between Homepath and Equator and it does NOTHING to help or speed the Massachusetts Loss Mitigation transaction but make more work.
This sale was started in May with 3 auction stops, and I am happy to say finally getting approved today. Thank you to Maria in our office who worked so hard, AND especially Keith Shaw out of Keller Williams for sticking with the sale and seeing it through.
Our Massachusetts Short Sale homeowner is very happy with our negotiation efforts.
Plymouth MA #SHORTSALE APPROVED in less than 14 days!
Yes! We had a short sale approved in less than 14 days from submission to approval. Keep them coming like that.
CLOSED Whitman MA Short Sale with 21st Mortgage
From submission to approval 67 days!! Yes, this was a great Massachusetts short sale with a smaller servicer. Massachusetts short sales are still hot and there are still many of them. Homeowners in Massachusetts are still seeing an increased default and foreclosure rate.
If you are looking for assistance on an underwater mortgage, please give us a call to discuss your options. We are happy to help at NO COST to the seller!!
Maryann Little, VP Mitigation
I’ve gotten away from publishing every closing. We are so busy we don’t have the time, but I need to recognize Lisa Johnson Sevajian on this sale. She really stuck with it. We were on our third buyer and finally got approval when there was an issue with the Condo Association.
Everyone, including the buyer stuck it out and we closed on time, but this was three rounds of short sale negotiation for us. This was a Fannie backed first lien property (Through Seterus) and a TD Bank second. TD Bank proved to be difficult. They like to pursue the deficiency and even though I had all kinds of correspondence that they wouldn’t do this for our homeowner, their approval letter was VAGUE, which is why it’s VERY important to work with a good legal team. I’m so grateful to all the attorneys that put their trust in us to negotiate. On this particular sale, I was grateful to Meghan Grugnale, of Grunale Law office who has worked through HUNDREDS of short sales and knows what she is doing.
On to the next batch of short sales to negotiate in Massachusetts – THANK YOU ALL.
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: email@example.com
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.