Massachusetts Loss Mitigation GONE WRONG!
Loss Mitigation – most people don’t know really what this term means, but for those who work in Short Sales or in the default department of a bank it’s as familiar as morning coffee.
I haven’t posted much this year. We were busy getting our Realtor website for Massachusetts Loss Mitigation up and running. Nick and I are sometimes two ships passing in the night and between work, family and our speaking engagements, it’s hard to get my thoughts wrapped around writing a post. Today is different. I felt compelled to share a letter from one of my homeowners. Some days we go on autopilot negotiating short sales in Massachusetts. Our team has a very intense approach to these sales. Not everything is a slam dunk, but for the most part, we are getting short sales approved month after month. Interestingly the battle hasn’t changed much since 2008, which is sad.
I guess the #1 thing that would prevent your property from selling short would have to be not coming to an agreement on the value. That was probably the case in 2008 and is still the case in 2017. We have not progressed on this issue. The system for valuation of property is still flawed. The worst part is even when it’s not flawed, it makes no sense. For example, I had a Wells Fargo loan we were negotiating on a property in Exeter, New Hampshire I believe. This was a few years back but the offer on the property from what I can recall was under $100,000. The counter from the bank was over $200,000. How did this happen you might ask? Well, I had to make a lot of noise. I called Freddie Mac who was the investor of the loan. I really do like the people at Freddie Mac. They haven’t become robots like their Fannie Mae counterparts. They are also normally VERY realistic when it comes to determining value. Anyways, after calls to Freddie, and Wells and almost 30 days wasted, it was determined the value that everyone was using at Wells was from an old outside, exterior assessment from two years prior. Thankfully, we all realized the error, but not before the homeowner had gotten so stressed from the process they ended up filing bankruptcy to end the sale. (We still negotiate short sales after bankruptcy in Massachusetts and New Hampshire, but this homeowner had had enough) Unfortunately, Wells and Freddie lost out at that point, as it was too late.
My post today is in part because my seller in Western, Massachusetts has had enough. I’m at a loss. Out of frustration last weekend he wrote to Maura Healy (our Attorney General), Elizabeth Warren (one of the Senator’s in Massachusetts who has fought the big banks), Richard Cordray (Director of the Consumer Protection Finance Bureau), Lloyd Bankfien (the INVESTOR of his mortgage at Goldman Sachs and their CEO) and Saul Sauders, the CEO of Shellpoint his servicer.
What was his COMPLAINT?
He is selling his Massachusetts Short Sale, in the western part of the state and the servicer (Shellpoint)
Massachusetts short sale approval
valued the property at $37,000 (This was for an for an EXTERIOR REPORT) and a month later at $38,000 (For an INTERIOR REPORT) – The buyer’s offer price was $52,500. This seems like a win win for Shellpoint, the investor (Goldman Sachs by way of MTGLQ, LP investors) and my homeowner.
The crux? Shellpoint countered $75,000 in July of 2017 and then $80,000 in August. His question in this, and mine is Why? Why would a servicer counter a borrower more than double the amount of the valuation? Keep in mind when you and I buy a property, and we need a mortgage, what is the first thing the bank does? They order an appraisal. That dictates the value and how much of a loan I can take out. Why is it when someone NEEDS a home valuation for loss mitigation purposes, all bets are off? This poor man will be FORCED into foreclosure because Goldman Sachs is willing to LOSE money. Do you know what a bank or investor gets when a property is foreclosed upon that doesn’t have mortgage insurance? NOTHING. Unless a third party buyer comes forward to pay towards the loss, they truly get nothing. Why would you take NOTHING, when you could have SOMETHING for the sale? We are getting Shellpoint and Goldman the value of the property. Why would you counter to a point no one would pay?
Interestingly I called Goldman, and I also emailed the CEO, no response. We faxed and my borrower emailed them and, no response. We emailed the CEO of Shellpoint, no response, so my homeowner wrote the following to the following people:
UPDATE: Maura Healy responded immediately saying a representative would contact him. So far that hasn’t happened.
Dear Elizabeth Warren, Richard Cordray, Maura Healey, Lloyd Blankfein, and Saul Saunders
8/31/17
I’m writing today over concerns I’ve had with Shellpoint who is the servicer of the property I own at XXXXXXXXXXXXX (redacted for privacy) Massachusetts. This property has been in foreclosure and a sale was stopped in order for a loss mitigation review (Short Sale) –
May 1st this year, a short sale package was sent to Shellpoint for review. On May 22nd we were told the auction would be postponed until June to try to review the short sale package. At this point we were very satisfied.
On 5/30 we spoke to Jesse in Loss Mitigation at Shellpoint and were told Shellpoint needed to NET $45,000. At this point we went back to the buyer and countered to get Shellpoint that amount. The buyer agreed to increase his offer to net that amount to Shellpoint. On 6/12 we escalated a title issue to Shellpoint which we never heard back from. The estates show a multitude of predeceased children and how all their heirs conveyed their interest to the property. Somewhere there is a title policy tied to the Countrywide mortgage and there is an attorney-agent already that has issued a policy. To date NO ONE from Shellpoint has responded about this issue.
We submitted an increased offer of $52,500 to Shellpoint with a HUD and this was able to NET Shellpoint the $45,000. We waited.
On 6/14 We spoke to Sandra Martinez who said SHELLPOINT MADE A MISTAKE AND THE COUNTER OFFER WAS $75,000. That is quite a costly mistake. We had asked if an interior valuation was ordered as the house is in shambles. The foundation is sinking and cracked. It needs thousands of dollars of renovations. We were told it was not and we escalated again.
On 6/15 we sent an email to Jack Navarro, Saul Saunders, Tuongvy Hoang and Escalations regarding this crazy counter offer. Not one person got back to us. We followed up again on 6/16 and nothing. In the meantime we were calling into Shellpoint as well, and then sent a third email on 6/20. On 6/21 we received the Exterior appraisal and a letter from Wendall Hayes at Shellpoint, letting us know the investor of the loan, and stating that they needed to NET $75,000, and it didn’t matter what the assessment ($37,000) came in at for the property. He included the assessment which I have a copy of.
On 6/26 we spoke to Shamarion Trevino who said that Shellpoint would now order an interior appraisal.
This gave us some hope, but it was also very confusing. If the exterior report came in at $37,000 and the counter offer was $75,000 NET then what would happen when an interior valuation was done? It would surely be less money, and maybe they would finally review my house for what the value truly was.
On 6/29 we reached out to Shamarion again to ask WHY an exterior assessment would be countered SO HIGH if that wasn’t what the value truly was. We did not hear back from her.
On 7/10 we were sent the INTERIOR appraisal. This showed the property was worth $38,000.
In July the file was submitted to the investor for approval. We thought this was good news. We had to get a new proof of funds from the buyer, but that was the only hold up. On 7/26 and 7/26 we followed up with Shamarion to see where the file was at. On 7/26 Shamarion indicated the value had been sent to their client for review.
My understanding of this is it went to MTGLQ Investors, LP for them to look at based on the above.
We called in weekly and finally on 8/14 had an update that the INVESTOR countered at $80,000.
This makes zero sense. Why would the counter be $4000 more? Yes the interior was $1000 higher, but not $4000.
I do not know the workings of Goldman Sachs, which I understand owns MTGLQ Investors, LP, but do they actually review their investments? In what world would something with two independent valuations stating the property worth UNDER $40,000 be countered double the amount? How does this help their investors?
If this property were to foreclose, it would be a complete loss. They could never put it on the market to get $80,000 unless they were going to put thousands into it.
On 8/15 we reached out to Lloyd Blankfein, and didn’t have a response. We called Goldman Sachs and left a message. We also reached out to Shamarion at Shellpoint and Wendall Hayes on 8/17 – no one responded. We reached out again on 8/21 to them and also reached out to Lloyd again. So far NO ONE has responded to this. My last attempt was on 8/22.
When a property owner buys a home, an appraisal is done, and the loan is typically capped at the appraisal amount. I cannot buy a home that was appraised at $300,000 and buy it for $400,000 just because the seller wants that amount, so why should the reverse be any different? What are the laws regarding loss mitigation valuations? If a property value is $38,000, why would a lender counter over double that amount? That would immediately put the buyer at risk.
There is a HUGE issue here. I’m going to be forced into foreclosure. Why would a servicer and investor even ORDER a valuation if they weren’t going to accept an offer from a buyer within a threshold of that amount? How is this good for anyone? It’s not good for me the homeowner, it’s not good for Goldman Sach’s investors, and realistically the only entity I see it good for is Shellpoint because they have wasted months and months and I’m sure they get paid monthly to service the loan. So the longer this loan is on the books, the more money they must make. This ENTIRE PROCESS IS ABSURD!
I would like someone to respond at this point and explain to me why I’ll be forced to foreclosure for a property valued at $38,000, which everyone knows is the value and yet the servicer is demanding $80,000. There must be some regulation of valuations for people exploring loss mitigation efforts. It seems to me just about everyone loses out here. I would like it if someone would contact myself or my third party contact (Listed below) I would appreciate it.
Sincerely (XXXXX homeowner in Massachusetts – protected for Privacy)
(owner of)
home in Massachusetts
Shellpoint Loan #
Third Party Negotiation Contact:
Maryann Little
Short Sale Mitigation
978-384-0032
603-505-4642
To date 9/6 – no one has responded but Maura Healy. Unfortunately, her rep never contacted the homeowner
On the internet this is published here:
Goldman Sachs Group, Inc., its current subsidiaries and affiliates, including MTGLQ Investors, LP and Goldman Sachs Mortgage Company (GSMC), recently reached a comprehensive agreement with the Department of Justice (DOJ) and others that primarily addresses actions and practices related to the marketing, structuring, arrangement, underwriting, issuance and sale of residential mortgage backed securities (RMBS). Goldman Sachs is committed to helping homeowners who are struggling to make their home loan payments. If you are having trouble making your home loan payments, you may qualify for additional relief through special limited programs offered under this agreement. Please contact Shellpoint Mortgage Servicing for additional information about loan modification or settlement options available as part of this Agreement.
http://goldmansachs.mortgagesettlementmonitor.com/Settlement-Agreement-Documents/SMS_Plain_Language_Document.pdf
The CFPB did respond. It was a complete joke. I’m fairly certain they didn’t read my homeowner’s complaint because if they had, they would have seen some glaring errors. I’m attaching Shellpoint’s response which I just received. Shellpoint contends they are going of a May valuation. This must have been an external evaluation. That valuation showed the property value at $166,000, however the July valuation shows it’s worth $37,000 and the August valuation shows it’s worth $38,000. Do you see why this is still a HUGE issue in loss mitigation?
Here is Shellpoint’s CANNED RESPONSE:
I don’t think even Shellpoint reviewed the information.
Unfortunately, this poor gentleman will end up in foreclosure because NO ONE is paying attention.
Broker Nick Aalerud & Maryann Little Short Sale Mitigation, LLC AA Premier Properties, LLC Serving Massachusetts and New Hampshire Homeowners with short sale negotiation.Do not promise your short sale homeowners a moving incentive until we talk to them. Here’s why!
Short Sale Negotiation Approval in Brockton MASSACHUSETTS
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.
Posted in Negotiation Short Sales Massachusetts New Hampshire by .
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.
Posted in Approvals by .
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
Posted in Uncategorized by .
Short Sale Mitigation Massachusetts Short Sale Negotiator CLOSED North Andover Condo
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.
Posted in Uncategorized by .
Nick and Maryann Teach Short Sale Negotiator Class, Concord MA Keller Williams
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
Why Ocwen HAFA Short Sales WASTE TIME in Massachusetts!
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)
VALUATIONS
SHORT SALE
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.
Disputed Valuations
–
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: ss@ocwen.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:
Property Valuation
Valuation is obtained based on an EXTERIOR Broker Price Opinion.
Disputed Valuations
1.Borrower/Agent needs to provide the negotiator supporting
documentation including:
3-5 comparables with complete MLS Sheets as well as agent comments and photos
x
Comparable properties should be current and in close proximity to the subject property
x
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:
- You must meet all licensing requirements to sell property at auction. In Massachusetts, you would need a current auctioneer’s license or real‐estate broker’s license;
- You would need an Exclusive Right to Auction agreement with the seller. In other words, your listing agreement should make you responsible for the auction;
- The current MLS listing should be withdrawn or cancelled;
- You could input a new “Auction Listing” to MLS, with the type of listing agreement specified as Exclusive Right to
Auction;
- You must offer cooperation and compensation to other MLS participants; and
- The new Auction Listing must meet all legal requirements for the advertising of an auction. If you have
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.
Posted in Uncategorized by .
