Fannie Mae will Make Things More Difficult for Short Sales in August in Massachusetts and New Hampshire

Fannie Mae will Make Things More Difficult for Short Sales in August in Massachusetts and New Hampshire

 

As if short sales weren’t difficult enough with lender red tape, lost paperwork, lenders forcing homeowners onto auction sites when they already have marketing and gotten an offer, and dictating unfavorable terms to already financially struggling homeowners, Fannie Mae has decided they will not pay ANY money towards secondary liens that aren’t actual mortgage liens.

fanniemaeYes, you heard right.  If there is a municipal lien on a property for let’s say an overdue water bill that has also accumulated penalties and interest, Fannie Mae won’t pay.  Although it doesn’t say, I’m assuming this goes for all Federal and State tax liens on title.  Unfortunately in my business I’ve seen HEFTY federal tax liens and we’ve always been successful in negotiating those liens down and rolling in a payout from the proceeds of the sale, but nope, Fannie Mae has drawn a line in the sand.

This is how the new announcement reads:
https://www.fanniemae.com/content/announcement/svc1409.pdf

Servicing Guide Announcement SVC-2012-19, Standard Short Sale/HAFA II and Deed-in-Lieu of Foreclosure Requirements

Fannie Mae is revising its policy on subordinate lien payments for short sales or Mortgage Releases to prohibit use of the $6,000 from the sale proceeds to settle non-mortgage liens. The $6,000 in available subordinate lien release funds must be used only for subordinate mortgages or deeds of trust recorded in the land records that constitute a valid lien against the property. The $6,000 in available funds must not be used for other types of liens, including but not limited to:

§ homeowners’ association (HOA) liens,

§ judgments,

§ mechanic’s liens, and

§ materialmen’s liens.

 

If such other liens impede the closing of a short sale or Mortgage Release, the servicer must submit the case to Fannie Mae for prior written approval. As a reminder, the servicer is required to protect the priority of Fannie Mae’s mortgage lien and must clear priority liens for delinquent HOA dues and condo assessments on properties acquired through foreclosure or deed-in-lieu of foreclosure as outlined in Announcement SVC-2012-05, Payment of Homeowners’ Association Dues and Condo Assessments and related sections of the Servicing Guide.

This pretty much stops any sale with any type of secondary non-mortgage lien in Massachusetts as it’s a super lien state.  There are certain liens that can TRUMP the mortgage including Condo Dues.  I’m not sure WHY no one has pushed back on this, but no condo association is going to give up their position with no payment…and homeowners who don’t have a dime to their name cannot afford to pay these liens, so that leaves it on the buyer.  This will minimize the buyer pool, excluding any FHA, VA, USDA borrower because the buyer will have to have CASH to pay off secondary liens and what do you think a buyer is going to do in that circumstance?  They will DEDUCT that amount from the purchase price NETTING Fannie Mae less, so this new announcement doesn’t help them at all.  Cash buyers are always lower buyers.  No buyer is going to pay full price for a property knowing he has to pay another $15,000 in cash for liens!!!!!  No federally financed buyer will have the cash on hand to assist with the liens.

This is a very poor move on Fannie Mae’s part and I don’t think they thought this through at ALL.  The only crumb of possible hope they gave us is if the lien impedes the closing of the short sale the servicer must submit the case to Fannie, which in my experience is a waste.  I have YET to see them approve a secondary non-mortgage lien since last Fall.

 

Maryann Little, VP Short Sale Mitigation
Nick Aalerud, Exec VP Short Sale Mitigation, Broker New Hampshire / Massachusetts
http://shortsalemitigation.net
http://twitter.com/rapidshortsales
http://aapremierproperties.com
978-384-0032
603-505-4642 (f)
Stoneham, MA - Plaistow, NH
Short Sale Negotiation in Massachusetts and New Hampshire

Broker Nick Aalerud & Maryann Little Short Sale Mitigation, LLC AA Premier Properties, LLC Serving Massachusetts and New Hampshire Homeowners with short sale negotiation.

The Current State of Short Sales

The Current State of Short Sales

Missing your mortgage payment?

Missing your mortgage payment?

Short Sales in Massachusetts, New Hampshire and multiple other states, are vastly different in comparison to the sales in the mid to late 2000′s, or even back in the 90′s.  Nick and I both started in short sales separately around the 2007 mark and there have been a LOT of changes.   When we started Short Sale Mitigation in Massachusetts, the process was quicker, smoother and a lot more phone work.  You can negotiate a short sale today with very minimal phone work depending on the lender, but it’s not quicker or smoother even though there have been many attempts by lenders and investors to STREAMLINE the process.

Lenders have made attempts to increase privacy, and security of files by introducing platforms like Equator and Res.net or have introduced “secure emails”, however this secures information for the lender, but not for the borrower of the loan.  The homeowner does not get a copy of the correspondence on these platforms, nor a copy of any requests in order to expedite the file.  The lenders have all the control in the platform used to negotiate the sale, and Equator boasts that it’s automated software will  ”automate a client’s daily processes, facilitating efficiency, transparency and compliance.”  That statement is laughable.  Anyone who has tried to enter a financial form or HUD through Equator knows it’s not efficient for the person inputting the data.  If you’re dealing with Bank of America there is a minimum of five steps to complete before they will open a short sale on Equator.  Oh how I long for the days back in 2008 where you just had to fax in a complete package and have the lender tell you they didn’t receive it, when you have a clear confirmation receipt.

There are very few servicers today that can get through a file efficiently.  Bayview is one of the smaller servicers that does come to mind, and of course if you are dealing with a small local credit union or bank, they tend to be fast and efficient, however we have found from experience they tend not to release the deficient portion of the note.  Today, after a submission with the larger servicers, it still takes a minimum of 3 days to “image” a letter of authorization, which some servicers have now gone to the extreme of ridiculousness on.  An authorization (LOA) is just a letter that informs the lender who is authorized to speak to the bank or lender regarding the homeowner’s account.  That could be anyone.  It could be the homeowners, brother, sister, kids, lawyer, agent, friend, co-worker, or just about anyone the homeowner deems to be a communication point.  Unfortunately, servicers like Nationstar and Bank of America really know how to thicken the red tape with their LOA’s. hafa They are now a two page disclosure in which you are DESIGNATING a licensed AGENT, that has to be signed by so many parties, that just the sheer nature of the first form in the short sale process would turn most underwater homeowners off.  This is not efficient by any manner, and it also forces the homeowner to possibly contract with someone they don’t want to.

If you are lucky enough to make it past the first stage of submission with some of these servicers, you then get assigned a PROCESSOR that will fine tooth comb your paperwork.  Usually once the processor gives the green light, which can take WEEKS you are then assigned to a negotiator.

 

I pity the homeowner that has a Wells Fargo FHA PFS (preforeclosure [short] sale) – It’s a tossup for me on whether Bank of America has the worst FHA PFS processing department, or Wells.  Last year I think I would have said Bank of America, but this year Wells Fargo takes the cake.  Plan a minimum of 6 months before you see an ATP (Authorization to Participate) letter from either servicer.  The ATP is the green light go for FHA borrowers in a short sale.  Both o need to explore retention options which can push homeowners into a loan modification review even if they don’t want a modification.  Many times homeowners have to call INTO a lender to do a questionnaire with a customer relationship manager, which even when completed, they don’t seem to get into their system leaving the homeowner in a black whole between loan modification and short sale and even if they opt out of the modification, getting the homeowner to the short sale department can still take 2-3 weeks, and then don’t forget about the review time.  This would frustrate any homeowner and of course ANY buyer of a FHA PFS.

The amount of affidavits, arms length transaction forms, short sale addendums, waivers, certifications, acknowledgements, disclosures, and any pullinghairoutother possible forms you think may accompany a purchase contract has had a major impact on the speed and efficiency of short sales today.  There were some possible derivatives of these forms back when I started, but not to the extent you see them today.  Lenders are so paranoid about short sale fraud, they have constructed every possible form to try to protect them.  Unfortunately some of the language in the forms doesn’t make sense at all.  We are led to believe there is wide spread fraud in short sales, through publishings from companies like Corelogic, but if you look closely at who is publishing the data, you’ll see these companies have something to gain by spreading panic in the field.  The fact of the matter is if you research the actual data pertaining to short sale fraud charges, you will see there is very little.  Lenders are highly suspicious of anything that sniffs a violation of an arms length transaction.  In reality there is no law stating you can’t sell a property to someone you know, or assign a contract.  In fact in Massachusetts recently the Attorney General is suing some of the big (F) investors; Fannie, Freddie and FHA due to the fact there are non-profits established in Massachusetts that will buy a property from a homeowner and then resell it to the same homeowner giving them a loan a bit above market rates for market value.  Of course the three F’s don’t like this, but there is nothing inherently legal about this.  Unfortunately lenders are so scared about losing money they have instituted restrictions on deeds and profitability on sales.  Buyers are forced to hold property a minimum of 30 – 90 or more days in many transactions or cap the resale of the property.  It’s ludicrous.

failedshortsaleWhat is troubling me now is the amount of paperwork homeowners and buyers must sign stipulating there is no relation that exists between the parties, keeping everyone on equal footing, however LENDERS such as Nationstar and Ocwen seemed to have formed relationships with companies like Auction.com and HUBZU to AUCTION their short sale properties.  At least Ocwen discloses the relationship between themselves and HUBZU, but none of the Nationstar paperwork is that forthcoming.  It’s extremely frustrating to see someone like Benjamin Lawsky a Bank Regulator out of New York an Steven Antonakes, deputy director of the Consumer Financial Protection Bureau publically call out the two servicers in question about their business practices, but neither has penalized the servicers for forcing homeowners to breach already existing contracts.  Both servicers are forcing homeowners to list their properties on  auction sites.  This practice legally implicates a homeowner and forces them to breach already in place listing agreements and even worse, purchase agreements with buyers.  Why this practice hasn’t been rapidly and swiftly put to a stop, I’m unsure, other than it seems the servicers have more power than the regulators.

Even if s short sale makes it all the way through the system, gets approved and closes they are still bogged down with red tape.  This is the first year I’ve seen wires returned on a closed short sale.  We’ve had three wire returns.  One had no reason for return, so the closing attorney had to just rewire it back, one lender felt they couldn’t read a signature, so they returned the wire, and one lender forgot to include an affidavit for closing so after the closing the attorney had to jump through hoops to find the buyers and sellers again to have an affidavit signed that appeared AFTER the closing, which should have been given to the sellers upon approval.

Homeowners will suddenly face more hurdles this August if their loan is Fannie Mae backed with Fannie’s recent announcement that any secondary property liens on title that aren’t mortgage related will not be covered out of proceeds from the short sale transaction.  This means if a homeowner has overdue condo association fees, and the association puts a lien on title, those dues will not be paid out of sales proceeds.  The same is true with executions from credit cards or municipal liens.  This puts homeowners who are already under a HUGE financial strain into even more of a spiral.

We are being led to believe we are in recovery, but our firm has seen the strongest growth in short sales in 2014 than over any other first quarter of any prior year.  Yes, mortgage delinquencies foreclosure rates are down, but keep in mind when a loan that’s delinquent moves into the HARP (refinance) program, that loan is now categorized as a refi and NOT a delinquent loan.  Keep in mind Transunion published that 60% of all loan mods end up in a re-default situation within 18 months.   Also any shadow inventory outside of FNMA and FHLMC are not required to be reported.  These programs are temporarily keeping foreclosure rates down.  Unemployment is still an issue in today’s default market.

Short Sales will be around for a while and it seems that even with attempts to streamline programs, the red tape is just making sales more difficult than easy.  It’s no wonder agents are steering clear of short sales and opting for third party help.  Forms for short sales keep changing and unless you are focusing on short sales for a living, you are likely not going to know about recent changes in the industry.  I see an increase in bankruptcy coupled with short sales and or foreclosures as homeowner still struggle with job loss, divorce and too much debt.  Even agency regulators can’t seem to step in and dictate any type of lender regulations in regards to short sales.  It seems as if we are all at the mercy of long, cumbersome short sale transactions where lenders are even dictating to lawyers how to do their jobs.  I would love to see a change in the market, but unfortunately year after year the state of short sales has gotten worse.

Maryann Little, VP Short Sale Mitigation
Nick Aalerud, Exec VP Short Sale Mitigation, Broker New Hampshire / Massachusetts
http://shortsalemitigation.net
http://twitter.com/rapidshortsales
http://aapremierproperties.com
978-384-0032
603-505-4642 (f)
Stoneham, MA - Plaistow, NH
Short Sale Negotiation in Massachusetts and New Hampshire

We negotiate short sales in Massachusetts and New Hampshire with many lenders such as, GMAC, Bank of America, AHMSI, Seterus, Wells Fargo, ASC, Chase, Select Portfolio, HSBC and many more.

CLOSED! Another Haverhill Short Sale THREE FAMILY with Debbie Kruzel – Chase

CLOSED! Another Haverhill Short Sale THREE FAMILY with Debbie Kruzel – Chase

Haverhill Massachusetts short sale - multi family

Haverhill Massachusetts short sale – multi family

We are very grateful Debbie Kruzel from Keller Williams puts her faith in our firm.  This sale was not easy.  The title itself was a WRECK and thanks to Meghan Grugnale we were able to actually straighten out an improper foreclosure.  That would scare MOST agents away as it is, but not Debbie.  I’m so happy she stuck with it because there were days even I couldn’t see the light at the end of the tunnel.

Thankfully this was Chase owned.  We gave Chase all the pertinent information on the file.  Interestingly we had another THREE family short sale in Haverhill literally sellign a few doors down and one sale definitely affected the other.  Initially offers came in pretty low, especially with such a horrific title report.  Not all investors would stick around for this either, but I’m happy Debbie found one that would.

With an in and out buyer, messy title and a servicer that’s NOT the  fasted in the world we were pretty thankful to get this one DONE!!

Debbie Kruzel - Keller Williams Short Sales

Debbie Kruzel – Keller Williams Short Sales

I could not have done this without the amazing support of Meghan Grugnale, Debbie Kruzel, Julie in my office and of course Noreen from Phenix title.  Any short sale is welcome in our neighborhood, ESPECIALLY the messy title short sales!!

Maryann Little, VP Short Sale Mitigation
Nick Aalerud, Exec VP Short Sale Mitigation, Broker New Hampshire / Massachusetts
http://shortsalemitigation.net
http://twitter.com/rapidshortsales
http://aapremierproperties.com
978-384-0032
603-505-4642 (f)
Stoneham, MA - Plaistow, NH
Short Sale Negotiation in Massachusetts and New Hampshire

CLOSED! Lowell, Massachusetts Short Sale with Greentree

CLOSED! Lowell, Massachusetts Short Sale with Greentree

58brunswick

Lowell MA Short Sale

Thank you again to Lisa Sevajian Johnson for handling a terrific Short Sale in Lowell.  We also need to thank Flavia da-Silva Benson who referred this seller to us.  This seller was amazing.  Lisa procured two buyers for this property as well.  Thankfully we closed with the second buyer.

Greentree is NOT the easiest servicer to work with.  They are SLOW, but after some time this sale was approved with a full release from them AND Bank of America as a second lender.  We opted to try for a HAFA short sale.  HAFA short sales were slated to end at the end of last year, however,

Lisa Sevajian Johnson Short Sale Listing Agent REMAX

Lisa Sevajian Johnson Short Sale Listing Agent REMAX

were extended through this year, so we are actively pursuing them with most of our homeowners, as USUALLY we can get the second lien holder to also comply with full release terms.

Thank you to Julie in my office who worked hard on this and of course, Grugnale Law that handled the closing for the buyer.  They are fantastic for title.

Maryann Little, VP Short Sale Mitigation
Nick Aalerud, Exec VP Short Sale Mitigation, Broker New Hampshire / Massachusetts
http://shortsalemitigation.net
http://twitter.com/rapidshortsales
http://aapremierproperties.com
978-384-0032
603-505-4642 (f)
Stoneham, MA - Plaistow, NH
Short Sale Negotiation in Massachusetts and New Hampshire

CLOSED! Brockton, Massachusetts Short Sale – Ocwen

CLOSED! Brockton, Massachusetts Short Sale with Ocwen

Brockton MA Short Sale

Brockton MA Short Sale

Ocwen which used to top my list of favorite servicers has plummeted.  The craziness of the requests on this sale was mind boggling.  We were grateful to get the short sale approved.  We are always grateful for an approval, but from the minute the file was approved, we THEN had issues.

This was a bit of a convoluted sale.  The seller and his mother bought the property together.  They were both on the note and the deed.  At some point, the mother deeded full ownership of the property to the son, which we do see a lot, but people forget when you sign a note, you are responsible for the debt, and the BANK of all people should know that.  So, when we got the approval, it was only in the son’s name, so there was the first escalation of the file, which the escalation rep didn’t understand.  His canned answer is he would have to check with UNDERWRITING.  They came back and said the approval didn’t need to be in her name as she wasn’t on deed, to which we protested.  This took 3 weeks to finally correct and get a new approval letter to close.  Mind you the son was down South and signed power of attorney over to his mother.

Thankfully due to Wade Roach at Jack Conway, we had a patient buyer.

Then came the HUD approval.  First we were told the municipal utility fees weren’t covered, but then came the doozy.  Ocwen told us they wanted the buyer’s deposit

Wade Roach Short Sale Agent

Wade Roach Short Sale Agent

money removed from the HUD.   This is where I blew my stack.  I explained Ocwen should CARE LESS what the buyer’s deposit was, nor should they care at all about the buyer’s side of the HUD, to which they protested.  So, I called Freddie Mac directly and got a supervisor their involved.  The supervisor immediately called Ocwen and reiterated what I said and 24 hours later we had HUD approval.

Thankfully we got this one to closing, as there were other small hiccups along the way, but I have to thank Kelly Couture in our office, Meghan Grugnale from Grugnale law, and of course Wade Roach for getting this thing don!!

 

Maryann Little, VP Short Sale Mitigation
Nick Aalerud, Exec VP Short Sale Mitigation, Broker New Hampshire / Massachusetts
http://shortsalemitigation.net
http://twitter.com/rapidshortsales
http://aapremierproperties.com
978-384-0032
603-505-4642 (f)
Stoneham, MA - Plaistow, NH
Short Sale Negotiation in Massachusetts and New Hampshire

CLOSED! North Andover Short Sale Condo with Lisa Sevajian – straight HELOC with Wells Fargo

CLOSED! North Andover Short Sale Condo with Lisa Sevajian – straight HELOC with Wells Fargo

9walker

North Andover Short Sale Condo

This was actually a first for us.  We have negotiated plenty of HELOCs in second position, however, on this condo in North Andover, there was no primary mortgage.  For some reason, this loan was written as a HELOC so the homeowner was able to pay it down, AND draw off it when necessary.  We approached Wells Fargo with a HAFA application in hopes they would release the entire deficiency.  Interestingly, the negotiator kept indicating our homeowner did not qualify for HAFA.  The problem is many of the servicers see thousands of applications a day.  They literally breeze over everyone’s finances.  Well our sale initially came back denied.  We knew this was not being read properly.

I called the homeowner and gave her some ammunition.  She called into Wells and got a manager on the phone and line itemed her expenses.  She was also kind enough to threaten Wells with the Attorney General and – POOF – we had our Massachusetts Wells Fargo Short Sale approval the

Lisa Sevajian Johnson Short Sale Listing Agent REMAX

Lisa Sevajian Johnson Short Sale Listing Agent REMAX

next day with a full deficiency release.

None of this could have been possible without the patience and knowledge of Lisa Sevajian who is an AMAZING agent for any homeowner who has a distressed property.  She knows what she is doing and you can see that with her track record.

Thank you Lisa, Kelly, Meghan and everyone who made this possible.

Maryann Little, VP Short Sale Mitigation
Nick Aalerud, Exec VP Short Sale Mitigation, Broker New Hampshire / Massachusetts
http://shortsalemitigation.net
http://twitter.com/rapidshortsales
http://aapremierproperties.com
978-384-0032
603-505-4642 (f)
Stoneham, MA - Plaistow, NH
Short Sale Negotiation in Massachusetts and New Hampshire

CLOSED! MULTI FAMILY Haverhill Massachusetts Short SALE – THANK YOU LISA SEVAJIAN!

CLOSED! MULTI FAMILY Haverhill Massachusetts Short SALE – THANK YOU LISA SEVAJIAN!

Haverhill MA Multi Family Short Sale

Haverhill MA Multi Family Short Sale

We wouldn’t be in business without the referrals from amazing top selling agents!  Lisa Sevajian Johnson fits that bill and exceeds it.  I have worked with Lisa I think a little over 2 or 3 years now and am grateful she puts her faith in us to negotiate her short sales.

This particular sale was full circle.  What I mean by that is we literally negotiated for this particular homeowner two other additional home sales, all of which closed.  We had done this homeowner’s primary residence AND two investment properties, so thankfully even the homeowner put their faith in us again.

This sale went along as to be expected, with a couple bumps along the way, but to me any short sale closing in Massachusetts means you have

Lisa Sevajian Johnson Short Sale Listing Agent REMAX

Lisa Sevajian Johnson Short Sale Listing Agent REMAX

successfully done your job and we couldn’t have done it without Lisa, Meghan Grugnale, from Grugnale Law, and of course Kelly in our office.

This was an Ocwen sale that was supposed to hit HUBZU, but for some reason didn’t.  We are VERY thankful it didn’t.

I’m humbled and honored to work with such amazing women day in and day out.

Thank you all.

Maryann Little, VP Mitigation
The Short Sale Closers in Massachusetts

Maryann Little, VP Short Sale Mitigation
Nick Aalerud, Exec VP Short Sale Mitigation, Broker New Hampshire / Massachusetts
http://shortsalemitigation.net
http://twitter.com/rapidshortsales
http://aapremierproperties.com
978-384-0032
603-505-4642 (f)
Stoneham, MA - Plaistow, NH
Short Sale Negotiation in Massachusetts and New Hampshire

CLOSED! Lynn Massachusetts Short Sale with Seterus

CLOSED! Lynn Massachusetts Short Sale with Seterus

Lynn Massachusetts Short Sale Condo

Lynn Massachusetts Short Sale Condo

I’m REALLY liking Seterus these days.  We had a condo or CONDEX in Lynn MA that the homeowners had unfortunately bought more than they could chew and it was losing money monthly for them.  First, these sellers were awesome. Talk about on the ball.  Here is a helpful tip, if you have an unmotivated short sale homeowner, then you’ll be wasting a TON of time.  Many of those sales are either so prolonged you end up with 2-3-4 buyers or a seller that just flakes out and you never get the sale done.  Do your homework early and let them know what is expected.

This was listed with Chris Leblanc who is a new agent with us.  This was also an investor purchase.   There are still DEALS out there people.  Many times properties that some pass up, an investor can come in and save the day.  I happy to greatly like this particular group too.  Anyways, this sale went through fairly, without incident and closed last month!! (sorry I’m behind on my posts)

We put this through as a HAFA sale  so thankfully Seterus forgave the balance of the loan and the homeowner was able to move on to a better

Chris Leblanc Short Sale Agent

Chris Leblanc Short Sale Agent

future.

Thanks to all involved for helping us with another SUCCESSFUL MASSACHUSETTS SHORT SALE!!

Maryann Little, VP Mitigation
~ The Short Sale Closers for Massachusetts and New Hampshire

Maryann Little, VP Short Sale Mitigation
Nick Aalerud, Exec VP Short Sale Mitigation, Broker New Hampshire / Massachusetts
http://shortsalemitigation.net
http://twitter.com/rapidshortsales
http://aapremierproperties.com
978-384-0032
603-505-4642 (f)
Stoneham, MA - Plaistow, NH
Short Sale Negotiation in Massachusetts and New Hampshire

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