Converstations on Shorts sales, HERA with Ed Dean with Potomac Mortgage Group

The shorts sales continue to rear their ugly head. Our agents continue to have problems with the time spent working on them, the energy devoted to them and the lack of results they are getting out of them.  It appears now that many of the banks have gone to call centers handling the shorts sale calls for the banks and these people have no training no experience, but more importantly no authority to make decisions on whether or not to approve or disapprove a short sale. 

Enough of short sales, now onto the mortgage news…

This week the head of FHA, Dave Stevens, made the announcement that FHA will not be going the way of HVCC because he is a wise man and recognizes the inherent problem associated with the HVCC.  Great news for all of us in this regard!

In a recent conversation with Ed Dean, we were further educated on the new TIL reforms and told us that 10 days is a reasonable amount of time to get a loan to close, you would have to move heaven and earth to get a loan done in 7 days (it can be done, but it’s not recommended), but his belief is that it is not going to have as much of an impact as many people are indicating. Check out his notes on the subject from our conversation.  Ed did a review of 5,000 loans that his former mortgage company had done and noted that only 30 of those loans would have needed re-disclosure. A majority of those 30 needed re-disclosure as a result of people failing to lock in their interest rate or it was initially a pre-qualification and it went to contract several months later. You’ll note at the bottom of page 3 of his notes, how significantly the numbers need to change to get a re-disclosure.

Other mortgage news included guidelines continue to get tougher on condos with more restrictions imposed. In addition it has become virtually standard operating procedure for every lender to pull the Form 4506 from the IRS to request the borrower’s tax returns to make sure they match the ones they provided in the loan application process. Basically with the way the loans are going today, you have to fit inside the box. There is no thinking outside, underwriting or loans being approved outside the box. And lastly, second trusts continue to have no future or part of the mortgage or sales landscape.

As is always we strive to keep you educated in the real estate world.  Get it? Got it? Good!

Platinum Club….another great meeting!

Another Platinum Club meeting, another short sale discussion meeting, when will the madness end?  My short answer is, when the government steps in and does something GOOD for our industry and gets banks to streamline and systemize the short sale process.

A few observations from today’s meeting include:  the processor makes all the difference in short sales, not the bank; as the foreclosures diminish, REO managers are migrating to Loss Mitigation departments – too early to tell if this will work better or not but us being optimists in this group, believe it will; despite what others say, make calls on your cases everyday – the squeaky wheel gets the grease.  The belief is that short sale departments are small – not big like everyone may think – in one case, one processor is handling 5 cases for one of the agents; everyone in the chain is overworked – negotiator, processor, and listing agent – much of the paperwork is lost in the process; the deals continue to get more difficult and take longer – one agent lost 6 deals in the last month; if the bank knows the property is vacant, it will speed up the foreclosure process;  the short sale part of the business has made agents more suspicious of each other – no MLS updates or incorrect/unauthorized status changes, unprofessional and/or unethical processes are instituted by many agents – they have clients ratify multiple contracts, and releasing contracts & accepting others without bank rejection of first contract is becoming more commonplace are just a few examples of what is taking place in our market;  only about 23% of short sales are making it to closing due to bank rejection, banks asking for notes from mortgagor, and the time it takes to get them to close today that buyers are releasing themselves from the contract.  From the listing side, to get better success, have buyers remove all contingencies prior to submitting the offer – it is easy to do in multiple contract situations and gets buyer buy in – provide title work, your own BPO, and mock HUD 1 with the offer, don’t wait on these procedures.

Additional discussions covered foreclosures.  There isn’t much happening on the foreclosure front.  The promise of the flood of foreclosures coming on the market is continuing to be delayed – bring it on is what we say as our inventory level is down 56% from the same time last year and the most competitive market is in the first time buyer price range where many of the supposed foreclosures will be priced.  We can sell’em if they list’em.  Listing assignments are down 75% from last year.  BPO’s are up – suspect they are for short sales – not for potential bank inventory.  Last year 1 BPO for every 5 listings obtained, this year it is the opposite, 1 listing for every 5 BPO’s.

Many markets are still extremely price sensitive – even when they are priced just a little high.  When priced right, in the right condition and show well – they sell.  Get it?  Got it?  Good!

Now, go sell something!