Alternative2Foreclosure.com

Lenders are canceling more foreclosure sales in California than ever before, and new financial and political demand for short sales could be the culprit.

Lenders canceled nearly 22,000 California foreclosure sales in June, driven mostly by JPMorgan Chase (JPM: 38.42 0.00%). It’s a 27% increase from May, a 153% growth from a year ago, and an all-time high, according to ForeclosureRadar, which tracks foreclosures in the state.

Foreclosure sales can be canceled for successful loan modifications, short sales, a legal requirement, or even a filing error. In terms of strategy, a spokesperson for JPMorgan Chase said the bank has not made any policy shifts to cancel more foreclosure sales. More

There are four programs in this package which include:

Up to six months of mortgage assistance for homeowners who have lost their jobs, with a cap of $1,500 monthly.

Assistance for homeowners who owe past-due payments, with a required match by the mortgage lender or the borrower, with a cap of $15,000.

Mortgage principal reduction for underwater borrowers, those who owe significantly more on their loans than their homes are worth. Details have not been announced, but the goal is to work with lenders to get principal balances to “market levels,” according to the Keep Your Home website.

“Transition” assistance for those who can’t afford to stay in their homes, are completing a short sale or signing the home over to the lender in lieu of foreclosure and must move to other housing.   More

Just attended REBarCamp.   Here’s what it is …  people get together for a tech focused day of networking and classes.  The class schedule is on a simple grid style board that lists what is going on in each room.  Lots of interaction takes place on a high level.  I left with some great ideas, many the result of the casual conversations in the hallways.

http://rebarcamp.com/sanfrancisco/

LOS ANGELES  (LoanSafe.org) – Attorney General Edmund G. Brown Jr. today joined the California Department of Real Estate and the State Bar of California to warn homeowners about an alarming rise in short sale fraud across California in a field “rife with scam artists”.

A short sale is an arrangement in which a homeowner sells his or her home for less than the outstanding mortgage, with the consent of the lender.

“While short sales can provide homeowners with a last-ditch alternative to foreclosure, this market is rife with scam artists,” Brown said. “Homeowners and buyers, agents, and lenders should beware of short sale negotiators who operate without licenses, use straw buyers or charge illegal fees.” More

People who may be seeking a short sale on their home will find new rules that will require lenders to respond more quickly to their requests.

Beginning Aug. 1, the requests on mortgages under Fannie Mae and Freddie Mac would require lenders to respond within 14 days of the request, said Chester Bridger, vice president of communications at M&T Bank.

A short sale occurs when a homeowner owes more on his or her property than it is worth.

The current lender can agree to the homeowner putting the home on the market and taking a moderate loss on the loan.

Short sales are not as common in the western New York region as some other areas of the country, Bridger said. More

Attorney General Jerry Brown is echoing short-sale scam warnings made by the California Department of Real Estate and the State Bar.

“This market is rife with scam artists,” Brown said.

Short sales let homeowners who can’t afford their mortgage to exit a troubled property. It involves some extra negotiating skills as it requires selling the property with the lender taking less than they are owed on the mortgage. Short sales have gotten a recent boost from the Obama administration’s push to use short sales as a way to solve problems of homeowners in financial distress and avoid foreclosures.

Brown notes that, “with so many homeowners now considering short sales, an entire industry of so-called short sale negotiators has emerged. These individuals solicit homeowners by promising to expedite the process and help coax lenders into taking part in the transaction.” More

We own a home in a suburb of Seattle. We paid $475,000 for it in the summer of 2006 and still owe $350,000. It was built in 2000 and needs updating. My husband was transferred to Texas in 2008. I stayed with our kids for almost a year trying to sell it, but the market dropped so much we were going to lose all our equity if we sold it.

My mom and sister rented it from us this past year, but they need to move out this summer, and housing hasn’t recovered at all. Our Realtor says we would be lucky to get $390,000. You can get a brand new house the same size as ours with all the new upgrades for the same price. More

The looming problem for the housing market in San Joaquin County is not the banks selling off foreclosed properties but the growing number of homeowners who are not keeping up with mortgage payments, says an analysis of the market by University of the Pacific.

“The future of the San Joaquin County housing market depends on the resolution of the rapidly growing number of delinquent borrowers. There are now many more seriously delinquent mortgages than loans in the formal foreclosure process,” says the report by Jeffrey Michael, director of the university’s Business Forecasting Center.

“It is a safe bet that short sales will continue to rise and could become more common than REO sales over the next two years,” says Mr. Michael’s report, “Delinquencies, Defaults, and Foreclosures: Understanding the San Joaquin County Housing Market.” More

The use of short sales as a loss mitigation strategy is rising as short sales tend to cut loss severity by 13% more than real estate owned (REO) sales, according to market commentary by risk analysis provider Clayton Holdings.

In states with extended foreclosure timelines, short sale loss severities came in 26% lower than REO loss severities in the six-month period from October 2009 to March 2010, when Clayton conducted its study:

“Overall, data shows that short sales cost bondholders about half the amount in fees and advances as REO sales, saving roughly $16,000 per sale,” Clayton said in the latest In Front monthly report. “Given the reduced loss severities, it appears that short sale strategies currently used by servicers are producing favorable outcomes when compared to REO sales.” More

RISMEDIA, June 8, 2010—Just a year ago, when preforeclosure and foreclosure properties were entering the market in unimaginable numbers, many real estate agents were estimating six to 10 months at best to complete a short sale. Now, some are beginning to see closings in as few as 10 weeks. That’s good news for sellers, the housing market and the U.S. economy.

The improvement is a product of a few key developments creating momentum in the lending industry. First, banks are starting to adjust to the market and becoming more proactive in creating systems and solutions for homeowners in distress. Second, and arguably more important, the U.S. Treasury has enhanced the guidelines and incentives for banks that are committed to improving the loan modification and short sale processes.

The Home Affordable Foreclosure Alternatives (HAFA) program, announced in November 2009 and fully implemented April 5, is the government’s answer to the problem. It’s a supplement to the February 2009 Home Affordable Modification Program (HAMP) that outlines a separate set of criteria for short sales or deeds-in-lieu to address the group of homeowners who are facing foreclosure because loan modification hasn’t worked out.

HAMP was a well-intentioned, albeit slow, start to helping at-risk borrowers. Unfortunately, the guidelines for modifications leave out many distressed homeowners who are eligible but are not successful in supporting a new loan. More

Bank of America, one of the largest lenders in the U.S., has instituted a policy of liquidating as many assets saddled with defaulted loans as possible before repossession, said Matt Vernon, the short sale and REO executive at BofA.

Vernon took the position at BofA in February. He has since announced plans to add 1,000 employees to the short sale staff. BofA currently holds more than 477,000 loans eligible for the Home Affordable Modification Program (HAMP), and has provided more than 600,000 modifications through HAMP and its own programs.

But Vernon said BofA will continue to make the short sale push when he spoke on a panel at REO Expo, being held this week in Dallas. More

High school teacher Deanna Deneen thought she and her husband Jeff would retire and grow old in the two-story colonial house they bought on Bashford Manor Lane in 2003.

Now she calls the house “the albatross that hangs around my neck.”

The couple is trying to complete a move to New York, where Jeff Deneen has a new job, but they’ve discovered they’ll get at most about $150,000 — $30,000 less than what they owe.

Homeowners like the Deneens increasingly are turning to so-called short sales — in which a bank agrees to accept less than the borrower owes on the mortgage and forgive the difference.

Banks sometimes can fetch more in a short sale than by selling the property after a foreclosure. They also avoid legal fees and the cost of maintaining a vacant house. More

For homeowners who can no longer pay their mortgage, there is an alternative to bankruptcy and foreclosure. The “short sale” is one option that is gaining a lot of momentum among buyers and sellers.

Jordan Low is now a proud homeowner after buying a short sale home in Great Neck, Long Island.

“I think I saved about a $150,000 on the short sale,” said Low.

Short sales occur when the seller’s bank accepts a discounted payoff to release an existing mortgage. More

Many people with an underwater mortgage have been very frustrated in their situation and it’s obvious to see why. Homeowners who owe more on their home than their home is actually worth are probably frustrated when it comes to their home loan. Some have even become so angry that they have just walked away from their home altogether.

Many people who plan to default or strategically default on their home loan feel that they are left with few options outside of doing so. This is actually an error and can be very detrimental to someone who simply walked away from their mortgage. Short sale options and in some cases principal reductions are available for homeowners and underwater mortgage. More

Question: We own three fourplexes in east Phoenix secured by one loan. When we purchased the units seven years ago, we knew the neighborhood was not a good one, but believed it would improve. To the contrary, the neighborhood has continued to deteriorate. The loan balance now greatly exceeds the value of the units, and we can no longer make the loan payments. Our lender has refused to accept deeds in lieu of foreclosure and wants us to do a “short sale” of the three fourplexes, but we would still have to pay the amount of the remaining loan balance. If the lender continues to refuse to accept deeds in lieu of foreclosure, can the lender foreclose on the units and demand payment of any deficiency? More

Foreclosures are going upscale across the Bay Area.

Nearly 1,000 homes valued above $730,000 were repossessed by banks in the nine-county region in each of the past two years, according to a Chronicle review of public records compiled by MDA DataQuick, a San Diego research firm. This year is on track for similar numbers, with 223 homes in that price bracket repossessed by banks since January.

Back in the real estate boom year of 2005, just 42 Bay Area homes valued above $730,000 went into foreclosure; in 2006, the number was 80.

“The numbers are certainly high by historical standards,” said Andrew LePage, an analyst with DataQuick. Even more striking is the growth of mortgage defaults – the first step in the foreclosure process – in affluent ZIP codes.  More

Revisions in the government’s Making Home Affordable Program (HAMP) may create new incentives for loan servicers and to defraud troubled homeowners according to a new report from the Inspector General who oversees the Trouble Asset Relief Program (TARP).

“Criminals feed on borrower confusion, and frequent changes in the programs provide opportunities for experienced criminal elements top prey on desperate homeowners who have not been educated as to the risks of fraud,” states the report released yesterday.

The Inspector General criticized the Treasury Department for failing to warn and education homeowners about the risk of fraud by servicers, citing the recent financial incentives to encourage borrowers and services to undertake in short sales rather than allow properties to go into foreclosure. More

April 21 (Bloomberg) — Mortgage servicers may have to take a pay cut to participate in President Barack Obama’s programs to modify home loans and advance the sale of properties in default.

Starting this month, the Treasury Department is paying companies that collect mortgage payments and examine pleas for assistance a $1,500 stipend for approving the sale of homes for less than the loan balance, known as a short sale. The servicers also get $1,000 for each completion under the government’s year- old mortgage modification program, and additional stipends over three years if borrowers stay current on their payments.

Those “carrots” won’t be enough to save the majority of the 4.6 million U.S. homes that have mortgages more than 90 days overdue, said Diane Swonk, chief economist of Chicago-based Mesirow Financial, which oversees $37.4 billion. The payouts at the heart of the Obama administration’s programs don’t come close to what servicers earn by foreclosing, she said. More

RISMEDIA, April 22, 2010—The short sale and foreclosure wave—a more accurate reference may be tsunami—has dramatically changed the real estate profession…and not all for the good. We have been dealing with this new real estate reality for more than a year now, yet lenders still seem to be befuddled on how to expedite or develop a process to handle these sales in a timely manner.

Additionally, communications are abysmal at best in keeping all parties informed as to where they stand in the process. I receive calls daily from Realtors and consumers frustrated with receiving no information regarding offers they have submitted on short sale properties. The situation worsens when they finally discover their offer was not accepted, only to find out that a lower-priced offer was accepted after their offer was submitted.

The situation escalates when the listing office provides no confirmation that the offer was ever submitted and the sales record shows that the selling agent was with the listing office. Demands being placed by asset management companies on Realtors, if they want to continue to receive listings, also appear to be going beyond the scope of marketing the property. More

Upstairs in Sacramento’s fashionable Senator Office Building, three full-time staffers and a steering committee of 12 are hurriedly crafting solutions to the raging mortgage crisis that neither banks nor the federal government has been able to stop.

Collectively, they staff the California Housing Finance Agency, an obscure branch of state government getting $700 million in federal funding to prevent foreclosures. A week from today they’ll send new ideas to help stop this mess to the U.S. Treasury Department. More

Sometimes when the governor flexes his aging political muscle he actually wins.

The state Legislature removed a provision that the governor said was preventing him from signing a bill that could help struggling homeowners thousands in taxes.

Last week Gov. Arnold Schwarzenegger vetoed a bill that would give a tax break to people who short-sell their homes instead of losing them to foreclosure. He said he would not sign a bill that included a provision about tax fraud penalties. More

Short sales, where lenders allow borrowers to sell their houses for less than the mortgages owed on them, once were available only in extreme cases, such as the death of a breadwinner.

But then the nation’s unprecedented flood of foreclosures have made short sales common, and they are expected to gain ground this year because of a federal initiative that will be launched Monday. More

A new government initiative is aiming to make so-called “short sales” easier to complete.

The Home Affordable Foreclosure Alternatives program takes effect Monday, designed to speed up the short-sale process.

Short sales involve selling distressed properties for less than consumers’ unpaid mortgage balances so as to avoid foreclosure. Lenders will “eat” the difference, as doing so usually costs less than foreclosing. More

Cindy Williams has seen some dramatic life changes over the past four years. In 2007, she was laid off from her job as an escrow assistant for a Vancouver title company, just one year after her husband had suffered a life-threatening bone infection that rendered him unable to return to work as an auto technician.

To make do while Williams, 49, looked for work, the couple sold their home and their most prized possessions. Last spring, she finally found steady work as a janitor, making much less than she was accustomed to. More

In her blog this week, real estate broker Christine Donovan, who analyzes the Huntington Beach market in her weekly “real estate minute,”  asks, “Do you ever wonder why it takes so long to get a short sale or a loan modfication completed?  It can take months or even years to to get a short sale or a loan modification done.  Why?”

She lists “any number of reasons:”

1. Hard to collect all necessary documents from borrower/owner.
   This may be because the banks never seem to receive the documents until they’ve been faxed in 5 or 6 times. More