I almost flipped when I saw this headline!  Finally, the nasty games mortgage servicing companies play are being brought to light.  I’ll bet we see more of these articles and lawsuits.  And I’m willing to wager that this sounds familiar to homeowners:

  • Failing to credit homeowners who submitted their payments on time.
  • Falsely claiming that homeowners did not make payments so they could justify charging late fees.
  • Failing to credit homeowners even after withdrawing funds directly from borrowers’ checking accounts.

This is such a common refrain.  I’ve heard about these tactics from s-o-o-o-o many homeowners — all with different lenders.  AHMSI is being held up as an example, but they’re far from being the only offender.

Please share your experience with this situation by responding to this blog, or sending me an email:  jennie@blackburninvestors.com.

Sincerely,

Jennie Blackburn, Realtor®, CDPE©, Licensed Mortgage Broker

Know Someone in Financial Trouble? Send them to:

http://www.StopFloridaForeclosureNow.com

https://jennieblackburn.wordpress.com

www.BlackburnInvestors.com

Main (727) 322-2900  Cell (813) 951-0618  Fax (727)499-9584


Short Sales are like the title of a new film starring Meryl Streep and Alec Baldwin… “It’s Complicated”.

Today, I wish all our Short Sale listings were Wells Fargo FHA loans. Their guidelines are specific and the process is predictable.  But the one we just closed in Palm Harbor, Florida, was ridiculous – a comedy of errors that took 16 months to close.  Here’s what happened:

The FHA has always had strict rules for Short Sales, and sixteen months ago, we found that those rules were designed for normal markets.  We listed the house and let Wells Fargo know that we were attempting a Short Sale.  Almost immediately, they told us they were ordering an appraisal. By the time I got a call from the Appraiser, we had an offer for $135,000.  The appraisal came back at $124,000.  

Perfect, right? Should be a no-brainer for the bank and a slam dunk for us.

But Wells Fargo denied approval for the Short Sale and closed the file.  Why? Because the appraisal was less than 60% of the loan value.  Makes no sense, right? They were getting more than what their own Appraiser said it was worth!  It took a lot of hammering on the Wells Fargo negotiator and higher ups within the company to get them to see that there was no way they would ever get 60% of the loan value for the house, and that they should approve the Short Sale at $135,000. By the time they finally issued the approval, our buyer had walked away and home values had collapsed.

Months go by and the best offer we can get is $117,000. In March, Wells Fargo countered at $124,000. The buyer said no thanks and walked away.  Finally, we got a third offer for $124,000 from a qualified buyer. Wells Fargo told us everything was taken care of and they were just waiting for the approval letter.

A week, two weeks go by – no letter and we can’t get our negotiator to call or email us.  Turns out, the file had been transferred to a different negotiator, the first of many transfers of this file as Wells Fargo struggled to handle the influx of foreclosures.  More time passes; each negotiator asked for new paperwork or came up with some new form that had to be signed. It was so ridiculous, giving them the same paperwork over and over.  We kept escalating up the ladder at Wells Fargo.  It was only when we got to the Vice President level that the file moved forward.  But it had taken so long that the appraisal expired and had to be done again.

By the time we F-I-N-A-L-L-Y got the approval letter, financing had dried up and the buyer that qualified in April no longer qualified in September. We put the house back on the market and eventually got a cash offer for $124,000, which closed two days ago. 

By my calculations, I made less than minimum wage for all the hours I spent on this.  So why in the heck would I continue to list Short Sales?  Because it’s not possible to put a value on the feeling I get from helping a young couple put their hardship behind them and get a fresh start on a new life.


My new favorite Vietnamese restaurant is…drumroll…MEKONG on US 19 in St Pete, just south of 62nd Avenue. WoW! They had my favorite: broken rice with pork chop, shredded pork skin (tastes better than it sounds), salad and soup for $5.95. While the fish sauce at Pho Quyen is yummy, mild and sweet and Halong Bay’s version is a little too spicy for this Mama Bear, the4 fish sauce at MEKONG is j-u-s-t right. A little kick, not too sweet, not too sour, not too spicy. Pour that on your meat and rice, take a bite, then eat some fresh salad to cool off those taste buds. Bill had curry chicken, which had a heavenly sauce. Not too spicy, and a hint of sweetness. I had a tiny bit of order envy.  We both had the fresh spring rolls for appetizer, served (for once!) with generous servings of peanut sauce.

Last, but not least, we had (our friend Bonnie’s favorite) Vietnamese coffee. It’s served with a Vietnamese “filter”, which is a miniature coffee pot that looks like a hat and sits on top of the coffee cup. As the coffee brews, it drips into the cup, which is lined with condensed milk. When it’s done brewing, stir the coffee until it blends with the condensed milk. I like to pour the mixture into an ice cube filled glass. It’s delicious.

I’ll still go to Pho Quyen because the food is good and the people are so nice, but Mekong is at the top of my list.


man question

Inevitably, my clients that are behind on their mortgage payments and possibly facing foreclosure ask me, “What about a loan modification?”  Here’s my answer:

Modifications are intended primarily for owner occupants.  Also, attempting a loan modification does not stop the foreclosure process. By the time the property owner finds out the bank won’t cooperate on a modification, it could be too late to do anything else and the bank could foreclose.  Unfortunately, due to circumstances beyond their control, many of them paid the highest possible price, with the highest possible financing, at the highest peak of the market.  So, even if a loan modification is successful, the homeowner is still upside down, owing significantly more than the property is worth.  One has to be willing to hang on to the property for 20 years or more.  That’s how long properties in Tampa Bay will have a negative value and, for investors, generate negative cash flow.

j0433180Sometimes I meet with homeowners that have already attempted a loan modification with the bank.  These folks share the same bewildered expression when they ask, “Why won’t my bank work with me?”  It seems that mortgage companies do everything they can to avoid modifications. Perhaps this, taken from an August 6th article in the St Pete Times, explains why:

 “Without government aid, servicers don’t have enough financial incentive to modify mortgages. Each year, they earn about one-quarter to one-half percent of the value of the loans they service, so the larger the mortgage, the more they can make. They earn less if the loan is modified, usually by lowering the interest rate or principal or adjusting the term.

The servicers also make money through late fees, or by foreclosing. The paperwork necessary to execute a House 4foreclosure can generate hundreds of dollars in fees for some servicers.”

More about loan modification from the Tribune:

“Housing advocates say homeowners still face “reluctant lenders,” said Irwin Trauss, an attorney who represents low-income homeowners for Philadelphia Legal Assistance. He recently testified at a hearing of the Congressional Oversight Panel, the watchdog that monitors the Treasury’s Troubled Asset Relief Program, better known as TARP, or the bank bailout bill.

Trauss said that Bank of America, at least through July, told homeowners that they couldn’t participate in the program when they should’ve been allowed to do so, and he alleges that Saxon Mortgage forced one of his clients into bankruptcy without providing a valid reason for turning down her modification request. Trauss’ comments were echoed by other housing advocates, who’ve found mortgage servicers slow to respond and confused about modification rules.

Servicers look for reasons to avoid making the modifications when they are most needed, rather than for opportunities to make them,’ Trauss said.”

 Banks are like everyone else – they work their pay plans, and mortgage modifications apparently don’t pay them enough.  A modification is unlikely, so be sure you don’t fall prey to a “stop foreclosure” company that wants money up front for “helping” you with the modification.   

However, a loan modification can be pursued simultaneously with a Short Sale.  If the loan modification is successful, the listing (even with an offer on the table) can be withdrawn, without penalty.  Listing a property, short sale or not, doesn’t mean the sale has to close.


At the dawn of the foreclosure crisis/global meltdown, I speculated that we would see 3 things increase:

1. Layaway
2. Customer Service Quality
3. Road Rage

As of this week, I would say I’m 3 for 3.  K-Mart’s offering layaway, surly servers have taken a hike (I got a call from VisionWorks the other day, just to see how my glasses were doing and to let me know they had a special going on. That’s a first!) and, in my neck of the woods (Tyrone/Beaches area of Pinellas County, Florida), I have witnessed 3 “Road Rage” incidents in less than two weeks:

The first was in the parking lot of Big Lots in St Petersburg.   When a female shopper returned to her car, a shopping cart blocked her access, so she pushed it out of the way. Before she could get in the car, a male shopper returning to his vehicle started yelling at her, accusing her of hitting his truck with the cart. And I mean YELLING. And threatening to run her over with his truck.

The second incident took place in the parking lot of the produce store located in the Wal-Mart parking lot at 38th Avenue and Tyrone.  This section of the lot is frequently jammed, partly because of the narrow layout and partly because this is a fantastic, fresh, friendly (but that’s a whole new blog, so I’ll leave it at that) produce store.  Two cars pull out of their parking spaces at the same time, so traffic going either way has to stop.  A shopper in a big Dodge Ram truck started to back out as well, and he didn’t see the 2-seater BMW perpendicular to his bumper. To be fair, the Beemer Lady must have been in la la land. How could she miss the guy’s backup lights? She should have given a warning tap on the horn. She launches out of the car, screeching & screaming up to Big Scary Truck Guy, who gives as good as he’s getting.

The last incident took place just over the Causeway into Madeira Beach.  Friday nights are pretty slow on the beach by 9pm, so I sailed over the bridge, expecting empty streets ahead. Instead, traffic was jammed all the way to Madeira Way. I saw people out of their cars, a couple of vehicles halfway up on the curb, halfway in the street, but no lights or sirens.  Apparently, someone had Road Rage, didn’t like the way folks were driving, and drove down the center line between lanes, plowing people out of his way as he went.

I thought I was going to encounter a fourth incident, but was surprised.  I was in Winn Dixie’s checkout lane when I heard a woman yelling at a man leaving the store. When she started running after him, my stomach knotted up as I braced myself to witness an uncomfortable scene.  I’m imagining all kinds of scenarios:  he’s her husband, they had a row, he stalked off, she’s trying to get the last word in, or they’re strangers, he butted in line or crashed her with his cart… Turns out, it was nothing like that. He didn’t notice a $20 bill fall out of his pocket.  She picked it up off the floor and was returning it to him.  You should have seen his expression.  Surprise? Gratitude? Doesn’t quite cover it. Awe. That’s the best word for what I saw on his face and the faces of everyone witnessing this. 

Zora Neale Hurston wrote about “using the broom of anger to sweep away the beast of fear”. That’s exactly what’s going on here.  Terror born of stress.  This all fits what I’m seeing in my dealings with homeowners that are behind on their mortgage payments. These folks have always paid their bills and never imagined they’d ever face foreclosure.  Their stress is colossal & eventually erupts. But underneath, most people are basically good, or they want to be.

Jennie Blackburn


42-15646477I just finished reading Dewey, The Small-Town Library Cat Who Touched the World. What a great book, great story, great cat.  In the 1980s, right around the time Dewey showed up in the overnight book drop, Iowa farmers were experiencing what Florida homeowners are experiencing right now. The only difference is that, in addition to losing their homes, Iowans were losing their livelihoods to foreclosure.  Land values were booming, tempting farmers to pull equity out of their land, and use it to buy more land, all based on the assumption that real estate values would rise ad infinitum. And then CRASH went the pyramid, POP burst the bubble.  Those were dark days in Iowa, just as these are dark days in Florida.

The author said a couple of things that really hit me, including, “…one of the worst things about bad times is the effect on your mind. Bad times drain you of energy. They occupy your thoughts. They taint everything in your life. Bad news is as poisonous as bad bread.” They say fear has a smell? Well, despair has a smell, too. This is what hits me on my first visit with homeowners who can’t make their mortgage payments.  It’s as though they’re in prison, the governor just turned down their request for a stay of execution, and they’re waiting for the footsteps of the executioner. 

 The other quote that resonated with me is: “…everyone has a pain thermometer that goes from zero to ten. No one will make a change until they reach ten. Nine won’t do it. At nine, you are still afraid. Only ten will move you, and when you’re there, you’ll know. No one can make that decision for you.”  The thing is, no matter how bad the situation is, no matter how obvious that the best option for avoiding foreclosure is a short sale, most homeowners I meet for the first time to discuss their options still cling to the magical idea that the government or the bank will come to their rescue.  I think that’s because they’re not at a 10 yet.  In the beginning, these folks (1 of 54 households in Florida) are like hurricane survivors; they’re so overwhelmed that they cannot form a strategy.

 I feel like the Dewey of Foreclosure Prevention.  For some, I’m a distraction, for others an anchor. To the banks, I’m just another animal making a mess in their litter box.


j0434819One of our Realtors has been working with a Buyer that has an offer on a Short Sale that is listed with another Realtor. The Seller’s bank approved the sale. WoW! That’s like winning the lottery! We specialize in Short Sales, and I tell you, they are a LOT of work. And lots of frustration & heartache for everyone….except for the Seller’s bank – they’re usually the ones creating the frustration and heartache. Even when a Realtor is experienced with loss mitigation, there is no guarantee that a Short Sale will be approved by a mortgage company. There are so many Realtors out there that are not experienced in Short Sales, but list them anyway, that I feel when they actually get an approval for a Short Sale, it’s a MIRACLE.

So, here we have this miracle of a Buyer actually buying a Short Sale property, and guess what happens? The Seller decides to go see an attorney. Great. She SHOULD talk to an attorney. I encourage our Sellers to talk to an attorney and/or CPA, especially if it’s a Short Sale. But not Aunt Ethel’s Divorce Attorney. Not the Attorney on the bar stool next to you. Not your nephew that just passed the bar exam. I’m talking about an experienced REAL ESTATE ATTORNEY. I don’t know what kind of attorney this woman talked to, but do you know what he told her? “Just let it go into foreclosure.”

What the…WHAT? This is not the first time I’ve heard of an attorney giving that ridiculous, heinous advice, but it’s usually to a homeowner that is at the beginning stage of the process, not the end. That listing Realtor should have recommended that her client visit an attorney when she took the listing. I have had more than one homeowner cancel a short sale listing after given that advice by an attorney, and then, when it’s too late for a Short Sale, they realize that foreclosure is forever and the bank can & WILL pursue them for the deficiency (the difference between what they owe & what the bank eventually gets for the house). Even worse, the bank has up to five years after the foreclosure to file for a default judgment. The bank might not pursue this lady at first, but in five years when her financial situation improves, they can use the judgment to attach new assets (e.g., put a lien on her new house), garnish wages, & generally make life miserable. It won’t even be the bank itself doing all that; the debt & the judgment will be sold to a collection agency for pennies on the dollar.

I sent the buyer’s Realtor a copy of Foreclosure vs Short Sale and Top Ten Florida Foreclosure Myths. If the Short Sale can’t be salvaged, the Seller, the Buyer, the Listing Realtor, the Selling Realtor, and the bank will lose. The only winner will be the attorney. If it was free advice, he can’t be sued for being wrong later. If it was paid advice, he’ll be the only winner in this dilemma.

Jennie Blackburn

Realtor®, CDPE©

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Main (727) 322-2900 Cell (813) 951-0618 Fax (727)499-9584

www.StopFloridaForeclosureNow.com 

www.BlackburnInvestors.com