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Every day I see ads on TV and the newspaper promising solutions to save people from foreclosure by negotiating a mortgage modification or short sale.  Many of these companies have professional sounding names, slick websites and made grand promises. It almost sounds too good to be true! 
After your initial information many ask for negotiation fees to be paid up front.  I'm also seeing marketing from real estate brokers who are requiring sellers to pay money up front for these services.  My understanding is that licensing through the Arizona State Banking Department is required in order to negotiate financing on behalf of another party.  There is absolutely no reason or requirement to pay any fees for someone to negotiate a loan modification and I hate to see people who can't afford to pay these fees get taken advantage of.  Simply go to www.MakingHomeAffordable.gov and you'll find information to help you determine if you would qualify for a mortgage modification.

I get so frustrated when financially distressed homeowners get caught up in these scams and pay their hard earned money to folks who pocket the funds and then the property still goes to foreclosure!  There are a few requirements that are necessary for a loan modification:  the homeowner must have income that can be verified, they must qualify for that payment (it's almost the same as when they originally applied for and qualified for the original loan), and must be able to AFFORD the new payment.  Homeowners can pursue a loan modification and a short sale at the same time.  There is ALOT of financial information required for both these processes and if you are filling out one set of financial documents, it's just as easy to fill out both!  If the loan modification isn't approved, or the new payment offered isn't affordable, the short sale can be pursued instead. 

One business model for short sales involves a professional looking company who offers to solve all your financial problems, including a loan modification and/or a short sale.  They make an offer to purchase your home with a short sale, and then go to the mortgage company for approval of that short sale amount.  Once they receive approval they list the home for sale and attempt to find a buyer who will subsequently purchase the property at a higher price.  When the date of closing occurs the investor closes the short sale with the lender, and then resells the property (or flips it) to the new buyer, pocketing the difference as profit.  Our office has been approached by several of these companies, asking us to list the property for sale.  We have declined these listings because I believe it's WRONG.  Taxpayers are funding this bailout of major banks and lenders.  If the property will sell on the open market to a second buyer at a higher price, then I believe it's morally wrong to participate in a "flipped" sale where the investor pockets the difference.  If the home is truly being sold short of the loan balance, and at market value, then there isn't room for profit for the investor between the short sale and subsequent sale.  While this practice might not be labeled fraudulent at this point, if you really look at this practice from an arms length position, in my opinion it's wrong for private investors to profit from a short sale where taxpayer money is being used to pay the difference between a loan balance and market value.  I believe it is wrong in the same way as it is wrong for the CEO's of these failing banks to pocket enormous paychecks and bonuses.  I've spoken to some of these business people who insist this practice isn't wrong because they are fulling disclosing the fact that the property is being resold to the mortgage company approving the short sale.  Just as it might have been "legal" for home repair contractors to greatly inflate repair prices for necessary repairs following Hurricane Katrina, I still believe it was morally wrong.

I'm proud to be part of an organization that is truly making a difference in people's lives.  That's the Distressed Property Institute.  There are currently over 8000 Realtors in the US who have spent their money and their time to take the intensive training courses to become certified as a Certified Distressed Property Experts.  These Realtors don't charge fees upfront to homesellers, and they are negotiating hundreds of short sales on a weekly basis.  The Institute continues to provide support on a weekly basis as short sale practices change and they've developed a complete system to give homeowners the best chance possible to successfully avoid foreclosure.  If you or someone you know is having difficulty making their payments, or owes more on their property than it's current market value, recommend that they find a Realtor who is a CPDE.  Consumers can access the Institutes' website at www.cdpe.com to locate a CDPE near them.

On May 20th, President Obama signed the Protecting Tenants at Foreclosure Act of 2009 (S. 896) into law.  These tenant protections are effective immediately and expire on December 31, 2012. 

In a nutshell, renters must now be allowed to remain in the home for the duration of their lease, even if the home is being foreclosed on.  The new law gives renters a minimum of 90 days notice before they must vacate.  If a new buyer plans to personally occupy the property, or the tenant's lease is month to month, or there is no lease at all the tenant is entitled to at least 90 days notice.

If there is a lease, tenants will be allowed to stay for the remainder of the lease before the foreclosing lender or new owner can proceed with eviction.  If a state offers greater protections to renters, the new law allows the stronger protections to apply. 

This bill is important and timely, because it specifies that tenants have rights and gives them protections they did not have previously.  As a broker who provides property management services, I'm thrilled that we have some guidelines that allow us to treat the tenant fairly.  Without this law, we were required to enforce the provisions of the existing lease. 

If an owner was attempting to negotiate with their lender for a loan modification, refinance or a short sale, we often didn't know until the day before the scheduled foreclosure if the the lender would postpone or stop the foreclosure auction.  This left the tenant in a precarious and stressful situation, not knowing whether or not they'd have to move.  As the property manager, my hands were tied, as I was unable to alter the lease without the owners permission, and they frequently are working furiously to keep the property. 

This new law provides a policy whereby tenants have rights, property owners have new guidelines to follow and landlords, new purchasers and lenders all know where they stand.

Lenders don't make short sale approval easy.  After receiving government financial assistance funded by taxpayers and direct instructions to work with borrowers to avoid foreclosure, they still insist on playing hardball with homeowners who are doing everything in their power to avoid foreclosure.  In fact, they try to force home sellers into signing agreements that are contrary to Arizona law!

The Arizona market has experienced two years of declining property values which has been accelerated and multiplied by the practice of lenders foreclosing and then dumping homes back on the market in terrible "as- is" condition at low prices.  Rather than working to put these homes in reasonable condition and qualify for government financing for owner occupant buyers, they prefer to take the easy route and sell these homes to investors for lower cash prices.  These low priced "as-is" sales then become comparable sales which appraisers are forced to use to set value on home sales that are not distressed and are in good condition.  This continues to force market values down and more and more property owners find themselves "upside down" and not able to sell and pay off existing loans and closing costs without bringing cash to closing.  The current market situation was in part caused by too many investors purchasing properties on speculation, and now the same lenders who fueled that speculation with unwise lending practices are contributing to further declining values. 

If these same lenders would repair these properties so that FHA and VA buyers could purchase them, live in them, care for them and become good neighbors our neighborhoods would become stable and over time values would rise at reasonable, sustainable rates.

Having worked in the Casa Grande Valley real estate market since the early ‘80's I have observed how lending policies stifle or inhibit growth and real estate values.  In an effort to help homeowners who need to sell and don't want to walk away from their homes and allow the banks to foreclose, we searched for the best training possible to learn how to become effective at negotiating with lenders and obtain short sale approvals on behalf of our clients.  As a result of taking the extensive training we have earned the CDPE designation (Certified Distressed Property Expert) and have been able to successfully negotiate short sale approvals for distressed homeowners in much shorter periods of time.

More and more lenders are beginning to understand the benefit of approving a properly documented and valued short sale rather than foreclosing.   Yet we still find unresponsive lenders, and those seem to be the ones with the most well known names who are responsible for the largest number of foreclosures through their earlier lending practices.

Yesterday we received a tentative approval from a well known lender who was not aware of Arizona Revised Statute 33-814, subsection G, which provides that it is illegal for a lender to obtain a deficiency judgment on a home which is the owners primary residence, is a single family home and is on a lot size of 2.5 acres or less.  A deficiency judgment is the difference between the outstanding loan balance and the amount the lender receives from a sale when they acquire the property and resell it.  There are details involved in the statute that I will not attempt to cover completely here.  The bottom line is that the loan was a "purchase money mortgage" and the current market value is less than the first mortgage which was used to purchase the property.  After dragging their feet and not wanting to accept the market values in the extensive documentation we provided, the lender finally accepted the second appraisal, which shows that the market value has continued to decline while they have been delaying an approval.  The agreement they provided yesterday stated that they would release the mortgage lien from the property in order to close the short sale but they would hold the seller responsible for the difference.  This is not consistent with AZ law.  This lender is doing everything possible to prevent an approval and sale of this property, despite the fact that the seller is insolvent, has no assets to cover the deficiency, did not participate in fraud when purchasing this property and is a victim of declining neighborhood property values. 

 If we hadn't taken the CDPE training, we probably wouldn't have known to question this lender and challenge the legality of their proposal.  There is also a home equity line for a small amount with a well known lender.   Despite being given a portion of the outstanding balance they are refusing to release the second lien without the seller agreeing to be liable for the difference.  After consultation with an attorney we know that this home equity line, which was obtained after the purchase of the home is a full recourse note, which means the lender can go after the homeowner for the difference.  

Both these lenders refuse to accept that unless they approve this short sale they will receive this property back in foreclosure.  The longer they drag their feet the more the value declines and the less money they will receive.   The lender with the second mortgage will receive nothing if the first mortgage holder forecloses.  If they choose to foreclose the property value will probably decline further as a result of more bank owned as-is sales, plus they'll have months of additional costs, attorney's fees, title fees, lost interest, property taxes, HOA fees and the property will sit abandoned with probable deferred maintenance and possibly vandalism and theft.  The property will ultimately sell "as is" to an investor who will do minimal repairs and rent it to a family who just lost their home in foreclosure. 

We as taxpayers will ultimately pay the cost for the additional delay, unreimbursed costs and we'll have added another distressed sale at lower values to the neighborhood.  Instead, these lenders could verify the financial data provided on the homeowner, verify the property value information and expedite this sale to a qualified, working family who will purchase this property using an FHA or VA loan and live in it, adding to the neighborhood stability.

If you ponder this situation even further, all those loans created just a few years ago as 80/20 loans and 90/10 loans to purchase properties cannot have deficiency judgments, according to Arizona law.  When are these lenders going to wise up and contribute to solving the problems of the declining values, rather than contributing to them?  And why will my taxes and those of future generations continue to be directed to these major lenders who continue to operate with these incomprehensible policies?

Please don't misunderstand me.  We are going to continue to fight for these property owners by negotiating short sales and try to stop the flood of foreclosures, which impact homeowners and neighbors.  A recent review of almost 90 expired listings showed the majority are in foreclosure and will wind back up on the market as bank owned listings.  As time consuming as these short sale packages and negotiating are, we feel it is the right thing to do, and we have been successful in nearly 90% of them, with approvals in less than 30 days or as long as 60 days.  It's hard to listen to news and know that our taxes for the next several generations will go toward solving problems that are still being created by these lenders.  Check out ARS 33-814, subsection G and seek legal advice if what the lenders are telling you sounds fishy!

 Visit us at www.StopAZForeclosureToday.com or www.YostHomes.com

Third quarter sales in Arizona were up 28.3% over the second quarter of 2008.  So questions about whether we have "hit the bottom" of this market should be answered.  Home prices are infinately more affordable than 2007 and low interest rates along with lower sales prices have unleashed the pent up demand.  Inventory levels continue to drop, but there are still plenty of choices for buyers in most price ranges.  We are still in a buyer's market in all but the lowest price tiers.  i guess folks are paying attention to Warren Buffet's advice:  "Buy when everyone else is selling!"  Full article available here: http://www.bizjournals.com/phoenix/stories/2008/11/17/daily28.html

With all the talk of the $700 billion bailout money being diverted to bail out everyone but homeowners who can't pay their mortgage payments, it's easy to assume you have few options except foreclosure or mailing your keys back to your lender.  Please don't assume that foreclosure is your only answer.  AND please don't make the assumption that your lender will automatically approve a short sale.

Short sales (mortage companies accepting a payoff less than the principle balance) are a viable alternative to a foreclosure.  They have been described as the "brain surgery" of real estate.  There are several steps to a successful short sale and very few Realtors have been properly trained in the current approval process.  Before choosing a listing agent, make sure your Realtor has received extensive training in the process and has several successful short sale approvals under their belt.  Realtors with the CDPE designation (Certified Distress Property Experts) have received the extensive training and average an 82% approval ratio compared with the typical 12% nationwide approval average.

The first step in the process is to determine if your personal situation fits into one of the "allowable financial hardship" categories.  These can include loss of or reduction in income due to business failure, loss of job, military service, or a mortgage interest rate increase and payment increase.  The hardship must be one that we can document with paper.  In fact the approval process for a short sale involves lots of paper.....generally our approval packages range in the 75 to 100 page length!  It will include all of the documentation you originally submitted for approval of the mortgage plus more!

Our job is to package all of your financial information along with extensive documentation to show why the mortgage company will benefit more from accepting a short sale than from taking your home in foreclosure.  Our package will include much more than the typical broker's cma (competitive market analysis).

The mortgage companies are flooded with requests from borrowers who are delinquent and the folks who work in the short sale approval departments (loss mitigation) are overwhelmed with incomplete short sale approval packages.  The documents that a mortgage company will request are not the only documents that are required for approval.  Our goal is to provide every and any document that will compel the mortgage company to approve the request as quickly as possible.  Once a package is received by a mortgage company it is placed in a "review" department.  In some cases we've found that our packages are so complete that our files are being sent directly to a negotiator rather than to the review department.  This simple step can save 10 days to 3 weeks in processing time.

Since obtaining the CDPE extensive training and designations our team has had a 100% success ratio in short sale approvals with the average time from contract to closing averaging about 50 to 75 days.  When you hear about buyers being tied up in escrow waiting for a short sale approval for several months, it's a good guess that the listing agent doesn't understand how to properly submit the file and negotiate on the seller's behalf.

We have more extensive information on short sales on our website at www.YostHomes.com including an interesting chart that shows the difference a foreclosure vs. a short sale on your credit in the future.  This is definately worth viewing if you are unable to continue making your payments.  We have a frequently asked questions section.  Follow this link for more information. Short Sale FAQ's 

Look at this great incentive for buyers in the Casa Grande, Arizona real estate market.  Housing is affordable again, interest rates are low and now assistance is available for their closing costs.  A program, called "Ask An Agent" is being offered on all Freddie Mac owned properties.  They will pay up to 3 ½ % of the buyers purchase price in closing costs.   In many property purchases, the buyer would ask a seller for a 3% contribution to their closing costs.  The seller may then either accept or reject to pay this cost.  With this program, you know "up-front" the seller is willing to help you get into the home of your choice.

This offer is available until January 31, 2009 and provides a great value for any new homeowner.  This is a nationwide program and Casa Grande currently has 13 properties available as of today's date in a wide range of sales prices.  All the information can be found on their very user friendly website - homesteps.com.   The website gives the example that the savings offered on a $150,000 home could be up to $5,250. 

Our agents are very knowledgeable about this program and can tailor a purchase that is just right for you.  Let us help you through the home buying process.