Erin Attardi's Blog

If you follow me on Facebook or Twitter, you will already know that I am experiencing a little frustration regarding a short sale I am negotiating for another agent. Because I am so well-versed in short sales and they require a special expertise, there are several other Lyon Real Estate agents who engage me to negotiate their short sale listings...our arrangement usually is that I am paid a percentage of the listing agent's commission from the transaction, and just deal with the lender loss mitigation reps. The other agent is responsible for all other pieces of the transaction like dealing directly with the seller, buyer's agent, etc.

Well for the last couple months or so, I had been negotiating a short sale with this type of arrangement for another Lyon agent. This agent listed his son's property. Fine...seemed like no big deal - just any old short sale.

The loss mitigation rep from the lender contacted me yesterday. "Erin, I have some good news, and I have some bad news. The good news is that the short sale has been approved! The bad news is because the listing agent and the seller are related, we are reducing the listing agent's commission to $0." WHAT!?

The loss mitigation rep explained that it is their policy that ALL short sale transactions must be at "Arm's Length."

Well no kidding! I have dealt with Arm's Length transactions before and have blogged about them...in fact most lenders will require buyer and seller to sign an affidavit swearing that they are not related, and not business associates. But the agents are not principles to the transaction...

I got my managing broker involved...basically Lyon Real Estate must still facilitate the transaction, but receive zero compensation, but accept all of the liability for the legal ramifications of the transaction. My managing broker suggested we switch listing agents...so we tried to convince the short sale lender to accept a substitute listing agreement, naming me as the sole listing agent rather than the seller's father. The short sale lender said no and they would cancel the approval if another listing agreement was presented.

So.....corporate legal counsel is now getting involved, and without going into more detail - the transaction is moving forward with no compensation to the listing side. Coincidentally, the buyer's agent commission was actually not reduced at all. The listing agent and his son (the seller) are just happy this short sale transaction was approved, and have assured me that my efforts will be compensated in some way...frankly, they are fortunate that Lyon Real Estate is still willing to facilitate the transaction.

So.....just be aware that this may happen if you list your short sale with a family member who is a Realtor. It looks like this transaction will have a happy ending, but I can see where this situation may cause problems for others.

Great Rosemont 3 bed, 2 bath, 1,260sf home! You will love the open layout with separate living and family rooms, cozy fireplace, spacious bedrooms, nice backyard with fruit trees, 2-car garage, central heating & air, and 2-year old roof! Offered at $175,000 - NOT A SHORT SALE / Foreclosure! Seller will provide pest clearance. Don't wait! FHA and VA loans are welcome! For more photos and additional detail, please visit http://3324huntsmandrive.com/.

Early this year, I blogged about a program from the California Association of Realtors called the Mortgage Protection Program. C.A.R. announced today that the program is going to be extended through 2010!

Through the C.A.R. Housing Affordability Fund, the Mortgage Protection Program (CARHAFMPP) affords first-time home buyers who lose their jobs due to layoffs up to $1,500 per month for up to six months to help make their mortgage payments. A qualified co-buyer also can participate in the program, for a reduced monthly benefit of $750 per month for up to six months in the event of a job loss.

I have enrolled some of my buyer clients in this program...in fact one was interviewed and quoted in the press release from C.A.R.

It is a great program that gives buyers peace of mind. To qualify for the Mortgage Protection Program, applicants must:.

• Be a first-time home buyer - someone who has not owned a home in the last three years.
  
• Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2010.
  
• Use a California REALTOR® in the transaction.
  
• Purchase the property in California.
  
• Be a W-2 employee (cannot be self-employed)

I received an alarming email yesterday from my favorite Escrow officer...she forwarded me a memo from their legal department:

"One of our escrow officers received a correspondence yesterday on a FNMA (aka, Fannie Mae) short sale escrow that indicated that FNMA has implemented a new policy effective today, 12-15-2009 that they will no longer postpone trustee sale dates. FNMA is requesting that the short sales are closed before the sale date. If they can not close the short sale before the Trustee Sale date, the property will go to Trustee sale and be foreclosed."

What exactly is a Trustee Sale, you ask? A Trustee Sale is basically a Foreclosure Sale conducted under the stipulations of a Deed of Trust. The Deed of Trust is a notarized document a borrower signs that secures the borrower's loan to the property, and permits the sale of the property upon default by the borrower. Upon default, the Trustee (could be the lender, or the lender's authorized agent) is authorized to foreclose the mortgage and put the property up for a Trustee's Sale. The proceeds of the sale are distributed by the Trustee according to the priorities listed in the deed of trust...usually first distributed to the 1st lender, and then any remaining proceeds (if any) are distributed to the 2nd lender, or any junior liens. After the sale is complete, the trustee transfers ownership to the winning bidder. The original owner/borrower does not have the right to redeem the property after the sale.

UGH. I immediately thought about my two approved short sales that are scheduled to close in January...I went through my files and whew - neither one has a Trustee Sale date scheduled. I do however, have other short sales in progress where there is an existing Trustee Sale date scheduled, or there could be a Trustee Sale scheduled at any time. On several past occasions, I have been able to convince lenders to postpone or reschedule existing Trustee Sale dates so that the short sale can be analyzed and approved. If this is true, then on Fannie Mae loans, there may no longer be an option to get these sale dates postponed.

Of all my short sales in progress right now, I think about 20% are Fannie Mae loans and may be affected by this new policy...not sure if that precentage is representative of all existing loans out there.

Sellers - DO NOT wait to the last minute to get your short sale started. You may not know if you have a Fannie Mae loan, and your lender/loan servicer probably would not be able to tell you if you were to call and ask.  You can use this online tool to see if you have a Fannie Mae Loan.

Buyers - be sure to have your agent ASK the listing agent to find out if he/she knows if the loans being negotiated for the short sale are Fannie Mae, AND if there is a Trustee Sale date scheduled, or if there is the possibility of a Trustee Sale being scheduled in the future (will depend on if/when a Notice of Default has been filed).

While I was doing some short sale negotiation this week, and listening to the zesty cha-cha "on-hold" music for one particular lender I seem to be working with a lot, I decided to take a stroll down memory lane and read some of my older blog posts...

I just wanted to point out that if you are doing research regarding buying or selling your Sacramento home, please make sure you are reading up on current information. Our market changes so frequently, that information and advice that was relevant just a short time ago is no longer applicable!

There have been many pieces of legislation that have affected the marketplace on the national, state, and local fronts. Think about the impact of doing away with seller funded downpayment assistance, new licensing requirements for loan originators, short sale "phantom" income tax ramifications at the state and federal level, local rental inspection ordinances...A LOT has changed in just even the last few months!

Market trends that have significantly changed over time. The local Sacramento trends do not copmletely line up with the national or state-wide trends. Just a year ago, foreclosed property listings dominated our marketplace, and now short sale listings do.

When you seek the advice of a local Sacramento Realtor, please be sure you choose to work with one that is on top of our ever-changing market...

Whether you are planning to Celebrate Christmas, Channukah, or whatever else this holiday season, if your festivities involve gift giving, there are many Sacramento-themed gifts you can give! Here are my top 12 gifts that will make any Sacramentan's holiday, at any age or budget:

• Dinner at The Grange and an overnight stay at The Citizen Hotel; This combo has become a favorite of mine! The food at the restaurant is outstanding, and the hotel is one of the finest in Sacramento. I highly recommend one of the penthouse suites with a view of downtown! Estimated cost: $200
• A membership to the Sacramento County Historical Society; The mission of the Sacramento County Historical Society is to preserve the history of Sacramento County, and to promote public awareness of local history. As a member, you will receive a monthly newsletter and be invited to monthly meetings. Estimated cost: $35/individual membership.
• A T-Shirt from the Hard Rock Cafe; Yep - if you forgot, Sacramento does have its own Hard Rock Cafe location at the corner of 7th & K Streets. Estimated cost: $25 - $50.
• A subscription to SacTown Magazine; Read up on local goings on, Sacramento hot spots, restaurant reviews, articles of local interest, and more! Estimated cost for 12 month subscription: $12.
• A California State University, Sacramento sweatshirt; My alma mater! Stay warm this winter while supporting our local CSUS Hornets! My CSUS sweatshirt was a Christmas gift from my mother during my freshman year...I still wear that thing even though it is totally faded and worn out...Estimated cost: $36 - $75.
• Auto Detailing at Pavilion Car Care; They will make your care shine and your carpets fresh! Definitely the best car wash in Sacramento! Estimated cost: $45 - $299.
• Tickets to go visit the Sacramento Zoo and Fairytale Town; Heck if you are going to visit one, why not visit both! Located at William Land Park, this is a great diversion for adults and children alike! Estimated cost per person/ticket: $13.
• Bottle of wine from Revolution Wines; Revolution Wines is Sacramento's only urban winery. Tucked away at 21st & P Streets in midtown, they make their wine...their facilities also host tastings. Estimated cost per bottle: $10 - $25.
• Massage from Arden Hills Resort Club & Spa; Arden Hills boasts not only a fitness / wellness center, but also an award-winning day spa. Why stop with just a massage? They offer more than 75 different treatments! Estimated cost/treatment: $40 - $440!
• Dance lessons at The Sacramento Ballroom; Want to learn the Texas Two-Step, the Tango, or how to Swing Dance? They have classes for both singles and couples, from beginning to advanced levels! Estimated cost/lesson: $5 - $10.
• Tickets to a Sacramento Rivercats game; See the Oakland A's affiliate play at Raley Field. I'm a SF Giants fan, but I do really enjoy these games (especially when they play the SF Giant's affiliate team, the Fresno Grizzlies)...many of these players are a phone call away from the major leagues! Estimated cost/ticket: $6 - $30.
• A new home; Sure, I saved the best for last. Nothing says happy holidays like closing escrow on a Sacramento home...sorry if that was a little cheesy! Estimated cost: Priceless. =)

So I have gotten to the point where I have closed so many Sacramento short sales, I figured I would share my experiences with different lenders...All lenders are radically different in the manner in which they process short sales. I think it is only fitting that I start with Bank of America (formerly Countrywide in some circumstances), since I have closed numerous short sale transactions with them. There are distinct differences in the process and the contact information if your loan is a former Countrywide loan, vs. a loan that has always been with Bank of America.

The following are the documents that Bank of America will require from the seller:

• Last 2 months of bank statements
• Last 2 months of paystubs (or proof of unemployment)
• Last quarter of profit and loss statements, if self-employed
• Most recent retirement earnings statement
• Last 2 years of tax returns
• Completed financial worksheet
• Hardship Letter
• 3rd Party Authorization Letter

Along with those documents, the listing agent must forward the listing agreement, purchase agreement, buyer's pre-approval letter, copy of deposit check, and Estimated HUD-1 (summary of costs associated with the sale). 3rd Party Authorization letters should be faxed to 972-661-7800, or 805-520-5019 (old Countrywide loan). Bank of America's general short sale fax number is 866-706-7497, or 888-491-4947 (old Countrywide loan).

The 3rd Party Authorization letter should be faxed immediately once the property is listed. The rest of the documentation (seller's financial documentation and purchase documenation) should be faxed ALL AT ONCE when it is all assembled. Do not fax an incomplete file to Bank of America, as it will likely be shredded at the other end...yes your fax may be around 100 pages. Bank of America's document imaging process is long. You may find yourself faxing documents multiple times before they are imaged into their system. In my estimation, on average, it takes approximately 2 weeks for a complete short sale document package to be uploaded into their system.

Once you can confirm that the documents have been received and imaged into their system, you should call at least once or twice per week. Bank of America's Short Sale Support department telephone number is 800-846-2222, or 866-880-1232 (old Countrywide loan). When you go through their phone system, depending on call volume, you may reach another department. Generally, someone in the short sale support department will order a BPO (aka, broker price opinion) or appraisal prior to the file being assigned to a "Negotiator" for complete analysis.

There are several variables that may influence the time periods of your Bank of America short sale. The fastest Bank of America short sale approval I have received took about 60 days. The longest Bank of America short sale approval I have received took about 180 days.

The best case scenario is that Bank of America actually owns the loan, and there is no mortgage insurance. This will ultimately produce the fastest short sale approval scenario because Bank of America is able to make its own decisions regarding acceptable losses.

The worst case scenario is that Bank of America does not own the loan, and it is instead owned by a 3rd party. A 3rd party can be another bank (seems like many of their loans are owned by Bank of New York, or Deutsche Bank), a securitized investment pool, a government entity (Fannie Mae, HUD/FHA), or a mortgage insurance company. In this instance Bank of America is just the loan servicer and can not necessarily make decisions about acceptable losses. This will ultimately produce the slowest short sale approval scenario.

Unfortunately, you will not know until a mid-stage of the short sale which of these variables exists. The negotiation will go through several "phases"...it is not unusual for the loan to pass through several "Negotiators" and have several BPO's. Once assigned to a Negotiator, you should be able to obtain that person's direct contact information, including a direct telepone and email address.

Once approval is issued, Bank of America generally gives only 30 days to close. BE READY...sellers be ready to move out, and buyers be prepared to close asap.

Bank of America seems to be the culprit of some of the absolute weirdest short sales I have done. The approval documents have been "lost" and short sales that have shown as approved in their system have taken weeks to get to me, and then we only have had like a week or two to close escrow. They have also "misplaced" short sale payoff checks from escrow. UGH...the only thing predictable about Bank of America is that they are completely unpredictable. I have worked with them many times and pretty can guarantee you it will be a clumbsy process...

Click here if you are thinking about doing a short sale of your home. Click here if you are thinking about buying a short sale home.

UGH...If you follow me on Facebook or Twitter, you will already know that I have been sick since last Friday. Finally went to the doctor on Monday, and without going into too much detail, I have been experiencing more pain in the last week than I have in my entire life. Thanks to my doctor (and a cocktail of antibiotics and painkillers) I should be back to normal soon. This photo is of one of my medicine bottles...I think warning #2 on the label is completely random and hilarious. Do foods really have "hidden sources of alcohol?"

Anyway, I have to return to at least light duty next week, as I have two new listings hitting the market. One is a short sale in Antelope, and the other is a regular transaction (yep, non-short sales, and non-foreclosures still exist!!) in Rosemont.