Short Sale success with Freddie Mac, BofA, BofA and UGI

As the title suggests, this was a loooong battle that included a lot of different moving parts. Yes, you read that correct, there was a BofA first servicing for Freddie Mac, a BofA home equity line and a mortgage insurance policy with UGI, against the BofA home equity loss. Wow my head hurts just writing that! OK, so the key to our success was perseverance. We continued to make calls and send emails to all necessary negotiators and managers on a regular basis and when they would not respond with the answer we needed, we escalated past them. This is a little more difficult because of Equator, but the twitter team is a great resource. This sale was started in January and finally closed April 30th, but before that it was denied in early March by Freddie Mac due to insufficient offer. We begged the buyer to raise their purchase price and they did, so we started over again and had an approval from Freddie Mac within 4 weeks. To our utter disgust, the insurance company (UGI) then denied it in early April, also due to insufficient offer. In their case it was not actually the offer, it was the amount of loss and lack of contribution from Freddie Mac. Since Freddie is that stubborn rich uncle we all love to hate, we avoided them and instead escalated to Sr. Management at BofA, demanding that they contact Sr. Management at UGI and negotiate an approval. When that did not happen, we simply sent an email to Sr. Management at BofA and cc'd Sr. Management at UGI, explaining that the two companies needed to come to a reasonable solution on the loss and issue an approval quickly. Since everyone involved could see each others email addresses, we revealed the wizard and eliminated all of the excuses they were making about not being able to reach a decision maker at UGI. In the end it worked because here we are 4 months later with a successful short sale, a happy client who avoided foreclosure and a happy new buyer. We are doing our part to help get this economy going again! Thank you Adam, you know who you are and congrats to Brad and Marti!

Short Sale success with BofA portfolio

Great news for those who are interested in short selling their homes with a BofA portfolio loan(s). They were actually very good to work with, no delays, no excuses, no missing documents and actually gave an approval in less than 45 days. We have a good team and generally get approvals in less than 70 days, but this was just flat out fast. So what you say, many banks do that, right? Nope, after the approval the title company sent their final documents to BofA showing that the property had a hidden second lien in the form of a Gov't sponsored down payment assistance loan. Even worse, the loan and accrued interest was over $9500 and our short sale price was only $120k, which creates an additional 8% loss for BofA. We thought the deal was dead for sure, but nope, only 7 days later the negotiator emailed us a revised approval with the second lien being paid in full. We were amazed to say the least!

So the sale has closed and we wanted to publicly thank the BofA portfolio group for their efforts. They are actually helping homeowners start over, which also helps turn the economy around. Our clients are now working on repairing their credit and getting all of their other debts paid off.

If you are struggling financially and are considering a short sale, make sure you educate yourself about the process and the credit ramifications, as some careers will not allow the damaged credit that a short sale creates. Start by calling your local real estate professional and ask as many questions as possible. Good luck all!

Time to invest in real estate again

Since many of us have lost a home, lost their job and see nothing but bad news all around, how can Warren Buffett announce today that now is the time to buy residential real estate? Well, considering he is one of the smartest and wealthiest investors in the World, let's take a look and see what he sees. First, the large builders (Pulte, Lennar, DR Horton) have all posted small gains this quarter; the pending home sales were up in January; mortgage purchase applications increased in January and best of all, mortgage interest rates are at record lows. In other words, Buffet sees long term value in residential real estate because of low prices, low interest rates, shortage of inventory and long term equity growth. He even suggests to finance the home purchase to really take advantage of these economic factors.

What if you are a cash buyer or investor? An even better opportunity presents itself here. First, tenants. There are a lot of Americans out of work or who have lost their home, but still need a place to live and will now become renters. Also, with your cash sitting in the bank it is not actually working for you but for the financial institution where it sits. They are lending it out to other institutions, people, businesses and earning a small income from it everyday. In return, they pay you a small monthly dividend or interest return. Buying residential real estate using that cash now allows you to become the bank. It ensures that you earn that daily/monthly income, while paying a small percentage or fee back to someone else, like a landscaper, plumber, etc. Yes there are risks, but a long term hold right now looks like a solid investment.

So based on this analysis, I would say that Warren is correct, again! So everyone waiting to buy a home or those with money sitting on the sidelines, earning no interest, call your local realtor and see what is available in your area. You might find a gem that could earn you good short term income, long term equity growth or both.

How much will my Short Sale cost?

So we have had a lot of inquiries recently regarding short sales, the costs, the tax consequences, etc. so we wanted to write a simple and quick tutorial for those who are considering it or even for those who already in contract on one.

In a traditional California sale, the seller (Mr. and Mrs. Smith) will be responsible for paying some closing costs, fees, commissions, etc. at the close of escrow. However, in a short sale transaction, the seller is actually a Bank/Investor like Bank of America, and they are the one's responsible for paying closing costs, fees, commissions, etc. In that scenario, Mr. and Mrs. Smith pay nothing, but lose their dream home and damage their credit. Bank of America takes a massive financial loss, but they send Mr. and Mrs. Smith a 1099 for that loss. The Smith's then become responsible for claiming the banks loss as income on their next years' tax returns. See your CPA for details as I am not a real CPA, I only play one on TV :-)

So bottom line, you will pay almost nothing to short sell your home, however there are some consequences to consider, like moving your family, the costs associated with moving, rent payments and of course, damaged credit. However, if you are a struggling home owner, who has a true financial hardship (job loss, death in family, job transfer, etc.) then you might be eligible for a short sale and it is an excellent start to getting back on your feet again!

USDA and first time home buyer success

Just closed another first time home buyer sale. This is an amazing time to buy, so renters and buyers, call your favorite local agent now! Our clients were able to trade their 800 sq. ft. apartment and it's $900 rent payment for a 1700 sq. ft. home with only a $1000 payment. They closed with a USDA loan. Yes I said USDA! It is an excellent and unknown loan, typically used for rural community growth, however it has 100% financing, low rates and doesn't have the red tape and delays that FHA loans have. Check with your local loan officer, both the buyer and home need to qualify for USDA approval, however it is well worth it.

Congratulations Boe and Holly on your new home!

Short Sale success with River City Bank and B of A

So the short sale negotiations with River City and B of A took 131 days, start to loan funding. Not typical, but expected due to the volume of short sales, foreclosures and loan modifications that B of A is dealing with. This is mainly due to their acquisition of Countrywide Home Loans, but that's another discussion for another day.

Luckily our buyer was very patient, but did get anxious after about 2 months of waiting and wanting to see more homes in anticipation of a short sale denial by B of A. Nope, to our surprise the BPO come back in line with our offer, River City paid much of the closing costs we asked for, plus most of the B of A loss request. Great news, here we go right? Nope, you sitting down? The real snag came near the end of the sale, when someone broke into the home via the side garage door, stole the light fixtures, the water heater and the pool equipment. It got worse from there, as the appraiser took it upon himself to play inspector and requested pool equipment, hot water and electrical repairs to the home before he would issue a clean appraisal. Our buyer was not FHA, VA or USDA, so there was no real need for him to make those requests, but once the lender saw them, it was trouble.

Anyway, so we got an electrician, pool guy (Thank you Mike from Nor Cal Pools) and plumber out there to repair everything. We sent the inspector, sorry, the appraiser (avoid AVK Appraisal Services) back out there and he gave it a clean bill of health.

Congrats Joe and Laura on your new home!

First time home buyer success!

Just closed our first internet buyer lead. She was a first time home buyer, all cash, great to work with and closed in only 17 days! The $100k home market in the Sacramento area is very competitive, but after only two weeks of searching we found her dream home. Congratulations Lori and Ron Hulsey!