Piedmont Real Estate Blog An ongoing dialog on real estate news, opinion and trends in Northern Virginia and the greater Piedmont area. Julie is an Associate Broker at Century 21 New Millennium, 5451 Old Alexandria Turnpike, Warrenton, VA 20187
Bad things do happen to good people. We don't want to believe it because it means we're all vulnerable.
I wish I could tell you how to protect yourself. I'll mention again that I'm a big believer in a strong relationship with a good, local bank. Will you always get the absolute best rate? Probably not. Will they likely foreclose on a house that you've made all the payments on? Probably not! (It's very bad business to show up on the front page of the local paper!)
The ruling effectively seems to say that loan servicers have no authority to foreclose on behalf of the lender.
If the ruling gets appealed to the Supreme Court and stands, given the number of foreclosures happening, it could mean tremendous changes in the industry and, in the short term, a real mess.
Of course, first the ruling has to get appealed. Then the Supreme Court has to agree to hear the case. Then it has to get on the calendar.
Maybe the real estate market will be so improved at that point that it has little impact.
I've posted here several times about the importance of choosing a good lender. If this story doesn't convince you, nothing else I could say will!
I've cut and pasted this from another blog. The writer is a real estate broker who wanted to remain anonymous for professional reasons. Hey, it can happen to anyone!
After an exhausting fight with Taylor, Bean, & Whitaker my mortgage has been sold to Bank of America.
The year leading up to this event has made me an emotional mess. Never have I felt so helpless and small. I was so distraught I sought out comfort from other victims of TBW scams. Some of those new found friends had lost their homes in foreclosure. The rest of us were holding on by a thread for our dear lives.
Now, for a real estate broker, foreclosing on your home is simply embarassing. Seeing my name in the legal section was my worst fear. People would automatically think I was in financial trouble or irresponsible. So my husband hugged me every day and told me there was nothing more I could do. The lawyer in my said otherwise.
So I went in search of others who were facing problems with TBW and found a class action lawsuit against them for effectively forcing people into foreclosure. The stories sounded eerily similar to mine.
1. The online bill pay site was down almost 24/7. When you did happen to find the website running they made it virtually impossible to pay online by hiding their payment system somewhere within the site. After 4 hours one day I managed to find it. I tried to pay and the system would not process the payment due to technical difficulties.
Because online bill pay was down we tried to mail our payment in.
2. I keep immaculate payment records. So I sent my payment through the mail.
25% of the time TBW claimed they never received the payment(even when mailed in their own envelope) and it never was seen again.
50% of the time TBW claimed they never received the payment and it showed up as being cleared on my bank statement. They refuse to use bank statements as proof of payment and marked my mortgage as late.So who was cashing my checks then?
25% of the time they received the payment but took 45-60 days to process it. Because their billing system took that long they tacked on late fees.This happened even if my payment was received weeks before the due date.
Now I am three months behind on my mortgage and receiving demand letters from TBW. I write them a long letter begging them to TAKE MY &**$% MONEY. I have been sending the payments but no one will process them or acknowledge ever receiving them.
3. I send by certified mail a payment for all that is currently and past due. I receive verification that they have my letter.
4. I receive a foreclosure notice because I have not paid(according to them). My credit is ruined at this point. I call them and am put on hold for 4 HOURS until their business is closed. I get a message that says to call back tomorrow.
5. I call back every day and wait on hold. My maximum record was 7 HOURS. I pressed the operator buttons, trying to trick the system into giving me a live person. No luck.
6. Even though I have verification of them receiving my payment it has not been processed yet.
7. I try the Pay-By-Phone option. They have a live version(supposedly) so maybe they will talk to me if I offer to throw more money at them. No such luck. The operator told me my account was in "Lockdown Status" and I needed to contact their attorneys in order to pay.
At this point I was pulling out my hair, drinking every night, and my temper was flaring. I wrote them one more nasty note before I intended on joining the lawsuit. They responded: You're mortgage has been sold to Bank of America. All payments received by us will be forward to BOA as required by law.
BANK OF AMERICA SAVED ME! I have contacted them and they have no records of any forwarded payments from TBW. So TBW has approximately $4800.00 in complimentary payments from me that disappeared from my bank account but was never credited to my account. And yes, I did verify the mailing address because at one point I thought I was being scammed by a private individual.
I wanted my story to be told because there are still at least 100 people that I know of who were forced into foreclosure or on the brink by Taylor Bean & Whitaker. And no, they were not doing this randomly or to everyone. Being a real estate agent I instructed other individuals to get a BPO or appraisal done on their house just in case they needed to sell fast. I presented their findings to an anonymous banker who knows the costs of foreclosures. He noted that TBW stood to make a sweet profit on each of properties if they foreclosed and sold themselves. Whether or not that is what they were planning I don't know.
I haven't followed the class action suit. From what I heard the majority of them were suing because TBW refused to take their monthly payments and forced them into foreclosure. But TBW has received a cease and desist order for FHA loans and are under investigation for fraud.
Just remember when you talk to people who are foreclosing, it isn't always their fault.
Now I'm with a new mortgage company so hopefully I don't get screwed again and this is all behind me. And I hope this never happens to any other person.
Word is that the federal government will soon be coming out with guidelines meant to standardize and streamline how short sales work.
For the record, nothing could make most real estate agents (and short sale buyers and sellers) happier than a better process.
Unfortunately, I have absolutely no faith that it will happen. The guidelines, like most of the government plans around foreclosures thus far, is going to take a carrot approach, with incentives for banks to cooperate. I'd be willing to wager a fair amount of money that the banks could care less about any incentive offered. The money involved is likely to be miniscule from the banks' perspective.
Let me also say that I'm a little offended by the concept. So these banks have billions of our tax dollars to save them from their own stupidity (and to keep us from going over the cliff with them) and now we have to bribe them to play nice?!
Seems to me California has a better idea here. They've passed new regulations that a bank that has gotten all the documents on a short sale, including the draft HUD1, must produce an answer in four days! And, if they don't there are penalties.
To give you some sense of perspective, if I get a response from a lender within 6 weeks, I do a dance of joy! Everyone has stories of banks that didn't respond for well over four or five or six months!
There has to be a better way. And I'd love to believe that the Federal Government is about to roll that out. I'm just not that gullible any more!
In a year when there is so much hardship, personally and financially, it's good to be reminded that failure is just a temporary state of affairs. I ran across this blog post and had to share it with you all!
I wish I was writing to tell you all I won the Mega Millions this last week. No such luck! But Fauquier & Culpeper county are a little richer thanks to the Neighborhood Stabilization Program. Fauquier County was awarded $1.5 million. Culpeper got $1.2 million. The money will be used to buy, rehab and resell foreclosures in neighborhoods hard hit by the real estate downturn.
In Fauquier that means the southern end of the county. In Culpeper think Lakeview for sure.
I got one thing wrong in my earlier blog about this. I thought it would be too late in the process for them to get the money. They met the deadline but given the money already awarded and the competition I really didn't think Fauquier & Culpeper would get any.
It's too soon to know if I was right about my other reservation. The foreclosures are getting fewer and fewer and almost always involve bidding wars these days. It'll be interesting to see what the counties are actually able to purchase with this money. There are plenty of short sales, just not so many foreclosures these days.
It's no secret to most people that the majority of homeowners are unable to get their mortgages modified and eventually lose their homes. And, in fact, even those who do get modifications, end up with a monthly payment that is HIGHER than the original. That's why you hear about so many modifications that still end with the homeowner losing the home.
Now there's new reporting about why those modifications aren't happening. There has been plenty of speculation, but now there are some facts to look at.
Baseline Scenario, in my mind the best blog out there on the economic turmoil we've been experiencing, has a new post talking about what's actually been happening.
Loans are not being modified because there is a financial incentive in many cases, to NOT modify them. Until that changes and the job market improves, it's hard to see how the foreclosures stop.
That said, the picture here looks rosier than the one depicted in the chart shown in the blog post on Baseline Scenario. Remember that all real estate is local!
So, how do we change the financial incentives for the services and mortgage companies?
The problem of banks not taking financial responsibility for the properties they foreclose on continues to grow. In this blog post from NPR's Marketplace (Scott Jagow is the author) he discusses the problem.
Is it happening here? I suspect in Prince William and Rappahannock counties the answer is no. Houses are selling so quickly it seems unlikely the bank wouldn't just go ahead and put it on the market.
There are a few properties I've seen in Culpeper and Fauquier county that I've wondered about. They are mostly rural properties on small lots with small houses in very bad condition. The bank supposedly foreclosed many months ago and there's been no sign of it being sold. So, the answer is....maybe.
Given the state of local county budgets, if this is happening seems like it'd be in the county's interest in getting this money. Legally, however, if the bank never transfers the deed, they don't legally own the property.
So, who does? If the owner paid the delinquent taxes could they move back in? If the bank has written off the loss and walked away what's to stop that from happening?
The Obama administration has apparently figured out what those of us trying to work short sales could have told them a long time ago, banks are making it incredibly difficult to deal with them.
So, they're being ordered to appear in person for a trip to the woodshed later this month, according to an article in The New York Times.
I'm thrilled to hear it, and not to suggest piling on, but that's exactly what every homeowner and real estate agent should be doing. In the next few weeks (the meeting is on July 28th) we should all be calling these banks (Office of the President) and letting them know that the administration has it right and they need to shape up. And, as long as you're at it, call the White House and let them know you agree with them on this issue.
Let's face it, none of us has much leverage on our own. But if each of us acted in concert with the White House on this, and if industry groups like NAR got behind it, there's a possibility that the force of our demands could produce some change.
Freddie Mac has posted a video on YouTube to help homeowners who are facing the possibility of foreclosure. It takes you through what documentation you're going to need to put together for your lender in order for them to help you avoid foreclosure.
This paperwork is, in most cases, the same paperwork needed if you're contemplating a short sale.
I hope this is helpful but even more, I hope none of you need this information!
Fauquier County is working to get funds from the Neighborhood Stabilization Program. The latest information says that they're seeking a grant of $2 million with which to purchase foreclosed homes. They also acknowledge that they're more likely to get only $1 million.
There are certainly still a fair number of foreclosed homes around. Out of the 75 homes sold in Fauquier last month, 28 of them were foreclosures. Out of those 28, 15 would fall into the price range (130K to 250K) that the county is looking at.
But the number of foreclosures in the lower price ranges is shrinking and they are often snapped up fast, sometimes these days, even with multiple offers. It will be interesting to see if a government entity can be nimble enough to compete with the first time buyers who are snapping these up.
The other complication here is the appraisal requirement for the program. In order to qualify for the program the Fauquier can not pay more than 85% of the appraised value of the home. Since the typical homebuyer can get a mortgage as long as the appraisal is 100% or more of the purchase price the bank will certainly find the county's offer more risky. If I'm the asset manager for the bank and I had multiple offers, I'd almost never choose the county offer.
I say all this not to trash the Neighborhood Stabilization Program. It was a good idea. The problem has been in the execution.
While in October 2008 the county was shown as having 228 bank owned properties., the MLS currently lists only 29 for sale in Fauquier County.
In the time it took to roll the program out and talk the counties into participating and then have them put together packages, the worst of the crisis has passed.
The program will still do some good if they're able to actually buy homes. It will help working families afford a home of their own in what is still a relatively high cost living area.
But no one should believe that this program will have any impact on stabilizing market conditions in any neighborhood. Time and the market appear to have already taken care of that.
Short sales are a pain! You're going to hear that from any real estate agent you talk to, or more likely, even stronger language.
The relationship between banks and real estate agents on short sales has gotten to the point where you could call it adversarial. And, it shouldn't be that way. We should be working together towards a common goal, finding a deal that works for everyone and getting it closed before the house goes into foreclosure.
The thing is, I don't think it needed to be this way. Both banks and real estate agents should have sat down at the beginning of this wave of short sales and worked out some things. Here are some ways the outcomes and the working relationships could have been improved.
Each bank should have a package of it's procedures in working with real estate agents and owners on short sales.
Banks should have a link on their main web site that provides real estate agents with everything they need to process a short sale.
Lending institutions and real estate companies and/or associations should have set up joint seminars where agents and lenders could meet and develop working relationships.
Banks should have easy access on their web sites to information for their customers who are contemplating going through the short sale process.
No one item here would have completely fixed the problems with the current system. But any and all of them would have helped tremendously. And, this list is just a starting point. There are lots more possibilities.
This is a broken system. A little planning up front might have saved us all a lot of grief!
I mentioned in a recent blog post that the Commonwealth of Virginia is desperately seeking a home for monies from the federal government, as part of the Neighborhood Stabilization Program, designed to help localities buy up foreclosed properties.
Hallelujah! Fauquier County is going after that money! Kristen Slawter has been working on this for the county and will be putting together a grant application of up to $2 million to buy properties in Remington and Bealeton.
I hope there's a lot of local support for this effort. There is an informational meeting being held at 6 p.m. on Wednesday, April 15th at 10 Hotel Street in Warrenton.
These homes would be rehabbed if necessary and then sold to local low or moderate income residents. There's a huge need for more affordable housing in the county. If we can get people homes and reduce the number of foreclosures I think we've got a win/win for everyone!
Apparently more and more banks are deciding some properties just don't have enough value to be worth the foreclosure process. When you consider that NAR (National Association of REALTORS) has estimated that the foreclosure process can cost a bank $60,000, properties at the low end of the market quickly become more trouble/expense than they're worth.
Of course, if you're a municipality with vacant, deteriorating homes where no one is paying any property taxes, you've got a big problem.
We haven't yet seen much of this in our area. Prince William would, perhaps have been most vulnerable to this with their high volume of low cost condos going into foreclosure. But the prices fell fast enough and demand jumped enough that the problem has been dodged.
There seems to be no chance of seeing this kind of thing in Fauquier or Rappahannock Counties. Culpeper does have some foreclosed townhouses selling below $100,000. But the numbers are very small and there seems to be enough demand in that price range to absorb what comes on the market.
I just got back from a class on short sales. Things keep changing and you have to try to keep up with the latest trends.
Here's the biggest take away as far as recent changes to the short sale process go.
Banks are much less inclined to forgive the debt on a short sale. This is particularly true of the second mortgage holder. And, they're willing to hold the deal hostage at the last minute in order to get their pound of flesh.
It brings up the question of whether a short sale, deed in lieu of foreclosure or foreclosure is better for the homeowner. And, I'm going to tell you that if you're a seller wondering that you shouldn't be asking me.
If you're not talking to an attorney who can protect your interests, with this much money at stake, I think you're making a mistake.
A couple of years ago, most debt was wiped out completely on a short sale. So, if you got one done then, be very, very glad!
The other take away is how difficult these things still are. I've seen press reports that they're getting easier, banks are getting more reasonable or smarter or more efficient. Don't believe it!
On a short sale, if you go from contract to settlement in anything less than 120 days, consider yourself lucky!
If you're a buyer you're going to have to weigh your ability to wait that long against the incredible deals that are available on short sales. The truth is that most buyers are deciding short sales won't work for them. That makes the deals better for those few willing to endure the pain of the process.
A smarter agent/blogger would no doubt have waited to write this blog. Emotions are still pretty raw.
I learned today that a house I have listed for sale in Fauquier has gone into foreclosure.
We've had this listed as a short sale for at least seven months. For slightly less than six months we've had an offer on the table, an offer very close to what the bank's own BPO came in at. We've been unable, despite daily phone calls, to get the bank to move forward with that offer.
In the interim, as the house has sat empty, it's been repeatedly vandalized. The first incident resulted in the theft of both heat pumps. The most recent theft involved copper plumbing and the water heater.
And, over these six months, property values have continued to decline.
The bank is now sitting on a property worth substantially less than the offer they had in their hands.
The owners will have a foreclosure on their credit record rather than the short sale that would have been less damaging.
The potential buyers have wasted all these months and so many hopes and dreams on a house they won't be buying any time soon.
I'm out many months of work for no compensation at all.
And, it didn't have to work this way.
This is the first short sale that I haven't been able to get to settlement. I'll admit to being angry as well as sad.
Would I take another short sale where this same bank held the note? Absolutely not! Will I be warning other agents about dealing with this particular bank? Of course!
If there are days I seem less than sympathetic to the losses being suffered by many financial institutions, here's a good reason why.
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