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Freddie Mac Road Show – Updates From The Field For Freddie Mac Short Sales

We were invited to attend the WinDS REO Conference in Las Vegas last month where I was one of the speakers.

One of the benefits we had was being updated by asset managers, HUD and banks. I have a list of the posts we wrote about REOs and the conference at the bottom of this post.

The Freddie Mac Road show was at the conference. Jason Root who is the director of the short sales for Freddie spoke to us about important updates and some facts about Freddie that are not really reported about.

Freddie Mac’s first goal is home ownership. They want people to stay in their homes if they can. Freddie Mac agrees that home ownership is good for the economy and good for families.

  • In 2010 Freddie Mac approved 38,000 short sales.
  • In 2011 it is projected that there will be a 20% to 25% increase in approved short sales.

We always say there are two sides to every story and also there is more to it than just approving a short sale.

After Freddie Mac gets a short sale package they will have an answer back to the servicer in 5 days or less.

This is of course, assuming that the short sale package is complete and has been thoroughly reviewed by the servicer and the MI company if there is one.

If the servicer is telling you that it takes 3 weeks to hear back from the investor and that investor is Freddie Mac, they are lying about it. Now, if it still has to go to the MI company then yes, it could take 2 to 3 weeks to hear back from the MI company. Freddie Mac’s turn around time is 5 days or less.

Freddie Mac wants to get short sales approved and does not want to foreclose if they can do a short sale. They understand that a short sale is better for the agents, the homeowners, the buyers, the neighborhood and the community than an REO property.

Now, if you are an agent and you submit a short sale package to the servicer don’t go calling up Freddie a day later asking if they have a package because that is NOT how the system works. Agents who do this are clogging up the system. Jason was telling us about an incident where he received a phone call from an irate agent who wanted to know if the short sale package she had sent in had been approved yet by Freddie Mac. She said that she had been calling they bank over and over again and they never returned her call back. When he asked her when did she submit this short sale package she said, ” I sent it to the bank this morning at 9 a.m. It is 4 p.m. now and I still have not heard anything from the bank telling me whether the short sale was approved or not.” Seriously!! Get some education on short sale processes if you are in this category.

The other calls that Freddie gets a lot of are agents who call up demanding to know what is going on with a short sale package only to find out from Freddie that the short sale is not a Freddie owned note at all but rather is owned by Fannie Mae. They are two separate entities. Make sure you know who the note owner is before you start calling. I guess this does not surprise me any more when we still get agents to this day who don’t know the difference between a short sale and a bank owned property.

Some servicers do have full delegation authority for Freddie mac files. Not all of them do.

To be approved for HAFA for a Freddie file- the borrower has to be 60 days delinquent on their mortgage.

However, to do a regular short sale the borrower does NOT have to be late on their payments. Write that down! The Borrower does NOT have to be late to do a short sale.

Freddie Mac does NOT waive rights to deficiencies however they DO NOT pursue judgments unless they discover FRAUD was involved in the transaction. That is right from the director of short sales, Jason Root.

If you go buy another house right after you do a short sale, Freddie is not going to come after you, according to Freddie Mac.

Freddie Mac will NOT interfere with your listing agreement.They will NOT reduce your commission. The maximum commission they allow is 6% and unfortunately this is also the case on very small sales.

Freddie Mac also does not refer borrowers to specific agents or agents with specific designations. We really like that. Freddie Mac says that the investor or the servicer DO NOT own the property and therefore the choice to do a short sale and the choice of agents is totally up to the borrower and they have no plans in interfering with that choice.

They understand that they are NOT a party to the contract.

Nestor and I brought up the fact that the servicers are the ones holding up the process and not doing things correctly.We also understand that there is a contractual fiduciary relationship between the servicer and the note owners/ investors. They have a signed contract so it is not as easy as just being able to fire a servicer for doing a poor job.

So Freddie Mac Road Show goes around the country to the servicers places of business and is training their negotiators how to do short sales. The servicers had to hire a lot more people but those people need to be trained. So Jason and about 9 or so other employees are taking a proactive approach and doing the training themselves.

Freddie Mac will pay out a maximum of 6% up to 10% of the second note to the second note holder. This is their policy for right now and there is no plan on changing that any time soon. They understand that this can create problems for the short sale closing however this is a moral hazard approach that they have chosen. The second is going to get nothing at a foreclosure sale.

This does not mean that you should call Freddie for every short sale where they own the note. Go through the servicer. Go to the  negotiators’ superiors, take it to the executive office and then as a last resort you can call Freddie at 1-800-FREDDIE.

Some servicers also are now being given full delegation authority to postpone foreclosures in behalf of Freddie Mac without having to go to Freddie for those requests and rulings.

Freddie Mac says they want to do short sales because:

  • Short sales help neighborhoods
  • REOs sell for 10 to 15% less than Short Sales
  • It helps borrowers save face and not face the embarrassment of a foreclosure
  • The borrower can go back and buy another home a lot sooner after a short sale
  • Short sales save the time to put an REO on the market
  • Short sales help customers, buyers, agents, investors who own the notes and the neighborhoods.

Jason said on behalf of Freddie that they appreciate the real estate broker and agent community, they look to the agents to solve problems and take short sale listings. Jason is a sincere person and we appreciate his time very much in giving us these Freddie Mac updates for short sales.

FHA Extends Missing Mortgage Payments To 12 Months

FHA is extending the unemployment benefit of allowing homeowners with FHA loans to go from missing from four months to twelve months to keep qualifying homeowners from losing their homes to foreclosure.

This is supposed to help a small group of homeowners who default on FHA loans which right now is about 3.500 homeowners per month who are unemployed while they try to find a job.
The administration came out to say that expanding this assistance will help the economy and that they hope that other lenders will follow their lead in allowing homeowners to miss up to 12 months of mortgage payments if they are unemployed.
Banking consultants are not hopeful that this program will expand beyond FHA except in certain situations. Their position is if a homeowner does not make their mortgage payments for a year, gets the extended relief for that year, what happens after they default after the 12 months? Who will take the loss?
Community activist groups are saying this is a way to break the link in America between losing your job and losing your home.

This is interesting because out of that 3,500 borrowers per month this could help– only a very small percentage of those people will be helped actually and out of those helped, most will default anyways. That is what the HAMP program is proving.

It is human nature to choose the path of least resistance.People how live in their homes without making house payments get used to using their money for other things besides housing. It is very hard for most people to start paying a mortgage payment after they have been living mortgage and rent free for a year. It also does not create the motivation to get back to work.

This is yet another program from the administration that is not even going to make a drop in the bucket. It will follow down the path of failure as did HAMP and HAFA. They don’t get it. Government is not a business and they don’t know how to run businesses or programs that actually benefit people. Instead they create more frustration.

Let the chips fall where they may and we would get through this mess much faster. All they are doing is prolonging the inevitable.

Wellington Short Sale Agents- Wellington Takes Action

The Village of Wellington and Royal Palm Beach have been meeting to discuss what to do about the foreclosures. While Wellington does not have that many bank owned properties for sale- that number is usually hovering around 50 at any given time that are available for sale- there have been about 300 homes that have been abandoned in our town of Wellington since 2008.  As Wellington short sale agents we are also concerned about our home values and property preservation.

Wellington has strong code enforcement rules and has continued to pass more so this forces the banks to make sure that the properties that they do own are taken care of. If the property is not on the market and is still in the bank’s ownership, what we call a Wellington REO, the bank must keep the lawns mowed, bushes trimmed, secure the property and more. Once the property is put on the market, the listing REO broker is responsible to keep the home maintained.

If you live in Wellington and know of a home in your neighborhood that has been abandonedplease let us know  or you can call the Village of Wellington code compliance and they will make sure the necessary steps are taken so you don’t have an eye sore in your neighborhood.

The Village of Wellington will help take care of the homes. The goal is to make it look like someone is still living there. The Village of Wellington also buys the worst of the homes, makes the necessary improvements and then puts them back on the market to sell. This is of course taking a risk but one that is worth taking for the betterment of our community. Wellington is a beautiful home town that is very desirable to live in. We all want to keep it that way.

Mortgage Defaulters Get More Access To Loans

Homeowners who have defaulted on their mortgage loans are getting loans again. The chief economist of the American Bankers Association says that banks are extending credit to those with serious blemishes on their credit. They are saying that borrowers who are current and pay all of their bills on time, their car payments on time and any other loans on time but that have defaulted on their mortgages are some of the “most attractive” candidates for the new loans.

From February 2009 to about August 2011 over 64,000 people who defaulted on their mortgages received consumer loans. This is according to TransUnion. Most of these consumers got credit cards but a lot of them got car loans. In fact, about 40% of the defaulted homeowners were given car loans, personal loans and line of credits.

The lenders believe that those who have defaulted on their mortgages and yet are current on their other obligations are a good credit risk because the housing bust put these borrowers into a situation they did not want to be in but were forced into by the market. The lenders take in many factors when deciding to give a loan so each situation is different.

But past homeowners seeking to get credit need to understand that they will be charged with higher rates and that getting credit is not always a good thing. It can become another trap. The average credit card interest rate is about 15% but for those who have defaulted on their mortgages the interest rate they are paying is 20% to 25% ! Wow, now that is high interest. Takes me back to the early 80’s! Getting a car loan if you have excellent credit can be as low as 4% but if you have a mortgage default that same car loan to you is going to be as high as 19%! Maybe consumers in that position should save their money and buy a car with cash.

Don’t wait until it is too late to call your Florida Short Sale agents-Nestor and Katerina Gasset at 561-753-0135. Authors of Short Sales Success. 
When it comes time to list your home as a short sale- don’t take our word for it, listen and read what our Florida Short sale sellers say about our services.
Don’t let time slip away. Take action today. Call your Wellington Short Sale Agents– Nestor Gasset and Katerina Gasset at 561-753-0135 to find out about your foreclosure options.
*Seek competent legal counsel and tax advice for any real estate transaction. International Properties and Investments , Inc. is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.*

Title Insurer Liquidation Bill Passes In Florida

Title Insurer Liquidation Bill HB 1007 passed the Florida Senate joined with the Florida House Of Representatives jointly. It was unanimous.

This bill contains operating rules that were recommended by the Florida BAR , the FLTA and the RPPTL.
Miami- based National Title Insurance company was placed in state receivership when they financially crashed during the housing bust. The company’s reserves are running out. The current state law would require that once the money is all gone out of reserves to pay outstanding claims and admin costs that they would have to terminate their title insurance policies leaving policy holders with no title insurance.
This bill that just passed, HB 1007- changes this law. This new law states that all of the title insurance policies from National Title will stay in effect forever. But you can not create such protection when there is no money to cover the claims and costs to administer the claims. We don’t have state income tax so there is no till to get into other than documentary stamp taxes on deeds.
So the new law requires an assessment of each title insurer on a market share basis to cover the cost. The assessments aer limted. In any one year it is 3% and 10% over 5 years. These assessments will be carried out through adding it to HUD 1 Settlement statements on new policies moving forward. They are going to be a separate government assessment and NOT added into line 1101 on the HUD.
This assessment is to be collected by each closing agent and sent to the title underwriter within 60 days after closing. 
We don’t know what the final amount is exactly going to be on the HUD1 Settlement statement but we will let you know as soon as we know.
Title companies are not to start collecting this fee until they are told by the state what that fee is going to be. 
The bill is now on the Governor’s desk for his signature.
When it comes time to list your home as a short sale- don’t take our word for it, listen and read what our Wellington Short sale sellers say about our services.
Don’t let time slip away. Take action today. Call your Wellington Short Sale Agents– Nestor Gasset and Katerina Gasset at 561-753-0135 to find out about your foreclosure options. 
*Seek competent legal counsel and tax advice for any real estate transaction. International Properties and Investments , Inc. is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.*