Strategic Realty

solutions for real estate

Certified Distressed Property Expert

By

Our office has recently obtained the Certified Distressed Property Expert Certification. A Certified Distressed Property Expert® (CDPE) is a real estate professional with specific understanding of the complex issues confront the real estate industry, and the foreclosure avoidance options available to homeowners. Through the comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales.

The current U.S. housing market has caused untold stress and heartache for many American families. Foreclosure is one of the most devastating financial challenges that a family can face and one of the many that can be avoided. The options available for foreclosure are many. The following is a brief explanation of all these solutions, including their benefits and drawbacks.

Reinstatement

A reinstatement is the simplest solution for a foreclosure, however it is often the most difficult. The homeownersimply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender’s approval and will ‘reinstate’ a mortgage up to the day before the final foreclosure sale.

  • Benefit: Does not require the mortgage company or lender’s approval.
  • Drawback: Requires that a homeowner be able to pay all back payments, fines, and fees.

Forbearance or Repayment Plan

A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

  • Benefit: Allows the homeowner to catch up on payments over time.
  • Drawback: Requires that a homeowner be in a financial position to pay not only their current mortgage, but also a portion of the back payments owed. Some mortgage companies will require a homeowner to ‘qualify’ for forbearance.

Mortgage Modification

A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage.

  • Benefit: Reduces the payment a homeowner is required to make on a monthly basis and may reduce the principal balance of the loan.
  • Drawback: Requires that a homeowner ‘qualify’ for the new payment and will often require full documentation. Lender has to be actively pursuing modifications.

Rent the Property

A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, is able to convert their property to a rental and use the rental income to pay the mortgage.

  • Benefit: Allows homeowner to keep property indefinitely.
  • Drawback: The issues that can arise with a rental property are many, and rent often does not cover the full cost of property ownership and maintenance.

Deed-in-Lieu of Foreclosure

Also known as a ‘friendly foreclosure’, a deed-in-lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property.

  • Benefit: Many times in a successful deed in lieu, the lender will forego their right to a deficiency judgment.
  • Drawback: Requires that a homeowner vacate the property, and a deed-in-lieu may be reported to credit bureaus as a foreclosure.

Bankruptcy

Many have considered and marketed bankruptcy as a ‘foreclosure solution,’ but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.

  • Benefit: Does not require lender approval.
  • Drawback: If a homeowner cannot afford their mortgage payment, a bankruptcy will only stall—not stop—the foreclosure process. Bankruptcy can be costly, is damaging to credit scores, and can only be declared once every seven years.

Refinance

If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.

  • Benefit: In some cases, this will lower payments.
  • Drawback: In today’s market, a refinance will almost always raise mortgage payments, and is an expensive process.

Servicemembers Civil Relief Act (military personnel only)

If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Servicemembers Civil Relief Act. The American Bar Association has a network of attorneys that will work with servicemembers in relation to qualifying for this relief.

  • Benefit: If qualified, this will lower payments on all consumer debt in addition to mortgage payments.
  • Drawback: Must be active military to qualify.

Sell the Property

Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.

  • Benefit: Allows homeowner to avoid foreclosure and harvest some of their equity.
  • Drawback: In many cases today, homeowners do not have sufficient equity to sell their property without negotiating a short sale (see next solution).

Short Sale

If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.

  • Benefit: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. This also keeps foreclosure off the individual’s public record, and in many cases will allow the homeowner to avoid a deficiency judgment. Borrower may qualify for another mortgage in as little as 24 months (as opposed to five years for a foreclosure).
  • Drawback: Short sales can be a trying process in which a homeowner is best served by contracting with a qualified real estate agent to guide the way. 

This represents only a summary of some of the solutions available to homeowners facing foreclosure. Please call me today for a free confidential evaluation of your individual situation, property value, and possible options. If you or anyone you know if at risk of foreclosure please fill out this short form and we will be in touch with you as quickly as possible.

Foreclosure Notices Drop in Deschutes County

By

Reported in the Bend Bulletin this morning, Notice of Defaults (the official notice that your bank sends you when you are not making your payment, and they’ve, frankly, grown tired of waiting on you) were about half last month of what they were in September 2010.  This notice initiates the foreclosure process for the lender.  From our experience, this is when most homeowners consider foreclosure alternatives.  One of the most common methods of avoiding foreclosure is a short sale.

It’s hard to say what this means for a market. It is not necessarily saying that people are now making their payments. We’ve seen some banks allow people to stay in their homes for well over a year before serving them with an NOD. We speculate that receiving an NOD has as much to do with internal bank processes as it has with the lack of a payment.

G-Mac: Central Oregon Real Estate Challenges of Today’s Housing Market

By

Okay, been awhile since I posted, but better late than never. I recently completed a short sale on a Central  Oregon home with G-Mac (for those of you who don’t know who I am referring to, you have to read beyond the dash). My client was looking to avoid foreclosure and the nasty potential deficiency judgment, and hired us as her real estate agent for this short sale.  This was a beauty. Here’s the scenario: Single family town house for sale in a resort community, 2 loans (both with the aforementioned lender), the first loan was $80k over list and the second added another $60k or so to the excitement. We had a lowball offer come in around give-me-a-break avenue and sent them walking with a counter near market value. Armed with a pre-approved price $5k under our advertised price, we received an offer right at list price. It was clean, all cash, no contingencies, and a great broker on the other end. Begin rant.

Over the course of the short sale debacle, one lender began to use a system called equator. Because the lender was so crappy at working short sales, inefficient in every way, and quite possibly the worst company to deal with, other lenders jumped on the technological breakthrough known as equator (they named it this because its halfway between the coal engine and the model T). In a nutshell, you log into the system, read your tasks from the faceless (and often brainless) negotiator and complete them. You upload all of the appropriate documents needed for a short sale and then wait for the next task. It is so efficient that if you upload documents with an underscore in the document name, it rejects them and won’t let you complete the task. One word: A.w.e.s.o.m.e
(translation:
Awful.
Worthless
Even
Sh*^#y
Overall
Menacing
Equator)

I’ll spare you the rest of the nightmares accompanying what appears to be an ms-dos based website more cumbersome than a bulldozer strapped to a 747 at takeoff.

So after I rename all of the documents and completely ruin every bit of systematic nomenclature I created to keep my files organized, I upload the required items, fill in the crossword puzzle, pin the tail on the donkey, and complete all of the tasks…for the first loan. I then call in to make sure the 2nd lien (with the same servicing company) is starting their evaluation of the short sale and the lender tells me they don’t show the loan as belonging to them. I call back 2 more times (overcome chromosomal issues by using best out of three) and they finally admit the bad loan is theirs. After 20 minutes on the phone, the negotiator sends me to equator to upload the same documents. Now I have 2 identically named property files in the equator system asking for the same things with different negotiatiors. Again, efficiency is why we are making so much progress on the war against banks. I call the 2nd lender back after upload and ask them if the current negotiator for the first loan will eventually handle the 2nd loan also. Nope. “Well, sir, these are 2 completely different loans and will need to be handled separately”. Sweet.

Time goes on and on and on and the 1st loan is telling me the investor is reviewing the file and we should know something soon (to her credit, she was responsive and kind). The next day, I receive an email from the equator system saying the short sale is approved. I login to dinosaur.com/brutal and see I have new messages. I click on the first file titled: 111 NW Any St and look for the approval message. Wrong loan. I hit the back button and click on the other file titled: 111 NW Any St and look for the approval message. I see the approval message with an attachment and still have no idea which loan is which (a lot like trying to distinguish between good superman and bad superman without knowledge of what either one looks like), open the attachment, cross reference the loan number after sorting through the renamed unorganized file system imposed by mr. awesome, and I discover we have approval on the 2nd lien. I call the 2nd loan negotiator and thank him. Then I ask if he can help me with the 1st. Expecting the same response given over the previous 28 days “I’m sorry sir, these are 2 completely different train wrecks” and some version of I can neither confirm nor deny, the guy tells me yes. WHAT? What is this, hotel California? I said great, thanked him again, hung up, and looked around for the wicked witch of the west, a tornado, Toto, something that would prove I was living an alternate reality and the response was merely a figment of my imagination. Nope. No tornado, no red shoes, no Auntie Em. Delighted I wouldn’t have to call a shrink or check into a mental ward for hallucinations, I closed equator and waited for approval from the first (cue finally Jeopardy theme song).

A few days go by and the 2nd loan negotiator calls me and asks if I have approval from the first (quick glance out the window for the Scarecrow). “No” I said. He takes a few seconds and says “Okay, I see it here in the system. You should have it this afternoon.” Rather than get hysterically upset with the guy, I thank him and hang up. And in the afternoon I received the approval from the first. I called the title company first and made sure they updated the title report for a 4 day closing (including the weekend) and then called the buyer’s agent and shared the great news. She was excited, called her buyer, I sent the addendum releasing the short sale contingency, and we closed and recorded four days later. Another one under the belt.

Chapter II

I call escrow to confirm that the final closing statement had been sent to the 2-faced lender with the same name. It was confirmed. 3 days later I recieve a call from Mr. Wonderful, the negotiator for the 2nd loan, and he asks if we’ve closed. I said yes and told him the documents and the funds were sent 3 days prior. He says cool and thanks me (confusing). A week goes by and I get another phone call from him: “We closed right?”, he says. I spared him the smart-ass comment of “No duh!” and answered yes. He then asked if I could email him the final closing statement. So, I did.

Three more days go by. I receive an email from G-Mac with “Urgent:Your short sale is in jeapordy of being cancelled and funds being sent back to escrow”. Frantically, I log into to stonage_software.brutal and click on secret link #1…no message. Back button, click on secret link #1 (really #2, but who knows) and see a new task. Best part, the task was added the day before with no notice, no email, no anything. I upload the final hud1 to the equator system, re-enter the information they already have (2 copies in the two files) including the final sales price, net to bank, borrower’s favorite color, and all of the other information contained in the pdf I just uploaded (after removing the underscores). Being that this was the day before the approval expired, I emailed both negotiators to make sure they received the file they needed. No response. “Honey?” I call downstairs to my wife, “Did you deposit the commission check from the NW Any St deal?” “Yes.” she says. “Why?” she asks. “Oh, no reason. Just curious. I love you!” I log off of the system to keep the zombies from crawling out of the depths of equator, place my head on the cold glass desk, and shake my head. What a frickin’ joke. End of Rant.

How to beat a bank in 5 days: Final Chapter

By

How to Beat a Bank in 5 days: Conclusion

This is the final part to a multi-episode, written depiction of a real life short sale.

It’s been awhile since I last updated this story, partly because we were working the short sale and partly because the outcome was so brutal. After much waiting, I beat the loan servicing company (which was amazing given the fact that the negotiator was the single most unpleasant person I have ever talked to), then I beat Fannie Mae and they approved the file, and then (cue ominous music)……the mortgage insurance company said they won’t agree to the sale unless the borrower signed a $25,000 note payable at approximately $350/month. One word (no, it’s not that word). Awesome.

I tried to get them to settle for less, to give a cash option, etc., because maybe, just maybe, the buyer would be willing to contribute to make the deal happen or we could find another solution. Just to summarize, 1) The seller couldn’t make their mortgage payment because they didn’t have the money 2) they had to uproot their family from a home they loved because they didn’t have the money 3) They couldn’t sell because the house was worth about ½ as much as they paid and they didn’t have the money to sell and make up the difference. So logically, the MI company realizing how much money the seller had (clearly defined above in the summary…ZERO), decided their portion of zero is $25k.

Needless to say, the deal fell apart and another foreclosure hit the market. To further illustrate the incompetence, we had an offer about $35k higher than the valuations the bank and previously mentioned idiots had in their possession, the mortgage insurance company still has to pay the bank the same amount, the buyer didn’t get the house, the brokers didn’t get paid, and Fannie Mae added to their ever-increasing property tax bill for Deschutes County. Oh and by the way, when the property came back on the market, the list price was $10,000 less than our offer.

Moral of the story: The banks, Fannie Mae, and mortgage insurance companies don’t care about the borrowers. They accept zero responsibility for their lending standards and practices and blame everything on the homeowners. Good news for them though, Uncle Sam will continue to fund their massacre of the people who are trying to do the right thing. I’m sick of it and my heart goes out to those who are dealing with this. End of rant.

Other parts of this series:

Part I:  https://movetobend.com/how-to-beat-a-bank-in-5-days-part-i/

Part II:  https://movetobend.com/how-to-beat-a-bank-in-5-days-part-ii/

Part III: https://movetobend.com/how-to-beat-a-bank-in-5-days-part-iii/

Final Chapter: https://movetobend.com/how-to-beat-a-bank-in-5-days-final-chapter/

 

How to beat a bank in 5 days: Part III

By

How to beat a bank in 5 days:  Part III

This is the 3rd part to a multi-episode, written depiction of a real life short sale.

Part I:  https://movetobend.com/how-to-beat-a-bank-in-5-days-part-i/

Part II:  https://movetobend.com/how-to-beat-a-bank-in-5-days-part-ii/

 

Note from the author (me):  Short sales and the rules and regulations banks try (and butcher) are changing every day.  Even though I try to keep things as recent as possible, for the protection of those involved, some of the events in my posts may not reflect “current events”.  Therefore, you should consult with the proper professionals when dealing with your short sale.  Now for the rest of the story…

Day 5

I awoke to the alarm clock blaring “Buffalo Soldier” by Bob Marley at around 5:30am (it is my current ringtone and therefore tends to strike me as an important call…and I fall for it every day).  So after about 3 verses, I slowly turn over and check the time.  5:30am…Sweet!  I can’t believe I’m awake.  Being that I am always trying to wake up early, the enthusiasm is understandable.  I flop my head back on my pillow thankful to be awake, and fall back asleep.  The snooze function is great.  It continues to disrupt my sleep for the next 2 hours.  Finally, I wake up (and actually get out of bed).

Shit!  I haven’t heard from the bank yet!  The foreclosure sale is in 3 ½ hours.

At this point in the game, I can’t really do much except for wait.  So…. I dial the bank and try desperately to get an update.  I beg and plead to speak to the wonderful woman who is paramount in our success to date, but can’t get her.  Another woman answers the phone and I ask for superwoman instead.  “She’s on the other line” the woman politely informs me.  “Uhhhh, can I hold?”  After hours of being on hold on nearly every short sale transaction (not by my choice), I could barely believe I asked such a ridiculous question.  Apparently, I wasn’t the only one.

“She is helping another customer…but there may be something I can help you with” she said in the most helpful tone imaginable.  She’s cheating on me.  That was my first thought, but then I came to the reality that the bank has thousands of customers and I would have to settle for her wingwoman (I officially coined that term after writing this).

“Well” I said, rather dejectedly.  “She knows the whole scoop on this file (and is quite possibly my favorite person in the banking industry), but I’ll give it a shot.  The property address is…” The woman interrupts and finishes the street name, city and zip code!  I was famous!

“Yes, I see here that the auction has been postponed.”  I wanted to blurt out “my favorite color is red, I’m a Libra and the account # is xxx-yyy-xyxy (it’s a habit)”.  But I stuttered “It, it is extended?  It’s been postponed? For how long?”

“Looks like until…about 5 days from today.” She responded.

All I can say is that I am very glad weren’t on a video chat.  Although dancing on a glass table in a bathrobe seems to be cool, I doubt she would have thought so.  I turned down the “I’ve got the power” background music, dismounted from the desk, and unmuted my phone.

“Thank you” I said.  She replied with “You’re welcome, Sir.” (Clearly we were not on a webcam because she would have known my age and that “sir” was not appropriate).

“Anything else I can help you with at this time?”

“No, ma’am, this is wonderful news.  Thank you very much; you have made my whole day.”

“Thank you for calling Bankland and you have a nice day, Sir.”

Once I made sure the call was completely ended, I clapped my hands 4 times and gave a little “whoop, whoop!”  (Alright, it was more than little, but hey, I was stoked).

Previous experience taught me that banks don’t always tell you what the actual situation is, so I headed for the courthouse to make sure the information I received was accurate.  After impatiently waiting for 17.8 minutes, the gentleman handling the sale strolled in fashionably late.  He was a pleasant man with a ball cap on and spectacles, sort of reminded me of St. Nick.  The one auctioneer saw him arrive and stopped his operation to tell me this was the gentleman I needed to ask about the status of my clients’ sale date.

“Property address?” the kind man asked in a very sincere and caring tone.

“”123 Main Street.”

His response did not match the news I received from the bank.  It was better!

“Postponed for 7 days.”  He declared.  I couldn’t hold back the smile.

“Thank you, Sir.  Thank you.  I cannot tell you how happy I am to hear you say that.”

With a warm smile and “relax kid, you’re okay” tone, he said “Have a wonderful day”.

“You too.  You too.” I said and shook his hand.

I managed not to do a cart-wheel down the courthouse steps (thank goodness, I’m getting older and the successful dismount from the desk earlier in the day was the 1 in 20 successful moves for the week and the outcome would have been disastrous).  I immediately sent a text to my client and called my best friend and principal broker.

“Guess what dude? (Long dramatic pause)  I got the auction bumped until a week from now”.

End of rant.

 

Other parts of this series:

Part I:  https://movetobend.com/how-to-beat-a-bank-in-5-days-part-i/

Part II:  https://movetobend.com/how-to-beat-a-bank-in-5-days-part-ii/

Part III: https://movetobend.com/how-to-beat-a-bank-in-5-days-part-iii/

Final Chapter: https://movetobend.com/how-to-beat-a-bank-in-5-days-final-chapter/

 

 

let us help

No matter what you’re trying to accomplish with real estate, we’re here to help. Let’s start with a real estate conversation. Let us know how I can help.

We help you find your dream home

Office Location

We're conveniently located near the center of Bend, Oregon, in downtown. Stop by our full service brokerage and let us help take some of the mystery about of the buying and selling process.

New Office Location
325 NW Vermont St., #107
Bend, OR 97703

See Location

Follow Us