Dear friends,
If you know anyone who may need to do a short sale on an owner-occupied house,
please have them contact me. The federal government has a new program
starting April 5, 2010 that should speed up the process and remove some of the shortcomings of the past. This program works best when there is one mortgage or where the second is with the same lender/servicer.
More info is available at:
http://www.realtor.org/government_affairs/short_sales_hafa
Feel free to Call House with any questions - 702-285-4226
It is hoped that this program will improve the short sale success record which remains poor. As of today, MLS reports 11824 short sales either for sale or in contract. In the past 30 days (1/23 to 2/23/2010) 541 actually closed. That amounts to 4.58 percent! Still not good.
The reason may be that when a short sale closed, the SERVICER takes the loss. Under the new HAFA program, the LENDER takes the loss, as I understand it. That may change things.
We are now certified with Bank of America's Equator program (The Great Seal is attached to this blog)and are
becoming well versed with short sales in general and Hafa in particular.
I look forward to hearing from you.
We appreciate your referrals.
Truly,
Grant
Tuesday, February 23, 2010
Wednesday, February 10, 2010
Banks, Real Estate Commissions, & The RICO Act - it's just a question
Q: Does routine forced reduction of Realtor short sale commissions by Banks
amount to a form of extortion that falls under the RICO ACT?
Suppose we have a small group of powerful bosses whose names, by
coincidence, all end in a vowel (Fargo, Chase, B of A, etc).
They target a small class of defenseless business people (Realtors) in a
very distressed neighborhood (Las Vegas, or your home town).
These people already owe the bosses a lot of money (on 1st and 2nd mortgages & HELOCS), so the bosses proceed to syphon off half of their business (REO listings = the
majority of closed transactions each month) and give that business only to
those who the bosses directly control (A very small group of
REO listing agents. Bank of America recently said they added only 3 realtors
to their REO approved list in 2009 IN THE ENTIRE U.S. and NONE in NV; to
get on the list one needs a year's experience in REO sales; tough to do if
you don't already have REO listings. Didn't our tax money bail them out? Shouldn't they spread these real estate jobs around a little? Why, no! That would be ... inconvenient.)
The bosses further squeeze the business people's income on what is left (By reducing short sale commissions by 25-33% routinely and often refusing to
approve the final HUD 1 closing statement unless "someone," usually the Realtor, agrees
to pay for additional items on the HUD per bank demands at the 11th hour) and they keep it for themselves. The bosses have the peoples' main industry (real estate) by the throat (Banks control REO sales, approve all short sales, and loan the money to any non-cash buyers).
When, due to declining income, the business people (Realtors) can't pay back their
loans, the bosses take their houses and sell them at current discount
prices (in Las Vegas, Feb 2010 avg price is roughly 80% below Feb 2006). The business men lose whatever equity they paid down (5 to 20% at 2006 prices) and the bosses keep that for themselves, too. And then they come after the people for the deficiency at the old inflated prices, demanding payment despite the fact that the bosses have intentionally damaged their ability to pay. (Q: Didn't the bank make an implied promise under Equity Law NOT to damage their barrowers ability to repay the loan?)
This "routine reduction" applies to hundreds of short sale transactions each month in Las Vegas alone. When Realtor income is down by 60-75% already, it feels like a systematic shake down. The bank is not actually a party to the short sale contract - it is
merely a beneficiary of the closing. The Realtor can't say no to a commission reduction without losing his entire commission. If he refuses, the bank has a "gun to the head" of the transaction. If the transaction does not close, the bank gets the property anyway via foreclosure. If the Realtor stands up for his rights, he may breach of his fiduciary duty to his client. The bank order is an offer he can't refuse because of FEAR of greater loss.
The commssion is reduced by an order called a "short sale approval" that arrives on
bank letterhead, signed by a bank officer, and 100% of that amount is retained by the bank. For the Realtor, it's death by a thousand cuts.
To make the math easy, let's suppose a Commission of 6% (split between listing and selling agent) on a $100,000 short sale house is reduced by a bank to 4% = a $2000 reduction.
Multiply this by 569 Las Vegas short sale transactions in January, 2010 = $1,380,000 in additional bank profits in one month. At this rate, the 4822 short sales closed in Las vegas in the past 12 months = roughly $9.6 Million in lost Realtor income in Las Vegas alone, all taken from the people who can least afford it. The average price per residence was actually $140,000 for the same period, so the $ amount is probably considerably higher. Multiply this by every city across the country and you know where the bank CEO bonuses come from. (GLVAR data)
It's a lot of money. Tony Soprano would be proud.
amount to a form of extortion that falls under the RICO ACT?
Suppose we have a small group of powerful bosses whose names, by
coincidence, all end in a vowel (Fargo, Chase, B of A, etc).
They target a small class of defenseless business people (Realtors) in a
very distressed neighborhood (Las Vegas, or your home town).
These people already owe the bosses a lot of money (on 1st and 2nd mortgages & HELOCS), so the bosses proceed to syphon off half of their business (REO listings = the
majority of closed transactions each month) and give that business only to
those who the bosses directly control (A very small group of
REO listing agents. Bank of America recently said they added only 3 realtors
to their REO approved list in 2009 IN THE ENTIRE U.S. and NONE in NV; to
get on the list one needs a year's experience in REO sales; tough to do if
you don't already have REO listings. Didn't our tax money bail them out? Shouldn't they spread these real estate jobs around a little? Why, no! That would be ... inconvenient.)
The bosses further squeeze the business people's income on what is left (By reducing short sale commissions by 25-33% routinely and often refusing to
approve the final HUD 1 closing statement unless "someone," usually the Realtor, agrees
to pay for additional items on the HUD per bank demands at the 11th hour) and they keep it for themselves. The bosses have the peoples' main industry (real estate) by the throat (Banks control REO sales, approve all short sales, and loan the money to any non-cash buyers).
When, due to declining income, the business people (Realtors) can't pay back their
loans, the bosses take their houses and sell them at current discount
prices (in Las Vegas, Feb 2010 avg price is roughly 80% below Feb 2006). The business men lose whatever equity they paid down (5 to 20% at 2006 prices) and the bosses keep that for themselves, too. And then they come after the people for the deficiency at the old inflated prices, demanding payment despite the fact that the bosses have intentionally damaged their ability to pay. (Q: Didn't the bank make an implied promise under Equity Law NOT to damage their barrowers ability to repay the loan?)
This "routine reduction" applies to hundreds of short sale transactions each month in Las Vegas alone. When Realtor income is down by 60-75% already, it feels like a systematic shake down. The bank is not actually a party to the short sale contract - it is
merely a beneficiary of the closing. The Realtor can't say no to a commission reduction without losing his entire commission. If he refuses, the bank has a "gun to the head" of the transaction. If the transaction does not close, the bank gets the property anyway via foreclosure. If the Realtor stands up for his rights, he may breach of his fiduciary duty to his client. The bank order is an offer he can't refuse because of FEAR of greater loss.
The commssion is reduced by an order called a "short sale approval" that arrives on
bank letterhead, signed by a bank officer, and 100% of that amount is retained by the bank. For the Realtor, it's death by a thousand cuts.
To make the math easy, let's suppose a Commission of 6% (split between listing and selling agent) on a $100,000 short sale house is reduced by a bank to 4% = a $2000 reduction.
Multiply this by 569 Las Vegas short sale transactions in January, 2010 = $1,380,000 in additional bank profits in one month. At this rate, the 4822 short sales closed in Las vegas in the past 12 months = roughly $9.6 Million in lost Realtor income in Las Vegas alone, all taken from the people who can least afford it. The average price per residence was actually $140,000 for the same period, so the $ amount is probably considerably higher. Multiply this by every city across the country and you know where the bank CEO bonuses come from. (GLVAR data)
It's a lot of money. Tony Soprano would be proud.
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