California Association of Realtors launched a new Short Sales website with a section specifically for Consumers.  http://www.shortsalescalifornia.org/consumers/

An important message from the CALIFORNIA ASSOCIATION OF REALTORS®:

I write on behalf of the CALIFORNIA ASSOCIATION OF REALTORS®, whose 170,000 members continue to witness the devastating consequences the home foreclosure crisis is having on California’s families, neighborhoods, and communities on a daily basis.

The number of families affected by foreclosure is staggering.  During the past three years, more than 640,000 Californians have lost their homes.  With the number of homeowners who owe more than their home is worth hovering at 30 percent, experts predict there will be many more foreclosures in 2011 and 2012.  Unless we take immediate, aggressive action to assist these homeowners, any meaningful recovery in the housing market and overall economy will continue to be delayed.

Tragically, only a fraction of those who face foreclosure will remain in their homes when all is said and done.  Those whose incomes and financial circumstances meet strict guidelines may qualify for a loan modification that will reduce their monthly payment to more affordable levels.   Yet the federal Home Affordable Modification Program (HAMP) is expected to prevent only 700,000 to 800,000 foreclosures nationwide before it expires at the end of 2012, and the program does little to help those homeowners who are unemployed or otherwise no longer able to meet their financial commitments.  Their last hope is to sell their home, which often means convincing their lender or the investor who “owns” the loan (and, in many cases, the holder of a second mortgage lien and the mortgage insurer) to accept a “short sale.”

With a short sale, homeowners with a proven hardship negotiate an agreement to sell their home for less than the balance owed.  Although not every homeowner or mortgage is eligible, those who are able to finalize a short sale avoid a foreclosure on their credit record and can move on with their lives.  Last year, 20 percent of home sales in our state involved short sales.

Short sales can play an important role in our state’s economic recovery by accelerating the pace of home sales and reducing the inventory of bank-owned homes on the market.  There are other benefits as well.  Homebuyers who can qualify for a mortgage at today’s low interest rates also are able to purchase a home at below-market prices.  Banks get a nonperforming asset off their books and avoid the headaches associated with disposing of assets they don’t want to own in the first place.  Neighborhoods have fewer abandoned homes, and local businesses have more customers with money to spend.

Unfortunately, many homeowners are unable to successfully negotiate a short sale.  According to a recent survey of 2,150 California REALTORS® who have assisted clients with a short sale, only three out of five transactions closed – even when there was an interested and qualified buyer.

What’s the problem?  For one, no two mortgage agreements are the same, so it can be difficult to standardize short sale processes and procedures.  Many homeowners have second mortgages, which further complicate matters.  Then there’s the challenge of convincing multiple parties to take a financial loss or, in the case of loan servicers, to forego fees they otherwise might earn during the course of the foreclosure process.  Poor and slow service by many banks and servicers has only exacerbated the problem.  Horror stories abound from potential homebuyers and REALTORS® forced to wait 90 or more days for a response to a purchase offer or being required to fax short sale applications or other paperwork as many as 50 times.   These delays discourage potential homebuyers from considering a short sale purchase and undermine the process for those who short sales are intended to benefit – the hundreds of thousands of families facing foreclosure.

Increasing the number of closed short sales by speeding up and streamlining the short sale process is one important way we can help California families avoid foreclosure and move our economy closer to recovery. That’s why the California Association of REALTORS® is taking steps to enable more families to arrange a short sale.  Recently, we advocated for improvements to short sale guidelines established under the federal Home Affordable Foreclosure Alternative (HAFA) program.  We’re meeting with major banks, U.S. Treasury officials, government-sponsored entities (including Fannie Mae and Freddie Mac), and others to urge them to standardize processes, comply with federal guidelines, improve communication with other stakeholders and increase staffing with the goal of eliminating service issues.  We’ve also offered our members training in every aspect of the short sale process so they can assist their clients.

But we can’t do it alone.  That’s why we’re focusing the spotlight on short sales and calling on regulators, elected officials, nonprofits, business organizations, companies, and individuals with a stake in California’s economic future to resolve this issue and others that get in the way of a recovery.   It won’t be easy, and some compromises will be required.  The important thing is that we need to act today.  Our families and our communities can’t wait any longer.

Sincerely,

Beth L. Peerce
President
CALIFORNIA ASSOCIATION OF REALTORS®

Bank of America is continuing its commitment to help more homeowners and work with agents through the short sale process. We received the following message about a new program they’re testing to streamline and incentivize short sales – similar to the HAFA program. This small initial push will make way for assessments of a larger-scale rollout. Bank of America knows the value of working with agents, especially CDPEs, in providing solutions to distressed homeowners.

Bank of America is committed to helping homeowners avoid foreclosure. As most of our partners are aware we have been diligently working to develop alternative short sale programs to solve some of the fundamental issues inherent in the traditional short sale process. Prior to rolling out the government’s Home Affordable Foreclosure Alternatives (HAFA) Short Sale program in April we’d begun a pilot program we refer to as a Cooperative Short Sale. It is structured similarly to HAFA in that we work with the homeowner and agent prior to marketing the property to gain agreement on the terms of the short sale so that once an offer is received the approval is streamlined. The objective is to utilize this program for customers that do not qualify or fallout of the HAFA program. HAFA is always considered first and no HAFA eligible loans will be included in the program.

The Cooperative Short Sale program is still being developed and tested. Under the current pilot we are proactively reaching out to homeowners who have been pre-screened to meet specific eligibility requirements. Examples of the eligibility requirements include asset reviews, no second liens or MI on the loan, and participating investors. Based on our pre-review, these customers may have limited documentation required for the program. We have other versions of the program for customers who fall into segments that may require more documentation. This very limited population of customers is notified via letter if they have been selected for inclusion in any test programs. Additionally, various execution methods have been used during testing including 3rd party organizations and internal teams handling all communications. Note that although these methods are useful to quickly roll out a small pilot they are not always feasible for full scale roll out.

Other similarities of the pilot program to HAFA include:

• We will work with the customer prior to listing the home to help establish the listing price using a valuation to determine fair market value.
• We will ask that the property be actively marketed for 120 days. If it does not sell in that time, we will consider a deed-in-lieu of foreclosure to satisfy the mortgage.
• Since the appraisal and qualifications are completed upfront, short sale approval will take less than two weeks to complete.

Results from the pilots will be used to design the upcoming expansion of the program. Announcements will be made when we expand this program beyond the pilot and will outline details of the program.

Thank you for your continued support of distressed homeowners as we all work together to help make short sales a more positive experience for homeowners, home buyers, and the agents that support them.

Bank of America Home Loans

Sales of homes for less than the amount of their outstanding mortgage debt have tripled since 2008, particularly in California and the Sunbelt, according to a report released Tuesday.

Known as short sales, the increasingly common transactions for financially troubled homeowners are projected to balloon to 400,000 in 2010, according to Core Logic, a Santa Ana company that provides services to the real estate and mortgage markets. By comparison, existing homes sold at a seasonally adjusted annual rate of 5.37 million units in June, according to the National Assn. of Realtors.