Tip 4-2012: Fannie Mae (Short Sales vs. Foreclosures - Part 1)

Fannie Mae:  Short Sales vs. Foreclosures—Part 1

Fannie Mae as an investor owns more and more troubled loans.  As the investor, Fannie Mae is “calling the shots” whether a property can be sold as a short sale or is going to foreclosure.  Their public policy statement on their website states Fannie Mae is “helping families prevent foreclosures,”  but recent practices in the short sale arena result in the opposite.  In other words, Fannie Mae’s actual practices and guidelines submitted to their loan servicers are resulting in more foreclosures.

Here are some recent trends observed with Fannie Mae:

1.  Fannie Mae loans are being foreclosed on much sooner than other conventional and government loans.  (For example, in the last several months, we are aware of two foreclosures in our local market where the Borrower was only four months behind.)  Most Lenders allow a much longer delinquency period before a foreclosure.

2.  Once a foreclosure is started it is practically impossible to postpone due to recent Fannie Mae Guidelines (which according to various loan servicers appear to be in conflict): 

     A.  A ratified contract has to be submitted to the Short Sale Lender prior to thirty days before a scheduled foreclosure, or

       B.   The completed Short Sale Package has to be submitted to Fannie Mae within ten days prior to the scheduled foreclosure date, or

     C.  Fannie Mae has to approve the short sale within ten days (or according to another negotiator within three business days) of the scheduled foreclosure. 

Most Lenders will postpone a foreclosure to allow sufficient time to review the short sale contract.

If these trends or guidelines continue, Fannie Mae borrowers are in for a rough time with trying to short sale their underwater properties.  Please look for Part 2 next week.

Please call or email me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.

 

William D. Tucker, III, Sr. Partner

Tucker Griffin Barnes P.C.

TGBLaw.com | Facebook | Twitter | YouTube

          

Where deep insight equals powerful advantage!

Charlottesville 434-973-7474 | Lake Monticello 434-589-3636

Tip 3-2012: Short Sales - Local Trends

(Short Sales—Local Trends)  Here are some interesting observations about short sales in our local market:

1.   There are considerably more homeowners wanting to discuss possible short sale listings and contracts. (We are now averaging between 20 to 30 new callers per month.)

2.  Unreasonably high BPO’s (Broker Price Opinion) will cause short sale contracts to be either significantly renegotiated or terminated. (Hopefully more BPOs will be prepared by local realtors who have a realistic idea of our current market values.)

3.   Once there is a short sale contract with a reasonable BPO, the short sale lenders are allowing the short sale to be completed successfully. Our experience from 2011 showed an 88% success rate once there was a short sale contract  (The small percentage that were foreclosed on occurred because of a high BPO or questionable short sale lender guidelines.)

The take away — (a)  there is a lot of short sale demand in our market, and (b) the short sale lenders are working hard (although not very fast) to approve the sales.  

Please call or email me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.

William D. Tucker, III, Sr. Partner

Tucker Griffin Barnes P.C.

TGBLaw.com | Facebook | Twitter | YouTube

          

Where deep insight equals powerful advantage!

Charlottesville 434-973-7474 | Lake Monticello 434-589-3636

Tip 2-2012: More Holidays

(More Holidays!!)  Once again the Clerk’s Offices will be closed for a long four day weekend.  On Friday, January 13, 2012, the Clerk’s Offices will be closed for Lee-Jackson Day.  Then on Monday, January 16, they will be closed again for Martin Luther King Jr. Day.  (All the Banks and government offices will be closed on Martin Luther King Jr. Day, while Lee-Jackson Day is still a work day for most everyone, except the Clerk’s Offices.)

Accordingly, recordings need to be completed by Thursday, January 12, 2012 or they will have to wait until Tuesday, January 17 to be recorded.  After these Holidays, the Clerk’s Offices will be open for the normal five day week (unless of course there are “snow days” to shorten the week.)

Please call me at 434-951-0858 if you have questions.

 William D. Tucker, III, Sr. Partner

Tucker Griffin Barnes P.C.

TGBLaw.com | Facebook | Twitter | YouTube

          

Where deep insight equals powerful advantage!

Charlottesville 434-973-7474 | Lake Monticello 434-589-3636

Tip 1-2012: Quicker Foreclosures?

(Quicker Foreclosures?)  There are no rules as to “how soon” a bank will start foreclosing after someone becomes delinquent with their mortgage payments.  The only requirements are that the delinquent homeowner receives a written thirty day notice of default, and that the foreclosure advertisements appear in a local newspaper as required by the Deed of Trust.  Each lender seems to have its own guidelines  (usually based on the investor’s instructions) as to when the foreclosure process will start.  (PS—These guidelines seem to keep changing!)

The normal time frame (if anything could be described as normal) appears to be at least five months, but usually longer, before the foreclosure will start.  Recently, however, there has been some lenders who have foreclosed after the Borrower is only four months delinquent.

Additionally, the lenders normally will postpone the foreclosure to allow time to consider a loan modification, or more likely, a short sale.  Although these postponements still occur, there have recently been occasions where due to “investor guidelines,” the foreclosing bank will not postpone the foreclosure to consider a short sale contract.  Hopefully these two observations (foreclosing after only four months delinquent and not postponing a foreclosure to review a short sale contract) are just abnormalities.

No one needs more foreclosures in their market place.  Lenders should be allowing the delinquent Borrowers to obtain a true loan modification and keep their house.  As this is just not going to happen, then they must allow sufficient time to review a short sale contract and not just foreclose because the guidelines require it.  We all lose with a foreclosure!

Please call me at 434-951-0858 if you have questions, or visit our real estate archive for all previous tips.

William D. Tucker, III, Sr. Partner

Tucker Griffin Barnes P.C.

TGBLaw.com | Facebook | Twitter | YouTube

          

Where deep insight equals powerful advantage!

Charlottesville 434-973-7474 | Lake Monticello 434-589-3636

Tip 53-2011: New Years

(New Years)  

Tag:  Real Estate Attorney

Hopefully everyone had a wonderful Christmas Holiday weekend.  Remember Tucker’s Tips is still taking a vacation this week for New Years. 

(Reminder: The Clerk’s Offices for Charlottesville and Albemarle will be closed Friday, December 30, but the other surrounding Clerk’s Offices will be open on Friday.  All of the Clerk’s Offices will be closed Monday, January 2, 2012.)

It’s hard to believe another year has gone by.  All of us at Tucker Griffin Barnes hope 2011 was a good year for you, and that 2012 will be even better.  Stay safe and warm.  Don’t drink and drive, and “Have A Happy New Year!”

 

William D. Tucker, III, Sr. Partner

Tucker Griffin Barnes P.C.

TGBLaw.com | Facebook | Twitter | YouTube

          

Where Deep Insight Equals Powerful Advantage!

Charlottesville 434-973-7474 | Lake Monticello 434-589-3636

Tip 52-2001: Holiday Vacation

(Holiday Vacation)  

Tag:  Real Estate Attorney

Tucker’s Tips is taking a vacation this week (Christmas Week) and next (New Year’s Week.)  Hopefully all real estate professionals who receive this email are preparing to spend time with their families and loved ones during this Holiday Season.

This is a great time to remember why we are thankful for all those people who enrich each of our lives.  Remember to tell them why they are so important to you (Gifts are fine, but telling someone that you love them, and why they are important to you can not be duplicated.)  And don’t forget — “A Hug a Day Keeps the Doctor Away.”

Merry Christmas and Happy Chanukah!  Have a Safe and Joyous Holiday!

 

William D. Tucker, III, Sr. Partner

Tucker Griffin Barnes P.C.

TGBLaw.com | Facebook | Twitter | YouTube

          

Where deep insight equals powerful advantage!

Charlottesville 434-973-7474 | Lake Monticello 434-589-3636

Tip 51-2011: Clerk's Office Schedule for the Holidays

(Clerk’s Office Schedule for the Holidays)   

Tag:  Real Estate Attorney

The local Clerk’s Offices will be closed on Friday, December 23 and Monday, December 26 for Christmas.  Accordingly, all recordings prior to Christmas need to be completed by Thursday, December 22nd.  The Clerk’s Offices, as of now, will be opened the full day on Thursday (No half day Thursday office hours, but this could change for individual Clerk’s Offices.)

For the next week, the Clerk’s Offices will be open from Tuesday, December 27 through all day Friday, December 30.  As Saturday is New Year’s Eve and Sunday, New Year’s Day, all of the Clerk’s Offices will be closed Monday, January 2.  Although none of the Clerk’s Offices have announced early closings on Friday, December 30, to be safe all recordings should be completed in the morning of December 30.

William D. Tucker, III, Sr. Partner

Tucker Griffin Barnes P.C.

TGBLaw.com | Facebook | Twitter | YouTube

          

Where Deep Insight Equals Powerful Advantage!

Charlottesville 434-973-7474 | Lake Monticello 434-589-3636

Tip 50-2011: Short Sales & Multiple Contracts

(Short Sales & Multiple Contracts)   

Tag:  Real Estate Attorney

The normal practice in the real estate community is that Sellers should sign only one contract to sell their home.  Any additional contracts are normally treated as “back up contracts.”

In a short sale situation, this practice is not necessarily true. In other words, the Short Sale Seller can sign multiple contracts (even if they do not state that the subsequent contracts are “back up’s.”)  The reason for this is that the Short Sale Lender will only accept one of the contracts for an approved short sale.

As long as each of the executed contracts have a short sale contingency (the VAR Form 600 SS, Short Sale Addendum contains an excellent contingency), then the Seller will not be in breach of contract by signing multiple contracts.  The Short Sale Lender will only accept one contract and the other contracts will terminate due to the short sale contingency.  In other words, the executed contracts not approved by the Short Sale Lender will terminate due to the failure to obtain Short Sale Lender approval.

Remember in “Short Sales” most of what all real estate professionals have learned and experienced in a normal market are “out the window.”  Everything is usually different with short sales.

 

Please call me at 434-951-0858 if you have questions.

William D. Tucker, III, Sr. Partner

Tucker Griffin Barnes P.C.

TGBLaw.com | Facebook | Twitter | YouTube

          

Where Deep Insight Equals Powerful Advantage!

Charlottesville 434-973-7474 | Lake Monticello 434-589-3636

Tip 49-2011: Debt Forgiveness Act

(Debt Forgiveness Act)   

Tag:  Tucker Griffin Barnes

Most of the federal attempts (HAMP, HAFA, HARP, etc) to deal with the country’s serious real estate problems have been dismal failures.  One of the only winners, however, has been the “Debt Forgiveness Act.”  This act will continue to be effective through December 31, 2012.

Normally any “debt forgiveness” is taxable as ordinary income.  Accordingly, if there is a foreclosure and the property is sold at less than the outstanding debt, then this creates a deficiency which usually becomes taxable income.  Likewise, with a short sale, the deficiency created by the short sale is again usually taxable as debt forgiveness.  The lender will usually issue a 1099 for the amount charged off.

Under the Debt Forgiveness Act, as long as the property being sold or foreclosed was the residence of the Borrower then the Act applies.  Also the debt being forgiven has to be either purchase money, refinance of the purchase money debt or money borrowed to improve the residence.  Assuming the debt being forgiven meets these conditions, then there will be no taxable income to the Borrower who has just lost or short sold his house.

PS—Even if the debt being forgiven from a foreclosure or short sale does not qualify as a residence, there are still some exceptions which may result in no taxable income to the Borrower.  Please suggest that the Borrower check with their CPA or tax professional.

William D. Tucker, III, Sr. Partner

Tucker Griffin Barnes P.C.

TGBLaw.com | Facebook | Twitter | YouTube

          

Where Deep Insight Equals Powerful Advantage!

Charlottesville 434-973-7474 | Lake Monticello 434-589-3636