Hey, Miss Loss Mitigation Operator…

I’m really not as dense as you might think I am. 

I did however, play dumb just because of your less than helpful attitude. 

Matter of fact, I made a graph just for you!  Maybe this will help you understand.

The next time we talk, and I politely ask questions about the documents you had before but somehow lost, please refer to the above graph and chose your response carefully.

That’s save both of us plenty of time. 

We’ll talk again tomorrow - ok?

Good luck.

Houston, I think we have a problem…

Really easy.
You call, you talk to the Lender, they accept the deal and you move on to the next one.  Done!

Some people wonder why I start calling at 5 AM Pacific time.
Some people wonder why I have 26 different phone lines on my desk.
Some people wonder why I’m always on the phone.

I don’t.

Film at 11:00…

Thought I would just share this.

I’ve got two perfectly good short sale negotiations that have been shot down by your Mortgage Insurance Company and I’m not happy!

I’m not talking about Mortgage Insurance that the Homeowner had.  No.  That would be too easy.  I’m talking about a dark, sinister, evil form of MI that is killing perfectly good short sales everywhere.

Once the loan was put into place, some (not all) Lenders bought a policy with you (which they paid for) on either the individual loans or an entire pool of loans.  Maybe you insured a tranched portion of those pools.  It doesn’t matter.

The Homeowner doesn’t know about this policy.  Nobody knows.  Ok, you do and the Lender at some level does.

And in the case of a short sale, the Listing Agent, the Buyers Agent, the Buyer, and all the parties concerned don’t know about this.

Until what we thought was the "Decision Maker" at the Lender submits the deal to their boss for final approval we don’t get to find out about the presence of MI or your involvement. 

So the Lender’s Negotiator sent the approved deal to you.  It was a good deal.  It was inline with the comps.  It was a good offer considering.  But then you come back to me saying that you are requiring a Promissory Note of $XXX,XXX ?

Did you not read the comps?  Did you not see the hardship?  They don’t have a job!  No Income!  They’ve drained their savings to make the payments.

Thanks for taking my call.  I weaseled your number out of the Lender.  I think they might have been a little tired of talking to me.  You were pleasant enough.  I understand your position.  If the home goes to Trustee Auction, your company is set to pay to the lender $xx,xxx.  In approving a short sale you are setting your company up for the same loss - ONLY if the Homeowner signs the Promissory Note.  I get that too.

My problem isn’t in the business decision to insure the loan.  that’s business.  My problem isn’t that you wasted a lot of people’s time, I can blame the Lender for that.

My problem is that there is no room is this business model for humanity, empathy, or compassion.  Your calculator shows either black or white - period.  The only loss you are concerned with is the loss your company will have in paying the claim.  If the home becomes an REO - you don’t care.

You are forcing two perfectly good short sale transactions this week into foreclosure.  Two perfectly good deals.  Two family’s who tried to sell, tried to refinance, tried to modify, and then finally tried to short sale, all in good faith.  And to you, their efforts mean nothing.

Shame on you!

When the Lender files the Notice of Default to start the foreclosure process often times they will also assign a New Trustee.

When that happens you’ll receive all sorts of important registered letters announcing the New Trustee. By law they have make sure you are properly notified. (you might call it being Spammed).

This is normal. Why do they do this?

Maybe the New Trustee is better, faster and / or cheaper than the old one when it comes to the Foreclosure Process. That’s all.

The Good News is that the New Trustee cannot change the terms of the Note. They only act as instructed.

The Bad News is that you still have a Notice of Default and it’s been transferred to a company that might better process that.

I just got off the phone with a Loss Mitigation Negotiator for a large bank.

Working on a solution to a short sale.

Both the first and the second has mortgage insurance put on the loans after closing by the Lender so I’m dealing with

• The Listing Agent,
• The Homeowner,
• The Loss Mitigation Negotiator,
• and the MI underwriter.

I’m a little taken back by what the Negotiator just said,

“We don’t care about Comps!”

This neighborhood is going down the tubes. You better care about comps and seriously look at this offer or you will be in for a lot more fiscal damage down the road - even with the $ your MI pays you.Wow!

Here’s the latest information on what Countrywide will do and what they won’t do.

I reported that there were various rumors going around that involved countrywide and short sale negotiations.

Some of those were true - others were not. ( here and here )

Then again, the rules are changing constantly. CFC has informed it’s Loss Mitigation Department as of late last week via an internal memo (I tried to get a hold of it without success) that they are indeed considering short sale negotiations on most all property.

Here’s what I’ve learned:

1. It depends on the Investor. Is the loan a Fannie, Freddie, ALT-A, Equity, etc.?

2. Needs a surplus percentage higher than 30%.

3. If not, must show a proper Financial Hardship

What constitutes a Financial Hardship with CFC?

• Natural Disaster
• Disability Mortgage Holder or Family Member
• Death of Mortgage Holder or Family Member
• Illness of Mortgage Holder or Family Member
• Property Damage (mold) Greater than 50% or more of the property
• Divorce
• and Other Financial Considerations

ME: “How do you calculate the surplus percentage?”

THEM: She didn’t know. The memo didn’t say. She said it was much like DTI. I was pushing my luck. I tried to get one more question answered…

ME: “Does the home have to occupied?”
(see Momma don’t let your Countrywide Houses go vacant)

THEM: “Not if they have a Financial Hardship”

So this tells me that if the present debt obligation is high - the income is low, according to their “surplus percentage” you don’t need to qualify under the Financial Hardship section.

However, if the income is high, the debts are low, you might need to knock off your significant other to qualify. At least according to their memo.

Remember all rules are meant to be broken. Never give up hope!

My First Hockey Post of the Season

Hopefully not my last.  I know it’s nothing about Short Sales.

Why the hockey post today?  Just because the San Jose Sharks beat the Calgary Flames in Game 7 and move on towards the greatest trophy in all sports, The Stanley Cup!

That’s why.  (That and I have a Hockey Hangover, eh?)

For you non Hockey speaking readers here’s what the cup looks like:

A quick Hockey Primer for you:

• 30 Teams compete during the season to be one of the 16 that enter the playoffs.
• 8 teams in the East, 8 teams in the West.
• Teams play the best of 7 in a series.  No Ties.
• There are 4 Series or rounds in the playoffs;
  1. Conference Quarterfinals 
  2. Conference Semifinals 
  3. Conference Finals
  4. Stanley Cup Finals
• Lose 4 in a series and you’re “playing golf”.
• Win 16 Games in the Playoffs and you  “Hoist the Cup!”

The Conference Quarterfinals ended last night.  We’re now down to 8 teams.

In the East

The Montreal Canadians will play the Philadelphia Flyers

and the Pittsburgh Penguins will play the New York Rangers

In the West

the Detroit Red Wings will play the Colorado Avalanche

and the San Jose Sharks will play the Dallas Stars

If you are graphical in nature here’s a quick little Bracket I made for my computer desktop.

Ok, that’s enough Hockey for now.  I have to get back to work.

Go Sharks!

Each state has it’s own rules.  In the State of California, for Residential Property (1-4 Units), Owner Occupied here’s a quick chart.

* If a senior Lienholder forecloses on the property, the wiped out junior loan lienholder who no longer has a secured note may NOT sue on this promissory note for those categories indicated on this chart.

There are other factors and conditions which may change the result (such as borrower fraud).

Always consult a legal professional.