These challenging files had a variety of different circumstances that would make a less-seasoned office cringe: multiple liens (in one case, the property had two mortgages, three IRS liens, and two Maine State Revenue liens…in excess of $900,000 of debt), LLC buyers who had to address assignment issues at the last minute, divorced sellers who had moved away – separately, of course – and had limited ability (and desire) to sign/return documents, newly placed encumbrances, and looming foreclosure auction dates.

Our successes would be fewer and further between if not for our having the systems and people in place to handle each and every file in detail and with diligence. It takes a village!

Without the front end work that Raina does to collect and verify of the documentation and information from all parties in the transaction, I would be limited in my ability to present all lien holders with appropriate offers in a timely fashion. As anyone who has been involved in a short sale knows, there are multiple requests for updated information throughout the process. To have a solid foundation of accurate and up-to-date documentation and details about the property, the debt, and the foreclosure process for each file is priceless in approaching lien holders in a professional and knowledgeable manner.

It goes without saying that once the lien holders have agreed to remove their liens, our having Jessica to confirm, coordinate and distribute all of the acquired approval information is one of the biggest secrets to our closing success. A point person to provide the closing agent/title company with every detail of the seller’s side of the short sale transaction is an amazing advantage! In most cases, all post-approval communications with the bank are done through Jess and that keeps the agents and the title companies from having to deal with an often-imperfect and frustrating closing and post-closing system at the lenders.

The real estate agents and the title companies and attorneys that we have the privilege of working with are the glue that keep these transactions together. Short sales make many an agent run for the hills, and we are grateful to know (and to continue meeting!) the hardy – and hearty! -  few that have learned how to make the most of even the most frustrating and time consuming situations. Obviously, we appreciate the kind of resiliency and steadfast commitment that we witness every day for agents out there doing what they do best.

So, while I am always proud to be part of this amazing team, it is as we wrap up a high-volume and tumultuous-closing month here at MH Solutions that I am reminded that all of our hard work, energy and experience makes us a force to be reckoned with. With the year winding down – our feet firmly in the last quarter of 2011 – we know we can look forward to more challenges and more rewarding successes!

OH – That “Really Good Point” I mentioned? Here it is: processing a short sale is not brain surgery, and I am not some sort of negotiating genius that produces miracles. I am, however, wildly successful in achieving approvals and having successful short sale closings. (The approval is only part of the battle, my friends!)  This is because I am part of a team of people who dedicate all of their time and attention to producing results with short sales. So….why do it alone?

The impact of an increase of REO sales in Maine is significant to the Maine housing market and the Maine economy.  REO properties sell for less than non-REO properties.  This is because when a bank takes back a property from a homeowner that was unable to pay their mortgage the homes are more likely to have been neglected with deferred maintenance issues and often major structural issues.  Often these homes have been abandoned, vandalized and in Maine, have experienced freeze up and subsequent water damage.

Here in Maine, banks will seldom do any improvements to their inventory of repossessed homes and instead will sell them “as-is” for a discount.  This drives market prices down and has a ripple effect throughout the housing market.  Neighbors that have been paying their mortgages on time, but are forced to sell (due to a move for instance) will often not be able to get a price that will enable them to pay off their mortgage.  This can result in more foreclosures.  It is estimated that 27% of all homeowners with mortgages are now “upside down” in their homes, meaning that the borrower owes more on the home than they could sell it for.

The sad part of this downward spiral where deteriorating bank owned homes in Maine bringing down Maine home prices and causing more Mainers to lose their homes to foreclosure and thus causing more homes to sit empty, is that in many cases it could have been avoided.  A Mainer that wants to avoid a foreclosure but cannot afford to keep their home may benefit from doing a short sale.  A short sale is where a mortgage lender agrees to accept less than what they are owed in order to allow a property to sell.

With a short sale, a Maine homeowner can continue to live in the property during the 90 to 120 days required for the short sale to be completed.  During this time many homeowner choose not to pay their mortgage payments and therefore can save up funds for a move.  The home is also kept in habitable condition this way, allowing it to sell for more and thereby helping keep the housing market up.  In addition, a short sale is far better for the homeowner than a foreclosure would be.  Homeowners who complete a short sale are generally able to purchase a new home one to three years faster than if they let their home go through a foreclosure, or had a bankruptcy.

For more information on Maine short sales you can visit www.mhsolutionsme.com or call 207-221-2277.

“For the better part of a year, we haven’t see Bank of America set a single auction date for any of the properties we’ve been negotiating a short sale for”, said Allyson Strout, lead loss mitigator for MH Solutions Inc, a Maine firm that provides free short sale assistance to homeowners and listing brokers.

This may all soon be changing though.  RealtyTrac, which monitors foreclosure activity nationally, recently reported that foreclosures were up last quarter by a little less than 1% over the previous quarter.  This isn’t much of an increase, but it does represent the change in the tide as it’s the first increase in foreclosure activity in several consecutive quarters.  What is more reflective of the shift in foreclosure momentum is that default notices were up 14 percent this quarter over last.  The default notice is a lenders’ first indication to the homeowner that they are prepared to start a foreclosure.

We can expect to see foreclosure filing rates jump proportionally to default notice rates, so stay tuned for a double digit increase in filings by the end of QT1 2012.

If you have a Fannie Mae or Freddie Mac mortgage don’t give up hope on keeping your home.  There is rumor in the White House of a new program that will allow homeowners who have a mortgage with one of the two quasi-government agencies to be able to do a refinance to a lower interest rate and a lower payment without having to go through the typical mortgage underwriting process.

What this means is that even if your credit has taken a dive during the past years and everyone else won’t let you refinance, Fannie and Freddie will.  If you don’t know if you have a Fannie or Freddie owned loan you can quickly find out online.  Go http://www.mhsolutionsme.com/government-programs to check if your loan is owned by Fannie Mae or Freddie Mac.

The idea here is that because the lender already owns your loan, there is no reason for them to have to make you jump through all the hoops of a traditional refinance.   It’s unusual for any lender to voluntarily reduce a borrower’s interest rate of course, meaning they’ll make less money, but since Fannie and Freddie are government controlled, President Obama can encourage them to make it easier on borrowers.

So, what’s the catch?  The only catch is that you can’t have missed any mortgage payments.  Your credit can be banged up from lower priority obligations (late credit card payments, late phone bill payments, etc.) but you have to have a pristine record of paying Fannie or Freddie on time.  Again, this program hasn’t passed Congress yet, but it’s in debate and we are hopeful that this sort of assistance comes through for borrowers who have been hanging on to keep their homes during these touch financial times.

If you have missed mortgage payments, and you’re faced with the potential of a foreclosure, there are other alternatives available to you.  Your lender or servicer may offer you a loan modification which allows you to make up missed payments over time.  With most loan modifications you must be able to prove that you have overcome your hardship and now have income to support your mortgage and other debts.  Short sales are also a viable option to help you move on from a property you can no longer afford with as little damage as possible and with the shortest time frame to financial and credit recovery.  Due to the severe impact on a borrower’s credit and other liabilities, Deed-in-lieu, bankruptcy and foreclosure should be viewed as last resorts when all else has failed.

For a radio clip on Fannie and Freddie’s proposed refinance program you can listen here.

Banks have pulled back on filing new foreclosure notices, in some instances nearly 50% fewer as compared to last year according to RealtyTrac, a company which reports on foreclosure industry data. With robo-signing lawsuits to contend with and a growing inventory of bank owned properties to liquidate, banks are slower to initiate new foreclosure cases.

Processing their current inventory of repossessed homes prior to initiating new foreclosure actions is a smart move for banks that neither want to increase their portfolio of non-performing assets, for which they must maintain reserves, nor flood the market place with distressed properties further weakening an already feeble housing market and lessening the value of their current inventory. In the meantime, banks benefit by letting non-paying borrowers remain because a home being lived in is kept up better and less likely to be vandalized than a vacant property.

The Portland Maine based loss mitigation company, MH Solutions, which provides free short sale services to real estate agents and their sellers, is witnessing this change first hand. They see more home owners living in homes without making their mortgage payments for longer periods of time without receiving any notice of foreclosure activity than in years past. “In the last year we have assisted several homeowners with short sales who had been in their homes for over 12 months without receiving any foreclosure paperwork from their lenders”, said Allyson Strout, head negotiator for MH Solutions.

Lenders are working through their current short sale and foreclosure inventory and will likely resume filings at a pace that matches the absorption rate of the local market, according to Peter Ingram, President of MH Solutions. “What this will mean is a prolonged recovery and a depressed housing market for a few more years,” Ingram added.

If a real estate broker is negotiating with the seller’s lender then they will need to comply with the Mortgage Assistance Relief Act (“MARS”) rules, even if he or she is the buyer’s agent.  Additionally, real estate brokers who make referrals to MARS providers (such as MH Solutions Inc) will be subject to penalties when the realtor knows, or consciously avoids knowing, that the MARS provider is engaged in any act or practice that violates the MARS rules.

Real estate brokers who market themselves as providing, or who actually provide MARS services will need to provide the MARS Disclosures, and comply with all other aspects of the MARS rules including, but not limited to, not accepting any fees in advance of services being provided, not misrepresenting material aspects of their services including guaranteeing specific results, not counseling clients to cease making payments to their lender, maintain records for at least 2 years, etc.  They should also be licensed under Maine’s Debt Management Services Act in the same manner that MH Solutions Inc is.   And, they are required to provide an additional disclosure which states that (a) they are a for-profit business which is not affiliated with the clients’ lender or the government; (b) that the clients’ lender or servicer may not agree to change their loans; (c) that the clients’ could lose their homes and damage their credit ratings if they stop making their mortgage payments; and (d) that the clients’ are not required to stay in the service or accept the results delivered, and the total cost of the service if they do not accept the results will not be due.

There are three MARS disclosures that an agent will need to present at specific periods during the short sale process.

The first disclosure titled “MARS SHORT SALE DISCLOSURE CONSUMER SPECIFIC COMMERCIAL COMMUNICATION” must be presented to the seller at the first point in time that the agent realizes that the property will be sold via short sale. 

The second disclosure titled “MARS SHORT SALE DISCLOSURE SHORT SALE OFFER” is to be presented at the time the seller’s lender issues the short sale approval letter.

The third disclosure titled “MARS SHORT SALE DISCLOSURE NOTICE OF MATERIAL DIFFERENCES”

 is to be presented at the time the seller’s lender provides a notice of material differences between the sellers current loan and the short sale approval. 

This third disclosure is bound to cause some confusion.  The Mortgage Assistance Relief Act was initially intended to protect consumers from real estate professionals marketing to help them do loan modifications.  For detailed information you can read The Final FTC Rule for Mortgage Assistance Relief Service. Short sales, by default, have been looped into the Act, where they really don’t apply.  Since the lender is most likely not going to provide a notice of material differences in a short sale, they are the ones that are not performing under the Act, and therefore they should be the ones to assume the liability. It is our opinion, however, that an agent should still provide the seller with the third disclosure attaching it to a brief notice that indicates the lender has not provided a notice of material defects.  Your notice should also outline the difference between the seller’s current loan and the terms of the short sale approval (i.e. – “current loan with fixed interest rate of 6.2% and term of 30yrs and a principal balance of $186,000 to be paid off through a short sale.  Resulting principal balance will be $0.”)   In short, you are being asked to provide a notice from a lender that will not provide one, and then compare apples to oranges, but it can never hurt for real estate agents to over disclose.

Real estate agents that wish to use MH Solutions to handle their short sales will still want to use the disclosure forms that MARS has produced even though MH Solutions’ Disclosure Forms already contain the necessary disclosure information and in most cases should adequately cover the real estate agent.

The MARS act has implemented more rules on companies and individuals who negotiate mortgage debt and assist with short sales or loan modifications. Companies and real estate agents must be licensed, and they cannot tell you to stop communicating with your bank, or charge you an up-front fee. Companies must also let the client know that they can stop using their service at any time and they have the right to reject or accept the offer from the lender.

Other important guidelines MARS requires debt relief companies to disclose up front and throughout the process:

• They are not associated with the government, and their services have not been approved by the government or the consumer’s lender.
• The lender may not agree to change the consumer’s loan.
• If companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.

MH Solutions Inc. has been licensed and bonded in the state of Maine for debt relief services since March 2009. If you or someone you know is struggling to pay their mortgage or facing foreclosure please check out our website www.mhsolutionsme.com for information about short sales, loan modifications and what your options are. You don’t have to face foreclosure and you shouldn’t be taken advantage of. Our negotiation services are free to sellers, it is the buyers that pay once closing takes place. That’s right no money is exchanged until the transaction has closed, and the seller who is in distress does not pay us a penny.

For more information about MARS visit:

http://business.ftc.gov/blog/2010/11/life-mars-new-rule-protects-homeowners-mortgage-relief-scams
or
http://www.ftc.gov/opa/2010/11/mars.shtm

Despite the rise in the median sales price of homes in Maine, overall there are fewer being sold. In 2010 the number of home sales dropped by 2.5% nationwide when compared with 2009. The Northeast saw a decrease of home sales by 5.4%, in December 2010 compared to December 2009. Maine’s percentage of home sales dropped even more with a decline of 10.68% over this same time period.

Click here to read the full report.