“You dropped a bomb on me baby”…The Gap Band. And boy, what a bomb it was. This Tuesday, Mortgage Bonds had their worst one-day performance since October, losing an astounding 206bp. So…what the heck happened and what’s next?

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May 15, 2009

Good news from Washington , D.C. , today. The Obama administration announced new details under its Foreclosure Alternatives Program (FAP) enabling servicers and borrowers to pursue short sales and deeds-in-lieu (DIL) of foreclosure in cases where the borrower is generally eligible for a Making Home Affordable modification but does not qualify or is unable to successfully complete the three month trial period. The program, effective through 2012, requires that prior to proceeding with a foreclosure, servicers must determine if a short sale is appropriate.

We’re gratified that the administration has recognized the need to streamline the short sale and deeds-in-lieu processes, and has provided viable options to homeowners who have fallen behind on their mortgages but owe more than their homes would sell for in today’s challenging market. We also appreciate the efforts of our colleagues at NAR for keeping this issue front and center in our nation’s capital.

Incentives in the FAP program include $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; $1,500 for borrowers/homeowners to help with relocation expenses; and up to $1,000 toward the cost of paying junior lien holders to release their liens ($1 from the government for every $2 paid by the investors to the second lien holders).

The FAP includes streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter to minimize complexity and increase use of the short sale option. Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements, based on an appraisal or one or more broker price opinions, issued no more than 120 days before the date of the short sale agreement.
 

In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. The property also must be listed with a licensed real estate professional with experience in the neighborhood, and no foreclosure may take place during the marketing period, of at least 90 days, as specified in the Short Sale Agreement.
  

The Short Sale Agreement also must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.  Servicers may not charge fees to borrowers/homeowners for participating in the program. Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement, plus any extensions.

1. 7424 Brigadoon Way, Dublin - This Ca Highlands townhouse went pending on the first day with 2 great offers
2. 230 Triana Way,San Ramon -  This Single family residence sold in 6 days and we had over 10 offers on this home.  We extensively staged this home with new paint, carpets and added some furniture to make it easy for the buyers to recognize a tremendous value!
3. 10723 Inspiration Circle, Dublin - This Hansen Hill executive home was sold after just 13 days on the market and continues to generate great interest with back up offers being introduced. 
4. 2152 Myrtle Beach Lane, Danville - This Crow Canyon Country Club golf villa sold after being on the market for just 12 days.  Others in the neighborhood have been sitting.
5. 2706 Salisbury Way, San Ramon  - This is a short sale listing in Windemere that was originally sold in the first week on the market but was resold with a few weeks. 
6. 2227 Inyo Avenue, Oakland - This is an Indymac REO bank owned home that sold in 41 days.   The home was sold in the first 10 days but the first buyer backed out for personal reasons.
7. 1504 Lipton Street, Antioch - This Indymac REO bank owned home was sold in 13 days! 
8. 2500 Mclaren Lane, San Ramon - This Windemere Canadoro home was sold after 10 days on the market.  We had over 100 groups through the first weekend!
9. 1308 Carlisle Court, Brentwood - This short sale listing sold within 8 days on the market and received multiple offers!
10. 39 Hightree Court, Danville - This Danville short sale listing sold the first day on the market!