Want to Short Sell Your Home Faster?

Much like the discussion around loan modifications, the discussion on short sales has matured over the last several months and unfortunately, it’s not getting much better.

In Arizona, short sales are apparently being approved by the banks with some regularity. This isn’t the case in California – a friend of mine who invests in short sales tells me he’s had some properties with short sale offers at the bank that have taken months for the bank to approve the deal.

I’m not going to get into the reasons why banks don’t approve these short sales – the point is, they apparently don’t have much of an incentive to do so unless you give them a few reasons to speed up the process.

I’ve also heard that many real estate brokers aren’t allowing their agents to negotiate short sales on behalf of clients because of liability issues. My thought is that finding a real estate agent to do this will become, if it hasn’t already, impossible especially with SB 94 in California and Arizona’s mortgage originator license laws, and because of the sheer frustration in dealing with these banks.

A creative way to do this is to use a loan audit to accelerate a short sale. Essentially, a homeowner gets a loan audit done and sends a letter to the lender letting them know that they’ve become aware of TILA/RESPA violations and could file a lawsuit if they so chose. However, given that the borrower really just wants to get rid of the house, they would prefer to short sell the home, and it’s really in the bank’s best interest to approve the sale.

In this scenario, the homeowner has several options: file bankruptcy, walk away or file a lawsuit. None of these three options look good for the bank. When it’s presented this way, it seems like it would get the bank’s attention and approve a reasonable short sale offer.

I know of a few attorneys who are using this technique to accelerate a short sale and getting them approved within thirty to sixty days of making the offer.

Got questions? Please comment below or send me an e-mail at Christine @ DesertEdgeLegal.com.

California SB 94 Expected to Become Law Today – No More Upfront Fees on Loan Modifications

Today, California Governor Schwarzenegger is expected to sign SB 94 into law.

To summarize, the bill prohibits persons from charging advance fees to borrowers in connection with the modification of the terms of the borrower’s loan, require those who wish to charge a fee for loan modification services (after performing them) to provide a specified notice to borrowers regarding other options available  to the borrower, prohibit servicers from imposing any interest or charge for performing services for borrowers in connection with loan modifications or other forms of loan forbearance of forgiveness; and close a loophole in the California Finance Lenders Law.

As we’ve discussed on this blog before, this bill will probably end the loan modification industry in California as we know it.

If you listen to the steady stream of propaganda coming from the California Attorney General’s office, you’d think everyone who performed loan modifications is a scam artist.

The California Attorney General’s advice to do your own loan modification is highly irresponsible. He assumes that the banks have borrowers’ best interests at heart, which we all know is not true. If you’re worried about scammers, let’s take a look at the banking industry, which is the biggest scam artist of them all.

According to a legal assistant contact in one of our attorney’s offices, loan modification companies and law firms alike are literally closing their doors because of this law. The industry is changing overnight.

The good news for homeowners who want to hire an attorney’s office to obtain a loan audit is that it will allow them to break up the cost of the loan modification over time. Because of the rule against charging upfront fees, the costs of the loan modification will be billed over time as the work is completed.

The downside is that the cost of a loan modification from a legitimate provider will go up because of increased administrative and collection costs.