The Agent Center Blog

By: Carrie Bay, DSnews.com

Gov. Arnold Schwarzenegger signed nine housing bills into law this week. One in particular, Senate Bill 94, consumer advocacy groups are calling a clear victory for California’s many troubled homeowners facing foreclosure.

The bill, sponsored by Sen. Ron Calderon (D-Montebello) aims to reduce fraud against desperate borrowers looking to save their homes. It bans all foreclosure consultants, including loan modification firms and attorneys who specialize in loan mods, from asking for any fees or compensation before fully completing the services contracted, whether the mod is successful or denied by the servicer.

Because it was labeled an “urgency measure,” the bill is effective immediately. It remains in effect until January 1, 2013. One local paper in Sacramento said the government’s swift action on the issue follows a colossal number of complaints made to the state’s Department of Real Estate by borrowers who said they paid up to $4,000 upfront to firms that abandoned them.

According to the Del Mar-based American Mitigation Law Group, the new law will force many loan modification companies to close their doors, while many others will scramble to come into compliance.

Assembly Bill (AB) 260, by Assemblyman Ted Lieu (D-Torrance), takes effect January 1, 2010, and caps yield spread premiums so mortgage brokers can’t “steer” borrowers into high-risk, high-interest loans. It also outlaws negative-amortization mortgages and limits prepayment penalties to no more than 2 percent of the loan balance.
The governor vetoed similar legislation last year at the urging of several industry trade groups, but Lieu successfully argued this go-around that the measure was now more important than ever to stem the tide of foreclosures in California.

According to Walnut Creek, California’s PMI Mortgage Insurance, a third bill – SB 291 – could provide regulatory relief to residential mortgage insurers in the state, and go a long way to support the market’s housing recovery.

The measure, which takes effect in California January 1, 2010, is similar to legislation enacted by Arizona last month and North Carolina in July 2009. It gives the state’s insurance commissioner added flexibility in assessing the strength of mortgage guaranty insurers, with discretion to permit such companies to continue to transact new business if capital falls below government-prescribed levels. Prior law required mortgage insurers to automatically cease conducting new business if they failed to meet the mandated capital levels.

Other mortgage-related bills signed by Schwarzenegger:

- SB 36, by Calderon, establishes standardized licensing requirements for all residential loan originators.

- SB 237, by Calderon, creates a registration program for appraisal management companies (AMCs).

- SB 239, by Sen. Fran Pavley (D-Agoura Hills), makes it a felony to commit fraud on a mortgage loan application, punishable by up to a year of jail time.

- AB 329, by Assemblyman Mike Feuer (D-Los Angeles), requires lenders to provide seniors with “a clear and informative” written disclosure of the risks and suitability of reverse mortgages.

- AB 957, by Assemblywoman Cathleen Galgiani (D-Livingston), allows buyers of foreclosed homes to choose local escrow officers, rather than being forced to use the company chosen by the seller.

- AB 1160, by Assemblyman Paul Fong (D-Cupertino), requires that mortgage loan documents be translated into the same language used in verbal negotiations.

Apparently, there’ some major confusion about Senate Bill 306 floating around out there!

Approved by the Governor in August, the bill--which contains several changes to real estate-related laws and is set to come into effect on the first of next year--has been misrepresented by some as--among other things--a piece of legislation that will institute a 21-day deadline for short sale approvals. However, this is not the case.

What the bill actually does is require lenders to respond to a request for a short-pay demand statement within 21 days after the approval has been granted--not to approve the sale within 21 days. And, even at that point, the lender still has the option to respond--in writing, of course--that they have decided not to move forward with the proposed transaction.

Another article of the bill that may be causing confusion is the one that states that lenders must approve short sale closing statements within four days or else the statement will be deemed approved as long as it isn’t in obvious conflict with the terms of the short-pay agreement or demand statement given to the escrow holder. What it does not say, however--as some seem to think--is that the lender is bound to a short payoff amount on an offer the lender has not approved.

The bill does make a couple of pretty noteworthy changes, though. The current requirement that lenders contact certain borrowers to discuss options for avoiding foreclosure at least 30 days prior to filing a notice of default has been expanded to include owner-occupied residential property with two-to-four dwelling units as well as owner-occupied residences, and the requirement that lenders record a notice of sale 14 days prior to a trustee’s sale has been extended to 20 days (though it does not change the existing requirement that lenders wait at least 20 days after mailing a notice before conducting the sale).

So, if we all spread the word, hopefully the confusion will be cleared up by the time the law goes into effect on January 1!

Brian Wilcher
Staff Writer, The Agent Center

In an article in the Tuesday, October 6, edition of the San Francisco Chronicle entitled “Layer of credit checks surprises home buyers,” a woman named Kimberly Hayes explains that when she and her husband decided to bid on a bank-owned property, they were shocked to discover that the only way the bank would allow them to do it is if they could do their own credit check beforehand.

“This unnecessary credit pulling can potentially lower my credit score and widens the exposure of my sensitive financial information,” the article quotes her as saying. “I’m concerned about another set of eyes looking at my private information in a time of so much identity theft.”

And, apparently, they are not the first potential buyers to find themselves in this situation. Though not all lenders have this policy when it comes to their REOs, (Wells Fargo, JPMorgan Chase and OneWest Bank are all quoted as saying they do not require their own credit checks of potential bidders) it appears that some of the banks who do also insist that the bidder apply for a mortgage with them.

“...It was strongly implied that if we did not [apply with the lender who owned the property], we shouldn’t even bother making an offer,” Hayes explains in the article.

But, it’s not just the lenders who are asking for credit checks. The story goes on to say that it’s more often the listing agents of the REOs who are doing so. And, in the process, they are doing little to endear themselves to potential buyers.

However, some agents are going out of their way to do the best they can to help their clients avoid these extra credit checks--and the harm to their credit report that can come with them.

The article explains that an agent contacted IndyMac Bank on her client’s behalf in February, saving the client what could have been an enormous pain in the behind (Apparently, before it failed, IndyMac was requiring potential bidders to submit an entire loan application--including tax records, pay stubs, bank statements, application form, and credit check.) But, the agent was able to get IndyMac’s permission to submit all the paperwork they’d already given to the bank who had pre-qualified the client, including copies of the credit reports the bank had obtained.

The article concludes with a quote from the client, Carol Jones, which provides us with the moral of our story: “My lesson from all of this is that a good Realtor...can spare you any problems or inconvenience in accommodating this...practice by the banks.”

In these tough times, I think this is a moral that all of us should keep in mind--don’t you?

Brian Wilcher
Staff Writer, The Agent Center

So, the National Association of Realtors^® has finally decided to offer a program to help its agents learn the ins and outs of short sales and foreclosure prevention. Its Foreclosure Resource Certification Program (SFR), which is set to launch in mid-October, will offer Realtors^® the opportunity to add this newly designated certification to their resumes. Now, we all know that certifications are a good thing; after all, they tell your clients that you’ve made the effort to learn as much as you can about the real estate industry, stay current on the latest market trends, and hone your skills whenever possible. However, aside from providing a shiny new logo for you to add to your marketing materials and web site, does the SFR program really offer the training and resources that agents need to succeed in the short sale and foreclosure market--especially when compared to third-party programs who have been offering their own certification programs for quite some time? Simply put, the answer is “no.”

To begin with, the descriptions the NAR has provided for the certification courses are vague at best. Members need to complete one core course (there are two offered) and three one-hour online “webinars” in order to gain their certification, but the course descriptions do a lackluster job of providing the specific information students can expect to learn from them. For example, the description of the Short Sales and Foreclosure Course (one of the two core options) states that, “This course helps students evaluate all available options for distressed homeowners and identify the components of an effective short-sale package. This course looks at how real estate professionals can counsel buyer-clients in the purchase of foreclosure properties. And as a practical resource, this course shows students how consumers can avoid foreclosure in the future.” In general, that sounds great, but what are some of the specific topics that will be covered? And, the webinar titles and descriptions have yet to be posted at all! In comparison, courses like those offered by The Agent Center, the Distressed Property Institute and RealtyU, which have been available for quite some time, have descriptions that tell agents exactly what aspects of short sale and foreclosure prevention they can expect to master.

Another problem, which I have already alluded to, is the fact that the SFR courses have yet to be made conveniently available! Given the fact that the need for this kind of certification has existed for nearly two years, it seems rather odd that the NAR would announce this certification with great fanfare, and then make its members wait nearly two months before they can begin the necessary training.  The program promises that the two core courses will be available in online versions in “mid-October” and, “at the end of 2009” respectively, but at this point they are only offered in a one-day classroom format in very limited locations in 26 states. And, none of the webinars will be available until mid-October! Meanwhile, the third-party sources I mentioned above--who seem to have recognized the need long before the NAR--have convenient online certification options readily available.

Lastly, even if the SFR program ends up providing Realtors^® with the insight they need to understand short sales and foreclosure prevention (something that remains to be seen due to the lack of information at this point), it seems to offer little support to help them successfully process transactions after they’ve gotten certified. For example, there is no mention of continuous updates on short sale and foreclosure laws and regulations, access to each lender’s specific requirements and paperwork, or tools to successfully market themselves to potential clients. And, though the program’s website says that it will offer Realtors^® opportunities to, “Network with [their] peers, reach consumers and stay up-to-date on the latest news and events related to short sales and foreclosure transactions,” it seems that this will only happen via the program’s Facebook page. Meanwhile, the other programs offer their own unique networking opportunities designed specifically to help agents maximize their business.

So, at this point, it certainly seems like the ability to add “SFR Certified” to their resumes is the most important benefit of the NAR program for Realtors^®. But, if they really want to gain the knowledge, insight, and support they need to be successful in the short sale and foreclosure prevention arena, a third-party program is still they way to go.

The Agent Center Support Team
by Brian Wilcher
The Agent Center Staff Writer

WASHINGTON – Today, almost one month ahead of a November 1 benchmark set earlier this year, the U.S. Department of the Treasury and U.S. Department of Housing and Urban Development (HUD) announced a new milestone of more than 500,000 trial loan modifications in progress under the Making Home Affordable program.

The goal of 500,000 trial loan modifications by November 1 initially set in July pushed servicers to ramp up program implementation and sustain a faster pace of modifications; trial modifications are now being issued at a faster rate than new homeowners are becoming eligible. Still, the Administration believes that more can and should be done to assist struggling homeowners and to stabilize the housing market. As part of a continued effort to improve program performance, senior Treasury and HUD officials held the next in a series of meetings with servicers this afternoon, with discussion focused on improving servicer efficiency and responsiveness to borrowers during the modification process.

Additionally, Treasury and HUD released today the next Monthly MHA Program Report, which tracks servicer performance through the month of September – ending September 30, 2009. That report can be found here: http://www.treas.gov/press/releases/docs/MHA%20Public%20100809%20Final.pdf.

In my last post I talked about how savvy agents who aren’t happy watching their commissions being taken by “short sale processing companies” are starting to process their own short sales.

And, what they are finding is that determining the fair market value of the property, making the offer to the bank, and completing the required paperwork is a much easier procedure than these so-called “short sale experts” would lead them to believe. Factor in the agent’s expertise in finding a qualified buyer--which will help secure a healthy commission once the short sale transaction is completed--and the benefits of taking the time to learn the process is a no-brainer. Of course, utilizing a third-party source like The Agent Center to keep up on the latest laws and regulations, obtain each lender’s specific paperwork--as well as their guidelines--is an essential part of their routine as well.

While it’s true that the short sale process can take a while before it’s finally completed, smart agents are finding that the time and effort is paying off and helping them succeed in today’s tough real estate market. So, don’t believe the naysayers; learning to process short sales is easier--and the benefits greater--than you may think!

The Agent Center

In my last post about Flat Fee MLS, I suggested that we agents need to be jumping at every opportunity we can to make money in this market (and from the comments I’ve read, you seem to agree with me!) Well, guess what?  There’s another untapped well of opportunity out there that smart agents are starting to take advantage of: processing their own short sales.

As more and more homeowners are finding themselves unable to make their monthly mortgage payments, while at the same time finding their homes are worth less than the amount they owe, short sales are becoming more and more common. In fact, some lenders are reporting in increase in short sales of three to four times the number in 2008.

But, what do these numbers mean for us real estate agents? Well, for smart agents who believe in accepting change and being creative, it means a way to utilize the effects of a down market to their advantage. Rather than letting the current crop of fly-by-night “short sale processing companies” capture the business of facilitating short sales--and charge steep fees for doing so--forward-thinking agents are taking the time to learn how to process short sales themselves. And, these specially trained agents who utilize a third-party source like The Agent Center to learn the process, keep up with the latest laws and regulations, get the documentation that the lender requires, and find qualified buyers to complete the transaction are finding a way thrive in today’s tough real estate market, while at the same time helping out homeowners who have found themselves in dire straights.

Whether it’s capturing a commission that could have been lost to a short sale processing company or building a positive, life-long business relationship with a homeowner who is suffering through one of the most difficult times of his or her life (but who could qualify for another mortgage at a reasonable interest rate in as little as 18 months if their short sale is completed successfully, which means you could be selling them another home in the not-so-distant future), the benefits of having the know-how to facilitate a short sale approval are clear--and smart agents are well aware of them!

You may have seen that in late August, the National Association of Realtors® announced the introduction of their Short Sales and Foreclosure Resource Certification Program (SFR). According to the press release, “The program includes training on how to manage short-sale, foreclosure, and real-estate owned transactions, and provides resources to help Realtors® stay current on national and state-specific information as the market for these distressed properties evolves.”

Now, while this program is definitely a step in the right direction for the NAR--who finally seem to have realized (about a year late) that knowing how to successfully process short sales and foreclosures is essential for Realtors® who want to succeed in today’s distressed market--it seems to me that it falls a bit short of being the complete answer for a few reasons.

First of all, while the program promises that the two core courses (members must complete one of the two to be certified) will be available in online versions in October and, “at the end of 2009” respectively, at this point they are only offered in a one-day classroom format in very limited locations in 26 states. For example, the only course being offered in California is on November 12 at the NAR Conference and Expo in San Diego. Seriously? Only ONE class on ONE DAY for the ENTIRE STATE? Come on! Since Realtors® are in desperate to get the skills and information they need to process short sales and foreclosures, this lack of convenient locations is a pretty serious downer.

Secondly, as I suggested in my introduction, the program seems kind of late in arriving--especially considering the fact that all the coursework required for certification still isn’t even available! In addition to the core courses not being available online until later this year, the online “webinars” Realtors® need for certification (they must complete three) won’t be available until early October either. All of this makes the NAR’s announcement even less inspiring.

Finally, while the program does seem to offer a fair amount of education for Realtors® looking for short sale and foreclosure processing expertise (or should I say will offer--once the courses and webinars are readily available), what it fails to provide is much in the way of continuous updates on short sale and foreclosure laws and regulations, access to each lender’s specific requirements and paperwork, and tools to successfully market themselves to potential clients. While the program’s website claims that it offers Realtors® opportunities to, “Network with [their] peers, reach consumers and stay up-to-date on the latest news and events related to short sales and foreclosure transactions,” this is accomplished by joining the program’s Facebook page--hardly the kind of serious, professional support you’d expect from an NAR certification program!

So, while the program does have it’s positives, it’s pretty clear that Realtors® who really want to have success in the short sale and foreclosure market will still want to use third-party sources like The Agent Center who specialize in providing the knowledge and support they need. This includes regular updates on applicable laws and regulations, specific lender packages and current submission requirements, and marketing and presentation tools to help sell themselves to clients.

It’s true that adding “SFR Certified” to their resume won’t hurt Realtors® looking to profit from the wealth of short sale and foreclosure opportunities currently available, but it looks like an effective third-party source is still going to be a necessity!

The Agent Center Team

Which cities are likely to be the hottest post-economic downturn destinations for young, brilliant, and highly mobile workers?

The Wall Street Journal surveyed six trend-spotting experts and they chose cities based on economic diversity, lifestyle and their own personal prejudices.

Here’s the top-10 list:

1. Washington, D.C. (tie)
1. Seattle
2. New York
3. Portland, Ore.
4. Austin, Texas
5. San Jose, Calif.
6. Denver
7. Durham, N.C.
8. Dallas
9. Chicago
10. Boston

Source: The Wall Street Journal, Sue Shellenbarger (09/30/2009)

Tougher Federal Housing Administration standards and falling investor interest in the federal Low Income Housing Tax Credit program has stalled construction of affordable housing. And even when it is built or rehabilitated, it's become difficult for potential buyers to get financing.

"This is a national tragedy," said Judith A. Kennedy, president and chief executive of the National Association of Affordable Housing Lenders.

Affordable-housing giant Enterprise Community Partners and other nonprofit community development leaders have been lobbying Congress to change tax rules to broaden the appeal of the tax credits.

Sandy Marenberg, a real estate practitioner who owns Marenberg Enterprises, has found it particularly frustrating that he’s unable to find buyers able to qualify for loans to buy energy-efficient properties selling for about half their cost to build.

"The pendulum's gone from giving loans to everybody, whether they deserve it or not, to only giving loans to the overqualified. The folks in between are getting turned down, and many of them would be fine home owners," he said.

Source: The Baltimore Sun, Jamie Smith Hopkins (09/28/2009)