Luckily we are double jointed so we can pat ourselves on the back….As predicted on this blog earlier this year….
That the FHA IS going to take over much of the Short Sale and REO business. (Read the article that follows from Bloomberg….)
Here is what will most likely happen over the next 90-120 days…and how you need to be prepared:
1) Earlier this year the CEO of Feddie Mac was quoted as saying that Freddie Mac was preparing to process shortsale requests for lenders. He also mentioned that they would not be requiring any referral fees or reduction from the standard commissions. HREU Short Sale Secrets Students, the greatest opportunities doing short sales are still ahead of us. Now that the FHA is making the decisions..calling the shots…and foreclosure prevention is a political ‘hot potato’ be assured that the overall short sale process is going to happen faster.
How much faster? We are expecting to see a ‘FHA Streamlined Short Sale Process’ rolled out over the next 90 days. Short sales are often the no-brainer solution for the seller and the lenders (now the FHA). Don’t be surprised if the short sale process takes less than 60 days from listing to close.
2) The FHA will buy $40 billion in troubled mortgage assets PER MONTH (Sub-Primes and Alt-As) from the lenders (and investors…) The lending bank will still be the service the loan. In other words, if Wells Fargo sells an Alt-A mortgage to the FHA, Wells will still service it. The FHA (oh, by the way..thats you and me..they are doing all of this with our tax dollars) will be the investor. All your existing bank contacts should still be valid.
3) In the cases where there is a possible loan modification. The FHA will allow for interest rate drops…reductions. Rarely, will they allow principle reductions. So, if you are upside down in your home by $100k the FHA may allow you to have your interest rate lowered to make the monthly payment more affordable but, you are still stuck with the negative equity. Any agent who is working in the Short Sale and REO business will tell you that the real issue is not the payment…but, the negative equity. The probem isn’t the payment..its the negative equity.
4) In some…very, very rare cases…there will be reductions in mortgage balances. Expect those cases to be urban myths. The problem with reducing mortgage balances is that once you start..you can’t stop. If my neighbor has his negative equity wiped out…you can be sure I will want my negative equity wiped out as well….you get the point. Doing this would lead to an never ending problem.
5) Loan Modifications will be a skill Realtors must know. HREU Short sale students…this is a natural extension of what you are already doing. 90% of the loan modificaiton process is the same as the short sale process…just easier. HREU is rolling out a loan modification program whereby Realtors can do fee based loan mods for their clients. That means you can help those who want to stay in their homes and quailfy based on the lenders requirements. The new AgentLoanModSecrets program will be officially announced this month.
Here is the Bloomberg article:
Oct. 11 (Bloomberg) — Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.
Fannie and Freddie began notifying bond traders last week that each company needs to buy $40 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential. The purchases would be separate from the U.S. Treasury’s $700 billion Troubled Asset Relief Program.
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