ALL PHOENIX REAL ESTATE

… which has no meaning whatsoever unless you had younger children at the time that Snow Dogs came out. Which is neither here not there.

This afternoon I received a short sale approval letter for my listing in Avondale. The loan was with Bank of America, which is notorious for it’s glacial pace for short sale approvals even in this era of global warming. To whit …

Contract was received on September 27 and submitted to Bank of America on September 29. (For the cynics out there, this was September of 2009.)

And, well … that was about it. Except for a couple of dozen phone calls and e-mails along the way along with three separate negotiators at least two of whom actually returned calls and e-mails. Oh, and an approval letter sent to the wrong e-mail address two weeks ago that seemed not to exist at the time of last week’s update call four days after the letter was supposed to have been sent.

There also was a small cut in the commission which I’m absorbing … what I offer in the MLS as a co-broke to buyers’ agents is what I pay; MLS rules mandate it and I’ve never been much for the 50-50 concept. Either negotiate a better deal or eat the difference. I chose the latter because it’s the right thing to do for my seller.

No promissory notes needed, no cash required at closing for my seller … a clean approval and hope of this chapter of their lives being put to bed in the next month.

Maybe this is what everyone means a childbirth … it’s uncomfortable as hell for months and painful as anything near the end but after it’s over you kinda forget all of that and instead are elated about the results.

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“The squeaky wheel gets the grease.”

- Anonymous

 “Yeah, unless the squeaky wheel gets so annoying the whole car gets sold.”

- Tobey

There’s a general opinion that the only way to successfully negotiate a short sale is to call the lender once a day (or more) every day until they take your file off of their desk and make a decision. My guess is this was started by agents who got files approved after they called the lender every single day demanding an update, leading to the belief the lender will make a decision simply to get rid of them.

Except … how many of you ever have seen this strategy pay off in real life?

Maybe you’ve bought your kids candy because they were stamping their feet and holding their breath until they turned a wonderful shade of scarlet if not blue, but my hunch is you didn’t give in to the petulance. So why would you expect an overwhelmed, undertrained short sale negotiator to do so?

Not that this will stop agents from masking inexperience with short sales with activity - I know we don’t have an answer, but I’m calling every day! - but the basic reality is there’s absolutely no difference between calling once a week and learning the update is there is no update versus every single day to learn the update is there is no update.

Well, except calling more often than the lender asks usually derails any hope of having any sort of working relationship with a negotiator. And while it’s not going to be effective in all cases, we all tend to work better and work harder for someone we can relate to even if only on a professional level.

You catch more flies with honey than vinegar, or so goes another ancient saying.

The short sale process is treacherous and lengthy enough without getting on the bad side of a negotiator who is working a stack of files, all of the absolute utmost importance … at least to the agent and parties involved. Though the reality is all the files are the same, even if that’s not what we want to hear.

So if you’re in the unfortunate circumstance of having to short sell your home, feel free to ask the agent telling you they’re on the phone every day for you a simple follow-up: so how is that working out for you?

(Editor’s note: this post was inspired partially by recent short sale training I’ve attended, reinforcing what I already felt, and also the nearly mind-blowing circumstance of having a negotiator proactively call me each of the last two days to update me. Tell me the vinegar works better.)

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Loyal reader Kyle had me scrambling through the rabbit hole that holds the Obama administration’s various housing and stimulus acronyms, trying to figure out if last week’s announced short sale guidelines were going to be totally useless here in Phoenix.

The preliminary assessment, assuming for the moment that lenders elect to follow these guidelines (it’s an opt-in kinda thing), is that it’s possible.

For a loan to be considered under the new short sale guidelines, it must be HAMP-eligible - HAMP being the Home Affordable Modification Program. The criteria here aren’t too terribly oppressive:

• The mortgage loan must have originated on January 1, 2009, or earlier.
• The home must be an owner-occupied, single family 1-4 unit property.
• The home must be a primary residence, not an investor-owned property.
• The home may not be vacant or condemned.
• Borrowers in bankruptcy are not automatically eliminated from consideration.
• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
• First mortgage loans must have an unpaid principal balance equal to or less than:
  • Single-unit property: $729,750.
  • Two-unit property: $934,200.
  • Three-unit property: $1,129,250.
  • Four-unit property: $1,403,400.
• There is no minimum loan-to-value ratio for eligibility purposes.

There are a few others but the last one, with my emphasis added, is they key as far as the Phoenix real estate market is concerned. For HAMP, there is no minimum loan-to-value requirement. That’s in contrast to HARP - the Home Affordable Refinance Program, which says the total loan to value can’t be more than 125 percent (up from the original 105 percent when the program was announced.) For that reason, HARP’s pretty useless in an area where we’ve taken a close to 40 percent hit across the Valley, varying depending where you happen to be.

It would seem the reason HARP has an LTV requirement where HAMP doesn’t is the nature of the two programs. HARP deals with refinances of a property, and if a home’s too far underwater than the government isn’t ready to coerce the banks into taking the chance. HAMP is loan modification - new money isn’t being added to the pot; the lender is being encouraged to find a way to help the homeowner afford the home, whether it’s through extended loan periods or other methodology.

Of course, that’s neither here nor there for Phoenix short sales. And if the lenders don’t agree to buy in to the program, the entire concept is for naught. One of the sticking points, as it always seems to be, could be the junior lienholders who despite facing the distinct chance of receiving absolutely nothing if a homeowner is foreclosed upon by the primary lender still manages to bog down the short sale process demanding more money.

Reminds me vaguely of the City of Glendale’s insistence that they will not renegotiate the terms of the hockey lease of Jobing.Com Arena because the city’s depending on the revenue, all the while ignoring that reality that the Phoenix Coyotes moving would leave the city with zip. Folly.

Will the minor payout be enough to keep the junior lienholders at bay? Only time will tell.

Program starts next April.

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Page eight of the Arizona Association of REALTORS’ Residential Resale Purchase Contract is a bit of a mish-mash of fine print. There are 16 separate sub-sections of the contract’s eighth section dealing with everything from risk of loss due to an “act of God” to the fact that days begin at midnight to what form the earnest deposit will take.

In this midst of all this is one line that often gets overlooked:

8c. 340. Permission: Buyer and Seller grant Broker(s) permission to advise the public of this Contract

Contrary to popular belief, this doesn’t involve the agents involved emoting like they just won an Oscar, shouting (and e-mailing) for all to hear that they finally sold a house. What it does involve is the Affidavit of Value, which is filed with the County Recorder.

While some continue to labor under the misconception that the appraisal is the true measure of a house’s value, what counts as far as the county is concerned (and what then is used to determine property taxes) is the actual market value - the sales price as had been agreed to be a willing buyer and willing seller.

There’s one notable exception to the requirement of an Affidavit of Value being filed - a home that is the subject of an unsuccessful trustee’s sale. The trustee’s sale is the final step in the foreclosure process - the home is sold to the highest bidder on the courthouse steps and that bidder then assumes responsibility for any liens against the property.

If there is no bidder, or the highest bid isn’t sufficient to meet the minimum needed bid to cover all expenses on the home, the house reverts to the bank.

These homes reflect on many websites - including some of the major online search portals - as recorded sales for the value of the mortgage owed on the property, which often has nothing whatsoever to do with the current value of the home. (A common question from those searching these portals for homes is how a home could have sold for hundreds of thousands above its current value just a month earlier - this is why.)

It’s yet another example of the wealth of data being available not meaning that all of the data is valid; you’ll want a second set of eyes double-checking what you’re seeing to make sure what you think you see is what really exists.

(Editor’s note:  This was but one nugget gleaned from yesterday’s day-long Short Sale and Foreclosure Resouce certification course I attended; more to follow.)

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Two last notes from the proposed changes to the short sale process:

1) The program doesn’t take effect until April 5, though servicers may implement it before then it they meet certain requirements (what they are, I haven’t seen.)

2) The program is an opt-in … and that causes a little concern as I wonder if there’s enough incentive for lenders to participate.

All the statistics indicate homes sell for more money as short sales than as REOs … it’s not even close. Yet the lenders continue to opt for the foreclosures while leaving everyone twisting in the wind on short sales. Logic isn’t their collective strong suit.

Incidentally, this whole program doesn’t apply for loans guaranteed by Fannie Mae or Freddie Mac … that’s about half the loans outstanding in America. Those are going to continue on the current program, which can be measured only by a perpetual calendar.

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