RealtorIrene Blogs about Northwestern NJ Real Estate - Hunterdon & Warren

Foreclosures after a BANKRUPTCY? A Deed-in-Lieu might be the way to go -

although I am not a lawyer and never give legal advice!

True story from Phillipsburg NJ. Although I've listed and sold many NJ REO homes for sale, this is my first time with this particular situation.  I'm working with a mortgage servicer that I'll call "the bank." It is trying to find the owners of a vacant home. Those owners completed a Chapter 7 bankruptcy and the mortgage debt has been eliminated.  A foreclosure, however, may well be in the works on this property.

Here the folks think they have legally and responsibly taken care of their obligations. Still one more hurdle outstanding, however. The bank does not yet own the home so cannot list it for sale.  It is hoping to discuss a post-bankruptcy deed-in-lieu of foreclosure with the owners of this Phillipsburg NJ home.  Given the high costs and long time for a bank to foreclose, it wishes to avoid this process.  The bank is willing to sweeten the pot.

Potential pluses of the deed-in-lieu of foreclosures to the bankrupt owners?

1. Money. Yes, a bank may be willing to pay them a little something to agree to the deed-in-lieu.
2. Credit rating. Depending on how the bank reports the final outcome can have a big impact on the owners' credit scores.  Certainly important as these good folks will wish to improve their credit ratings for the future!
3. No costs to the owners for the deed-in-lieu process (unless they wish to consult their own legal counsel).
4. Really and truly having the situation resolved.  I suspect the owners will be surprised to learn they still have a legal liability on the home.

Am I certain this is the best choice for these particular owners?  Of course not. My task simply is to locate them, inform them that the bank is VERY interested in doing a deed-in-lieu of foreclosure and put the 2 parties in touch with one another.  My only "reward" would be to list the Phillipsburg NJ REO home for sale once the bank takes title.

As more and more distressed homeowners in Northwestern NJ consider bankruptcy, I have a feeling my experience with this will serve me and others well. I'd like to think that I'm providing a useful service to both sides of the equation!

 My Distressed Properties series on Short Sales - Foreclosures - REO issues and BPOS:

Copyright © 2010, Irene Kennedy, all rights reserved. This blog post represents Irene's personal musings.

Considering selling a home or looking to buy a house in Northwestern NJ - Warren County or Hunterdon County NJ? I serve the Route 78 corridor of Warren County & Hunterdon County. Benefit from creative marketing, top negotiating skills and vast real estate knowledge by contacting Irene via the data to the right.

For several shorts sales in the Sussex County, NJ, area, I've had great interactions with Chase.  On Monday, I faxed a best-and-final offer, a net worksheet, copy of check and mortgage preapproval, updated seller financials, etc. Chase has already agreed to a short sale of the property in Hamburg and had 2 interior BPOs done. So, all should be ready to roll.

Wrong!

I just phoned to confirm receipt and learned that the Chase corporation is doing work on or replacing its computer systems.  Employees will be unable to access details on any loans until at least July 8. According to the very polite gentleman in the Short Sale department, Chase decided to schedule this conversion to include a holiday weekend.

But one is talking about a least a week! And this does not just apply to the Short Sale section.

So, do not attempt to call Chase for any mortgage-related reason before July 8, 2009!

 Save yourself some agony...

Copyright © 2009, Irene Kennedy, all rights reserved. This blog post from http://www.realtorirene.com/ represents Irene's personal musings.

Considering selling a home or looking to buy one around Sussex County, NJ? Benefit from creative marketing, top negotiating skills and vast real estate knowledge by contacting Irene via the data to the right or http://www.homesirene.com/.

Irene Kennedy, who is a NJ real estate agent with Weichert, Realtors, lives in Sussex County & works from the Hamburg office. Her primary market includes: Augusta, Branchville, Crystal Springs, Frankford, Franklin, Hamburg, Hampton, Hardyston, Highland Lakes, Lake Mohawk, Newton, Ogdensburg, Scenic Lakes, Sparta, Sussex, Vernon, Wantage. With her vast network, however, Irene Kennedy also can help you find an equally talented real estate agent elsewhere.

 In my areas of Sparta, Hamburg, Vernon, Wantage, Frankford, etc., more and more homeowners are having difficulty paying the mortgage.  Once a homeowner is several months late, the mortgage company/bank starts to consider its options.  Some options will keep the owner in the home by modifying the loan; some will mean the owner must list the home for sale.

 When a distressed property needs to be evaluated by the bank, one or more Broker Price Opinions are normally requested - very often through a third-party, outsourced vendor.  BPOs are not as detailed as an appraisal. A BPO is a quick assessment by a real-estate agent that gives the bank an idea of what the home could sell for within the next 90 - 120 days. It is based primarily on MLS listings of similar properties in the same neighborhood.

 I have done countless BPOs around Sussex County. I view BPOs as a discussion of list price with a potential seller, albeit one who is far away and has never seen the property. I am that bank's local real estate agent for the sake of a price opinion. (While my experience has been localized, I do BPOs for the same vendors and same banks that get them done across the U.S. Hopefully, my opinions and expertise might help someone elsewhere.)

Here are the main reasons I've been hired to do BPOs in Sussex, Morris and Passaic Counties:

1. A homeowner is late and the bank is weighing its options - perhaps deciding whether to foreclose or consider a work out;
2. The owners have no means of remaining in the home and have listed or are prepared to list it for sale, have had some hardship and are asking the bank to consider a Short Sale;
3. Potential buyers have put in a written offer and the bank needs to evaluate it based on today's market conditions;
4. Foreclosure has occurred. The property is now an REO and the new owner (the bank) needs to set a price for the sale of the home.

 Reason 1 is the type I like least. These owners are usually unaware that the bank is having a BPO done. (The mortgage documents specify the rights of the bank to inspect the property under prescribed conditions.) This will always be an exterior or drive-by BPO for which I need to get my outside photos very, very discretely and be prepared for some unpleasantness if the owners drive down the street and spot me...  Too, these home are not currently listed for sale, so there is no MLS listing with current interior photos. My research will take much longer.

 With the other 3 reasons, the sellers are typically supportive of the BPO. Many times I am hired to do an interior BPO. By appointment, I access the home and take interior & exterior pictures. Frequently, multiple BPOs are done on the same property within the same time frame. The current record for me is when I was in one Lake Mohawk home for sale at the same time 2 other agents were also taking their interior pictures! Triple opinions from real estate agents working for 3 different brokers but it was a very high-priced home. This indicates just how inexpensive a BPO is, but I'll return to that later.

 Future posts will detail which BPOS I will agree to do, what information I provide, the stumbling blocks I've encountered, how listing agents view my BPOs and my compensation for these efforts.

Part 2: Pink Elephant BPOs based on a case in Sparta, NJ.

Short Sales can be a Great Thing for All Despite Timeframe & Lowballs Part 2 of Distressed Properties are NOT Black Holes!, a six part series based on the experience of a real estate agent now serving Northwestern NJ - areas of Warren County and Hunterdon County.

Not all Short Sales, also known as pre-foreclosures, are nightmares. The right real estate agent makes all the difference. Yes they are more complicated because it is not just a transaction between a seller and a buyer. A third party (bank, mortgage company or debt collector - I'm going to use the term "bank") has to be consulted every step of the way.  Many people have heard of or been involved in a Short Sale that drags on forever; banks take forever to respond, if they respond at all. This does happen, but it should NOT.

Timeframe with Short Sales

First, the bank needs to be informed that a Short Sale is being attempted. Banks handle delinquent mortgage loans in many ways but the loan information will NOT be shifted into the correct Short Sale department until the bank is notified that a property is listed for sale. "Transferring" the loan from one section to another can take several business days.

Personally, I get written seller authorization to work with the bank along with the listing agreement. That is also when I get the other important pieces of a complete Short Sale package. My first contact with the bank is the day I list the property. I have worked with excellent agents who don't know the ins-and-outs of the process, so they wait until there is an offer on the table and then learn they need written authorization. Meanwhile, the loan isn't even in the right section of the bank.

Second, many banks will order a BPO (Broker Price Opinion) once they know the distressed property is listed for sale. Because a seller is cooperating with the sale, the BPO will usually include the interior of the home. This will be the first assessment by the bank of the current, local market value of the home and its actual condition. Depending on the length of time, the bank might order a second BPO once it has an offer in hand. On average, it will take 5 - 7 business days from the BPO request date until the finished report with photos gets back to the Short Sale Department.

Because I immediately establish a good working relationship with the bank's Short Sale department, I'm often successful in getting reluctant banks to do a BPO right away. Banks pay for the BPOs, so some wish to hold off. By broaching it as a WIN-WIN proposition, "this way we'll all know the reasonable value," most banks order the BPO. And then share those amounts with me, so I can work with the sellers to tweak the list price... (Remember - The bank does not own the property, so it cannot dictate list price. Only the seller may do that.) When an offer does materialize, the bank already has at least 1 objective opinion to compare to the offer.

I've listed many where I've gotten third-party approval very rapidly - 2 different deals with 2 different banks, I got the buyer's agent a counteroffer in less than 2 hours. On one Short Sale I listed, we closed 20 days from the date I got the offer.

Third, with Short Sales, it depends greatly on the listing agent's interaction with the bank and that bank itself. There is a "third party" involved, so they will always take longer than "two party" deals. If there is more than 1 bank, as with a second mortgage, you're adding to the timeframe.

Lowballs: Serious Offers Get Serious Consideration

Sellers really don't care what the sale price is because they're not going to be walking away with cash in their pockets. The banks, however, do care. Even if the offer is for full list price, the bank probably is taking a serious loss - and the buyer is probably getting a good deal. Whether I'm working for a buyer or a seller, my job is to process all WRITTEN offers.

So what happens when the offer is for 55% of the list price? I do my job.

What does the bank do? It puts that lowball offer on the "not even worth the time of day" stack to be looked at way down the line. Seriously, I have never even had the bank provide a counteroffer to a real lowball, although I have been successful in at least getting them to reject the offer - and thus provide a rapid response. Based on my experience, an offer of 75% of the list price is necessary to even begin negotiations with a bank.

My perspective on Short Sales? I'm delighted to do the extra work they involve, so keep ‘em coming.

• Part 1 - Distressed Properties are NOT Black Holes!
• Part 2 - Short Sales can be a great thing despite Timeframe & Lowballs
• Part 3 - So You Want a Foreclosure: Bank-owned Properties - REOs
• Part 4 - Want to Steal a Foreclosure? Get the REO facts.
• Part 5 - Consider a Foreclosure - Advantages of REOs
• Part 6 - Pitfalls of Foreclosures. Disadvantages of REOs for Buyers

Copyright © 2009, Irene Kennedy, all rights reserved. This blog post represents Irene's personal musings.

Considering selling a home or looking to buy a house in Northwestern NJ - Warren County or Hunterdon County NJ? Benefit from creative marketing, top negotiating skills and vast real estate knowledge by contacting Irene via the data to the right.

Irene Kennedy, who is a NJ real estate agent with Weichert, Realtors, lives in Warren County NJ & works from the Phillipsburg office. She also services adjacent areas of Hunterdon and Sussex Counties - and understands the pain of moving!

A distressed property normally is associated with the foreclosure process. Distressed properties are on the rise in my market area of Sussex County, NJ. They're not limited to this region plus experts predict we'll ALL be living with them for quite some time to come.

So, let's get comfortable with Short Sales and REOs.

When the owners are behind in mortgage payments and cannot catch up, they may try to sell the property for less than they owe on it. As an alternative to foreclosure, many banks will "forgive" the shortfall between the debt and the sale price. These are commonly known as Short Sales or pre-foreclosures.

The other common type is when a foreclosure or a deed-in-lieu-of foreclosure has occurred. I'll use the term bank but the new owner also could be a mortgage company, corporation or debt collector. The bank is now the deeded owner of the property, usually called an REO for real-estate-owned. The initials are normally spelled out R-E-O although some people say it as a word for like the Brazilian city, Rio de Janeiro.

Many buyers and agents lump all distressed properties into the same "it takes months to get an answer" category. Based on my very extensive work - and training - with pre-foreclosure and foreclosed real estate in Sussex County, NJ, I can dispel some myths and clarify some issues for you.

Many folks confuse Short Sales and REOs. These are very different animals. Let me elaborate in a little series of postings...

• Part 1 - Distressed Properties are NOT Black Holes!
• Part 2 - Short Sales can be a great thing despite Timeframe & Lowballs
• Part 3 - So You Want a Foreclosure: Bank-owned Properties - REOs
• Part 4 - Want to Steal a Foreclosure? Get the REO facts.
• Part 5 - Consider a Foreclosure - Advantages of REOs
• Part 6 - Pitfalls of Foreclosures. Disadvantages of REOs for Buyers