The year 2009 passed by with a kind of stagnation and the federal as well as state governments intervened with foreclosure mitigation plans (also criticized as bail-out programs) to help the distressed home owners retain their homes, with loan modifications; short sales; tax-break incentives for home buyers etc. which to a certain extent contained the crisis, though not addressed the problem fully.

Since the start of this year, particularly in the first quarter ended April, we were hearing good news of spurt in home sales, increase in median home prices and return of customer confidence etc. The tax-credit incentive acted as a morale-booster in increased sales of homes – both under distress sale and traditional sale – as reported by every market including SF Bay Area.

After the expiration of the tax-break benefits by 30^th April, as expected there was decline in home sales in the months of the latest quarter ended July. But what is intriguing market watchers is the report for August. The number of foreclosed properties sale is sagging, despite the fact that mortgage interest rates bottomed out a record low points in the last 50 years.

For example in Santa Clara and San Mateo counties, while the number of properties stuck in the foreclosure process is really high, those reaching the market for distress sale is only a portion of them. See the figures – in Santa Clara County 4,045 homes and in San Mateo County 1,429 homes have been scheduled for foreclosure sale, but not yet auctioned off.

In the pre-foreclosure stage there were 3,947 homes in Santa Clara County and in San Mateo County the number is 926 homes – which received default notices, but surprisingly not scheduled for foreclosure sale.

Real Estate experts see the reason behind as lenders are acting smart – giving more time for delinquent borrowers; work out loan modifications; encourage short sales and thereby stall these properties reaching the market, to avoid total fall in the prevailing prices.

The local news papers are full of informative news stories and offers, for those seeking help to gain knowledge about Short Sales. The advantages of Short Sales over a foreclosure disaster are well explained to the readers. Precisely a Short Sale is a transaction where the troubled home owner is permitted to sell the property for a lesser amount than the loan balance. The lender bears the loss and typically it is a welcome relief for everyone concerned – the lender; the barrower and the prospective buyer.

Realtors and lending institutions have joined the fray in encouraging distressed home owners under waters – the home value being less than what they owe the mortgage bank – to resort to Short Sales. For example, Wachovia has widely advertised their Short Sale program online.

The sellers in distress – particularly from Contra Costa and Alameda Counties – who are in need to do a Short Sale can avail the benefits of Wachovia’s Short Sale Solution Program. It is a known fact that Wells Fargo has taken over Wachovia, but the company claims that the present program is far better than what it was in Wells Fargo.

They say their program renders all the help needed to people just opting in for Short Sale of their property – right from property appraisal (even without seller financial and supporting documentation) to approving the short sales as quickly as an unbelievable time of 2 weeks. This breaks the popular belief that getting the approval of the lender for a Short Sale will take months.

There is another report online that the Short Sales are on the increase in California Bay Area including Freemont and surrounding cities. The report also contains a lot of useful tips for distressed home owners as how they can be benefited by seeking the Short Sale option as a solution for foreclosure avoidance.

So there is every chance, judging from the spurt in Short Sales stories in and around all the nine Counties of San Francisco Bay Area that 2010 is going to be a year of Short Sales trend.

The plan is due to be announced by President Barack Obama on Wednesday and is expected to break new ground by helping troubled borrowers even before they miss a mortgage payment.

 If it works, officials will have a standardized approach to quickly determine whether a borrower is in trouble, revalue the home, and set new mortgage terms under a program that could help contain losses for banks that have incurred huge losses on bad housing investments.

 The hope is that a uniform standard will do two things: give legal cover to rewrite loan terms and provide a universal template to quickly churn through the rolls of troubled borrowers. Mortgage servicers, the companies that collect a borrower’s monthly payments, are often hamstrung by contracts and cannot loosen loan terms.   See full article

Fannie Mae’s short-sale program focuses on homes listed to sell for less then the mortgage balance and that are being serviced by Countrywide Financial.

If the program is successful, it will be expanded to other parts of the country.

Why?

Realtors fiduciary responsibility is to represent the seller.  Are the interest of the seller and the bank different?  Of course, this the the reason for the short sale since there is a breach of contract between the seller and the lender.  Now, how strong the negation position of the realtor towards the bank can be when she/he represents the seller’s conflicting interest?    Could he/she be really effective effective in this position?

The lenders like the idea to work with the Realtors since they know that agents can not not present a real negotiation leverage.  In the mean time realtors’ work is for free for the bank.  Most of the mitigator companies are charging mitigation fees, not the agents though who’s compensation is rolled into the commission.  So  it a “perfect” setup for the bank.

Common wisdom is to focus on what we are good at and source out ourbackdoor operation.  This is especially true if we are fundemantally limited to become effective in our secondary activities. Ignoring this often leads to burn out and ineffective operations.

No question the REALTORS. 

The legality and the logistics of this transactions are often becoming a jungle not only for agents and brokers, but also to the employees of the lenders, not to mention the sellers.  In the mean time there is a seldom better opportunity to create win-win and financially rewarding scenarios for all participants involved in these transactions.  Our mission is to provide relevant information and discussion forum to creatively overcome this economic challange.