Peter Nielsen

A few weeks ago, the seller of the condo that is the subject of this short sale saga had been offered, and accepted, a loan modification from Chase, her first mortage lender. She felt that even if Countrywide, the second mortgage holder, didn't also offer her a loan modification, that she could make the payments and stay in her home. At that point, I drew up a Cancellation of Contract form to let the buyers know that there would be no short sale. I also submitted a modification to our Listing Agreement. The Seller had indicated that she would pay the sales commission in light of the fact that I had met her objective of being able to not have to move from her home. (The sale had included a rent-back provision.) Even though a commission is earned when an agent brings a buyer who is willing to purchase on the terms offered by the seller, knowing that she was financially stretched thin, I proposed that she pay only half of the commission, since the buyers' agent would not have to be compensated. This amounted to $3270, which I was willing to accept over the course of the coming year in 12 equal installments. I also agreed to continue to negotiate on the seller's behalf with Countrywide in an attempt to get them to also grant a loan modification.

The seller responded with an email indicating that there would be no way that she could afford to pay $272.50/month (even though her first mortgage payment had now been reduced by over $900/month). She said that she could pay $100/month after her "Payday" loans were paid off, skipping the months of August and September due to her reduced salary as a teacher over the summer. I then revised the proposed modification to accomodate her stated ability to pay $100/mo, stretching payments out over nearly 3 years.

To this, she responded (at 2:42am) with an even longer email citing her need to save to pay property taxes and income taxes, a need to pay delinquent HOA dues, etc. She also concluded that she didn't want a loan modification from Countrywide, since that would likely still leave her total mortgage debt "under water." She said that they could foreclose if they chose to, and that since a sale had not been concluded and she didn't have the financial resources, that she would not sign any kind of commission payment plan and asked me to stop work on her behalf, and that this was final -- end of the discussion. The next morning, I called and left a message telling her that was fine, that I would mail a cancellation of the Listing Agreement and that when Countrywide called back, I would tell them that I no longer represented her and that they should contact her directly.

Stay tuned for the conclusion to the story.

Peter Nielsen, Area Pro Realty, Peter@MarinRealtyExperts.com, 415-472-6243.

This is another posting of a series that began in February with an offer for a condo that I had listed as a short sale in January. After getting to within a day of when I thought I would receive an approval from the second mortgage holder, Countrywide, I received a phone call telling me that a new "second phase negotiator" had been assigned to the case, and it needed to get in line behind 70 other cases awaiting her attention. That was just over 2 weeks ago.

Since then, the Seller has decided to accept a forbearance agreement from the first mortgage holder, Chase, under which they will not take foreclosure action during the next 3 months so long as she makes a reduced payment amount of $927 each month. This is a reduction from the payment that she stopped making many months ago that was $1935/mo. If she makes those 3 payments on time, they will negotiate a long term loan modification, based on her income level. Still, she needs to see what Countywide will negotiate, because unless they also provide some mortgage relief, she may still have a home that is "under water" and have payments that she can't afford.

Today I received an email from the Countrywide negotiator stating that "Your file has been submitted & is under review." She didn't say to whom it had been submited, whether it was submitted with a recommendation to approve the offered $3000 payoff amount, to whom it had been submitted or how long it would take to get a response. Perhaps it's been submitted to a "third phase negotiator"...

You can find the complete story on my blog at www.MarinRealtyExperts.com/Blog.

Peter Nielsen 415-472-6243

The Big Picture: The downward pressure on prices continued in the first quarter of 2009 as the recession deepened. Short sales and foreclosures have become more common. At the beginning of April there were163 "distressed" properties listed on the MLS in Marin. The number of homes on the market has increased and the median time to sell a home remains approximately 3 months.

Prices: The median price for a single family residence in Marin in Q1-2009 was $712,995, down 25% from the same quarter a year ago and down 11% from the previous quarter. The median price for a condo was $260,000, down 46% from the same quarter a year ago and down 17% from the previous quarter.

Inventory: As of April 1, 2009, there were 1,053 residential properties on the market in Marin. With only a little over 100 homes having sold each month this quarter, the time it would take to sell th e current "inventory" has jumped to 10 months.

Buyers or Sellers Market? It remains a Balanced Market for homes priced under $750,000. It is a Buyer's Market for homes above $750,000, especially for the homes priced above $1,750,000.

To view the complete report, including prices by type of property and by town, visit www.MarinRealtyExperts.com/Current_Market_Report.

Peter Nielsen (415) 472-6243 / Peter@MarinRealtyExperts.com

Just when I thought I had provided everything that Countrywide needed to make a decision on authorizing a short sale on their 2nd position loan, and had made a connection with the decision-maker, I got a call from Farzaneh, a new "second phase negotiator" who said that Marjorie had been transferred to another department and that she would be taking over the file. Since everything was in her hands for a decision, I assumed she'd make that decision in a day or two. Instead, she told me it would be 3-4 weeks before she could do her own analysis, since she has 70 other files on her desk to process first!

So that set us back, but may have been just as well, since it provided us with time to evaluate the loan modification offered by Chase, the first mortgage holder. The owner was concerned that they would reduce her interest rate, but keep the principal the same, which would put her right back in the short sale situation should she want to sell anytime in the near future. Because of that, she came up with a brilliant idea -- offer the buyers a buy-back agreement that would be signed immediately after her sale closes. She would offer to buy it back at a higher price than it was sold for if the buyers would sell it back to her under a 7-year amortiztion period that would provide them with greater cash flow than they can get by renting it out. Alas, the buyers don't want to be her banker and would lose the upside appreciation potential if they did this.

Further discussion with the servicer of the first mortage, Select Portfolio Services, revealed that the offer they are making does not specify the interest rate or term that they will offer. Instead, if she agrees to the "forebearance agreement" that they have offered, and makes the reduced payment amount for the next 3 months, then they will work out with her at that time how the principal balance and interest rate will be adjusted. They have assured her that the principal will be reduced to something near the current market value and they will loan her the amounts needed to bring her property taxes current. This sounds very good and so she is going to sign the forebearance agreement.

For the complete story, see the previous segments of this story on my blog at www.MarinRealtyExperts.com. Peter Nielsen 415-472-6243.

Here's what's been happening on this short sale (see prior entries for the whole story): I received a call on Thursday, April 2 from Marjorie, Countrywide's "second phase negotiator" asking me to fax her a copy of the HUD1 closing statement showing the amount ($3000) that the first lender (Chase, via Select Portfolio Services) would offer them to settle. I faxed it to her along with the Chase's approval letter and thought that I might get final approval from her later that day.

On Monday, April 6, I emailed to Marjorie the seller's most recent bank statements that she had taken a few days to get to me, and asked what the next step was. That same day, I got a call from the seller, saying that Countrywide was asking her if she was still interested in doing a short sale. She said, "yes, of course" and was told it shouldn't take too long now to get a decision from them.

Later that day, I got another call from the seller, saying that the first lender had called and offered her a loan modification instead of the short sale. They have offered to cut her payments to $927/mo instead of her current $1935/mo! I wondered what the catch was and told her to send me the documents when she gets them, so I can look for the loopholes.

The next day, she called me to say that someone else had called her and asked if she was going to apply for the loan modification. She had already agreed to it on the phone the day before and now was wondering herself if this was really a legitimate offer. She wasn't even sure at this point if the caller was from either Chase or Select. So I told her I'd call Select and see if I could get confirmation. Sure enough, they had a record of having offered this repayment plan, for which she would have to apply and which would take about 10 days to process. If she made the new payment for the next 3 month trial period, they would most likely recast the loan at the new interest rate that makes such a payment possible. (On a loan of approximately $245,000, the interest rate would be approximately 2.5%.) I phoned back the seller to say that it appears to be a legitimate work out plan, so she says to call off the short sale because with a reduction of nearly $1000/mo, she figures she can afford to stay in her home. We'll scrutinize the paperwork when it arrives, but if it's as they say it is, this could be the best possible outcome for the seller.