Mortgage Modifications in Florida Are Abysmal!

Do you remember my article in December 2009…New Math Equation: HAMP + HARP + TARP = DUD? Well I guess I did not use strong enough words. I am not even sure abysmal is strong enough. Complete failure…utter disaster…absolute waste of a few hundred billion dollars! Anyway you slice it,  a permanent loan modification under President Obama’s nearly year-old program to stem home foreclosures has been a horrific failure. So bad that I believe we may have been better off with out any bailout programs and saved tax payers hundreds of billions of dollars. So how bad is it?

Florida ranks third in the nation for foreclosures and has over 1 and 6 homeowners currently in default we have put hundreds of billions of dollars to good use and have successfully completed a whopping 8,405 mortgage modifications! Nationwide we have done 66,465 permanent mortgage modifications less than 2% of the total loans that are past 60 days delinquent. I personally know of only two people  that have actually received a mortgage modification.

The dismal performance of the program marketed as a helping hand for the nation’s more than 3.3 million delinquent home loans was released last Friday in a Treasury Department progress report.

Throughout Florida, which by every measure is one of the states hardest hit by the real estate crash, there are 8,405 permanent modifications. In Palm Beach, Broward and Miami-Dade counties combined there are 2,987 permanent modifications.

Another 96,703 Florida loans are on trial modifications.

The Making Homes Affordable program gives incentives to banks to modify loans in three basic ways; reducing interest rates to as low as 2 percent, increasing the life of the loan, and reducing the principal owed on the loan.

“You keep hearing about this wonderful program the government is doing but it’s not working,” said Joel Bienvenu, who owns a home west of Boca Raton and has been trying to get a loan modification through Wells Fargo since August. “I keep getting excuses that they are just overwhelmed.”

Nationwide, 66,465 permanent modifications have been approved, less than 2 percent of the total loans that are 60 or more days delinquent. Another 46,056 permanent modifications have been approved by the lender, but not yet by the borrower.

The median monthly decrease to mortgages that received permanent modifications was $516, according to the Treasury Department.

From the beginning of the program, homeowners have complained about having to send lenders the same paperwork multiple times, while banks say borrowers provide the wrong documents or fail to meet the requirements for the permanent modification.

Anthony DiMarco, executive vice president of government affairs for the Florida Bankers Association, said Friday that lenders have been on a learning curve, but are improving.

“I think the industry is working hard,” he said. “You can’t ramp up a program like this overnight.”

Fort Lauderdale real estate attorney and foreclosure mediator Shari Olefson said the more than 1.1 million trial modifications offered to borrowers nationwide shows lenders are making an effort.

The fact that just 66,465 have become permanent points to a fundamental problem with the program, she said.

“The program itself is a failure,” said Olefson, author of Foreclosure Nation, Mortgaging the American Dream. “It’s trying to put a square peg in a round hole.”

To qualify for a modification, a person’s monthly housing expenses must be more than 31 percent of gross monthly income. But you also must prove that you can pay for the modification.

Olefson believes high unemployment and a steep loss in housing equity is keeping the plan from working.

“The whole program was crafted before we correctly identified the problem,” she said.

New Short Sale Guidelines Encourage Sweeping Changes to Short Sale Process

It has been a very long year fighting everyday to save homeowners from foreclosure. It is a daily challenge to push short sales efficiently and effectively through the short sale process. I have been actively involved in national short sale advocacy groups and we have been demanding changes to a broken short sale process. Two years ago when we started our first short sales, it was a difficult path of paving a road never traveled. As short sales become more prominent we saw changes and guidelines help streamline and encourage lenders to participate in foreclosure prevention programs under the Making Home Affordable Program or Home Affordable Alternatives Program (HAFA). These programs encouraged mortgage modifications and offered some incentives for shorts sales and deed in lieu of foreclosures. However, the program struggled to offer real solutions to an epic problem plaguing our country’s real estate market.

Today’s announcement by the Treasury Department is the next critical and potentially monumental step to making a difference in offering homeowners a real foreclosure alternative. With over 88% of our distressed inventory in Okaloosa, Walton and Bay County being short sales…this is a very significant and much needed change…or as I would call it the necessary lifeline to get through this current real estate crisis. The plan is designed to accelerate the necessary agreements between lenders, real estate agents, buyers and sellers.

Here is a quick break down of the new guidelines…will it change short sales overnight? No. But we have yet to see the bulk of short sales and 2010 will be an epic year for short sales and foreclosures!

The program’s official name is the Home Affordable Foreclosure Alternatives Program (HAFA), and it’s part of an existing initiative, the Home Affordable Modification Program (HAMP). HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac, which cover over half of all U.S. mortgages; however, Fannie and Freddie will issue their own versions of HAFA in coming weeks.

While HAFA’s goal is simple – increase the number of short sales and “deeds in lieu of foreclosure” by simplifying the process – the rules are complex, and it comes with 43 pages of guidelines and forms. Among other things, HAFA:

Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

• Prohibits servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).

• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed.)

• Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors.

The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on Dec. 31, 2012.

To qualify under the new guidelines:

  • The property must be the homeowner’s principal residence.
  • The homeowner is delinquent on the mortgage or default looks likely. Homeowner is insolvent.
  • The loan was made before Jan. 1 this year and is less than $729,750
  • The borrowers’ total monthly mortgage payment exceeds 31 percent of their before-tax income.


Read the complete 43 page SHORT SALE GUIDELINES

If you are a troubled homeowner, or have a family member or friend facing foreclosure, please give us a call for a confidential consultation about the possibility of a short sale.  Call Craig Baranowski at 850.259.1788 or email  us @ Team Baranowski has a 100% success rate for all of our short sales for 2009!

This site, Craig Baranowski or Keller Williams Realty is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax adviser for more information.

Is a Next Wave of Foreclosure on the Horizon?

Industry experts have been closely monitoring and trying to predict if and when the next wave of foreclosure will hit. Many fear that a second wave of foreclosures is poised to hit the market and potentially undermine much of the housing recovery efforts as more homes add to the glut of inventory and drive down prices.

Many of the housing recovery efforts by the Obama administration have targeted homeowners in financial distress. The Making Home Affordable program was intended to have hundreds of thousands of financially devastated homeowners stay in their homes via a mortgage modification or avoid foreclosure by doing a short sale. These housing recovery efforts have delayed thousands of foreclosures.

It is estimated that  about 7 million properties are destined to go into foreclosure in 2010 compared to 1.27 million properties in early 2005, according to a September study by Amherst Securities Group.

There is a significant lag time between a borrower going deliquent and the bank taking the home via foreclosure. Here’s why:

1. Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.

2. Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.

3. Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.

4. Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don’t want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.

If the projections are correct this could have a significant impact on home prices across the country. We will keep an eye on how this will impact Walton, Okaloosa and Bay Counties.

Bank of America's Irresponsible and Unacceptable Short Sale Practices Must Change

Well it is a catchy title. I know we all yearn for any improvements with Bank of America’s current short sale and mortgage modification track record. A track record that is abysmal and most certainly one of the worst in the industry. I recieve dozens of phone calls and emails from angry customers across the country complaining about Bank of America. All feel improsoned with inadequate and unacceptable response times on Bank of America short sales and mortgage modifications. Many buyers and sellers have put their lives on hold and live in turmoil while Bank of America literally watches the dust collect on thousands of files with little to no action for weeks or even months…or shuffles the paperwork from one negotiator to another with little to no progress on the file’s status. This is not how the customers were treated when Bank of America was writing the loans.

With 1 in 5 loans in Florida estimated to be with Bank of America, formerly Countrywide, it is clear that this issue has raised the eyebrows of a number of people in Florida that can prompt change or at least raise the issue up to the executive ranks at the nation’s largest lenders .

Today, Tuesday November 17th, Attorney General McCollum sent a letter to the Florida Executives of Bank of America, JP Morgan/Chase, Wells Fargo and Wachovia. He called upon the executives to provide homeowners with a fair and efficient loan modification process. To help solve the crisis he requested the executives to meet with him and discuss the bank’s responsibility to make immediate and necessary changes.

Whether this letter will create any action from the executives remains to be seen. It is clear however, that the issue will not be buried or swept under the rug. Too many homeowners, home buyers and industry professionals are impacted by this crisis and their demands for change can be heard loud and clear across the country.

In McCollum’s letter he states Florida borrowers are:

·         Placed on hold for excessive periods when calling for help

·         Forced to speak to unknowledgeable representatives

·         Transferred from department to department and person to person

·         Forced to submit identical paperwork again and again

·         Provided no avenue or recourse for complaints

·         Never informed  about the status of their loan modifications

Bill McCollum says these practices are “irresponsible and unacceptable”.

These are all the same issues affecting the processing of short sales. Any positive change to the processes and procedures for short sales and mortgage modifications would be welcomed with open arms.

You can read Bill McCollum’s letter to Bank of America by clicking HERE.

If you are a troubled homeowner, or have a family member or friend facing foreclosure, please give us a call for a confidential consultation about the possibility of a short sale.  Tracy Baranowski at 850.259.4270 or Craig Baranowski at 850.259.1788 or email  us @ Team Baranowski has a 100% success rate for all of our short sales for 2009!

Foreclosure Program Gets Another $3.1 Billion to Help Modify Mortgages

On Wednesday it was announced that the government will provide another $3.1 billion to a group of mortgage servicing companies as an incentive to modify loans to combat record levels of foreclosures. The modifications, which included reductions in projected payments for some companies, pushed the total amount for the program to $18.3 billion, from $15.2 billion. The biggest adjustment was made for Countrywide Home Loans Servicing LP, part of Bank of America Corp., which received an increase of $3.3 billion, bringing its total to $5.2 billion. Treasury spokeswoman Meg Reilly said the original estimates were based on publicly available information. The revised estimates were calculated using more accurate data supplied by the companies. Further adjustments in the amounts available to the companies will be made on a quarterly basis, she said. The administration announced in March that it would provide $50 billion from the $700 billion financial rescue fund as an incentive for the mortgage industry to modify loans at lower monthly payments. The effectiveness of the relief plan remains in doubt, with questions lingering about how much the lending industry is cooperating. Many housing counselors say it hasn’t made much of a difference. The administration last month expanded the program to provide incentives for lenders who streamline short sales which is the process of selling a home that is worth less than the mortgage, or a deed in lieu that transfers ownership of a home to the lender. Both options will still ding the homeowner’s credit score, but less than a foreclosure.

If you or someone you know is looking at buying or selling distressed property…rely on the experts, The Distressed Property Experts of Team Baranowski!
Note: The information provided is for informational purposes. No legal advise is given or implied. Please check with a qualified attorney in your area

Bank of America formerly Countrywide short sale process streamlined?

Update: Bank of America Positive Changes to Their Short Sale Program

Countrywide was one of the largest home loan providers in the United States, as a result they have been overwhelmed with a staggering number of foreclosures and short sales. During the last twelve months they have received a large amount of bad press and has earned a bad reputation for taking an excessively long time to process a short sale. In some cases Countrywide has taken as long as 8 to 9 months to approve a short sale. In the process the seller get discouraged, buyers walk from the transaction and Realtors lose faith in a system that seems fundamentally broken. Bank of America’s purchase of Countrywide appears to have only exacerbated the problem.

In recent months we have seen and heard of talks about a streamlined short sale process and incentives being put in place by the Obama Administration under the Making Home Affordable Program. This program is targeting to prevent homeowners from foreclosure with alternative options including mortgage modifications, short sales and deed of lieu of foreclosures. You can read more about the program here.

We have yet to experience any tangible changes to Bank of America’s short sale process however, this letter to one of our customers is a sign that they are acknowledging and trying to define a standardized short sale process. In this letter Bank of America is expecting the short sale process to take 30-40 days to complete. If the loan was sold to an investor it will take an additional 20 days to process. This would make the entire process from start to finish 60 days. Our experience with dozens of  Bank of America – Countrywide short sales has been anywhere from 3 months to 6 months.

If we could get close to a 30-40 day turn around on short sales with Bank of America it would be almost magical and welcome any changes to improve the process. Click here to view the letter from Bank of America.

Relief for military homeowners in financial distress

The economic downturn and the crashing of the real estate market have put millions of homeowners in financial distress. This financial crisis has spread far and wide and is impacting members or our military who are forced to sell their homes in a down market due to a relocation. Military homeowners who must sell their homes for a loss after receiving transfers orders are eligible for aid that could mean thousands of dollars in reimbursements from the federal government. Recently, the Departments of Defense has published guidelines for a $555 million program to help military families that have had to relocate.

Members of the Armed Forces permanently reassigned during the mortgage crisis can recieve aid if they meet these guidelines:

1. Permanent reassignment requires move of more than 50 miles.

2. Reassignment ordered between 1 February 2006 and 31 December 2009.

3. Property purchased (or contract to purchase signed) before 1 July 2006.

4. Property sold by owner between 1 July 2006 and 1 May 2010.

5. Property was the primary residence of the owner

6. Owner has not previously received these benefit payments.

To find out more information visit the DOD HAP website by clicking here.

If you do not directly qualify for this program, there are more options under the Servicemembers civil Relief Act (SCRA). It is important to remember that lenders and working hard to help homeowners prevent foreclosure especially for our military. Foreclosure alternatives include; forbearance, reinstatement, short sale, mortgage modification and deed in Lieu of foreclosure. You can read more about these terms here.  It is in the lender’s best interest to help you.

Unwinding the Data, A Look at Foreclosures Nationally for the First Quarter 2009

I get asked every day when we are going to see the bottom of the market and how foreclosures and short sales are affecting prices. Predicting the bottom of the market is a very difficult question to answer especially if you are trying to decode National and local real estate trends. It does not take a crystal ball to know that this is absolutely the best time to buy real estate. Mortgage rates are at an all time low and housing and land prices are at lows that still surprise me every day.

Trying to track foreclosure data and predict trends is very complex, especially when we add a volitile mix of negative job data, excessively negative media coverage, complex stimulus packages and foreclosure moratoriums. What we do know is that lenders opened the foreclosure floodgates by lifting the moratorium on foreclosures in March, resulting in a record number of foreclosures nationally. This has sent a flurry of negative media coverage regarding the real estate market.

The U.S. Foreclosure Index rose 44 percent in March as 175,199 homes were lost to foreclosure, up from 121,756 in February, reported.

Nevada ranks No. 8 in foreclosures nationwide with 26,760 real estate-owned — bank-owned — properties over the past six months. California is first with 130,855 REOs, followed by Florida, 77,542, and Arizona, 53,928.

“Hopefully, this is a short-term surge caused by months of delayed foreclosures,” said Alexis McGee, president of “This is a very troubling turn after seeing some bright spots earlier this year.”

Several banks had agreed to suspend foreclosures while the Obama administration crafted a plan to modify home mortgages for troubled borrowers. They included Citigroup, JPMorgan Chase, Bank of America, Morgan Stanley and Wells Fargo & Co.

Fannie Mae and Freddie Mac, government-controlled mortgage finance companies, suspended all foreclosure sales involving occupied single-family homes and two- to four-unit properties through March 6 to give troubled borrowers more time to negotiate with their loan services.

McGee said that a backlog of properties in the system exists and that the backlog is going to take a couple of months to work its way through the process.

The Obama administration’s Making Home Affordable Plan is intended to help promote loan modifications by bringing debt-to-gross income ratios down to 31 percent. In short, that would allow homeowners to only spend 31 percent of their income on the mortgage, including taxes. With such low payment levels – compared to 50 percent payments as the recent norm of banks – people who get their loans modified under the new plan will be far more likely to remain in their home. With President Barack Obama’s loan modification plan now in effect, the hope is that pre-foreclosure filings will decline, which will help stabilize the housing market, she said.

“I really think at some point that will take hold,” she said. “In the beginning, lenders are having trouble keeping up with demand. If a homeowner was denied (modification) in the past, they need to go back and ask for it again.”

California led the nation in number of foreclosures last month – 38,318, up more than 59 percent from February, the report shows. “But the state also is a leader in the housing recovery,” says Ms. McGee, “and mixes the good with the troubling news. It’s indicative of what’s beginning to happen in states across the country.”  The report ranks Florida No. 2 nationally in March foreclosure numbers, with 18,946 foreclosures, up 33 percent from February.

Nationally, the number of properties in the pre-foreclosure process climbed slightly to 225,131 in March, up 5.8 percent from February’s 212,703, according to the report.

For the quarter, 604,590 pre-foreclosure filings occurred nationwide, up 14.5 percent from 528,241 in the fourth quarter of 2008 and up 17.3 percent from 515,411 in the first quarter of 2008. The quarterly pre-foreclosure filings are also the highest quarterly numbers since the foreclosure crisis began.

Annualizing that number, the U.S. is on track to top 2.4 million pre-foreclosure filings before year-end.

California had the most pre-foreclosure filings, followed closely by Florida, in March. Over the last six months, however, Florida has had the most pre-foreclosure filings, followed by California, Arizona, Illinois and Nevada.

Foreclosures account for roughly 80 percent of homes sales in Las Vegas as investors have returned to the market to snap up deals.

Something to watch closely at the National level which I found interesting…

“As an aside, if one were to look at the dark side, should housing decline and the foreclosure rate continue at current levels or increase, FHA could be the next major bailout and could be the mental straw that drives the taxpayer nuts,” said home financing expert Fred Claridge.

Las Vegas business advisory firm Applied Analysis reported that new foreclosures, or homes that transferred title back to banks, remained elevated at 2,381 in March, a 70.8 percent increase from a year ago. That is about 77 home take-backs every day.

Foreclosure levels reflect the latest market dynamics, Applied Analysis principal Jeremy Aguero said. Pricing in the residential sector has continued to erode, placing an increasing number of homeowners in a situation where they owe more on their mortgage than their home is worth.

“While a portion of foreclosures are the result of borrowers’ inability to make necessary payments due to job loss or other factors, many are facing the psychological dilemma of servicing an obligation with a cavernous disconnect between debt and equity,” Aguero said.

There is some good news. Heavily hit markets are seeing a flurry of sales. I recently read some statistics on my Twitter feed regarding their market statistics. The numbers are looking positive:

  • The current AZ MLS inventory is 43,976 which is a drop of about 20% or over 10,000 properties since January of this year.
  • Of the houses currently on the market 42% of those are lender owned or short sale properties.
  • Currently there are 15,707 homes in pending which is one of the highest numbers anyone remembers seeing for AZ MLS. Of those 15k homes, 78% of those are bank owned or short sales properties.
  • Closed homes YTD is 20,003 and half of those home sales in Phoenix have come since March 1st.
  • Of the Phoenix area homes that have closed in 2009 75%, or 15,019, were lender owned or short sales.  Of that 75%, 88%, or 13,234, were lender owned.
  • In 2009 will should see a stabilization of foreclosures and eventually the real estate market will settle back into equilibrium.

    If you or someone you know is looking at buying or selling distressed property…rely on the experts, The Distressed Property Experts!
    Note: The information provided is for informational purposes. No legal advise is given or implied. Please check with a qualified attorney in your area.

    Making Home Affordable Program – the Obama Housing Plan

    On February 18, 2009, President Obama announced his Making Home Affordable Program, designed to help up to 7-9 million families avoid foreclosure by restructuring or refinancing their mortgages. This plan is designed to not only help responsible homeowners behind on their payments or at risk of defaulting, but prevents neighborhoods and communities from being dragged over the edge too, as defaults and foreclosures contribute to falling home values, failing local businesses, and lost jobs.

    More detailed information can be found at

    Guidelines to the Making Home Affordable Program

    The Obama Administration announced the new U.S. Department of the Treasury guidelines. These guidelines enable servicers to begin modifications of eligible mortgages under the Administration’s Making Home Affordable Program – announced by President Obama on February 28, 2009.

    Here are the key elements of the Obama plan summarized by the National Association of Realtors:

    1.  The Home Affordable Refinance Program.  Under this program, eligible borrowers may refinance loans that Fannie Mae or Freddie Mac (the government sponsored enterprises, or GSEs) own or guarantee.  The program can help homeowner-occupants who are current in making loan payments and have loan-to-value ratios (LTVs) above 80 percent but not more than 105 percent.  Cash out refinancings are not permitted.  The program ends in June 2010.

    2.  The Home Affordable Modification Program.  This is a $75 billion program with lender, servicer, investor, and borrower incentives to make it work.  The program is limited to homeowner-occupants who are at risk of default or already in default and who have loans at or below the maximum GSE conforming loan limit of $729,750 (or higher for 2-, 3-, and 4-unit properties).  Loan modifications under the program may be made until December 31, 2012.

    3.  More Support for the GSEs.  President Obama also announced more support for the GSEs, including doubling of potential Treasury investment from $100 billion to $200 billion for each GSE, to maintain their positive net worth.  The plan also raises the cap on mortgages that the GSEs may hold in their portfolios by $50 billion to $900 billion.

    If you are behind on your mortgage or know a friend that is behind on their mortgage please direct them to This is an excellent resource to determine if you are eligible for a Loan Modification. 

    If you do not qualify for a mortgage modification and need to sell your property. Please give us a call. We can help!