Posts from — August 2009

Arizona Short sale agents are not all the same!

At AzHomeHelp.com we are experienced, professional, & licensed Az Short Sale Realtors.  Of the thousands of Arizona real estate agents only a handful are capable and experienced in doing short sales and even some of these “Az Short Sale Experts” are not what they claim to be.

Here is some of the  “advice” some of my clients received before utilizing us to close their Az short sale deals (and my comments afterwards in italics):

• “We charge $1900 up front to do a short sale. ” WHAT????!!  At AzHomeHelp.com we do not charge any fees up front at all…
• “I don’t know much about taxes after a short sale.” We aren’t tax attorneys but our Arizona short sale experts know and understand the laws as well as how the Mortgage Debt Relief Act of 2007 & Economic Stabilization Act of 2008 allows primary residence homeowners to be exempt from taxes after a short sale until the year 2012.
• “Noone is buying short sales so it’s a waste of time to try and sell one.” Again, WHAT???  We are selling our Arizona short sale homes in less than 60 days and some don’t even last a week on the market before we get a contract!
• “It’s probably better to just foreclose.”  HUH?? Take a look at our short sale vs. foreclosure chart.
• “I’ve never done a short sale before but I’ll try.”  Uh-oh…this can be trouble!  Do you really want to trust your financial status and the threat of a foreclosure on someone who has never dealt with all the intricacies of a short sale in Arizona?

These are some of the things that inexperienced and unprofessional agents are telling people regarding short sales.  If you are looking to do an Arizona Short Sale then contact the ones who can answer your questions, put your needs first, and get the deal done!  Call us from 8am to 8pm 7 days a week at (480) 241-4406 or visit our Az Short Sale website at http://www.AzHomeHelp.com for more information about how to short sell your Arizona home!

Well, Bank of America & Countrywide have all but 100% solidified themselves as the country’s most difficult bank to do a short sale with.   I spoke to an agent last week who has had a complete file in with them for 3 months and still no BPO has been ordered.

90 days is supposedly their time from contract to close, not just to get a BPO (brokers price opinion or mini-appraisal).  I have not had that much difficulty with BOA/Countrywide but they are certainly one of the toughest lenders to work with.

When asked why they are such a nightmare to deal with I was given this answer 6 times in 2 days – (obviously they were highly trained to answer this one)  “We are the largest bank in the country and therefore are processing more short sales than any other bank.  Due to the large number of deals we are working on it is natural that our deals may take a little longer.”

Or do you think it’s the fact that you ask agents to fax 10 pages at a time?  On a 75+ page fax I’m supposed to stand there and fax just 10 at a time???  And the reason why is they say when other faxes come in it can screw up the line and even though it says the fax went through on the agent’s end it may not have on their end.

What?

Does that even make any sense?  So instead I’m supposed to fax 10 pages at a time, which will then open up the line for Joe from Texas’s 10 pages?  Then Sally from Mississippi’s 10 pages?  Then my 10 again?  If you don’t even have a sophisticated enough fax machine that can handle a 10 page fax who in the world is going to collate 50 different agents 75+ page faxes of 10 pages each and make sure that john’s philadelphia short sale doesn’t get confused with my arizona short sale?

Are you kidding me?

Ok, I’m done complaining about them.  It’s just that I’ve been doing this so long and have heard the craziest stories from them and still do and it absolutely floors me.  To be honest I get a bit of a laugh out of it all, especially considering the fact that I don’t do one thing they actually tell me to, I do it all my way.  And how about this, it actually gets done!

There are agents in town that won’t even take short sale deals if the lenders are BOA or Countrywide.  That’s fine with me — we still plan to get them done!

Call us at (480) 241-4406, visit our Arizona Short Sale Realtor website at http://www.AzHomeHelp, or stop by the fax machine….we’re probably there, faxing 10 pages at a time….

With questions pouring in about the Arizona anti-deficiency law SB 1271 I thought I would take a moment to try and explain what it is, what it means, and how it may affect you.

Currently if you own a property in Arizona and it is a one or two family dwelling on 2.5 acres or less and you default on the loan a first lienholder may not come after you for the deficiency.  Any junior lien holder where funds were used at the time of purchase to buy the home also may not come after you.

If you have a HELOC or did a cash-out refi at some point then the 2nd lienholder MAY come after you for the deficiency.  It is a common misconception that you can just stop paying your mortgage and let it go into foreclosure because you think that jr lien can’t do anything but they CAN pursue a deficiency if you did not use those funds to actually buy the property.

Investment property is included in this!  It doesn’t matter if its a second home, investment property, or primary residence, as long as it’s a single family home or duplex and on 2.5 acres or less it is exempt!  So your investment condo that you own and rent out?  Covered!   Duplex?  Covered!  Triplex?  Not covered.  Primary residence on 3 acres of property?  Not covered.

Now, with the passing of SB 1271 things have changed a bit.  You must now PROVE that you lived in a property for 6 consecutive months AND you must be able to show a certificate of occupancy.    Here’s where the issues with SB 1271 begin.

A certificate of occupancy is issued by the city in which you live and basically states that the property is in livable condition and meets building codes and laws.  Some cities, such as Mesa, do not issue certificates of occupancy!  And the city of Phoenix just started issuing them recently!  Historic homes may NEVER have had a COO given.

To get a certificate of occupancy if you don’t have one requires a home inspection.  And to pass that home inspection, you may need to make repairs, fix items, replace large ticket items, and basically pay for this entire fiasco out of your own pocket.  Most of the time people who foreclosed or did a short sale on their property don’t have extra money laying around to pay for inspectors, contractors, electricians, plumbers, etc. or to pay the local goverment for some ridiculous certificate that they never needed once while they lived there!

Let’s touch on the larger issue with SB 1271 which is the fact that INVESTMENT PROPERTY is now fair game for bank deficiency judgements.

If you lived in your property for 6  months consecutively or more then you should not be affected by this law directly as it probably won’t apply to you.  But your neighbors & neighborhood will be and this may drastically affect your property values dropping them even further than they have gone already!

Why?

I’ll give you an example that explains why — Let’s say you live in a new home subdivision.  You bought your house 3 months ago for $350,000 and you next-door neighbor bought the exact same house at the same time and at the same price.  After 3 months, his job relocated him to another state and he thought “Ok, no problem.  I’ll just rent the property for a while”.    But after 6 months of tenant troubles, dropping property values, and negative monthly cash flow he can’t afford it anymore.  So he asks the bank for a loan modification and they stall and stall and stall and finally deny him.  Meanwhile he has fallen behind on his payments and the bank immediately begins foreclosure proceedings.

In this scenario, the bank WANTS to foreclose on this property.  Let’s say they finally do and sell it at auction for $225,000 which is deficiency of $125,000.  Because the owner never lived there for 6 consecutive months the bank may now pursue this seller for the deficiency.  Sure, they want to get as much as they can for the house but we all know that foreclosures are usually priced pretty low and what does the bank care?  No matter what it sells for they’ll just go after the borrower for the deficiency and if he doesn’t pay they can garnish wages, go after his checking & savings accounts, any equity in any other property he owns, etc.

Not to mention that the house next to you just sold for $225,000 because the bank had no interest or concern about the neighbors or neighborhood.  If they did they would have worked with the borrower via loan modification or short sale.  Now your property is worth somewhere around $225k, the bank is pursuing the borrower for their deficiency but what can you collect?  SQUAT!

That’s just an example and you can feel free to change around the scenario all you want, the answer remains the same.  The banks will heavily pursue foreclosures as opposed to working out the terms like loan modifications or short sales because a law like this is basically another bank bailout!

“Hey, Mr. Banker — Even though you made all that money when the market was flying high and even now you continue to make money as a servicer but guess what?  Now you can pursue every person who doesn’t pay you because they’d rather put food on the table and you can go after them personally!  Go after every last penny they have!  And by the way, isn’t the President of one of the largest banks in the country in jail right now for fraud???   YES HE IS!!!!!”  (Google “Mozilo” & “Countrywide” for more on that story….)

It’s absolutely ridiculous.  We already used our tax money to bailout the banks and what did they do with it?  They bought more banks!  Now they want to be bailed out again!

Another major issue of this law is that it is retroactive.  That means that when you signed the loan 3, 6, 12, 24, 36 etc. months ago THIS LAW WAS NOT IN EFFECT!!!  You signed loan documents under the impression that you WOULD NOT be pursued for a deficiency.  Now they want to change the rules in their favor with 5 minutes to go in the game!  Now they want to tell you that  ”It doesn’t matter what you signed back then, this law applies to you NOW so tough!”

How fair is that?

So, here’s SB 1271 in a nutshell:

• You must live in the property for 6 consecutive months
• You must provide a certificate of occupancy
• It is up to YOU as the trustor (borrower, owner, mortgagor) to prove this

Here’s how it may apply to you (this law is written so ambiguously however that there is no defining terms so all we can do is speculate):

• Currently your primary residence and you have lived there 6+ months – You should be fine
• An investment property now but you lived in the property at some point for 6+ months and can prove it – You are probably fine
• 2nd home – Noone knows the answer to this but if you can’t prove 6 months consecutive occupancy then my guess is look out, here they come!
• Investment Property — They will just be drooling over the chance to foreclose and come after you!

So what can we do?

1.  Click here to goto the Governor’s contact page.  Send her a note saying you support the signing of HB 2008 and the FULL repeal of SB 1271.  Here, you can even cut & paste the following:

Governor Brewer – I am in full support of you signing HB 2008 and repealing the Arizona Anti-Deficiency Law SB 1271.  The law was not written in the best interest of Arizona homeowners and residents and by repealing this law you will be protecting the interests of your constituents and the people that you serve.  Thank you in advance for repealing SB 1271 and thereby preserving the better interests of myself, my family, and our future.

2.  Take action!  If you were thinking about doing a loan modification or a short sale, get started!  Even if this law is repealed it will be revisited probably in January and although should not be as one-sided I’m sure there will still be some repercussions for investors and second-home owners.

3.  Don’t bury your head in the sand! – Educate yourself, learn about your options to avoid foreclosure, move forward and take a stand!

Together we can fight this and make Arizona a better place for our families & our future!

If you have any additional questions regarding this law, short sales, loan modifications, or the like please call me at (480) 241-4406 and I’m happy to discuss it with you.  If you think a short sale may be your best option then we want to be your Arizona Short Sale Realtor of choice so visit our website at http://www.AzHomeHelp.com for more information or call us today!

Disclaimer:  I am  not an attorney and you should consult legal counsel about how this law pertains to your specific situation.

As Az Short Sale Specialists we are happy to help fellow real estate agents across the country with their Arizona Short Sale Referrals.

If you have someone in need of a short sale in the greater Phoenix/Scottsdale real estate market please give us a call at (480) 241-4406 and we are happy to provide our excellent short sale services to your referral client.

We offer a healthy referral fee to all of our agent partners once the deal has closed.

You may also contact us via our Az Short Sale website.

Thank you in advance for all of your Arizona Short Sale Referral business!

I’ve had a lot of requests lately for updates on SB 1271 and I’ll be sending out up-to-the-minute information as I receive it.   If you’d like to be put on that list Email Me.

I will also be putting information regarding this bill as well as HB 2008 (the bill that IF signed will fully repeal the anti-deficiency law) on our Az Short Sale website so feel free to check in there as well.

Also, here is the law as was slipped behind the public’s back…whoops, excuse me, I mean passed through the senate…!!

SB 1271 requires a trustor to have lived in a trust property for at least six consecutive months in order for a deficiency judgment against that trustor to be prohibited.

History

Arizona Revised Statutes (A.R.S.) § 33-801 defines a deed of trust as a deed conveying trust property to a trustee or trustees to secure the performance of a contract or contracts. A trust property is any legal, equitable, leasehold or other interest in real property which is capable of being transferred, whether or not it is subject to any prior mortgages, trust deeds, contracts for conveyance of real property or other liens or encumbrances.  If a trust property is sold at auction for less than the lender is owed, the difference between the owed amount and the amount received in the trustee’s sale is called the “deficiency”.  In some cases, the lender may be permitted to seek a judgment in the amount of the deficiency against the trustor, called a “deficiency judgment”.

Arizona Revised Statutes (A.R.S.) § 33-814 states that within 90 days after the date of sale of a trust property under a trust deed, an action may be maintained to recover a deficiency judgment against any person directly, indirectly, or contingently liable on the contract for which the trust deed was given as security. The deficiency judgment must be for an amount equal to the sum of the total amount owed the beneficiary as of the date of the sale either by the fair market value of the trust property as determined by the court or the sale price at the trustee’s sale, whichever is higher.  However, that section prohibits a lender from seeking a deficiency judgment against a trustor if the trust property is 2.5 acres or less and is used as a single one-family or single two-family dwelling.

Provisions

• Prohibits a deficiency judgment against a trustor pursuant to a trustee’s sale of a trust property that is 2.5 acres or less and is used as a single one-family or single two-family dwelling if both of the following apply:

The trustor has lived in the trust property for at least six consecutive months.

A certificate of occupancy has been issued for the property.

Places the burden of proof on the trustor to demonstrate that the statutory requirements to prohibit a deficiency judgment are met.