Jacksonville Real Estate Market Information

So Bank of America has announced that they are trying a new program out to go ahead and take homes back from delinquent homeowners, then rent the home back to the homeowner.  

BOA will charge the homeowner rent (!!!) that is less than their payment and is an amount they can afford.  Then they will sell the home to an investor with the former homeowner in place as a tenant.  Guess at that point they can be on the chopping block as soon as the lease is up and they lose their home anyway.  But who cares, right?  BOA can paint themselves as a "hero" for helping the homeowner.

Hey...Bank of America?  Why don't you consider meaningful mortgage modifications.  Reduce the payment to the homeowner to what you would charge them in rent.  Sign new paperwork reflecting the new payment (which will also be a workaround since you lost or destroyed the original paperwork in many (most?) cases.)

BOA, when you sell to the investor at today's real estate market prices you will still lose LOTS of money.  If you modify the mortgage you will have the income coming in again and get more for the house in the end.  

Higher profit = Happy investors...right?

Unless this isn't really about mitigating losses....and it is NOT really about mitigating losses is it?  Over the past five years we've learned that.

As the government has gotten more and more involved, and MI companies have gotten into the action, we have seen the process get longer and more difficult.  We've seen short sales lengthen as you generally have several layers to get through.  Even in the "slow" short sales we used to generally expect our approvals within 60 days.  Now 90 days would be a blessing on many.  We can see absolutely no need for this inefficiency.  Since we are five years or so into short sales being on the upswing banks have had ample time to work their kinks out. 

Processor approval

• While this is not in any way an "approval" in most cases paperwork must pass this level of scrutiny before it is passed along and assigned to a negotiator.  
• While this layer has no authority to approve a file, they can hold the file up for long periods of time by simply not doing their job.  
• We've seen processors require contract terms to be rewritten to suit them.  We've also seen processors seemingly forget, or refuse, to pass it along and require a second complete round of paperwork down the road because things have "expired."

Negotiator approval

• This is the point of contact for the short sale after the paperwork has made it through the processor.
• There are really, really good ones...really, really bad ones...and lots in between.  Some are really nice, some are crazy, nutso jerks....and they don't come with warning stickers so you don't know what to expect until you start dealing with them.
•  The negotiator submits everything to necessary parties for approval.  The negotiator can be very efficient, or very lazy or fall anywhere in between.  
• This is a person you do not want to tick off.  They have the ability to close your file on a whim...and usually have slim to no oversight.  
• In the "old days" we used to contact the negotiator very regularly...now you have to pace your contact  with the negotiator.  See point above.  I don't care how bad the negotiator is.  They control everything.
• The negotiator will generally try to negotiate the contract up to a level that they know will be approved by all interested parties.  They often try to negotiate the contract up above a level that they expect to be accepted.  Sometimes they will back down...other times they will close the file if you do not agree.  You never know what you are going to get until you make your offer or counteroffer.
• Once the negotiator is satisfied, they pass along the contract to the next "in command."
• Sometimes you will have one negotiator throughout the process...sometimes you may see 4 or 5 come and go before you are done.

MI Approval

• They have decided that they have to get their hands in the decision making process because the lenders want to make sure they get paid for their losses.  
• Many times the seller is not even aware that they had PMI because they got an 80/20 or put enough down to avoid it.  They did get a no PMI loan.  Surprise!  We're now waiting on MI approval.  This is because lenders decided to place an MI policy anyway after the fact.  
• If you are told you have MI, you do.  You can argue until the end of the world, you can get mad, you can punch something....we still have to wait on MI approval.  
• The MI company will usually ask you for money.  Sometimes it's a little.  Sometimes it is a lot.  We don't know what they will ask for until they ask for it.

Investor Approval

• Unless the bank has the authority to make the final decision, the negotiator has to send the file out to the investor.  This usually happens after the MI company has gutted, I mean negotiated with, the seller. They can ask for money too if they want.
• Most loans have investors because most loans were sold.
• You make think your loan was never sold, many times because that's what the bank represented in the foreclosure paperwork.  But it was usually sold despite their misrepresentations...and now we have to wait on investore approval.

Senior Management

• Ahhh....one of our favorites.
• We don't seem to see this one so much lately.
• We almost always see them ask for something.
• We have learned from our experience it seems to go here when the loan is held by the bank or the bank has the authority to approve a file on behalf of the investor.  But we're never really sure because it's quite hard to obtain straight answers.

Once you get through all of these layers you can get your approval letter immediately, or it could take days or weeks.  And this doesn't even address the second lien holder, if you have one.

The only thing predictable in Jacksonville short sales is that they are unpredictable.  You have to be patient if you are going to buy a Jacksonville short sale.  Even more so if you are going to sell your home through a short sale.

Oh...and you'd better pick the right agent, one who knows their stuff and can maintain professionalism and patience in the height of frustration.   Keeping a cool head goes a long way in short sales and negotiation.

We've been doing short sales for almost five years in the Jacksonville real estate market and nothing makes us as upset as fast as lender placed mortgage insurance.  This issue makes us angry.  Very angry.

When we first started doing short sales, MI was never a factor.  We got approvals without a huge amount of drama.  

"The math is simple.  Right?"

A bank is better off taking a reasonable short sale then foreclosing.  It's all math.  You never heard "the MI company wants this" or "we are waiting on MI approval."  Now it is expected. 

"I don't have PMI on my loan."

You are probably wrong.  Many (most???)  sellers do but have no clue.  

How does this happen?

Lenders bought a mortgage insurance policy AFTER the closing (or before the closing but it wasn't disclosed to the purchaser...not sure which).  The borrower thought they were getting a loan with no PMI when in reality they have it, but just were not openly charged for it...or at least it was not disclosed in the upfront fees.  We don't know if the bank knew they were placing it and even charged a higher amount because of their intentions.  

"The MI company wants XX in seller contribution to approve this deal."

In our experience, many times it is an amount that the seller can not really afford.  If they see any amount of wiggle in the financials, they will demand it.  They usually want upfront cash, but sometimes it is a note or some combination.  

"There is MI but we will NOT tell you who the MI company is!"

We get this one a lot too.  It is rare that you know what company is holding you hostage.  The lender will tell you there is an MI company, but refuses to tell you who the MI company is.  

YOU ARE OBLIGATED TO PAY THEM MONEY FOR A POLICY YOU DIDN'T ASK FOR OR EVEN KNOW ABOUT?  Yup.  And they get away with it.  

How can a third party company that you had no known relationship with DENY your short sale?  They just can.  And they are more than willing to do just that.

If you don't pay, you don't play.  Short sale denied.

Here is a list of the homes sold in Marsh Landing in 2011 taken from the MLS.  The sales listed represent all sales by all brokers that are members of the local MLS.

 Let us know if you are ready to buy or sell in Marsh Landing.  We can provide a complete analysis of the neighborhood.

Bank of America just sent out an e-mail today to their short sale real estate agents.  It shortens the period of time you have to get a new contract in to Band of America if your first contract falls out.

Text of e-mail I received copied and pasted....

8-Day Window to Submit Backup Offer 

Based on agent feedback and to reduce overall cycle times, we are making a change to the short sale process. If it becomes necessary to submit a backup offer during a short sale, you now have a reduced window for making the submission. Instead of 14 days, backup offers must now be submitted within eight calendar days after the initial offer becomes invalid.  

When a backup offer becomes necessary:  

• Contact your short sale specialist immediately.
• Let the specialist know if you have a backup offer to submit.  

Within eight calendar days, resubmit the listing data, submit the short sale offer, and upload the offer documents and supporting documents.  Any backup offer will require analysis and investor approval, regardless how similar it may be to the previous offer.  

If no backup offer is available:  

• The short sale will be closed in Equator by your short sale specialist.
• You should return to marketing the property.
• You may initiate a new short sale in Equator when you receive a new offer on the property.  

The Jacksonville real estate market is a very interesting thing.

Sometimes an experience is so completely "out there" that I feel obligated to share my experience.  This week we had a buyer ready to put in an offer on a home in a St Johns County neighborhood.  The home is absolutely gorgeous.  wood floors, beautiful colors, a kitchen begging for the next Paula Deen...it is a fabulous home.  The price seemed pretty reasonable.

As we always do, we ran comps for the buyers when they were trying to decide what to offer.

The home is priced in the mid-$200s.  There are three others priced in the $300s.  All roughly the same size.  Seemingly a great deal.

Ooops!  There are only three comps for the past year.  All roughly the same size. They sold for only $185k, $189k and $200k.

Because there are three comps in the same neighborhood, and they are all within the year...we don't know how an appraiser could possibly appraise the home for the seller's asking price.  And we KNOW an appraiser couldn't even begin to justify the sales price for the other three homes that are priced in the $300s.

Where are these asking prices coming from?  Do they really believe they can get those prices for those homes considering the recent comps?

My guess is that they are trying to avoid a short sale situation.  Buyers are not (or at least SHOULD NOT) going to overpay for a home just because the seller does not want to go short.  This is an impossible situation.  A cash buyer could overpay like this, but WHY would they?

Price your home correctly or don't even try to sell it in this current Jacksonville real estate market.

Are Jacksonville short sales and Jacksonville foreclosures comparable to straight Jacksonville FL resales?