How to Buy a Freddie Mac Foreclosure

How to Buy a Freddie Mac Foreclosure

Freddie Mac, one of the 2 quasi governmental mortgage buying companies and sister company to Fannie Mae (the largest), published this document on how to purchase a HomeSteps Mac foreclosure/REO, 5 Easy Steps to Buying a HomeSteps Home.

According to the document, a potential buyer, or their agent should do the following 5 things in order to give them the best shot at buying a Freddie Mac foreclosure.

1. Prepare your offer, signed by the buyer(s), in writing on your local or state contract.  The seller should appear as "Freddie Mac."
2. Include signed copies of the following HomeSteps addenda: (1) the Single-Family Real Estate Disposition, (2) the Lead-based Paint Disclosure addendum, (3) Property Condition addendum and release, (4) State Riders (if applicable) and (5) Manufactured Home addendum (if applicable). These addenda are available from the listing agent. Please reference them in the contract, and remember, no changes are allowed to the addenda printed text.
3. Submit a buyer pre-qualification letter with the purchase contract and addenda to the listing broker. The listing broker must have all required documentation prior to presenting the offer to HomeSteps.
4. Negotiate the written offer verbally until final agreement is reached.
5. Submit final terms on a clean, typed contract with buyer’s original signatures and initials, along with all required addenda. Return the executed contract and any additional deposit monies to the listing broker no later than three (3) business days from the verbal acceptance by HomeSteps. If the contract is not returned timely, HomeSteps (Freddie Mac) may withdraw its verbal acceptance to sell the home at the agreed-upon terms.

According to the document, HomeSteps (Freddie Mac) will not agree to the following items:

• Offer contingent on the sale of buyer’s current residence.
• Buyer(s) to occupy or store personal items at the home prior to closing.
• Buyer(s) allowed access to the home to perform repairs prior to closing.
• Buyer(s) to receive credit at closing for repairs not completed.
• Repairs after the buyer(s) signs the closing documents.
• Seller’s funds to be escrowed

According to the Freddie Mac document, the following persons are not eligible to purchase Freddie Mac-owned homes:

• HomeSteps suppliers (including listing agent, agents within listing broker’s offices, all independent subcontractors, etc.), their employees and/or their immediate family members.
• HomeSteps or Freddie Mac employee or member of his/her immediate family or household.

If you are a home buyer in Middle Tennessee who would like to purchase a Freddie Mac foreclosure, a Fannie Mae foreclosure, another foreclosure or REO, a short sale, or other distressed real estate in order to get a home at a low price, please contact me, or visit my website Search the Middle Tennessee MLS - Find Middle TN Short Sales, Pre-foreclosures, Foreclosures & REO's so that you can find foreclosures, short sales and other distressed real estate and homes in Middle TN.  I help home buyers in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

Bank of America Loses More Money Due to High Mortgage Loan Defaults

Bank of America Loses More Money Due to High Mortgage Loan Defaults

According to this Bloomberg article, Bank of America Posts Third-Quarter Loss on Defaults, in the 3rd quarter of 2009, Bank of America had its second quarterly losing quarter this year when it posted a $1B loss for the third quarter.  The loss was attributed to the sagging economy and high mortgage and consumer loan defaults.  To date, Bank of America has taken 2 government bailouts.

The article quotes Harvard University professor Niall Ferguson as saying "The idea that the financial crisis is over is a fantasy and it looks like the numbers bear that out.  It’s clearly not over for Bank of America." According to the article, Bank of America "said the provision for credit losses was $11.7 billion, with $9.6 billion of loans considered uncollectible. Reserves for future losses increased by $2.1 billion, compared with a $4.7 billion addition in the previous quarter, the statement said. The bank’s reserve is now 4 percent of total loans, compared with 4.7 percent at JPMorgan Chase & Co. and 5.9 percent at Citigroup Inc., analyst John McDonald of Bernstein Research said in a report today.  Bank of America said net write-offs of uncollectible loans rose 11 percent from the second quarter to $9.62 billion. The bank wrote off $3.2 billion of home loans, including home equity loans, during the quarter, up 10 percent from the second quarter. Charge-offs on credit cards increased 5 percent to $2.17 billion." Again, this is a debt problem. All forms of debt (mortgages, car loans and consumer loans) are performing poorly.

As I said in some previous blog posts a lot of the "record profits" reported by big banks such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. are due to profits from their trading activities (risky - could just as easily be huge losses) and write downs on their own debt (as the value of their own debt (bonds) declines due to the poor financial condition of the banks they are able to book the decline in the value of their debt as income). The big banks are making lots of fee income from writing mortgages, overdraft fees, credit card fees, etc., but are not actually lending much money. Almost all of the loans made by the big banks are being bought by the US government (via Fannie Mae and Freddie Mac) so when they go bad it will be the US taxpayer who will be taking the loss. This is type of lending (i.e. riskless to the mortgage company writing the loan as they are little more than a loan broker) is one of the causes of the financial mess we are currently in. Bank of America is no different than the other big banks in that most of BofA's earnings growth came from their acquisition of investment bank Merrill Lynch, which made made money primarily through trading activities. One of my concerns beyond the government buying all those loans is what happens when the investment banks lose money via their trading activities. The government will probably have to bail out the banks again. Does this knowledge encourage the banks to take on extra risk since they will not have to pay the full cost of trading losses? That remains to be seen.

According to the article, "Bank of America expects to add to its 20.5 percent share of U.S. home lending over the next five years, Barbara Desoer, president of home loans and insurance, said in an Oct. 14 interview. Home loans not accruing interest increased by 14 percent to $16.5 billion, or 6.9 percent of the bank’s loans and foreclosed properties, the bank said." In other words, nearly 7% of Bank of America's mortgage and home loans are not producing any income because the borrowers are not making payments. Therefore, how can Bank of America increase their mortgage lending? Simple, they will make a ton of new loans (in order to generate fee income), which will be purchased by the US government via Fannie Mae and Freddie Mac, thus transferring the risk to the US taxpayer. The result of these activities will be more short sales and foreclosures.

If you are a homeowner in Middle Tennessee who has defaulted on your Bank of America, or other, mortgages, just cannot pay your mortgage due to income loss or unemployment, or your home is already in foreclosure, please contact me to discuss your options including a loan modification or a short sale. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I serve real estate owners, homeowners and investment property owners in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

If you need to sell your home through a short sale, or pre-foreclosure sale, you can request help on my website at Get Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Expert.

Foreclosures Reach Record High in 3rd Quarter 2009

Foreclosures Reach Record High in 3rd Quarter 2009

According to this CNNMoney article, Foreclosures: 'Worst three months of all time', "Despite signs of broader economic recovery, number of foreclosure filings hit a record high in the third quarter - a sign the plague is still spreading." The loan modification and foreclosure prevention programs pushed by the government are just not working. The 3rd quarter of 2009 saw foreclosures hit a record high. The article quotes Rick Sharga, spokesman for RealtyTrac, as saying July 2009 through September 2009 "were the worst three months of all time. The fastest growing area is in the 180 days late-plus category, the most seriously delinquent borrowers. It's going to be a lingering problem. It's hard to envision [the banks] putting millions of properties up for sale and cratering prices. Recovery will be slow and gradual. I don't see home prices getting much better until 2013."

According to the article, "During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008. Nevada continued to be the worst-hit state with one filing for every 23 households. But even tranquil Vermont, where the foreclosure crisis has barely brushed the housing market, saw foreclosure filings jump nearly 170% compared with the third quarter of 2008. Still, that resulted in just one filing for every 5,023 households in the state -- the best record in the country. The RealtyTrac report also unveiled the results for September, and it found that there was slight relief from foreclosure filings. Last month, notices totaled 343,638, down 4% compared with August. Unfortunately, that total accounts for 87,821 homes that were repossessed by lenders. That deluge contributed significantly to the quarter's record 237,052 repossessions, a 21% jump from the previous three months. So far this year lenders have taken back 623,852 homes."

The article quotes James Saccacio, RealtyTrac's CEO, as saying "REO activity increased from the previous quarter in all but two states and the District of Columbia, indicating that lenders may be starting to work through some of the pent-up foreclosure inventory caused by legislative delays, loan-modification efforts and high volumes of distressed properties."

The article raises concern over these record foreclosure numbers occurring despite all the government efforts to prevent foreclosures and lenders voluntarily not foreclosing on many homeowners who are many months delinquent on their mortgage payments. In short the train is coming and there is nothing that can stop it.

The article mentions that many lenders are starting the foreclosure process, but just not following through. The article quotes Jim Rokakis, treasurer for Cuyahoga County, Ohio, which includes Cleveland, as saying the lenders will "even set the date for the sheriff's sale, but they don't file the final papers. They hold it in abeyance and let the residents stay in the house." I have seen this many times. It is insane. In many cases the homeowners cannot take the stress of the whole thing so they want the foreclosure to end, but the lenders just do nothing. That is why many homeowners simply abandon their homes.

The article quotes a study by the Chicago Booth School of Business and the Kellogg School of Management that "determined that when home price declines drop home values 10% below the mortgage balances, people start to give up their homes. When "negative equity" approaches 50%, 17% of households default, even when they can still afford their mortgage payments."

The article states "the RealtyTrac statistics may understate the depth of the foreclosure mess because lender and government actions have delayed many filings. As a result, some delinquencies have not been counted on the foreclosure tallies. That means the crisis may not end quickly." As I have been saying for a while now, this foreclosure crisis is far from over because it was caused by a housing market that was built on debt, not peoples' incomes. Until prices fall back down, the market will continue to be poor.

If you are a homeowner in Middle Tennessee who cannot pay your mortgage, or your home is already in foreclosure, please contact me to discuss your options including a loan modification or a short sale. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I serve real estate owners, homeowners and investment property owners in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

If you need to sell your home fast via a short sale, you can request help on my website at Get Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Expert.

Citigroup Getting Hurt By Mortgage Defaults and Consumer Loan Delinquencies

Citigroup Getting Hurt By Mortgage Defaults and Consumer Loan Delinquencies

According to this Yahoo! News article, Citi results weighed down by failed loans, Citigroup (aka CitiBank) is being hit very hard by high rates of default on mortgages and consumer loans. The article states, Citigroup "reported a $101 million profit before accounting for $288 million in preferred stock dividends and the debt exchange offer that gave the government a 34 percent stake in the bank. Including those items, the New York-based bank reported a $3.24 billion loss. Citigroup, one of the hardest hit during the credit crisis and recession, said loan losses during the quarter came to $8 billion, down $386 million from nearly $8.4 billion in the second quarter, but a sign that many consumers continue to be overwhelmed.
Citigroup's results are a measure not only of its health after it lost nearly $19 billion in 2008 and needed a $45 billion government bailout, but also the economy's, since the bank caters to consumers."

The article quotes Bart Narter, a senior vice president at consulting firm Celent, as saying "The bank is not making money, they are losing money in credit cards and mortgages, and it's dragging down the entire bank." The article also quotes Nancy Atkinson, senior analyst at Boston-based research firm Aite Group, as saying that Citigroup "still has a number of quarters that are going to be challenging. They made very bad bets on mortgages and consumer lending. They were clearly a leader in the consumer card space, and as a result are suffering now."

According to the article, the problems at Citigroup are similar to other large banks as a result of the poor economy and high unemployment rate. The article states "more customers stop repaying loans as the economy falters and unemployment rises. Credit card defaults and mortgage losses are likely to continue to climb."

If you are a homeowner in Middle Tennessee who cannot pay your mortgage payments, or are in foreclosure, please contact me to obtain help with a loan modification. If you owe more than your home is currently worth, we can discuss a short sale. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I serve real estate owners, homeowners and investment property owners in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

If you need help or assistance with a loan modification, or need to sell your home via a short sale, you can request help on my website at Get Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Expert.

Legal Loophole May Help Homeowners Delay or Stop a Foreclosure

Legal Loophole May Help Homeowners Delay or Stop a Foreclosure

According to this RISMedia article, Op-Ed: 60 Million Mortgages May Have Fatal Flaws, issues with the way mortgages were sold in the secondary market and the way the ways they were recorded in the local county offices may prevent many mortgage companies (or mortgage servicing companies) from foreclosing on delinquent homeowners. The problem apparently is due to a company called MERS (Mortgage Electronic Registration Systems, Inc.) which is a company that records the mortgages against the properties in the local county offices where the properties are located. While that is normal procedure, the problem is that MERS is basically an exchange where mortgage lenders can buy and sell mortgage loans without having to re-record the ownership of the mortgage notes. In other words, although MERS shows up as the mortgage lien holder on the public records, MERS does not actually own the mortgage loans. Since it is established case law that the mortgage loan holder (i.e. the note holder) must be identified and must produce the mortgage note (the mortgage note and the mortgage lien are 2 separate documents - the note is the borrower's promise to pay and the mortgage is the document that pledges the property as collateral in the event that the borrower does not pay), MERS, due to not being the actual note owner, cannot foreclose. The other problem is that the actual note holder does not own the mortgage lien since MERS owns that. The obvious solution to this problem is for the actual note owner to have the mortgage assigned to them by MERS (and pay the normal recording fees, etc.) or to just join in the foreclosure action and then proceed with the foreclosure. The problem is that MERS seems unable to find many of the actual notes which they hold on behalf of the note owners. There have already been court rulings in the Kansas Supreme Court and the U.S. Bankruptcy Court for the District of Nevada in which the judges ruled that MERS had no legal standing to forecloses since they did not own the note and could not produce the actual note showing who the note owner is. This could become a huge problem for mortgage lenders if more homeowners and attorneys become aware of this legal snafu.

According to the article, "As a registered security, the Note is a negotiable instrument, like money or a cashier’s check, and under securities law that Note must be given to the investor. In this case, mortgage backed securities, (MBS) were bundled together in a pool and shipped to…well, we don’t really know. One of the impediments to an MBS is the need to file assignments for the beneficiaries in each county each time the mortgage is resold. And apparently, no one holds them for very long because most have been passed around several times. In order to avoid the logistical nightmare of trying to maintain a public chain of title, the biggest lenders joined MERS, Mortgage Electronic Registration Systems, Inc. MERS was created with the sole intent of evading the recording fees due to the county in which the security is located. In so doing, in my opinion, they also destroyed the age-old practice of making a public record of information concerning real property in general, and legal interest specifically. The chain of title is a vital record produced to resolve many a dispute. Now, that’s gone. I believe, erased simply so they themselves, MERS, could siphon off the recording fees for themselves. They sold their business model to lenders as a better way to track mortgages that were being sold and resold all over the world. But, as there often is with a BIG IDEA, there were also unintended consequences. Only now are they coming to light. Until MERS was challenged in a foreclosure proceeding, no one had taken a look at the law. The law, according to a Nevada Judge, is that for purposes of foreclosure, both the Note and the Deed of Trust must be assigned. When the Note is split from the Deed of Trust, the Note becomes unsecured. A person holding only a Note lacks the power to foreclose because it lacks the security. MERS lost track of the Notes. In some cases, according to my research, they deliberately destroyed them."

The article states that in reviewing the judicial rulings the author has concluded the following:

• MERS is not the beneficiary of the Notes and has no skin in the game. It did not lend any money, collect any payments or do anything more than track the sale of the securities.
• Judicial procedure requires that parties identify themselves and prove their standing.
• Splitting the Note and Trust Deed leaves no party with standing to foreclose. The true holder of the Note, the security, paid the lender so the lender is covered. The true holder of the Note was insured by AIG so they are covered. AIG and the banks were bailed out by taxpayers. So, unless the American tax payer can produce a “blue-ink” original Note, no one has standing to foreclose.
• Allowing a foreclosure to proceed without the original Note places the homeowner in double jeopardy. If the original Note were to surface, the holder of the Note would be entitled to payment, but from whom? The borrower is still on the hook.
• MERS currently holds 50 to 60 million loans so this is no small matter. And, just because they have lost repeatedly doesn’t mean they will give up. They will keep right on foreclosing in hopes that the homeowner won’t fight back and, in most cases, they won’t be stopped.

If you are a homeowner in Middle Tennessee and your home is in foreclosure you should contact a real estate attorney and discuss the legal loophole described above to see if it can delay or even stop the foreclosure action against you.  If that is not successful, or only helps you delay the foreclosure process you should contact me to discuss a short sale if (1) you have lost your job or have seen your income decline, and (2) your home is worth less than your mortgage balance. I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I serve real estate owners, homeowners and investment property owners in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

If you need to sell your home fast via a short sale you can request help on my website at Get Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Expert.