Virginia Deficiency Judgement (Judgment) at Foreclosure? Current Trends & PMI

Something smells fishy.

Virginia Realtors: What are you all seeing in regards to Bank Deficiency Judgments/ Judgements*  in Virginia?

Disclosure: I am not a lawyer, this is a discussion and my understanding. This information is changing monthly, so please verify with a lawyer. When in doubt, ignore me. READ THE COMMENTS, ONE REALTOR SAID I WAS DEAD WRONG ON EVERYTHING.

My Understanding/Definition (ie correct me if I'm wrong): When a home goes to foreclosure* on the courthouse steps, the bank can either

1. Buy it at the loan amount, or
   
2. Let the price drop below the loan amount and then "win" the property for less.
3. Let somebody on the courthouse steps win the property for less. (not/rarely occuring)

If they take the #2 or #3 option, they then have the right to go after the homeowner for a "Deficiency Judgment" where the borrower would still be responsible for the shortcoming (amount under the loan amount).

Ie, Home is bought for $1,000,000 with a $800,000 loan. The property happens to be worth $600k. The property is foreclosed on at the courthouse steps. The bank either 1) offers $800,000 and takes over the property, thus losing their right to go after losses or 2) Does not offer on the property and waits for the first bidder and buys for $600,000, or 3) Lets somebody buy it for $550k. In the #2 and #3 instance the bank can go after the previous owner for their $200,000 or $250,000 loss.

What I am finding is that the courthouse steps are vacant. (see Post's "No buyers, no bidders.") Why? Because the banks are taking them back at the loan amount (not the property value).

Now the big question is WHY!

Why would they take over the property at $200,000 OVER what is it worth and let the previous owner be releaved from further obligations?

I suspect:

1. They don't have the time to figure out which properties are worth what. Sure it would cost $50 for a BPO (Broker's Pricing Opinion) or $300 for an appraisal that they will have to do at the next step anyhow.
2. They figure it is a waste of time and effort for the banks to go after the homeowner since they are broke.

But the strange thing is it wouldn't cost the banks that much to bid LESS and file a Deficiency Judgment (I can see not letting somebody else win the place for less). I believe the bank would have something like 5 years to go after the money, or package it up and sell it to a debt collector.

Very strange that they are doing this.

Another thing to ask when a seller is considering a Short Sale, is if the homeowner has PMI. Private Mortgage Insurance covers the bank in the event of a loss in value and foreclosure (apparently not necessarily the entire loan amount). So watch out, it might be BETTER for the bank to foreclose and get the insurance, then it is to allow a loan restructure or a Short Sale, both of which as not insurable. Read this about PMI and Foreclosure)

Realtors, why do you think the banks are OVER bidding on these homes to buy them at the loan amount?

In California it seems like the bank can't go after the owner. Read this. Is that correct for VA too?

- Written by Frank Borges LL0SA- Broker FranklyRealty.com

*(50% of searchers misspelling this word as Dificiency Judgements, and forclosure) Other keywords: Bankruptcy, stop foreclosure, deed in lieu, Pre-foreclosure, 1099-C Debt forgiveness, loan modifications, Bank Liens, Maryland, Arlington, Alexandria, VA, DC washington, Maryland, MD.

Spammer? Fax Their Cellphone!

Ok, I got a new secret.

I just got a new spam. Subject line: 100% Loans to Active Military & Veterans to $650,000

It was sent by a stranger to my homesdatabase email of hdb33@franklyrealty.com (don't worry I have change it ever few months due to spam) (they cultivated the emails from that site)

If I get a spam, like that one 5 minutes ago, if they have a cell phone #, I take that cell # and I email it to TheirCell#@maxemailsend.com . It is like efax for outgoing faxes.

It will send that spam as a fax... to their cell phone.

What? Cell phones don't take faxes? Oh sorry, I didn't know that. I guess it will take the fax service 3 or 4 call attempts, meanwhile screaming into the earpiece of the cell caller.

Ok, I leaked my secret.

Also hate Realtor spam? Join my Realtors Against Realtor Spam group.

- Frank

Virginia Commissions Offered to Buyer Agents. MRIS RULES

I just attended the NVAR (Northern Virginia Association of Realtors) Hispanic Forum event, which included Michelle Yam from MRIS's Compliance department.

It was a great way to clarify the rules on how to advertise cooperating commissions on our local MLS.

Here are the rules for MRIS as I understand it (as of today, it might change at NAR's mide year event).

1) "You can NOT put "50/50%" as the commission amount."

It isn't the buyer's fault or the buyer's agent's fault if the listing agent makes a mistake and accidentally wipes out everyone's commissions. Also as Michelle put it "If you were to offer 50%, what is that 50% of, 100 chickens?" (or something like that)

2) You can not put TBD (To be determined, which is the same as putting 50%)

3) You can NO LONGER put Commission Subject to 3rd Party Approval. (either in the remarks or scroll down option)

4) You CAN put X% of Net (sales price minus seller subsidy)

5) You CAN put $1

6) You can NOT put $0 (some offer has to be made)

I am strongly in agreement with the decision to take this route.

Why? Well if I have a buyer agency agreement that states I will be paid "100 Chickens" or X percent, that means that the buyer is obligated to make sure that I get paid that at closing. If the commission changes mid stream (or 3 days before closing) the BUYER is the one that effectively has to come up with the $ difference.

If $1 is offered up front on the MLS, that is fine, then my buyer can decide if they want to proceed with this listing (you really SHOULD since it won't be seen by anybody and we will get a great price on it).

Listing agents that say "but what if the bank cuts the commission, it isn't fair." Well you need to know what you are doing, to make sure that doesn't happen. And it isn't the buyer agent's fault (nor the buyer) if you don't know what the hell you are doing. Also with the lack of certainty, you will get LESS agents to look at your property (because the buyer tells them, they don't want to fill the gap).

And Brokers beware. If your agents are putting in a percentage on the MLS as the "offered" commission, if the total commission gets cut by the bank, the BROKER is still responsible for the entire amount. Even if it gets cut to "1 chicken" on the HUD1, the broker will get sued and LOSE for offering X% or $X and not paying it at closing.

Consumers beware. You need to have this discussion with your buyer agent. You want your agent on your side. You don't want them NOT showing you listings because they fear that they won't get paid. Read my blog on Short Sales, while they currently suck. Don't worry, we are working on a new process where hopefully 90% of them will close.

Just wait, somebody who hasn't read the post, is bound to comment "You can't talk about commissions."

- Written by Frank Borges LL0SA Broker FranklyRealty.com

p.s. Even Lem talks in terms of Chickens.

Superior Termite (DC area). Boycott the Spammers

If you also hate spam, please boycott Superior Termite. I have reported these guys 3 or 4 times to MRIS. Nothing has been done, so hopefully this will work. And hopefully Google will pick it up.

What they do is illegally use MRIS's Matrix and they send out daily a mass email to each agent that just went under contract. Brilliant right! No! Illegal. This is against the Terms of Use for Matrix. I have also worked with MRIS to make our emails more hidden and secure, but obviously not enough has been done. (they did some changes a year ago after 2 years of screaming)

So much for SAFEMLS, our data is not safe, and this shows it.

When you get emails like this, please report it to compliance@mris.net 

Here is the spam! 

$20 Termite Inspection Dear Frank, In honor of your recent settlement contract, Superior Pest Management is offering to do the termite inspection for $20 We appreciate your business, and hope you will use us again! 2 easy ways to order 1. Click here to order online 2. call our call center at 1.877.Bug.B.Gone (877.284.2466) Best Wishes! Rusty Markland GM Superior Pest Management rmarkland@superiortermite.com 1.877.Bug.B.Gone (877.284.2466)	A special offer from Superior just for you! We also do Home Inspections! Starting at $215 Click Here for Details

Forward email This email was sent to web@franklyrealty.com, by fbowers@superiortermite.com

Sorry, I Don't Answer My Phone! And I Won't "Call Me Back"

Many might consider me a horrible Realtor.

First of all, my cell isn't published online. My clients get that, and they can call all they want.

 

But I get WAY too many random calls (to the "office" published number)

 

I recently got calls regarding:

• Mobile homes in West Virginia (no joke)
  
• Solicitation to join HomeGain.com for the 4th time
• A $500 rental in DC that they need to see in 1 hour
  
• A question about a home 3 hours away, since they thought I was the listing agent (I hate how Homesdatabase makes it look like I'm the listing agent for all 65,000 homes in the DC area, I even had to blog about it and send the post to callers that leave their email) 

I refuse to have the overhead of these "traditional offices," and hire a full time secretary to answer these calls just to tell them, "Sorry, can't help you."

 

So I use AnswerConnect.com which is an actual operator that answers the phone with "FranklyRealty..." and proceeds to ask several questions. That includes asking for the email address twice. And then they give a warning that if you don't leave an email, due to the overwhelming solicitations, you will probably not get a call back. I should change that to "will not get a call back."

 

So If I get a message from somebody that I don't know, and they refuse to say what it is regarding, and they refuse to leave an email and all they say is "Have Frank call me." Sorry I won't. Too busy for that.

 

What I will do is

1. Google their phone number to look for their email (works 50% of the time) and send them a questionnaire (and now a link to this post)
   
2. Sometimes I will send them a text to the # with a "email me at..." 

But to call a random person back because they want to chit chat? Sorry.

 

I would rather dedicate my time to my clients and focus on their needs then call back and play phone tag 50% of the time, with somebody that 90% of the time is a wasted call. So it might be hard to initially get a hold of me, but hopefully people will see that it is well worth it.

 

Do I lose business from it? Probably. Actually the Winner of the Apprentice called me to have me help her sister buy a condo. She hated the answering service... yet HER cell phone isn't published online. (I texted her, that worked).

 

So if you got an email that is linking you to this blog post, I hope you understand. This is how I am able to stay sane.

 

You can email me, twitter me, gtalk chat with me over at my other blog, but whatever you do, if I don't know you... don't call me. And don't take it personally if I don't call you back.

  

 

Writen by Frank Borges LL0SA- Broker FranklyRealty.com

  

Questions to ask Short Sale Listing Agent BEFORE showing

I wrote extensively before about Short Sales and how only 5% close in my area.

Well, I think it might be a little too harsh to completely ban them, especially if a client is looking further south where the stats might not be AS bad.

So I have come up with a questionnaire to ask the listing agent BEFORE showing a short sale.

What are your thoughts?

************* 

Hello I have a possible buyer looking for a home in your area.

Our company policy is to ask for more information from the listing agent, before showing any Short Sales.

Can you please answer the following questions:

1. Have you closed a Short Sale before?
2. Have you requested and received the short sale package yet from the bank, including the hardship letter?
3. Have you sent the package and have you confirmed receipt?
   
4. What communications, if any, have you had with the bank?
   
5. Has the bank approved the list price?
6. Have you received any other offers that you are waiting to hear back from the bank on?
7. Does the loan have PMI on it? (Mortgage insurance)
8. Is there 1 or 2 trusts? Any other liens?
   
9. What is the name of the banks? Are the FHA or VA loans?
   
10. How long do you estimate that the lender will take to provide an answer to an offer?

************ 

Am I missing anything?

Frank     

(3 were added by Cindy and 1 by John)

Lost blog post

One of my favorite blog posts, is suddenly gone:

http://activerain.com/blogsview/42723/Spam-Friend-or-Business

It was a post about email headers. I would frequently email it to people that had "Sally Smith" in their From, instead of "Sally Smith- GE Services."  Even showing an example of a CEO of a company, with a very similar name to a customer service rep at a trash company.

Any ideas what happened? I know I didn't delete it.

Is it gone forever? 

Financial Advisors vs Monkey Throwing Darts, Like REALTORS?

Disclosure: I am not a financial advisor. This is not financial advice, and you'd be an idiot to follow what I do personally. 

I personally only own ONE "stock", and that is called SPY. The #1 bought and sold stock in America, meanwhile most individual investors don't know about it.

It is an Index Fund (also called an EFT, Exchange Traded Fund) that has all of the S&P 500 rolled into one stock with virtually no fees and no annual maintenance. Motley Fool  wrote that "3 out of 4 mutual funds don't beat the market." (ie SPY)

So why not just be average and beat 75% of the funds every year?

The Wall Street Journal used to have a competition. They would have a monkey throw darts at a group of stocks and compare the results to the experts. I believe the monkey repeatedly won. What does this mean? This means that the market is too efficient for somebody to consistently beat it.

Just yesterday my girlfriend asked me to review what her financial advisor sent her. It was 25 pages of gibberish. It appeared as if the entire intent was to confuse the reader into thinking, "Wow, they really must know what they are doing, I'll just tell them YES." (Sound familiar? Some Realtors take the approach of, "overwhelm the client with BS to scare them into signing.")

So, I looked up the 10 Mutual Funds in her report. I compared them to my SPY and I was impressed... my monkey theory was blown. 8 of the 10 blew away the industry average (S&P 500 & SPY). This couldn't be... So I had her log into her account. I then looked at what her account had. They were totally different mutual funds!

Upon rereading the manifesto, those well performing funds were the "RECOMMENDED funds" for the future. Are you freaking kidding me!!? The funds she owned did horribly! Probably 10% worse than SPY! So what they did was take 10 random funds that DID do well and say "we recommend you buy these, look how well they did, you will do great next year." Are you kidding me?

So much for a long term plan to leave the funds untouched for 5-10 years. The worst thing you can do is dump the under performing ones (all of them) every year and chase the next big thing. (Re-Disclosure: Ignore me, I am not a financial advisor).

Oh yeah, for those that don't know, there is something called Churning an Account. Oftentimes they only make money when they buy and sell, not when it sits. So not only did their initial picks blow, they now want to sell and rebuy everything to get another commission.

What did we decide to do? Sell everything (they were down from the purchase date, so no taxes, actually a tax break). And we bought just SPY (The S&P 500 rolled into 1 "index" stock).

Why haven't you heard about the #1 stock (in volume, look for yourself)  being bought and sold in America everyday!??? Because the financial advisors make squat on it! And magazines are always looking to beat the market and promote their advertisers (mutual funds). Nobody gets rich pushing SPY. 

Even the torch bearer of truth, the Motley Fool, figured out that they don't make money on pushing "dumb", reliable and outperforming SPY, instead they receive millions from Mutual Funds to sell their products. This link even talks about how 75% of mutual funds stink and their theory on how to find that 25% (which is nearly impossible in the long run, but they make money watching people try!).

Compare your funds to SPY here,  and report back in the comments.

(Sidenote: One reason to consider NOT unloading your funds would be the tax ramifications. For my girlfriend's IRA it was a Tax-Free no brainer, but we held off on her other funds since she would have to pay capital gains for the tax. Now that the market has pulled back, and they are nearly all losses, we are cutting bait and switching to SPY. By the way, we would have been much better off if we had paid the tax and swapped last year) 

For those consumers that hate Realtors as much as I hate this financial advisor, I now better understand them.

Hopefully by explaining better what we do, and talking straight, and not feeding you BS, we can separate us from Financial Advisors.

I'd love to hear from a Financial Advisor and debate the practice above.

Please correct me. Show me what I am missing (I really want to know!). Nobody in the history of mutual funds has consistently beaten the average, so why buy Mutual Funds which:

1. Start 1-2% behind every year in management fees (don't be fooled by "no-load" funds, they got fees)
2. Only have a 25% chance of beating the average, with all the downside risk of doing much worse
3. Paying a fund manager $400,000 a year, and he can't even beat a monkey.
   

Discuss. I am making no opinion on whether or not to get into the stock market, but if you did, how did you decide what to buy? 

Written by Frank Borges LL0SA- Realtor (not a Financial Advisor)

Please report typos 

Read more here: Motley Fool: Why ETFs [like SPY] Beat Mutual Funds

FranklyMLS.com Launch: World's First Wiki MLS

I am officially launching FranklyMLS.com, the World's First Wiki MLS!

Where BUYER AGENTS from multiple brokerages come together to ADD information and photo albums to listings they visit. MORE DATA & 1,000+ MORE PHOTOS!

THE "OLD 1.0 WAY" MLS: (see all 31 MLS search engines here)

1) One-Way Information. "Here are the homes for sale, as marketed by the listing agent. Take it, trust it, or leave it."

2) Photoless MLS Listings! They sell for $15,000 less but they are a pain for everyone. Oftentimes foreclosures or a listing by an underpaid or sucky agent.

3) Confusing Branding.Who is selling what? Each of the 60,000 MLS listings are plastered with one "Brought to you by" buyer agent from one brokerage. I tried to explain: "No, I am not listing 1,298 homes," but it isn't the consumer's fault, it is confusing! See my account on Homesdatabase.com/frankly a service that many agents pay $30 a month for. My annoying face on each listing.

4) Limited Data or Sign-In Required. All but a few sites have stopped the practice of requiring users to create an account and login in order to see listings. Also may sites will NOT show you all the data possible. Some even hide the addresses so you have to "call your local trusted Realtor!"

5) Slow, Fancy, & Feature Filled- Some of it might be useful, but it slows down the website. Their goal is to have such perfectly targeted results that it can take minutes to find something.

6) Small photos.As our computer resolutions get higher, the images get smaller. On my screen most MLS sites show 4 inch photos.

7) Computer based. No focus on cell-phone ready searching.

THE "NEW 2.0 WAY" MLS: FranklyMLS.com

1) Wiki it!

(Attn Buyer Agents, do you have a progressive office? Let me come and talk at your Tuesday meeting so that more Buyer Agents can get involved)

The World's First Wiki MLS. No, we can not CHANGE the listing itself (or the price!) as presented by the listing agent. What we do is ADD comments and photos to the listing and as a community flag and remove inappropriate comments. Every buyer agent with an ounce of techie-ness should be taking Buyer Agent Photo Albums. What is that? Well, the listing agent takes photos for their sellers to put the house in one light, but the buyer agent takes photos for their clients in a more realistic light. Including shots of how far it might be from a highway, or showing bathroom water damage or a roach infested place (scroll to bottom of those listing to see the comments).

The goal is to add information, and not opinions. No "this house stinks" or "this house is great," but instead factual information like "This house backs to Rt 66" or "This house is listed at 44.6% lower than the purchase price in 2006." Information not evident in the listing agent's presentation. I wish everyone was like Loudoun agents Tony and Danilo with their Blogback blogging for feedback where they list the pros and cons of their listings and ask buyer agents to leave comments. How can you find the reviewed homes? When you do a search on FranklyMLS.com, homes with a yellow highlighter, those have the comments, see an example search for 1021 Clarendon.

2) More Photos Than ALL other MLS sites.

So far, prelaunch, 10 buyer agents from 5 firms add photo albums with as many as 40 photos of 50 properties. With this, the database grows to thousands of extra photos. Consumers want PHOTOS,PHOTOS, PHOTOS and on our co-opetition website, several otherwise competing agents come together to give what the customer wants... MORE INFO and PHOTOS.

Sidenote: A year ago I bought a baseball glove from Amazon.com. It was photoless. After getting the glove, they asked if I would take a photo of it and post it on Amazon. That is what first gave me the idea for this Wiki MLS. (see post)

The site also has a point system. 1 point for comments, and 10 points for a photo album. For that, the contributor is listed underneath the listing instead of my mugshot on each listing (see above). They also get a front page link to their website. Why contact me as a buyer agent, if another agent has actually BEEN to the property, specializes in that area and has helped you get more information on it.

Buyer agents, here is a " how to add the photo albums."

3) No branding, advertising, or logins required. Other than the required link from the site owner (me) at the bottom of each page, there is no advertising or cheesy recommended buyer agent next to each listing. Only when a buyer agent contributes to a listing with comments or a photo album, do they get a link to their site. Also, you should already have a buyer's agent by the time you hit this site.

4) ALL MLS DATA(that is legally allowed to be shown) We show everything. Including BOTH the Days on the Market-M (MLS#) and Days on the Market- P (Property). Otherwise known as DOMM and DOMP We even show you the "within the industry 'you must be nuts'" listing agent's name and number. Only 1 other site does that. Don't worry agents, there is a disclaimer that says NOT to call the listing agent and why. So why have it? Well the consumer should ultimately decide.

What we can NOT legally show is: Realtor Remarks, Compensation amount (ask your agent if they take buyer agent bribes), Owner's phone number, showing instructions and lockbox codes.

5) Not Fancy, just FAST.Except for photos of houses, there is not one graphic, icon, logo on the site. No Geewhiz, just speed. With that comes fewer features, but how many features do you see on Google or Craigslist? Just give me info fast, even if it isn't 100% accurate (as in there might be a "madison manor" in both Arlington and Baltimore). FranklyMLS.com searches by keyword only. I know that looking at 400 homes can take a ton of time. The goal was to count each click and scroll in the home buying process and cut that time down by 80%.

1. "Sexy?" homes? Search the Realtor Public Remarks. Try it, search for "sexy." Only a 3 of the 33 local MLS sites will let you search the Realtor Public Remarks as part of an advanced search. Some information in these remarks can't be found in any drop down or checkbox search. For example: Lake Ridge Short Sales or Arlington Metro
2. Keyword search for ANYTHING.One box, search anything. Including, search by ZipCodes, subdivision name, school name (if the agent put it in), street name, street number, city, brokerage name, and even by agent name (nobody does that). It takes getting used to, but it works for Google and Craigslist, dso it works for FranklyMLS.com
3. Spreadsheet mode.Search like the Realtor's back end system. Text only results to quickly find what you need. Also the columns show you in a quick second the List price, Original Starting price, Tax assessment and DOMp/m. (See link above)
4. Photos only mode. Just a page full of 50 medium sized images. For the quick glance.
5. Photos and Details mode with image rollover. Most sites that have this mode have useless 1 inch images. We show in this mode the 4 inch images that other sites use for their "full size." Also you can use a rollover link to see all the other 2-30 images.

6) HUGE PHOTOS. Example. All the other sites use the 4 inch photos for each listing. Probably to leave room for mortgage calculators, frames, ads etc. We instead are the only ones that pull the high res 7 inch photos as the DEFAULT. Bigger is better.

7) Cell Phone Ready. Nobody offers this... for FREE.

With the former slogan, "So easy, a cellphone could use it," the site wasn't designed for the cellphone, but it is so simple that it still works great on most cell phones. I recommend the "photo mode." This is perfect for when you are in front of a house and want to get the details. I suggest using the house # and the zipcode.

******

Other interesting features:

• FACEBOOK integration.We all have been asking ourselves if a useful tool for Facebook will come up. Well now there is one. You can "save" each listing into your Facebook account with 1 click. Then your friends can comment on what you have selected, or you can share them easily with loved ones.
• Super Short URLS. http://franklymls.com/FA6683625.htmlfor easy copy and pasting. (soon we are dropping the .html) into an email for others to share. I'm obsessed with "easy."
• Super Short Search Strings: www.franklymls.com/default.aspx?m=R&h=ALL&s=1021+Garfield (soon this will be even shorter). You can also bookmark the search string to quickly see all listings for that search.
• Find Similar Results: If you see a "more" or a ">>" click it to find similar homes or to see ALL the listings that a particular agent has (great for comparing listing agents!).
• Links to similar Craigslist FSBOs, and to Zillow for previous sale data.
• Link to that property on Google maps. Click on the "map" link.

So that pretty much wraps it up. I hope you have enjoy the site. I would love to get some feedback from current users (see Feedback contest), local agents and others on how to improve the site.

- Written by Frank Borges LLosa-Broker/Owner FranklyRealty.com

p.s. Yes I bought WikiMLS.com and I started the Wiki MLS group on Active Rain in early Nov 2007.

p.s.s. Several comments (the ones with no last names) were added by Frank. Those comments were sent in via email.

Reviews of the Wiki MLS
• A Stroke of Genius! The Epitome of Real Estate 2.0 By Matthew Rathbun Real Estate Instructor and Consultant
• Broker launches 'Wiki MLS' site Inman News

ALERT! Market BOTTOM! I have 100% Proof!

I officially have 100% proof that we have officially hit rock bottom.

No other indicators from NAR or the government have been as accurate as the proof that I have. I found a 100% correlation!

When My MOM SELLS, THE MARKET SKYROCKETS shortly thereafter! 

The chart to the left is factual. Actual points when my Mom has sold her property.

The last arrow is from a recent listing  which is now under contract. (see listing).

So there you have it. No more need to think. I have always been against the NAR campaign that says "Buy Now," but now I can show proof that NOW is the time to buy! That market is going UP UP UP!

Thanks Mom, for taking one for the team and helping us all out by single handedly turning markets around!

For my previous prediction on the EXACT best day to buy, read my Market Timing  post.

 - Written by Frank Borges LL0SA- Broker FranklyRealty.com

p.s. Don't miss my official launch of the World's First Wiki MLS