Perhaps morally, but not legally. You actually don’t have to have a note under the law, otherwise there would be no such thing as a lost note affidavit. You can fabricate values – otherwise there would be no such thing as mark-to-model (the majority of our banking systems assets are valued this way), and ratings agencies can simply assign ratings, otherwise Congress wouldn’t be bothering to start regulating them now.

Fair is in the eye of the beholder. It may seem fair to you that the homeowner shouldn’t have to pay because the servicer lost the note. But is it fair to the banks depositer, or to the taxpayer who bails out that bank, to simply forego collecting that debt?

With the exception of a few activist judges who want to teach these banks a lesson, I expect the rule of law will prevail, and VERY few loans will be wiped out due to paperwork issues in the end.

Instead it will be some mix of foreclosures, short sales, principal balance loan mods (whether voluntary or forced) and inflation that will ultimately clean the massive negative equity up. Hard to argue given that those are the only real options that short sales often make the most sense. Some just haven’t realized it yet.

First of all – Thank you for creating Foreclosure Radar and Foreclosure Truth – the forum has been great for many homeowners seeking information.

Second – I agree with you wholeheartedly that short sales are the right solution for certain situations. There are alot of “myths” out there, yet, hard work on behalf of a homeowner who needs assistance is what works for me – This month we had two short sales approved where the homeowner was not late, yet, we hear the naysayers say that this can not be done. We here that BofA does not offer non-deficiency settlements, yet, we closed one this month – no recourse to the Seller.

Short sales are not for everyone, however, they are perfect for lots of people. I am passionate about homeowners avoiding foreclosure. In virtually most situations, a short sale is way better for the distressed homeowner then a foreclosure. I believe the hope of a loan modification is disruptive wehn there is no realistic way a homeowner will make the payments. I believe mods are good when someone has a good job and needs a lower payment, yet, so many dont qualify – the #’s are outrageous and I think the banks should have a quick pre-qualification and say no to people when there is NO chance for them to get a mod – waiting 2-5 months to be told no and then foreclose is just the wrong solution.

We have maintained an 85%+ success rate with our short sales – we do this with complete persistance and care for our clients. We’d gladly give referrals to satisfied customers. Most say they were so relieved when the short sale was done and they could move on with their life. Trust me when someone walks from $350,000 of negative equity and goes from $6,000 per month housing payment to $2,500 rental payment there is a new lease on life…

So, yes short sales are here to stay and yes they are not for everyone as a homeowner or as a Realtor. We process short sales for other Realtors in CA and this is a “win-win” as we always operate from.

I wish homeowners would speak up sooner – I wish homeowners who have real hardship would see the light when one door closes and a new one opens – I wish they could feel the relief moving forward from a touch situation.

We are dedicated to helping distressed homeowners. As always, we are open to recieving e-mails from homeowners who would like to find out if a short sale is right for them or for Realtors who need help with getting their short sales approved.

BOB, MBA, CDPE

bob@inspiragroup.com

Enough with the counting already. I like you.   I know it might not seem like it right now… :0

All I’m saying is: sure, you can find the single mortgage homeowners to work with – sure you can make it work. But stepping back and looking at the larger picture, the odds of that making a big impact are slim.

B of A is proud to tell you 2 out of 10 of their short sales go through. They think that’s good.  To suggest that all the other avenues of exploration which are uncovering that from stem to stern the financial system as we know it is hopelessly corrupted and inbred are simply a waste of our time because “we can do short sales” is, to my way of thinking a fallacy in itself.

Sure, short sales might work – some of the time for some of the people – but they are simply another symptom of the larger problem which is an overinflated real property market which has collapsed and yet, for which the lenders are still demanding payment in full.

That is precisely why the short sale is such a tough sell. Because every short sale that gets recorded on the books is evidence of the true underlying value of the asset and it is never what everyone had bet it would be.

As for education, spare me the rote memorization of the rules of the State as to who is allowed to do what and instead give me the education to understand what is happening on a larger scale in the ecologic reality I call my life.

Should it turn out that all those “sidetracks” who demand on following the actual rules and codes of financial conduct (you have to have a note, you have to have a signed instrument, you cannot fabricate values outside of known financial models, you cannot simply assign ratings to instruments based on who is paying you to do so.) If and truly all of these “side tracks” are now to be passed by as irrelevant to how things “really are” then we have already passed a gateway that most people never saw coming or going.

But I do not believe that is so. I believe it is actually true that it is possible for people to become educated about the fundamentals of a system of fiscal responsibility that makes sense and to hold those who are their “money changers” accountable for following such guidelines.

It is my sincere belief that if we do not do this, then we are doomed to a slower or faster decline that will result in the death of this nation. But that’s just what I think – it’s not a fact, and you cannot measure it with statistics.

The statistics you can measure right now would tell you, or me or anyone who looked at them that we are in serious trouble – and they would not be trying to convince anyone. They would just be what is.

2. You won’t convince me that less education is the answer.

3. Political traction has completely stopped the traditional foreclosure process in its tracks and put us into the current limbo. A political shift could just as easily get short sales moving.

4. Nice pot shot, but I’m a broker, sold my own home through short sale years ago, have been involved in short sale transactions recently, work with a number of short sale processing companies, and have hundreds of customers successfully doing short sales using techniques we showed them… have you read our testimonials?

Taibbi’s doing a great job of popularizing some issues, but naked shorting is not a new topic, nor one that I wasn’t aware of. April Charney’s minor wins in forcing lenders to produce a note is nothing but a temporary delay and is meaningless. Lost note affidavits are accepted law no matter your feelings about them. Same goes for the whole MERS issue.

Becky – your site advocates short sales. What’s your beef???

1. If you are a homeowner with only one loan, you can probably do a short sale – and find someone to help you – (but what if you are not – as in most cases? – what are the percentages of homeowners with only one loan in CA right now?)

2. Another licensing requirement put into place by government regulators who seem unable to write legislation that is not obfuscating and confusing is helpful – because the “licensing” will improve the quality of the service negotiators will provide.  Sorry but I have yet to see a single thing the Govt has done that has improved the situation – anywhere.

3. Political traction is going to get short sales moving – or may do something to assist in forcing lenders to get their acts together and deal with the problem.

4. Advocating for short sales when you do not do them is easy – advocating for short sales when you see the lenders forcing homeowners on Non Recourse loans to make cash or promissory note contributions in order to approve the short sale is less appealing as something one would wish to advocate for.  Sure I get your point, but the bottom line is that until the massive corruption and fraud underlying this entire mess is brought to light no amount of advocacy is going to fix it.

For a little better insight into what might be delaying the real solutions read Matt Taibbi’s latest Rolling Stone Article here:

http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle

Here’s a snip of the ending of the article to give you an idea- but don’t just read this, read the whole article:

But the “phantom” shares produced by naked short-sellers are symptomatic of a problem that goes far beyond the stock market. “The only reason people talk about naked shorting so much is that stock is sexy and so much attention is paid to the stock market,” says a former investment executive. “This goes on in all the markets.”

[snip]
The same is true for mortgages. When lenders couldn’t find enough dope addicts to lend mansions to, some simply went ahead and started selling the same mortgages over and over to different investors. There are now a growing number of cases of such double-selling of mortgages: “It makes Bernie Madoff seem like chump change,” says April Charney, a legal-aid attorney based in Florida. Just like in the stock market, where short-sellers delivered IOUs instead of real shares, traders of mortgage-backed securities sometimes conclude deals by transferring “lost-note affidavits” — basically a “my dog ate the mortgage” note — instead of the actual mortgage. A paper presented at the American Bankruptcy Institute earlier this year reports that up to a third of all notes for mortgage-backed securities may have been “misplaced or lost” — meaning they’re backed by IOUs instead of actual mortgages.”

Think that over – then think about “solutions”…

1. We have customers closing 20+ short sales a month by simply focusing on properties with only one loan, from lenders that have a good track record of approving short sales.

2. I think it is great that short sale negotiators have to have a real estate license. The ease by which they give real estate licenses is bad enough, the last thing we need is completely unqualified folks claiming to be experts anywhere near real estate.

3. We are beginning to see some traction among politicians that short sales may work where their coveted loan mods are failing. So I do expect we’ll see more political pressure on banks to approve short sales going forward.

4. Part of getting to the point where short sales become easier is by advocating and lobbying for them. I truly believe they are the best alternative for all involved when the homeowner is upside down in a home they can no longer afford. As such you will continue to see me advocate for them in posts like this one.

Thanks as always for you input.

While I agree with your premise the news flash is that many lenders are now telling borrowers they do not have the option of a short sale.  We have had short sale sellers told by lenders they do not have enough of a hardship for a short sale – and this after they have been denied a loan mod by the lender who told them going in that they had three choices:  Loan mod, short sale or foreclosure.  Seems the banks have other ideas of what those choices really are…

Bottom line is unless and until the banks are forced to mark to market so that it is not in their self interest to continue to carry the loss as a hidden book – there is very little leverage that can be applied successfully.

The “business” of short sales has gotten more and more complex and difficult over the past 18 months to the point where many brokers and agents we know are stepping aside – it just is not worth the aggravation for them to keep pushing day after day – so while they may commit to try to complete the ones they have started they are not taking new files – and who can blame them?

We have files where lenders have literally taken over six months just to say they will assign a mitigator and we have been in this business for several years and work with a strong team of negotiators who are former loss mitigators themselves. If we cannot get them to move, the poor agents trying without professional negotiators are not going to have any better luck. And now California is changing up the game again and requiring negotiators to be licensed and bla bla bla. So more hurdles are introduced and more people decide not to get involved in the business – or to drop out of it.

We hear another tactic some of our contacts use is to go after the lender for forensic loan audtis with attorneys and then force them to the table on a negotiation to sell the house – but that is not the path of an old style short sale – it’s a strong arm attorney tactic – which we have seen work a few times – but which is certainly not the average short sale negotiation as it requires going to the legal department of the lender rather than the loss mitigation department.

When the banks have finally managed to stonewall everyone and stop all progress while offering loan mods with HIGHER payments (we had a fresh comment on this on our blog today from a homeowner who was offered a 500$ INCREASE in paymetns on her loan mod) then what is left?

Just a question.

I don’t expect that you will necessarily have the answer.