With the market in such disarray there is much talk about whether banks will take advantage of the bailout by holding onto their foreclosures and take their run with REOs (Real Estate Owned) or if they will become more formidable about short sales.  As managing partner of ALMS (American loss mitigation Services) I spend my days negotiating short sales with the banks.  Having been active and watching all the changes this market has undergone in the short sale arena I tend to be opinionated on this topic.

What most people don’t understand, banks are FINALLY getting it, is the gap between foreclosures and REOs.  Many banks have turned to third party asset managers to liquidate their REOs.  Most of the asset managers are using the retail market as a way of unloading them.  On paper this looks like the banks are better off selling an REO as opposed to doing a short sale, hence the reason things have been so rough for short sale investors.

Let’s talk about where the problem is.  In an example where an investor makes an offer of $150k on a home valued at $200k.  Let’s say the bank does the BPO and it comes back right at $200k.  This would prompt them to deny the above offer for $150k.  Once the house goes into Foreclosure the file is probably noted as having an offer of 75% of the CMV (current market value).  Note I just used a percentage instead of the actual dollar difference.  Now the asset manager is going to assign an agent.  Once they do this the agent that received the property will have to “reassess value”.  Here is where all the problems come into play.  An REO agent, traditionally, will NOW come in low on value.  For the purpose of this example the agent will come in around, say, $170k.  Keep in mind that the agent’s motivation is getting that rock bottom number so that it will move quickly which will make them look good and hence the asset manager.  They take an offer of $145,500 and close.

What is wrong with this picture?  If we go back to percentages the bank will see that the asset management company just sold the home at 85% of current market value.  That is 10% more than the investor was offering, but is it?  Herein lies the leak that everyone was missing for some time.  The “retail” offer itself was $5,500 LESS than the “investor” offer.  Again, for purposes of reports most are given in %’s.  Somewhere along the line the dollar figure will come into play but the value of $200k will be lost in time and space due to the shuffling of the file.  There really isn’t a good enough “checks and balances” system to catch this.

This has been killing the investor market prior to the sale date of the property.  Mitigators are told that they can get an average of 85% of CMV if they let it go as REO.  This will prompt them to decline offers that will yield, say, 75% of CMV.  They are given an analysis system to which they simply plug in numbers and, like the magic 8 ball, the system spits out the infamous yes, no or maybe.  This is what the investor’s HAVE been dealing with.

With the feds stepping in now we, ALMS, have already had Freddie Mac force the banks hand to take the property back because there was a current offer on the table.  We were negotiating on these properties as a short sale and the mitigator declined the offer and let the file go to sale in these cases.  Upon review by Freddie Mac someone internally called us and asked if the offer was still valid.  Of course you know my response was ABSOLUTELY!  We were able to complete the deal and close.  The feds don’t want to flood the market with REOs anymore than we want them to.  My honest thought is that someone has recognized this little leak and things will get a little easier, evidence this has already happened, for the short sale investors.

ALMS spent months putting together their full short sale training program but waited until recently to finally release it.  One of the reasons we waited was the market shift.  We wanted to make sure that our students would have the best of the best and we have dedicated ourselves to keeping it current, creative and comprehensive.

To find out more about our training program visit our website at www.americanlms.com/training

Written by Donna Atwater, American loss mitigation Services, Inc.

When I was growing up I remember thinking I could change the world!  I was going to make this world a better place, not only for myself, but for my children and theirs to follow.  Somewhere along that time line I got lost in the every day shuffle as I am sure MOST of us have!  Though it weighs in the back of your mind and you are definately upset and bothered by the current state of our nation and our earty, you continue on with life.  Occassionally you make larger donations and drop those in the mail and you sometimes have that one that you give $5-$25 to monthly but you can’t seem to find the time to do anything else!

Recently I started working with a local animal rescue and helping with their overflow.  I was initially looking for a personal pet/companion for our family and our other dog.  The funny thing is, I thought by going to a rescue that made me a better person.  Although it is a GREAT thing to adopt a rescue.  We even went to an extreme and got a “special needs” dog.  He is a three legged dog with the charisma and personality of someone GREAT and AMAZING.  Was I really making as much a difference as I could have?  Of course not!!  We have 5 acres of land and have more than enough room, love and patience to help on a larger scale.  So why was I not doing this before?

Many of us feel like we don’t have the time or the ability.  It is certainly NOT for everyone but it isn’t only about rescuing pets.  There are organizations developed for animals, the environment, countries, starving communities, homeless and many others that could use a helping hand.  What if you spent an hour a day helping raise money for a cure for cancer?  What if you spent an hour a day and you were able to feed 7 families a week?  What if you were to help serve food at the local shelter and because of your extra hand or extra food that you brought they were able to feed 50 more people?  Really what is an hour or two if it means making our world a better place?  If 100 people gave 1 hour a day that would equate to 700 man hours a week.  100 can be recruited in a couple of hours.

Let’s say that we spread the word around to start digging into the depths of our souls and remember that feeling of wanting to change the world!  Wanting to make this world a better place for generations to come.  Imagine if 1 million people (that is less than the population in many large cities!!!!  Not states, ONE CITY has more than 1 million) decided to donate 7 hours a week?  That would equal 7 million hours a week or 175,000 full time workers!!!  Think of what this country could do with 175,000 full time volunteers.  Imagine the dent that would make!  Money is a GREAT thing if you have it.  But many times we find that we, ourselves, are struggling financially.  That doesn’t mean you don’t have time!  This can also be something that the whole family pitches in on!

Bottom line is, I was MOVED into action!  I was sent a video from a member of MonaVie.  This had to have been the MOST eye opening and compelling address I have ever had the privelege of listening to.  If these five kids could muster up this kind of courage and tenacity than what in the HECK is wrong with ME???  Take a look at the video.  If you can spread this video around for everyone to see we might just create a wave of change.  I don’t know about you but this woke up a side of me that has felt dead for many years!!!

Watch and ENJOY!!!

http://cfreedom.info/wp-content/uploads/2008/06/make-this-video-go-around-the-world.wmv