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There are changes looming in the guidelines which Fannie Mae and Freddie Mac utilize relative to the multiple listing services (MLS). Beginning August 1st, each new short sale listing must maintain an “active” status for a minimum of five days. Additionally, the five days must a weekend.

“Along with our regulator, the Federal Housing Finance Authority (FHFA), we decided to take this step in response to Realtors’ concerns,” says Jane Severn, director of marketing at Fannie Mae. “We’ve had cases where a short sale property is listed in the MLS as ‘active’ and, in less than an hour, it goes into ‘pending’ status.”



“Realtors should identify any short-sale listings that would require approval by Fannie Mae or Freddie Mac,” Grant says. “If the new rules apply to a listing added to the MLS after Aug. 1, we recommend that agents put a disclaimer in MLS comments telling cooperating brokers that the seller must keep the listing active for five days, including a weekend. This disclaimer would allow cooperating agents to structure their offers accordingly.”

Grant says it’s important to remember two things: that the new rule only affects Fannie Mae and Freddie Mac short sales; and, though it directly affects sellers, it also indirectly impacts buyers’ offers.


Severn says Fannie Mae wants their “short sale listings to be marketed in a manner that allows the market to see the listing.” She notes that their current policy for properties Fannie Mae owns (REO listings) reflects the same philosophy since Fannie Mae won’t evaluate offers until the listing has been in the MLS and “active” for at least three days.

Under Fannie Mae and Freddie Mac’s rules, the short sale property must be listed in an MLS that covers its geographic area, and a printed copy of the property’s MLS listing must be kept on file. If a property is located in an area not covered by an MLS, it must be advertised in a manner customary for the same period of time – at least five consecutive calendar days that includes one weekend.


Paddy Deighan JD Ph.D



There are a dramatic number of deficiency judgment lawsuits being filed. Many experts predicted this and it is happening. There is just too much money sitting out there for the lenders to ignore.   Many states have lengthy statute of limitations and lenders are taking advantage of it. Additionally, many home owners who were in distress are now financially stable and this makes them an easier target.

Home owners quickly breathe a sigh of relief when the short sale is completed. However, for many owners, this is the start of their problems.  In the past, it was possible to get a “waiver” of deficiency as part of the short sale negotiation process. However, it is rare to receive a waiver today.  You can ask for a waiver, but in all likelihood, it will not be granted.

So, what can you do??

The first thing to do is determine what the lender must do in order to enforce its rights relative to the deficiency judgment. In some judicial foreclosure cases, the lender has also received the right to seek a deficiency judgment when it received its final judgment. In other situations, the lender must take the additional step and file a lawsuit in order to seek a deficiency judgment.  Many home owners transfer assets out of their name when they believe that they are going to be sued on a deficiency judgment.  By then, it is too late as the lender has already performed an asset check PRIOR to filing the deficiency judgment complaint.


It is also interesting to note that the junior lien holders are more likely to pursue a deficiency judgment!! The reason for this is that they frequently received a very small percentage of the loan balance during the short sale.   There is no seniority when it comes to a deficiency judgment. The junior lien holders have as much chance of receiving judgment as the superior lien holders.

There are measures that can be taken by prudent short sellers….

Paddy Deighan J.D. Ph.D

New York is making best use of the money that it received from the Attorney General foreclosure lawsuit. New York attorney general Eric Schneiderman played a key role in negotiating the settlement and he earned significant money for his own state. In last year’s foreclosure abuse settlement with five of the country’s largest banks Mr. Scheiderman announced this week that he will I use $20 million of that money to “rebuild and restore neighborhoods hit hard by the housing crisis.” Schneiderman noted that his office has already provided “roughly $2 billion in relief to homeowners throughout the state, but it’s not nearly enough”. He believes that the key to truly effecting a recovery lies in empowering his state’s land banks, which can acquire vacant, abandoned, or foreclosed properties and then rebuild, demolish, or redesign them. Mr. Schneiderman believes that the land banks will best be able to truly “empower local communities to rebuild their own neighborhoods” and said that his office will “invite competitive proposals from land banks to directly address the effects and aftermath of the foreclosure crisis.”


Schneiderman is presently engaged in suing – and re-suing – several banks for foreclosure abuse in New York and for failing to honor the terms of the foreclosure abuse settlement from last year. His movement in support of landbanks actually could result in increased foreclosures in some areas of the state since land banks often seize control of property via tax delinquency. In Syracuse, nine percent of all property iseligible for seizure due to property tax delinquency at this time. However, land banks tend to focus on properties that are not being maintained or that have been abandoned rather than inhabited homes. The land banks have previously been reluctant to seize property because there were no ready buyers for the properties and they did not have the funds to rebuild, restore, or maintain on their own.


Paddy Deighan J.D. Ph.D

There is additional (hopefully) good news in regard to loan modifications. Fannie Mae and Freddie Mac want to change the terms of your mortgage – AND, best of all…they want to do so QUICKLY!!! Yes, Government and quickly can exist in the same sentence sometimes!!  



The Troublesome Twins may hopefully get something right and actually help many home owners with their distressed real estate. At least, that’s what many homeowners with GSE (Government Service Entity)-backed mortgages are hoping to hear this week as the Federal Home Financing Agency (FHFA) initiates its Streamlined Modification Initiative (SMI) this week. Lenders will be responsible for contacting homeowners and offering them modifications with no paperwork. The homeowner simply will have to make three months’ worth of on-time payments for the modification to become permanent. Although the GSEs will not actually reduce principals on loans at this time under THIS program, they could reduce interest rates or extend the life of loans by as much as a decade in order to reduce monthly payments by hundreds of dollars.


In order to qualify for the program, homeowners must have loans at least 12 months old, be no more than 24 months behind on payments, and have principal balances of at least 80 percent of the value of their homes. SMI is scheduled to last through December 2015. The GSEs are encouraging homeowners to contact their lenders if they are experiencing financial hardship rather than waiting for an SMI offer because “in many cases working with the servicer to document the homeowner’s financial situation [something left out of the “streamlined” process] will create a more affordable monthly payment than would be available under [SMI]”.

It is widely believed that this is a limited program and even though it will last for 2.5 years, the number of home owners that will receive loan modifications is unknown. It is also unkown the criteria to be utilized in the determination of who gets relief.


Paddy Deighan J.D. Ph.D

Many real estate investors believe that short sales are a thing of the past. There are so many local, state, and federal regulations that govern these transactions. Regulations include how much profit you can make and in what time frame yo can make the profit. Consequently,  many investors have opted to pursue other investing strategies rather than continue doing short sales. However, for investors who know the best markets, the short sale, can still yield significant returns on time and money Knowing the best spots in the country for short sales can also help maximize your success in this industry.  Here is the first area for hot short sales today: 

Las Vegas, Nevada

The “Giant Litter Box” as I am known to affectionaltely refer to Las Vegas is experiencing fantastic appreciation these days (28 percent year-over-year). However,  there is still a lot of potential for bargain-hunting investors in this hardest-hit area. If you’re looking to do short sales in Las Vegas, note that the average number of days it takes to negotiate a short sale on a home already in the middle of the foreclosure process is 358 days. This is certainly not a short period of time, but that the average short sale is coming in at $124,555 and median home price in the area coming in around $187,000 for the first quarter of 2013, it might be worth the wait. Also, consider optimistic new home builders who say that their segment of the market could reach a median price of $250,000 by the end of the year. Therefore, it seems likely that Las Vegas and the surrounding area could remain “hot” for short sale investors for some time to come.

Las Vegas certainly is hot right now…117 degrees in the shade hot!!! LOL  Record temperature highs and hot real estate!! Who could ask for anything more!!


Paddy Deighan J.D. Ph.D

There was a little known Supreme Court decision that did not receive the same fanfare as some of the other cases before the Court. The recent property-rights ruling went in favor of landowners and land developers. The ruling could have far-reaching effects on how government handles property owners’ decisions that “cause wider harm or social burdens” on the community. The case, Koontz v. St. Johns River Management District, revolved around the property owner (Koontz)’s desire to develop about four acres of a 14.9-acre wetland property. When Koontz sought a permit for the development from the local water management district (St. Johns), he was told that he could choose either to develop only one acre or pay for contractors to make improvements to government-owned wetlands in the same watershed in exchange for a full permit. Koontz opted to take neither option and sued, saying that his property was essentially “taken for public use without just compensation” because he was not able to develop his land without agreeing to “extortionate demands.”



Backed by the National Association of Home Builders, civil liberties groups, and property-rights advocacy groups, Koontz’ case spent 11 years working its way through the legal system. The Supreme Court ended up siding with Koontz, saying that the local watershed “impermissibly burden the right not to have property taken without just compensation” by creating a set of parameters around the receipt of the desired permit that prevented Koontz from using his own land for his own benefit. The vote was 5-4 in favor of Koontz, with Justice Alito writing in support of the decision that “land-use permit applicants are especially vulnerable to…coercion…because the government often has broad discretion to deny a permit that is worth far more than the property it would like to take” and that “government…may not leverage its legitimate interest in mitigation to pursue governmental ends that lack an essential nexus and rough proportionality to [social costs of the proposal]”.


Not surprisingly, many property owners are breathing a collective sigh of relief that their rights are being further defined and protected, but critics of the decision warn that the ruling sets a dangerous precedent since technically no physical thing was taken away from Koontz. Justice Kagan, who wrote the dissenting opinion on the case, said that the ruling “threatens to subject a vast array of land-use regulations….to heightened constitutional scrutiny” and “I would not embark on so unwise an adventure”.  Why an I am not surprised that Justice Kagan dissented on this…..


Paddy Deighan, J.D. Ph.D

Virtually every day, there is a story about something that we cannot eat or drink…or DRIVE. I am a car fanatic and when I travel to Europe, I see all of the fuel efficient and cool cars that we cannot have because of our burdensome regulations – Citroen, Alfa Romeo, Peugeot, Renault (most are French, perhaps THAT explains it – LOL), Opel (owned by GM) and Ford of Europe and Australia (will not export many types of cars to the US market). The Ford Falcon is still being produced…but not for use in the USA.

Anyway, I read on the internet today that NYC has now banned the delivery of 2 liter Coca Cola with PIZZA delivery. Hey, Bloomberg, guess what ya clueless bureaucrat, PIZZA ain’t real healthy either! Why don’t you ban delivery of that too? Eateries are now banned from serving soft drinks in a size larger than SIXTEEN ounces in NYC. Bloomberg has taken action against salt, sugar, trans fat, smoking and baby formula. While these may be noble causes, this is AMERICA and we are allowed to be unhealthy.  We are allowed to be a lot of things and it is not the government’s role to regulate BEHAVOIR!!

Coca Cola

Does this idiot think that DIET Coca Cola is healthy??? Many suggest that is may be unhealthier than regular Coca Cola…but in any event, who are these bureaucrats that keep ramming this stuff down our throats (pun intended). THIS IS AMERICA, and AMERICA is SUPPOSED to be synonymous with “freedom of choice”. Coca Cola has Ryan Seacrest as a spokesperson…is wholesome, pure Ryan Seacrest advocating bad behavior? Would he be beanned from drinking it in NYC?

I have stated it before and I will state it again…it is not the politicians’ fault that these things happen; it is OUR collective fault for electing these well-intentioned, but delusional idiots. Nothing will change until we have a better quality of politician…and who would want to run the way the media eviscerates anyone short of Mother Teresa (God rest her soul). Oops, I said “God”…now the media will eviscerate me for writing a religious blog…


Paddy Deighan J.D. Ph.D


Fannie Mae and Freddie Mac announced changes to their servicing requirements for short sales. Yipee!! This is not going to be good news….dontch ya just know it?? Please be aware of the following key changes for all parties involved in a short sale. These changes apply to all Fannie Mae and Freddie Mac short sales, with an offer and without an offer.

Title Transfer requirement change:

The buyer is prohibited from selling the property for any sales price for a period of 30 days from the date of the deed.

After a 30 day period, and until 90 days from the date of the deed, the buyer is further prohibited from selling the property for a sales price greater than 120% of the short sale price.

Note: The above restrictions will run with the land and are not personal to the grantee.

Below is an example on how to calculate the 120%:

Purchase Price is $100,000.00

120% of the purchase price would be

$100,000.00 X 1.2 = $120,000.00

Relocation Assistance:

The borrower may be entitled to an incentive payment of $3,000 from Fannie Mae / Freddie Mac to assist with relocation expenses following successful completion of a short sale unless:

The borrower is required to contribute funds or execute a promissory note.

The borrower has Permanent Change of Station (PCS) orders and receives a Dislocation Allowance (DLA) or other government relocation assistance.

The servicer has knowledge that the borrower is receiving relocation assistance from another source other than the servicer.

Note: If the borrower receives relocation assistance from a source other than Fannie Mae / Freddie Mac or the Servicer, the difference in the relocation assistance amount up to the $3,000 incentive maximum may be provided. If the borrower will receive relocation assistance from a source other than Fannie Mae / Freddie Mac or the Servicer and the amount is equal to or greater than $3,000, no relocation incentive will be provided.

More shenanagins from the government…in trying to fix the economy and real estate, they are making it worse.

Paddy Deighan J.D. Ph.D



Fannie Mae and Bank of America (BOA) recently announced an $11.6 billion settlement to a long-standing dispute Monday. Fannie Mae, is a government-sponsored enterprise that buys mortgages and bundles them and then turns them into securities.  It has been legally pressuring BOA to buy back a significant amount of non-performing loans issued between Jan. 1, 2000 and Dec. 31, 2008. The allegation is that these loans were poorly underwritten.  The bulk of those mortgages came from Countrywide Mortgage, which was acquired by BOA in 2008.

As part of the settlement, BOA agreed to pay $1.3 billion to Fannie Mae to atone for alleged poor servicing on mortgages for Fannie Mae by delaying contacts with delinquent borrowers or failing to process foreclosures properly.

While the settlement is aimed at compensating Fannie Mae, there are  implications for many BOA mortgage customers.  In coming months, they will be notified that someone else will service their mortgages.

BOA, which has been pulling back from several areas of mortgage lending, got approval from Fannie Mae to transfer certain mortgage servicing rights to two firms, Nationstar Mortgage of Lewisville, Texas, and Green Tree, part of Walter Investment Management Corp .

Nationstar Mortgage, which specializes in mortgage servicing, agreed to acquire $215 billion in servicing rights from Bank of America for about $1.3 billion.

Executives of Nationstar, whose shares trade on the New York Stock Exchange, said in a conference call Monday they expect to take over the massive pile of mortgage servicing rights in a series of steps over the next nine months. In the meantime, BOA will continue to Mortgage-Loanshandle them.



Specialty servicers like Nationstar focus on customer outreach to try to reduce losses. But changing mortgage servicers can often be a challenging experience for bank customers.

Both Bank of America and Nationstar promised a smooth transition. Yeh, right!!!

“Servicing of accounts acquired will be transferred throughout the year in a manner that will ensure a smooth transition for our customers,” Nationstar told The Miami Herald in a statement.


Paddy Deighan J.D. Ph.D

I had an interesting conversation with an Investor from Russia today.  He read two of my recent blogs about a housing recovery.  He commented that lending is tight in the USA yet the sale of homes and the prices of homes are both increasing. It did not make sense to him.

I have been a partner in two Venture Capital firms and two private equity firms.  These types of firms have been buying real estate for many years. It occurred to me that these types of firms were at least partially fueling the current housing recovery.

So, I did some research and I was astounded.

The National Association of Realtors (NAR) expects average existing home prices in 2013 to be around $185,800, with an increase to $193,600 by the end of 2014. (Source: National Association of Realtors, January 2013.)

It appears that what is fuelling the recovery in the U.S. housing market and home prices is something that’s never happened in our history. It’s not individuals buying houses that are moving prices and demand higher; it is the institutions.

The Blackstone Group L.P. (NYSE/BX) bought $2.5 billion worth of U.S. homes—that’s 16,000 units in total so far, with cash! In October of 2012, the company owned $1.5 billion worth of homes and was spending $100 million a week to purchase more! (Source: Bloomberg, January 9, 2013.)

Other companies like the Colony Capital LLC and Waypoint Homes are taking similar courses of action as the home prices increase. Colony Capital has already purchased 5,500 homes since April of 2012 and expects its investments to increase to $1.5 billion by the end of this year. Waypoint Homes has bought 2,500 home and plans to have a total of 10,000 homes by the end of 2013.

Institutions are pouring big money into buying individual homes and fixing them up, and then turning around and renting them. And more and more companies are entering this new “game.” As an example, Silver Bay Realty Trust Corp. (NYSE/SBY) raised $245 million in an initial public offering (IPO), and it plans to get involved in the markets for single-family homes.

This is clearly a good situation at first glance since the infusion of cash into the markets has helped fuel recovery.  However, there is a downside to this.  As soon as institutional investors can get better returns for their money elsewhere, they will be out of housing and moving on to the next thing. Home prices increasing may have been great for speculators and investors, but not for the economy.

Paddy Deighan J.D. Ph.D




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