Liniger to Lenders: 'Release Properties' (24 comments)

Industry Leadership

LINIGER

Editor's Note: The following is a Feb. 10 press release from RE/MAX International.

RE/MAX Urges Lenders to Release Properties
Record Foreclosure Numbers Need to Be Tackled Head On

(Denver, CO, February 10, 2010) – Dave Liniger, RE/MAX International Chairman and Co-Founder, urged government and economic leaders to push lenders to release foreclosures to help speed the housing recovery. Liniger made his comments as a featured speaker at the Five Star Government Forum in Washington D.C. The Forum brought government and industry leaders together to share ideas for building stability in the nation's housing market.

"Most of us feel that there is a tsunami of properties out there. I can assure you in the hardest hit areas of the country, there are bidding wars going on," said Liniger, the only speaker representing a real estate company. "So, for those lenders who are here listening, now is the time to release properties, because you've got the Homebuyer Tax Credit that's driving buyers into the market, and a limited window of opportunity to get these properties sold before the credit expires this year."

Liniger explained that in some markets experiencing high foreclosure rates, homes in price ranges that qualify for FHA financing are attracting a lot of attention. In these areas, there are multiple offers from investors and first-time buyers, which indicates there’s a real shortage of available homes.

The Five Star Forum focused on the Home Affordable Modification Program (HAMP), and the challenges facing mortgage lenders in modifying loans under the program. It brought this group of influential leaders together to begin the hard conversation on how better to keep more Americans from losing their homes.

Over the past year, RE/MAX International has led the way on the housing recovery. Liniger and other RE/MAX representatives met with Housing and Urban Development Secretary Shaun Donovan, as well as officials with FHA, Fannie Mae, the Treasury Department, and the Homeowner Preservation Office. RE/MAX offered recommendations for streamlining the Short Sale process, some of which the Treasury Department adopted when it announced a new process last November.

In 2009, RE/MAX trained more than 10,000 agents to handle Short Sales. More RE/MAX agents have earned the Certified Distressed Property Expert (CDPE) designation than agents with any other real estate company. Surveys show that after earning a CDPE designation, agents are twice as likely to be able to keep families in their homes. And, if the best route is a Short Sale, CDPE agents are much more successful at completing the transaction.

"In our industry, we talk about distressed properties, but we're dealing with distressed sellers, distressed human beings," said Liniger. "They're humiliated by their situation, and that's why 70% of them never pick up the phone to help themselves when they're faced with a foreclosure. That's where Short Sales come in. They provide a better way for both the homeowner and the lender."

While some cities and markets are experiencing a recovery, as both home sales and prices rise, others are not faring as well. Overall, the real estate industry is in a correction, according to Liniger, who sees distressed properties making up the majority of sales for the next three to five years. And, after that, another housing boom may be on the horizon.

"Once this correction is over, we have a whole new generation of homebuyers waiting to get into the market. But we have to get through this first, and the best way to do that is to take it head on."

Comment on this story
E-mail your comments to editor@remax.net. Please include your full name, RE/MAX office, city and state or province. Comments, slightly edited for length, flow and punctuation, will appear below.

Comments (24)
I could not agree more with the article. There are plenty of buyers for short sale homes if the lenders would REALLY work with the real estate community. I do a lot of short sales, in fact about 25% of business in 2009 was short sales. I do all of the negotiating and follow up with the lenders so I know firsthand how incompetent they are and how slow they are. As only one example, I listed a home in February 2009 as a short sale and sent an offer to the lender, Bank of America who seems to be the worst, on 2/29/09. The offer was for $210,000 on a property that appraised for $224,000 which is 94% of the appraised value. It took 11 months to get this approved. It went through 5 different negotiators who each did nothing except pass it to another negotiator after their allowed time expired. You could never talk to anyone LIVE in the short sale department, everything was by email and they NEVER responded to any of the emails I sent them in 11 months. So the bottom line is the investor could have had the same payoff in 30 days that took a year. No wonder the banks are in trouble. I hope the new Treasury guideline have some teeth and this changes. My first-time home buyers won’t even look at short sales because they are afraid they cannot get closed by April 30. Bravo for Mr. Liniger.
– Mike Cluck, RE/MAX Excels, Geneva, Ill.

I love the fact that Dave is leading the charge in this delicate subject. There are so many vacant homes in our market and no loan modification program is going to get those homeowners to come back. If we can just get the banks to release the vacant properties, the buyers in our market would have some inventory from which to choose. Believe it or not, we need the inventory in some price categories to retain some of the buyers. Buyers want to give up after bidding and losing out on 7+ properties. At that point, the tax credit isn’t worth it. Our agents are working so hard and often feel defeated after multiple rejections on the strong offers they’ve written. It’s a gutsy message to send out and I applaud Dave for taking the lead. See you in Orlando soon, Dave!
– Jane Wallace, RE/MAX Bravo, Spotsylvania, Va.

Heads up to Dave L. for jumping right in the middle of this and STAYING right in the middle of this. Now that the Loan Modification plan has gone bust (if a guy doesn't have a job and can’t make his house payment at all, how can you modify his loan?), we need to use whatever means we have to put pressure on those banks who cannot get their system together to be able to process these requests for short sales. This should take no more than 30 days to approve. Shame on you, Bank of America! Get you heads out of the sand or wherever they are! Surely they know that they are losing much more money on each and every one of the foreclosures they are doing. I closed 45 of those transactions last year and I know in this area they brought about 60% of the dollar amount of the loan plus holding, marketing and selling costs.Get real!
– Tommi Perkins, RE/MAX Associates, REALTORS, Fayetteville, Ark.

I agree with the time tables and level of service by the banks previously mentioned. I might add the banking industry is also controlling the REO market by releasing their properties to previous relationship brokers of the past and that they have an on-line REO entity which they control whereas they suggest that brokers/agents must sign up for their REO programs which have a hefty fee. It seems the banks want to control who gets the REOs while cashing in on duplicated seminars and education to the brokers/agents already informed and certified all while they determine who will be getting REO's and who won't. If I recall, the banks cannot sell real estate but they can foreclose, the worst scenario of all and for the economy. It seems as if they are trying to engineer a method to raise capitol on transactions that are already in the red by 12 months. Once the banks do release their properties, they don't want to use state approved contracts, reliable escrow and title companies in addition to using, just recently developed, "bank controlled" appraiser pools. Maybe it's time to have the REO's managed by a pool as well, like it or not.
– Garth Clark, RE/MAX Masters, Covina, Calif.

The banks are so slow we are loosing sales right and left. I had one sale where we wrote the offer 12/5/09 and this was a full price offer, to date have not received a response from BOA. And by the way they allowed the utilities to be turned off without winterizing the property and now the price has gone from $190,000 (which we offered) to about $140,000 because of the broken pipes and damage to the property. Was that a smart decision? As a 30 veteran of real estate, I cannot write an offer and hope someday maybe the bank will look at it. At one point they requested social sec., birth date along with name, address (which they already had on the offer) before they would open the file to consider the offer. Now tell me, why do they need that kind of info on a pre approved buyer? The banking industry has no real estate knowledge and that is what is costing the U S citizens (in the form of bailouts) too many dollars. Thanks Dave for speaking on our behalf!
– Donna Weber, RE/MAX of KC, Kansas City, Mo.

While there are many distressed properties for sale in the Columbus Ohio area, banks slow response to offers on short sale homes is making it difficult to close these properties within the normal 30-60 day time frame. I have seen many Central Ohio short sale properties take more than 6 months to close. I have helped several buyers purchase short sale properties, many get frustrated at the lengthy process and tire of waiting on the bank to respond to their offer. I just recently sold a home in Worthington Ohio as a short sale through Suntrust Bank and it took over a year to finally get it closed. I had 4 different buyers make offers on the home and most got tired of waiting on the bank to respond. Finally, by the time I got the 4th offer, the bank had ordered the BPO (broker price opinion) and it still took about 30 days for them to approve this offer and another 30 days to get it closed. That is simply too long. I have some home buyers who don't want to look at short sale properties because they are afraid they won't be able to close in time, to take advantage of the home buyer tax credit. Due to the current market conditions, many home buyers are looking for a bargain and distressed properties can often attract multiple offers. However, that does no good if banks won't respond in a timely manner. Helping home owners avoid foreclosure by selling their home through the short sale process benefits everyone involved, the seller, the bank and the buyer. So banks should really make processing short sales a smoother and quicker process. More expensive for banks to foreclose than to work out a short sale. Banks incur a lot more maintenance expenses and legal costs when they foreclose on a home rather than working out a short sale. Typically less damage occurs to a property when a seller voluntarily sells it through a short sale, which means the bank may get more for the home and the buyer will feel more comfortable buying the home. When a home goes through the foreclosure process, they often sit empty for an extended time without utilities working. Homes that sit empty without utilities during the winter months often have plumbing pipes that burst causing extensive water damage to a home. Homes sitting empty during the summer without proper cooling or ventilation can quickly develop mold. Without electric, basement sump pumps don't work which often causes water backup and mold issues in basements. Banks should be especially motivated to process short sales as quickly as possible because it is in their best interests to get the most money out of a home. So I just don't understand why they remain so slow at dealing with these distressed sales. I wish banks would start taking short sales more seriously. Hopefully real estate professionals and industry advocates like RE/MAX who help to educate the public, banks and politicians will eventually make a difference.
– Petra Hinterschied, RE/MAX Connection Realtors®, Gahanna, Ohio

Let me first say that I have done short sales for years in California and now in Tennessee. I am writing to say that I have had great success with lenders on short sales so far. My main concern is that the time for approving short sales really needs to be handled with more concern over losing a ready, willing and able buyer. My only negative experience so far has been the delay caused by a 3rd party negotiation that began prior to the offer made by my buyer. Another 60 days passed from the verbal acceptance of my client's offer, and though the buyer's offer was a better offer than the 3rd party's offer to the lender, their offer could not be considered because the 3rd party had preference and was buying in order to sell it to my client who would actually occupy the property. Also, even though the buyer wanted to buy and move into the property the 3rd party was actually costing them an additional $20K on having to refi their loan after their closing with the 3rd party which now because of seasoning would have added another 30 days from the 3rd party's closing on to the actual short sale date. The Department of the Treasury has been talking a lot about a 10-day limit on approvals which would hopefully force 3rd party negotiators out of the market releasing the properties to sell to people who are not just speculating or flipping but actually planning to move in and live in them. Some 3rd Party negotiators are in it to "stop the foreclosure." Again I thank Dave Liniger for calling for a release of these properties that don't need to go to foreclosure to get sold!
– Joan Hall, RE/MAX Elite, Franklin, Tenn.

Thank you so much for this article! I am working closely with the Bankruptcy Court in our area and have a property listed right now that has brought in a $1.3 million cash offer, which would keep the bank’s short sale loss to less than 11%. The bank’s own attorneys have told them to accept the offer, yet the bank is quibbling about paying the fee to the Court, and they moving the transaction around between departments like a hot potato. Can we take it to a successful closing? Who knows?
– Jean Griswold, RE/MAX Leading Edge, Concord, N.C.

Liniger has it right, timely short sales can be the answer to lenders preserving principal of devaluing assets. The negotiators are so burdened with gathering correct paperwork it hinders decision making. The lenders may need to consider reversing the decision making process in an attempt to streamline approvals and root out non-qualified deals. Submit the offer, attain a BPO, negotiate the sale, qualify the transaction, close. The entire transaction would take 45-60 days. If questions arise relative to value or qualification, the deal would be escalated to the next level. Streamlining the system would also begin to stabilize values within that market. The 6 month lag for sold comps would be cut down to 2-3 months. Buyers would have more confidence in placing higher bids due to the shortened reporting time. This is crucial if we are to restore any semblance of a “normal” 5-7 month inventory. Mortgagees, not the servicers, should be directly involved in the process. Too often a servicer will delay action simply to increase self imposed fees. These actions impact both the seller/owner and the investor/lender. The owner goes further into debt while the investor loses additional principal by the delay. With this system all involved would benefit. Buyers wouldn’t shun short sales, sellers will reduce negative credit exposure and investors will regain and preserve principal, which can be put back into the market.
– Greg Flanagan, RE/MAX Advanced Realty, Mount Pleasant, S.C.

I also agree with Dave’s viewpoint! We here in Palm Beach County, Florida, have multiple offer situations on any decent properties under $250,000. Most of our inventory is short sales and we are finding a fair number of them are priced under market value. This creates the bidding war and gives our buyers the feeling that this is the fair price of houses! Most of these buyers do not stay with the offers as they wait months and months with no indication from the lender as to the progress of the file! I feel that short sales should not be even allowed to be on the market until the bank has approved the seller to sell the property and the price agreed as to what they will accept. If we had more bank owned properties, we could sell them!
– Diane Vervaet, RE/MAX Direct, Wellington, Fla.

The banks need someone to take the lead. They have no understanding of what goes on at our level and how much money they are losing by not getting the short sales processed. I had a buyer in contract with Bank of America for 18 months. They lost $ 40k in purchase price plus 18 months of payments. some of my short sale properties have lost over $ 100k because of the length of the process. Our area is 50 to 70% down and they do not get it. I have a short sale that is covered by FDIC and the loss share agreement I sold the home at the top of the market but they chose to foreclose unless the young buyer signed a note for $18,000 He said no so they are foreclosing and getting more money from the FDIC coverage This has to end We have to pay for this.
– Pat Dykes, RE/MAX Executive, Modesto, Calif.

Banks need to understand that they will sell the properties for more money and faster if they have them cleaned and heated. Buyers cannot visualize themselves living in homes that smell bad and are freezing cold with mold on the walls.
– Louis Abraha, RE/MAX First,Clinton Twp., Mich.

I recognize that the banks have real concerns about recasting the value of the homes for which they hold mortgages. The truth will not set them free. The truth will cause many of them to collapse. The regulators demand for cash reserves will drive many under if the banks are forced to be honest about the value of mortgages they hold. The "other shoe to drop" are commercial properties which carry similar liabilities and thus the easy answer for the banks and government is to pretend that the problem is not as bad as it is. The result is to continue to pile up hidden inventory and hope that the FDIC and regulators won't take over everything. Can anyone say "government banking"? We all now know that GM is "government motors." The banks, The Fed and the government understand that the demand is high and that we in the industry could move the inventory given a chance. The point of their policies has been to reduce inventories, foreclosures, and raise values. The effect of the policy is to create a new bubble. Dumping hidden inventory would not create the perception that the crisis is ending. If we open the floodgates of inventory values will fall as banks race to undercut the market. Perception of this "new crisis" would be reality despite demand. Dave Liniger is right, of course, that getting rid of this inventory would shorten the crisis. The problem is that it would also reveal a bunch of warts in the system. The political hope is that if we kinda put a band aid over the warts and the patient will heal. We sorta have to agree to worry about things like commercial real estate later. The mentality of the policy makers is an attitude of going on hoping despite reality. No policy maker is willing to take responsibility, cut our losses, and move-on. In my opinion a political reality has replaced a business reality and has left us with one answer. Throwing money at the problem is our official policy, despite the long-term results.
– Loren Ransier, RE/MAX Gold

I love this article. I love that Dave is taking a hands-on approach to the situation and that we (Realtors) have such an experienced voice working for us on the front lines. The current loan modifications and home programs are not working to save our seller’s homes. The majority of the people don’t qualify for the programs. Short sales are our next best option, but most consumers don’t even know what a short sale is or how it works. Dave’s comment about “distressed sellers, distressed human beings” goes right to the heart of the matter. We are dealing with real people that did not ask for this economic crisis to knock on their front door. Consumers do not have the knowledge or the confidence to pick up the phone and ask for help. If they do, pride and shame prevent them from making the call. Wouldn’t it be nice if we could educate the public about real solutions to their housing problems – including a short sale option. Then tell them with confidence that there is a system in place to handle their transaction; that is streamlined and has cooperation by all entities? This will only happen when everyone understands the true nature of the processing problems and gets on the same page to work for the consumer, instead of against them. Thanks Dave!
– Bobbie Rupp, RE/MAX Properties, Colorado Springs, Colo.

It is extremely difficult to get offers accepted on the few REOs we have on the market. Our market is saturated with short sales, and agents and buyer's want that to be the last choice. We need more marketable properties and lenders to work more deligent with short sales so we can clear the pipeline. For every property listed we have 5 or more offers on REO and standard sales. Short sales have our market backlogged.
– Lou Vera Ross, RE/MAX Champions, Rancho Cucamonga, Calif.

These two videos tell the story of why the banks seem to be dragging their feet. It’s not just incompetence and that they are overwhelmed. Some banks are betting with tax payer money that certain number of properties will foreclose and the banks will make more money that way because these mortgages are insured by the FDIC, with our money.
http://www.thinkbigworksmall.com/mypage/player/tbws/23088/870776
http://www.youtube.com/watch?v=vxyRFSYe7ws&feature=player_embedded
This must be what the Obama Administration calls “Change you can believe in.”
– Demos Papadopoulos, RE/MAX Gold

Good article and thanks Dave! Here is an example of the insanity going on. I had a $375,000 short sale approved by the First deed of trust lender Capitol One and the second lender refused to take a short sale (even though the first lender agreed to give them $10,000) and the second lender did nothing to redeem the property after the Public Trustee sale. Therefore the First lender Capitol one got the property and then rather than take the contract they already agreed upon, they sent it to a out of town Realtor 30 miles away who has a referral agent 3 doors away from me in the same RE/MAX office. The out of town Realtor says they may have the property back on the market in 30-to 45 days. So the people purchasing the property and approved by the first lender have no home to go to and have to go and buy something else or wait for it to come back on the market. We constantly called them after the redemption and were sent to over 4 different people who would get back to us and nothing. Thanks for trying to get things streamlined.
– Ken Anderson, RE/MAX Alliance, Fort Collins

Great comments! Buyers are ready to leave the starting gate and the banks are taking too long to respond to short sale offers. Buyers are now considering leaving the short sale market if they want to take advantage of the tax credit by the deadline. Whatever can be done to personalize the market as Dave Liniger has done would help, too. Great job representing RE/MAX!
– Ellen van Nagell, RE/MAX Real Estate Center

I sold a Bank of America foreclosure in January. The experiance was the most frustrating event I have ever had in my 15 years of real estate practice. My buyer had a 804 credit score, her own 5% downpayment, and over 6 months of monthly payments reserved in her bank accounts. The agreed contract price of the house was $68,000. The " AS IS " appraised value was $83,000. The buyer planned to use her own money to make cosmetic repairs and to put on a new roof within the year. I thought it would be a slam dunk with $25,000 equity built in. The appraiser said that the roof, carpet, and A/C condensor had to be replace. The buyer had enough funds to do these improvements. Bank of America owed the property and approved the loan. There was no leaking of the roof per buyer paid home inspection. The bank required her to escrow 110% of her own money for the repair cost and provide a licensed contractor before they would close th loan. After 2 bank of America extentions it finally closed after two and a half months. The biggest problem was that the lender ( Bank of America ) and the seller ( Bank of America ) were not on the same page while working the loan process. The asset manager can't allow the buyer to makle repairs and the lender wants repairs before the loan will close. My buyer would loose her $250 ( for home inspection ) and her $1000 earnest money if she backed out or if the contract extension time expired again. The listing agent had another buyer ready to purchase and the asset manager tried to cancel the deal. Bank of America controlled the entire transaction but could not communicate internally. It was INSANE. The buyer had a 804 credit score on a supposed " AS IS " PURCHASE but the loan was not based on the $68,000 sales price and the $83,000 as is appraised price. The property had to be repaired or escrow repair funds before it closed. If you sale a property as is then that used to mean " AS IS." If the lenders won't lend the money to a buyer with 804 credit score then that leaves out a big market of people wanting to buy with lower scores. Please let me know how to get around this travesty. A lot of my past clients are near foreclosure and call me for advice. I have no answers because the homes have lost value and if they sell it will cost them money.
– Frank Taylor, RE/MAX of Montgomery, Montgomery, Ala.

Not exactly sure if it's appropriate to bring up this point, but if I do not voice it, it would not get heard. So here goes. On the REOs especially in our market here in California lower end under $200,000, any first time home buyer agent knows how our offers are getting beat out by the all cash potentially investor buyers. So my people who are looking to buying their first home, with an FHA loan, we have to keep submitting offers (multiple properties at one time), just to hopefully get a bank to accept our offer over the all cash buyer. To exacerbate the situation even more, is when a listing agent will put this REO on the market for tens of thousands of dollars less than the market is showing to spawn multiple offers. Why not just put it on the market for its value? Who would want to create such a workload for themselves to review 30, 40 or even 50 offers on one property? Makes no sense to me. Buying a home should not have to be seeing 101 properties and submitting 22 offers to get one. My $.02 worth.
– Yvonne Jordan, RE/MAX Gold

I heard Dave speak in Rancho Cordova recently on this same subject. While he is in the vanguard, another can of worms has been opened up. The problem: Bank of America. I have done short sales for nearly 20 years, and presently have 7 sales ends open on BofA short sales. Consistently, they are the WORST possible business partners in resolving short sales. It is my conclusion that BofA makes these sales as difficult and punishing as possible for clients, agents and RE/MAX as well. By partnering RE/MAX with BofA, and putting their logo stickers in our RE/MAX offices, we are now forced to walk our Short Sale clients past promotions in our offices for the very same lender that is causing us all so much grief and anxiety. This cross-branding with the worst, most despised lender in the world at the same time Dave lectures these lenders to "get real" about the release of inventory and short sale issues, is certainly sending crossed messages to our clients who are caused to suffer by this affiliation with the very difficult Bank of America. I wish they would take down the BofA logos in RE/MAX offices until they can get our mutual clients some real service on their short sales and get the transactions closed without brutalizing everyone involved. I think maybe this association (or the timing of it) was not so well thought out. Bank of America has everything to gain, while RE/MAX can only suffer by cross-branding with this rather insidious institution. I hope this gets to Dave for his consideration. It's only because I care about my clients and about our outstanding RE/MAX brand.
– Charles L. West, RE/MAX Gold, Cameron Park, Calif.

In my opinion the problem with short sales is that the people at the banks are not in real estate sales. They are totally clueless as to how our business works. The best example is how it takes them to make a simple decision. We get our clients to make decisions relatively quickly and most have not bought or sold a property in years. What needs to happen is for the banks to hire real estate licensees in the short sale departments.
– Diane Bush, RE/MAX Olson & Associates

Bravo and totally agree! We are experiencing many of the same issues here. Short sales, good offers, multiple offers, but cannot get responses quickly enough from banks before well qualified potential buyers walk away! Then they go to full foreclosure for much less than if they had worked on one of the many good offers we present! Makes no sense.
– Janine Weaver Kimble, RE/MAX Peninsula, Newport News, Va.

We all know the mess homeowners are in regarding foreclosures. But most owners don't know until it is too late that a lender will not take a partial payment. If a homeowner loses his job and has a problem making two payments, then gets another job and offers to catch up by paying one and a half times his mortgage payment until he is up to date, the bank will not accept this! The bank wants all that it is owed and will not accept the offer to catch up. Meanwhile, the owner gets more in debt because he cannot pay all three months at once and very quickly he is in foreclosure. This makes no sense. The banks would have their money and the homeowner will get to keep his property. I am surprised that the National Association of Realtors has not gone after this to help the homeowners and the economy.
– Rosemary Johnson, RE/MAX Focus, LaGrange, Ill.

Posted 2/11/10