The Most Viable Foreclosure Alternatives

We don't want anyone to lose their home. We don't want anyone to be forcibly displaced. There is no place for foreclosures and evictions in an intelligent society. They are symbols of moral, economic and social corruption. Unfortunately, they are of our own making. Our own craving for materialistic pleasures leads to consumerism and a system of governance that is more concerned about the health of its financial institutions than the health of its citizens.

In order to help home owners facing foreclosure,  the government of United States introduced HAMP. As of 04/30/2013, 18% of the home owners offered permanent modifications under this program had redefaulted and many were on the brink of default. The program itself is only available until 2015, so it does not really provide us a viable long term alternative to foreclose.

Some market partipants have, however, come up with some options that look like viable long term alternatives to foreclosure. I would like to discuss three of them.

The first one is an Assisted Short Sale program offered by Ocwen Loan Servicing in association with Altisource. The purpose of this program is to help fetch the best price for the property while ensuring that only minimum costs are incurred, encouraging the first mortgagee to approve the short sale instead of foreclosing on the loan. As a part of this program Altisource work on reducing costs by negotiating liens, judgements, HOA dues and other encumbrances and let the seller list the property on their online platform HUBZU.COM. This program is viable long term alternative to foreclosure because it addresses three major concerns of associated with a short sale - time, financial viability and finding a buyer. A short sale can be completed, in most cases, in less than two months from the date the seller opts for this program. Many short sales fail because the costs associated with them are high compared to a foreclosure (particularly in non-judicial foreclosure states). This generaly happens due to junior liens, HOA dues, judgements etc. The major strength of this program lies in the way it is able to deal with these issues. Finally,  HUBZU tries to find buyers. In case the seller already has offers, this a good opportunity to see if it is possible to find better offers. Overall, this looks promising and has folks at Altisource very excited about it. I hope firms other than Ocwen also get together with Altisource to design similar programs.

The second viable long term alternative comes courtesy real estate agents. Wherever and whenever possible a realtor may get an investor to buy the home through a short sale and rent it out to the seller with an option to buy. This would have to be disclosed to the lender at the very beginning. I understand that some lenders may not allow this. However,  wherever possible, this is a great way of letting the distressed home owner continue living in his home. This prevents foreclosure and displacement.

The third option is what can roughly be termed as "a deed in lieu of foreclosure in exchange for contract to rent". The first and the second options are great if you can find a buyer. However, there may be properties which may not find a buyer but have a home owner not wanting to be displaced. In such cases, wherever and whenever feasible, the home owners should have the option of offering the property via a deed in lieu of foreclosure to the lender or an REIT/investor (through the lender) in exchange for being allowed to rent the home.

The only fool-proof way to avoid losing material possessions is to not have them in the first place. Its not the loss of possessions that causes stress but our attachment to them. However, since we all have material desires ourselves, we can understand the stress others undergo when they are on the verge of losing material possessions. It is with this understanding that we must help others. Let us get together and end foreclosures. Let us say no to forced displacement. Let us push for viable alternatives to foreclosure.

—————————————————————————————————

Saurabh Singh is a student of the Vietnamese monk Thich Nhat Hanh and is currently employed with Altisource. All views expressed here are his personal views and are not necessarily  endorsed by his employer. The author does not guarantee the accuracy of any information contained in this post. Real Estate, finance, banking and online transactions are complicated and governed by various regulations and readers are advised to consult with certified professionals before making any decision.

Realtors entering the path of Enlightened activities

Helping a home owner prevent foreclosure is a noble cause. Those realtors who wish to commit themselves to this cause are entering the path of Enlightened activities. However,  not everyone will be a success. It is more profitable to flip homes than work on a short sale for months only to see your efforts fail.

There are many challenges like negotiating liens, voluminous documentation, high wait time and an aggressive first mortgagee trying to foreclose the property. Such challenges do not exist on a normal real estate transaction. A reator entering this path will need to not only familiarize themselves with the technical aspects but also train their mind to develop certain special qualities.

Many websites do a good job of helping realtors with the technical aspects through courses and forums. When like minded people get together, they can encourage each other. However, I want to talk about training the mind to develop special qualities so we don't abandon our cause.

First,  we must try to remember that many people have helped us when we have been in distress and the high esteem in which we hold such individuals. Compare them with selfish individuals you have come across. You can then see clearly that you'd rather be the former than the latter. This is the first training.

Second, we develop the understanding that this could happen to anyone. Many people experience financial difficulties due to poor economy or not being able to work due to illness etc. Loss of job or reduction in income are the most common reasons due to which  people are unable to make  their mortgage repayments. This can happen to anyone. We must develop the understanding that this can easily happen to us.

Third, we develop a commitment to the cause. We must not look at a short sale transaction as just another transaction. We do not want to just go through the motions. Having realized that we want to help others and having understood that this could happen to us, we must seize the opportunity to rescue the home owners from their plight. This happens when we have committed ourselves to the cause. Every morning when you wake up tell yourself that today you will save homes from being foreclosed. You will save a family from the social and financial trauma brought about by a foreclosure.

Fourth, is awareness. Aware of the stress that such transactions can cause we can be better prepared. We have all experienced stress and if we did not like the experience chances are that somebody else will not like it either. By offering our presence to our clients we put them at ease by bringing them in contact  with our solidity.

Fifth, we must be vigilant. Many things can go wrong. By being vigilant we can prevent that from happening. Always keep an eye on the foreclosure clock. Check if you have standard documents like hardship letter, pay stubs etc. Some lenders frequently lose items or may deny having ever receiving them. Know where you are with each transaction at all times.

Sixth is developing the very valuable quality of patience. We have to tell ourselves that this will take time. You can negotiate a lien for 30% quicker than for 10% but that can kill the short sale. Be patient and help others do the same.

Seventh is perseverance. Perseverance is the ability to overcome difficulties that come our way. No agreement between the first and second lien holder. Unrealistic timelines set by the first mortgagee. Non responsiveness. These are commonly encountered challenges that we must overcome.

Eight is meditation. Take a glass of water. Add a few spoons of sand in it and stir it. That is the state of our mind. Now wait for the water to be still. The sand settles at the bottom and you can see clear water. This is a mind post meditation. By meditating we create conditions for wisdom to arise. We stop negative seeds like selfish desires, greed and frustration from germinating and we remind ourselves of these nine qualities and improve every day.

Finally, the ninth quality is wisdom. The understanding that we are all connected to each other and no one can do anything arbitrarily. While one idiot with poor knowledge can ruin it for others, this also means that we can make it a success. Make sure that you drive the transaction. Be clever. This realization will help you take almost every transaction to the desired conclusion.

Helping others is an activity of the Enlightened. Welcome to the path of Enlightened activities!

Don't worry. I will be there.

The most valuable gift you can give others is your presence. This is the perfection of giving. When we are present we are practicing the perfection of giving. When we are present and mindful we can touch life. We can truly be of service to others.

Working for a real estate service provider I come across many people experiencing great anxiety and stress. Some buying a home for the first time. Some desperate to save their homes. Some trying to prevent a foreclosure.

People rely on real estate professionals to help them through what can easily turn into a nightmare. Most real estate agents are quick to highlight their acheivements, their qualifications,  the number of deals they have completed etc. Only a few say, "Don't worry. I will be there. It can get complicated and frustrating but I'll help you cope with it."

Being there we can do more. We do not have to be Governors or Presidents to make a difference. We don't have to be the CEO to bring about transformation. We just need to be present and mindful. When we are present and mindful we can penetrate the moment. We can heal. We can transform.

Your presence reassures a first time home buyer. Your presence gives confidence to someone trying to prevent a foreclosure. Offer your presence, your serenity, your freshness. These are more valuable than you can imagine.

I am happy to be with you. Lets see what comes along. When we are present, we are aware. We can experience. The food, the music, the love. We can experience life. We can touch happiness.

“The most precious gift we can offer others is our presence. When mindfulness embraces those we love, they will bloom like flowers.”