Obama Announces Big $$ Incentives on Short Sales for Lenders and Homeowners

With around 43,000 notices of default last month in California alone, now more that ever the industry is in need of a Foreclosure Alternative Program.

I am so happy to see that the Obama administration has recognized the need to streamline the short sale and deeds-in-lieu process, and has provided viable options to homeowners who have fallen behind on their mortgages or owe more than their homes would sell for in today’s market.

The Obama administration announced the new details under its Foreclosure Alternatives Program (FAP) enabling lenders and borrowers to pursue Short Sales and Deeds-in-lieu of foreclosure in cases where the does not qualify for a Loan Modification. The program requires that before proceeding with a foreclosure, lenders must determine if a short sale is appropriate, if that is not successful, a deed-in-lieu of foreclosure.

They are even providing incentives for homeowners and lenders!

Borrowers (Homeowners). Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don’t qualify for a modification or do not successfully complete the three month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.

Incentives. Incentives include: (1) $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; (2) $1,500 for borrowers/homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).

Standardized Documents. The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.

Property Valuation by Appraisal or BPO. Servicers will independently establish both property value and minimum net return to the bank, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs)

Timeline. In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional and no foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.

Commissions. The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.

No Borrower Fees. Servicers may not charge fees to borrowers/homeowners for participating in the FAP. Contact Short Sale Pros for 100% Free Short Sale Help

Program Expiration. Starts May 14th 2009 and is in effect through 2012.

For the full report take a look at

How do you think the Foreclosure Alternatives Program will help the thousands of struggling homeowners? Do you think this is the best way to fix the problem?

Contact me anytime,

Oliver Graf

Real Estate Expert
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Real Estate Foreclosure
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California cracks down on "Foreclosure Consultant" Scam Artists

Beware of so called "Foreclosure Consultants"!

With the current state of the economy and the down turn of the Real Estate market its times like these where we see all the opportunistic Sharks coming out of the water! They are preying on desperate homeowners during moments of weakness… charging up front fees… and then NOT Performing the Service they said they said they would perform.

California Foreclosure Consultant Act aims to protect Families from these scam artists

The California Foreclosure Consultant Act Summary.

If a Notice of Default has been recorded against your home, this law will prevent a “foreclosure consultant” (even a real estate licensee) from charging fees in advance(in any form) to help you work out a loan modification or in some other fashion avoid foreclosure.

If a Notice of Default has not been recorded on your home it may be permissible for a real estate broker to assist you in obtaining a loan modification. Although in this narrow circumstance the broker can ask for advance payment they must provide you with a written contract which satisfies certain specific statutory requirements(and is compliant with the local real estate board).

Along with that, the contract must have been previously submitted to the California Department of Real Estate for review and received a “no objection letter” regarding its use. Real estate brokers who do not charge an advance fee for loan modifications or similar services are not required by the DRE to obtain a "no objection letter." However, their work must be completed before they’re paid.

You should know that there are agencies, attorneys, and real estate licensees who will assist you with your loan workout for a fee payable after the work is completed.

Attorneys licensed in California rendering services in the course of their legal practice are exempt from this law.

Definitions for Foreclosure Consultants

This Act defines a "Foreclosure Consultant” as anyone who offers for compensation to perform any service which "the person will in any manner do any of the following."

• Postpone or stop the foreclosure sale
• Obtain any forbearance
• Assist in the reinstatement of the loan
• Obtain extensions to reinstate the loan
• Obtain any waiver of an acceleration clause
• Save the residence from foreclosure
• Avoid or repair adverse credit reports resulting from a foreclosure sale
• To assist in recovering residual proceeds from the foreclosure sale of the owner’s residence.

Right to Cancel must be specified-

Under this section the owner is given 3 business days to cancel the contract and specifies the method of notice of cancellation.

Once operative the new law will require a Foreclosure Consultant to register with the Department of Justice and maintain a surety bond of $100,000.00. The Department of Justice will have the power to refuse to issue, or to revoke a Foreclosure Consultant’s registration. A violation of these provisions will be a crime. These changes will effectively give the Department of Justice oversight over California Foreclosure Consultants.

If you or someone you know is, or is about to be, in default on their home mortgage, and are approached by an individual or company that is offering to, in some fashion, “save the home from foreclosure” be sure they are reputable and only get paid when they perform!

What programs have you seen out there that this will affect?

When we are performing out Short Sale service for homeowners we make sure that we NEVER charge any fees! The goal is to help as many families as possible, NOT take advantage of them.

For any additional questions contact or visit:

To your success,

Oliver Graf

Real Estate Expert

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g list today! ***

Real Estate Foreclosure
Real Estate Help
Real Estate Avoid Foreclosure
San Diego Based Real Estate Blog