Bank Owned Properties

My partner and I are being foreclosed on. Why did I get served with papers when I am not on the note, just on the deed?

The note is the obligation to pay, so it sounds like your partner may have to wage that battle alone. However, everyone that may have an interest in the disposition of the property will typically be served when the lis pendens is filed. That would include all of the parties on the deed, the HOA or condo association, second lien holders, etc.

It is not too late to structure a short sale just because you were served with foreclosure documents. In most cases, a short sale is the best option for the owner and lender. Please call us direct for more details.

As always, please visit us at or for questions, email us at


Are the foreclosures and short sales drying up? Fewer of them seem to be available for purchase.

Yes, they are. Distressed properties only represent 20% of the sales market this year as opposed to more than 40% just two years ago. Foreclosure filings are down an average of 37% as compared with last year. Strong buyer demand for distressed properties has caused the average sale price for such properties to increase by 27% as compared with last year as well.

The low interest rates that we are seeing have played a significant role in the reduction of distressed inventory. Call us for a list of what’s available today and be ready to act quickly!

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Regional MLS Adopts New REO Rules

Regional Multiple Listing Service Inc. in southeast Florida is now requiring that their MLS participants identify listed properties as bank-owned or REO if they are in fact owned by a lender. This action was taken two days after the Palm Beach Post reported that some banks were telling agents not to disclose their ownership. A “large” asset management company was specifically referenced that sells homes for Wells Fargo and other banks. According to the article, they were instructing listing agents to show the owner of these bank-owned properties as “Owner of Record,” rather than naming the bank. 

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What is a robo-signer and why did some banks stop foreclosures?

Robo-signing is a media term used to describe the process whereby foreclosure affidavits were (allegedly) executed without being reviewed. As a result of the recent scrutiny, many lenders chose to curtail certain foreclosure processes. This is to allow for additional review to ensure that proper procedures are being followed. The current foreclosure moratorium is both voluntary and temporary. We expect foreclosure filings to resume very quickly.


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I am renting and just got served by a bank that is foreclosing the house. Is my lease enforceable?

According to S. 896, (enacted as Public Law 111-22) passed and signed into law on May 20, 2009, your lease may be valid if it was executed before the owner received a notice of default from the lender. Otherwise, you may be given a 90 day eviction notice. Most lenders will offer you cash-for-keys, meaning that they will pay you to move out and leave the property in broomswept condition.

February Update

The news of the day is the relocation of our office this month. We recently executed an agreement to lease our Main Street building to First Florida Bank. That building is 8,500 square feet and was originally built for specific use as a bank. With the vault, drive-thru lanes, night deposit and fire-proof rooms still intact, it was perfect for a bank that needs to move in a hurry.
So, we have moved our office into another building that we own at 725 Harbor Blvd, less than 2 blocks west of our former location. It is just less than 4,000 square feet and is perfectly suited for our use. This building was Destin’s first real estate office back in 1973 and was then called Cox and Young.
We are excited about the new location and the increased exposure we will gain from the Highway 98 frontage. We are easy to find — We are situated directly between Golden Corral and McDonald’s!
Also of note is the fact that Terri and I are ranked as the number 6 residential team in Florida by RE/MAX for 2009. The December stats will not be released until after the RE/MAX Int’l convention next month, so our final ranking may go up or down a little.

The Economic Front

Good news as interest rates continue their downward trend. 30 year fixed rates are now hovering around 4.75%. 5-year ARM’s are around 3.75%.
More good news … There are fixed rate jumbo products (stimulus) in the 5.25% range. These are loans that exceed $417,000 but are less than the established limit for the county within which the property is situated. The individual county limits may be viewed at:

With even lower interest rates and still declining real estate values nationwide, the housing affordability index is off the charts.

So, you would think that with housing affordability at an all time record high, homes should just be flying off the shelves, right?
Unfortunately, the credit markets are still tight and mortgage insurance is still non-existent, with the exception of course of government programs such as VA, FHA, and (Freddie Mac) Rural Housing. Consequently, cash buyers are taking advantage of the best deals out there on the market.
Condo financing (overall) is still about as tight as a vault door. A few portfolio programs are available and a limited number of investors are offering some end-user funding for certain individual condo units. The mortgage market has improved, but it still has a very long way to go.

The Local Trend
January was the fifth consecutive month of increased sales transaction numbers as compared with last year. As you can see from the reports below, single family, residential lots, condos and townhomes are all up.

There was a single $23,519,400 sales transaction for 116 condos at Waterscape on Okaloosa Island that skews the data. It appears to be a partnership buyout, so there is no significant resulting impact on market values.

Increased numbers of distress sales are expected, but 2010 should see continued improvement. Sales numbers are rising and appreciation may be slowly coming into focus.

Why do short sales take so long to complete?

That old adage “garbage in, garbage out”, probably best sums up the problem. The banks and lenders are being inundated with hundreds of thousands of short payoff proposals that don’t stand a chance of EVER seeing the light of day. The offers must fit within certain parameters to be approved. While our personal short sale success rate is more than 90%, the national average is only 25%. Were it not for the 75% “garbage”, the short sale process would be far more efficient and the real estate markets could see genuine recovery much more quickly.

If a home is offered as a “short sale”, is the listing agent required to set a price that the bank will accept?

We recently made a full price offer on a short sale home in Florida. We knew that the final selling price would be subject to bank approval. We recently were told that the bank would not accept our full listing price offer. We were told that an additional $42,000.00 would be required in order for us to purchase this house. We have received nothing in writing. Is this a legal “bait and switch” tactic? Any suggestions on how to proceed?
Yes, listing agents should try to list a property at a price that would be acceptable to the lender. Unfortunately, many agents do not have a clear understanding of how the short sale process works. First, each lender has their own “loss severity rate”. This is a numerical reflection of how much a given lender is writing off on deals gone bad. Today, it is not out of the question to see a lender with a LSR of as high as 60%. This means that they are only recouping 40% of the mortgage balance at closing. Each different lender has their own loss tolerance level. This is important to know because if you can keep their loss below that threshold, your odds of success are much greater.
Additionally, each individual lender has their own “sale to market ratio”. This is the lender’s in-house guideline indicating what percentage of fair market value will be acceptable. Most lenders want 90% of fair market value. Some 85%.  We have worked with one lender that can go all the way down to 75% if the property is in Florida. Knowing this number is likewise important. Again, your odds of success are much greater if your offer falls within these parameters.
Often, the lender will respond with a counter such as you described. Sometimes they want the seller to sign a promissory note, sometimes they want cash. Sometimes, they want to attach a mortgage on another property owned by the seller. Remember that the first counter is not likely the last.  You can always go back with another one. Submit additional comps to help justify the price that your offered. Sometimes, it is helpful to submit a new appraisal. Ask the negotiator before spending the money on one though.
The other wild card is the seller’s financial condition, which you will not likely be privy to. If the lender believes that the seller is much better off than he is reporting, the lender will take a much tougher stand.
You rarely get anything in writing when it comes to counters from the bank. Short sale negotiation is not a regulated process. It is not something that the bank has to engage in at all. There are no hard fast rules, only general guidelines. And the guidelines change weekly.
Hope this helps, and good luck to you!



How will the financial bailout make it easier for me to buy a house?

At this writing, it has not helped at all. All the gibberish that we are hearing from the banks is just that … gibberish.  We’ve heard them say that some of the funds will be used to help them offset or mitigate future losses, shore up their poirtfolios, acquire more banks, etc. But not once have we heard any of them say that the TARP funds will be used to ease credit or to make it easier for consumers to borrow.

The fact that the banks were given this money without strings attached is absurd. The intent and expectation is certainly a far different cry than reality. Let’s face it – Parents will hardly give their children a weekly allowance without some general guidelines.  

In sum, most of our politicians in Washington are far more concerned with padding their own beds, which means to do and say only that which sounds politically advantageous. This TARP program, at least at this point, is nothing but a sham. “We the people” are the dupes.

Houses are getting so affordable that we want to start buying some investment properties. The one we really like has some suspicious looking previous damage but the bank that owns it won’t provide a seller’s disclosure? Is this normal?

 The bank loaned money against the value of the property, then acquired it (took title) through a foreclosure or deed-in-lieu–of foreclosure. Until that point in time, they had a vested interest, but no personal knowledge of the condition or history of that property.



Buying such properties is a great method for building wealth. However, when purchasing bank owned properties, the terms of the sale will be strictly “as-is with right to inspect”.  You must order any and all inspections that you deem appropriate, and complete them within the allotted due diligence period.