Realtors Target House Seizures from the Chattanooga Times Free Press

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Reported by: Jason Reynolds


Saturday, December 6, 2008


Although the government has imposed a moratorium on some foreclosures for the next month, more could be done to save people’s homes if lenders and real estate agents worked together, some industry experts say.


“Why isn’t every lender … utilizing Realtors to assist in foreclosure prevention?” Cindy Walker, director of Crye-Leike Realtors’ foreclosure division, said. “These are the people that already know the market.”


Real estate agents are a logical choice to check on homeowners’ financial status, in some instances, said Keith Sanford, executive vice president of First Tennessee Bank in Chattanooga. Realtors have the ability to check on their previous clients, he said, and would know if those clients’ finances were tight at the time of closing. However, Mr. Sanford said the bank could not simply provide client information to Realtors because of privacy concerns.


Lenders and Realtors have an opportunity to help people stay in their homes with the recent announcement by Freddie Mac and Fannie Mae that foreclosures on government-backed loans will be halted until Jan. 9 so loan handlers can try to modify bad mortgages, Ms. Walker said. The moratorium affects owner-occupied properties, not abandoned houses or homes that have been rented.


Several agents and other industry experts talked over foreclosures and other real estate issues during a recent roundtable discussion at the Times Free Press.


Last month, Crye-Leike President Harold Crye began pushing the concept of encouraging Realtors to help homeowners, Ms. Walker said. Mr. Crye wrote a letter to all Crye-Leike agents asking them to find homeowners in financial trouble and help them talk to their lenders or a housing counseling service. The initiative is one way for Realtors to give back to the community, she said.


Nancy Clairmont-Johnson, a Crye-Leike agent, has been trying to prevent one house from being foreclosed on for more than three months. Her client’s home in Windstone is listed at $485,000. Mrs. Clairmont-Johnson said she persuaded the lender to hold off recently on foreclosure to let her try to conduct a short sale.


She also said that her company’s foreclosure prevention initiative is a way to help the community instead of having people being forced from their homes.


“I think it was an effort not to help us sell property, but to help people stay in their homes,” she said. “It’s not normally what Realtors would be doing, but it’s a personal effort on our part to help people.”


The federal government’s moratorium is a good beginning to solve the foreclosure crisis, said Aaron Shipley, co-owner of ReMax Properties North. It could give homeowners time to conduct short sales, he said.


A short sale is when a house that’s facing foreclosure is quickly sold, often for less money than is owed on the mortgage.


Mr. Shipley also agreed that agents should help people avoid foreclosure and stay in their homes.


One stumbling block, however, is that lenders have to approve such a sale, and it’s taking weeks and even months for some sellers to hear back from lenders, Ms. Walker said.


Brandi Pearl Thompson, Mr. Shipley’s co-worker at ReMax, said she agreed. She has been working with a client for five months to buy a Signal Mountain house on a short sale, but the lender is holding up the sale, she said.


“This buyer wants this house,” Ms. Thompson said. “The seller wants to sell but the lender will not help us to get this facilitated. And we could close in a week.”


Mr. Shipley attributes such problems to lenders and servicers being overwhelmed with work. That makes the idea of Realtors helping lenders connect with homeowners all the more logical, Ms. Walker said.


First Tennessee sold its mortgage servicing business, but still makes loans, Mr. Sanford said. Sometimes a servicer will get backlogged, but will try to contact a borrower who is behind in his payments.


In the last few years, too many buyers were allowed to take on too much debt, buying more house than they could afford, Mr. Shipley said. Now, lenders are tightening credit restrictions for loans.


Some homeowners are facing foreclosure, however, because lenders are tightening credit requirements on people who already have loans, said Jay Mace, a senior loss mitigation counselor at Save America Homes in Ringgold.


Until recently, a monthly mortgage payment could account for 50 percent or more of a person’s overall debt, he said, but the threshold is being lowered to between 28 percent to 36 percent, and some lenders are requiring more money from homeowners.


“It makes a person a long-term renter,” Mr. Mace said. “People aren’t being grandfathered in under the new rules.”