{"id":11760,"date":"2010-04-23T10:55:46","date_gmt":"2010-04-23T17:55:46","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=11760"},"modified":"2010-04-23T11:12:30","modified_gmt":"2010-04-23T18:12:30","slug":"performance-bonds-for-real-estate-escrows","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/11760\/performance-bonds-for-real-estate-escrows\/","title":{"rendered":"Performance Bonds For Real Estate Escrows"},"content":{"rendered":"

The world of distressed real estate (only about 90 of my past 100 transactions) is a funny one; all the rules are different.<\/p>\n

The REO sellers are pretty simple.\u00a0 They have a take it or leave it policy when it comes to negotiations, escrow terms, etc..\u00a0 Some short sellers however, can be like the\u00a0 “bait and switch” mortgage brokers of last decade.\u00a0 The “bait and switch mortgage brokers” would issue a fictional good-faith-estimate prior to pulling credit, getting a good valuation estimate, and checking income.\u00a0 One week prior to escrow, a “surprise” was discovered, changing loan terms and putting the potential escrow in jeopardy.<\/p>\n

Not all “oops” moments were conceived in evil nor should they be attributed to professional incompetence; sometimes; s**t just happens.<\/p>\n

A similar trend has developed in short sale real estate agent community.\u00a0 Like the bait-and switch mortgage broker, some short sale agents low-ball the price, collect offers, submit them to the bank, and pray for a reasonable settlement.\u00a0 Oftentimes, the counters are far apart from the originally accepted offer.\u00a0 Sometimes, the term changes are issued after the buyer has become emotionally vested to the property or invested\u00a0 funds to secure a loan approval for purchase.<\/p>\n

I’ll repeat myself; sometimes, s**t just happens<\/strong>.\u00a0 Other times, the surprises DO come from professional incompetence, poor disclosure and communication, or just plain old deceit. The result is an unhappy buyer or seller.\u00a0 The collateral damage is consumer mistrust in every agent involved in the transaction.<\/p>\n

Rather than vent about the reasons, let’s consider a private market solution to the problems:\u00a0 Performance Bonds. <\/strong><\/p>\n

Performance bonds, issued by independent insurance companies, could seriously contribute to the #rtb movement<\/a>.\u00a0 They can be offered by mortgage originators and listing agents alike.\u00a0 The credibility of offers to purchase, and listings for sale,\u00a0 could rise with the attachment of a performance bond into the escrow terms.\u00a0 Buyers could confidently place non-refundable escrow deposits, knowing that the lender has indemnified them from loss.\u00a0 Likewise, listing agents could rely on timely execution of the escrow if a lender performance bond were attached.<\/p>\n

Performance bonds could lend confidence to short sale transactions, too.\u00a0 Buyers could enter Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The world of distressed real estate (only about 90 of my past 100 transactions) is a funny one; all the rules are different. The REO sellers are pretty simple.\u00a0 They have a take it or leave it policy when it comes to negotiations, escrow terms, etc..\u00a0 Some short sellers however, can be like the\u00a0 “bait […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[26,5],"tags":[],"class_list":{"0":"post-11760","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-lending","7":"category-real-estate","9":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":11580,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/11580\/will-pre-approval-letters-be-banished\/","url_meta":{"origin":11760,"position":0},"title":"Will Pre-Approval Letters Be Banished?","author":"Brian Brady","date":"March 17, 2010","format":false,"excerpt":"Score one more screw up for the Government-Banking Complex...and watch mortgage brokers thrive because of it. Andrew Duncan of Keller Williams in Tampa, FL reprinted a Mortgage News Daily story: As part of the changes to the Real Estate Settlement Procedures Act, borrowers can no longer shop for a home\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":116,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/116\/who-pays-whom-for-real-estate-follow-the-money\/","url_meta":{"origin":11760,"position":1},"title":"Who pays whom for real estate? Follow the money . . .","author":"Greg Swann","date":"July 21, 2006","format":false,"excerpt":"The second in my series of articles devised to tick off real estate brokers appeared in the Arizona Republic today. (Here is a more permanent link to a longer version of the article.) Torquing the brokers is not really my intent, just a secondary consequence. Next week we get to\u2026","rel":"","context":"In "Enduring Interest"","block_context":{"text":"Enduring Interest","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/enduring-interest\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":17763,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/17763\/real-estate-agents-may-work-against-buyers-interests-with-shortened-contract-contingencies\/","url_meta":{"origin":11760,"position":2},"title":"Real Estate Agents May Work Against Buyers’ Interests With Shortened Contract Contingencies","author":"Brian Brady","date":"January 22, 2021","format":false,"excerpt":"If you are reading this, you are probably a real estate agent or broker.\u00a0 Most of the people who read Bloodhound Blog are industry folks rather than consumers.\u00a0 Consumers DO read Bloodhound Blog but, all in all, our audience is mostly comprised of the industry grunts who show or list\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1277,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1277\/the-new-bait-and-switch\/","url_meta":{"origin":11760,"position":3},"title":"The New Bait and Switch","author":"Morgan Brown","date":"April 9, 2007","format":false,"excerpt":"The term \"bait and switch\" is a favorite amongst consumers when dealing with mortgages. It's a refrain heard every day in our industry. Somehow uttering this term gives consumers personal strength and a sense of confidence. \"I'm not going to fall for any 'bait and switch'\" is a chant designed\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1669,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1669\/how-not-to-divorce-the-real-estate-commissions-la-buyer-figures-out-who-pays-the-commissions-but-seems-not-to-grasp-the-nature-of-the-listing-agreement\/","url_meta":{"origin":11760,"position":4},"title":"How not to divorce the real estate commissions: L.A. buyer figures out who pays the commissions but seems not to grasp the nature of the listing agreement","author":"Greg Swann","date":"July 17, 2007","format":false,"excerpt":"Via Freakonomics, the L.A. Land weblog at the Los Angeles Times has a shaggy-dog story about a buyer who came up with a brand new way to shoot herself in the foot: Pay all the commissions herself, regardless of the terms of the listing agreement and the HUD-1 procedures currently\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":329,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/329\/could-valley-resale-home-inventories-really-only-be-15-over-normal\/","url_meta":{"origin":11760,"position":5},"title":"Could Valley resale home inventories really only be 15% over normal?","author":"Greg Swann","date":"September 13, 2006","format":false,"excerpt":"Interesting notes from John L. 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