HAFA Short Sale Update for Real Estate Pro


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This is the September Presentation by Making Home Affordable on the HAFA Program.

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HAFA Short Sale Update for Real Estate Pro

  1. 1. Home Affordable Foreclosure Alternatives September 2011 Making Home Affordable
  2. 2. Home Affordable Foreclosure Alternatives – HAFAH Aff d bl F l Alt tiThis presentation will cover the following: 1 Welcome 2 Treasury HAFA Overview & Update 3 GSE Overview & Update p 4 Servicer Overview & Update  5 Discussion/Questions September 2011 Making Home Affordable 2
  3. 3. Home Affordable Foreclosure Alternatives – HAFAOverview September 2011 Making Home Affordable 3
  4. 4. HAFA Advantages  dHAFA has key benefits for the homeowner. Releases homeowner from future liability of mortgage debt Homeowner receives $3,000 in relocation assistance Less negative effect on homeowner’s credit score Homeowner incurs no out‐of‐pocket expenses Homeowner incurs no out‐of‐pocket expenses Foreclosure cannot take place while the homeowner is being  considered for HAFA Servicer will assign a “relationship manager” to work with the  homeowner September 2011 Making Home Affordable 4
  5. 5. HAFA Advantages  dHAFA has key benefits for the real estate professional. Ability to market property as pre‐approved short sale Sales commission cannot be changed once established Ability to escalate difficult cases Transparency in the short sale process Transparency in the short sale process Foreclosure cannot take place while the homeowner is being  considered for HAFA Servicer will assign a “relationship manager” to work with the  homeowner September 2011 Making Home Affordable 5
  6. 6. What are the Goals of HAFA?Wh h G l f HAFA? Key Components  of the Program  Release of subordinate liens and   Release of subordinate liens and  personal liability l li bili personal liability. Provide assistance to homeowners  Provide assistance to homeowners Goal 1 who need to transition to more  who need to  transition to more   Financial incentives for   Financial incentives for  homeowners, investors and  affordable housing. affordable housing. homeowners, investors and  servicers servicers.  Uniform documents.   Specified response times and  Standardize & streamline the Goal 2 short sale process. timeframes.  Upfront disclosure of short sale  terms and conditions. September 2011 Making Home Affordable 6
  7. 7. HAFA by the NumbersHAFA is growing in scope and influence. g g p Source: Making Home Affordable Program Performance Report Through August, 2011 September 2011 Making Home Affordable 7
  8. 8. HAFA Resources Get help with  questions about  HAFA at  ssdil@HMPadmin.com September 2011 Making Home Affordable 8
  9. 9. Trusted Advisors Escalate Tough Cases d d i l hHAMP Solution Center (HSC) helps trusted advisors with cases that are difficult to resolve.difficult to resolve September 2011 Making Home Affordable 9
  10. 10. MakingHomeAffordable.gov  ki ff d bl September 2011 Making Home Affordable 10
  11. 11. More Help for Struggling Borrowers Foreclosure Alternatives Short sale Deed-in-lieu Deed-for-Lease™11
  12. 12. Leave the home: Short sale• A short sale, also known as a pre-foreclosure sale, is when a borrower sells a home for less than the balance remaining on the mortgage. If the mortgage company agrees to a short sale a borrower can sell the sale, home and pay off all (or a portion of) the mortgage balance with the proceeds. These borrowers may also be eligible for the government’s Home Affordable Foreclosure Alternatives Program (g (HAFA) which ) offers short sale and DIL options.• A short sale is an alternative to foreclosure and may be an option if a borrower: – Is ineligible to refinance or modify the mortgage – Is facing a long-term hardship – Is behind on mortgage payments – Owes more on the home than it’s worth – Has not been able to sell the home at a price that covers what is still owed on th mortgage till d the t – Can no longer afford the home and is ready or needs to leave12
  13. 13. Leave the home: Deed-in-Lieu of foreclosure f l• A Deed-in-Lieu of Foreclosure (DIL) is where a homeowner ( ) voluntarily transfers the ownership of a property (the title and all property associated with it) to the owner of the mortgage in exchange for a release from the mortgage loan and payments.• A DIL may be an option if a borrower: – Is ineligible to refinance or modify the mortgage – Is facing a long-term hardship – Is behind on mortgage payments – Owes more on the home than it’s worth – Doesn’t want to sell the home or hasn’t been able to sell the home – Can no longer afford the home and is ready to leave13
  14. 14. More Help for Struggling Borrowers p gg g Outreach • Fannie Mae Mortgage • Thousands attend • KnowYourOptions.com™ Help Centers open in 11 foreclosure provides interactive help markets prevention events14
  15. 15. 15
  16. 16. Freddie Mac Short SaleOverviewMark JohnsonLoss Mitigation ManagerOctober 12, 2011
  17. 17. Everyone Benefits From A Short Sale Homeowner Investor  Prevents foreclosure  Reduces potential losses  Avoids REO and associated  Avoids deficiency judgment expenses  S ti fi the debt for less than Satisfies th d bt f l th MI Company full amount  Reduces claim losses  Avoids stigma of foreclosure g  A id REO and associated Avoids d i t d Servicer expenses  Reduces NPL servicing costs  Receives potential incentives 17© Freddie Mac
  18. 18. Freddie Mac Short Sale Options HAFA Programs Classic Short Sale & DIL Eligibility Criteria • Delinquent more than 60 days Borrowers who are delinquent or in • Meet HAMP eligibility criteria danger of imminent default • E l t d f other home retention Evaluated for th h t ti options No need to be HAMP eligible Borrower Not required to make any contribution Maximum possible contribution toward Contribution any deficiency from the sale in cash and/or promissory note Documentation Uniform documents: SAI Uniform documentation  Short sale agreement Form 710  Request for short sale  Approval and denial letters  Deed-in-lieu agreement Property Servicer orders a property valuation Same as HAFA Valuation V l ti using th 90 d “ i ” marketing value i the 90-day “as is” k ti l Price is based on a market sales comparison using the as-is value Incentives Servicer $2,200 $2,200 Borrower $3,000 18© Freddie Mac
  19. 19. Challenge: Many Real Estate Agents Are NewTo The Short Sale Experience Most common challenges:  MI and junior liens are part of the negotiation process  completed short sale package  Postponements and pending foreclosure sale  Deficiency Judgments, Tax g implications, Arms Length Affidavit 19© Freddie Mac
  20. 20. Challenge: Getting Agreement AmongMultiple Parties Parties in a Typical Short Sale Transaction These have up to three times more parties involved than a typical real estate transaction Agents Loan Mortgage Mortgage Seller Buyer Servicer Investor Insurer Housing Counselor C l Primary Pool Junior Lienholders HOA Buyer’s Liens Lender 20© Freddie Mac Source – “Effective Short Sale Workouts, Genworth Financial , Inc
  21. 21. Freddie Mac Is Improving Short SaleProcesses & Increasing Awareness  Streamlined document requirements  Paying agents full commission  Providing quicker decisions  Implemented training programs for real estate agents  Debuted an online learning center  Participating in borrower workshops nationwide 21© Freddie Mac
  22. 22. Real Estate ProfessionalPresentation on HAFA Short SalesDate: October 12, 2011 22
  23. 23. Chase Foreclosure Alternatives Chase Foreclosure Alternatives Map Short Sale High Level Process Flow Short Sale Consideration Short Sale Document Requirements HAFA Program Overview Approval of a HAFA Short Sale HAFA SSA Timeline HAFA Short Sale Benefits HAFA Short Sale Buyer HAFA Program Comparison Chase List Assist Short Sale Webpage How Can You Help Us? Short Sale Resources 23
  24. 24. Chase Foreclosure Alternatives Map 24
  25. 25. Sh t S l P FlShort Sale Process Flow Liquidation Process Overview Entry Points Live Transfers Document Quality List Assist Negotiation Closing Customer Intake/Setup Reviews Care Strategic Theme St t i Th Collections Pre-Qualification Underwriting System Maintenance Denial Modification• Denials  D Document Review R i  Inbound Triage  HAFA/BAU Review  R l Time Real Ti  Cash Posting &  HAFA Pre-Qual Reviews  Customer Contact  Offer & HUD Instructions CHOC’s  SSA Production  HAFA Compliance  Missing Document Negotiation  CBR Coding Letters  List Price  GSE Compliance  NRV Calculation  HAFA Validation Borrower  File Setup  Investor Policy Maintenance  Approval/Denial Outreach  Document  Loan Assignment Communication  Internal Policy  Loss Recognition Perfection Customer Correspondence Offer Listed 25
  26. 26. Short Sale ConsiderationSh t S l C id tiWhen is a short sale considered?When is a short sale considered?When the value of the property is less than the outstanding balance of the loan.When the customer is unable to make their mortgage payments due to a hardship and all  g g p y pother retention options have failed.How does a customer qualify for a short sale?Provide hardship information and proof of hardship.Financial difficulties (loss of employment, reduction in income, etc.)Fi i l diffi lti (l f l t d ti i i t )The loan is delinquent or will be an Imminent Default loan. 26
  27. 27. Short Sale Document RequirementsBorrower Real Estate Professional R lE t t P f i l – Hardship Affidavit/RMA – Listing agreement (If property is  – Dodd Frank Certification (HAFA) already on the market) – Letter from any junior lien  – Proof of MLS  holder(s) agreeing to accept a  – Sales/Purchase Contract with all  settlement to release their  applicable addenda lien(s) – 3 Comparable Active Listings – Authorization to provide and Authorization to provide and  – HUD (Estimated Closing  ( i d Cl i release information – allows  Statement) agent or designee to discuss the  account with Chase – Financial information if required Financial information if required  by the investor or mortgage  insurer (MI): • Proof of Income • Two most recent bank Two most recent bank  statements • Last two years’ tax returns 27
  28. 28. HAFA Program OverviewHAFA P O iThe Home Affordable Foreclosure Alternatives (HAFA) Program provides additional options to avoid foreclosure and offers incentives to borrowers, servicers and investors who employavoid foreclosure and offers incentives to borrowers, servicers and investors who employ liquidation strategies (short sale and deed‐in‐lieu) instead of pursuing foreclosure. The borrower will receive the Short Sale  Agreement (SSA) with related  documentation. It will contain the acceptable list price and the expiration date of the documentation It will contain the acceptable list price and the expiration date of the Pre Sale (SSA) SSA. The borrower must list the property with a real estate agent at a price that will support the minimum net proceeds. When an offer is received, the borrower will submit a Request for Approval of Short Sale (RASS), along with the required documentation to be approved within 3 Offer (RASS) business days. The servicer will approve the sale, provided it will generate the minimum required net proceeds and will comply with the terms given in the Short  g Sale Terms and  Conditions Agreement. Alternative Rass If an offer to purchase a property is made before the servicer provides an SSA, the (ARASS) borrower will submit an Alternative RASS for the servicer s consideration. borrower will submit an Alternative RASS for the servicer’s consideration. 28
  29. 29. HAFA Short Sale Approval Process Alternative Request for Approval of Short Sale (Alt RASS) – Negotiator compiles all of the required documentation.  – Negotiator will evaluate offer presented and determine if any negotiation is required for the  price, closing costs, etc. – Negotiator completes a gain & loss analysis once all negotiations are complete Negotiator completes a gain & loss analysis once all negotiations are complete. – The gain loss analysis is presented for short sale approval and may require investor  and/or mortgage insurance (MI) carrier approval(s) prior to final Chase internal  approval. Short Sale Approval (SSA) – Pre‐Contract Specialist compiles all of the required documentation. – Pre‐Contract Specialist evaluates for HAFA eligibility. – Pre‐Contract Specialist completes a gain & loss analysis once they have values and the  HAFA documents. – The gain & loss analysis is presented for SSA and may require investor and/or mortgage  insurance (MI) carrier approval(s) prior to final Chase internal approval. 29
  30. 30. HAFA Short Sale Agreement Timing After Borrower responds  to HAFA solicitation,  Borrower submits  Chase must complete and  Chase must complete and offer to Chase along  offer to Chase along send SSA to borrower   with the completed  Borrower must  RASS contact Chase &  Chase must  accept HAFA  SSA Marketing Period* approve/deny  offerTrigger – 14 days 45days  120 days 3 days 10 daysSolicitation*Chase will not permit an extension after the 120 day SSA marketing period expires*Chase will not permit an extension after the 120 day SSA marketing period expires 30
  31. 31. HAFA Short Sale Benefits   HAFA uses borrower financial and hardship information previously collected for  consideration of a HAMP loan modification.  Allows borrowers to receive pre‐approved short sales terms before listing the  p pp g property.  Requires borrowers to be fully released from future liability for all mortgage debt  (no cash contribution, promissory note, or deficiency judgment is allowed).  Provides $3,000 for borrower relocation assistance.  Provides a $6,000 aggregate cap for subordinate mortgage lien holders. $ , gg g p g g 31
  32. 32. HAFA Short Sale Buyer  Sales contract must be executed with all appropriate addenda.  Buyer(s) must have pre‐approval or commitment letter on letterhead from a  lender.  Short Sale must be an “Arm’s Length” transaction.* Short Sale must be an “Arm’s Length” transaction *  No agreements permitted between the Seller and the Buyer that the Seller  will remain in the property as a tenant or later obtain title or ownership of  the property.  Purchaser may not sell the property within 90 days of closing.* Servicers have the discretion to approve sales to non‐profit organizations with the stated purpose that  Servicers have the discretion to approve sales to non‐profit organizations with the stated purpose thatthe property will be rented or resold to the borrower, so long as all other HAFA program requirements are met. 32
  33. 33. HAFA Program Comparison Treasury HAFA Fannie Mae HAFA Freddie Mac HAFAEffective date April 5, 2010 – December 31, 2012 August 1, 2010 – December 31, 2012 August 1, 2010HAFA short   HAMP eligible (delinquent or   All Treasury eligibility criteria,  All Treasury eligibility criteria    All Treasury eligibility criteria,  All Treasury eligibility criteria  sale eligibility imminent default) plus: plus:  Evaluated for HAMP and other   Not considered strategic default   Borrower must be 60 days  retention options (able but unwilling to make  delinquent  Not in an active HAMP Trial Plan payments)  Unencumbered assets and cash   Chapter 7 & 13 active   Unencumbered assets and cash  reserves less than the greater of  p bankruptcies reserves less than the greater of  g $5,000 or three times the  5,  Disqualified for HAMP or  $5,000 or three times the  monthly mortgage payment requested short sale prior to  monthly mortgage payment evaluation for HAMP  Low surplus income  Vacant no more than 12 months   No foreclosure sale scheduled or  prior to Short Sale Agreement,  reasonably able to be scheduled  Alternative Rass or DIL  within 60 days Agreement. Ag t  properties where no pending  ti   h     di g  judgment, judgment, hearing or  summary judgment is scheduled  within 60 daysHAFA deed in   At servicer discretion, according   Property listed for at least 120   Property listed for at least 120 lieu eligibility to investor requirements days at market price, except in  days at market price under short‐ specific circumstances sale agreement  DIL must accelerate acquisition   HAFA DIL approved by Freddie  of property by Fannie Mae,  Mac versus foreclosure  No foreclosure sale scheduled  within 30 days, unless approved  by Fannie Mae  Borrower has been evaluated for  f deed‐for‐lease, if they want to  lease the propertyProperty value  Must assess value in accordance   BPO or appraisal (if required),   Interior BPO required, within 30  with investor guidelines within 90 days days 33
  34. 34. HAFA Program Comparison 34
  35. 35. List Assist Department Chase List Assist program was designed to proactively reach out to customers who  have properties listed for sale to assist through the marketing process and collect all  have properties listed for sale to assist through the marketing process and collect all required documentation prior to the offer in an effort to expedite approval.  Through our List Assist team, we have enhanced our short sale efforts and  streamlined the process by:   Proactively reaching out to homeowners who have listed their property.  Working to gather the documents, provide guidance on property value and actively  market the home. k t th h  Establishing a dedicated team working closely with real estate agents on offers and  valuations.  List Assist agents will also take incoming calls from agents and Borrowers to provide  information and instant contact with a Liquidation agent.  The List Assist agents will explain to the borrower their options, review the short sale  process and request the needed documentation to move forward.  35
  36. 36. Short Sale Webpage• The Short Sale website is easily accessed from the Chase Home page and provides the short sale  information packet and FAQ information about the Chase Short Sale process .  The site can be  accessed through www.Chase.com/shortsale. 36
  37. 37. How Can You Help Us?  Submit all required documentation as soon as possible:  If an offer is not received on the property, provide an executed listing agreement and MLS  listing history.  If offer has been received, provide all information discussed previously.  Help the homeowners in negotiations with subordinate lien holders.  Make sure all required signatures are on the relevant documents.  Set reasonable expectations on timelines and valuations.  Ensure that the proposed transaction is at “Arm’s Length.”  Make every effort to ensure title and escrow are scheduled to close within the  approved timeframe. 37
  38. 38. Short Sale Resources •Chase Borrowers can be referred to the following: Chase Borrowers can be referred to the following: •Toll‐free number: 1‐866‐233‐5320 •Or •Access the Chase Short Sale website  •Access the Chase Short Sale website •On line at https://www.chase.com/shortsale •Or  Locate a Chase Homeownership Center Locate a Chase Homeownership Center •On line at chase.com/HomeownershipCenter Short Sale Fax Line: 1‐866‐220‐4130 38
  39. 39. Default LiquidationsShort SalesAbel Fregoso, Jr gVice PresidentNational Field Short SalesOctober 2011
  40. 40. Potential for Acceleration – Short Sale Activity From a rate of 7.8% (Q1 2009), residential delinquency rates continued to rise to a high of 11.3% (Q2 2010). During the last 6 months of 2010 rates declined to a low 10.0% (Q4 2010). Q1 2011 reflected an upward trend to 10.2% - Q2 2011 pending. Revisions to the 2010 and Q1/Q2 2011 GDP numbers show less economic activity than previously reported, and no material improvement in new jobs or the current level of unemployment – the factors will remain a strong influence on the residential housing market. 40
  41. 41. Wells Fargo’s Loan Servicing by ypInvestor Type Wells Fargo is primarily a Lender and a Servicer, with 81% of the loans serviced by Wells Fargo, owned by outside investors. Wells Fargo Loan Servicing By Investor Ownership (as of 2nd Quarter 2011)1 19% of the loans serviced by Wells Fargo 69% of the loans serviced by are also owned by Wells Fargo: Wells Fargo are owned/ • Roughly 26% of this is Wachovia Pick-a- guaranteed by Fannie Mae*, Freddie 19% Pay, which came to Wells Fargo as part Mac , Mac*, and Ginnie Mae: of the Wachovia acquisition. f • FNMA and FHLMC buy • A portion is also Wells Fargo Home loans up to a “conventional Equity and Wells Fargo Financial. loan limit” now $417,000 in most markets. 69% 12% • GNMA buys FHA and VA- 12% of th l f the loans serviced by i db insured loans, which Wells Fargo are owned by private provide mortgage funding for investors. homeowners with little cash to • Private investors include pension put down or U.S. Veterans. funds, investment houses, banks, and insurance companies. * Fannie Mae = FNMA, Freddie Mac = FHLMC, Ginnie Mae = GNMA • Includes “America’s Servicing Company,” or ASC loans, which are loans that Wells Fargo did not originate or underwrite, and which were serviced under the ASC name. We only maintain the servicing rights to these loans, we are not the end investor.1 Includes all residential mortgage loans serviced within Wells Fargo (WFHM, WFF, HE) and Wachovia (including PaP) Confidential. For review only in Wells Fargo approved meetings. Not to be copied, shared or distributed beyond members of the approved meeting.
  42. 42. Strategic Partnership – Wells Fargo and OurREALTOR® Partners Wells Fargo’s primary concern and obligation is to our customers and investors. Our goal is to exhaust all efforts to help customers remain in their homes through various workout options. Once home retention efforts are no longer an option, Wells Fargo continues to work diligently to provide alternatives to foreclosure through short sales or deeds-in-lieu of foreclosure. Our last resort is to foreclose. Our partnership with experienced real estate brokers and their agents, familiar with the management of distressed real estate, is key to our success and commitment to quality service. Our REALTOR® Partners’ expertise helps us to deliver timely solutions to assist customers, minimize losses to investors, and help to rebuild and stabilize our communities. These are unprecedented times in our industry, and now more than ever it is critical that we partner together as leaders in driving solutions and results to help in the p g g p recovery of a strong housing market. Our REALTOR® Partners help us by providing their: - Familiarity with local market trends and community goals y yg - Established relationships with the real estate community - Expert knowledge in short sale and REO liquidations - Strong customer service and communication skills 42
  43. 43. Short Sales: Excellent Alternative to ForeclosureA Short Sale Benefits Everyone Everyone… Customer Benefits Alternative to foreclosure with planned & graceful exit, Wells Fargo or Investor exit pays closing costs and incentives in certain cases, credit report reflects “Settled for Less than Owed.” Buyer Benefits Usually home is in better condition than buying a foreclosed property. Wells Fargo or Investor pays some closing costs. Investor Benefits Savings over REO, reduced losses and corporate advances, eliminates non- performing asset. Junior Lien Holder B J i Li H ld Benefits fit Higher debt payment resulting from short sale versus foreclosure transaction. Community Benefits Occupied and maintained properties, stabilizing neighborhoods, preventing vandalism and other crime. 43
  44. 44. Our HAFA Strategy • Filter incoming workload using Regular Short consistent metrics to control HAMP Sales Fallout and direct the inventory HAMP Eligible Determine Path • Consider HAFA first; p p proprietary Short Sales / y Proprietar DIL second HAFA y Short • HAFA inventory and the Inventory Sale Proprietary inventory are Inventory going to remain distinctly separate. 44
  45. 45. Primary Concerns or Myths SurroundingShort SalesTop concerns provided through external surveys and our own internal escalated complaints.Primary Concerns and Myths  Difficulty of obtaining mortgage financing – appraisals a special sore spot.  Fall-off in First Time Homebuyers affects overall demand.  Banks are holding shadow inventory in the hopes values will increase.  Lost documentation, multiple submissions.  Short sale process takes too long and I lose potential buyers buyers.There are a number of decision makers involved in a short sale – themore parties involved, the more complex th process becomes. All ti i l d th l the bparties must be aligned before the home can be sold, i.e., investors,second lien holders, and mortgage insurance.Most importantly, this is not a typical buy-sell transaction. 45
  46. 46. Partnering to Improve the Short Sale Process We have worked to improve our processes and communications regarding short sale transactions. We hear your concerns and are working diligently to reduce the completion timeline and improve communication.Internal Improvements to Short Sale Process  Staff resources have been increased by 57% over the last 12 months to ensure forecasted volumes can be managed. managed  Proactive marketing efforts to provide information and education on short sale workout alternatives to customers.  Wells Fargo is leveraging new technology (Equator) to provide a rules-based work flow system with direct portal access for agents and customers.  Process Re-Engineering project for all operation sites will allow for alignment between sites and investors and best p practices.  Our field negotiator team and branch offices are expanding to support more difficult markets for customer face-to- face assistance, and for seminars and training for agents.  Integrating ServiceLink and Stewart Lender Services as 3rd party providers for Short Sales overflow.  Automated Valuation requests for Short Sales Marketing campaigns.  Short Sales Fraud monitoring through CoreLogic.Wells Fargo is Persistent and Continuously Focused on Third Parties to Improve the Short Sale Process  Wells Fargo has led discussions with Fannie Mae and Freddie Mac, resulting in increased delegation authority, foreclosure prevention, and streamlining processes. These efforts have resulted in industry wide solutions.  We have partnered with Treasury to provide guidance on rules for the HAFA program.  Expanding our REALTOR® Finder Tool to leverage experienced agents in all markets for referring our customers.  Participation in Congressional Hearings and other government meetings to further educate and inform on existing processes and concerns.Communication and Education  Multiple communication materials have been prepared for HMC’s, Agents, Customers and Real Estate Consultants  Cine-meetings were conducted to provide consistent information across the country to address concerns and provide detailed steps necessary to complete a successful short sale. 46
  47. 47. Challenges in the Short Sale Process  Portfolio is serviced for other investors, and may require obtaining investor approval from Freddie Mac, Fannie Mae, etc.  Mortgage Insurers & Junior Lien Holders take longer to respond and may want cash contributions or promissory notes from the customer customer.  Not all customers have a valid hardship, however many seek to dispose of their property via a short sale transaction.  Not all buyers can be qualified to purchase – bad credit and/or limited cash for closing.  High HAFA fallout rates; HAFA p g g ; program limits q qualified properties, however, can review for proprietary programs.  Technology in market place for short sale processing is in the early stage of adoption industry wide and still needs improvement.  Some jurisdictions and investors are not allowing 47 f l l t t
  48. 48. Understanding Short SalesInformation to Help You and Your Clients pin the Short Sale Process
  49. 49. Short Sale Overview How the Process Works • Bank of America is the negotiator between the seller and the investor. • M Many l loans h have multiple i lti l investors who must b satisfied. t h t be ti fi d • We have 500+ investors, and each can set different policies. Communication Investors Real Estate Agent (Own the Loans) (Selling the Property)  1st lien investors  Represents the R h (Mortgage Servicer) distressed homeowner  Mortgage insurer  Services the distressed  Identifies and obtains  2nd lien investors homeowner the releases of all  Home equity loans non-Bank of America  Has an obligation to liens uphold investor requirements Communication49 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  50. 50. Short Sale Overview Two Paths Homeowners have two paths to successfully complete a short sale. I do not have an offer to purchase my home Homeowner Wanting to Short Sell I have an offer t ff to purchase my home50 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  51. 51. I do not have an offer to Short Sale Overview purchase my home Homeowner Wanting to Short Sell Initiating a Short Sale Before There’s an Offer Provides numerous benefits if the homeowner is eligible and qualifies for a pre-offer program. Homeowner Benefits Process Benefits • $ - Relocation assistance. • Foreclosure hold, if applicable (subject to • Deficiency may be waived. specific conditions). – The mortgage debt may be • Faster decisions – within 10 business days settled through the program program. once an offer is submitted submitted. • Cash contributions or promissory notes may not be Agent Benefits required. • Suggested list p gg price is p provided p prior to Note: When the homeowner initiates a marketing the home. short sale before there’s an offer, all • Most elements of the short sale process are program options are explored: HAFA, addressed upfront (including commission) cooperative, traditional, etc. rather than at the end.51 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  52. 52. The Short Sale Process – a Detailed Look Path No. 1: Initiating Without an Offer The steps involved when you initiate a short sale before you have an offer. Initiation 1. Initiate short sale and begin negotiating any 2nd liens not serviced by Bank of America. Borrower Outreach 2. Upload the 3rd Party Authorization. Complete the Borrower Contact Information task. If the homeowner qua es for HAFA, continue to t e o eo e qualifies o , co t ue to… Document Collection 3. Upload required documents to the Equator Library within 14 calendar days. 4. The short sale and the homeowner’s financial situation receive a deeper review. Underwriting No agent action required. 5. Coordinate access to the property, if needed. Notify the short sale specialist when you Valuations have mailed and uploaded the signed Short Sale Agreement. Marketing 6. List and promote the property to potential buyers for up to 120 calendar days. Offer Submission 7. Submit the short sale offer and supporting documentation. Offer Analysis 8. Come to an agreement with the investor on terms of offer and determine closing date. Closing g 9. Complete the short sale by the date noted in the approval letter. p y pp52 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  53. 53. The Short Sale Process – a Detailed Look Path No. 2: Initiating Without an Offer The steps involved when you initiate a short sale before you have an offer. Initiation 1. Initiate short sale and begin negotiating any 2nd liens not serviced by Bank of America. Borrower Outreach 2. Upload the 3rd Party Authorization. Complete the Borrower Contact Information task. IfWhatoif t e homeowner does not qualify? theat the e qua eseo HAFA, continue to o eo t e homeowner qualifies for eo , co qua to… ot t ue y Document Collection 3. Upload required documents to the Equator Library within 14 calendar days. • Homeowner and agent will be notified. 4. The short sale and the homeowner’s financial situation receive a deeper review. Underwriting • Equator record will be closed. No agent action required. • 5. Coordinate access to the property, shouldNotify the short sale specialist when you Agent and homeowner if needed. market the Valuations property. and uploaded the signed Short Sale Agreement. have mailed Marketing • 6. List and promote theinitiate a new buyers forsale 120 calendar days. Agent should property to potential short up to in Equator once there is an offer on the property. property Offer Submission 7. Submit the short sale offer and supporting documentation. Offer Analysis 8. Come to an agreement with the investor on terms of offer and determine closing date. Closing g 9. Complete the short sale by the date noted in the approval letter. p y pp53 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  54. 54. Short Sale Overview The Process Steps Are the Same in Both Paths But you get a huge timeline benefit by completing steps in advance of your offer. offer Path No. 1: Initiating before offer… $ Offer $ Borrower Document OfferInitiation Valuation Marketing Closing Outreach Collection Analysis Program Collect Determine List Home Submit * HAFA only. For other pre-offer Eligibility Homeowne Home For Sale Offer programs, the time may vary. Decision Review r Value & in 100 Documents Sign Days!* Program Agreement Path No. 2: Initiating after offer… No offer $ Offer $ Borrower Document Offer Initiation Valuation Closing Outreach Collection Analysis HAFA Collect Determine Negotiate Interest? Documents Home Value Offer, Submit to Investor, Renegotiate 54 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  55. 55. Short Sale Overview Comparison of Paths Path 1: Before There’s an Offer Path 2: After There’s an Offer General Qualifications Each customers situation is considered separately Each customers situation is considered separately by investors. by investors. For HAFA program features including qualifications please refer to HAFA Education Guide. Timeline for Decisions HAFA - within 10 business days. For other 50 days on average. After Offer Is Received pre-offer programs, the time may vary. HAFA – none. For other pre-offer programs, the Cash/Promissory Note The investor/insurer may require. investor/insurer may require. HAFA – none For other pre offer programs, the none. pre-offer programs Deficiency Pursued The investor may retain the right . investor/insurer may require. Auto hold once Short Sale Agreement is executed Foreclosure Holds Vary by investor; require investor approval. (subject to specific conditions) Suggested List Price Provided. Not provided. Approval/ Closure Rates High after qualification. Low-medium. HAFA – $3,000. For other pre-offer programs, the Relocation Assistance None. amount will vary. Unrealized Short Sale Optional deed in lieu of foreclosure foreclosure. Optional deed in lieu of foreclosure foreclosure.55 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  56. 56. Short Sale Tips Three Key Steps for Real Estate Agents Engage Homeowners Early • Find out if the homeowner owes more than the home’s fair market value. 1 • Discuss short sale opportunities during initial conversations with the homeowner. – If the homeowner would like to better understand their options or initiate the short sale themselves, encourage them to call Customer Care at 1.866.880.1232. • Explain the short sale process and how it can help avoid foreclosure. Contact Bank of America Before the Home Is Listed 2 • Initiate the short sale in Equator – even if you don’t yet have an offer – don t offer. The homeowner may be required to contact Customer Care to discuss participation in one of our pre-offer programs, such as HAFA. If the homeowner isn’t eligible for a pre-offer program, then next action is to market the home, obtain an offer and initiate new short sale in Equator. Complete Required Tasks on Time 3 • Make sure all tasks are completed as soon as possible in Equator. • Provide necessary documents as soon as possible to keep the process moving forward. • Communicate with your short sale specialist via Equator to reduce delays.56 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  57. 57. bankofamerica.com/realestateagent Bank of America’s Real Estate Agent Resource Center • Important news and updates about the short sale process and enhancements • Online subscriptions to keep you informed via email updates • Free webinar replays • Education library of important documents documents, including tips to a successful short sale • Events • Important links • Contact information57 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  58. 58. Understanding Short Sales Commitment to Continued Improvement Bank of America clearly recognizes the need for continued improvement in the short sale process and is committed to identifying new and different f ff ways to make the process transparent and efficient. New Approaches To Reduce Processing Times Where to Locate Additional Information • Ongoing collection of feedback on Real Estate Agent Resource Center process, people, and technology bankofamerica.com/realestateagent • Right-sized staff to meet service level expectations; dedicated team of short Dedicated Customer Care sale professionals 1.866.880.1232 Monday – Friday 8 a.m. to 10 p.m.; Saturday 9 a.m. to 5:30 p.m. Eastern. • Enhanced our technology; monthly upgrades ongoing For homeowners: • Resources for short sale education Bank of America Home Loan Assistance bankofamerica.com/homeloanhelp58 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation
  59. 59. Questions?59 Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation