Short Sales For Real Estate Professionals
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Short Sales For Real Estate Professionals

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Short Sale Presentation for Real Estate Professionals

Short Sale Presentation for Real Estate Professionals

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    Short Sales For Real Estate Professionals Short Sales For Real Estate Professionals Presentation Transcript

    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Introduction to
      Short-Sales for the
      Real Estate Professional
      2009
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Objective
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      We want discuss:
      • Our mission to homeowners and the neighborhoods in which they live
      • Background and key statistics on delinquencies and workouts
      • Real estate professional’s prospective on current environment
      • Retention and Liquidation Workout Options
      • Short-Sales
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Our Mission
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      MAXIOM is dedicated to:
      • Supporting early intervention efforts to help homeowners stay in homes they can afford and want to keep
      • Avoiding foreclosure when homeownership retention is not possible
      • Reducing credit losses while maintaining neighborhood values
      • Reducing the percentage of homeowners who go to foreclosure without ever making contact with their servicer
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Personal Communication
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      What percentage of loans are placed into the foreclosure process without any personal contact being made with the borrower?
      5%
      10%
      25%
      35%
      50%
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Background
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      • Loan modifications have been the workout of choice for the last several years
      • As property values decrease, there will likely be an increase in the number of short-sales which will keep REO inventories down and preserve neighborhoods
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Background
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      • It’s becoming more difficult to negotiate short-sales due to the frequency and size of junior liens
      • Many real estate professionals are new to the short-sale experience
      • As short-sales increase, the default servicing industry must re-develop relationships with all parties
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Key Statistics
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Delinquent Loan Inventory
      • 30-days delinquent at record number
      • 90-days or greater continue to grow
      • Foreclosure sales at all time high
      Environment
      • Housing prices/valuation falling in many areas of the U.S.A.
      • Housing stock with high inventory
      • Tight money supply and credit market makes it harder to obtain financing
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Key Statistics
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Data
      • Completing high number of workouts a year
      • 75% of Loan Modifications ‘cure’ for good
      • 70% of late stage repayment plans fail versus 40% of early stage
      • Servicers report that less than a 50% contact rate with borrowers that went to foreclosure sale
      • Roper survey showed the majority of borrowers do not contact their Servicers, but are willing to talk to a financial counselor
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Workout Options
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Retention:
      • Full or partial reinstatement
      • Short-term or long-term forbearance
      • Repayment plan
      • Loan modification
      • FHA partial claim / MI claim advance
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Workout Options
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Liquidation:
      • Full payoff
      • Make whole preforeclosure sale
      • Short-sale
      • Deed-in-Lieu of foreclosure
      • Delinquent loan assumption
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • What Is A Short-Sale?
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      A short-sale is when the net proceeds from the sale of a property are insufficient to cover the mortgage obligations and closing costs and the seller is unwilling or unable to cover the variance.
      Property Value $350,000
      Total Amount Due – 1st TD $420,000
      Sale Price $340,000 (97% of Value)
      Brokerage fees & closing costs ($30,600) (9% of Sale Price)
      Less homeowner paid costs $1,000
      Payment to $50K – 2nd TD ($3,000)
      Net Proceeds $307,400 (88% of Value)
      Shortage/Loss ($112,600)
      20% MI Claim (100% of claim) $84,000
      Shortage/Loss ($28,600)
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Parties in Typical Real Estate Transaction
      Agents
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Parties In A Short-Sale
      Agents
      Seller
      Loan
      Servicers
      Mortgage
      Investor
      Mortgage
      Insurer
      Buyer
      Housing Counselor
      Primary
      Pool
      Junior
      Lienholders
      Buyer’s
      Lender
      HOA
      Liens
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Short-Sale Process
      • Short-sale closes
      • Seller contributes to minimize the loss based on ability
      • Seller avoids foreclosure
      • The investor and the MI company minimizes losses
      • Real estate professional closes an additional sale
      • Neighborhood avoids the stigma of foreclosure
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Who Benefits From A Short-Sale?
      MI Company
      Neighborhood
      Servicer
      Investor
      Homeowner
      Real Estate Professional
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Who Benefits From A Short-Sale?
      Homeowner
      • Satisfies the debt for less than the full amount
      • Avoids a foreclosure on credit record
      • Avoids the pursuit of a deficiency or a deficiency judgment
      • May avoid reporting of discharged debt to the IRS
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Who Benefits From A Short-Sale?
      Investor
      • Potentially reduces losses over the insured amount
      • Avoids an REO and the expenses incurred
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Who Benefits From A Short-Sale?
      Real Estate Professional
      • Enhances relationships with buyers and sellers
      • Increases listing inventory
      • Increases sales activities
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Who Benefits From A Short-Sale?
      Servicer
      • Enhances relationships with Investors
      • Avoids an REO on portfolio loan
      • Potential investor incentives for completed Short-Sales
      • Avoids expensive servicing costs incurred on delinquent loans
      • Enhances goodwill for future business
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Who Benefits From A Short-Sale?
      MI Company
      • Reduces claim losses
      • Avoids an REO and the expenses incurred
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Who Benefits From A Short-Sale?
      Neighborhood
      • Keeps housing values from declining
      • Allows existing homeowners to keep refinance efforts
      • Reduces housing inventory
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Short-Sale Preparation
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Pre-listing interview with homeowner/ seller
      • Does homeowner really want or need to sell?
      • Discuss other workout options
      • Obtain payoff statement
      • Determine all contingencies at time of listing (subject to lender approval, etc.)
      • Advise the seller of their financial participation in the sale is a condition
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Short-Sale Preparation
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Pre-listing interview with homeowner/ seller
      • Time is of the essence
      • Start with first trust deed
      • Communicate with junior lien holder(s) and know their payoff requirements
      • What is required by the seller’s servicer (loss mitigation department)
      • See workout documentation
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Documents For A Short-Sale
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      General workout documentation
      • Hardship letter
      • Seller financial statement
      • Statements – bank, investments, retirement, etc.
      • Recent pay stubs or P&L/Tax returns if self-employed
      • Estimated Seller Closing Cost / HUD-1
      • Complete purchase contract signed by all parties
      • Buyer FNMA DO/DU or AUS equivalent approval
      • Buyer Proof of Funds
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Documents For A Short-Sale
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      General workout documentation
      • Mortgage statements for all mortgages
      • Separation/Divorce agreement or court documents
      • Comparative Market Analysis with model match homes sold, REO, pre-foreclosures, cancelled, and expired
      • HOA & Property Management Information
      • Real estate professional visual inspection with repair estimates
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Short-Sale Requirements
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Interior Broker Price Opinion (BPO) with the 90-day “as is” marketing timeframe
      • Sale is always “as is” condition
      • Will accept more recent comparable sales to support current value
      Net proceeds required
      • Percentage of interior BPO value
      • Closing costs and brokerage fees
      • Includes any payment to junior lien-holder(s)
      Seller’s financial participation in the transaction based on ability
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Short-Sale Obstacles
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      • Seller’s financial participation in seller’s closing costs
      • Have better or recent comparable sales available
      • Obtaining buyer loan approval through reputable lenders
      • Must be arms length transaction – notarized affidavit if unclear
      • Know who the owner (investor) of the loan note
      • Present market value offers
      • Negotiations with all junior liens holders
      • Clear, easy to read documentation
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Short-Sale Obstacles
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      • Buyer on the Final Settlement Statement (HUD-1) must be same buyer on short-sale lender approval
      • Seller receives no rebate, proceeds, or commission from sale
      • Include Power of Attorney when sending HUD-1 to servicer
      • HUD-1 must be “Certified True Final”
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Certified True Final
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      Who certifies the Final Settlement Statement (HUD-1) as “Certified True Final”?
      Servicer
      Closing Agent
      Real Estate Broker
      Investor
      Title Company
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Short-Sale Obstacles
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      • Promissory note must be prepared by Freddie Mac
      • Executed promissory note must accompany HUD-1
      • Do not reduce seller cash contribution for closing cost
      • Changes on HUD-1 to purchase price or buyer not able to perform will negate the short-sale
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • Resources
      MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.
      • Reinforce short-sale as a workout option with servicers
      • Continue to educate homeowners to avoid foreclosure
      • Retention options
      • Liquidation options
      • Real estate professional competency development
      • Training
      • Educate
      • Seminar / Workshops
      • Conferences
      • Reference materials
      Source: Freddie Mac
      Copyright © 2009 Maxiom California Realty All Rights Reserved
    • MAXIOM
      California
      Realty
      Maxiom Agents. Maximum Results.