BROKER PROCEDURES

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BROKER PROCEDURES

  1. 1. 1 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates BROKER PROCEDURES First American REO Servicing (FAREO) is presenting the following guide to assist you in working with FAREO in the managing and marketing of foreclosed or alternately acquired real estate (REO). We look forward to a mutually beneficial relationship with the real estate community and would encourage you to read and familiarize yourself with First American REO Servicing and our REO business procedures. Your Broker’s Price Opinion (BPO), an appraisal and/or a 2nd BPO are utilized to establish the market values for individual properties. It is of paramount importance that you provide accurate, complete and timely information. It is our objective to manage and market the real estate assets of our Clients in a timely, efficient and cost effective manner to achieve the highest possible recovery for the Client. To that end, we look forward to working with you as our local representative in selling the assigned properties. If at any time you have any questions concerning our policies or procedures on a specific asset, contact the FAREO Asset Manager for assistance. NOTE – THE INSTRUCTIONS PROVIDED ARE GENERIC GUIDELINES. PLEASE REFER TO THE INSTRUCTIONS PROVIDED FOR EACH INDIVIDUAL ASSIGNMENT. INSTRUCTIONS WILL VARY DEPENDING UPON THE CLIENTS NEEDS. OUR CLIENT’S REQUIREMENTS CHANGE FREQUENTLY, SO REFERENCE THE MOST RECENT INFORMATION RECEIVED FROM THE ASSET MANAGER.
  2. 2. 2 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates TABLE OF CONTENTS OCCUPANCY STATUS Occupancy Notification Hazard Notification Broker Checklist of Vandalism / Damage Personal Property Inventory Log HOA / Association Checklist Notice to Occupant Letter Relocation Assistance Agreement (Cash for Keys) Release Cash for Keys Final Action to Broker Winterization Report BROKERS PRICE OPINION (BPO) BPO Form Repairs & Improvements Addendum Subject Photos Addendum Utilities Information Report & Acknowledgement HOA / Mobile Home Information REPAIRING PROPERTIES FAREO Property Bid Form Summary of Repair Bids Waiver of Lien and Repair Completion Certification MARKETING THE PROPERTY FAREO Master Listing Agreement Property Referral Form Monthly Status Report OFFER NEGOTIATIONS All offers are to be submitted through www.reosource.com PURCHASE AND SALE AGREEMENTS FAREO Counterproposal to Purchase and Sale Agreement FAREO Addendum B Cash Contract CLOSINGS Expense Reconciliation Requests INVOICE PAYMENT PROCESS Payment Request Form W-9
  3. 3. 3 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates OCCUPANCY STATUS The first responsibility of the agent is to locate the property, determine occupancy and secure the property if needed. The FAREO Asset Specialist is to be notified within 24-hours of assignment as to the occupancy status, this is critical to the disposition and marketing process. Provided, herein, is an Occupancy Notification for you to complete and return via fax or email to the Asset Specialist. Following are the pre-marketing procedures for vacant properties and for occupied properties. NOTE – THE INSTRUCTIONS PROVIDED ARE GENERIC GUIDELINES. PLEASE REFER TO THE SPECIFIC INSTRUCTIONS FOR EACH INDIVIDUAL ASSIGNMENT. INSTRUCTIONS WILL VARY DEPENDING UPON THE CLIENTS NEEDS. VACANT Secure the property within 48 hours of assignment by re-keying, replacing missing or damaged windows & doors or boarding if the area warrants it. Check the REO Occupancy Instructions to determine if there is a required key code and / or lock box code. Fax or Email the Hazard Notification, Broker Checklist of Vandalism / Damage, and HOA / Association Checklist forms to the FAREO Asset Specialist within 48-hours of assignment. In most instances, an independent Property Preservation company will be contacted by FAREO for the initial removal of debris, clean up, lawn maintenance and curing emergency safety hazards. It is your responsibility to assess the amount of personal property (i.e. furniture) remaining on the property, if the value is in excess of $300, a personal property Eviction may be necessary. Advise your Asset Specialist of exact property contents on the Personal Property Inventory Log so that the appropriate legal advice can be obtained. Debris removal, yard clean up and safety hazards elimination must occur prior to marketing. Code violations are a concern and need to be avoided if at all possible. FAREO will order an appraisal and/or a 2nd BPO as soon as property has been secured. You are to provide timely access to the appraiser or 2nd Agent. NOTE – THE INSTRUCTIONS PROVIDED ARE GENERIC GUIDELINES. PLEASE REFER TO THE SPECIFIC REO OCCUPANCY INSTRUCTIONS FOR EACH
  4. 4. 4 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates INDIVIDUAL ASSIGNMENT. INSTRUCTIONS WILL VARY DEPENDING UPON THE CLIENTS NEEDS. Lawn Maintenance: In most instances, an independent Property Preservation company will be contacted to schedule the bi-weekly lawn mowing, once the initial yard clean up has been completed. It is your responsibility, however to monitor the property and if services are not being completed, the Asset Specialist should be notified. If the client requirements are for the agent to perform this service the agent will schedule the bi-weekly mowing. If the cost of this exceeds $100 per month, 2 bids will have to be obtained. Pool Maintenance: In most instances, an independent Property Preservation company will be contacted to insure that the following is completed. Swimming pools need to be secured (fenced with locked gates) or covered according to FHA guidelines. Pools need to be serviced according to local requirements if they are functional. Pools should be drained in all locations where feasible. If draining is not an option, bids are to be obtained for securing, initial cleaning and ongoing service. It is your responsibility, however, to monitor the property and if services are not being completed, the Asset specialist should be notified. If the client requirements are for the agent to perform this service the agent will follow the above directions. Winterization: Winterization is required on properties between October 15th and April 15th or within 3 days of assignment if during this period. In most cases, an independent Property Preservation company will be contacted to provide the required services. It is your responsibility, however, to monitor the property and if services are not being completed, the Asset Specialist should be notified. If the client requirements are for the agent to perform this service the agent will follow the above directions and provide the FAREO with a Winterization Report. Snow Removal: Is the responsibility of the Agent. All Sidewalk & driveways are to have snow removed once the snowfall is complete and is deeper than two inches or within City Codes. A 30-inch path (or within area standards) will be cleared in front of the property, up from the street to all access doors including the garage. Ice melt will be used as added protection for the property. Insurance Claims: Should there be damage to the property from fire, water, freezing, theft or vandalism that could result in recovery for the client through an insurance claim, you are to report these conditions immediately by completing the Broker Checklist of Vandalism / Damage. A Police Reports is also required on theft and vandalism. OCCUPIED As our local representative, it is your responsibility to try to make contact with the occupant of the property. A Notice to Occupant letter is provided for personal
  5. 5. 5 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates presentation or mailing, if safety is an issue. FAREO needs to be advised of the occupancy relationship (debtor or tenant) and occupants names as quickly as possible. Depending on Client guidelines, a cash-for-keys package will be provided. If it is an option, you are to approach the tenant with an offer designated by the Eviction Specialist. The provided Relocation Assistance Agreement and W-9 is to be signed by the occupant and you are to make it clear to the occupant that the property is to be left broom clean, the yard debris free and utilities paid current. The viability of obtaining a cash-for-keys agreement should be determined within 3 days of occupancy status. The general acceptable time to vacate is 14 - 30 days per client requirements. The Cash for Keys Final Action to Broker form must be returned with all other documents. Once the Eviction Specialist has received the executed Agreement and W-9, the Check and Release will be sent to you within 7 days for disbursement and execution. The Check for the Cash for keys is not to be released to the tenant/debtor until you have verified that all property and debris has been removed from the house, yard and all out buildings. If a check has been paid out and there is the need for cleanup, the cleanup will be at your expense. FAREO will order the eviction and keep the agent informed of the status of the process. Throughout the eviction process, you are responsible for checking on the property bi-weekly for changes in the occupancy status or significant changes in condition (such as fire). You are to advise the Eviction Specialist of pertinent changes. You are required as our representative to be present at the Eviction lockout with your lockbox (a code will be provided to you). The Property Preservation company will provide you with the keys to the property. The Property Preservation company will perform the actual lockout. You may or may not be required to attend eviction related hearings or trials as our representative.
  6. 6. 6 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates BROKER PRICE OPINION (BPO) Broker Price Opinions (BPO) and any required supporting documentation must be received by FAREO within THREE (3) days from verification of vacancy. The Broker Price Opinion Form must be completed in its entirety. The BPO form may be client specific; therefore you must use the form that is provided in the REO Prelist Instructions. All blanks are to be filled in. It is preferred that the form be typed. If this is not possible, it must be legible. FAREO is to receive an original final product signed and dated by email or by postal service. When possible please provide an Electronic copy with photos vs. sending a hard copy. Digital photos in .jpg format transmitted by email are preferred although; original color photos are acceptable if mounted on the provided form. Extensive / detailed photos are required. Exterior photos are to include front, back, landscaping and street scene. Interior photos are to include a photo of all rooms, photos of damaged areas and areas where major repairs are needed. Exterior photos of comparable listings and sales required – MLS printout is acceptable if it provides a photo of the comparable. All three marketing values are to be provided: As-Is, Repaired & Quick Sale. Repairs needed to add value and/or enhance marketability are to be itemized with the associated estimated cost on the Repair / Improvement Addendum. Of the repairs listed, those that are possible lender required repairs are to be marked with an (*). If special marketing conditions or special property conditions exist, a narrative explanation should be provided. These are conditions such as environmental hazards, socioeconomic conditions, external or functional obsolescence. The estimated market values must be substantiated by the comparable sales and listings used. The goal is to establish the most accurate property value possible. NOTE: Completeness & timeliness is the goal – an electronic transmission of the BPO, Photos, and Comps is preferred. If not available a fax of the BPO is required followed by an over-night package of the original. If the asset is a manufactured home – it is mandatory that the HOA / Mobile Home Information form be completed including the VIN number.
  7. 7. 7 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates Utilities: Utilities are to be established in the agent’s name and address. The Utilities Information Report & Utilities Acknowledgement is to be completed and returned to FAREO. Any initial deposit is to be paid by you and recovered by you upon sale of the property. Monthly bills are to be paid timely and submitted for reimbursement upon completion of the work and/or services in accordance to our invoicing procedures. As our representative, you are responsible for disconnecting all utility services on the day of closing or upon notification that property has been pulled by our client. FAREO will not reimburse late fees and all final bills must be submitted within 21 days after closing.
  8. 8. 8 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates Repairing Properties It is the desire of FAREO and our clients to obtain the maximum possible return on the sale of REO assets. In order to accomplish this, it may be necessary to repair the property. Recommended repairs will be analyzed for appropriateness, economic feasibility and affect on marketability. To be viable, repairs must enhance value and/or marketability (reduce marketing time). Things to consider in recommending repairs are the target market, the security of the property, the age of the property, the properties compatibility to the immediate neighborhood, the occupancy mix (tenant vs. owner occupant) of the surrounding area and financing availability. If repairing is the recommended marketing strategy two or more bids from licensed contractors will be needed. An independent Property Preservation company will provide the bids in most cases. However, on occasion the Agent may be required to provide these bids as indicated below. Bids must be submitted for approval on the FAREO Property Bid form prior to any work commencing. Multiple bids are to be summarized on the Repair Bid Summary. Repair items on the bid form are to correspond to your repair recommendation and each contractor is to bid the same items. Should the contractor identify a critical repair item that you missed, this can be submitted in the supplemental repair section of the bid form. All repairs recommended and bids must comply with any homeowner associations’ CC & Rs, if applicable and address Code Violations. If the most likely buyer will seek FHA financing, FHA repair requirements should be addressed. If repairs are approved, it is the agent’s responsibility to monitor the progress and quality of the work being done. FAREO will advise the agent in writing of the repair items and the contractor that has been approved. The FAREO Asset Manager is to be advised by the agent of the repair work beginning date and anticipated completion date.
  9. 9. 9 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates Upon completion of the approved repairs, the agent is to inspect the work and either approve or disapprove. If the work is not satisfactory, and a Property Preservation company preformed the work, contact the Asset Specialist immediately to obtain satisfactory completion from the contractor. If you (the agent) provided the contractor, and the work is not satisfactory, obtain satisfactory completion from the contractor immediately. If the work is satisfactory, the Waiver of Lien and Repair Completion Certification and photos of the completed repairs are to be submitted to FAREO. If the contractor was provided by you please also include the contractors invoice, a Payment Request Form and W-9.
  10. 10. 10 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates MARKETING THE PROPERTY All agents must be registered with FAREO and have agreed to the terms and conditions of the FAREO Master Listing Agreement, on First American REO Servicing’s web site. The listing will be assigned to the agent with a Property Referral Form. It is our expectation that the property will be expediently placed on the market and marketed professionally according to local real estate law. The property is to be posted with proper signage and lock box access. The property is to be listed with the local MLS service within 24 hours of receipt of the FAREO Listing Referral Form. A copy of that MLS sheet then needs to be provided to FAREO as evidence of the listing. The agent is to adequately market the property through advertising, open houses, the Internet, agent tours, etc. The property is to be maintained to show as well as possible and the FAREO Asset Manager is to be advised of any physical conditions that appear to impede marketing efforts. Monthly Status Reports are due every 30 days after the initial or extended listing date. All status report should include a copy of the current MLS listing and should include copies of any published advertisements. Failure to timely complete a MSR every month may result in the listing being re-assigned. If the property remains unsold after 75 days of marketing, the listing agent is to provide an updated BPO and marketing strategy. Valuable information at this point includes, but is not limited to, number of listing in the subject’s immediate area & price range and average marketing time of recent or newly sold comparable properties. Additional pictures of the subject and / or comparable properties may be required. If damage occurs to the property during the marketing period, provide FAREO with an updated Broker Checklist of Vandalism / Damage, photos of the damage and a copy of the police report (if required).
  11. 11. 11 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates OFFER NEGOTIATIONS It is our intent to aggressively negotiate the best possible sale for the Client. No offer will be accepted without a pre-qualification letter for financed offers or a verification of funds for cash offers. Any and all offers are to be submitted through www.reosource.com. Offers should not be submitted unless you have the contract in writing with proof of funds and or prequalification of the buyer and an earnest money deposit. A buyer or a buyer’s agent may submit an offer directly through www.reosource.com. The listing agent will be notified immediately via email. The acceptance or any counter offers will be direct to the listing agent for completion of the negotiations. All requested buyer concessions must be entered on the reosource form. No offer will be accepted without a pre-qualification letter for financed offers or a verification of funds for cash offers. All counters are to be submitted through www.reosource.com. Once an offer has been accepted through www.reosource.com, a Counterproposal will be prepared and sent to the listing agent for executions by the buyer. The buyer’s executed contract and counterproposal must be received by FAREO within three days of acceptance. Every attempt will be made by FAREO to respond within 48-hours. Some assets, however, will require multiple levels of approval on offers. Never refer a buyer or their agent directly to FAREO without prior consent. All offers are ultimately subject to Client approval and are not final until FAREO or the Client signs a contract. Contingencies upon the sale of another property are generally not acceptable. These are treated on a case-by-case basis. Seller financing is not provided. If the buyer is a licensed agent it must be disclosed to FAREO with the presentation of the initial offer. It is FAREO’s policy not to pay commission to a Selling Agent that is acting as a principle in the purchase of any given property.
  12. 12. 12 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates AUCTION SALES It is the goal of FAREO to provide our clients with all the tools needed to market and sell their assets. The auction process is one of those tools that will be utilized. Once a property is identified for auction, the agent will be notified first by the Asset Manager, then by and Email / Letter from the Auction Company, and finally by an Email / Fax from the FAREO Auction Coordinator. The agent may receive a yard sign to be placed on the property, informing the public of the upcoming auction, depending on the value and / or location of the property. The agent is to continue maintenance and security of the property. The agent is to facilitate showings to prospective bidders. This process will not affect the agents already agreed upon sales commission. The agent will receive the listing commission on any successful sale through the auction. If the buyer is not represented by an agent there will be no selling commission paid. While the auction is in progress, all offers must be submitted through the auction company website. This website can be accessed as a link through www.reosource.com. However, offers will not be accepted through www.reosource.com. during the auction process. The agent will cooperate with FAREO during the seven-day post auction-negotiating period. The agent is to aid in facilitating the contract and closing process.
  13. 13. 13 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates PURCHASE AND SALES AGREEMENT It is our intent to structure contracts that will allow for the successful, timely closing of sales. If local or lender rules require original signatures, please indicate so to the Asset Manager with the contract submission. If you do not inform FAREO an original is needed, a fax copy will be returned. The contract is to include the FAREO Counterproposal to Purchase and Sale Agreement, a lead based paint disclosure, mold disclosure and any other locally required attachments. The contract must reference the FAREO Counterproposal to Purchase and Sale Agreement as an attachment to the Contract. All Cash contracts must include the FAREO Addendum B Cash Contract. The contract must reference the FAREO Addendum B Cash Contract as an attachment to the Contract. Proof of funds or a prequalification letter must be submitted with all contracts. The contract should specify the agreed upon closing date from www.reosource.com electronic acceptance. The contract should state that the title company, closing attorney and/or escrow agent is to be selected by FAREO. Once FAREO or the seller has signed the counterproposal, it will be returned to the agent, and Attorney and/or closing agent via email for distribution to the purchaser.
  14. 14. 14 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates CLOSINGS It is the goal of FAREO to close sales within the timeframe allowed for in the contract. Timeliness of closing is dependant on teamwork between agents, closer, attorneys, and our clients. Please keep in mind that in some cases, closing documents must be sent to our clients for execution. While FAREO will do whatever is possible to expedite closings, a realistic closing date is necessary. Unexpected, last minute closings may not be possible. An assigned FAREO Closing Manager will be facilitating the closing functions. The FAREO Closing Manager will be the “point of contact” throughout closing, for most contract changes or extensions. The Asset Manager will do all re-negotiations of terms. At no time should the listing agent or selling agent attempt to contact the owner / seller. The agent must make contact with the assigned local closing entity to ensure that the closing is scheduled, as per the contract. FAREO looks to the agent to maintain an active role in promoting a timely closing. The inspection discoveries and loan approval dates are to be conveyed to FAREO immediately. Any lender or buyer required repairs must be approve by the Seller. These repairs are to be coordinated and monitored by the agent for timely completion. Agent is to immediately advise FAREO of issues that arise that may delay closing. When the closing agent and lender, if applicable have set a closing date, the agent is to promptly notify the FAREO Closing Manager. An expense reconciliation form is returned along with the executed contract. You MUST complete, sign and return this form prior to closing. Failure to do so will result in a delayed closing and / or delay in commission disbursement. The Agent is to send confirmation of closing to FAREO by phone or fax on the day of closing. NOTE: As some of our clients allow for expenses to be paid on the HUD-1, please check with your Closing Manager to determine if this is allowed for the subject property. FAREO will only accept final current utilities after closing. Every attempt should be made to ensure that ALL bills are submitted prior to closing; otherwise you MAY not be reimbursed.
  15. 15. 15 Broker Manual (Revision 8/07) ©The First American Corporation – Proprietary Information For use exclusively by First American REO Servicing employees and approved associates INVOICE PAYMENT PROCESS It is the desire of FAREO to pay expenses in a timely, efficient manner and at the same time provide the Client with adequate documentation. A Payment Request Form with the listing agent’s signature must be submitted for reimbursement of expenses or request for vendor payment. (See specific instructions on Payment Request Form.) Invoices (not bids) must be attached to the Payment Request Form for processing. Invoices must include the name, address, phone number and tax identification number of the service provider. In cases where payment is requested directly to vendors, a W-9 Form must be attached. The payee name and address must match the name and address submitted on the W-9 Form and the check copy. Payment will not be made for any repairs without the listing agent’s signature on the Payment Request form signifying satisfactory work. Photos documenting repair work MUST be attached to the Payment Request Form. The fully executed Waiver of lien form must be filled out completely and attached to the Payment Request Form when submitting repair invoices. The listing agent is responsible for paying utility bills on time each month, and then submitting the Payment Request Form with a copy of the actual utility bills for reimbursement. FAREO will not pay late penalties. The listing agent is responsible for disconnecting all utility services on the day of the closing and submitting all final bills within 21days. FAREO does not reimburse initial deposits to the listing agent. Any Payment Request Forms received more than 21 days after closing will not be reimbursed unless adequate justification is attached. Payment will be subject to FAREO’s discretion. If you have not been reimbursed for an invoice submitted in excess of 45 days, contact your FAREO Asset Manager. Never resubmit a Payment Request Form without prior approval from FAREO.

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