Short Sales Simplified

Presented By: The REO Institute of Colorado

• • Masters in Real Estate • Certified Commercial

Education Broker/Owner Browning Group LLC

•

Liquidated 115+M REO Properties/last 3 years

•

25 years of Commercial Real Estate Experience

• Commercial Director for CB

NRT-17yrs

•

National Trainer/CREOBA

• CEO/The REO Institute of

Colorado

James A. Browning

MRE,CEC,FSP,CREO, SFR, REO Certified, Short Sale Certified

The Distressed Market, Short Sales, & Pre-Approved Pricing

2014, 2015, or Longer

Many banks, lenders, & outsourcers are looking for solutions to our current market problems.

Unknown Quantity

REO, Pre-Foreclosure, Foreclosure, and/or Short Sale What is the solution?

Pre-Approved Pricing

• Increase residential sales • Spur recovery • Complete submission package

The Short Sale Prospect

• Distressed market has the potential of continuing into 2013-2015 • The Broker with education & training can succeed.

• Have compassion.

• Ask the right questions.

Property Profile

• O & E • Understand the financing on the property.

• Additional liens on the home.

• NED, NOD, NOI filed?

• Sale or Auction date?

• Order a payoff- either from the mortgage company or the foreclosure attorney (10 days)

UNDERSTANDING THE SELLER’S FINANCIAL CONDITION OR STATUS

• Is the Seller in financial distress?

• Request the most recent mortgage statement.

• What are the other financial stressors?

Seek Tax/Legal Advice • Recommend the Seller obtains Tax/Legal Advise • You are not the expert!

• Provide the client with a letter stating these recommendations, and have the Seller receipt for a copy

Acquisition Indebtedness = • Is incurred by acquiring a property • Is secured by the residence • Is secured by the property resulting from a refinance, but not to exceed the original indebtedness

Example: • A borrower refinances an original note, and then takes a vacation, or purchases a vehicle • Answer: This indebtedness is taxable

Negative Credit Reporting • The Seller’s thought process may only be survival today • Armed with knowledge, the Seller can take steps to improve his/her credit

Credit Basics • FICO- 35% is made up of payment history • Negative public record information • Severity of delinquency • How recent is the delinquency, and the number of items on file • Number of accounts paid as mutually agreed upon

Late Payments • It is possible to negotiate a short sale without late payments, however it is more difficult • Both HAFA and FHA require that the seller be delinquent, and display a negative cash flow

Short Sale Listing

Documents • State or Division required listing contract • Short Sale Addendum • Seller Authorization Letter

Approaching the Lender – What’s Next?

• Is the lender open to a short sale?

• What will the conditions be?

• Fannie Mae or Freddie Mac are more motivated then private lenders • Discuss and negotiate what the seller wants from the lender

LOSS MITIGATION DEPARTMENTS, WHO?

What department?

Who?

What?

Wrong number… “Who’s on first base?”

Get past the call center!

• Loss Mitigation Department • Default Managers • Persistence • Objective- Where do I need to send the short sale package?

GETTING ALONG WITH THE LOSS MITIGATION DEPARTMENT AND PREPARATION OF THE SUBMISSION PACKAGE

Submission Package • One time, with all required docs • Installments = rejection • What should be included?

Listing Agreement • Listing Agreement • Short Sale Addenda • MLS • Website Advertising, Flyer, and any other marketing or advertising

MARKETING THE SHORT SALE LISTING

Accurately Market • Listing Broker – your responsibility to accurately represent your listing!

• Continue your education and designations!

Timeframe for Lender’s Response • Could be the most frustrating aspect • One week… Six or seven months… • What is the requirement for the lender? • The property may have to be listed for a period prior to acceptance of short sale • Your expertise can make the transaction much smoother!

Problems and Pitfalls • Loss mitigation departments are overwhelmed with loan modifications, short sales, & foreclosures • Subject to final senior management approval • Private mortgage insurance • When your negotiator is no longer employed there…

Lender Takeovers and Merging • Reasons – Government influence, cost cutting, bank failure, contract issues, etc • Decisions are now delayed, who has the file now • Be prepared to re-submit all docs!

This is everyone’s main concern What’s the loss and deficiency?

Buyer Cooperation • Is the Buyer serious?

• Is the Buyer going to be patient?

• Is the Buyer going to complete inspections and appraisals?

Education • Laws, programs, & regulations are changing constantly • Be familiar with state regulations • Knowledge, disclosure, compliance

Thank you!

The REO Institute of Colorado Congratulations on becoming Short Sale Certified