Transcript ALM Presentation to CB Gundaker

Loss Mitigation for Selling Agents
May 7, 2009
Presented By: Richard Petz
Strictly Private and Confidential
Director of Realtor Services Division
Table of Contents
1. Introduction to Access Loss Mitigation
2. How to Identify a Good Negotiator
3. What We Need to Get Started
4. File Flow / Customer Service
5. Fee Structure
1. Introduction to Access Loss Mitigation
Introduction to ALM
ALM works with distressed homeowners nationwide to avoid foreclosure and mitigate against its associated
negative credit impact. ALM provides an array of loss mitigation solutions and services including loan
modification and short sale negotiation.
About Access Loss Mitigation
Advantages to Partnering with ALM
 National leader in short sale negotiations
 Short sales are complex and time-consuming
 Operate in all 50 states
 Leverage ALM’s relationships with lenders and
expertise in the negotiation process
– Comprehensive understanding of rules and
regulations applicable to each foreclosure
situation
 Based in Los Angeles, CA
– Satellite office in New York, NY
 Assisted thousands of homeowners facing
foreclosure
 Expand the scope of your services
 Increase your volume of property listings and
enhance your earning potential
 Focus on what you do best: selling properties
 We boast a 75-80% success rate
 When we have offer, and buyer stays in
place
 Reduce legal risks
 Education, Selling and Listing Agents
 Pre-qualification for borrowers
Foreclosure Basics
The following overview provides a basic summary of the key elements and concepts involved in
foreclosures.
Stages of Foreclosure
Judicial vs. Non-Judicial Foreclosure
 Pre-Foreclosure
 Borrower misses payments
 Missed payment notices sent by lender
 Mortgage deed vs. deed of trust
 Notice of Default (NOD)
 A document made public and states that the
borrower is in default and legal action may be
taken (foreclosure)
 In Missouri a NOD is typically used as
Missouri is primarily a Non-Judicial state
 Notice of Sale
 Mailed the borrower twenty (20) days prior to
scheduled day of sale
 Must also be published in a newspaper within the
county
 Foreclosure Sale (Auction)
 The sale is conducted by the trustee at public
auction for cash to the highest bidder
 Redemption Period
 If the lender is the winning bidder, the
borrower has one year (12 months) to
redeem the property
 REO
 Judicial:
– Foreclosure passes through the state or district court
– When homeowners default on mortgage, lender files
claim to recover unpaid balance of loan
– Courts decide case, which typically takes 4-6
months, but sometimes up to a year
 Non-judicial:
– Foreclosure by trustee sale
– If homeowner defaults lender can notify the trustee
to start foreclosure
– The trustee can then sell the property and transfer
proceeds to the lender
– Trustee sale is typically much faster than foreclosure
by judicial sale
 Not tied up in courts
The Short Sale Process
Although every short sale is a unique transaction, the following outlines the typical steps in a short sale.
From offer submission to approval takes an average of two to four months
Homeowner
Defaults on
Payments
 Homeowner
misses payments
List
Property
For Sale
Submit
Short Sale
Package
BPO /
Assign
Negotiator
 Homeowner works  ALM creates short  The lender orders
with expert and
sale package;
a BPO to
determines value
assists
determine value of
 Lender initiates
of
property
homeowner
in
property and the
collection efforts
through CMA and
gathering and
minimum sale
 Homeowner
BPO
completing all
price required
consults with
necessary
 If total owed is
 Lender assigns a
expert and
paperwork;
less than the
negotiator
determines short
compiles all
property
value,
sale is only option
transaction
short sale is the
documents from
 The earlier the
best option
realtor
homeowners start

Homeowner
puts
the short sale, the
 Lender reviews
property up for
higher the success
package to
sale
rate
determine
eligibility of short
sale
Negotiate
Short Sale /
Sell Property
 Lender agrees to
accept offer, final
details are
negotiated
 All other liens on
property (e.g.,
second
mortgages) must
be negotiated and
settled prior to
sale
 ALM knows
guidelines for liens
 Lender reviews
and must agree to
final HUD-1
 75-80% success
rate
2. How to Identify a Good Negotiator
How to Identify a Good Negotiator
When considering making an offer on a short sale property we need to determine the competency of the
negotiator working on the file. In most cases the Listing Agent will be negotiating the file on their own with
little to no experience.
Questions to ask the Listing Agent
 How many short sales have you negotiated?
– They should have worked on more than 4
files
– Success rate will be very low….
 How many Liens on the Property?
– Multiple liens = Much more difficult to
close
– Steep learning curve
 Out of those short sales how many closed?
 Have they negotiated with this specific lender
before?
― If the agent has closed less than 50% of
their files be wary
● Do not ask “how successful are you”
– You will not get a useful answer
● How long has it taken them to close there
files?
– If longer than 4 months the property will
likely go to foreclosure before its
completed
― Each lender has their own process
― You can close with Litton all day but
Countrywide is a nightmare
― If the Listing agent cannot answer these
questions to your satisfaction then give us
a call
Managing Expectations
The biggest reason we see buyer and seller fallout is from not “Managing the Expectations” of our clients.
Typical Short Sale Timeline
● Week One – Rush the File
― Borrower and Agent contacted by
Managing Listing Agents Expectations
● Let the Listing Agent know it will take…
― Takes 2-4 months for completion
•
Negotiator
•
Is the seller cooperative?
•
Processing
•
Do they want to sell or would they like to
keep if possible?
•
Explain the S.S. process
•
Just because they are doing a short sale
does not mean they know how it works
― CMA, HUD-1, Listing Agreement, COMPS
― Submit offers to ALM
― Processing will complete S.S. package with
borrower assistance
● If there are multiple offers we can still help
● Once we have fully executed offer and complete short
sale package
– Two-Four Months for Approval
― Most buyers walk, marathon process
― If your buyer stays in place they will get the property
3. What We Need To Get Started
Homeowner’s Responsibilities
These items are required for ALM to work on the homeowner’s file.
 Homeowner fills out ALM paperwork
– Client agreement
– Property profile
– Letter of authorization
 Realtor fills out Realtor Welcome Packet
 Gather Required Docs – Bottleneck for Submission of Offer to Lender
– Pay stubs
– Tax returns
– Bank statements
– Hardship letter
ALM Client Agreement
This document describes the services we provide and the terms of the agreement between our company
and our clients.
Title
 Client Agreement has industry disclosures
– Protects Brokerage and ALM
 Legal document
– Must be signed by all borrowers
ALM Client Agreement
Property Profile
This form provides us the necessary information regarding the homeowner’s property, their loans, and any
outstanding liens.
Title
 Provides borrower / property snapshot
– Contact information
– Property information
– Mortgage information
– Additional liens
Property Profile
Letter of Authorization
This form authorizes the homeowner’s lenders to discuss their loans with representatives of our company
and allows our company to interact with their lenders on their behalf.
Title
 Required for ALM to discuss borrower’s loan
with servicing company
 Must be signed by all borrowers
– Complete one for each loan
 First and second lenders
 LOA is submitted to the lender upon receipt
Letter of Authorization
Hardship Letter
An effective hardship letter sticks to the facts and is concise, straight-forward, and relatively simple. It is not
a good idea for the homeowner to blame the lender for their problems. It is a good idea to highlight how
they have exhausted all options available to them to repay their lender.
Anatomy of a Hardship Letter
 Good Hardship
– One page
– What was catalyst
– Show how borrower got into this situation
– Short sale as a last resort
 Bad Hardship
– Blaming the lender
– Emotional
– Not factual
 If it makes sense the lender will accept it
Sample Hardship Letter
January 1, 2009
To Whom It May Concern,
This is a hardship letter. Our loan number is 987-456-321. We bought our home
two years ago and received a mortgage from your institution to finance 80% of the
purchase. At the time, we both had good jobs and a stable income. We have
always been financially responsible. Unfortunately, in October of 2006 I got laid off
from my job and since then I have been unable to find steady employment. Since
my unemployment benefits ran out we have simply been unable to afford to continue
making our mortgage payments. Our credit cards are maxed out. We have cut back
on all but the most necessary expenses but continue to struggle to keep up with the
bills and make ends meet.
We are now four months behind on our mortgage payments. We considered selling
our home, but property values in our area have come down greatly. As it turns out,
we have no equity left in our home and there is no way we could sell our home for an
amount that would pay off our mortgage in full. Even if we could sell at current
market prices, we would first need to replace the roof (it is beyond repair), which we
cannot afford to do. We are late on our credit card and car payments, and have not
paid our utility bills for some time now.
Of course, we would love to keep our home, but given our current financial situation
it is just not possible. Even if things turn around for us, we see no way that we can
make up for the mortgage payments we missed. We really want to avoid foreclosure
which will further damage our already ruined credit. We have exhausted all of our
savings and we have nobody left to turn to for help. Please do whatever you can to
help us out of this situation. Thank you for your time and consideration in this
matter.
Sincerely,
[signatures]
Michael & Samantha Jones
St. Louis, Missouri
4. File Flow / Customer Service
Selling Agent
As a selling agent you can still take advantage of our negotiation services and here is how…
 Seller’s agent
– Find property for purchase
– Ask Questions to find negotiation competency level
– Tell listing agent that you will make an offer contingent on it being negotiated by ALM
 Talk us up, put us in a position to win
 Call dedicated phone line- 877-552-7353
 One of our sales reps will contact listing agent bring them on board
– Fees
 Same fee structure as CBG (discounted rate)
 Split fees with listing agent
 Ex. Property sells for 350k
– Split would be 15% from each side totaling 30%
 Create realtor welcome packet for listing agent
 Fax ALM required paperwork + Realtor Welcome Packet
– Client agreement
– Property profile
– Letter of authorization
 (Homeowner Welcome Packet)
 Agent will receive a confirmation of receipt
– All agents notified
5. Fee Structure
Fee Structure
Listing Side Commission Splits
Short Sale Price
ALM Compensation
Brokerage Compensation
$100,000.00 or less
$1,000
Remainder of commissions
in excess of $1,000
$100,000.01 to $200,000.00
38.9% of commissions
61.1% of commissions
$200,000.01 to $300,000.00
34.5% of commissions
65.5% of commissions
$300,000.01 or more
30% of commissions
70% of commissions
• All commission are paid by the lender
• The lender will not honor your listing agreement’s commission/ However Fannie and Freddie Paper
will honor listing up to 6%
• Commission is negotiated
• Some lenders have blanket commission policies
• Countrywide 5%
Table of Contents
1. Introduction to Access Loss Mitigation
2. How to Identify a Good Negotiator
3. What We Need to Get Started
4. File Flow / Customer Service
5. Fee Structure
QUESTIONS??
Send them to: [email protected]
Loss Mitigation for Selling Agents
May 7, 2009
Presented By: Richard Petz
Director of Realtor Services Division