Transcript ADP VAMS Program

Mortgage Education
Short Sales
The following is provided for
information purposes only and
is not intended as legal advice.
State Laws May Vary
 You May Have Other Rights
You May Have Other Duties
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If you have questions regarding how mortgage loan delinquency and foreclosure may affect
you, please consult legal and/or tax professionals.
Bad Things Happen to Good
Homeowners
Hardship has no regard for social or financial status.
Foreclosure is a Lose-Lose Situation
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Mortgage company loses revenue
Mortgage insurance loses premiums
Mortgage insurance pays a claim
Mortgage investor doesn’t collect principal
Mortgage investor doesn’t collect interest
Potential damage to property during foreclosure
Foreclosure’s negative stigma results in lower value
Lower property values have negative effect on real
estate market
Homeowner Loses the Most
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Foreclosure reported to credit agencies
Late Payments reported to credit agencies
Remains on credit report for at least 7 years
Viewed negatively by credit lender, employers and insurance
companies
Adverse credit rating may limit ability to get credit cards, mortgage
loans, consumer loans and other forms of credit
Foreclosure may NOT relieve you of responsibility
Insurer could bring suits against you
-Court order to pay balance
-Reasonable attorney fees
-Interest on judgment amount
Reportable income or loss to the IRS via 1099-A
Sample Foreclosure Timelines
(amount of time it takes to foreclose on a property in each state)
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Texas – 27 days
Georgia – 37 days
Florida – 135 days
California – 117 days
New Jersey – 270 days
New York – 445 days
Turn It Into A Win-Win with a Short Sale
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Minimize the effects of foreclosure
Mortgage company reduces time and work
Mortgage insurer reduces time and work
Mortgage insurer minimizes claim payment
Mortgage investor saves time, work and money
Additional potential damage to property during foreclosure
avoided
No foreclosure’s negative stigma resulting in lower value
No lower property values to have negative effect on the real
estate market
What is a Short Sale?
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A short sale is when a bank or mortgage lender
agrees to discount a loan balance due to an economic
or financial hardship on the part of the homeowner.
The homeowner negotiates with the bank’s loss
mitigation department to sell the property for less
than is owed on the mortgage. The lender has the
right to approve or decline the proposed sale. If
approved, the loan will be recorded as “paid in full”
and will allow the homeowner to avoid foreclosure.
Your first step:
Call Customer Service
Get to the person who can help!
To Get to Loss Mitigation:
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Call 800 customer service number on your current
mortgage statement
Do NOT enter loan #
Do NOT give loan #
Request “Loss Mitigation” from main Customer
Service Representative
Loss Mitigation’s #1 goal is to return the loan to
current status and produce revenue. They are paid
$500 per workout and $1,000 for successful short
sales. It’s in their interest to help you!
Documentation Needed for the Lender
*send copies, not originals!*
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Hardship Letter – include all the details! Use this letter to win their
sympathy. Go back to the very first instance where you had trouble
paying your monthly obligations and start your story.
Hardship Documentation - It you have medical problems, include
copies of hospital documents. If you’re getting divorced, include
copies of separation papers, etc. Financial Form - It’s okay to show
bad credit. You need to show that you have more expenses than
money coming in – don’t leave anything out.
2 months bank statements – all accounts, checking and savings
2 years tax returns
2 months pay stubs
Credit Report
How to Write a Hardship Letter
The hardship letter to the mortgage company written by
the homeowner should describe:
 Everything that has happened which has resulted in
their inability to make the payments or pay off the
loan
 Everything they have done to try to rectify the
situation
 The desired outcome of the homeowner (to stay in
the home with a better mortgage or to move out)
Documentation continued:
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Appraisal, Broker Price Opinion, Market Analysis
Repairs bids & photos – bank will require three bids
for each repair.
Listing Agreement- synopsis from your Realtor if
already on the market; beginning list price, reasons
why the home isn’t selling, etc.
Homeowner Authorization Letter (see next slides)
Sales Contract
Buyers Loan Approval Letter
What is a Homeowner Authorization Letter?
The Homeowner Authorization letter is a
letter written by the homeowner to the
mortgage servicer that gives the mortgage
servicer approval to speak directly with a
specific third party (i.e. your Realtor) about
that particular loan.
Homeowner Authorization
Sample
January 1, 2008
My Mortgage Servicer
123 Main Street
Big City, NJ 12345
To Whom It May Concern:
I am working with Mr. E. Z. Sale who is a real estate agent with W.E. Sell Homes Realty to
sell my property. I give My Mortgage Servicer permission to share information related to
my property and its sale with Mr. E. Z. Sale. My property address is: 1 Nice Street, My
Town, NJ 12345 and my loan number is 123456789. If you have any questions, please call
me at 973-999-9999 after 5 pm.
Thank you,
Hap E. Homeowner
Don’t fall through the cracks!
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Don’t Hide from phone calls or letters – the bank is trying to help.
They CAN Foreclose even if you ignore their attempts to contact
you.
It is NEVER too late or too early - If you anticipate a hardship, call
and make arrangements before you miss payments, etc.
Be persistent – follow up once or twice a week
Banks have guidelines as to what they can work with – involuntary
hardships (fired) vs. voluntary hardships (quit)
In this market, banks are making exceptions to these guidelines!
Divorced Does Not Equal Release of Liability – if your ex-spouse
took possession of the property, you will need a quit claim deed
and for the mortgage investor to send you a release of liability.
Loss mitigation can help.
Other resources for help:
HOPE NOW is an alliance between counselors, servicers,
investors, and other mortgage market participants. This
alliance will maximize outreach efforts to homeowners in
distress to help them stay in their homes and will create a
unified, coordinated plan to reach and help as many
homeowners as possible.
www.hopenow.com
Real Estate Services Team
Lois Johnson
Manager
Real Estate Services Group
Manage VAMS, REST (Client Program), & Affiliate Vendor Programs
Direct: 704-285-6132
Toll-free: 866-896-7045
Jennifer Woodward
Real Estate Counselor
Direct: 704-285-6123
Grace Meeks
Program Assistant
Direct: 704-285-6134