Monday, July 25, 2011

: Law against short sale deficiencies expanded to Junior Liens

I know most of you are aware of the great news in regards to the expansion of the deficiency law to junior lien holders. There is no doubt this is a huge improvement that will make negotiating with seconds much easier and much more successful. However, there have been some misunderstandings on these new rules and I wanted to clarify a few things so that moving forward you are able to set proper expectations with your clients.





SB-458



1. As of 7/15/2011 Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or JUNIOR LIEN holder.





2. Effectively immediately on all transactions closing escrow.





3. A lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval.





4. The law does state that this does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale.





5. A lender is permitted under the new law to negotiate for a contribution from someone OTHER than the borrower, such as other lenders, agents, relatives, and the like.





When we receive great news like this it is easy to overlook some key points or not read between the lines and think it through. I have had several calls on items 2-5 so here are the Q&A in order:



Q. If my client completed a previous short sale or the home was foreclosed on does this law apply?



A. No, this law only applies to transactions in escrow from the date the bill was passed and all new short sales moving forward.







Q. Since the lender is no longer able to require a borrower to pay additional compensation in exchange for a short sale approval, does the lender have the right to reject the short sale?



A. Look at numbers 3 and 4. In number 4 it states that the law does NOT PROHIBIT a borrower from voluntarily offering a contribution in HOPES of obtaining a short sale. How I interpret this is the lender can reject the short sale in order to see if they can obtain a contribution where the hardship is not strong and the homeowner does not offer anything in good faith.



We still need to make sure our clients are true candidates for a short sale. If the homeowner clearly shows in his financials that he has money to contribute and it is therefore not a traditional hardship you will want to have an upfront conversation with the homeowner to lay the groundwork. The lender may or may not accept your short sale so a contribution may be in your client’s best interest.



If the homeowner can clearly show in their financials there is nothing to give they have a better shot at getting it approved. There are no guarantees so the best you can do is pre-qualify all clients and set proper expectations.







Q. Does this mean that the lender will no longer expect other parties to contribute?



A. This is one that really needs to be read all the way through. The lender can still ask for a contribution from agents and possibly relatives. Wells Fargo seconds almost always do this. Again, I would make sure that you set proper expectations with your clients in regards to voluntarily contributing depending on their circumstances to minimize your risk of coming out of pocket.



First lien holders are getting better at contributing 10% to the seconds but it is hard to say what their number will be until we get the approval in hand. Remember when they would only contribute 6%. Well I can tell you from experience that seconds are getting smarter and tougher and that they will try to pull dollars from as many places as possible to squeeze as much as they can. Remember that they are taking the biggest loss.



We still need to do our due diligence in the beginning to have a smooth closing in the end.







Please join # 1 Real Estate Attorney “ David Bright” and myself on 7/28/2011, at the Tamarack Beach Resort between 11am and 1pm for an educational event. We will be discussing important topics in the short sale market including this new senate bill, Equator and MARS rules. Please RSVP as there is limited seating at 858-764-7300 or email Lana@lotusrealtygroup.com.



(Quote) The very essence of leadership is that you have to have vision. You can't blow an uncertain trumpet.



Theodore M. Hesburgh

REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?


Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.



LOTUS REALTY GROUP



PROFESSIONAL SHORT SALE NEGOTIATORS







At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...







Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com

Wednesday, July 13, 2011

Substitute a new buyer without restart in Bank of Americas Equator

LOTUS REALTY GROUP





I received the below email from Bank of America yesterday. I am sure some of you may have received the same but just in case I wanted to make sure you were all up to date on the latest news and programs and as usual give my advice on how to utilize this information to your benefit.



Bank of America now allows real estate agents to submit a backup offer on a transaction if the original buyer has walked away from the sale. This means you will no longer have to initiate a new short sale; instead, you can continue with the original transaction in Equator and still work with your same short sale specialist. This change will save you time by not having to repeat a number of process steps.



When a Backup Offer is ready



you should send a message to your short sale specialist via Equator when the original buyer is no longer interested in the property. Your short sale specialist will then respond to you within two business days and ask if you have a backup offer ready to submit. If you have another buyer prepared to make an offer, the short sale can proceed without having to repeat the short sale initiation steps. The short sale status in Equator will change to "Marketing," and you will be directed to complete the following tasks within 14 business days:





· Complete the "Listing Data" task.



· Provide the marketing description.



· Review the marketing plan.



· Upload the offer. (To do this in Equator, locate "My Properties," then "Offers" and select "Place New Offer.")



If the "Listing Data" task is not completed and the new offer is not uploaded within 14 business days, the file will be closed.



When No Backup Offer Is Ready




This new process applies only if there's an available backup offer when a buyer walks. If you do not have a backup offer ready to be submitted, the short sale will be declined. In that case, you should return to marketing the property and initiate a new short sale in Equator once you receive another offer.




We work with many Equator transactions and obviously one of the biggest frustrations when we lose a buyer is starting all over as Equator typically works one offer at a time. This new system is great however, I wanted to remind everyone to pay attention to the last paragraph. If there is not a back up offer to replace the one you lost, you will have to start over and re initiate the short sale.




I would make sure that you have a couple back up offers on standby to avoid this issue. Time lines are much longer when we have to start all over and this only frustrates buyers therefore, we run the risk of creating a revolving door. If there are sale dates that we have to postpone, starting over will definitely pose a problem.



Setting expectations with the buyers is another way to keep them on the line. Knowing the time frame is key and sharing that with them. Every transaction is different and some will take longer than others so do not over promise and under deliver. I would also make sure all buyers are pre qualified and are not putting in offers all over San Diego County. We need to create a level of commitment which can only be accomplished by setting proper expectations and due diligence.



General Time Line: (These are subject to change with every deal)

1. File submitted



2. 7-10 days to upload into the system



3. 2-3 weeks processing time



4. Order BPO



5. 7-10 days for BPO to be submitted and assigned to a negotiator



6. Negotiator can take anywhere from 2-4 weeks to negotiate the file



7. Submit to the investor for final approval



8. Investor can take anywhere from 1-3 weeks (plus or minus)


It has been my experience when I slow down and do things properly in the beginning my transactions go much more smoothly in the end.






(Quote) Efficiency is doing things right; effectiveness is doing the right things.



"Peter Drucker"



REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?




Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.



LOTUS REALTY GROUP



PROFESSIONAL SHORT SALE NEGOTIATORS



At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...




Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com

Wednesday, July 6, 2011

This real-estate scam can land you in jail......

This real-estate scam can land you in jail


In some cases, ‘flopping’ is a crime with serious consequences



http://www.marketwatch.com/Story/story/print?guid=1B883062-A0CE-11E0-9F46-002128049AD6



Dear friends and colleagues,

I wanted to share this article with you I read on Market Watch. Those of you who have attended one of my events with my Real Estate Attorney “David Bright" know how passionate we are about education in the short sale market to ensure we are all operating above board and in the same return protecting all parties involved in the transaction. Please take time to read it.




I found this very interesting. As a listing agent in a short sale transaction our fiduciary duty is to the seller and the lender. To help the homeowner experiencing a true hardship; to find a serious and committed buyer and bring the lender the highest best offer. PERIOD. There is no easy way around it. No short cuts. Though this process can be very frustrating at the end of the day if the process is done properly then it will be a win win for everyone. If it is not, then we run the risk of potential legal ramifications. I don’t know about you, but I would much rather be able to close my eyes at night and actually sleep.





The BPO agent’s fiduciary duty is to the lender. I personally have only ran into issues with BPO agents driving my values up not down. Which is why I have developed the listing history method. This helps me when I am in a value dispute situation. So, now we have" Flippers and Floppers" to watch out for. Ha!





It is unfortunate to me that so many people are willing to create situations such as these. This is not a market to mess around with. Our number one goal should be to help homeowners who really need the help avoid foreclosure. The only way to do that is to take on qualified clients; know what the lender is looking for and act accordingly to reach that goal upholding our integrity and ethics. .





I believe if we truly have our client’s best interest in mind all of our good intentions and efforts will come back tenfold.




(Quote) "There are seven things that will destroy us: Wealth without work; Pleasure without conscience; Knowledge without character; Religion without sacrifice; Politics without principle; Science without humanity; Business without ethics."

— Mahatma Gandhi




REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?




Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.





LOTUS REALTY GROUP



PROFESSIONAL SHORT SALE NEGOTIATORS




At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...


Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com