Short Sale Updates

I have added some important information and lender updates to the agent quick facts. Please take time to read it.


I had an interesting comment from a REALTOR the other day who referenced short sales as not being a real deal. I understand that because short sales are not potential re occurring revenue streams and that alot of us have experienced economic hardships that have forced us to work harder to support our families. The fact still remains that short sales have been and still are a very important part of the market. Education, skill and strategy are the only thing stopping a professional from being successful in the short sale arena.


Rewind the clock back 4 years ago, 2 years ago. How many short sales did you close back then? How many homeowners did you help avoid foreclosure? And finally, how many of those clients you helped do you stay in touch with? Because here is the reality; some of those homeowners that you helped 2-4 years ago are able to buy again. Have you followed up with them? I would like to encourage you to not shy away from short sales. If it is done properly you will be setting up your revenues for the future when those homeowners are able to buy again. All deals are real deals if they are done with integrity and good intention.


Here is an article on CNN Money I would like to share with you entitled "Boomerang buyers return to market after foreclosure " http://money.cnn.com/2013/03/11/real_estate/foreclosure-homes/index.html


UPDATED AGENT SHORT SALE QUICK FACTS AND LENDER REQUIREMENTS


Communication/Time Frames



1. When your file is submitted to Lotus Realty Group one of our representatives will do an audit of your file and send you a needs list of all outstanding documents. We will not submit a short sale package to the lender until we have a whole and complete short sale package. We understand these transactions are time sensitive.


2. If you are unavailable or will be out of town we will need the information of who will be assisting you with this so we can work with them on getting what we need to submit a package.


3. Lotus Realty Group will update you weekly every Thursday. If there is any information or requested documents from the bank we will contact you sooner. Please allow us to work with the bank and adhere to the time frames.


4. Every transaction is different and unique. Some approvals come faster than others however; the more solid of a package we have the faster we will move through the system. We do not have connections to move files along faster. They have to go through the normal time frames. If the normal lender time frames are not honored at that time we will push to escalate. There is no magic to this. It is all strategy. It is the responsibility of the listing agent to prequalify their clients and use the platform we have created and follow our guidance.


5. Fannie Mae and Freddie Mac deals take longer to underwrite so you will want to set expectation with seller and buyer. In addition, they are driving values up to minimize their loss. There will be some challenges with these types of transactions. It is important that we know if it is a Fannie/Freddie deal upfront so we can ensure we have a decent market time and listing history to show the investor when it comes time to dispute their counter.


6. From the time of submission it can take anywhere from 30-90 days before we may see an approval. The bank typically looks at how many days the property was on the market to see if the property was marketed for a substantial amount of time, comparative market analysis, the value of the offer, what is owed on the property and how strong the hardship is. We suggest that you complete the listing agent packet with the seller questionnaire before listing the property and discuss with a representative at Lotus Realty Group so we can determine together if this is a deal you should take or what we need to do in order to structure it properly.



7. Please send all short sale packages to INITIATE@LOTUSREALTYGROUP.COM


Lender updates


1. Green Tree wants all sellers to call in and do a survey first to see if they qualify for a short sale. At that point they will order a BPO. Once they receive it they will assign to a processor.


2. We have seen lenders require homeowners to call their lien holder first and inform them they do not want to do a loan modification they want to short sale. It will save you alot of time if you advise your clients to this at the time of taking the listing.


3. Citi Mortgage has been requesting sellers that are married that originally had an FHA loan to have two separate hardship letters signed and dated.


Commission


1. The seller and listing agent cannot be one in the same.


2. Listing agent cannot be related to the seller or the buyer.


3. If the buyer’s agent is also the buyer, the short sale lender may reduce your commission or they may decide to eliminate your commission all together.


4. If the agent is representing both buyer and seller the short sale lender may reduce your commission

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Contracts


1. It is imperative whenever possible to use our counter and addendum in the listing agent short sale packet for all potential buyers on your short sale listings. This will set expectations as to who will be responsible to pay fees that the short sale lender will not agree to pay.



2. The SSA needs to be initialed and signed by BOTH buyer and seller.



3. All items incorporated into the RPA on page 4, need to accompany the offer as the bank will require these.



4. Not all lenders accept Doc U Sign. It is a suggestion to get wet signatures up front to save time.



5. If the buyer is an LLC or incorporated, we will need the Articles of Incorporation and Operating Agreement. The signatures on the RPA need to match the LLC or incorporated documents.



6. Cash buyer proof of funds need to be within 30 days.



Sale Dates



Most lenders require a full short sale package to be submitted 15 days prior to a sale date to consider a postponement. If there is a sale date on the property in two weeks and we do not have a short sale package in place with an offer we will not be able to take this type of transaction. There may be exceptions granted however; we generally do not take these circumstances on due to the success rate being extremely low. If the listing agent packet is complete and we have had a chance to go over the seller questionnaire together to determine if this is a transaction we can successfully close we will eliminate most if not all of these issues. If your client is delinquent 12 months plus there is a minimal chance the date will get postponed.



Please contact us with any questions or short sale scenarios you would like to discuss. We look forward to working with you.



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...

Rental/Lease to Own Wanted

Realtors, I am looking for a Lease to Own Between 4-5 bedrooms, 3.5 baths, 3500-4000 plus sq feet on at least a half acre to an acre. Private and serene environment for a special project. If you have a client who tried to sell but has not been successful and would entertain a lease to own please email me or give me a call. Areas if interest" Elfin Forest, Olivenhein, Rancho Santa Fe, Vista and Poway Encinitas. Thank you.

Run Real Estate..Don't let it run you!

Quote: Battles are won by slaughter and maneuver. The greater the general, the more he contributes in maneuver, the less he demands in slaughter.
( Winston Churchill )


When I first started my career in real estate I wanted to help everyone. I adapted a habit of people pleasing along with the drive to succeed and be one of the top producers in San Diego. I quickly learned through trial and error that I needed to learn how to balance the two very quickly. There is nothing wrong with wanting to please another and there is nothing wrong with wanting to be the best we can possibly be in our career. The problem is created when we over extend ourselves to others such as our clients, family and friends to a point where it disrupts our ability to effectively manage and prioritize our days; enabling us to be consistent in all aspects of our lives. This not only disrupts our well-being; it also disrupts our bank account. We have to be able to manage our personal and business lives to be productive and efficient daily.


I have noticed there are some agents that want a listing and may be up against 2 or 3 other agents before the potential client makes a decision. The home owner will try to cut commissions and maybe use the line;" The agent before you said they would take a smaller commission" if it is a traditional sale . OR, an agent will over promise in order to get the listing. But one example that I see over and over again especially in short sales is expectations are not properly set and the agent ends up with the following problems:


1. Uncooperative clients - On a short sale transaction a client needs to understand that a short sale requires that they give us all the appropriate documents and when the bank requests a document the ETA has to be immediate. They also need to cooperate with showings. In addition; they need to understand that they have to be moved out by close of escrow. Homeowners are going through a lot of emotional turmoil. They do require a lot of compassion and assistance however; there are things that they need to be responsible for and you cannot take on that role for them otherwise you will jeopardize the transaction, lose focus and be pulled away from your daily schedule. Delegating is something we need to utilize. Know what roles are yours, your clients and your teams and delegate accordingly. This will allow you to stay on task.


2. Messy Transactions - When we are pulled off task transactions get messy. Contracts are not complete, all appropriate documents are not collected. Communication levels are poor. Short sales cannot be submitted unless the packages are 100% complete. If you are using a third party to negotiate for you there is no way they can effectively do that if they don't have all they need and if the proper strategy is not followed. It is a listing agents responsibility to collect the documents and up date their clients. If you do not know what that proper strategy is it is your responsibility to find out the proper procedures so you can delegate appropriately.


3. Angry and confused clients - It is important to be well versed in short sales. If you cannot effectively explain the process to your client then you need to take someone with you on that listing appointment that can. Here is where over promising and under delivering really happens. An agent will go on a short sale listing appointment. They may or may not have some short sale experience but there are a few agents they are competing against and promise the seller they can get them some relocation money. Guess what happens? The seller does not in fact get the relocation money and when the seller learns of this they are not happy. You may have landed the listing but you will not keep that client. My suggestion is you know your content and if you don't then take someone with you. Tell the homeowners the truth. Not what they want to hear. They will respect you a hell of alot more in the long run and you will most likely keep them as a long- term client.


I understand how easy it is to get overwhelmed and frustrated in this business. It happens to me time and time again and I have to re center myself. We have pressure to perform, to pay our bills and take care of our families. The temptation to cut corners will always be there. But if we are creating a balance in our lives; all aspects of our lives and shift our perceptions about our day to day tasks in a positive way we will be so much more organized, less stressed allowing us to move through our days with ease and grace. In that space is where your true desires are manifested. You are not swimming up stream, you are floating down the river on a raft with the sun on your face.


We are here to answer any questions you have and we look forward to helping you with your short sale transactions.



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...

Short Sale Lender Updates

1. Below is an article that was in the Union Tribune on March 1st in regards to Fannie Mae over pricing homes. I encourage you all to read it. This is going to be a huge hurdle that we will have to jump through. It is important for you to know if the short sale listing you are about to take is a Fannie Mae deal. It is also important to know if there is a sale date on the property. If there is a sale date in three weeks and the seller is 6-12 months delinquent the trend we are starting to see with Fannie Mae is the sale date WILL NOT be postponed unless the file is approved and in closing status. If you are in a value dispute and the sale date is in a week you most likely will not get a postponement unless the buyer comes up to what the investor wants to net.


With Fannie Mae's unreasonable values; the chances of a buyer agreeing to their terms is very slim. I encourage you to not take Fannie Mae deals that are time sensitive with sale dates. I would also list the property at what is owed, keep it there for 30 days and set up 2 price reductions on the first and the 15th of the month. Any Fannie Mae deal with a market time below 30 days will have extreme issues. This will be the only shot you may have at proving to the bank their determined value is unreasonable.And even then it may be a losing battle. Its important that you are upfront with your clients on these types of deals. As we move forward with short sales it is my hope as it is every Realtor in town, that Fannie Mae will come to their senses on this issue as it is not a help at all to struggling homeowners and is a waste of any ones time that was invested into trying to negotiate a short sale.


2. Green Tree has a new policy. The lender wants the homeowner to call in to customer service and take a short sale survey that will determine whether or not they qualify for a short sale. They do not want us to fax in a package first. Once the lender has determined that the homeowner does qualify for a short sale; then we can fax in a complete short sale package and then the process can start. Please note; Green Tree has their own financial packet. Call us when you have a Green Tree deal so we can send you the proper paperwork.


3. We are starting to see Wells Fargo second lien holders cut commissions down to nearly 4% WHEN, the first lien holder is getting paid in full. Something to pay attention to when pre qualifying your seller and listing the property on the MLS.


Again, please take the time to read the article below. It definitely sheds some light on what to expect moving forward. I do believe that if we slow down and take the time to structure these deals properly the better chance we will have at getting the results we want. Please feel free to contact me with any questions or concerns you might have.


ARTICLE IN THE UNION TRIBUNE- 3/1/2013

Is Fannie Mae overpricing homes?

Is mortgage titan Fannie Mae overpricing homes throughout California?
Real estate agents and sellers have raised that question in a growing number of deals that have fallen apart with the taxpayer-supported company because of price disputes.
In those deals, sellers who had hoped for a more graceful exit from home ownership are pushed toward foreclosure.

Fannie Mae — which owns or backs about half of the home loans in California along with fellow mortgage-finance giant Freddie Mac — is trying to juggle two goals that appear to be at odds with each other.

The first is to help homeowners avert foreclosure through short sales.
For sellers, short sales — which allow borrowers to sell their homes for less than they owe as long as the owners of the mortgages say OK — are considered better than foreclosures because they shave off fewer points from credit scores and are sometimes more cost effective for banks.

Sellers also benefit because they can re-join the housing market faster, often cutting the wait time to as little as two years instead of seven for a foreclosure.

However, Fannie Mae also must price properties appropriately so that taxpayers, who have floated the company for four years, are getting a good deal.
The result of those competing goals?

Fannie Mae would agree to start the short sale process but would price those homes 20 percent to 40 percent above neighboring comparable sales, said Don Faught, president of the California Association of Realtors. The association is one of the largest trade groups in the state.

The disagreement in pricing has left homebuyers feeling ripped off, and at times, has caused short sales to fail. When short sales fail, home sellers could get stuck with foreclosure auction dates.

“Obviously this is a problem because the agent has to (re-)market the property with the Fannie Mae property price,” Faught said. “And often, there’s no time to re-market the property before a foreclosure (auction date.)”

The disputed values, which Fannie Mae says are justified, are based on several factors, said Fannie Mae spokesman Andrew Wilson. They include past sales, the opinions of contract real estate brokers, and sometimes appraisals.

Those factors yield a minimum amount for each property being considered for a short sale.
“We’re comfortable in the values we set,” Wilson said.

At times, the requested price is more than the highest comparable home sale and requested at the eleventh hour, say people involved in these deals.

A deal gone sour

Mark DePlachett, a 62-year-old plumber, was trying to short sell his home in Rancho Peñasquitos during the holidays.

DePlachett wanted to get out of his mortgage because he could no longer afford it, he said. He was hurt on the job and lost a huge source of income.

The buyer interested in the property offered $191,000 for the condo, which appeared to be a fair price because a sampling of condos in the same building were being listed at or had sold below $200,000, said Jacalyn Blank, the short sale negotiator in that deal. Analyzing comparable units is a common practice in the housing world.

Fannie Mae’s asking price: $260,000, or roughly 30 percent above the highest comparable sale in that area.

That offer was actually made by Bank of America on behalf of Fannie Mae. As with many loans, one company can own the loan and another company can service it. Servicing a loan means accepting and managing mortgage payments from borrowers.

Fannie Mae gives loan servicers a minimum price that it’s willing to take in a short sale. The mortgage-finance company says it will even consider “close” offers, Wilson said.

If the buyer’s offer doesn’t meet the minimum, then servicers like Bank of America negotiate on Fannie’s behalf. This delegated responsibility, in fact, was expanded in the fall as a way to speed up short sales.

If a buyer wants to dispute the Fannie Mae value, then the servicer can send it to Fannie Mae for review.

That happened in DePlachett’s case. Analysis of comparable condos, either listed at or sold for sub-$200,000, were turned in along with other market details.

Fannie Mae ultimately rejected the offer and the buyer walked. The property was later re-listed at $260,000, the Fannie Mae request. Months passed. No bites.

A new buyer in December offered $251,000. But by then, it was too late.

“That was declined because the foreclosure sale was weeks away,” said Bank of America spokewoman Jumana Bauwens.

Eventually, the property sold at foreclosure auction for $240,000. That’s about 4 percent less than what the second buyer offered.

However, in some cases, owners of home loans can make more money through a foreclosure because they don’t have to pay real estate fees, such as commissions, escrow and title, said Blank, the short sale negotiator.

“It’s not fair to homeowners who don’t want the foreclosure in their records,” Blank said. “... It’s not fair to the buyer. It means they are overpaying ... Sometimes, you have to pay $10,000 more.”
DePlachett now has a black mark on his borrowing history for about seven years.
“Bottom line ... just move on,” he said. “What else can you do?”

If a Fannie Mae short sale goes to foreclosure, then it is listed for sale at public auction. Proceeds of that sale would go to Fannie Mae.

If the property fails to sell at auction, then it goes into Fannie Mae’s foreclosure portfolio for resale. Mortgages for those homes generally do not require appraisals.

Widespread disputes

Accusations of value inflation in Fannie Mae deals appear widespread. It became such an issue that the officials with the California Association of Realtors, which has a 115,000-person membership, recently flew to Washington D.C. to meet with Fannie Mae officials.

Faught, the California group’s president, said the meeting was cordial and reps from the company appeared eager to listen. But the bottom line is, price inflation is still very much an issue.
Fannie Mae officials are aware of the pricing disagreements with their short sales. Their answer in February was to create a process that allows agents to send those issues directly to Fannie Mae.
Addressing San Diego resident DePlachett’s short sale, Wilson said, it “would be a prime example of the kind of issue we’d hope to avoid by allowing agents and others to escalate short sale cases directly to Fannie Mae.”

Despite the new process in place, real estate agents are still concerned.

Agents fear that prices in certain areas are already artificially inflated.

When Fannie Mae sets minimum prices above the highest comparable home sale in a neighborhood, it’s creating a new value standard that may not be justified, said Phil Johnson, a real estate agent is dealing with Fannie Mae value disputes.

Also, agents say Fannie Mae’s minimum asking prices are driving away qualified buyers and increasing competition for traditional buyers.

When Fannie Mae asks for higher prices, buyers who have secured financing would then have to get more financing to cover the difference.

This could be a problem for borrowers because they’d have to justify the request for more money from the mortgage company, which may not be possible.
Cash buyers, on the other hand, may not have that issue.

They’re typically backed by companies with capital or hard-money loans, so “they can pay whatever they want,” Johnson said. This could create bidding wars and other issues for traditional buyers, who are already facing a tight inventory.

San Diego real estate broker Kurt Wannebo says the values that Fannie Mae officials set make sense because they’re fully aware that the housing market in areas like San Diego are hot.

Low inventory levels, spurred by high levels of underwater homeowners, have caused prices to go up. The median price for a local home sold in January was $350,000, up 15 percent from a year ago.
Competition for limited inventory, especially in the entry-level price range, has been worsened by declining foreclosures.

Buyers who had typically purchased distressed homes now are forced to enter the regular home market. This means more competition for traditional buyers.

“Fannie realized that certain market prices are appreciating quickly and offers are coming in high,” Wannebo said. “ ... It’s wrong in that you know the values aren’t always there.

“The problem is, let’s say you list a property for $300,000 because that’s what the comps show,” he added. “I actually get an offer of up to $350,000. Buyers will overpay for properties if they just want to get into it. (Fannie Mae) is exploiting that aspect.”


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...