A short sale is a frustrating experience. It can leave the homeowner and even the REALTOR disillusioned and negative about financial institutions in general however, CITI Bank is one of my top 3 Lenders I like to work with. Or should I say debt collector as banks no longer want to be addressed as the lender. Once a home owner defaults on their mortgage they are no longer a servicer of a loan; they became the servicer of a debt. I received an email from a client who was very disturbed by the amount of phone calls they were getting due to their missed mortgage payments. Please do not be mistaken. A short sale will help avoid foreclosure and help reduce the hit to your credit significantly but this does not stop the servicer of the debt from making all attempts to collect.
Additional Documents to include in the short sale package:
As most of the financial institutions, CITI Bank has tightened up their time lines. They want to get short sales off their books as fast as possible. Nevertheless; the deal still needs to make sense and the home owners have to qualify. CITI Bank has their own financial packet that needs to be completed. Some additional documents CITI may ask to include in your short sale package are the Deed of Trust and the original mortgage note. Mortgage coupons for existing payments may need to be provided as well.
Additional Requirements:
CITI Bank requires borrowers to be in default by at least one month and have no means to pay off the mortgage and other existing debts. This is where prequalifying the home owner is important. If you have a home owner who is continuing to make his or her payments, has a nice savings account and a surplus every month after all expenses are paid; they may not be successful with CITI or any other financial institution for that matter unless the home owner is prepared to make a contribution in the form of cash or a new note.
Time Frames:
I love working with CITI Bank because I know what they are looking for. Knowing that, I am not going to submit a package unless I have the following:
a) A qualified seller
b) A qualified buyer (with an offer in line with the value and or listing history so that CITI knows we aggressively marketed the property)
c) A complete short sale package with all of CITI’S applicable documents.
It has been my experience that if I follow these guidelines I will have a BPO ordered in 5-10 business days after submission, a negotiator in 2 weeks and an approval in less than a month. Add to this a 30 day escrow and we are looking at a closing in less than 2 months as opposed to the 3-4 months as most other financial institutions.
Extra tip:
CITI seconds tend to sell off the debt to a collection agency. We want to avoid this at all times. Once the debt gets sold to a collection agency we lose the power of leverage when it comes to the payoff. Most seconds will settle for 10% of the balance. Collection companies will want 30-40% and they will be firm on their request therefore hurting your chances of being successful. My suggestion is if at all possible, have your client make a payment every now and then while the short sale is in process to keep it in the system. This will reduce the risk of this occurrence.
The goal is to work smart. Effective and efficient. Knowing ahead of time what the financial institution requires will allow you to do the following:
a) Take the right deal
b) Gather the applicable documents that are required of that particular financial institution (as each has their own)
c) Educate your client on what to expect.
d) Give you more than enough time to build a solid proposal to get you the results you desire in a timely manner.
Furthermore, building a solid reputation as well which leads to REFERRALS!!
(Quote) It is better to lead from behind and to put others in front, especially when you celebrate victory when nice things occur. You take the front line when there is danger. Then people will appreciate your leadership.
Nelson Mandela
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
Tuesday, February 15, 2011
Friday, February 4, 2011
Friday, January 28, 2011
New Short Sale Rules to Consider in 2011
"The year of the Short Sale"
With one out of five borrowers underwater on their home and an estimated 1.5 million foreclosures scheduled for 2011, the opportunity for short sales will be better than ever. Banks usually see a 20-30% better execution price on a short sale versus an REO sale. With the foreclosure volume and current and pending REO inventories, servicers will be pressed to do more short sales in 2011.
I have done a lot of research into how Banks will be handling short sales this year. It is no secret that when short sales first hit the market there was not a lot of knowledge from REALTORS, homeowners or Banks on how to effectively handle a short sale. Learning has been through trial and error. Each bank has different guidelines and these are changing constantly. In this environment it is critical to know what type of deal to take, and how to properly put a short sale package together.
The good news is lenders are making an effort to minimize the time it takes to close the transaction but in return they will be tightening up their guidelines and will expect all of us to abide those rules if we want to be successful.
Here are some rules to consider this year:
Some of the major Banks including Bank of America, Wells Fargo, Chase and Wachovia will be implementing the following:
· There will be no postponements of Trustee Sales and NO extensions of closings on Short Sale approvals past the approval date. They all want to clean out their inventory as quickly as possible.
· Banks have put systems in place to speed up the short sale approvals. Wachovia has cut their paperwork to 13 pages and will send a representative with the agent to meet the seller and will provide an approval within 14 days. They are also paying a 6% commission. (I have a transaction with Wachovia right now and it has been moving faster than most.)
· Do not call them the “lender” – they were the lender when they made the loan but once the homeowner went into default, they became “Debt Settlement Companies” on the loan. This adds a new perspective to the homeowner that feels that they can stay in the property forever without paying.
· They are not paying attorney fees to attorneys that the borrower has hired to fight the foreclosure. If it shows up on the HUD it will be removed.
· They are not paying third party negotiator fees.
· These companies are willing to work with REALTORS who truly have their client and the bank’s best interest in mind.
· They are paying extra attention to offers that are two low.
With these guidelines in place it is important to make sure that we have the following before submitting a short sale:
A) A qualified seller
B) A listing history
C) A qualified and committed buyer
D) A complete short sale package with all applicable documents
E) A solid proposal (HUD)
I believe that short sales are going to be massive this year and with the Banks finally tightening up and creating better systems and incentives, short sales are going to close much faster.
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.
(Quote) If you want to get somewhere you have to know where you want to go and how to get there. Then never, never, never give up."
Norman Vincent Peale
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
Saturday, January 22, 2011
Thursday, January 20, 2011
Bank of America Short Sales and Equator
I have heard mixed reviews from REALTORS who have tried to negotiate a short sale on their own with Bank of America. Last year when Bank of America introduced their new system for processing short sales, Equator, it was their intention to stream line the short sale process. However, due to the lack of staff training it appeared that we were all flying blind trying to figure this system out. That being said, all great things happen over a period of time and that is what I see has happened with Bank of America.
I have found this lender and the Equator system to be effective, efficient and less time consuming than the old system where you had to fax over a short sale package and you were not sure whether it was received on the other end and whether all the pages went through. YES, that is how the other lenders are still doing it but it is my hope that more lenders will adopt the Equator system. I know GMAC is now using Equator. As we move forward in 2011, there are going to be massive amounts of short sales being submitted. It is my belief that the other lenders should follow Bank of America and GMAC’s lead to become more effective and efficient in getting these closed.
Here are some common complaints:
A) My paperwork seems to get lost when I submit Bank of Americas requests:
When Bank of America assigns a task through Equator they give you a time frame to get that task done. It has been my experience that if I am clear on what the bank is asking for and I am able to collect the right documents and get them uploaded into the system in the time frame that they gave me, my paperwork gets to the right person.
B) Inaccurate Broker Price Opinions:
Bank of America and most other lenders want to see the property listed for 120 days. We typically like to create a listing history for the lender so we have our data to back up the offer we bring to the table. We do a detailed comparative market analysis of the property with 3 active, pending and sold listings, a list of repairs and other detrimental factors that would decrease chances of getting what the bank wants to net. This will help to dispute whatever the BPO agent comes up with. Let’s face it, we all know BPO agents spend 5 minutes taking a few pictures and doing a 2 minute walk through and base their opinion on that. Get used to it, it is not going to change, but if we approach a short sale the right way we will be able to get the negotiator to see our point of view.
C) Unresponsive negotiators:
It is my opinion that there is no reason why you cannot communicate with the negotiator. There are many different avenues you can go through to get the negotiators to respond. Call customer care, email, phone and if all else fails, file a complaint. It is your tenacity that is going to get them to respond. They have hundreds of these on their desk; it is your job to keep it in front of them.
D) Unexpected closed files:
This is very simple to me. Do not submit a package unless it is 100% complete with a fair proposal and all documents attached and make sure you are submitting the documents in the time frame that the Equator system gives you. If you do not submit a complete package there is a good chance that the negotiator on the other end will close out the file or shred what you have sent.
E) Buyers walking:
The process with Bank of America only starts when you have a buyer. If your buyer walks away then you start again. A letter will be sent to your client declining the short sale. Set expectations with the buyers. Make sure you give them a realistic time frame.
I understand the complaints and frustrations REALTORS have in this regard. I personally accept that every short sale is different and every lender and negotiator is different. I know what the lenders are looking for and I stay within those parameters as best as I can and ONLY take the deals that make sense.
Tip of the week:
Bank of America will only cover property taxes for up to 2 years. This does include penalties and interest. If you have a homeowner who is over two years behind, you will want to set expectation with the buyer and structure the offer to cover it.
(Quote :) The leader has to be practical and a realist yet must talk the language of the visionary and the idealist.
~Eric Hoffer
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, January 19, 2011
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