Fannie Mae short sales- Valuations

(Quote) A classical work doesn't ever have to be understood entirely. But those who are educated and who are still educating themselves must desire to learn more and more from it.

"Karl Wilhelm Friedrich Schlegel"

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There have been a lot of issues with the Fannie Mae short sale valuations. They are countering offers at a very unrealistic price. Fannie Mae is basically trying to push prices up to minimize their loss. Here is an example:


Lets say you list a property and within 5-10 days you receive an offer. It may or may not be an offer at fair market value but you want to get the short sale package submitted to the lender as soon as possible as shorts sales can take up to 6 months to process maybe even more than that. Even with the shorter time frames we have been seeing with the lenders we will still run into the more difficult deals pushing our time frames up as every deal is unique. The full package gets submitted and because Fannie Mae deals take longer to underwrite we typically do not get a response back for 60-90 days plus or minus to only learn that they are countering at $150,000 hire than your offer. Frustrating, I know but there some actions you can take in the beginning of the process before the short sale gets submitted to the bank. We have talked about this before but with Fannie Mae deals moving forward you really do not have a choice and need to take the following steps if you want to have a successful out come .

Here are some tips to help you structure these deals properly:


1. Use the seller questionnaire in the listing agent packet I created to help you pre qualify your clients. One of the questions on there asks if their loan belongs to Fannie Mae. If they do not know you can log onto the government site to punch in the name , address and social and the system will automatically generate and answer for you.


2. If there is not a sale date ( hopefully you are not taking on transactions with sale dates 2-3- weeks away) we need to market the property for a substantial amount of time. The starting price should be what is owed on the property. I know it will be unrealistic however; we have to create a listing history for Fannie Mae. Keep it at that price for 30 days and then set up two price reductions on the 1st and the 15th of the month. You may need to do more. The goal is to show Fannie Mae where you started ( at what was owed) and where the offers started coming in with the price reductions. You have to be able to back up the offer you are bringing to the table.

3. There are going to be times that you need to take it a step further. If you have a strong listing history and Fannie Mae is still not budging then an appraisal should be ordered. A buyer is not going to pay more than a home is worth period, and at the end of the day the bank gets nothing if all parties cannot come into agreement.


So, having said that; It is important that you understand the potential pitfalls going into a Fannie Mae deal. There may be times you have a smooth experience but I have heard from a lot of frustrated agents and sellers, myself included who are experiencing difficulty. Agents, we need to set proper expectation with a buyer and a seller on these deals . If they don't understand the time frames and what kind of fight we may be looking at you run risk of killing your deal before you even start.
Please note; we can go through all the proper steps and still run into pitfalls. We do the best we can with the information we have at hand.


Short sales are always going to be challenging. That's not going to change and you cannot control what the bank or the investor is going to do on the other end. What you can control is how you effectively and efficiently pre qualify, market the property and create a solid short sale package with no holes which will minimize the pitfalls that you encounter.


Please contact me with any additional questions or concerns you might have.


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...

Another Housing Bubble? Recovery Shows Dangerous Signs, Reports Say

(Quote) “I believe the single most significant decision I can make on a day-to-day basis is my choice of attitude. It is more important than my past, my education, my bankroll, my successes or failures, fame or pain, what other people think of me or say about me, my circumstances, or my position. Attitude keeps me going or cripples my progress. It alone fuels my fire or assaults my hope. When my attitudes are right, there is no barrier too high, no valley too deep, no dream too extreme, no challenge too great for me.”


I wanted to share this article I read in CNN Money this morning. It reminded me of how we can all get our hopes up and then the moment they come crashing down we forget who we are and what we are made of and how we all have special and unique gifts. I feel that when things don't happen quite as we expected them to it is easy to become paralyzed without motivation to move forward. Here is what I know; nothing happens exactly the way we want it to and nothing lasts forever. Life is messy and nothing stays the same. But circumstances do not make up who we are and what we are capable of.


I do not think we are 100% out of the woods with the housing market and I feel there will be some challenges ahead however; this could be a good opportunity to get in touch with your message and special gift that you want to give to the world. Maybe it has nothing to do with Real Estate or maybe there is a special niche in the current Real Estate market you have inside of you to create. Hardships help use tap into our creative self. So what if what we expect to happen doesn't; how are we going to move forward in spite of what is happening around us and be the best we can be? The market doesn't determine our fate, we do.


Another Housing Bubble? Recovery Shows Dangerous Signs, Reports Say- CNN Money


It's impossible to ignore the increasingly loud cheers: The housing recovery is in full swing! Just on Monday, CoreLogic reported that home prices increased more than 8 percent year-over-year in December -- the largest gain in six years, when the boom was at its height. Home sales recently have been the strongest we've seen in a long time (though they are expected to temper in January due to a normal winter slowdown). All of that sounds great, but here's the problem: It seems to be mostly smoke and mirrors.

As CNBC reported, the jump in home prices is on an upward trajectory as dramatic as it was in the boom years. Prices soared 7, 8 and 12 percent year-over-year in the early 2000s, prompting experts to scream that the huge leaps were unsustainable. As we all know, the crash hit shortly thereafter. Now, though home prices are still down by double digits from where they were, the shoot up is happening at a similarly fast and furious pace. Conditions like these are what set us up for the last housing bubble to burst. The question now is: Are we heading for another housing bubble (that will inevitably pop)?

       There's another factor that is also a cause for concern. As David Stockman, former director of the Office of Management and Budget under President Reagan, told Yahoo! Finance, a disproportionately large chunk of home sales has been driven by investors buying up distressed properties and betting on being able to flip them for big profits once prices rise further. But the everyday home buyers (first-time buyers and buyers trading up for larger properties) that investors would need to sell to have been mostly staying out of the real estate market. Financial hardships, continued unemployment (albeit improving) and other factors are keeping them on the sidelines. So when prices reach a level where investors are ready to sell, there may not be many buyers to sell to -- and that could be disastrous for home prices once again.

       "I would say we have a housing bubble again," said Stockman, who recently has been working in the private equity sector. "We don't have a real organic sustainable recovery because, in a world of medicated money by the central bank, things aren't what they appear to be. ... It's happening in the most speculative subprime markets, where massive amounts of 'fast money' is rolling in to buy, to rent, on a speculative basis for a quick trade. And as soon as they conclude prices have moved enough, they'll be gone as fast as they came."


I am always here to assist you in your short sale transactions and help you build a plan of action that is in alignment with what you really want and allow you to sustain in any market. Please feel free to call me with any questions or concerns you might have.


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...

AGENT SHORT SALE QUICK FACTS

 

 

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.

 

 

5.       Fannie Mae and Freddie Mac deals take longer to underwrite so you will want to set expectation with seller and buyer.

 

 

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

 

 

 

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. 

 

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

 

Fannie Mae and Freddie Mac updates

Fannie Mae and Freddie Mac announced changes to their servicing requirements for short sales. Please be aware of the following key changes for all parties involved in a short sale. These changes apply to all Fannie Mae and Freddie Mac short sales, with an offer and without an offer. Title Transfer requirement change: The buyer is prohibited from selling the property for any sales price for a period of 30 days from the date of the deed. After a 30 day period, and until 90 days from the date of the deed, the buyer is further prohibited from selling the property for a sales price greater than 120% of the short sale price. Note: The above restrictions will run with the land and are not personal to the grantee. Below is an example on how to calculate the 120%: Purchase Price is $100,000.00 120% of the purchase price would be $100,000.00 X 1.2 = $120,000.00 Relocation Assistance: The borrower may be entitled to an incentive payment of $3,000 from Fannie Mae / Freddie Mac to assist with relocation expenses following successful completion of a short sale unless: The borrower is required to contribute funds or execute a promissory note. The borrower has Permanent Change of Station (PCS) orders and receives a Dislocation Allowance (DLA) or other government relocation assistance. The servicer has knowledge that the borrower is receiving relocation assistance from another source other than the servicer. Note: If the borrower receives relocation assistance from a source other than Fannie Mae / Freddie Mac or the Servicer, the difference in the relocation assistance amount up to the $3,000 incentive maximum may be provided. If the borrower will receive relocation assistance from a source other than Fannie Mae / Freddie Mac or the Servicer and the amount is equal to or greater than $3,000, no relocation incentive will be provided.

Short sales...What to expect in 2013

2013 is going to be a huge year for short sales. The lenders are going to be working with Realtors to get these transactions closed in a stream lined manner however; how fast they get approved and closed are going to be our responsibility as well. The lenders will be looking for the following:
1. A qualified home owner. There needs to be a valid reason and hardship to justify a short sale. The stronger the hardship the stronger your chances are at getting the short sale approved. This will also give you the ability to set expectations with your client and all other parties involved such as a buyer and the buyers agent.

2. A complete short sale package with no holes. The goal is to get everything submitted whole and complete the first time around. All documents need to be fulled out in its entirety. We have been seeing RPA contracts and RLA contracts coming in without all of the signatures and initials. This slows the process when we have to chase down signatures. In addition; not all lenders accept Doc U Sign. It is a suggestion to always get wet signatures upfront.
Certain lenders require their own financial packets to be completed. The key is to follow the listing agent packet we have designed for Realtors. It is a platform that will ensure that you gather all the appropriate documents specific to your clients lenders. You can contact us directly for a copy if you do not already have one.

3. An offer that makes sense. We need to be able to justify the offer we bring to the table. Lenders will be looking at market time, comparative market analysis vs the offer and what is owed on the property. Conventional and cash deals are always encouraged for short sales and make for a smoother transaction. Government loans take longer to underwrite . If you have a sale date on the property this can cause a problem not to mention if there are costs the short sale lender will not cover buyers with these types of loans in most cases are unable to help with those costs.
We have also seen investors write offers at asking price and then once the lender issues a short sale approval they want to reduce their offer at a price that suits them. That is not how this game works with the lenders and quite honestly it puts all parties involved in a bind especially if there is a future sale date on the property. The duty is to the seller and the lender in the short sale. There are plenty of buyers out there that are willing to pay asking price. If you sense this is taking place then you will need to take the appropriate actions to get the property back on the market and get an offer that will satisfy the bank.

We are here to help you put your transactions together and if the procedure is followed there is success on the other side but it takes the cooperation of all parties to make it happen. It is a suggestion that you contact us before you take a listing so we can discuss the details of the transaction and how it should be structured. We look forward to working with all of you.

A few extra tips
1. If you are a REALTOR putting in an offer on a short sale and representing yourself the lender may not approve your commissions.

2. Lenders are selling off loans to other companies. If you have a short sale in process and this happens your client will receive a letter in the mail with the new lender information. You will need that in order to proceed. A short sale package will need to be submitted and you will most likely have to request updated pay stubs and bank statements from your client.

3. Fannie Mae and Freddie Mac short sales take longer to underwrite. This expectation should be set with all parties.

FROM BANK OF AMERICA
The Bank of America Cooperative Short Sale Program may be able to help your clients complete a short sale if they owe more on their mortgage than their house is worth and do not qualify for the Home Affordable Foreclosure Alternatives (HAFA) short sale program. This program can streamline the approval process and offers financial assistance to help homeowners with relocation and moving expenses.

As of January 15, 2013, there will no longer be a temporary foreclosure hold during the Cooperative Short Sale property marketing phase. We may begin or continue the foreclosure process up until a submitted offer to purchase the property is approved by all relevant parties. Any existing short sale will not be impacted by this change.


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...