Mitigation Specialists Short Sale Presentation_revised1

8/6/2019 Mitigation Specialists Short Sale Presentation_revised1

http://slidepdf.com/reader/full/mitigation-specialists-short-sale-presentationrevised1 1/28

SHORT SALE SPECIALISTS AND CONSULTANTSMSMITIGATION SPECIALISTS

OF FLORIDA



Disclosure: Consumers First Titis not a law firm. The peopl

speaking today are not attorneyand this discussion should in no

way be construed as legal advicThe information being providedyou today has been obtained throur underwriter and other variou

public resources.



What is Short Sale?

A Short Sale permits the borrower to avoid Forecloby selling the property to an unrelated third party famount that is less than the outstanding principalbalance in exchange for a release of the real propefrom the lien of the mortgage.

The difference between the accepted sales amountthe loan balance is called a deficiency.

Short Sale and Pre-Foreclosure Sale are synonym



A Short Sale Might Be Option When…

A home is worth less than is owedHow do I know if the home is worth less than what is owed?Fair Market Value - Closing Costs (NET Value) < Total Amount Ow

The potential seller has a demonstra

financial hardshipWhat constitutes a hardship?A situation that has a life changing effect for the borrower that resuability to pay the mortgage debt in either, short or long term.Some examples are: Separation or Divorce

Health Issues/Medical Bills Death of Spouse Job Relocation Reduced Income or Unemployment Business Failure Inability to pay higher adjusted interest rate on the mortgage Bankruptcy



Cont…

The potential seller can submit all reverification and documentation tlender within the timeframe

What is the required documentation?

It varies by lender but in most cases is a hardship letter, financial stlast (2) bank statements, pay stubs, tax returns.

Subordinate lien holders are willingaccept little or nothing



But How Much Time Do I HLender File

(Lis P

20 days

If you Do Not respond

Motion for SummaryFinal Judgment

1 Week to 45 Days

Final Judgment ofMortgage Foreclosure

20-60 Days

SALE DATE!

Notice of Sale is published with location,date, time once a week for two weeksthe last being at least 5 days from the

date of the sale.

Clerk issues Certifto winning bid

property goes bac

RE

AN UNCONTESTEDForeclosure TAKESAPPROXIMATELY 5

MONTHS



Why would the lender agree to a Short The mortgage is in default or ForeclosureThe property is in poor condition

The homeowner has suffered a hardship and can no longer afford paThe area or neighborhood has depreciated in value

New homes in the area are being chosen over existing homeThe bank's shareholders are concerned when there are too many defaulting loan

Some banks are required to have loss reserves of 6 times the retail value of eacAn REO is a liability, not an asset , and too many liabilities will cause

Why would a lender NOT agree to a ShorThe seller has financial ability to pay, supply funds to close or can rThe seller has filed for bankruptcy protection (consult a legal profe

Seller isn’t willing to actively participate in providing documentation accordiTwo-thirds of all mortgages are securitized and sold on Wall Street. Servicersagreements with Wall Street investors that limit their ability to modify the term

Carrying out a Foreclosure eliminates junior liensThe lender is covered by private mortgage insurance

What Motivates the Lend



Benefits to the SellerCredit rating can be preserved

A Short Sale is bad for your credit, but not nearly as bad as aForeclosure. Typically with a Foreclosure or Deed in Lieu it years to get a mortgage with a decent interest rate as when yShort Sale your property it only takes 18 months to two year

A Short Sale is considered a “Pre-Foreclosure redemption status”(Credit report can reflect “Settled for less that full amount owed”, “Paid 0

payments”, “Paid was 30”, “Paid as agreed”)(FICO says Foreclosure status usually drops score by 250-280 points and

Sale by only 80-100)

Less stressful than Foreclosure

Allows the opportunity to negotiaterating and deficiency judgments ther

preserving other assets



Potential Short Sale PitfaWhat about the deficiency?

The bank can pursue a deficiency judgment sometime in theThis must be negotiated UP FRONT!

Tax implication to the seller (debt “forgivcan result in 1099 incomeIn December 2007, the United States Government passed ("Cancellation Relief Act"). The Act amends the Internal Revto exclude from gross income amounts attributable to a dischto January 1, 2010, of indebtedness incurred to acquire a prinresidence.

If the property was acquired as an investment property thereother alternatives to limiting the potential tax liability resultisale.

* Always consult with a licensed account for guidance.



Potential Short Sale PitfaIt can take up to 60-90 days to get approv

some lendersThe buyer making the offer has to be aware that this is a timand the reward for patience is getting a great deal!Typical guidelines for frontline acceptance:

FREDDIEMAC 92%Fannie Mae 90%VA 88%FHA 82%OTHERS 80%

Meeting all lender timeframes is paramouYou are not only dealing with the Foreclosure timeline but ifand counteroffers are not received in a timely manner the filout.



Short Sale Approval Proc

General ProcessIdentify the property and seller as Shcandidate (loan to value, hardship,

List the property at Fair Market

Borrower (seller) should maFIRST call to lender

Borrowers (sellers) fill out “third

authorization formComplete the “financial package”submitted to the lender

Find a buyer



A Complete PackageYour cover letterItems in borrowers financial packageA signed and ratified listing agreementA sales contract signed by buyer & seller, subjec

Lender Approval

An estimated settlement statement (NET Sheet)Proof of buyer’s financing (pre-approval letter, s

funds)Comparables/Listing historyTitle reportJunior lien holder release agreement/Payoff

*Make sure to negotiate all liens at the same time.



What Are The Other OptioMortgage ModificationA loan modification can accomplish changing the terms of the or

Loan agreement (mortgage or note) by either extending the tthe loan and/or reducing the interest rate whereby the monthpayments go down. Sometimes even the principal amount obe reduced based on the current value of the property.

The lenders take into consideration:The terms of the Note and MortgageThe equity ratios of the propertyThe status of titleThe borrowers current financial situationForbearance AgreementOnce a loan is accelerated, the client has the option of pursuing a

Forbearance Agreement which allows borrowers a reasonablopportunity to cure arrearages and remain current on future

payments.Deed In-Lieu of ForeclosureThe Deed In-Lieu of Foreclosure permits the lender to gain own

and possession of the property quickly and at a lower cost thobtaining the same property through Foreclosure. The borrowable to avoid a Foreclosure judgment.

http://www.smithhiattdiaz.com/lm_mortgage_mod.htm

http://www.smithhiattdiaz.com/lm_forbearance_agreement.htm

http://www.smithhiattdiaz.com/lm_deed_fore.htm

http://www.smithhiattdiaz.com/lm_deed_fore.htm

http://www.smithhiattdiaz.com/lm_forbearance_agreement.htm

http://www.smithhiattdiaz.com/lm_mortgage_mod.htm



Options vs Short SaleIn order of best to worst:

Loan ModificationThis minimally effects your credit especially if you haven't fbehind on your paymentsForbearance AgreementMinimally effects credit only to the extent of your delinquenShort Sale

Same as “Paid as Agreed” or “Settled for Less than Full AmOwed”. Either waived deficiency (possible 1099-C Issues) opayment for deficiency (no 1099-C issues).Deed in LieuSame as “Voluntary Repossession”. Avoid Foreclosure judgStill have deficiency judgment and 1099-A-C issues based o

(appraised value).ForeclosureInvoluntary Repossession of property and Foreclosure judgmStill have deficiency judgment and 1099-A-C issues based ogross bid price.

* You should always explain to your client what their options are



MITIGATION SPECIALISTS OF FLORIDA

AGENTS: Do you have the Short Sale Business but not the Time?Let the Mitigation Specialists of Florida assist you and your clients

in completing the necessary paperwork and handle the negotiations with the bank.

Let our Pre-foreclosure and Short Sale Experts handle yourShort Sale needs allowing you to do what you do best!

The Mitigation Specialists of South Florida Will:

Provide you with the document requirements as they pertain to each individual lender

Assist you and your client in filling out the necessary forms

Deal directly with the lender to negotiate the existing mortgage(s)

Negotiate other debt and liens on the property

Prepare the Net Sheet for the bank

Handle the sellers side of the transaction

Leaving You More Time To:

Help homeowners avoid foreclosure

Avoid the time and frustration of negotiating with lenders

Boost your volume and close more deals

Increase your bottom line

MSITIGATION SPECIALISTS

OF FLORIDA

MSMITIGATION SPECIALISTSOF FLORIDA

Call Michele Streda to find out how to simplify your next Short Sale transaction.

(954) 340-5150 [email protected]



























Documents

Mitigation Specialists Short Sale Presentation_revised1