Short Sales For Real Estate Professionals

  • Published on
    16-Apr-2017

  • View
    1.353

  • Download
    3

Transcript

Slide 1

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Introduction toShort-Sales for theReal Estate Professional2009Source: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

2

Objective

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.We want discuss:Our mission to homeowners and the neighborhoods in which they liveBackground and key statistics on delinquencies and workoutsReal estate professionals prospective on current environmentRetention and Liquidation Workout OptionsShort-SalesSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Our Mission

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.MAXIOM is dedicated to:Supporting early intervention efforts to help homeowners stay in homes they can afford and want to keepAvoiding foreclosure when homeownership retention is not possibleReducing credit losses while maintaining neighborhood valuesReducing the percentage of homeowners who go to foreclosure without ever making contact with their servicerSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Personal Communication

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.What percentage of loans are placed into the foreclosure process without any personal contact being made with the borrower?5%10%25%35%50%

Source: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Background

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Loan modifications have been the workout of choice for the last several yearsAs property values decrease, there will likely be an increase in the number of short-sales which will keep REO inventories down and preserve neighborhoodsSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Background

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Its becoming more difficult to negotiate short-sales due to the frequency and size of junior liensMany real estate professionals are new to the short-sale experienceAs short-sales increase, the default servicing industry must re-develop relationships with all partiesSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Key Statistics

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Delinquent Loan Inventory30-days delinquent at record number90-days or greater continue to growForeclosure sales at all time highEnvironmentHousing prices/valuation falling in many areas of the U.S.A.Housing stock with high inventoryTight money supply and credit market makes it harder to obtain financingSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Key Statistics

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.DataCompleting high number of workouts a year75% of Loan Modifications cure for good70% of late stage repayment plans fail versus 40% of early stageServicers report that less than a 50% contact rate with borrowers that went to foreclosure saleRoper survey showed the majority of borrowers do not contact their Servicers, but are willing to talk to a financial counselorSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Workout Options

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Retention:Full or partial reinstatementShort-term or long-term forbearanceRepayment planLoan modificationFHA partial claim / MI claim advanceSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Workout Options

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Liquidation:Full payoffMake whole preforeclosure saleShort-saleDeed-in-Lieu of foreclosureDelinquent loan assumptionSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

What Is A Short-Sale?

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.A short-sale is when the net proceeds from the sale of a property are insufficient to cover the mortgage obligations and closing costs and the seller is unwilling or unable to cover the variance. Property Value$350,000Total Amount Due 1st TD$420,000Sale Price$340,000(97% of Value)Brokerage fees & closing costs($30,600)(9% of Sale Price)Less homeowner paid costs$1,000Payment to $50K 2nd TD($3,000)Net Proceeds$307,400(88% of Value)Shortage/Loss($112,600)20% MI Claim (100% of claim)$84,000Shortage/Loss($28,600)Source: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Parties in Typical Real Estate TransactionAgentsSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Parties In A Short-SaleAgentsSellerHousing CounselorJuniorLienholdersLoanServicersMortgageInvestorMortgageInsurerPrimaryPoolBuyerBuyersLenderHOA LiensSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Short-sale closesSeller contributes to minimize the loss based on abilitySeller avoids foreclosureThe investor and the MI company minimizes lossesReal estate professional closes an additional saleNeighborhood avoids the stigma of foreclosureShort-Sale ProcessSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Who Benefits From A Short-Sale?MI CompanyNeighborhoodServicerInvestorHomeownerReal Estate ProfessionalSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Who Benefits From A Short-Sale?HomeownerSatisfies the debt for less than the full amountAvoids a foreclosure on credit recordAvoids the pursuit of a deficiency or a deficiency judgmentMay avoid reporting of discharged debt to the IRSSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Who Benefits From A Short-Sale?InvestorPotentially reduces losses over the insured amountAvoids an REO and the expenses incurredSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Who Benefits From A Short-Sale?Real Estate ProfessionalEnhances relationships with buyers and sellersIncreases listing inventoryIncreases sales activitiesSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Who Benefits From A Short-Sale?ServicerEnhances relationships with InvestorsAvoids an REO on portfolio loanPotential investor incentives for completed Short-SalesAvoids expensive servicing costs incurred on delinquent loansEnhances goodwill for future businessSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Who Benefits From A Short-Sale?MI CompanyReduces claim lossesAvoids an REO and the expenses incurredSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Who Benefits From A Short-Sale?NeighborhoodKeeps housing values from decliningAllows existing homeowners to keep refinance effortsReduces housing inventorySource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Short-Sale Preparation

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Pre-listing interview with homeowner/ sellerDoes homeowner really want or need to sell?Discuss other workout optionsObtain payoff statementDetermine all contingencies at time of listing (subject to lender approval, etc.)Advise the seller of their financial participation in the sale is a conditionSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Short-Sale Preparation

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Pre-listing interview with homeowner/ sellerTime is of the essenceStart with first trust deedCommunicate with junior lien holder(s) and know their payoff requirementsWhat is required by the sellers servicer (loss mitigation department)See workout documentationSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Documents For A Short-Sale

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.General workout documentationHardship letterSeller financial statementStatements bank, investments, retirement, etc. Recent pay stubs or P&L/Tax returns if self-employedEstimated Seller Closing Cost / HUD-1Complete purchase contract signed by all partiesBuyer FNMA DO/DU or AUS equivalent approvalBuyer Proof of FundsSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Documents For A Short-Sale

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.General workout documentationMortgage statements for all mortgagesSeparation/Divorce agreement or court documentsComparative Market Analysis with model match homes sold, REO, pre-foreclosures, cancelled, and expiredHOA & Property Management InformationReal estate professional visual inspection with repair estimates

Source: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Short-Sale Requirements

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Interior Broker Price Opinion (BPO) with the 90-day as is marketing timeframeSale is always as is conditionWill accept more recent comparable sales to support current valueNet proceeds requiredPercentage of interior BPO valueClosing costs and brokerage feesIncludes any payment to junior lien-holder(s)Sellers financial participation in the transaction based on abilitySource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Short-Sale Obstacles

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Sellers financial participation in sellers closing costsHave better or recent comparable sales availableObtaining buyer loan approval through reputable lendersMust be arms length transaction notarized affidavit if unclearKnow who the owner (investor) of the loan notePresent market value offersNegotiations with all junior liens holdersClear, easy to read documentationSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Short-Sale Obstacles

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Buyer on the Final Settlement Statement (HUD-1) must be same buyer on short-sale lender approvalSeller receives no rebate, proceeds, or commission from saleInclude Power of Attorney when sending HUD-1 to servicerHUD-1 must be Certified True FinalSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Certified True Final

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Who certifies the Final Settlement Statement (HUD-1) as Certified True Final?ServicerClosing AgentReal Estate BrokerInvestorTitle Company

Source: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Short-Sale Obstacles

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Promissory note must be prepared by Freddie MacExecuted promissory note must accompany HUD-1Do not reduce seller cash contribution for closing costChanges on HUD-1 to purchase price or buyer not able to perform will negate the short-saleSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

Resources

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.Reinforce short-sale as a workout option with servicersContinue to educate homeowners to avoid foreclosureRetention optionsLiquidation optionsReal estate professional competency developmentTrainingEducateSeminar / WorkshopsConferencesReference materialsSource: Freddie MacCopyright 2009 Maxiom California Realty All Rights Reserved

MAXIOMCaliforniaRealtyMaxiom Agents. Maximum Results.