HAFA Short Sale Update for Real Estate Pro

Home Affordable Foreclosure Alternatives

September 2011 Making Home Affordable

H Aff d bl F l Alt ti HAFAHome Affordable Foreclosure Alternatives – HAFAThis presentation will cover the following:

1 Welcome

2 Treasury HAFA Overview & Update

3 GSE Overview & Updatep

4 Servicer Overview & Update

5 Discussion/Questions

2September 2011 Making Home Affordable

Home Affordable Foreclosure Alternatives – HAFAOverview


dHAFA Advantages HAFA has key benefits for the homeowner.

Releases homeowner from future liability of mortgage debt

Homeowner receives $3,000 in relocation assistance

Less negative effect on homeowner’s credit score

Homeowner incurs no out‐of‐pocket expensesHomeowner incurs no out‐of‐pocket expenses

Foreclosure cannot take place while the homeowner is being considered for HAFA

Servicer will assign a “relationship manager” to work with the homeowner


dHAFA Advantages HAFA has key benefits for the real estate professional.

Ability to market property as pre‐approved short sale

Sales commission cannot be changed once established

Ability to escalate difficult cases

Transparency in the short sale processTransparency in the short sale process

Foreclosure cannot take place while the homeowner is being considered for HAFA

Servicer will assign a “relationship manager” to work with the homeowner


Wh h G l f HAFA?

Key Components

What are the Goals of HAFA?

Key Components

Release of subordinate liens and l li bili

of the Program

Release of subordinate liens and

of the Program

Provide assistance to homeowners who need to transition to more affordable housing.

personal liability

Financial incentives for homeowners, investors and servicers

Goal 1Provide assistance to homeowners who need to transition to more affordable housing.

personal liability.

Financial incentives for homeowners, investors and servicers.

Uniform documents.

Goal 2 Standardize & streamline the short sale process.

Specified response times and timeframes.

Upfront disclosure of short sale terms and conditions.


HAFA is growing in scope and influence.

HAFA by the Numbersg g p


Source: Making Home Affordable ProgramPerformance Report Through August, 2011

HAFA Resources

Get help with questions about

HAFA at [email protected]


d d i l hTrusted Advisors Escalate Tough Cases

HAMP Solution Center (HSC) helps trusted advisors with cases that are difficult to resolvedifficult to resolve.


ki ff d blMakingHomeAffordable.gov


More Help for Struggling BBorrowers

Foreclosure AlternativesDeed-in-lieu Deed-for-Lease™Short sale

1111

Leave the home: Short sale• A short sale, also known as a pre-foreclosure sale, is when a borrower

sells a home for less than the balance remaining on the mortgage. If the mortgage company agrees to a short sale a borrower can sell thethe mortgage company agrees to a short sale, a borrower can sell the home and pay off all (or a portion of) the mortgage balance with the proceeds. These borrowers may also be eligible for the government’s Home Affordable Foreclosure Alternatives Program (HAFA) which g ( )offers short sale and DIL options.

• A short sale is an alternative to foreclosure and may be an option if a borrower:

– Is ineligible to refinance or modify the mortgage– Is facing a long-term hardship

Is behind on mortgage payments– Is behind on mortgage payments– Owes more on the home than it’s worth– Has not been able to sell the home at a price that covers what is

till d th t

12

still owed on the mortgage– Can no longer afford the home and is ready or needs to leave

Leave the home: Deed-in-Lieu of f lforeclosure

• A Deed-in-Lieu of Foreclosure (DIL) is where a homeowner ( )voluntarily transfers the ownership of a property (the title and all property associated with it) to the owner of the mortgage in exchange for a release from the mortgagemortgage in exchange for a release from the mortgage loan and payments.

• A DIL may be an option if a borrower:– Is ineligible to refinance or modify the mortgage– Is facing a long-term hardship– Is behind on mortgage paymentsIs behind on mortgage payments– Owes more on the home than it’s worth– Doesn’t want to sell the home or hasn’t been able to sell the home

Can no longer afford the home and is ready to leave

13

– Can no longer afford the home and is ready to leave

More Help for Struggling Borrowersp gg g

Outreach• Fannie Mae Mortgage

Help Centers open in 11 markets

• Thousands attend foreclosure prevention events

• KnowYourOptions.com™ provides interactive help

1414

15

Freddie Mac Short Sale OverviewOverview

Mark JohnsonMark Johnson

Loss Mitigation Manager

October 12, 2011

Everyone Benefits From A Short Sale

Homeowner Investor

Prevents foreclosure

Avoids deficiency judgment

S ti fi th d bt f l th

Reduces potential losses

Avoids REO and associated expenses

Satisfies the debt for less than full amount

Avoids stigma of foreclosure

MI Company

Reduces claim losses

A id REO d i t dg

Servicer

Reduces NPL servicing costs

Avoids REO and associated expenses

Receives potential incentives

© Freddie Mac17

Freddie Mac Short Sale OptionsHAFA Programs Classic Short Sale & DIL

Eligibility Criteria • Delinquent more than 60 days • Meet HAMP eligibility criteria

E l t d f th h t ti

Borrowers who are delinquent or in danger of imminent default

• Evaluated for other home retention options No need to be HAMP eligible

Borrower Not required to make any contribution Maximum possible contribution toward Contribution any deficiency from the sale in cash

and/or promissory note

Documentation Uniform documents: Short sale agreement

SAI Uniform documentationForm 710

Request for short sale Approval and denial letters Deed-in-lieu agreement

Property V l ti

Servicer orders a property valuation i th 90 d “ i ” k ti l

Same as HAFA Valuation using the 90-day “as is” marketing value

Price is based on a market sales comparison using the as-is value

Incentives

© Freddie Mac

IncentivesServicerBorrower

$2,200$3,000

$2,200

18

Challenge: Many Real Estate Agents Are New To The Short Sale Experience

Most common challenges:

MI and junior liens are part of the negotiation process

completed short sale package

Postponements and pending foreclosure sale

Deficiency Judgments, Tax implications, Arms Length

© Freddie Mac

gAffidavit

19

Challenge: Getting Agreement Among Multiple Parties

Parties in a Typical Short Sale TransactionThese have up to three times more parties involved

than a typical real estate transaction

Agents

HousingC l

Seller LoanServicer

MortgageInvestor

MortgageInsurer

Buyer

Counselor

JuniorLienholders

Primary Pool

© Freddie Mac

HOALiens

Buyer’sLender

Source – “Effective Short Sale Workouts, Genworth Financial , Inc

20

Freddie Mac Is Improving Short Sale Processes & Increasing Awareness

Streamlined document requirementsStreamlined document requirements

Paying agents full commission

Providing quicker decisions

Implemented training programs for real estateImplemented training programs for real estate agents

Debuted an online learning center Debuted an online learning center

Participating in borrower workshops

© Freddie Mac

nationwide 21

Real Estate Professional Presentation on HAFA Short Sales

Date: October 12, 2011Date: October 12, 2011

Presentation on HAFA Short Sales

22

Chase Foreclosure AlternativesChase Foreclosure Alternatives Map

Short Sale High Level Process Flow

Short Sale Consideration

Short Sale Document Requirements

HAFA Program Overview

Approval of a HAFA Short Sale

HAFA SSA TimelineHAFA SSA Timeline

HAFA Short Sale Benefits

HAFA Short Sale Buyer

HAFA Program Comparison

Chase List Assist

Short Sale Webpage

23

How Can You Help Us?

Short Sale Resources

Chase Foreclosure Alternatives Map

24

Sh t S l P FlEntry PointsEntry Points Liquidation Process Overview

Live

Short Sale Process Flow

DocumentDocumentIntake/SetupIntake/Setup

List AssistList Assist NegotiationNegotiation Quality Quality ReviewsReviews ClosingClosing

St t i Th

Customer Care

TransfersLiveTransfers

• D R i Inbound Triage

R l Ti

Pre-Qualification Underwriting System Maintenance

DenialDenial

Strategic ThemeCollections

ModificationDenials

Document Review

Customer Contact

Missing Document

Letters

File Setup

HAFA Pre-Qual

SSA Production

List Price

Validation

Cash Posting &

Instructions

CBR Coding

HAFA

Maintenance

Real Time

Reviews

HAFA Compliance

GSE Compliance

Investor Policy

HAFA/BAU Review

Offer & HUD

Negotiation

NRV Calculation

Approval/Denial

CHOC’s

Borrower File Setup

Loan Assignment Document

Perfection Loss Recognition

Investor Policy

Internal Policy

Approval/Denial

Communication

ListedOffer

Outreach

Customer Correspondence

25

Sh t S l C id tiShort Sale Consideration

When is a short sale considered?When is a short sale considered?

When the value of the property is less than the outstanding balance of the loan.When the customer is unable to make their mortgage payments due to a hardship and all g g p y pother retention options have failed.

How does a customer qualify for a short sale?

Provide hardship information and proof of hardship.Fi i l diffi lti (l f l t d ti i i t )Financial difficulties (loss of employment, reduction in income, etc.)The loan is delinquent or will be an Imminent Default loan.

26

Borrower R l E t t P f i l

Short Sale Document RequirementsBorrower

– Hardship Affidavit/RMA– Dodd Frank Certification (HAFA)– Letter from any junior lien

Real Estate Professional– Listing agreement (If property is

already on the market)– Proof of MLS

holder(s) agreeing to accept a settlement to release their lien(s)

– Authorization to provide and

– Sales/Purchase Contract with all applicable addenda

– 3 Comparable Active Listings( i d Cl iAuthorization to provide and

release information – allows agent or designee to discuss the account with Chase

– Financial information if required

– HUD (Estimated Closing Statement)

– Financial information if required by the investor or mortgage insurer (MI):• Proof of Income• Two most recent bank• Two most recent bank

statements• Last two years’ tax returns

27

HAFA P O iThe Home Affordable Foreclosure Alternatives (HAFA) Program provides additional options to avoid foreclosure and offers incentives to borrowers, servicers and investors who employ

HAFA Program Overview

avoid foreclosure and offers incentives to borrowers, servicers and investors who employ liquidation strategies (short sale and deed‐in‐lieu) instead of pursuing foreclosure.

The borrower will receive the Short Sale Agreement (SSA) with related documentation It will contain the acceptable list price and the expiration date of thedocumentation. It will contain the acceptable list price and the expiration date of theSSA. The borrower must list the property with a real estate agent at a price that willsupport the minimum net proceeds.

Pre Sale (SSA)

When an offer is received, the borrower will submit a Request for Approval of ShortSale (RASS), along with the required documentation to be approved within 3business days. The servicer will approve the sale, provided it will generate theminimum required net proceeds and will comply with the terms given in the Short Sale Terms and Conditions Agreement.

Offer (RASS)

g

If an offer to purchase a property is made before the servicer provides an SSA, theborrower will submit an Alternative RASS for the servicer’s consideration.

Alternative Rass(ARASS) borrower will submit an Alternative RASS for the servicer s consideration.(ARASS)

28

HAFA Short Sale Approval ProcessAlternative Request for Approval of Short Sale (Alt RASS)

– Negotiator compiles all of the required documentation. – Negotiator will evaluate offer presented and determine if any negotiation is required for the

price, closing costs, etc.Negotiator completes a gain & loss analysis once all negotiations are complete– Negotiator completes a gain & loss analysis once all negotiations are complete.

– The gain loss analysis is presented for short sale approval and may require investor and/or mortgage insurance (MI) carrier approval(s) prior to final Chase internal approval.

– Pre‐Contract Specialist compiles all of the required documentation.

Short Sale Approval (SSA)

– Pre‐Contract Specialist evaluates for HAFA eligibility.– Pre‐Contract Specialist completes a gain & loss analysis once they have values and the

HAFA documents.– The gain & loss analysis is presented for SSA and may require investor and/or mortgage

29

insurance (MI) carrier approval(s) prior to final Chase internal approval.

HAFA Short Sale Agreement Timing

After Borrower responds to HAFA solicitation, Chase must complete and

Borrower submits offer to Chase along

Borrower must contact Chase & accept HAFA

Chase must complete and send SSA to borrower

SSA Marketing Period*

offer to Chase along with the completed RASS

Chase must approve/deny offeroffer

Trigger –Solicitation

14 days 45days 120 days 3 days 10 daysSolicitation

*Chase will not permit an extension after the 120 day SSA marketing period expires*Chase will not permit an extension after the 120 day SSA marketing period expires

30

HAFA Short Sale Benefits

HAFA uses borrower financial and hardship information previously collected for

consideration of a HAMP loan modification.

Allows borrowers to receive pre‐approved short sales terms before listing the p pp g

property.

Requires borrowers to be fully released from future liability for all mortgage debt

(no cash contribution, promissory note, or deficiency judgment is allowed).

Provides $3,000 for borrower relocation assistance.

Provides a $6,000 aggregate cap for subordinate mortgage lien holders.$ , gg g p g g

31

Sales contract must be executed with all appropriate addenda.

HAFA Short Sale Buyer

Buyer(s) must have pre‐approval or commitment letter on letterhead from a lender.

Short Sale must be an “Arm’s Length” transaction * Short Sale must be an “Arm’s Length” transaction.* No agreements permitted between the Seller and the Buyer that the Seller

will remain in the property as a tenant or later obtain title or ownership of the property.

Purchaser may not sell the property within 90 days of closing.

* Servicers have the discretion to approve sales to non‐profit organizations with the stated purpose that Servicers have the discretion to approve sales to non‐profit organizations with the stated purpose that the property will be rented or resold to the borrower, so long as all other HAFA program requirements are met.

32

Treasury HAFA Fannie Mae HAFA Freddie Mac HAFAEffective date April 5, 2010 – December 31, 2012 August 1, 2010 – December 31, 2012 August 1, 2010HAFA short HAMP eligible (delinquent or All Treasury eligibility criteria All Treasury eligibility criteria


HAFA short sale eligibility

HAMP eligible (delinquent or imminent default)

Evaluated for HAMP and other retention options

Not in an active HAMP Trial Plan Chapter 7 & 13 active

bankruptcies

All Treasury eligibility criteria, plus:

Not considered strategic default (able but unwilling to make payments)

Unencumbered assets and cash reserves less than the greater of

All Treasury eligibility criteria, plus:

Borrower must be 60 days delinquent

Unencumbered assets and cash reserves less than the greater of $5,000 or three times the p

Disqualified for HAMP or requested short sale prior to evaluation for HAMP

Vacant no more than 12 months prior to Short Sale Agreement, Alternative Rass or DIL Ag t

g$5,000 or three times the monthly mortgage payment

Low surplus income No foreclosure sale scheduled or

reasonably able to be scheduled within 60 days

ti h di g

5,monthly mortgage payment

Agreement. properties where no pending judgment, judgment, hearing or summary judgment is scheduled within 60 days

HAFA deed in lieu eligibility

At servicer discretion, according to investor requirements

Property listed for at least 120 days at market price, except in specific circumstances

Property listed for at least 120 days at market price under short‐sale agreementspecific circumstances

DIL must accelerate acquisition of property by Fannie Mae, versus foreclosure

No foreclosure sale scheduled within 30 days, unless approved by Fannie Mae

f

sale agreement HAFA DIL approved by Freddie

Mac

Borrower has been evaluated for deed‐for‐lease, if they want to lease the property

Property value Must assess value in accordance with investor guidelines

BPO or appraisal (if required), within 90 days

Interior BPO required, within 30 days 33


34

Chase List Assist program was designed to proactively reach out to customers who have properties listed for sale to assist through the marketing process and collect all

List Assist Departmenthave properties listed for sale to assist through the marketing process and collect all required documentation prior to the offer in an effort to expedite approval.

Through our List Assist team, we have enhanced our short sale efforts and streamlined the process by:

Proactively reaching out to homeowners who have listed their property.

Working to gather the documents, provide guidance on property value and actively

k t th hmarket the home.

Establishing a dedicated team working closely with real estate agents on offers and

valuations.

List Assist agents will also take incoming calls from agents and Borrowers to provide

information and instant contact with a Liquidation agent.

The List Assist agents will explain to the borrower their options, review the short sale

process and request the needed documentation to move forward.

35

Short Sale Webpage• The Short Sale website is easily accessed from the Chase Home page and provides the short sale

information packet and FAQ information about the Chase Short Sale process . The site can be accessed through www.Chase.com/shortsale.

36

Submit all required documentation as soon as possible:

How Can You Help Us?

If an offer is not received on the property, provide an executed listing agreement and MLS listing history.

If offer has been received, provide all information discussed previously.

Help the homeowners in negotiations with subordinate lien holders.

Make sure all required signatures are on the relevant documents.

Set reasonable expectations on timelines and valuations.

Ensure that the proposed transaction is at “Arm’s Length.”

Make every effort to ensure title and escrow are scheduled to close within the approved timeframe.

37

•Chase Borrowers can be referred to the following:

Short Sale ResourcesChase Borrowers can be referred to the following:

•Toll‐free number: 1‐866‐233‐5320•Or

•Access the Chase Short Sale website•Access the Chase Short Sale website •On line at https://www.chase.com/shortsale

•Or Locate a Chase Homeownership CenterLocate a Chase Homeownership Center

•On line at chase.com/HomeownershipCenter

Short Sale Fax Line: 1‐866‐220‐4130

38

Default LiquidationsDefault LiquidationsShort SalesShort SalesAbel Fregoso, JrgVice PresidentNational Field Short Sales

October 2011

Potential for Acceleration – Short Sale Activity

From a rate of 7.8% (Q1 2009), residential delinquency rates continued to rise to a high of 11.3% (Q2 2010). During the last 6 months of 2010 rates declined to a low 10.0% (Q4 2010). Q1 2011 reflected an upward trend to 10.2% - Q2 2011 pending. Revisions to the 2010 and Q1/Q2 2011 GDP numbers show less economic activity Revisions to the 2010 and Q1/Q2 2011 GDP numbers show less economic activity than previously reported, and no material improvement in new jobs or the current level of unemployment – the factors will remain a strong influence on the residential housing market. 40

Wells Fargo is primarily a Lender and a Servicer, with 81% of the loans serviced by Wells Fargo, owned by outside investors.

Wells Fargo’s Loan Servicing by Investor Type

Wells Fargo Loan Servicing By Investor Ownership

(as of 2nd Quarter 2011)1

yp

19% of the loans serviced by Wells Fargo are also owned by Wells Fargo:

• Roughly 26% of this is Wachovia Pick-a-Pay, which came to Wells Fargo as part

f

69% of the loans serviced byWells Fargo are owned/guaranteed by Fannie Mae*, Freddie Mac*, and Ginnie Mae:

(as of 2nd Quarter 2011)1

19%of the Wachovia acquisition.

• A portion is also Wells Fargo Home Equity and Wells Fargo Financial.

Mac , and Ginnie Mae:

• FNMA and FHLMC buy loans up to a “conventional loan limit” now $417,000 inmost markets.

12% f th l i d b

69% 12%

• GNMA buys FHA and VA-insured loans, which provide mortgage funding forhomeowners with little cash toput down or U.S. Veterans.

12% of the loans serviced by Wells Fargo are owned by private investors.

• Private investors include pensionfunds, investment houses, banks, and insurance companies.

• Includes “America’s Servicing Company,” or ASC loans, which are loans that Wells Fargo did not originate or underwrite, and which were serviced

* Fannie Mae = FNMA, Freddie Mac = FHLMC, Ginnie Mae = GNMA

under the ASC name. We only maintain the servicing rights to these loans, we are not the end investor.

1 Includes all residential mortgage loans serviced within Wells Fargo (WFHM, WFF, HE) and Wachovia (including PaP)

Confidential. For review only in Wells Fargo approved meetings. Not to be copied, shared or distributed beyond members of the approved meeting.

Strategic Partnership – Wells Fargo and Our REALTOR® PartnersREALTOR Partners

Wells Fargo’s primary concern and obligation is to our customers and investors. Our goal is to exhaust all efforts to help customers remain in their homes through various workout options.

Once home retention efforts are no longer an option, Wells Fargo continues to work diligently to provide alternatives to foreclosure through short sales or deeds-in-lieu of foreclosure. Our last resort is to foreclose.

Our partnership with experienced real estate brokers and their agents, familiar with the management of distressed real estate, is key to our success and commitment to quality service. Our REALTOR® Partners’ expertise helps us to deliver timely solutions to assist customers, minimize losses to investors, and help to rebuild and stabilize our to assist customers, minimize losses to investors, and help to rebuild and stabilize our communities.

These are unprecedented times in our industry, and now more than ever it is critical that we partner together as leaders in driving solutions and results to help in the p g g precovery of a strong housing market.

Our REALTOR® Partners help us by providing their:- Familiarity with local market trends and community goals

42

y y g- Established relationships with the real estate community- Expert knowledge in short sale and REO liquidations- Strong customer service and communication skills

A Short Sale Benefits Everyone

Short Sales: Excellent Alternative to Foreclosure

Customer BenefitsAlternative to foreclosure with planned & graceful exit Wells Fargo or Investor

A Short Sale Benefits Everyone…

Alternative to foreclosure with planned & graceful exit, Wells Fargo or Investor pays closing costs and incentives in certain cases, credit report reflects “Settled for Less than Owed.”

Buyer BenefitsBuyer BenefitsUsually home is in better condition than buying a foreclosed property. Wells Fargo or Investor pays some closing costs.

Investor BenefitsInvestor BenefitsSavings over REO, reduced losses and corporate advances, eliminates non-performing asset.

J i Li H ld B fit Junior Lien Holder Benefits Higher debt payment resulting from short sale versus foreclosure transaction.

Community BenefitsOccupied and maintained properties, stabilizing neighborhoods, preventing vandalism and other crime.

43

Our HAFA Strategy

Regular Short

•Filter incoming workload using consistent metrics to control

HAMP Eligible

HAMP Fallout

Sales and direct the inventory

Determine PathDetermine Path

•Consider HAFA first; proprietary Short Sales /

HAFAInventory

Proprietary

Short Sale

p p y /DIL second

•HAFA inventory and the Proprietary inventory are Sale

InventoryProprietary inventory are going to remain distinctly separate.

44

Primary Concerns or Myths Surrounding Short SalesShort Sales

Primary Concerns and Myths

Top concerns provided through external surveys and our own internal escalated complaints.

Difficulty of obtaining mortgage financing – appraisals a special sore spot.

Fall-off in First Time Homebuyers affects overall demand.

Banks are holding shadow inventory in the hopes values will increase.

Lost documentation, multiple submissions.

Short sale process takes too long and I lose potential buyersShort sale process takes too long and I lose potential buyers.

There are a number of decision makers involved in a short sale – the ti i l d th l th b All more parties involved, the more complex the process becomes. All

parties must be aligned before the home can be sold, i.e., investors, second lien holders, and mortgage insurance.

45

Most importantly, this is not a typical buy-sell transaction.

Partnering to Improve the Short Sale ProcessWe have worked to improve our processes and communications regarding short sale transactions. We hear your concerns and are working diligently to reduce the completion timeline and improve communication.

Internal Improvements to Short Sale Process Staff resources have been increased by 57% over the last 12 months to ensure forecasted volumes can be

managed

your concerns and are working diligently to reduce the completion timeline and improve communication.

managed. Proactive marketing efforts to provide information and education on short sale workout alternatives to customers. Wells Fargo is leveraging new technology (Equator) to provide a rules-based work flow system with direct portal

access for agents and customers. Process Re-Engineering project for all operation sites will allow for alignment between sites and investors and best

practices.p Our field negotiator team and branch offices are expanding to support more difficult markets for customer face-to-

face assistance, and for seminars and training for agents. Integrating ServiceLink and Stewart Lender Services as 3rd party providers for Short Sales overflow. Automated Valuation requests for Short Sales Marketing campaigns. Short Sales Fraud monitoring through CoreLogic.Short Sales Fraud monitoring through CoreLogic.

Wells Fargo is Persistent and Continuously Focused on Third Parties to Improve the Short Sale Process Wells Fargo has led discussions with Fannie Mae and Freddie Mac, resulting in increased delegation authority,

foreclosure prevention, and streamlining processes. These efforts have resulted in industry wide solutions.foreclosure prevention, and streamlining processes. These efforts have resulted in industry wide solutions. We have partnered with Treasury to provide guidance on rules for the HAFA program. Expanding our REALTOR® Finder Tool to leverage experienced agents in all markets for referring our customers. Participation in Congressional Hearings and other government meetings to further educate and inform on existing

processes and concerns.

Communication and Education Multiple communication materials have been prepared for HMC’s, Agents, Customers and Real Estate Consultants Cine-meetings were conducted to provide consistent information across the country to address concerns and

provide detailed steps necessary to complete a successful short sale. 46

Challenges in the Short Sale Process

Portfolio is serviced for other investors, and may require obtaining investor approval from Freddie Mac, Fannie Mae, etc.

Mortgage Insurers & Junior Lien Holders take longer to respond and may want cash contributions or promissory notes from the customernotes from the customer.

Not all customers have a valid hardship, however many seek to dispose of their property via a short sale transaction.

Not all buyers can be qualified to purchase – bad credit and/or limited cash for closing.

High HAFA fallout rates; HAFA program limits qualified g ; p g qproperties, however, can review for proprietary programs.

Technology in market place for short sale processing is in the early stage of adoption industry wide and still needs the early stage of adoption industry wide and still needs improvement.

Some jurisdictions and investors are not allowing f l l t t

47

Information to Help You and Your Clients

Understanding Short Salesp

in the Short Sale Process

Short Sale Overview

How the Process Works• Bank of America is the negotiator between the seller and the investor.

M l h lti l i t h t b ti fi d• Many loans have multiple investors who must be satisfied.• We have 500+ investors, and each can set different policies.

Communication

Investors (Own the Loans)

Real Estate Agent(Selling the Property)

R h 1st lien investors

Mortgage insurer

2nd lien investors

Home equity loans

Represents the distressed homeowner

Identifies and obtains the releases of all non-Bank of America liens

(Mortgage Servicer)

Services the distressed homeowner

Has an obligation to

Communication

liensuphold investor requirements

Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation49

Short Sale Overview

Two PathsHomeowners have two paths to successfully complete a short sale.

I do nothave an offer to

purchase my home

I have an ff t

Homeowner Wanting to Short Sell


offer to purchase my home


Short Sale OverviewI do nothave an offer to

purchase my home

Initiating a Short Sale Before There’s an Offer



Provides numerous benefits if the homeowner is eligible and qualifies for a pre-offer program.

Homeowner Benefits Process Benefits

• $ - Relocation assistance.• Deficiency may be waived.

– The mortgage debt may be settled through the program

• Foreclosure hold, if applicable (subject to specific conditions). • Faster decisions – within 10 business days

once an offer is submittedsettled through the program.• Cash contributions or

promissory notes may not be required.

once an offer is submitted.

Agent Benefits

• Suggested list price is provided prior to gg p p pmarketing the home.• Most elements of the short sale process are

addressed upfront (including commission) rather than at the end.

Note: When the homeowner initiates ashort sale before there’s an offer, allprogram options are explored: HAFA, cooperative, traditional, etc.


The Short Sale Process – a Detailed Look

Path No. 1: Initiating Without an OfferThe steps involved when you initiate a short sale before you have an offer.

Initiation 1. Initiate short sale and begin negotiating any 2nd liens not serviced by Bank of America.

Borrower Outreach 2. Upload the 3rd Party Authorization. Complete the Borrower Contact Information task.

If the homeowner qualifies for HAFA, continue to…t e o eo e qua es o , co t ue to

Document Collection 3. Upload required documents to the Equator Library within 14 calendar days.

Underwriting 4. The short sale and the homeowner’s financial situation receive a deeper review. No agent action required.

Valuations 5. Coordinate access to the property, if needed. Notify the short sale specialist when you have mailed and uploaded the signed Short Sale Agreement.

Marketing 6. List and promote the property to potential buyers for up to 120 calendar days.

Offer Submission 7. Submit the short sale offer and supporting documentation.

Offer Analysis 8. Come to an agreement with the investor on terms of offer and determine closing date.

Closing 9. Complete the short sale by the date noted in the approval letter.


g p y pp

The Short Sale Process – a Detailed Look

Path No. 2: Initiating Without an OfferThe steps involved when you initiate a short sale before you have an offer.

If the homeowner qualifies for HAFA, continue to…

Initiation 1. Initiate short sale and begin negotiating any 2nd liens not serviced by Bank of America.

Borrower Outreach 2. Upload the 3rd Party Authorization. Complete the Borrower Contact Information task.

What if the homeowner does not qualify?t e o eo e qua es o , co t ue to

Document Collection 3. Upload required documents to the Equator Library within 14 calendar days.

Underwriting 4. The short sale and the homeowner’s financial situation receive a deeper review. No agent action required.

• Homeowner and agent will be notified.• Equator record will be closed.

at t e o eo e does ot qua y

Valuations 5. Coordinate access to the property, if needed. Notify the short sale specialist when you have mailed and uploaded the signed Short Sale Agreement.

Marketing 6. List and promote the property to potential buyers for up to 120 calendar days.

• Agent and homeowner should market the property.

• Agent should initiate a new short sale in Equator once there is an offer on the property

Offer Submission 7. Submit the short sale offer and supporting documentation.

Offer Analysis 8. Come to an agreement with the investor on terms of offer and determine closing date.

Closing 9. Complete the short sale by the date noted in the approval letter.

Equator once there is an offer on the property.

Not intended nor authorized for consumer distribution. Bank of America: Proprietary. © 2011 Bank of America Corporation

g p y pp

53

Short Sale Overview

The Process Steps Are the Same in Both PathsBut you get a huge timeline benefit by completing steps in advance of your offerof your offer.

Path No. 1: Initiating before offer…Path No. 1: Initiating before offer…

$

Offe

r $

InitiationInitiation Borrower OutreachBorrower Outreach

Document CollectionDocument Collection ValuationValuation MarketingMarketing Offer

AnalysisOffer

Analysis ClosingClosing

Decision in 10

Program EligibilityReview

Collect Homeowne

r

Determine Home

Value &

List Home For Sale

Submit Offer

* HAFA only. For other pre-offer programs, the time may vary.

Path No 2: Initiating after offer

0

Days!*Documents Sign Program

Agreement

Path No. 2: Initiating after offer…

$ O

ffer

$

InitiationInitiation Borrower OutreachBorrower Outreach

Document CollectionDocument Collection ValuationValuation Offer

AnalysisOffer

Analysis ClosingClosing

Negotiate Offer,

Submit to

Determine Home Value

HAFA Interest?

Collect Documents


Investor,Renegotiate

Short Sale Overview

Path 1: Before There’s an Offer Path 2: After There’s an Offer

Comparison of Paths

General Qualifications Each customers situation is considered separately by investors.

For HAFA program features including qualifications please refer to HAFA Education Guide.

Each customers situation is considered separately by investors.

Timeline for Decisions After Offer Is Received

HAFA - within 10 business days. For other pre-offer programs, the time may vary. 50 days on average.

Cash/Promissory Note HAFA – none. For other pre-offer programs, the investor/insurer may require. The investor/insurer may require.

HAFA – none For other pre-offer programs theDeficiency Pursued HAFA none. For other pre offer programs, the investor/insurer may require. The investor may retain the right .

Foreclosure Holds Auto hold once Short Sale Agreement is executed (subject to specific conditions) Vary by investor; require investor approval.

Suggested List Price Provided. Not provided.

Approval/ Closure Rates High after qualification. Low-medium.

Relocation Assistance HAFA – $3,000. For other pre-offer programs, the amount will vary. None.

Unrealized Short Sale Optional deed in lieu of foreclosure Optional deed in lieu of foreclosure


Unrealized Short Sale Optional deed in lieu of foreclosure. Optional deed in lieu of foreclosure.

Short Sale Tips

Three Key Steps for Real Estate AgentsEngage Homeowners Early

11 • Find out if the homeowner owes more than the home’s fair market value.• Discuss short sale opportunities during initial conversations with the homeowner.– If the homeowner would like to better understand their options or initiate the short sale themselves,

encourage them to call Customer Care at 1.866.880.1232.

• Explain the short sale process and how it can help avoid foreclosure.

22Contact Bank of America Before the Home Is Listed• Initiate the short sale in Equator – even if you don’t yet have an offer22 Initiate the short sale in Equator even if you don t yet have an offer.– The homeowner may be required to contact Customer Care to discuss participation in one of our

pre-offer programs, such as HAFA. If the homeowner isn’t eligible for a pre-offer program, then next action is to market the home, obtain an offer and initiate new short sale in Equator.

Complete Required Tasks on Time

33Complete Required Tasks on Time• Make sure all tasks are completed as soon as possible in Equator. • Provide necessary documents as soon as possible to keep the process moving

forward.


• Communicate with your short sale specialist via Equator to reduce delays.

bankofamerica.com/realestateagent

Bank of America’s Real Estate Agent Resource Center• Important news and updates about the short sale process and

enhancementsenhancements • Online subscriptions

to keep you informed via email updatesvia email updates• Free webinar replays• Education library of

important documentsimportant documents,including tips to a successful short sale• Events • Important links • Contact information


Understanding Short Sales

Commitment to Continued ImprovementBank of America clearly recognizes the need for continued improvement in

f ffthe short sale process and is committed to identifying new and different ways to make the process transparent and efficient.

New ApproachesNew Approaches To Reduce Processing Times Where to Locate Additional Information

• Ongoing collection of feedback on process, people, and technology

Real Estate Agent Resource Centerbankofamerica.com/realestateagent

• Right-sized staff to meet service level expectations; dedicated team of short sale professionals

• Enhanced our technology; monthly upgrades ongoing

Dedicated Customer Care1.866.880.1232Monday – Friday 8 a.m. to 10 p.m.; Saturday 9 a.m. to 5:30 p.m. Eastern.

For homeowners:upgrades ongoing

• Resources for short sale education

For homeowners:Bank of America Home Loan Assistancebankofamerica.com/homeloanhelp


Questions?
