1 The Short Sale Process What is a Short Sale? What is a Short Sale? Who Qualifies For a Short Sale?...

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Transcript of 1 The Short Sale Process What is a Short Sale? What is a Short Sale? Who Qualifies For a Short Sale?...

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1 The Short Sale Process What is a Short Sale? What is a Short Sale? Who Qualifies For a Short Sale? Who Qualifies For a Short Sale? What are the Benefits of a Short Sale? What are the Benefits of a Short Sale? What Documents Are Required? What Documents Are Required? What are the Benefits to Attorneys? What are the Benefits to Attorneys? What is Expected in the Process? What is Expected in the Process? Answers to Frequent Questions Answers to Frequent Questions REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Our Presentation Today Will Address the Following: Slide 2 What are a Distressed Homeowners Options? REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 3 What is a Short Sale? The property may be over-leveraged or underwaterThe property may be over-leveraged or underwater The property owner may be behind on mortgage payments & cannot sell for high enough to cover what you owe plus other required fees to close.The property owner may be behind on mortgage payments & cannot sell for high enough to cover what you owe plus other required fees to close. A short sale is an alternative to foreclosureA short sale is an alternative to foreclosure Foreclosing on properties always costs lenders money:Foreclosing on properties always costs lenders money: Attorneys Fees, Taxes, Insurance, Winterization, Vandalism, Weather Damage, Stigma of being REO Weather Damage, Stigma of being REO A Short Sale is when the lender(s) and/or lien holder(s) agree to take less than is owed so the property can be sold. REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 4 Who Qualifies? Experiencing a true financial hardshipExperiencing a true financial hardship Be in default on the mortgageBe in default on the mortgage Facing imminent default while in a Must Sell situationFacing imminent default while in a Must Sell situation NO Equity in the homeNO Equity in the home NO available assetsNO available assets In General to Qualify, the Seller usually is or has: REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 5 Who Qualifies? Most people facing foreclosure or a financial hardship who cannot sell their home for what is owed should qualify for a short sale. Each lender & loan type has a different set of requirements: Each lender & loan type has a different set of requirements: This information can be found on a current mortgage statement or the settlement papers from the previous closing. or the settlement papers from the previous closing. REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 6 The Benefits of a Short Sale NO Foreclosure on CreditNO Foreclosure on Credit Generally NO money needed to closeGenerally NO money needed to close NO repairs necessary Sell AS-ISNO repairs necessary Sell AS-IS NO taxable event for those that qualifyNO taxable event for those that qualify NO deficiency judgment if negotiatedNO deficiency judgment if negotiated Out from underneath your mortgage debtOut from underneath your mortgage debt NO Need to file bankruptcyNO Need to file bankruptcy A positive step towards home ownership in only 2 yrs.A positive step towards home ownership in only 2 yrs. REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 7 The Paperwork Handwritten & Signed Hardship LetterHandwritten & Signed Hardship Letter Explain the situation, when it started, how it happened & what is being done to fix it Explain the situation, when it started, how it happened & what is being done to fix it A Financial WorksheetA Financial Worksheet Everything that is spent on a monthly basis Everything that is spent on a monthly basis 2 Years Most Recent Tax Returns2 Years Most Recent Tax Returns With W-2s & all schedules With W-2s & all schedules 2 Months Recent Bank Statements2 Months Recent Bank Statements All accounts & all pages All accounts & all pages 2 Most Recent Pay-Stubs2 Most Recent Pay-Stubs Or, if unemployed, a statement stating such The Lender Will Require a Minimum of the Following: REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 8 The Paperwork An Authorization to Release Information aka. 3 rd Party AuthorizationAn Authorization to Release Information aka. 3 rd Party Authorization Copy of recent mortgage statement(s)Copy of recent mortgage statement(s) Copy of any correspondence received regarding the propertyCopy of any correspondence received regarding the property from attorneys, lien holder(s), bankruptcy trustee, or probate. from attorneys, lien holder(s), bankruptcy trustee, or probate. Any paperwork regarding any other liens and/or judgments.Any paperwork regarding any other liens and/or judgments. Property tax recordsProperty tax records Information about any Home Owners Association & any outstanding HOA dues owed by the SellerInformation about any Home Owners Association & any outstanding HOA dues owed by the Seller Information about any outstanding assessment/s on the propertyInformation about any outstanding assessment/s on the property Negotiation Disclosures signed & datedNegotiation Disclosures signed & dated To Communicate With the Lender, We Require the Following: REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 9 Pending Foreclosure Date? URGENT MESSAGE If a property is scheduled for a foreclosure sale date, be sure that you contact the Lender immediately. Lenders would rather postpone over 95% of the time than to get the property back. This can be achieved without filing for Bankruptcy. REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 10 The NAR Supports Short Sales November 9, 2008 Short Sales give many families in financial difficulties the possibility of salvaging their credit & avoiding the embarrassment of a foreclosure. Realtors across the country stand ready to help, & NAR will work hard to ensure that short sales are a viable alternative to foreclosures whenever possible. - National Association of Realtors President Richard Gaylord REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 11 The Benefits to You, the Attorney REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Homeowners in distress need solutions from Attorneys because you: Will protect their interests Will protect their interests Have specialized skills Have specialized skills Maintain high ethical standards & integrity Maintain high ethical standards & integrity Offer Win-Win solutions like Short Sales Offer Win-Win solutions like Short Sales Slide 12 What to Expect? 1.Property is Listed & Seller Documents Are Collected 2.Sales Contract Signed 3.You Submit the Short Sale Package 4.The Lender Orders BPO and/or Appraisal 5.You Undergo Negotiations with Lender 6.You Receive Approval From Lender 7.Title Work is Ordered & Completed 8.Property is Sold The Process often takes 3-4 months or longer to complete. Patience & Communication are the Keys to Success! REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 13 What is a Basic Timeline? Get authorization on file with lender 2 daysGet authorization on file with lender 2 days Compile short sale documents 7-14 daysCompile short sale documents 7-14 days Get short sale package on file with lender 3-7 daysGet short sale package on file with lender 3-7 days Short sale package assigned to negotiator 10-14 daysShort sale package assigned to negotiator 10-14 days Get BPO/Appraisal ordered 14-21 daysGet BPO/Appraisal ordered 14-21 days Schedule BPO/Appraisal with agent 5-10 daysSchedule BPO/Appraisal with agent 5-10 days Time for BPO/Appraisal to get to negotiator 21-28 daysTime for BPO/Appraisal to get to negotiator 21-28 days Negotiate & obtain approval from negotiator 15-20 daysNegotiate & obtain approval from negotiator 15-20 days Total: 77-104 daysTotal: 77-104 days This timeline is in no way accurate for every lender. Some lenders are expeditious, others are buried with thousands of short sales & pending foreclosures. FNMA, FDMC, FHA etc. expand this timeline & often work on their own schedules. REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 14 There Are No Guarantees As with any real estate transaction, there are No Guarantees. REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Short Sale Success is Based Upon: Stopping and/or Postponing a Pending Foreclosure Cooperation from any & all Lien Holder(s) Cooperation from & between the Seller & Buyer. Slide 15 Common Mistakes Assuming that the short-sale process is easy & fast Assuming that the short-sale process is easy & fast Listing a property for an amount to cover full payoff Listing a property for an amount to cover full payoff Not understanding that most lenders have a fixed minimum percentage of the BPO they will accept Not understanding that most lenders have a fixed minimum percentage of the BPO they will accept Not preparing for the crucial interior BPO Not preparing for the crucial interior BPO Allowing the BPO to be done without being present Allowing the BPO to be done without being present Sending incomplete short-sale packages Sending incomplete short-sale packages Not being patient & persistent with lenders Not being patient & persistent with lenders Not knowing how to negotiate with lenders Not knowing how to negotiate with lenders REAL ESTATE MITIGATION PROFESSIONALS, LLC Short Sale Specialists Slide 16 Why Are We the Best Decision? We Know the St. Louis Market We Know the St. Louis Market Your Local Team Your Local Team We Know How to Negotiate with Lenders We Know How to Negotiate with Lenders We Are Obligated to Protect Your Interests We Are Obligated to Protect Your Interests Of Files Accepted, Over 95% Completion Rate Of Files Accepted, Over 95% Completion Rate Wholesale & Retail Short Sale