Short Sales Simplified

Presented By:The REO Institute of

Colorado

James A. BrowningMRE,CEC,FSP,CREO, SFR, REO Certified, Short Sale

Certified

• Masters in Real Estate • Certified Commercial

Education• Broker/Owner

Browning Group LLC• Liquidated 115+M REO

Properties/last 3 years• 25 years of Commercial

Real Estate Experience• Commercial Director for

CB NRT-17yrs • National

Trainer/CREOBA• CEO/The REO Institute

of Colorado

The Distressed Market,Short Sales, &

Pre-Approved Pricing

2014, 2015, or Longer

Many banks, lenders, & outsourcers are looking for solutions to our current market

problems.

Unknown Quantity

REO, Pre-Foreclosure, Foreclosure, and/or Short Sale

What is the solution?

Pre-Approved Pricing

• Increase residential sales

• Spur recovery

• Complete submission package

The Short Sale Prospect

• Distressed market has the potential of continuing into 2013-2015

• The Broker with education & training can succeed.

• Have compassion.• Ask the right questions.

Property Profile• O & E• Understand the financing on the property.• Additional liens on the home.• NED, NOD, NOI filed?• Sale or Auction date?• Order a payoff- either from the mortgage

company or the foreclosure attorney (10 days)

UNDERSTANDING THE SELLER’S FINANCIAL

CONDITION OR STATUS

• Is the Seller in financial distress?• Request the most recent mortgage

statement.• What are the other financial

stressors?

Seek Tax/Legal Advice

• Recommend the Seller obtains Tax/Legal Advise

• You are not the expert!

• Provide the client with a letter stating these recommendations, and have the Seller receipt for a copy

Acquisition Indebtedness =

• Is incurred by acquiring a property

• Is secured by the residence

• Is secured by the property resulting from a refinance, but not to exceed the original indebtedness

Example:

• A borrower refinances an original note, and then takes a vacation, or purchases a vehicle

• Answer: This indebtedness is taxable

Negative Credit Reporting

• The Seller’s thought process may only be survival today

• Armed with knowledge, the Seller can take steps to improve his/her credit

Credit Basics

• FICO- 35% is made up of payment history• Negative public record information• Severity of delinquency• How recent is the delinquency, and the

number of items on file• Number of accounts paid as mutually

agreed upon

Late Payments

• It is possible to negotiate a short sale without late payments, however it is more difficult

• Both HAFA and FHA require that the seller be delinquent, and display a negative cash flow

Short Sale Listing

Documents

• State or Division required listing contract

• Short Sale Addendum

• Seller Authorization Letter

Approaching the Lender – What’s Next?

• Is the lender open to a short sale?

• What will the conditions be?

• Fannie Mae or Freddie Mac are more motivated then private lenders

• Discuss and negotiate what the seller wants from the lender

LOSS MITIGATION DEPARTMENTS, WHO?

What department?

Who? What?

Wrong number…

“Who’s on first base?”

Get past the call center!

• Loss Mitigation Department• Default Managers• Persistence

• Objective- Where do I need to send the short sale package?

GETTING ALONG WITH THE LOSS MITIGATION DEPARTMENT AND

PREPARATION OF THE SUBMISSION PACKAGE

Submission Package

• One time, with all required docs

• Installments = rejection

• What should be included?

Listing Agreement

• Listing Agreement• Short Sale Addenda• MLS• Website Advertising, Flyer, and any other

marketing or advertising

MARKETING THE SHORT SALE LISTING

Accurately Market

• Listing Broker – your responsibility to accurately represent your listing!

• Continue your education and designations!

Timeframe for Lender’s Response

• Could be the most frustrating aspect• One week… Six or seven months…• What is the requirement for the lender? • The property may have to be listed for a

period prior to acceptance of short sale• Your expertise can make the transaction

much smoother!

Problems and Pitfalls• Loss mitigation departments are overwhelmed

with loan modifications, short sales, & foreclosures

• Subject to final senior management approval• Private mortgage insurance• When your negotiator is no longer employed

there…

Lender Takeovers and Merging

• Reasons – Government influence, cost cutting, bank failure, contract issues, etc

• Decisions are now delayed, who has the file now

• Be prepared to re-submit all docs!

This is everyone’s main concern

What’s the loss and deficiency?

Buyer Cooperation

• Is the Buyer serious?• Is the Buyer going to be patient?

• Is the Buyer going to complete inspections and appraisals?

Education

• Laws, programs, & regulations are changing constantly

• Be familiar with state regulations• Knowledge, disclosure, compliance

Thank you!The REO Institute of Colorado

Congratulations on becoming

Short Sale Certified