Short Sale Mitigation, Consumers Should Be Warned! (Mitigation Firms)

Distressed property owners suffer the confusion of solution along with the stresses of their financial hardships. Once a default filing reaches the public 411, every joker and legitimate provider of pre-foreclosure services gets the memo. Mortgage Brokers, Realtors, Mitigation Attorneys, Investors and Short Sale Scam Artists prey on the chance for their piece of the buck.

One solution offered to distressed homeowners is the use of Mitigation Services provided by firms qualified in their State to provide these services. For example in California, they are most likely Legal Firms. The Legal approach to negotiating with lenders adds the sledgehammer in cases for example, when it is discovered that when the mortgage was originated, the consumer disclosures were not properly executed. Law Firms are poised with the perceived authority they personify to the public, though it has been debated by many lenders as to their effectiveness over other solutions offered by Brokerages staffed with Short Sale Specialists. Re-finance is commonly impossible.

Mitigation Firms have proved to be an exceptional way for many distressed homeowners to save themselves by saving their homes. If that is your situation, I would not call a real estate firm until after the modification process proved a disqualification. The banks are not going to throw you under the bus if your mortgage is tied to HEMP or HAFA guidelines. HEMP and HAFA are government mandates President Obama rushed through to squash the red tape in the pre-foreclosure process and to help restore pride of homeownership to millions of Americans. HEMP relates to Modification and HAFA tags on HEMP with Short Sale guidelines and protocol. While the programs have honorable intent, there are many mortgages in default which are exempt from these governmental compliances. This is one example where Mitigation Firms provide an equitable and valued Consumer Service.

Here is the Warning! Many Mitigation Firms make their money on Advance Fees, often disclosed as Fees for Service. When you examine the services and fees due in phases, the bulk of the fee is more like a nonrefundable retainer in exchange for the same roundup of the homeowner’s documents and Short Sale packaging as would be included in the Brokerage Commissions paid in the sale of the property. There is a New School of Real Estate Short Sale Specialists out their trained in these pre-foreclosure lender regiments and can supplement the Short Sale Banks bottom-line more equitably. The advice here would be that before signing any Agreement for Mitigation Services, it would be wise to forward the agreement to a second Mitigation Expert, Attorney or Specialist for a Consultation.

Copyright © Bryan Ridgley



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Looking For Where the Short Sale Cheese Moved?

Agents are scrambling to find out how the latest (HEMP, HAFA, Equator, etc.) changes will pan out in real practice. With all of the proliferating awareness of these moves to streamline our American disaster, the Short Sale, it isn’t surprising so much confusion exists.

While the pre-foreclosure real estate market tanked homeowners into immediate REO status, governmental halts came quickly to help distressed borrowers save their American dream. The saving graces, while difficult to completely implement overnight, are promising to many homeowners whom are otherwise thrown under the bus. While this is appeasing to the homeowners, the real estate industry is faced with the challenges of immense changes in both approval guidelines and the new apparently REO minded procedures of facilitation demanded by Equator program Servicers. It was announced last month that Bank of America contracted a major portion of its defaults to the use of the Equator system.

Given the complexities of these changes, the entire prospecting map Realtors drove toward fishing out these distressed property opportunities is also on the fast track for change. One of the captivating value propositions of Equator to Agents today is that they believe that by creating an account with the site will automatically grant them assignments from Equators participating Asset Managers. This may prove to be a fantasy driven premise as other 3rd Party ‘Mining the Minors’ entrepreneurs like Mitigation Firms slip in to the process before a Brokerage file can open with the Active listing.

Agents need to “Know what they don’t KNOW” if they intend on getting their slice of this phantom pie referred to as a Short Sale or Pre-foreclosure Sale. The word on the street is that Short Sale transactions will be taking over the marketplace and representing over 60% of the closed transaction comps in every county across the nation. With the combination of Specialty trainings, Designations and higher level education, Agents who resist placing the investment of this education in themselves will have to find a secondary career, while the innovators of common sense will prevail as is often the case.

I teach Real Estate Agents where the Cheese is today! Find out more at:

https://sites.google.com/site/oraclegroupmain/courses

Copyright © 2010 Bryan Ridgley



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Home Buyer Events or Seminars

There are so many little changes that occur almost daily in our industry. Interest rates, lending programs, guidelines, HEMP, HAFA, Short Sale and REO content are being published so often by every media giant known. The Newspapers sell HEADLINES; we can sell ourselves by being the best STORY of content to our data bases and our Events, based on those headlines. Events that appear “Out of the Box” in contrast to these headlines may provoke the greatest amount to activity. Be sure to back up anything and everything you advertise and be prepared to communicate this content with the guise of mission.

You can team up with affiliated vendors in areas of Lending, Taxation, Estate Planning, Insurance issues and many other topics that can by promoted in a way that is literally life saving! Offer something free, do a drawing for something of relevant value or support a charitable cause within the theme.

Events that offer a practical or experiential view of today’s news will captivate readership audiences and a very inquiring Buying public interested in finding the expertise and ultimately, the Professional.
One of my opening career wins was when I found an area I loved in the suburbs on Los Angeles. There was one Agent who dominated the area with a 20% market share that generally scares off most Agents from investing revenue toward. I found 2 For Sale by Owners and exploited them in the newspaper, offered to clean up distressed looking properties and listed both FSBO’s within 2 weeks along with 4 other properties within the coming 2 months. Within a year, I had 50% of the other Agents market share.
First time Buyers and Estate Planning Seminars may attract the greatest number of potential Clients, however they must be made both public and extraordinary.

Events come in all sizes and shapes; you are in charge of how to create events out of the usual activities we know can place us out in front of the crowd.

Copyright © Bryan Ridgley 2010

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Open House or a Captivating Event?

A well staged Open House can be one of the greatest opportunities an Agent can capitalize on to add a professionally outstanding persona. These opens can both attract Buyers as well as Sellers into our magnetic sphere. The magnetism here is the Quantum effect you bring by planning, staging inviting and promoting, and then showing up like it is the BIG Event you planned. I mean here, a dozen signs or more leading from all around the neighborhood. Don’t worry about spamming your signs if you also promise your public they will be up just before the event and taken down immediately afterward. A big public relations mistake is made when people follow signs to an event that is not open.

Open houses can be done the same with other Agents listings as well as your own. Many Agents do open other Brokers listings; however I have not seen the huge demographic displays in promotion that we see Listing Agents commonly do. Savvy Agents know that the impression made when you show up empty handed is not one that caters to Buyer confidence. Buyers are attracted to professionalism; they want to BUY from Experts. Experts are as much promoters as they have the knowledge base.

Opens houses can be also featured in more creatively by having a theme or event behind them. You can attract more visitors by promoting it as an educational event as well as a viewing of a property. You can offer food, prizes, have drawings to get accurate contact information from guests. Your open homes can be revenue streams of constant Buyer lead generation.

Starlight Opens can be a hit with View properties, make it a networking event with your Agent colleagues. Post in Social networking site you frequent, place ads in Craigslist.org. Place plenty of directional signs; bring plenty of flags, balloons, property fliers. Bring Market Data, Active listing in the area, Sold Comps! Make your reputation for events both fun and magical.

Advertising in local community sites like Craigslist can be extraordinary in results, if your ads titles speak those hypnotizing captions and a proactive value proposition is visible within a second of eye contact with the display.

To recap, put the pedal to the metal on creativity in your open house planning and turn the often mundane into a revolutionary success.

Copyright © Bryan Ridgley 2010

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Credits and Concessions can loosen gaps in some Short Sales

When it comes to Seller Concessions, the area of debate is gigantic. Both debate and Strategy; I capitalize Strategy here because in the world of Short Sale, Seller concessions can overcome monetary gaps in multiple lien sales (when they are devised with reason), A Seller credit to the Buyer for closing costs is considered almost customary in some markets of issue in others. In a Short Sale, while approving Banks do not favor them with some known to outright decline them, some Banks will pay these concessions. It is important for both Agents to have a formulate strategy whether they disclose them to each other or not.

The rules of the game here are not scientific or curriculum text. The game itself is to bring Buyers and Sellers together and within that process, there are issues that need to be creatively matched to affect the closing scenario.

Let’s take the following example.

The property has two liens. The first was a purchase loan, 100% financing and the junior lien was a concurrent equity line second for improvements prior to occupancy. The first is $400,000 and the junior is $65,000. The value of the property has declined to $300,000. The Buyer is very interested in the property, doesn’t really the concession of Seller paid closing costs, though the Listing Agents has confided to the Selling Agent in advance that there are 2 lien on the property and that a ‘getting the deal approved strategy might be the buyer contributing to a junior lien holders shortfall. In this situation, we know by experience that senior lenders, especially the giants, will not pay anymore than $3,000 to $5,000 to junior lien holders for their title interest. In this case, we will use the amount of $3,000. We know that most junior lien holders want more and in the more savvy Investment arenas, a typical settlement on a junior loan is 10% of the value of the note. In this case, that would be $6,500. Now we have a $3,500 shortfall to satisfy the junior lien holder. If this picture were property presented to the Selling Agent and the Buyer prior to writing the initial offer, this shortfall could be creatively factored into the transaction in a way that make a difference of a closing in 90 days or a failure after waiting 14 months.

Real Estate Agents must learn to communicate more effectively with each other to employ the benefits of debate, inquiry and investigation if they wish to receive the success opportunities that got them in the real estate game. With all that said, you’ll just have to wait for my next dissection article of process for your success or amusement.

Copyright © 2010 Bryan Ridgley

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Repair Concessions (Mice or Elephants)

Every property is different, every sale will be different and subject to unique nuances that can make or break a closable transaction. One of the reasons I am a believer in and advocate of pre-inspection at the time of listing has never been experienced more often (in my experience) than the matter of Termite assessment and abatement. We know of no actual law that make Termite mitigation mandatory, however, once the issue of Termite are brought into the agreement by either party, mortgage originators typically require a Termite clearance or completion notice. I choose this point because it is the most miss-understood point by not only the public, but too many real estate professionals. Here is how it usually happens when termite issues cripple a Short Sale transaction.

Example

The initial offer contains the provision that the Seller both provide a current Termite report, and perform the corrective recommendations at the Seller’s expense. In counter offer, the Buyer and Seller agree to split the costs of the corrective work and life goes on, the offer is submitted and we wait. In the old school, the Buyer has NO skin in the deal and once the sale is approved by the Short Sale bank, we go merrily into escrow and perform. The Buyer now conducts a general home inspection and the Seller provides the Buyer a Termite inspection for review.

In this instance of the example, the termite report reveals corrective work in the roof eaves at the rear of the structure. The Buyer plans on demolishing the rear portion of the structure to allow for a room addition. After diligent consideration the buyer requests a waiver of Termite work in exchange for a credit from the Seller. All seems fine, they agree and life moves on again. The Buyers final loan approval is granted, the contingency for the Buyers financing is now removed by the Buyer as agreed. Loan documents are drawn and delivered to the Escrow or closing Attorney. One or the conditions of the Buyer loan provide for that Termite Completion or Clearance. This condition is not known by the Agents because it is typically a condition that closing servicers assume will be delivered by the Agents in the transaction. In this case, the fact that Termite was waived out is something that servicers may not imagine would become a problem later either. The funding of the loan is now declined and the Buyer has removed that contingency for financing. In most States, this removing of a contingency of this nature may be considered final and not retractable. Where could perhaps these parties wind up having to settle this miss-understanding?

Laws are different from State to State. Before concluding that the Buyer is safe because the entire offer proceeding was subject to the approval of a Short Sale, may not be the answer every plaintive hungry Attorney may tell.

With this area of a Short Sale revealed, keep in touch until my next tip hits real estate cyberspace and be well.

Copyright © 2010 Bryan Ridgley

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Now here is the Earth Day Challenge

As I cling to the edge of my soapbox, I recollect that soap itself is a contaminant that contributes to earth’s continuation of having to stress against its balancing a polluted environment. The dollars that consumers spend on laundry soaps and chemical cleaners is spiraling out of site, while the contents of these products are both harmful to our earth and not necessary when you discover what we are paying for.

It was an eye-opener to me to discover that the majority of the ingredients in these products are designed to change the tension of the water which in many areas is hard or polluted. The Earth Day Challenge is to the educate yourself and consider alternative solutions that may be more user friendly to the environment. We live in exponential times and Earth Day should come every day.

Here is your Earth Day assignment.

Look into ionized Water. 11.5 PH Alkaline Water is as strong of a cleaning agent as the hazardous toxic chemicals we use every day. This Water will pull blood and other stains out of fabrics, is the most earth friendly laundry soap on the planet and will emulsify the oil based pesticides off of all your fruits and vegetables.

Many of the toxic chemicals we use (Ammonia, Alcohol, Disinfectants) will become history and totally useless in the Great New Earth Day Every Day life we can create Today! Look at 2.5 PH Acidic Water. This Water is used widely in hospitals and food institutions in Japan, for sterilizing, disinfecting, food preparation and a host of other health related conditions. Skin conditions plague many of us (who would guess why in our chemically modern life) and this 2.5 PH Acidic Water is also used as a topical treatment by Doctors and the New World Holistic Health Industry (as soon as they read this).

My Dream for Earth Day is that I Live this Dream for all of our Earths children’s, children’s children.

For more info on Kangen Water including health benefits

Bryan Ridgley Copyright © 2010

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San Juan Capistrano Teachers Set To Strike - KNX

San Juan Capistrano Teachers Set To Strike - KNX

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San Juan Capistrano Teachers Set To Strike - KNX

San Juan Capistrano Teachers Set To Strike - KNX

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What is so ‘Short’ about Short Sales?

Of the current inventories nationwide, Pre-Foreclosure Sales, or Short Sales are the emerging dominion to their counterparts, The REO. Of all the sales transactions in real estate today, short sales are being processed in record numbers. What has plagued homebuyers and the marketplace has been the amount of time these purchases take to complete.

Often these sales require the mitigation of more than one lien in order to completely negotiate the settlement. Often, undiscovered Tax liens or unrecorded judgments surface in the middle and cause delays or even dissolution.

Generally it is the responsibility of the Listing Agent to facilitate documents and communicate with the Seller Lenders. While Agents are placed on hold for long periods of time, the mortgage companies are processing hundreds if not thousands short sale files that statically have the odds of a less than 20% closing ratio. By the time many of these sales are approved, the Buyer has since purchased elsewhere.

Real Estate Agents must know what to expect when working Short Sales and be prepared to properly handle the obstacles. A good time to discover all that will have a financial impact on the Bank net is at the time of listing.
To accomplish a short sale smoothly, a listing agent must implement a step-by-step process, identify what steps a homeowner needs to take to get qualified as a Short Sale Candidate and get them approved through their lender.

As a result of HAFA, banks will have to streamline their process to help distressed homeowners achieve a short sale in a more expedient manner. While many in the industry are waiting for the new guidelines, lending giants such as Bank of America are outsourcing to asset management services which liquidate REO inventories.

Wells Fargo Bank has recently assigned a healthy percentage of its nonperforming assets to its Wachovia Bank Program. Wachovia is a prime example of what HAFA is hoped to bring to the Short Sale process. The homeowner gets a quick response to their desire to do a short sale. There are no hassles, no red tape and no concerns about deficiency judgments, so they say. Other banks will likely follow Wachovia's lead going forward to compress the timeline to complete the approval process.

Copyright © 2010

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Social Network Marketing Lesson 1

We live in exponential times. Whether your online habits are casual or focused, “when you get to it or habitual”, everyone is out there at their own pace, just like on Route 66 or the 101 freeway.

For those that have not reached the new world or online generation, we might be surprised to find out that over 50% of Search Engine entries and results are on the Names of People. People are interested in other People.

It would be easy to pass this off ignorantly thinking, yes… Who isn’t looking for the latest 411 on Celebrities and other Famous People? It may be a significant portion of the majority that utilizes their online experience to be casually entertained. While many Corporations, Business Professions and Online Marketing industries are capitalizing on their Internet presence with a strategy. Others are phishing, spamming and contributing to the online pollution in the same way the masses have polluted the earth; though that’s not the song I intended to sing here.

Like on the portals of Reality TV, we have to ‘get a grip’ that our experiences of online socialization are not a proven science, are as individual as the next person and that while there are multitudes of people entertaining each other and themselves, there are others soliciting, collecting, sorting, search mongering and data basing all of this in the spirit of progress and capitalism.

We are now being taught to be careful of what we say, how we act and responsible we behave online as being online is not the anonymous platform that existed years ago. Corporations and Companies now have Internet Commerce, Social Networking and Advertising budgets, Departments that dedicate their focus on both online presence and Online Mitigation of their Branding Integrity. This at times may include the online behaviors of their associates and employees.

We can learn from the Masters of Branding and market dominance by both putting ourselves out there in an impactful way, as well as placing our ears out there to understand which markets we may be penetrating. In a nut shell the premise may be as easy as asking the question “What are they saying about me?

So your initial task in your quest for Mastery is to simply Google yourself, then Wait for my next article.

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Rule Number 7 of the NEW SCHOOL Short Sale Specialist

STOP WORKING BACKWARDS! In the ‘Old School”, the value we place on the table for in the Buyer is the Pre-approved for their loan. Just like the traditional sale, we want to see a letter on Mortgage Company or Bank stationary. The savvy Agent will also ask for supporting bank or financial statements showing the liquidity of their down payment and closing costs. Other than this, in a Short Sale, in 98% of cases, that is the extent of the Buyers performance until the Sellers bank approves the sale. Obviously, we know that if a series of months have sailed by, the chances of that first Buyer being around to perform at that time has proven over and over to be less than 10 percent.

We know the exhaustive amount of work we put in to these as Listing Agents at every level on the playing field. It makes little difference if we turn these over to a 3rd party negotiation service or not. The best of us still have to place time and attention into the marketing, offer presentations and initial packaging for the 3rd party negotiator.

In the “New School”, we assure every security to our Seller Client that we would in the Traditional sale. The majority of State has laws that govern the actions and fiduciary guidelines under the same Business and Professional codes which apply to Attorneys, Trustees and Doctors. It has always challenged my comprehension of sociological trends in human behavior that in the case of the Real Estate Profession, the State acknowledges our competence as a profession as the assumption, while we live daily through the myriad of negative pre-assessments of a pubic that compares our profession to used car salesman.

In the case of working the Short Sale arena over the last 3 years, coupled with the number of calls I have engaged with bank Underwriters, the number one chasm between us, is this non performing Buyer issue which needs to be dealt with if we are to become optimally leveraged. We need to shift our own ‘mindset’ and realize at least this one point and what it equals.

We know that banks are plagued daily with thousands of new case files. These again have to be sifted, sorted and prioritized in some order either be a measure of urgency or first cursory qualifier. This means that when 100 offers have come into the system, in the ‘Old School’ there is only 2% of them that will pass the urgency test. This EQUALS 98 out of 100 of these offers are either strategic default of have non performing Buyers (no skin in the deal). Unfortunately, the majority of complaints extend from the ‘Old School'. They are about the length of time passing, the buyers flaking out, the Sellers Agent doesn’t know what they’re doing, undiscovered or non-disclosed liens and the negative perceptions and challenges of a distressed economy. This equals 2% or 2 out of a hundred submissions that will pass the test of the “New School”. Stop working backwards!

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The New School Buyers (Short Sale) Agent and What They Must Know

Ah ha, and it’s true… Some will, some won’t, SO WHAT! The fact is, even when rigorously qualifying these properties and their occupants, not all Short Sales are easy passages. What holds the account for the national stats of Short Sale failures is that we haven’t as professionals 1. Known the complexities and hoops we would have to account for as any other profession must metamorphose itself from an avalanche of change. 2. We dove in and placed little value or emphasis on Buyer performance until after the Short Sale lender has in fact, approved the sale. 3. The Underwriters are mentality thinking, “That’s Backwards”!

There are other learning curves we have taken in the mix of these distressed sales. Junior lien holders, tax liens, HOA judgments and arrearages make not be items that will be fully absorbed by the Short Sale lender and must be accounted for.

Another mindset infraction commonly plaguing these transaction is that Agents representing Buyers in these purchases seem to feel it part of their Fiduciary responsibility to keep their Buyer financially and attentively innocent until the Short Sale lender approves the sale. I am always dealing with this question in talks and Seminars I facilitate. I tell Agents with this consideration about the number of Buyers, Sellers and Agents out there that tell the stories we hear when the Short Sales sounded easy, and that were approved in a short amount of time. Stories that truly express the belief that Short Sale property can represent an extra value proposition over its REO competition. There is usually a live Seller that is disclosing what they know about the property, they’re usually maintaining the property and have not excavated the cabinetry and poured cement down the plumbing drains. There may be value there, enough to justify a Buyers investing four or five hundred dollars to perform an inspection, investigate the property and remove that contingency from the transaction early, even though there exists that risk that the sale may not go through.

Some of us may be rigorously staunch lead generators. If we are, we know to systemize and prioritize our leads to leverage our production percentages. Why would it be any different with regard to the waiting game of short sale process purgatory?

With millions or offers being submitted, depending on the size of the Bank or Servicer, incoming files are opened, processed through some system which favors priority and leverage. These must at many times be sifted out from hundreds of files by someone perhaps not as experienced in making the final dispositions on these sale files.

Regardless of the various styles of this sifting and sorting you can make a serious difference in the timing by which your package sorted into ACTION.

First of all, you would think that the first thing a lender would do is look at all the cool stuff in the Sellers hardship package and place their sole excitement on that above all. The quality of this part of the package though important is secondary in purgatory. Sorry, there are other elements to a swift ready closing that might mean the leveraging of their time.

If the lender does what they are supposed to do in the bigger picture of loss mitigation, a mitigating factor would logically include time. With the old school of Short Sales representation, we place our Sellers (and Buyers) in a nonperforming sale, and then chase an uncommitted Buyer after a Lender Approval many months after contract; we create time in working against us. We do this time after time, though with the many successes we do have with 2nd and 3rd Buyers, we know we eventually get many of these deals closed.

Part of the perpetuating mindset that hoaxes our deals is our insistence that because we are use to working the way of the Old School, that we run the risk of losing our Buyers by asking them to place the very “Skin” in the deal, that may singly be the cause most Short Sales that have been approved within the first 60 days. If this writing creates any kind of movement, my hope is that is causes every Agent in our profession to get some additional mindset training. Then the most knowable of us will prosper quickly. (End)

© 2010 Bryan Ridgley
Bryan is a Real Estate Consultant, Health and Wellness Coach and Educator. He is currently available for both personal and group coaching and training in Stress Management, Molecular Hydration and Real Estate Loss Mitigation. He currently lives in Los Angeles and Consults in the real estate, health and legal industries. Follow him on Twitter at http://twitter.com/bryanridgley or Facebook at http://facebook.com/bryanridgley or E-mail Bryan at bkr@pacbell.net



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Writing a Short Sale Hardship Letter

Now with the Wachovia model around, I have to say MOST lenders require a valid and genuine hardship when considering a short sale. After all, they are releasing the mortgage for less than what is owed.

Perhaps the borrower lost a job they had been working at for the last 20 years, transferred to another state, facing divorce, serious illness or other loss of income. These are all perfect reasons to list in the hardship letter.

A good hardship letter should bring tears to the reader's eyes. I'm not joking; this is where you want to really spell out all the details of the trouble your family is facing. Don't hold back on the reasons you can no longer afford the payments.

Persuasive Short Sale Hardship Letters

Most lenders require homeowners applying for a short sale to write a hardship letter, which is a written explanation describing why a borrower is not able to make his or her mortgage payments. The thought of writing a letter sometimes causes fear and anxiety in homeowners, but it's really quite simple and if written properly, a good letter can help a homeowner make a powerful case to their lender. Certain elements written into your letter can help make your case to the bank while others can hurt your chances of getting a short sale approval.

The borrower should write the letter in their own words, but they need to make sure that there is a clear picture of their financial condition, and back up their claims to hardship with documentation, such as pay stubs, medical bills, job layoff letters and more. The numbers should clearly illustrate that the borrower is headed for foreclosure or bankruptcy.

The following is what I would give a Seller to use as a guide.

7 tips to writing a persuasive hardship letter:

1. Write it yourself. This is your story, only you can tell it convincingly, so make sure you write it.

2. Explain the events and personal circumstances that contributed to your inability to make your mortgage payments. Examples include: tenant problems, a medical condition or illness, job loss, job relocation, death in the family, divorce etc. Also, describe any additional circumstances currently making your financial situation difficult. An apology for not being able to continue to pay your loan (be sincere). Don't blast the lender for charging you too high a rate after all, you did accept this loan.

3. Describe all attempts previously made to sell your home either by you personally or through a real estate agent. Be sure to include all previous price adjustments. If you've already tried to sell your home, this helps make a more compelling case to your lender that your financial hardship is real and that you are not just trying to walk away from your financial obligation. How you were previously able to pay; both my wife and I were working and healthy. What you have done to try to continue to pay: exhausted savings, cash advanced credit cards, gotten part time work, borrowed from family.

4. Don't blame the bank for your financial trouble in your hardship letter. Scape-goating the people that you are trying to convince to reduce your mortgage does not work to your advantage, so don't do it! (Do not say I stopped making payments because the property you sold me dropped 50% in value) Just because the value of your property has dropped below what you owe does not mean you will have the ability to do a SHORT SALE.

5. Make sure your letter makes logical sense. More specifically, make certain your letter does not contradict any of the other personal documents your bank is examining as part of your short sale application (i.e. your bank statements, personal financial worksheet, pay stubs, tax returns).

6. Tell your lender that you want to avoid bankruptcy. If the bank believes that you intend to file bankruptcy, it will be less likely to seriously consider your short sale application. If bankruptcy is being considered dropping the B word, it gets their attention (DO NOT call them the B word)

7. Tell the bank what you want them to do. Although your ultimate goal in pursuing a short sale may seem obvious to you, it may not be to your bank. In your letter, don't forget to ask your lender to accept your buyer's sales contract, approve your application and forgive any deficiency that may arise as a result of the short sale. DO NOT lie. Simply spell out, politely and sincerely the reasons you need assistance.

Thank them for their understanding and assistance.
And, of course call me if you need further guidance.

Lenders have to look at numbers, so the letter (sob story) about the borrower's difficulties will not be the only factor. It should be a factual description of a financial situation that is leading up to a bankruptcy or a foreclosure on their home, or both. The lender must be convinced that their only other option is foreclosure, and then they can analyze the numbers to see if a short sale is a preferable alternative.

Different sources quote different numbers, but the average seems to run around $50,000 in costs to the lender for the average foreclosure process. Then there are the reserves that are required to be held to back up non-performing loans. The lender must tie up resources that could be invested elsewhere to back up these loans. So, they are open to alternatives.

A well written hardship letter will continue to be of benefit in the process of loans not affected by Governmental red tape, HEMP or HAFA.

Beyond the Flat Earth Society

NEWS FLASH FROM HUD

HUD to Allow Electronic Signatures on Some Documents for FHA Mortgage Insurance

On April 8, 2010, Commissioner Dave Stevens announced that, effective immediately, FHA will begin accepting electronic signatures on "third party documents originated and signed outside of the lender's control, such as real estate contracts." This change, which NAR has long advocated, is the first in a series of changes that eventually will permit more real estate transaction documents to contain electronic signatures, thus improving the efficiency of FHA mortgage transactions.

NAR President Vicki Cox Golder praised the move and commended FHA's "refreshing attitude towards modernization." NAR CEO Dale Stinton also noted that "the use of electronic signatures in real estate transactions is a valuable tool for the consumers and the real estate industry." Since last fall NAR has been partnering with it REALTOR Benefits® partner, DocuSign, to help buyers and sellers sign bids and other closing documents online. DocuSign is an investment of NAR's capital venture arm, Second Century Ventures.

This means that finally, the real estate industry gets another restraint removed from their daily grind. The matter of ‘Electronic Signatures’ and their acceptance has been widely approved with the exception of some organizations like HUD, who have just entered into current times from the dark ages. The HUD recognition of electronic signatures will add to many other efforts to streamline Short Sale and REO transactions as well as the traditional.

Let this one be an added success tool for every professional that moves through and in & out online commerce, sales offices and the public and private setting we communicate with our Clients and Prospects.

Ahh, the little conveniences of Life!



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Short Sale Basic, Why HAFA and Where are we now?

For easy public understanding of what Shorts Sales are, here is a brief Q and A from a Realtor.org post. It is short and general, though with it one can see the present happenings and where we are headed. I invite everyone to keep checking in, as I continue to do some catch up posting on helpful content on this and other related subjects, thanks again! (Bryan)

What is a short sale?

A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.

Why is the number of short sales rising?

Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses.

A short sale can also be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.

What challenges have short sales presented for REALTORS®?

The rapid increase in the number of short sales, and the short sales process itself present a number of challenges for REALTORS®. Major challenges include:

1.Limited experience

Many REALTORS® are new to the short sales process; a difficulty which is compounded by many lenders' lack of sufficient and experienced staff to process short sales. Even if the REALTORS® are experienced, most servicers are under-staffed and still not adequately trained, making negotiating a short sale particularly difficult.

2.Absence of a uniform process and application

Until HAFA guidelines were established, both short-sales documents and processes were lender-specific, making it very difficult and time-consuming for REALTORS® to become knowledgeable and efficient in facilitating these transactions.

3.Multiple lenders

When more than one lender is involved, the negotiations are much more difficult. Second lien holders often hold up the transaction to exert the largest possible payment, in exchange for releasing their lien, even though in foreclosure they will get nothing.

As a result of these challenges our members have reported difficulties with: unresponsive lenders; lost documents that require multiple submissions, inaccurate or unrealistic home value assessments, and long processing delays, which cause buyers to walk away.

What is being done to address or eliminate these challenges?

Training, Training and more Training!

HAFA is one thing, though Agents today must forge their way through what will be continuing challanges as not all Loans will be subject to HAFA or other governmental guidelines.



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Real Estate Agents! HAFA now RULES!

HAFA now RULES! But so much confusion exists about the procedures and the immediate compliance of Banks and Servicers’.

I thought I would share a couple of helpful tips that can ease our minds if evolved with a Short Sale.

1. Don’t be surprised when the timeframes HAFA outlines are not met by the Banks and Servicing Underwriters. Though effective on April 5th, there are anticipated delays in practice and accountability, as even at this moment, Freddie Mac and Fannie Mae have not even published their revisions to meet HAFA.

2. The initial steps normally taken to acknowledge a Real Estate Agency relationship with these properties converts more to a Borrower generated application format. Be acquainted with the 3 major forms for standard use.

3. You can take advantage to this SHIFT by stepping up your game prospecting distressed Sellers now, before they apply for their Short Pay approval prior to meeting an Agent. Once a Seller becomes pre-approved for a Short Sale through HAFA, the distressed Sellers MINSET is going to show up different to us as they suddenly become more selective about representation in a competitive way.

4. Don’t Stress, we have time to learn this, it is actually less complicated.
I hope these tips are useful to you as these sales will continue to be significant in our market and there are trainings out there that have value in helping us profit greater, help more people (Knowledge is power) and be the best we can be.

If you are interested in any of mine Short Sale Trainings, please reply to this e-mail for my upcoming events.




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Welcome to my New Blog

This Blog site like any other will provide interesting content, personal and professional tips, information and sometimes, YES, even Advice.

The content rainbow may start off slowly, while I am also adding the final touches to my upcoming e-book, soon to be published.

Thanks so much for noticing this Blog out of the catrillion of others circulating all over the planet.

We are off to some wonderful revelations to come :)




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