Southwest Florida Title Insurance & Real Estate Blog -

Archive for the ‘Short Sales’ Category

If you’ve ever worked on short sale transactions in the real estate industry, then you probably know how frustrating it can be when lenders put a value on either an appraisal or even a “drive by BPO” (broker price opinion) without sharing the report with the sellers and or potential buyer.

For me, it’s absolutely infuriating when a lender counters a property’s appraised value but then never tells us what value they arrived at.

Fortunately, things are changing at Bank of America.

Bank of America short sale transactions (Photo Courtesy of Flickr User MoneyBlogNewz)

Recent changes to Bank of America’s short sale process include providing a valuation report to the customer each time a value is obtained and used as part of the process.

This change improves the customer experience by providing more transparency and clarity to the information used in reaching a decision on a short sale offer. Valuation reports will be supplied each time a value is obtained.

Whether you have initiated the short sale with an offer or are just beginning the short sale process and do not yet have an offer, your customer should understand that:

  • A current value for the property must be determined, which then helps determine the market value
  • This process typically takes less than two weeks to complete

Note:

  • For Equator® short sale files: The valuation report will be available in the Equator record
  • Non-Equator short sale files: The valuation report will be mailed to the customer

What can you do to assist with the valuation process?

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Why not consider purchasing a distressed sale?

BusinessDictionary.com defines a distressed sale as an urgent sale of normal or distressed goods, at deeply discounted prices.

For the purpose of this article, “distressed goods” refers to homes that sell at deeply discounted prices via either a short sale or foreclosure.

We have been and still are in a housing market unlike any we’ve seen in years. The economy of the past few years has produced more properties that are either in foreclosure or short sales status.

From our point of view, many buyers (we’ll call Group A) routinely steered clear of distressed sales because they had the idea that these properties were damaged money pits and very likely to be trashed. Therefore they avoided taking such a risk on a big investment.

But then there are others (we’ll call Group B) who enter the market either for the first time or as a seasoned buyers, who view distressed sales as an opportunity.

They’re searching for (and finding) great properties that have been overlooked by those people describe above who categorically excluded foreclosures and short sales.

If you’re part of Group A, you may want to reconsider purchasing a distressed sale because they make great sense, especially when the market is tight.

What is the difference between a Foreclosure and a Short Sale?

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What is a Short Sale?

A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens fill amounts, and whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt.

We work with some amazing and knowledgeable listing agents on short sales in Florida. However, there are occurrences where we have a file where the buyer’s agent is not familiar with the short sale process.

Short sale listings are very different from listings where the seller has equity. When an offer is received on the listing and the seller agrees to the price, it does not mean that the lender will accept the price.

When we receive the offer on a new file we like to talk to the buyer agent and explain how the short sale process works. It is important for them to understand the process for buying a short sale for their clients.

Communication from the short sale processor, listing agent and buyer’s agent play a critical role in keeping the buyers on board.

It is very important for them to know that when we request a response from the buyers, weather it is a counter offer or to provide any information, we usually get only 3 days to respond.

We also like to reach out to their buyer to help educate them as well so they know what to expect.

Here are some things buyer agents should know about short sales in Florida:

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Top Ten Things We’d Like to Say to Short Sale Lenders

Posted by Jillian Dohack On April 25

If you deal with short sales on a regular basis sometimes you just need a good laugh.

Top 10 Things we'd like to say to Short Sale Lenders

I decided to have a little fun and create a spinoff of David Letterman’s famous Top Ten segment of Late Night and relate it to the Short Sale world and lenders.

So without further ado, here are the Top Ten Things we would like to be able to say to the Short Sale Lenders:

10. Your File is declined!

9. I can’t find you on the Letter of Authorization; please fill out a new one and allow 72 hours before you can speak on this file.

8. I need your 2 most recent bank statements, all pages for every account possible.

7. We are going to need a higher offer, but we can’t tell you how much.

6. I will give you until the end of the day to respond or I will have to close your file.

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Thank you all so much for the taking our recent survey. You have no idea how valuable your feedback is to us!

You may recall that the second question in our survey asks:

Think of the last time you went through a short sale. What was the most frustrating aspect of the process that you faced?

So far, we have received over 75 responses (woo hoo! :)) to our survey, the vast majority coming from real estate agents and our referral partners.

The common frustration expressed from you is the lack of communication between all parties involved, most notably the lender.

Communication During the Short Sale Process is the Key to a Successful Closing

This is such a common frustration and most times it cripples the process and leaves a sour taste in the mouths of those involved.

As a Realtor®, you know how incredibly annoying it is when you have an eager buyer who’s ready, willing, and able to purchase a short sale, and yet she can’t because of loads of red tape that must be cleared up between the seller and his lender. UGH!

What’s even more frustrating is when you have bills to pay (just like everyone else) and you could really use the commission from this sale, and yet no matter how much effort you put in, IT JUST WON’T CLOSE! Talk about stress!

Well, at Winged Foot Title, we’ve heard your frustrations loud and clear and hopefully the advice in this article will help you with the next short sale transaction…that is, if you ever decide to be a part of one again.

Yes, short sales can be incredibly frustrating and challenging, but I enjoy orchestrating short sales for all of those same reasons.

It’s the thrill of the Chase”. 😉 (No pun intended- A little short sale humor).

So to make your next short sale as relatively painless as possible, here is what I suggest:

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Short Sale Process…Just How Long Does it Take?

Posted by Jillian Dohack On April 17

Short sales have been known for taking a long time to close!

How long is this short sale gonna take?

It was not uncommon in the past to see a short sale take sometimes a year to close, causing overwhelming stress to all parties, especially to the seller.

So why do short sales take so long? Most often we can blame the banks for the delay. However, that complaint does not always apply to Short Sales in 2013.

Many of the lenders and investors have updated their systems, buyers are still interested in buying, and incentives to short sell for both banks and sellers are still viable.

So the question many will ask is…

How long does a short sale take?

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Nationstar Mortgage

Logo is property of Nationstar Mortgage.
Winged Foot Title claims no rights to this logo.

As I have mentioned in a few past posts, there have been many changes taking place with Short Sales that have been creating quite a lot of buzz.

Today I want to share some of these new concerns specifically pertaining to dealing with servicers instead of banks, specifically Nationstar and their recent requirements for Short Sales.

We’ve noticed that a large portion of our short sales are no longer serviced by banks, but by other entities such as Ocwen, Greentree and Nationstar Mortgage. There are so many bad mortgages that these 3 companies are taking over the servicing of the loans.

The main reason for concern is that these servicers are not banks and this means they do not fall under the control of the OCC (Office of the Comptroller of the Currency) and the Federal Reserve, which gives them the ability to create their own rules.

Nationstar Mortgage

Nationstar Mortgage has also been the talk of our office as they have recently changed some of their requirements which are causing a stir in the processing of short sales. Here are the most recent changes and requirements:

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1,000,000 Short Sales Expected in 2013!

Posted by Jillian Dohack On March 20

Short Sales

At Winged Foot Title, we are always looking to stay educated on Short Sales. We recently watched a Short Sale Superstars webinar that was presented by MAPS Coaches Jacob Swodeck and Knolly Williams.

It was very informative as they discussed the short sale market and the BIG changes that have occurred. Specifically we learned about Fannie Mae and Freddie Mac’s alignment, the Pre-approved hardship/no-doc short sale program launch and the HAFA program changes

I was blown away to learn that there will be an explosion of short sales in 2013. CoreLogic says there are still over 3 million delinquent homeowners that are already 30-60 days late in payments.

There was an estimated 440,000 short sales in 2012 and Daren Blomquist from Realty Trac estimates there will be a record number of 1,000,000 short sales expected in 2013.

We are constantly asked the question if short sales are going away anytime soon and this information gave us some great statistics to relay to those that are curious.

It was great to hear more about the servicing alignment initiative for Fannie Mae and Freddie Mac. This is a FHFA-led effort to establish consistent policies and processes for the servicing of delinquent loans owned or guaranteed by Fannie Mae and Freddie Mac.

The alignment will help the servicer do a better job of resolving delinquencies in a more consistent and fast manner. Their goal is to have a more streamlined process as far as hardship, timelines and documentation needed.

If a seller is 90+ days late and they have less than a 620 FICO score they automatically have a pre-approved hardship. The approved hardship loans will then qualify for the new low doc process.

We were also informed that they will now be delegating the decision on non-delinquent loans when there is death, disability, divorce or distant employment (50+ miles). The servicer can now make the decision.

We also learned about some positive changes for the Making Homes Affordable Program (HAFA). These were put into effect February 2013:

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Ocwen Continues to Grow

Posted by Jillian Dohack On March 13

The transferring of services to Ocwen continues.

I recently started a new Short Sale that was being serviced by Homeward Residential as it was an original mortgage with American Home Mortgage only to find out Ocwen has recently acquired Homeward Residential.

Homeward Residential brings with it approximately $422,000 mortgages with an unpaid principal balance of over $77 billion.

A major frustration with a file being service released is that it typically means a whole new set of documents from that new lender are required which creates major setbacks with the short sale process. 🙁

In even more recent news, Ocwen continues to grow as they won an auction for Rescap’s mortgage servicing and origination assets.

Files that were previously being serviced by GMAC will now be serviced by Ocwen.
Ocwen is a large servicer who is well known in the Short sale community for its outsourcing and unwillingness to postpone sale dates.

My past experiences led to many frustrations from not being assigned a single point of contact, challenging customer service representatives and an overall slow short sale process.

I have recently found that Ocwen’s process has improved immensely over the last year. They have created an easier system for short sale submissions and for the processing/review of the short sales.

To start a short sale with Ocwen:

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Bank of America (Photo Courtesy of Flickr User MoneyBlogNewz)

Lately, we have been advised by many lenders’ that you can’t use electronic signatures on short sales.  The major lending institutions really do not like to see electronic signatures.

Despite an announcement in late May of 2012 that Freddie Mac will allow it, the servicers usually frown upon it.

On February 22, 2013 Bank of America recently advised us that they will now accept electronic signatures on most documents collected throughout the processing of short sales; however there are specific requirements that must be met in order for the documents to be accepted.

Real Estate agents choosing to use electronic signatures will need to check with their electronic service provider to ensure the below requirements can be met prior to initiating a short sale.

DocuSign, is one of the providers that has shown they have the capability to meet Bank of America’s security requirements.

The requirements are as follows:
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NOT LEGAL ADVICE: This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area. This information is not intended as legal advice and may not be used as legal advice. It should not be used to replace the advice of your own legal counsel.

Winged Foot Tite, LLC is not associated with the government, and our [short sale orchestration] service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.