Archive for the ‘Short Sales’ Category

New Fannie Mae website educates homeowners about their options regarding foreclosure., by Inwest Title a Utah Title Company

Thursday, January 13th, 2011

Fannie Mae has recently launched a new website that will help to educate homeowners on the process of foreclosure.  The site aims to show them different options available to them on staying in their home such as (refinancing, forbearance, modification etc.).  It also explains the options for leaving their home such as (deed-in-lieu, short sales etc.).  The site can be found at www.knowyouroptions.com.  The site is very user friendly and provides a largely video based interface that will prove valuable to people who have found themselves in foreclosure.

Only Real Estate Agents should be Processing/Negotiating Short Sales in Utah!, by Inwest Title a Utah Title Company

Friday, June 25th, 2010

The Utah Insurance Department (UID) has confirmed that it considers an Escrow Officer that processes or negotiates any short sale transaction(s) in violation of the insurance laws and are putting their license in jeopardy.   The UID issued a June 21, 2010 Bulletin 2010-5 to put all Title Agencies and Insurers on notice of this fact.

The UID’s bulletin goes hand in hand with the Utah  Division of Real Estate’s (DRE) position that the negotiation of a short sale falls under the province of a licensed real estate agent, and that all others (except attorneys) conducting such negotiations are in violation of Utah law by acting as unlicensed real estate agents. The DRE has commented on this issue several times in their quarterly newsletters.

The UID Bulletin cautions any dual licensed individuals (those holding title, real estate, and/or law licenses) that there are clear boundaries on when a licensee can negotiate a short sale while also handling the title work.

We agree with both the UID and URE’s positions since real estate agents are professional sales advocates who are in the best position to negotiate the terms of a short sale transaction.

Lenders Use Technological Innovation to Improve the Short Sale Process, by Inwest Title a Utah Title Company

Friday, June 11th, 2010

As many in the real estate industry know being involved in a short sale can be a very lengthy and frustrating process.  Short Sale Lenders are difficult or impossible to contact and providing the necessary documentation for approval (usually via facsimile) is problematic at best.  This results in short sales dragging on forever, and then never making it to the closing table.

Bank of America, one of the largest lenders out there, has launched a new on-line system that both Short Sale Sellers and their Agents can utilize that is directed at eliminating these problems and streamlining the process to result in a fast closing.

The new online system allows both the Agent and Seller the ability to provide information and documentation electronically, track the short sale 24/7, and communicate directly with the lender’s short sale representative.  To that end Bank of America has released a detailed guide on how an Agent can sign up for this system through Equator as well as instructions for the Seller to sign up on Bank of America’s website.  They also provide helpful tips so you know what the bank expects and what they do not allow, so that you can avoid making mistakes that may delay your short sale.

We have had an agent provide details on using this system, and he stated that it was easy to use resulting in his short sale being closed in about 60 days.  Wow, what a refreshing change!!  It sure beats working on a short sale transaction for a year, only to have it fall apart as parties give up on the deal.  If all transactions moved this fast it would go a long way to save the sanity of Sellers, Agents, and Escrow Officers involved in the short sale process.

Housing Wire reported in a June 10th, 2010 article that “Bank of America said they are doing everything they can to put short sales ahead of REO, and they’re the biggest lender in the country”.  We are excited that this is their goal and we hope other lenders follow suit as this would benefit everyone.

If you learn of any other lenders using a streamlined process, please let us know the details, so that we can pass on the information through our blog.

Monetary Incentives are available to Lenders and Homeowners for Short Sales or Deeds-in-Lieu of Foreclosure**, by Inwest Title a Utah Title Company

Friday, April 23rd, 2010

In the last few weeks the Home Affordable Foreclosure Alternatives (HAFA) Program has come into play.  This program will allow homeowners to avoid some of the negative impacts of a foreclosure by (1) providing financial incentives for both the Homeowner and Lender to participate, and (2) by requiring that both the first mortgage holder and all subordinate lien holders must fully release their liens and waive all future claims against the homeowner for any amounts still owed after the completion of the short sale or a deed-in-lieu of foreclosure.

To learn more about HAFA please watch this video produced by the US Treasury Department :

The financial incentives under HAFA are as follows:

  • Homeowner Relocation Assistance. Following the successful closing of a short sale or DIL, the homeowner who is selling their property will receive $3,000 to assist with relocation expenses.
    • Short sales – payment is received from the closing proceeds, and
    • Deed-in-Lieu of Foreclosure (DIL)-  payment is received at time of closing or a check must be mailed within five business days of the homeowner’s vacancy and delivery of keys to the Lender or its agent.
  • Lender Incentive. The Lender will be paid $1,500 to cover administrative and processing costs.
  • Reimbursement for Subordinate Lien Releases. A maximum of $2,000 will be paid for allowing a portion of the short-sale proceeds to be distributed to or paid to subordinate lien holders. (3 to 1 matching basis = $6,000.00 to be paid to subordinate lien holders = $2,000 reimbursement). The subordinate lien holders must agree to release their liens and waive all future claims against the borrower.

 

Key provisions of HAFA for real estate agents assisting in a short sale:

  • Pre-Approval. Lenders are also require to pre-approve short sale terms, when requested, prior to the home being listed.
    • The pre-approved terms are contained within a Short Sale Agreement (SSA) which are effective for 120 calendar days.  Lenders may extend the effective date by up to 12 months.
  • Fast Decisions. Once a Real Estate Agent submits a Request for Approval of Short Sale (RASS) the Lender must approval or deny it within 10 business days.
  • Mandatory Approvals. Approval must be granted if the net sale proceeds to the Lender are equal or exceed the preapproved minimum amount (as contained in the short sale approval).
  • No Commission Reductions. Lenders are prohibited from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement.
  • Up to 6% Commission Allowed. Real estate commission is not to exceed 6% of the contract sales price.
  • Standardized Forms to Request a Short Sale. Special forms must be used for Homeowners that qualify under HAFA, however they are readily available for download here->  HAFA Homeowner Forms .

 

How do you know if a Homebuyer qualifies for HAFA?

  • Principal Residence.  The property is the homeowner’s principal residence.  If you the homebuyer no longer lives in the residence there are a few exceptions where you may still qualify.
  • Short Sale Loan Prior to 1/1/09.The mortgage loan is a first lien mortgage originated on or before January 1, 2009.
  • Mortgage Delinquency or Default. The mortgage is delinquent or default is reasonably foreseeable.
  • Loan Principal Balance Limit. The current unpaid principal balance is equal to or less than $729,750, higher amounts apply to multiple unit buildings.
  • Income vs. Debt. The homeowner’s total monthly mortgage payment exceeds 31 percent of the homeowner’s gross income.
  • Participating Lender. The program may not be required of every loan or by every lender so check with your lender to see if this program is available to you.

What is a Short Sale?
In a short sale, the servicer allows the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the mortgage. The short sale must be an arm’s length transaction with the net sale proceeds (after deductions for reasonable and customary selling costs) being applied to a discounted (“short”) mortgage payoff acceptable to the lender/servicer. When a lender/servicer accepts the short payoff they agree to release their trust deed from the property allowing the sale to the new buyer to be completed.  In some circumstances the lender/servicer may (1) forgive any deficiency owed by the seller, or (2) require all or a portion of the remaining loan funds they did not receive from the short sale to be repaid by the seller at a later date.  As a short sale can have significant legal and tax consequences you should consult with legal and tax professionals prior to engaging in this type of process.

What is a Deed-in-Lieu of Foreclosure?
In a deed-in-lieu of foreclosure (DIL), the borrower voluntarily transfers ownership of the mortgaged property to the servicer in full satisfaction of the total amount due on the first mortgage. The servicer’s willingness to approve and accept a DIL is contingent upon the borrower’s ability to provide marketable title, free and clear of mortgages, liens and encumbrances. Generally, servicers require the borrower to make a good faith effort to sell the property through a short sale before agreeing to accept the DIL. However, under circumstances acceptable to the investor, the servicer may accept a DIL without the borrower first attempting to sell the property. With either the HAFA short sale or DIL, the servicer may not require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower.

**The information compiled above is from MakingHomeAffordable.com and Supplemental Directive 09-09 Revised.  If you need additional details about HAFA we highly recommend you review these sources or call and speak with a counselor about this program at the Homeowner’s HOPE™ Hotline 1-888-995-HOPE (4673).

As HAFA has just been recently launched (and will run through December 31, 2012) check back as we will be blogging soon about the real world details of this program once we see it in action.