Mortgage Education Short Sales

1
Mortgage Education Short Sales
2
The following is provided for information
purposes only and is not intended as legal advice.

• State Laws May Vary
• You May Have Other Rights
• You May Have Other Duties

If you have questions regarding how mortgage loan
delinquency and foreclosure may affect you,
please consult legal and/or tax professionals.
3
Bad Things Happen to Good Homeowners

• Hardship has no regard for social or financial
  status.

4
Foreclosure is a Lose-Lose Situation

• Mortgage company loses revenue
• Mortgage insurance loses premiums
• Mortgage insurance pays a claim
• Mortgage investor doesnt collect principal
• Mortgage investor doesnt collect interest
• Potential damage to property during foreclosure
• Foreclosures negative stigma results in lower
  value
• Lower property values have negative effect on
  real estate market

5
Homeowner Loses the Most

• Foreclosure reported to credit agencies
• Late Payments reported to credit agencies
• Remains on credit report for at least 7 years
• Viewed negatively by credit lender, employers and
  insurance companies
• Adverse credit rating may limit ability to get
  credit cards, mortgage loans, consumer loans and
  other forms of credit
• Foreclosure may NOT relieve you of responsibility
• Insurer could bring suits against you-Court
  order to pay balance-Reasonable attorney
  fees-Interest on judgment amount
• Reportable income or loss to the IRS via 1099-A

6
Sample Foreclosure Timelines(amount of time it
takes to foreclose on a property in each state)

• Texas 27 days
• Georgia 37 days
• Florida 135 days
• California 117 days
• New Jersey 270 days
• New York 445 days

7
Turn It Into A Win-Win with a Short Sale

• Minimize the effects of foreclosure
• Mortgage company reduces time and work
• Mortgage insurer reduces time and work
• Mortgage insurer minimizes claim payment
• Mortgage investor saves time, work and money
• Additional potential damage to property during
  foreclosure avoided
• No foreclosures negative stigma resulting in
  lower value
• No lower property values to have negative effect
  on the real estate market

8
What is a Short Sale?

• A short sale is when a bank or mortgage lender
  agrees to discount a loan balance due to an
  economic or financial hardship on the part of the
  homeowner. The homeowner negotiates with the
  banks loss mitigation department to sell the
  property for less than is owed on the mortgage.
  The lender has the right to approve or decline
  the proposed sale. If approved, the loan will be
  recorded as paid in full and will allow the
  homeowner to avoid foreclosure.

9
Your first step
Call Customer Service Get to the person who can
help!
10
To Get to Loss Mitigation

• Call 800 customer service number on your current
  mortgage statement
• Do NOT enter loan
• Do NOT give loan
• Request Loss Mitigation from main Customer
  Service Representative
• Loss Mitigations 1 goal is to return the loan
  to current status and produce revenue. They are
  paid 500 per workout and 1,000 for successful
  short sales. Its in their interest to help you!

11
Documentation Needed for the Lendersend copies,
not originals!

• Hardship Letter include all the details! Use
  this letter to win their sympathy. Go back to the
  very first instance where you had trouble paying
  your monthly obligations and start your story.
• Hardship Documentation - It you have medical
  problems, include copies of hospital documents.
  If youre getting divorced, include copies of
  separation papers, etc. Financial Form - Its
  okay to show bad credit. You need to show that
  you have more expenses than money coming in
  dont leave anything out.
• 2 months bank statements all accounts, checking
  and savings
• 2 years tax returns
• 2 months pay stubs
• Credit Report

12
How to Write a Hardship Letter

• The hardship letter to the mortgage company
  written by the homeowner should describe
• Everything that has happened which has resulted
  in their inability to make the payments or pay
  off the loan
• Everything they have done to try to rectify the
  situation
• The desired outcome of the homeowner (to stay in
  the home with a better mortgage or to move out)

13
Documentation continued

• Appraisal, Broker Price Opinion, Market Analysis
• Repairs bids photos bank will require three
  bids for each repair.
• Listing Agreement- synopsis from your Realtor if
  already on the market beginning list price,
  reasons why the home isnt selling, etc.
• Homeowner Authorization Letter (see next slides)
• Sales Contract
• Buyers Loan Approval Letter

14
What is a Homeowner Authorization Letter?

• The Homeowner Authorization letter is a letter
  written by the homeowner to the mortgage servicer
  that gives the mortgage servicer approval to
  speak directly with a specific third party (i.e.
  your Realtor) about that particular loan.

15
Homeowner Authorization Sample

• January 1, 2008
• My Mortgage Servicer
• 123 Main Street
• Big City, NJ 12345
• To Whom It May Concern
• I am working with Mr. E. Z. Sale who is a real
  estate agent with W.E. Sell Homes Realty to sell
  my property. I give My Mortgage Servicer
  permission to share information related to my
  property and its sale with Mr. E. Z. Sale. My
  property address is 1 Nice Street, My Town, NJ
  12345 and my loan number is 123456789. If you
  have any questions, please call me at
  973-999-9999 after 5 pm.
• Thank you,
• Hap E. Homeowner

16
Dont fall through the cracks!

• Dont Hide from phone calls or letters the bank
  is trying to help.
• They CAN Foreclose even if you ignore their
  attempts to contact you.
• It is NEVER too late or too early - If you
  anticipate a hardship, call and make arrangements
  before you miss payments, etc.
• Be persistent follow up once or twice a week
• Banks have guidelines as to what they can work
  with involuntary hardships (fired) vs.
  voluntary hardships (quit)
• In this market, banks are making exceptions to
  these guidelines!
• Divorced Does Not Equal Release of Liability if
  your ex-spouse took possession of the property,
  you will need a quit claim deed and for the
  mortgage investor to send you a release of
  liability. Loss mitigation can help.

17
Other resources for help

• HOPE NOW is an alliance between counselors,
  servicers, investors, and other mortgage market
  participants. This alliance will maximize
  outreach efforts to homeowners in distress to
  help them stay in their homes and will create a
  unified, coordinated plan to reach and help as
  many homeowners as possible.
• www.hopenow.com

18
Real Estate Services Team

• Lois Johnson
• Manager
• Real Estate Services Group
• Manage VAMS, REST (Client Program), Affiliate
  Vendor Programs
• Direct 704-285-6132
• Toll-free 866-896-7045
• Jennifer Woodward Grace Meeks
• Real Estate Counselor Program Assistant
• Direct 704-285-6123 Direct
  704-285-6134