Foreclosures and Short Sales

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Comment by Melissa Melnick on April 22, 2009 at 12:43pm

Does anyone have a good answer for the following question? I seem to hear different answers...

How long does a short sale affect credit/ability to get a mortgage?
foreclosure?
turning the keys in to the bank before foreclosure?

Thanks, Melissa

Comment by Troy Schuricht on April 22, 2009 at 12:41pm

Commonly unknow fact on FHA loans.

FHA does not require any home to have any appliances to be eligible for FHA financing.

Keep this in mind on you short sales and foreclosure transactions.

Best Regards,

Troy Schuricht

Comment by Greg A. Marthaler, GRI, ePro on September 23, 2008 at 8:40pm

While most of the agents in our Southwest Phoenix West Coldwell Banker Office are choosing to do REO Properties, I have selected to base my business in the direction of helping folks avoid foreclosure and promote doing Short Sales. Not only would Banks normally prefer a short sale over a foreclosure - if the numbers make sense - it is usually a better situation for the Sellers as far as their credit standings, and a winning situation for the Buyers, who are getting a good deal on the price of their new home.

Comment by Ange Fries GRI;ABR;E-Pro on September 19, 2008 at 6:03am

Hello Ange,Are you looking for buyers or do you have the investor buyers on this one Interesting my name is Ange and we spell it the same way.

Comment by Jeremy Thompson on September 18, 2008 at 4:51pm

The majority of my business lately seems to be short sales transactions. Although challenging they are a necessary part of the market we are in today. So we have created a great organizational tool to help gather the necessary paperwork you will need to submit to the loss mitigation department and assist you in the process. I have closed dozen's of short sale transactions and can assist you with anything you may need. Please call or email me if there is anything I can do for you. Thank you

Comment by Geoff Adams on August 28, 2008 at 3:52pm

I only work foreclosure properties. My main clients are banks and I act as a listing agent for foreclosed properties. I also assist buyers in negotiating with the banks on foreclosures. Please email me with questions: Geoff@HolisticRealtor.com

Comment by Brent Hammonds on August 28, 2008 at 2:51pm

A Colleague of mine put this together. I provide this to Buyers and Agents who are new to the Short Sale world. Hope it is helpful...

Buying a Short Sale? What is the Process?
1. When you write your offer for a Short Sale, your agent should insert language into the contract that states the contract is "Contingent on seller's mortgage holders' approval".
2. Often, lenders require Short Sale properties to be sold in "as is" condition, thus not threaten a potential closing with repair items. Language should be inserted into the offer in that regard, either with appropriate addendum, or under additional terms.
3. The Seller may counter your offer. Remember, the contract is between you and the Seller, not you and the Seller's lender. The Seller does not want to submit an offer to the bank knowing it will likely be rejected and/or counter-offered because it is too low or has too many closing costs on the Seller's side. The lender pays these costs, and will always analyze its "net". In this case, it will be a "loss", so the lender wants to mitigate the loss as much as possible.
4. After the contract is signed and agreed to by both you and the Seller, it will be sent to the Seller's lender, or lenders if there is more than one mortgage holder. Documentation submitted with the contract includes an estimated net sheet, the Buyer's approval or proof of funds letter, the listing agreement, Seller's financial worksheet, recent pay stub, recent bank statement, last year's tax returns and hardship letter.
5. The Seller's lender will then order an independent appraisal and/or Broker Price Opinion (BPO) of the subject property. Why? They are already losing money on their investment with the seller, i.e. the full mortgage amount that was agreed to is not being paid back. Therefore, their investors are not making what was promised. They want to make sure the offer is in line with market value, and not too low. They have a responsibility to their investors, and in the case of VA or FHA loans, they have federal guidelines that must be met in terms of value.
6. The Seller' lender will counteroffer your offer with the appraised value.
7. You will accept or counteroffer this amount. Your offer may ultimately be rejected if it does not net a certain percent of the appraised value, including closing costs. This varies by lender. The lender makes it decision based on the requirements of the end-investor on the mortgage regarding price. For example, even though the "lender" may be Wells Fargo, the actual investor reaping interest may be the Bank of New York or Merrill Lynch. There may also be PMI or private mortgage insurance on the loan. In that case, the PMI company will also order a separate appraisal or BPO. Your offer must satisfy both lender's requirements. If there is a second mortgage on the property, the first mortgage holder will offer the second mortgage holder a dollar amount as a "buy out". I help facilitate these negotiations. Additionally, the lender(s) may ask the Seller for a cash contribution or promissory note. If the Seller cannot comply, you may be asked for additional monies to make up some of the difference. If the property is a good deal, you may wish to do so.
8. The timeline for initial counteroffer from the lender may be 12 to 18 weeks. This is because lenders have an overwhelming number of sellers asking for Short Sales. Some of the bank "negotiators" have as many as 400 files at one time. They often work on the files facing imminent foreclosure sale dates first. Rest assured, I contact these lenders every two business days by phone and/or email to get updates on the offer.
9. After final approval by the lender, a "demand" or "approval" letter is sent out to the Seller. The letter will normally stipulate that closing must occur by the date stated in the contract, or there will be a per diem penalty for not closing on time. Thus, you are expected to have your mortgage, insurance and inspections completed in a timely manner. The per diem penalty is quite common in the corporate world.
10. The lender will expect to see a copy of the settlement statement at least two days prior to closing to ensure it is accurate, and matches what was stated in the net sheet that was submitted with the offer and on the approval letter.
11. Congratulations! Your patience has been rewarded. You got a great deal!

Comment by Diana Braun, QSC, PS, TRC on August 21, 2008 at 2:10pm

A wonderful way to share expertise and knowledge in foreclosure/short sales. Helping individuals/families remain in their home has consistently been my goal. I would love to share with others successful ways of advocating for your customers.

Comment by Julia "Julie" Bridge on August 14, 2008 at 10:50am

Equity Title just handed me a wonderful tool....a legal size packet with all the forms you need. The front of the packet has a "Short Sale Checklist" printed on the front. Call Kim at 623-580-1218

Comment by Doreen Drew on August 10, 2008 at 9:07pm

Does anyone have experience with Indymac? Countrywide?

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