Are you having trouble getting your short sales closed? Do you think that they take forever to process? Do your buyers walk when you have finally obtained your approval letter?

This is article number five in a series of 10 articles about the Top Ten Tips for Getting Your Short Sales Closed.

Tip 1: Get Educated About the Short Sale Process.

Tip 2: Set Expectations Accordingly.

Tip 3: Prepare Your Short Sale Package With Care.

Tip #4: Get Non-Institutional Liens Released Early.

And here is Tip #5: Follow Up Quickly to Avoid Delays

It never fails. You are laying in bed at 5:00 a.m. and your cell phone rings. You hear it even though the phone is plugged in and charging down the hall. Who is it? Well, it’s a short sale lender and s/he needs an item in order to complete or update the short sale package. Or perhaps the lender has a question or needs a change to the estimated settlement statement.

In order to avoid delays in the processing of your short sale, assigned tasks (either in the Equator system or received via telephone or email) must be completed quickly and efficiently. Some delays can slow or even halt the processing of your short sale transaction.

• Check your phone and email messages regularly (including your spam or junk box) in order to assure that you have all your messages.
• Log into Equator daily (if you are working in that system) in order to verify that you have no open tasks.
• Make sure to learn about deadlines and be sure that all requested responses are addressed prior to their deadlines.
• Encourage the homeowner to read and review all mail regularly. Many items pertaining to programs such as HAFA, will be sent to the homeowner directly and may not be available directly to the agent processing the short sale.

Completing tasks or activities immediately upon request will help you to help your seller avoid foreclosure and will also help your short sale to move along efficiently.

It does not take Albert Einstein or Isaac Newton to process a short sale. There are very simple steps, that when completed methodically and efficiently can lead to a successful short sale closing. Responding immediately to all requests is just one of those things that can result in an effective short sale closing.

If you have completed more than a handful of short sales, then you have no doubt faced the music with respect to property value.  During the course of the short sale, the short sale lender sends out another Broker to complete a Broker Price Opinion (BPO) for the short sale listing. The bank then, in most cases, bases their price on the value stipulated in the BPO. However, often times, there is a slight discrepancy between the value stipulated in the BPO (what the bank wants) and the offer amount (what the buyer wants to pay). In many cases, what comes next is a valuation dispute. And, at some lending institutions, this is much easier to complete than at others.

Bank of America has recently revised their process for valuation disputes during the short sale transaction.

Here is an outline of the new process (courtesy of our friends at Bank of America):

• Tell your short sale specialist that you would like a reconsideration of the value.
• Receive an investor-specific, easy-to-complete form from your short sale specialist that specifies all requirements for a successful value dispute.
• Fill out the form and attach specified evidence.
• Stay in touch with your short sale specialist for results.
• Expect a value dispute review within 10-12 business days once all required information has been received.

Here is the evidence you will need in order to support your valuation dispute:

Provide comparables that are recent, proximate (nearby) and similar to the property in question.

• “Recent” means sold within 90 days of the actual value document date.
• “Proximate” varies by location. In a rural area, for example, a home five miles away could be considered proximate.
• You will be able to provide additional notes to highlight characteristics of the comps.

When the dispute centers on property condition or hazards:

• Provide an itemized estimate from a licensed contractor on the contractor’s letterhead.
• Provide photos to illustrate the repair, condition issue or hazard you want to highlight.

If your valuation dispute relates to condition and significant repairs are required (which in turn, lower the subject property’s value), it’s best to have multiple bids in order to support you position. But, don’t expect the bank to pay for all new carpet when there is a small stain in the living room.

Here’s a recap of some of the interesting stuff that went on this past week in the distressed property arena:

HAMP Modifications Down 33% from Last Year  This article provides information on the decline in HAMP loan modifications. What does it mean? Are we winding down in the distressed property arena or are the banks just not that efficient? Read more to find out.

Are We Really at the Bottom?  We’ve seen some big changes in the market lately? Is the bottom behind us and will this bottom actually stick? Read more in this dsnews.com article.

How to Command the Short Sale Lender’s Attention  While it is feasible for Lady Gaga to wear a meat dress to her job to command attention, a short sale takes much more specific finesse in order to get a deal done. Here are some ways to do just that.

There’s lots going on in the distressed property arena. And, if you are actively working with ‘distressed’ borrowers, it’s important to keep up with all of the changes in the industry. Sometimes that’s hard, which is why we’ve provided you with a weekly recap right here.

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Are you having trouble getting your short sales closed? Do you think that they take forever to process? Do your buyers cancel when you have finally obtained your approval letter?

This is article number four in a series of 10 articles about the Top Ten Tips for Getting Your Short Sales Closed.

Tip 1: Get Educated About the Short Sale Process.

Tip 2: Set Expectations Accordingly.

Tip 3: Prepare Your Short Sale Package With Care.

And, here is Tip #4: Get Non-Institutional Liens Released Early.

There are several kinds of liens that can be associated with the property or the borrower. And, in most cases, all of the liens associated with the property or the borrower need to be released prior to closing.

In order to learn about the liens associated with the property and/or the borrowers, the best course of action is to order a preliminary title report when you take the short sale listing. The preliminary title report will list many of those liens that will need to be cleared prior to closing. Another recommendation would be to have the local title company run a Statement of Information on the short sale seller. Often liens are associated with the seller, but not attached to a specific property.

In a short sale, most short sale lenders in the first position will provide some sort of compensation of other mortgage lenders on title (such as a home equity line or 2^nd mortgage). However, it is not common for short sale lenders to pay for any of the following: HOA Liens, child support, abstracts of judgment, federal and state tax liens or mechanic’s liens.

If you want your short sale transaction to move along swimmingly, work with your short sale seller to assure that any non-institutional liens on the property are released prior to closing.

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I think that there is no question that in many parts of the United States (San Diego County included) it’s a seller’s market again. Just a few weeks ago an agent in my office received 24 offers on his short sale listing, and another property got 10 offers the very same weekend.

When reviewing short sale offers with clients, it is important to look at the type of loan that the buyer will obtain: VA, FHA, or conventional financing. And, will the buyer require a closing cost concession from the seller?

One of the unknown factors often associated with a short sale is whether the bank will approve the closing cost concession. For example, you may have an offer from a buyer that needs a 3% closing cost credit. However, it is entirely within the realm of probability for some short sale lenders to have guidelines that would prohibit them from approving that 3% closing cost credit.

Then what do you do? A short sale seller is not going to net any money at closing and will not pay that closing cost credit out of his/her own pocket. But, there are two easy and obvious solutions:

1. Suggest that the seller select an offer that does not ask for a closing cost credit.
2. Write a counter offer whereby you specify that approval of the short sale closing costs by the short sale lender is not a contingency of sale.

Need more information on how to write a short sale counter offer? Why not download our free ebook at http://www.shortsaleexpeditor.com/ebook/  You’ll be glad you did!

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Here’s a recap of some of the interesting stuff that went on this past week in the distressed property arena:

What an Extension of the Mortgage Debt Relief Act Could Mean This article provides a financial breakdown on the benefits of extending the Mortgage Forgiveness Debt Relief Act of 2007 through the end of 2014. As of the publication of this article, the extension has not yet occurred.

New California Bill Could Be Good for Approved Short Sales  The California Association of Realtors® is backing a bill whereby foreclosure auction dates cannot be set if the bank has approved the short sale. For those of us who have spent countless hours trying to postpone a foreclosure auction for a transaction where we already have short sale approval, if this passes, it could actually be a good thing. Of course, passing and getting put into play be the lenders… now that could be tough.

HAMP Rental Fraud  Treasury watchdogs are criticizing the mortgage servicers for not doing enough to verify that investors taking advantage of the rental component of the HAMP program are actually renting out their units. Additional changes to the Treasury programs (HAMP and HAFA) are coming on June 1, 2012.

There’s lots going on in the distressed property arena. And, if you are actively working with ‘distressed’ borrowers, it’s important to keep up with all of the changes in the industry. Sometimes that’s hard, which is why we’ve provided you with a weekly recap right here.

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Are you having trouble getting your short sales closed? Do you think that they take forever to process? Do you buyers when you have finally obtained your approval letter?

This is article number three in a series of 10 articles about the Top Ten Tips for Getting Your Short Sales Closed.

Tip 1: Get Educated About the Short Sale Process.

Tip 2: Set Expectations Accordingly.

Tip 3: Prepare Your Short Sale Package with Care.

There are two kinds of short sale packages: those that are presented without an offer and those that are presented with a purchase offer.

When preparing your client’s short sale package, you need to know whether you are going to be processing the short sale with or without an offer.

There are certain short sale programs for which a loan can begin the short sale review and qualification process without an offer. Two such programs are HAFA, and the Bank of America Cooperative Short Sale Program.

If your client (the short sale seller) is not a candidate for one of these two programs, then the best tactic for effective short sale processing is to submit the entire short sale package to the lender at one time: this means one fax, one email, or one login to your Equator account.

Collect all of the items required for the short sale package from your seller and take time to review all of the documentation.

• Did the seller provide you with all pages of the bank statements (even if one page was blank)?
• Is the hardship letter legible?
• Are any scanned documents easy to read?
• Do you have financial information for all borrowers on the loan?

Carefully review the items you have collected. Know that each bank may have a slight variation in the required forms. So, it’s a good idea to call ahead in order to be sure that your client has completed all of the items required for effective and efficient processing of your short sale.

Of course, if you believe that paperwork is tedious and time-consuming and you would rather be in the field, showing homes and taking listings, please contact us. We can show you a way to get that short sale approved without even breaking a sweat!

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Negotiating with second lien holders has long been a hot topic on the Short Sale Expeditor® website. Most recently, two agents asked the following questions about second lien holders and short sales.

Why do second lien holders play games when they are in the inferior position? Why doesn’t the threat of foreclosure scare the second lien holder?

First off, who knows why anyone does anything? But, nevertheless, I will be more than happy to speculate.

In a short sale where both the first lien holder and the second will each have to accept less than the amount owed, the first lien holder will state how much of the proceeds will be allocated to the second lien holder.

For example, let’s say that there is a first lien on Fred Flintstone’s property for $400,000, and a second lien on his property for $100,000. Let’s also say that Fred needs to move to another part of the United States because the quarry is relocating. His Bedrock home is only worth $300,000.

Fred’s property receives an offer for $300,000. His savvy short sale agent contacts his first lien holder and the lien holder says that they will allocate $6000 to the second lien holder.

The short sale agent calls the second lien holder and advises the lien holder that they will receive $6000 in order to release their lien at closing. However, the second says that they want $12,000.

This is the “game” that is referred to in the question above. Depending upon the state in which you reside and the deficiency laws for that state, the second lien holder may not be able to “go after” the borrower for the difference after closing. This could be one reason why the second lien holder plays this “game.”

Another reason may be that the second lien holder may have additional legal recourse in a foreclosure. So, if their “game” causes Fred’s home to be foreclosed, the second lien holder may have additional recourse (again, this depends upon the state in which you live, and you should discuss this with an attorney).

A third reason may have to do with mortgage insurance. If there is a mortgage insurance premium on the second lien, then the second lien holder may have more to gain in foreclosure than in a short sale.

Again, this is all pure speculation. Frankly, I just feel badly for Fred Flintstone that he cannot get his short sale approved. Shouldn’t the Slate Rock and Gravel Company have some sort of corporate relocation program?

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