Negotiating_a_Short_Sale[2

Negotiating a Short Sale : 

Negotiating a Short Sale 101

IDENTIFICATION - BANK : 

IDENTIFICATION - BANK Determine the lenders and verify all documents are present to deal with that particular lender For example: Some lenders require: Listing Histories MLS Listings Listing / Contract Addendums Multiple fax numbers for different departments IMPORTANT: DO NOT ASSUME THINGS ARE THE SAME AS THE LAST TIME YOU SUBMITTED A FILE – SHORT SALE SERVICING IS CONSTANTLY CHANGING

IDENTIFICATION – TITLE COMPANY : 

IDENTIFICATION – TITLE COMPANY Needs: Contract Correct HUD-1 Format To know you are in control of the deal You will be requiring multiple Preliminary HUD-1s Ordering Title Demand Letters

IDENTIFICATION - FORECLOSURE : 

IDENTIFICATION - FORECLOSURE Ask MMREM Asset Manager if they know of a Foreclosure Date Ask Seller when last payment was made and cross reference with State FC directory Ask Bank if there is a Foreclosure Date NOTE: Banks run Foreclosure concurrent with Short Sales

AUTHORIZATION AND PAYOFF : 

AUTHORIZATION AND PAYOFF Fax Complete Authorization to all Lenders Some lenders will require you to send an authorization to a different department to order a payoff Make sure to get the Payoff for 30-Days out When submitting a SS Package – Always include an authorization

ANALYSIS : 

ANALYSIS Review Client Financials Bank Statements, Pay Stubs, Tax Returns Review Hardship letter to ensure nothing is self-inflicting

HUD-1Heart of the SS Package : 

HUD-1Heart of the SS Package Line 400 should show the contract amount. Lines 406-412 will show tax adjustments that have been paid by seller in advance Line 502 will be total of all settlement charges from page 2 line 1400 Line 504-509 will show what the lenders are netting depending on how many there are. Line 504 is to the first lender and will reflect what is left over when all settlement charges are deducted. 502 will show form 1000-5000 depending on what the second lien holder will require to accept a short sale. Line 510-519 will show adjustments such as taxes unpaid by seller or other liens and or seller subsidy. Very important that you make sure that if the contract calls for seller subsidy it is only a maximum of 3%. Line 603 should show 0 if not your HUD 1 is wrong. Page 2 Line 700 should show no more than 6% of sales price 701-702 will show any admin fee 704 will show earnest money deposit All other lines should show customary fees that are paid in any transaction.

PACKAGING – Loan Numbers : 

PACKAGING – Loan Numbers Loan number should be at the top of any document or cover page you send to the bank

PACKAGING– Listing Agreement : 

PACKAGING– Listing Agreement Listing agreement must be: Valid at the time the offer was written If not attach listing addendum Applicable signatures and initials Concurrent through closing Listing price

PACKAGING – Purchase Contract : 

PACKAGING – Purchase Contract Purchase Contract must: Initialed and signed on every page by all parties Valid through closing Contract cannot be assignable

PACKAGING – Financial Worksheets : 

PACKAGING – Financial Worksheets All Client financials and authorizations must be signed and dated!! All financials must be updated monthly Hardship Letter must be signed and dated

PACKAGING – HUD-1 : 

PACKAGING – HUD-1 Must include anticipated costs for anticipated closing dates Try to get the Title Company to order title upfront

FOLLOW UP : 

FOLLOW UP This is KEY to being successful Learn everything you can from anyone that answers the phone it will help you understand the lender and their practices.

FOLLOW UP … : 

FOLLOW UP … Within 48 hours contact the lender to see if your package has been accepted Make sure you know the next steps and timeframes The friendlier you are the more information you will learn.

NEGOTIATIONS : 

NEGOTIATIONS Every mortgage company is different This is where you have to be aware of your deal. Such as value, hardship, and liquidity of your client Promissory Note Cash to close Remember to let them do most of the talking and learn from what they say.

JUNIOR LIENS : 

JUNIOR LIENS Junior Liens or 2nd Mortgages will often need to be negotiated Find out what the 1st Lien is willing to contribute to the 2nd and then find out what the 2nd wants to take Build a HUD-1 based what the 2nd demands and let the 1st counter. All banks are different with regards to who will agree to release their liens first, so error on the side of working the 1st as a priority.

KEY POINTS : 

KEY POINTS Be aware of property value. Know your HUD 1, have it up on the screen or in front of you. Be aware of who you are talking to get a name and direct number or even an email BPO back- they can negotiate value - Some may tell you what the value is and some will not. Generally they will accept a minimum of 77% of BPO value (after all expenses) Short Sale versus REO Appraisal to fight valuation After agreement they will give you a demand letter.

CLOSING : 

CLOSING Demand Letters Make sure to match the letter to the HUD 1 Verifying all numbers Closing date needs to be at least 30 days from the date the letter Demand letter to the title company Title company provide you with a copy of wire or checks and a signed HUD 1