Fannie Mae Will Directly Resolve Short Sale Issues

March 14, 2013

shortsale1

Fannie Mae recently introduced an expanded HomePath for Short Sales tool to resolve short sale challenges. The tool, a new short sale escalation process, is open to any real estate professional working on a short sale involving a Fannie Mae-owned loan. Once a case is escalated, Fannie Mae will directly engage with the agent or servicer to address challenges such as when you are ready to list a property and need a recommended list price; you want to contest a value Fannie Mae has assigned to a listed property; you haven’t heard back from the servicer; and/or you have an issue with an offer currently under negotiation.

Contacting Fannie Mae about an Active Short Sale

A Job Aid for Real Estate Professionals

If you are a real estate professional seeking assistance with an active short sale, you have the option of escalating certain issues directly to Fannie Mae to get the answers you need.

When should you contact Fannie Mae about a short sale?

  • I’m ready to list a property and need a recommended list price.
  • I want to contest a value Fannie Mae has assigned to a listed property.
  • I submitted an offer to the servicer more than 20 days ago and have not received acknowledgement of it.
  • My request for a valuation has been pending with the servicer for more than 30 days.
  • I have not received an acceptance, rejection or counter to an offer I submitted more than 60 days ago.
  • I have an issue with an offer.
  • I have a question about a Fannie Mae policy related to short sales.

To contact Fannie Mae about a short sale:

  1. Determine if Fannie Mae owns the loan using our Loan Lookup tool.
  2. Read about what information you’ll need to provide on the checklist below.
  3. Ask your client to complete Fannie Mae’s Borrower Authorization Form.
  4. Submit your short sale issue directly at http://www.homepathforshortsales.com/hpshortsaleinquiry.html

Important Info

Know What You Need Ahead of Time
Required Information

Before you contact Fannie Mae about a short sale, make sure you have all of the information you need. The information you need depends on the request you are making. Some information is required for Fannie Mae’s dedicated short sale team to be able to help you.

After verifying Fannie Mae owns the loan, Fannie Mae will need your contact information (listing agent name, agency name, phone number, and email), the Fannie Mae and/or servicer loan number, and a completed Fannie Mae Borrower Authorization Form, which you will need to upload when you begin the process.

In addition to this information, here’s what Fannie Mae will ask you for when you inquire about an active short sale. *Note that the information marked with an asterisk is required*

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Bank of America Short Sales and Bankruptcy: What Agents Need to Know

December 24, 2012

home_vs_lender_on_judicial_scale

Bank of America can review a short sale offer while the loan is in an active bankruptcy. To complete a short sale and issue the approval letter, the bankruptcy documents must be filed and approved by the court. Any final agreement will require Bankruptcy court approval.

Homeowner(s) should consult with their Bankruptcy Counsel about how these programs could affect their mortgage and their bankruptcy case.

When a loan is in bankruptcy, there is an Automatic Stay, also known as a “hold,” of any collection activity placed on any and/or all debts to which the debtor is a party. Before the short sale specialist can discuss the short sale, Bank of America must have written authorization from the Homeowner(s’) Bankruptcy attorney on the law firm’s letterhead to discuss loss mitigation options with the borrower. This is in addition to the Bank of America Third-Party Authorization Form needed from the borrower to speak to the bankruptcy attorney and the listing agent.

If Homeowner(s) is/are currently in a bankruptcy proceeding, or have previously obtained a discharge of this debt under applicable bankruptcy law, all communication and notices are for information purposes only and is not an attempt to collect the debt, a demand for payment, or an attempt to impose personal liability for that debt. The Homeowner(s) is/are not obligated to discuss their home loan with Bank of America or enter into a short sale agreement or other loan-assistance program. Customers should consult with their bankruptcy attorney or other adviser about their legal rights and options.

For a short sale to be processed to completion for a loan in bankruptcy, Bank of America must receive one of the following releases issued by the bankruptcy court:

  • Granted Motion to Sell*
  • Granted Motion for Relief from Automatic Stay with noted short sale negotiation*
  • Dismissal
  • Discharge with Abandonment, Closing Order, Final Decree, Trustee No Asset Review

*A granted Motion differs from a requested Motion.

Note: If Homeowner(s) receive(s) a discharge under a Chapter 7 bankruptcy proceeding: discharge releases the Homeowner(s) from personal liability for certain specified types of debts. The Homeowner(s) is/are no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the Homeowner(s) from taking any form of collection action on discharged debts, including legal action and communications with the Homeowner(s), such as telephone calls, letters, and personal contacts.

Although a Homeowner is not personally liable for discharged debts, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.

Bankruptcy Frequently Asked Questions:

What additional documents will be needed to complete this short sale?

Bank of America must have written authorization from the Homeowner’s bankruptcy attorney (on the law firm’s letterhead) to discuss loss mitigation options with the Homeowner. The customer and the attorney may determine that they do not want to give this authorization and the short sale can be negotiated through the attorney. This attorney authorization permitting Bank of America to speak to the Homeowner(s) is in addition to the Bank of America Third-Party Authorization Form needed from the Homeowner(s) to speak to the bankruptcy attorney and agent. Communication cannot occur with the real estate agent/Homeowner(s) until the bankruptcy attorney’s written authorization on the firm’s letterhead and the Bank of America Third-Party Authorization Form are received.

When will I receive the approval letter?

An approval letter cannot be issued until the releases, identified above from the Bankruptcy court has been received. Once the release is received, the file can be submitted for approval to the appropriate investor(s) and/or mortgage insurance company. The file will then follow the normal approval process to ensure it meets investor requirements.

Why can’t you approve a short sale file while waiting for the bankruptcy to be released?

An approval must follow the direction provided in the release by the Bankruptcy court. That is why a short sale will not be approved unless a court order permitting the sale is first received.

What fees can be paid related to the bankruptcy proceeding?

Any fees that are directly associated with the bankruptcy would be subject to further review and approval. For example, if Bank of America incurs fees to file a pleading to approve the short sale in the Bankruptcy court, Bank of America may seek permission from the Bankruptcy court to allow such attorney and filing fees.

Can a homeowner qualify for a Home Affordable Foreclosure Alternative (HAFA) incentive while in bankruptcy?

Yes. However, any funds going to the Homeowner(s) through state incentives or other incentive programs must be properly disclosed and handled in accordance with bankruptcy legislation and local rules.

Are additional documents required for a short sale when the homeowner is in active bankruptcy?

Yes. Two additional documents are needed for a short sale that is in active bankruptcy:

  • An attorney authorization letter from the Bankruptcy attorney providing permission to speak with the Homeowner(s) is required. This is separate and in addition to the required Bank of America Third-Party Authorization Form signed by the Homeowner(s) permitting Bank of America to speak with the bankruptcy attorney and the real estate agent.
  • Bank of America must receive a release issued by the Bankruptcy court (listed above).

If you have questions, first contact your short sale specialist (or closing officer) through Equator messaging. If there’s no response after two days, escalate to the team lead.

For urgent needs (such as a foreclosure postponement) or for escalation beyond the team lead, contact Short Sale Customer/Agent Care at 1.866.880.1232.


Bank of America Short Sale Agent Update

December 4, 2012

short sale house

Understanding Short Sale Agent Commissions

Bank of America pays commissions to licensed real estate professionals who close acceptable short sale transactions.

Commissions are:

  • Allocated from the sale’s proceeds to qualifying real estate agents or attorneys at closing
  • Calculated as a percentage based on the total/gross sales price of the property
  • Usually divided between the buyer and seller agents, as per mutual agreement

The maximum commission for all acceptable transactions is as follows and is paid when the short sale reflects positive mitigation:

max commission

Flexibility is allowed in the commission structure when the short sale does not reflect positive mitigation* or if the minimum acceptable net proceed** is not met. In these circumstances, the real estate agent may choose to reduce his/her commission to meet minimum mitigation requirements.

Exceptions:

  • Dual agents unrelated to either party will receive a 4% commission
  • In some situations, commission is limited per investor guidelines/investor approval and may vary

 Acceptable and Unacceptable Short Sale Transactions

In an acceptable transaction, commissions will always be paid within the following guidelines:

acceptable and unacceptable boa short sales

* Positive mitigation is the amount of loss Bank of America will mitigate by accepting the short sale as opposed to foreclosure.

** Minimum acceptable net proceed is the amount the investor requires to complete the short sale transaction.

An eligible short sale transaction is made on an arm’s-length basis, meaning the buyer and the seller have no personal, familial or professional (business associate, business interest) relationship and the property is listed for sale on the open market at fair market value. There may not be any actual or implied conflicts of interest.

If you have questions, first contact your short sale specialist (or closing officer) through Equator messaging. If there’s no response after two days, escalate to the team lead.

For urgent needs (such as a foreclosure postponement) or for escalation beyond the team lead, contact Short Sale Customer/Agent Care at 1.866.880.1232 between 8 a.m. – 10 p.m. (EST), Mon- Fri,  and 9 a.m. – 5:30 p.m. (EST), Sat.


Bank of America Short Sale Process Presentation

April 19, 2010

 

 On April 8, 2010, Bank of America (BOA) executives held a webinar presentation for over 10,000 Realtors to discuss BOA’s short sale process.

Tip: Refer to the Equator Agent/Homeowner Guide for step-by-step instructions 

Summary

10 Tips to Avoid Delays in Processing Time

  1. Review all documents and images for accuracy prior to uploading in Equator
  2. Ensure that property is listed in the MLS
  3. Negotiate external party fees prior to submission of HUD-1
  4. Supply HUD-1 that is valid for at least 60 days
  5. Ensure that agent and customer tasks are completed as timely as possible in Equator (i.e. accepting short sale assignment, submitting short sale offer, and uploading offer documents within 7 days)
  6. Only submit fully executed purchase offers with all appropriate addendums signed by both buyer and homeowner
  7. Work to get purchase offer representing the best possible fair market value and highest net proceeds for the lender
  8. Set appropriate expectations with buyers/sellers so they understand the complexity and resulting length of time a short sale can take
  9. Work to get a release on outside liens as early as possible
  10. The following situations will cause delays: (1) Change in buyer or agent at any time during the process; (2) Customer files bankruptcy; (3) Deal change after the approval letter is issued

Steps Already Taken to Improve the Short Sale Process

  • Increased staffing and updated training
  • Dedicated Short Sale Call Center:  1-866-880-1232
  • Hours of Operation: 8 AM – 9PM (EST), Monday -Friday
  • Extended Saturday hours – Coming Soon!
  • Equator – primary tool for initiating the short sale
  • Changed procedures to improve associate responsiveness
  • Enhanced the procedure to proactively provide loan status

Steps Underway to Enhance Programs

Home Affordable Foreclosure Alternatives (HAFA):

  • Implemented on April 5, 2010 and are following the HAFA guidelines 
  • HAFA is first in short sale waterfall of options for a homeowner
  • Remember: Some investors (Fannie Mae and Freddie Mac) are not participating; offering a cooperative or traditional short sale
  • Proactive outreach to homeowners
  • Offering a pre-approved short sale solicitation 
  • After offer is submitted, approval within 14 days
  • Promissory Note – Not required with HAFA 
  • Homeowner required to clear second liens
  • Homeowner leaves the home – no deficiency and no contribution

Cooperative Short Sales:

  • Similar in approach to HAFA but wider in scope
  • Includes homeowners who are not eligible for HAFA – non-owner occupied, jumbo loans, Fannie, Freddie
  • Currently in pilot stages with rollout expected 2nd Quarter of 2010

Steps Underway to Educate Agents

Education Materials:

  • Overview of the process so agents can lead process
  • Step-by-Step Guidelines for working through the system as an agent and homeowner
  • Tips to avoid common problems

Outreach Events to Distribute Materials

  • Large Realtor Events
  • Webinars
  • Participation with Short Sale Certification Programs

Want Agents’ Input

  • Developing mechanisms for on-going feedback on process, systems, materials
  • Will act on feedback with continuous improvements

Introduction to Equator

  • 24/7 access to the short sale system
  • Status tracking
  • Direct communication with the Short Sale Negotiator
  • Documents are uploaded directly to Equator instead of faxing
  • Streamlined approval process
  • Historical view of offers and counter offers

Coming Soon in Equator:

  • There are a few specific loan investor types (i.e., FHA/VA) that are not on the Equator system and will be added at a later date
  • Agent feedback, homeowner feedback, and internal data is being leveraged to identify system and/or enhancements for future process rollouts and educational material improvements

Agent Communication within Equator

  • Throughout the process you will receive notifications of the status of the short sale. The system automatically tracks the agent, customer, and bank tasks and will alert you after key milestones have been achieved and to let you know the next steps.
  • For specific questions/concerns you have, the negotiator assigned to the short sale is your primary contact.
  • Please ensure when sending a message in Equator you only select “Negotiator”.
  • We request that you only send messages via Equator and not directly through email. This enables our associates to effectively manage the case load and respond to agent inquires in a timely manner.
  • If you have submitted a request to the Negotiator via Equator AND there has been no response after 2 business days: You should escalate to a “Team Lead” by selecting this role in your message drop down menu.
  • In the event of an urgent issue, such as, a foreclosure sale date within 48 hours: You should immediately escalate to the “Team Lead” and “Manager”; and also call the Short Sale support team at 1-866-880-1232. 

Fannie Mae Promotes Short Sales

January 16, 2009

Short Sale Cloud

During the past month, we’ve heard of several ideas and seen several attempts to give some relief to distressed homeowners facing foreclosure. Here are a few: interest rates have been lowered, loan modifications are being proposed, foreclosure moratoriums have been suggested as has the use of bankruptcy courts to restructure loans.

Each approach offered by government and banking officials is flawed, but at least they’re finally looking at the problem.

This past December, Fannie Mae made a move when they put a moratorium on foreclosures through January 9th. Their reasoning was that they were installing a new computer system that would allow them to address the challenges of the current market much more efficiently . . . and they wanted time to come up with some ideas on how to handle all the foreclosures.

So what did they figure out? You got it! Fannie figured out that short sales present a very good way to get these properties moved fast. Fannie is now testing a program in Orlando and Phoenix whereby they will agree to a minimum price for which they would be willing to sell a house, rather than risk having it go to auction and sit on the market for months.

In essence, they want to do the short sale BEFORE there’s a buyer and then give the approved price to the real estate agent who then can market and sell the property.

Many real estate agents loath short sales because of the complex paperwork and the incredibly long response times it takes for lenders to respond to offers. Agents often lose their buyers because banks move too slow. Fannie Mae believes that any solution for today’s housing crisis will have to involve real estate agents, and to get this group on board, they’d need to take away obstacles that cause agents to run in the other direction.

It always looks good on paper doesn’t it?

If the reason agents aren’t doing short sales is because they’re complicated and take too long, then Fannie is going remove those obstacles and give the agent a number that they can successfully market. That way there’s no complicated paper work, and no guessing at what number the bank will finally approve.

But for Fannie to make this work, they need to overcome two challenges: 1) Working with homeowners to provide the information (short sale package) that is necessary to get the approval; and 2) A reliable way to determine market value.

In addressing the first concern, Fannie Mae could waive standard short sale package guidelines. Regardless, Fannie Mae is going to need to make the process as simple as can be on the front end so that homeowners can effectively begin the process. As for the second concern, who is going to make the decision on what each property can sell for, if the number is being determined BEFORE an agent gets involved?

Is it too far of a stretch to think of a 25 year-old in a cubicle looking at comparable properties for each case and ball-parking a number without understanding the market? Moreover, do you really think Fannie will be aggressive in discounting property before they know what the market will actually bear? And will it be enough of a discount to lure buyers?

Let’s use Los Angeles as an example. LA has seen value declines in middle class areas as much as 40% in 2008. In 2009, they are expecting a drop of 24% followed by a 6% drop in 2010.

Do you really think that Fannie will set minimums low enough to reflect what going on in the Los Angeles market?

I have my doubts.

Keep your fingers crossed for the next administration and hope that whatever they decide to do, it works.

*This article is adapted from SREC’s Blog


What Are Your Resolutions for 2009?

January 5, 2009

happy New Year

I want to take a moment to wish you a very safe, happy, healthy, and prosperous year in 2009!

 

Here is a list of the top 10 real estate investor’s resolutions for 2009:

 

1) I will clearly articulate what I want my real estate investing business to look like in one year and set concrete attainable goals to make it happen. (We can’t get where we’re going without a goal roadmap, so let’s chart it out)

 

2) I will follow those who have succeeded, emulate their successes
and learn from their mistakes. (It’s true. We all need mentors.)

 

3) I will stay focused on my core business and not get distracted by all the “next best things” (Just because an investment, opportunity, seminar, product, or book is exciting, informative, or hyped to the moon, doesn’t mean it is going to help in our specific business plans.  Let’s exercise some wisdom and maintain momentum staying focused)

 4) I will use the educational products and resources I have acquired before jumping onto anything else.   (Do we have unread books?  Let’s read them!  Unwatched trainings? Get watching. Unheard audio recordings. Pop them in your .mp3 player or listen using the Automobile University time when driving. Let’s apply what we ALREADY know this year, ok?)

 

5) I will prioritize networking relationships with others in the real estate arena, as it is people and not just technology or strategies that makes my business successful. (Let’s remember that the greatest successes are built on the greatest service to the greatest number…)

 

6) I will make every effort to attend at least one real estate investing seminar live event in 2009.  (This is a great place where we can forge lasting business relationships that add greatly to our bottom line)

 

7) I will wisely invest both time and money in my real estate business. (If we aren’t willing to make the necessary sacrifices, we probably aren’t going to achieve our goals. Time is the biggest equalizer we all have. I have the same time as you, as a pauper. The difference is what we do with it. And investing money in our real estate businesses can be vital – tools, technology, systems, education, marketing, office supplies, and more – all of these are vital)

 

8.) I will THINK BIG! I will THINK BIGGER! (The opportunity before us is limitless.  Let’s not be satisfied with small successes… let’s go for it!)

 

9) I will not give up! (Nothing happens without action.  We must never stop taking action. Take Massive action NOW!)

 

10) I will always “pay it forward”. (Let’s remember what it means to be a giver, in this season of giving. To sow a seed by helping others— and reap a harvest of better relationships, people served, and friendships made and renewed)

 

So what are your resolutions for 2009?

 

Let me know or post them below so I can help you achieve them and have it be the best year you have ever seen!

 

 

 

 


The Greatest (and Largest!) Real Estate Giveaway In The History Of Real Estate

December 27, 2008

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