Kathy Mehringer: Fannie Mae Strives to Improve the Short Sale Process for Homeowners and Real Estate Professionals

Posted on June 14, 2013 by admin

As part of their ongoing effort to create a more efficient system for Fannie Mae short sales a recently implemented system was introduced in June of this year. Yes, it is true; an improved short facilitation program is awaiting your next Fannie Mae short sale. Both homeowners and real estate professionals alike will find great value in the going forward changes!

It is well known that short sales are not the answer for every distressed homeowner. Equally true is the fact that these complex transactions take patience, perseverance and attention to detail! Once a homeowner determines that the short sale path is right option for them selecting a qualified and experienced real estate professional is the next step.

Staying up to speed with industry development is an integral component of success for that reason today’s post will provide you with an overview of the changes.

Start with a visit to this website: HomePathforShortSales.com. This site is designed for listing agents who have been selected to represent homeowners who have determined that they wish to pursue a short sale IF Fannie Mae is the investor on their mortgage. When you click on the link titled “Listing Agent Representing a Homeowner in a Fannie Mae Short Sale,” you will note an option to “Register an Offer.” I strongly urge you to do just that! In this way Fannie Mae will be able to begin working proactively with the servicer; thereby improving communication as well as the decision making process.

The overall experience will be much better if the homeowner understands the eligibility requirements and the needs to aggregate financial date early in the process. There are so many moving parts in a short sale, they can seem daunting but preparation and knowledge remain essential to success! As the good Dr. Seuss so aptly put it: “The more that you read, the more things you will know. The more that you learn the more places you’ll go.”

Please see below Fannie Mae’s description of the resources now available to real estate professionals:

  • Request a recommended list price from Fannie Mae before listing the property.
  • Register an accepted offer with Fannie Mae immediately after submitting the offer to the servicer.
  • Escalate an issue they are having with a servicer in regards to an offer they submitted or a valuation they received.
  • Submit a question about a Fannie Mae policy related to short sales.

Through this comprehensive site, agents can also:

  • Learn more about the key steps of doing a short sale with Fannie Mae.
  • Access our loan lookup tool to determine if Fannie Mae owns the mortgage.
  • Find answers to frequently asked questions on short sales and helpful resources to share with homeowners on their role and Fannie Mae’s role in the short sale process.
  • Report fraud if they see it occur on a Fannie Mae short sale.

Spread the word to your colleagues and be sure to take the time to review the plethora of information housed within HomePathforShortSales.com! I think you agree that Fannie Mae has taken great strides in improving the short sale experience for real estate professionals and homeowners!

The News Release associated with this aforementioned announcement may be found by clicking on the following link: http://www.fanniemae.com/portal/about-us/media/corporate-news/2013/5976.html

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Kathy Mehringer: “Hot Pockets” – Firestorm Erupts Over Withholding Listings from MLS

Posted on June 11, 2013 by admin

Market trending analysis in most areas demonstrates that buyers are “off the fence” and ready to invest in real estate.  The dream of homeownership is alive and well, interest rates remain at historic lows, consumer confidence is rising and prices are appreciating in varying degrees dependent on the region. But for today’s buyers the experience is frustrating at best!  Limited inventory translates to limited opportunity for many!

The first time homebuyer is forced to compete with all cash investors. FHA and VA buyers face increased challenges when there are competing offers because many sellers prefer larger down payments to exclusion of federally backed loan programs. Multiple offers create even more obstacles as bidding wars push the sales price upward.

As if all this wasn’t enough, the Pocket Listing appears to be gaining popularity with sellers and real estate agents alike.  When a listing contract is formed between seller(s) and broker the MLS Rules require the broker to submit the listing to the MLS within a set number of hours or days, unless the seller instructs the broker otherwise. The instruction must be in writing and submitted to the MLS along with the listing contract. This process results in the listing agent holding the listing in their “Pocket” or “Off-MLS” unless and until the seller instructs otherwise.

The term Pocket Listing is also used to describe a property that is not officially on the market but the seller has “authorized” one or more agents to quietly promote the property to prospective buyers and/or other brokers. Often these agreements are oral and highly risky. To avoid the many perils of such agreements, a Single Party Compensation Agreement (CAR Form SP) (CLICK FOR SAMPLE) should be executed by and between the broker and the seller. This document identifies the subject property, potential buyer, the commission rate due to the broker who secures the agreement as well as the commencement and expiration date. Note* the seller is to receive and acknowledge a Disclosure Regarding Real Estate Agency Relationships (“AD”) (CLICK FOR SAMPLE) PRIOR to the execution of the agreement.

If a cooperating broker secures the buyer identified in the agreement any compensation due must be negotiated by using the Cooperating Broker Compensation Agreement (CAR Form CBC) (CLICK FOR SAMPLE) or by including the cooperating broker in the Single Party Compensation Agreement.

When either of above-mentioned scenarios occurs the marketing is limited to small number of agents who may be part of a common networking group.  This practice is legal and ethical so long as the seller is made aware of the pros and cons of this particular strategy. Home sellers who may prefer the Pocket or Off-MLS marketing are often celebrities, judges, prosecutors, politicians or other high profile figures that prefer to maintain their privacy and security by limiting the exposure of their property to a smaller audience.  But for the average home seller who desires broader exposure this may not be the most effective approach. The MLS reaches the entire brokerage community stretching far beyond the geographic location of the property. Failure to utilize this service often results in a limited buyer pool and possibly a lower sales price. Even so, as previously mentioned there are home sellers who are more comfortable with a private marketing program.

The key is to be certain the home seller understands the advantages and disadvantages that go along with Pocket or Off-MLS Listings. This can be achieved by using the Seller Instruction to Exclude Listing from the Multiple Listing Service or Internet (CAR Form SEL)  (CLICK FOR SAMPLE) or similar form.

The duty of the listing brokerage is to assist the home seller in securing the highest and best price and terms possible. Setting, managing and meeting expectations are essential!

The California Association of Realtors® has published a number of support materials to assist its members in coping with the current state of the market you are able to access these resources at www.car.org: 

As always, feel free to contact me if you have any questions.

Kathy.mehringer@nrtsouthwest.com

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The Scoop on “Confidentiality of Offers to Purchase Real Estate”

Posted on May 31, 2013 by admin

Every week I receive multiple emails or phone calls on the subject of “Confidentiality of Offers.”

Most of the time these inquiries arise as a result of the buyer’s and/or their agent’s suspicion that the terms of their offer may have been used by the seller and/or his/her agent to solicit higher and better offers! While this may seem like an unfair practice the truth is the seller has the right to instruct his/her agent to do just that!

It is of interest to note that Article 1, Standard of Practice 1-15, of the National Association of Realtors® Code of Ethics requires Realtors® to advise potential clients of: “the possibility that sellers or sellers’ representatives may not treat the existence, terms, or conditions of offers as confidential unless confidentiality is required by law, regulations, or by any confidentiality agreement between the parties.”

For that reason the Statewide Buyer and Seller Advisory (CAR Form “SBSA”) was amended in recent years to include the following language, thereby providing a written disclosure to clients.

In addition, California Association of Realtors® Disclosure and Consent for Representation of More Than One Buyer or Seller (CAR from “DA”) includes language that addresses the Non-Confidentiality of Offers in similar fashion.

In an effort to assist Realtors® and their buyers in the negotiating of a confidentiality agreement between the parties and their respective agents the California Association of Realtors® (“CAR”) released a form which addresses this issue. 

The form is self-explanatory and is intended to be used to bind, Buyer, Seller, Landlord or Tenant as well as the involved real estate broker/licensees to confidentiality.

In the event a Buyer wishes to negotiate confidentiality by using this form keep in mind: (i) The form is to be sent in advance of the Offer to Purchase (ii) The applicable boxes should be checked (iii) Seller(s), Buyer(s) and both agents sign the Agreement.  It should be returned to the Buyer’s agent prior to presentation of any offer being delivered.

Be aware that Paragraph 1 includes language regarding the Agent(s) obligation to keep the information confidential; it also states that the respective parties are responsible for any breach of the CND by its agents.

At the end of the day our duty is to make certain our clients understand the risk versus reward analysis of any contract negotiation. Whether the inclusion of a confidentiality agreement is a good strategy depends on the market conditions. For example, based on the number of multiple offers and bidding wars we are currently experiencing, conditioning an offer on such an agreement may severely handicap the buyer’s ability to secure the property. There is no secret recipe, our responsibility is to consult and advise while setting and managing the expectations of our clients!

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Short Sale News You Can Use – Fannie Mae to Streamline the Short Sale Process

Posted on March 19, 2013 by admin

Fannie Mae (www.fanniemae.com) continues its efforts to streamline the short sale process by providing real estate licensees representing sellers in these complex transactions additional tools designed to improve the likelihood of achieving a successful closing.

These efforts are demonstrated by the recently introduced expanded HomePath for Short Sales Escalation Tool (click to visit).  Listing agents who believe a short sale is being derailed due to a servicer’s lack of responsiveness or property valuation disputes are urged to complete the requisite form (click to view form) in order to facilitate the escalation request directly to Fannie Mae thereby bypassing the servicer. While we respect the role of the servicers, it is important that we be assured of the investor’s involvement in the weighty decisions of debt settlement.  For that reason we applaud Fannie Mae for launching the HomePath Escalation Tool.

The simple truth is it is not uncommon to learn that Fannie Mae may not have been made aware of requests for short sale escalation, exceptions to guidelines or property valuation disputes when these requests have been made directly to the servicer.  The newly introduced program will insure that Fannie Mae is in the loop on Short Sale transactions that require a little extra TLC. This should make for a smoother transaction for everyone involved.

I would be remiss if I did not add: it is important to keep in mind that escalation requests are not intended for use at the initiation of a short sale.  Judicious use of the process, on an as needed basis, will ensure that the real estate community as well as distressed homeowners continue to receive this much needed support and assistance from Fannie Mae.

By working together toward our common goals we can achieve success. Please remember that a short sale is a debt settlement and as such is optional. In simple terms the proposal needs to makes sense regardless of whom the investor may be!  The investor’s expectation of a Fair Market Value price (FMV) is appropriate and we must remember that the FMV concern is not limited to individual properties but rather to entire neighborhood. Investors often own many loans in a given community and when the sales prices fall below FMV everyone feels the pain because artificially deflated values can destroy communities.

 

 

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Nationstar Mortgage Implements New Short Sale Failsafe Program

Posted on March 14, 2013 by admin

Nationstar Mortgage recently implemented a program that provides them with might be called a failsafe mechanism with respect to the valuation of properties being sold as short sales.  Once a bonafide offer to purchase is received by Nationstar they issue a what seems to be a verbal “conditional short sale approval.”  Once the conditional approval is given the homeowner receives a letter advising them that the property must be marketed for a set period of time on www.auction.com for open bidding. 

I see this as a check and balance system designed to ensure that the offer currently awaiting approval is truly the hightest and best.

As is typically the case www.auction.comwill charge the successful bidder a buyer’s premium of 5%.  If the auction process results in a higher offer than the one “on the table” the higher offer will be accepted.  As a buyer who has waited months for word on the short sale approval this extra step is likely to be disappointing and frustrating.

But the truth is there are those who would strive to mislead the short sale lender as to value in order to profit by flipping the property at a higher price.  That type of behavior may be what has motivated the additional check and balance!

The challenge with short sales remains a lack of transaparency in terms of understanding the process at the onset.  Last minute changes and surprises can be frustrating for sellers, buyers and their real estate professionals.

Lions and tigers and bears, oh my!

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Bank of America Mortgage to Lease Short Sale Program

Posted on March 13, 2013 by admin

Kathy Mehringer SFR, CDPE, CRB

DRE License # 00625769

Short sales continue to be transactions where emerging trends are the order of the day.  Staying up to date on new procedures and programs is more and more challenging!

This post will provide you with a brief overview of a new short sale program being piloted by Bank of America in the following states:

Arizona, California, Florida, Nevada and New York

While I admit that things could change within minutes of this publication, as of this date March 12, 2013 this pilot program is being offered on an invitation only basis to select group of homeowners.  Based on specific criteria homeowners will receive a solicitation from Bank of America through. a third party company Carrington Property Services, Inc.

You might say this is an “invitation only” program and no one is allowed to crash the party!

Because these select homeowners have already met certain requirements and the files have been reviewed upfront Bank of America may be able to better assist qualified homeowners with the short sale process. 

The program, in a nutshell, is as follows:  Subject to an acceptable purchase price and terms, the program conditions the short sale upon a buyer’s willingness to enter into a long term lease agreement (up to three years) with the seller.

This agreement, would out of necessity, limit the likely buyer pool to investors who are willing to purchase the property subject to a three year lease agreement, with a set first year rental rate. The properties will marketed via www.Auction.com  which is a bit of twist!  In most cases buyers will pay a 5% buyer premium to purchase a property that is being marketed in this fashion. One thing is certain the Short Sale transactions are fluid, sort of like ”shape shifters.”  

One benefit of this program is that homeowners, selling their property under this arrangement, would be able to stay in their homes, avoid foreclosure and perhaps build their credit sooner than they may have done otherwise as they would be building a track record as a renter.

 

Letters of solicitation are being mailed to homeowners now, so as the late great Dr. Seuss told us:  “The more you read the more will know the more you know the more places you’ll go.”  Staying abreast of industry news is always the best practice whether you are a Realtor®, Buyer or Seller.

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Certain Homeowners in Distress Remain Eligible for Federal Tax Liability Exemption For One More Year!

Posted on January 4, 2013 by admin

It is now offical:  The so-called “fiscal cliff bill” passed at the eleventh hour and it included an amendment extending the Mortgage Debt Relief Bill for one more year (December 31, 2013). This is good news for homeowners who remain “underwater” on their primary residence and are considering a short sale. As you recall the Mortgage Debt Relief Bill of 2007 provided tax liability exemption for certain taxpayers received forgiveness of debt from their lender.  Please remember not all taxpayers qualify under the terms of aforementioned bill, for that reason consultation with a CPA / Tax Advisor / Accountant remains a prudent course of action for any homeowner evaluating options. The IRS website www.irs.gov features a very comprehensive analysis of the Bill which can be very helpful for sellers who are contemplating a short sale as an option to foreclosure.  State tax liability is a horse of another color, for that reason homeowners must determine if their state has or intends to pass a bill with similar/parallel protection.

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Stalled Short Sale – Oh No!

Posted on November 1, 2012 by admin
 

Why is my short sale stalled?  Have you ever asked yourself this question?  Many practitioners along with their clients are asking some variation of this question nearly every day.  The truth is there are a multitude of reasons that short sales stall, in some cases it is due to circumstances beyond the control of the seller and the real estate licensee.  However, there are a few issues that arise that can be controlled and managed, while each servicer has a preferred process for moving short sales along the track there are few common sense practices that can make a difference in many cases.

 In some, but certainly not all situations, short sales are stalled because the (i) required paperwork has not been submitted AND/OR (ii) submitted documents have not been completed correctly.  This happens for a myriad of reasons, rather than focus on the reasons I want to focus on the solutions. 

 As you know I am big fan of Bank of America’s real estate agent website:

 www.bankofamercia.com/shortsaleagent

 And frankly in many short sales we find ourselves dealing with Bank of America or one of their sub-servicers, so why not start there.

 As I said the Bank of America website is very useful and I peruse it on a regular basis.  It is user friendly, rich in content and up-to-date.  Recently I spentsome time reviewing the information contained in the link below:

 Avoid Document Rejection – Common Document Errors

 While this is a tutorial geared specifically to Bank of America short sales you can certainly take away a number of helpful tips that can be readily applied to any short sale transaction.  It is well worth your time to review the training deck above as it delves into the five forms required to initiate a short sale serviced by Bank of America. 

 And yes, I do realize that short sales can stall for many reasons other than those referenced above.  We all know that lenders/servicers can be guilty of: (i) misplacing our files (ii) failing to respond to deadlines and timeframes (iii) being unreasonable with valuation disputes (iv) insensitivity to borrower hardships (v) lack of cooperation with contributions to junior/additional lien holders and so much more!

 But when we meticulously prepare our files in an orderly fashion, include complete documentation, stack and submit information skillfully we are more likely to “take away” any excuses that delay the processing of our short sales.

 Realtors(R) continue your good work and remember the goal; assisting homeowners who need your caring and dedicated professional service.  Never give up!

 

 

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Successful Strategies for Short Sale Valuation Disputes

Posted on August 30, 2012 by admin

Strategies for Successful Negotiations

Courtesy of Kathy Mehringer

Short sales can be frustrating for everyone involved that’s for sure!  Preparing in advance readies us to meet challenges as they arise thereby increasing the likelihood of success.  After working diligently to market and sell a short sale at a fair and equitable price we often learn that a BPO Vendor or Desk-Top Automated Valuation System has determined that the property is worth much more than the price agreed to by buyer and seller.  If you feel confident that your value assessment is accurate and reflects the best possible price for the property based on, location, condition and amenities don’t be afraid to challenge the numbers.  Take a moment to review these tried and true techniques for resolving valuation disputes.

  •  Request any lender/servicer/investor specific procedural requirements or guidelines for dealing with valuation disputes
  • Know who you are dealing with:  (I) portfolio loan or (ii) a loan serviced on behalf of an investor
  • Be prepared with relevant comparables
  • If possible include all property types:  REO, Short Sale and Non-distressed
  • Prove up the existence of structural defects, environmental hazards, needed improvements
    • Estimates from licensed contractor
    • Photographs
    • Reports or investigations from previous escrow(s) or those obtained by seller
    • Neighborhood influences that are likely to impact the value of the subject property
    • Market history
      • Utilize a market activity report template
      • Demonstrate area trending
      • Use charts and graphs when appropriate

 

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Short Sales and Junior Lien Holders

Posted on August 27, 2012 by admin

 

Q. Kathy, can you give me some guidance regarding the timing of working with junior lien holders in short sale transactions?  I hear some agents say that you can wait until after the first lien issues the approval letter to begin negotiations with the junior liens BUT when I tried that technique it backfired!  What is the best way to approach short sales with multiple liens?

A. Time and time again I hear agents lament the fact that they neglected to engage the junior lien holders at the onset of their short sale negotiations!  I cannot emphasize strongly enough the importance of working will all lien holders, including Mortgage Insurance if any, at the very beginning of the short sale negotiation process.

It is counter-intuitive to believe that debt settlement discussions (and please keep in mind   a short sale is “debt settlement”) should occur in stages!  Waiting for the approval of the first lien holder before beginning settlement discussions with other stakeholders is a dangerous practice.   You can be assured of delays if you follow that path.

Engaging all participants at the outset in order to assess settlement options and amounts, timing, procedural requirements and the like will go a long way toward increasing your closing ration on these very complex transactions!

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