Loss Mit Services

Short Sale Tip 1-7-10

Posted on 07. Jan, 2010 by ctlms in Short Sale, foreclosure

Do you know the foreclosure process in CT?

I ran into a Real Estate Broker today that has been in the business since the 1970's and he had no idea how the foreclosure process works in CT or how to look up information about a possible foreclosure on the property he was working on.

So that got me thinking, how many others are in the dark?

Here are a few questions that I figure we should all have the answers to in today's market.

1. How do I know if a property is in pre-foreclosure?

A. The first document filed in the public record when a foreclosure is being initiated is called a Lis Pendens.  The Lis Pendens is served to the homeowner and recorded in the land records at the town hall of the town the property is located in.  This document is a notice to all that may review the chain of title on the property that there is pending litigation involving this property.  As a side note...Lis Pendens are also recorded on the land record when a property is part of a divorce.  So if you see one where the Grantor and the Grantee are both individuals, you can bet it is a divorce and not a foreclosure.

2. How can I find out where in the foreclosure process a property is?

A. The state of CT Judical Court Website.  About 10 days after the Lis Pendens is filed at teh town hall, the fill should be posted to the court website.  The website gives only general case information but is a good place to start and see where the property lies in the timeline.

3. What is the difference between Strict Foreclosure and Foreclosure by Sale?

A. Foreclosure by sale is what most people are familiar with.  If the court determines that there may be equity in a property above the debt owed to the foreclosing lender, a judgement will be rendered for Foreclosure by Sale and a Sale Date will be set.

If the court determines that there is no equity in a property, then a judgement will be rendered for Strict Foreclosure and a Law Date will be set.

Either date will be listed on the website.

4. How much time do I have to sell a property before it is foreclosed?

A. That depends.  Currently the courts are running at about 5 months or so from the start of the process.  But the sellers participation in mediation among other things can drag that out longer as does Bankruptcy.  A good rule of thumb is that we need an offer in hand at least 4 weeks before any pending Sale or Law dates.  So here in CT there is usually ample time to help a homeowner sell and avoid foreclosure.

5. Are the names of people facing foreclosure easy to find?

A.  If you are considering marketing to homeowners that may need to sell to avoid foreclosure, you will need to know who they are.  The best way to get this information is at the town hall.  However it is very labor intensive to gather.  Often times not all the information that you need to market to someone is on the Lis Pendens and needs to be cross referenced with other sources.  We visit 10 of the local town halls in North Central CT to gather this information on a weekly basis and it is time consuming to gather.  We do make this information available to agents that work with us to help homeowners.

Have any other questions on foreclosure or short sales?  Think you and your fellow agents could benefit from an office visit from us?  Give us a call or emai us for more information about or office visits.  They're free and always informative.

Subscribe to this blog via RSS for instant updates.

As always Visit the Ask The Expert Page to leave your questions or contact Sean Wilder directly if you need immediate assistance at [email protected] or visit www.CTLMS.com

Short Sale Tip 11-19-09

Posted on 19. Nov, 2009 by ctlms in Short Sale, foreclosure

Common Short Sale Misconceptions

I get questions all the time and what is and is not true about short sales and foreclosure.  So I thought it was time for a good Q and A post.

Download and save this Q & A for your own reference. Short Sale Q & A

Q. How long do short sales take?

A. No easy answer to this one.  The average is 90 days from offer to acceptance.  But often we can get them approved in as little as 4 weeks.  It all depends on the specific lender we are dealing with.  You have Wells Fargo and AHMSI that can be as quick as 4-5 weeks on the low-end of the spectrum...and then you have Bank of America that is a minimum 6 months on most short sales at the other end.

Q. Will the bank cut the commission?

A. Once again, it depends.  If the loan being shorted is FHA, Fannie Mae, or Freddie Mac and there is no second mortgage, 6% is an acceptable commission.  These account for a HUGE majority of loans.  However some other lenders are not so nice and if they are in second position they can require a cut in commission to approve a short sale, even though the extra money goes to the first mortgage not the second.  I know, it makes no sense what so ever.  But it's their "rules".

Q. Do all offers have to be presented to the lender?

A. No.  All offers must be presented to the Seller.  They decide what gets sent to the lender for review.  And like any other transaction, they can only sign one offer.  Unless that offer is no longer valid, they cannot sign another one.

Q. Is there any way to shorten the length of time a short sale takes?

A. Yes.  If your negotiator already has authorization on file with the lender and the seller already has all their documents ready to go when an offer is received, you can save 7-21 days easy on the process.  Wait to do all that, and the buyer will already be getting happy feet before you ever get the short sale package to the lender.  After that, diligent follow-up is key.  Follow up at least once a week even if you do not expect there to be any new notes on the file.  You can often find out the lender wants some new or updated information from the agent or the seller but has not let you know it yet.

Q. Does a property with 2 mortgages take longer or is it more difficult to short sale?

A. Not necessarily but there is a chance.  Often times we can have an approval from a second mortgage before the first has made a decision.  That is because most of the time the second mortgage will not order their own BPO.  If they know that the 1st is taking a discount then they know that their loan is totally unsecured.  However that approval may make the deal more complicated.  Most second mortgages are demanding at least 10% of their principal balance to accept a short sale.  However most 1st mortgages will only pay up to $3,000 to the second in a short sale.  So if the second mortgage balance is over $30,000 there may be an issue.  Also certain lenders are asking for ridiculous sums of money to accept short sales when in second position, especially if the debt has already been charged off.  This is very lender and loan specific, but knowing the tendencies of the lenders before an offer comes in is key to getting these to closing.

Q. I just got a call from a seller that needs a short sale.  When should I get a negotiator involved?

A. Right away.  We will help you to be sure to add the proper contingencies to the listing and on the MLS.  Along with set the proper commission and answer your and sellers questions.  We will also get the authorization in to the lender and get the proper documents to the seller so they can get started gathering the required paperwork to be included with the offer.  We will also help you to formulate an effective pricing strategy to sell the property as quickly as possible but at the same time, prove to the lender that the property could not have gotten a higher price.

Q. What should I offer as a cobroke?

A. I have gotten conflicting information on this topic.  I have gotten guidance from the state board of realtors yet other brokers have gotten conflicting answers on the same topic.  Therefore you must ask your broker how they want you to handle this.  We have been told that making the commission contingent on lender approval is acceptable yet may not stand up in arbitration.  So leave that decision to your broker so you are covered.

Q. Do I need to be an expert in short sales to take a short sale listing?

A. If you plan on negotiating it yourself you better be.  Yet if you are going to involve a licensed expert negotiator then the answer is No.  We are here to make sure you don't cross any lines and that the seller knows there options fully before proceeding.  Like you are always taught in P & P,   to cover your but, defer to the expert, don't be the expert.

Q. My seller has had a foreclosure filed against them.  Is it too late?

A. Maybe, maybe not.  Depending on if a foreclosure date has been set and how close and what kind will determine whether there is time to sell the property to avoid foreclosure.  Also if it is, or is not a short sale makes a difference.  This definitely a case by case answer and one we can answer for you when you need it.  But remember that these days’ foreclosures are taking at least 90 days and if the sellers participate in the mediation process, it can stretch the process out quite a long time.

Download and save this Q & A for your own reference.  Short Sale Q & A

Subscribe to this blog via RSS for instant updates.

As always Visit the Ask The Expert Page to leave your questions or contact me directly if you need immediate assistance at [email protected] or visit www.CTLMS.com

Short Sale Tip 11-12-09

Posted on 12. Nov, 2009 by ctlms in Short Sale, foreclosure

Some lenders just LOVE to cut commission.

Yes, unfortunately there are some lenders that have policies about how much is an acceptable commission on a short sale.  Many will approve whatever is normal in the area.  FHA, Fannie Mae and Freddie Mac all allow a maximum of 6% if it was in the listing agreement.  Don't forget to ALWAYS get at least a 6% commission when it is a short sale.

Now some lender such as Ocwen Loan Servicing have less favorable policies.  Ocwen's policy when they have to take a discount is no more than 4% commission no matter what.  Kinda.  They will sometimes allow 5% if they consider the offer to them to be "good".  They are also more firm on this policy when they are in the 1st mortgage position.

Now I am of the mind that "some rules are made to be broken".  And I think this is one of those.  Thus, whenever possible we go to bat HARD to higher commissions.

Obviously if every lender did this, agents would flock away from short sales in droves which is one of the many reasons why cutting commissions is just STUPID in the first place.  But the lenders are in control, unfortunately.

Anyway, with all that said...I just got an approval letter on a short sale where Ocwen was the second mortgage.  They approved an offer to them of 10% of their principal balance, just over $2,400, and with 6% commissions.

This took me calling every day for 5 days until I finally got a rep that would listen to why it made sense to Ocwen to accept the offer.  I'm not going to get into the specifics, but the point is, without that persistence, and knowing that not all rules are written in stone, this deal would have been capped at 5%.

Another thing to note about commissions and short sales has to do with the number of agents and brokerages involved with the offer.  If there is only one agent involved it is highly likely the bank will cut the commission.  Some lenders will cut it as low as 3% others will allow 4-5% when they would have allowed 6% with 2 agents.

Now it gets worse when there is only one brokerage involved.  Many lenders will, regardless of how many agents are involved, cut the commission when there is only one broker.  If there are two agents at the same brokerage we can sometimes get the lender to agree to the full commission, but not always.

The point here is if you are thinking of working a short sale as a dual agent, you may be better off referring the buyer to another agent, and preferably one in a different brokerage to assure the maximum commission.  No point in working both sides if you will only be paid for one.  And a referral fee for the other side is better than working it for free.  Having one brokerage has the highest likelihood of a cut in commissions.

So the point of the this Short Sale Tip is to know going in what likelihood is of a cut in commission.  You want to be informed of the chance of a commission cut and you definitely want to inform the buyers agent of it.  The buyers side will be very upset if they had no idea of the possibility of a commission cut and then after months of waiting for an approval, find out they are getting paid less.  And as with all short sales, always disclose in the MLS that commissions are subject to lender approval.

Check out our Website at www.CTLMS.com for more information about our services.

Subscribe to this blog via RSS for instant updates.

As always Visit the Ask The Expert Page to leave your questions or contact me directly if you need immediate assistance at [email protected] or visit www.CTLMS.com