Location: California. We had an accepted deal from Bank A, who mid escrow sold their portfolio to Bank B. Bank B has been less than cooperative. We have missed the Close of Escrow date as they will not return “Sellers Cost” paper, which my lender needs to fund my loan. Can I pull out my money from the Title Company escrow account if they do not/will not perform and supply the needed form. ?? Bank A’s agent, my title company and my lender have all been trying to leave messages, no one is responding, I feel like I’m in purguratory, my wife wants to walk from the deal, sue everyone….it sucks.
To Lakerman: Bank B is located in Texas, I cannot visit their office, as I’m in California
Also…Bank “A” is currently in bankruptcy.
Problem solved with help of university alumni connection who happaned to work for Bank A…Bank B supplied the sellers HUD first thing this morning, my loan funded and I closed escrow this afternoon.

Short Sale Bpo Process

Selling short is the process whereby a lender accepts less than is due on a mortgage or deed of trust that they hold against a property. This process typically happens when the property’s value had dropped below the amount due on the mortgage. This situation is generally referred to as the property being “upside down” in equity. Currently there are as many as 12,000,000 Americans who are facing the question, “Why should I make a mortgage payment when my home is worth so much less than I owe?” Short Sale Bpo Process

If a homeowner knows he will not be able to continue to make his mortgage payments he has the option of doing a short sale if his lender agrees. The lender generally will allow a short sale instead of having the expense and time involved to take the homeowner through the foreclosure process. The homeowner must sell the property because he is the owner of the property, the lender can not sell the property on its own unless they foreclose.

Short sales are often done by realtors®, real estate investors, or entities who specialize in doing short sales. The actual short sale, while being a loser for the homeowner, is a profit maker for all the parties involved in the process except the homeowner and the lender. Because of this the lender requires a “short sale package” be completed and at least one property analysis to determine the property’s market value. This analysis is usually done by a real estate agent and the report is called a Broker’s Price Opinion “(”BPO”).

If an investor is trying to buy the short sale property he needs to get the lowest possible price to make a profit, and he tries to “influence the BPO” or the person at the lender handling the case. This lender representative is called a Loss Mitigation Representative (”Loss Mit Rep”). Influencing the BPO can be done legally in a number of ways. Legally influencing the Loss Mit Rep can take more effort.

Following are a three techniques that have worked for us: Short Sale Bpo Process

1. Frequently, the Loss Mit Rep doesn’t answer your telephone messages or e-mails and your perspective short sale seems like it will never get done. It’s frustrating and very aggravating but this “make-um sweat” is part of what they are trained to do. Besides she probably has other deals she can complete where she will earn an easier and larger commission. Yes, Loss Mit’s make commissions (bonuses, etc.) based on the discounts (small is better here) they get accepted.

A very powerful technique to overcome the aggravation of not knowing where you are in the process, if you seem to be trading punches with the Loss Mit is to cancel your file. Stop the processing by sending a Cancellation of Offer Notice. The next thing to do is wait 10 days and resubmit the file from the beginning. A new Loss Mit will be assigned to your file and it is highly likely that you will have a better chance because the work has been completed on the lender’s side. This “cancel and resubmit” is standard operating procedure (”SOP’s”) for many of the larger short sale operations in the country when they know their offer is below what is the “easily acceptable” offer (78% - 82% of final judgment) for the lender.

2. If you aren’t regularly submitting “Sexual Offender” information with your short sale package you should consider it. This information is easily obtained online and is a powerful psychological motivator for the Loss Mit Rep doing the package. It may be just the one piece of info that makes the difference in your deal getting done more quickly.

3. Here is a best kept industry secret - the Loss Mit can accept 80% of the BPO without approval from a Supervisor. Most people doing short sales are striving to get the BPO to the price they are offering and often it comes in at that price. Sometimes it comes in ridiculously high. This is most often the BPO agent trying to impress the lender. Depending on the motivation of the buyer you should have already in hand, negotiate like crazy as the other option if the property goes to foreclosure, the lender will pay an additional $45,000 cost (on average) to get the property through foreclosure.

This simple ideas have made investors hundreds of thousands of extra dollars on short sale packages so the next time you decide to try a short sale integrate at least one of these into the process. Short Sale Bpo Process

“Following Up” is your key to short sale success! Following up on every aspect of your short sale is one of the most crucial parts of a short sale.  If there was one thing that, above all, needed to be done well in order to ensure success, it would be following up.  Because a short sale has several different pieces that all come together at various points in time, it follows that there are many people and parties to follow up with as you work through the process.

Who are you following up with?

When working on a short sale, there are three main parties that you are involved with: the lender(s), the homeowner, and the buyer’s real estate agent.  At different points throughout the short sale process, you may need to follow up with one, two, or all three of these parties at the same time.  In the beginning it will primarily be the homeowner, however as the short sale continues to move along, you’ll be following up more heavily with the lender and buyer’s agent to keep the buyer in the loop with the status of the short sale.

The Three Parties…
You will be in direct contact with the homeowner to obtain the documents to send to the lender and you’ll also need to be in touch with them when it comes time to drop the list price on their home as well as when it comes time to close on their property.  It is also very important to stay in contact with the homeowner to keep them updated on the status of the short sale negotiations.

The lender is the primary party that you’ll be following up on from the beginning to the end.  From the initial call right up through closing you’ll be on the phone with the lender, always following up on your most recent fax, email or phone call.  Depending on which lender it is that you’re dealing with, you may be following up with any number of different employees throughout the course of the short sale.  You may find yourself calling customer service representatives, loss mitigators, set-up representatives, managers or supervisors, and occasionally collections.

When trying to reach someone directly, always be alert to the possibility that the person you are trying to reach is not the correct person to be speaking to.  It is quite possible that you received some misinformation and have been trying to reach the wrong mitigator.  Remember, you are dealing with employees that could care less or perhaps are completely clueless.  There have been a few instances where I was given a name and told that that a particular person was the assigned loss mitigator.  After three weeks of leaving multiple messages, I hadn’t heard a peep from the “supposed” mitigator.  In need of a definitive update, I called the loss mitigation department and spoke to a different person who told me that the file had been assigned to someone else.

Be prepared to do that yourself.  If you go a couple of weeks without hearing back from the person in question, try calling and speaking to the department of which your designated party belongs  to and clarify the situation.  If you speak to someone different, chances are they will clear up some misinformation that you had received prior.  Keep digging, and you will get to the right person.  And while there are some important matters to attend to regarding the homeowner and real estate agent, the lender is who you’ll spend 80% of your follow up time with.

Another important party to follow up with is the buyer’s agent.  They need to be updated on a constant basis, and it will greatly benefit you if they are well versed in short sales, because then they will understand the nature of the situation they are involved in and be able to reassure their client to be patient.  The success of the short sale, and its 100% conclusion, is based largely on the buyer cooperating and sticking around, and so you’ll want to make sure that you set their expectations very clearly from the beginning!
How to keep everyone updated without having to make follow up calls every single day….
The best way I found to cut down having to make follow up calls every day is an online short sale management tool called managemyshortsale.com. This has taken a huge weight of my shoulders because it allows me to keep everyone in the loop on what the status of my short sale negotiations.  As soon as I speak to the foreclosing lender and I update the account it automatically sends an email notification to every party involved in the short sale process (Homeowner, Buyers Agent, Attorney, Mortgage Broker, etc).

View more articles about the preforeclosure industry and investing in real estate at http://www.realestatebusinessmentors.com

Visit www.AskBobLachance.com for any short sale bank negotiating questions.

Short sale approval can be a lengthy and complex process. Obtaining approval for short sales must be processed through the lender’s Loss Mitigation Department. There are many steps involved with a trail of paperwork.

When lenders engage in short sale approval transactions they agree to accept a lesser amount than is owed on the mortgage note. Typically, a Loss Mitigator is assigned to the Borrower’s account and reviews their situation to determine if they are eligible for this type of real estate transaction.

Short sale approval eligibility requirements include the following:

1) The Borrower must provide proof their home is worth less than the unpaid balance. Generally, this is accomplished by obtaining comparable home sale prices in the area where the Borrower’s home is located. Comp reports can be obtained through Realtors or by conducting research via the Internet.

2) The Borrower must be default on their mortgage note by a minimum of three months. Additionally, the majority of lenders only consider short sales when the Borrower has no equity in their home. If the Borrower has equity or other financial assets, chances are high the lender will not agree to a short sale approval.

3) The Borrower must provide proof they are facing financial distress due to hardships such as extended unemployment, chronic health problems, bankruptcy, death or divorce.

4) The Borrower has no financial assets they can draw from to maintain mortgage payments.
Before granting a short sale approval, the lender generally offers the Borrower a variety of options such as a Loan Modification or Deed in Lieu of Foreclosure. Some lenders will suggest loan modifications which allow the Borrower to roll over the delinquent mortgage payments to the end of the loan. Other lenders will reduce mortgage payments for an extended period of time.

There are multiple options available to homeowners who want to keep their home out of foreclosure. Each comes with their own set of pros and cons. Therefore, it’s vital to investigate all options and determine the best financial decision for you and your family.

Once the decision has been made to pursue short sale approval, certain elements must be in place. Generally, the lender will require the homeowner to have a Buyer lined up. This is best accomplished by working with a Realtor qualified to handle short sale transactions.

Finally, a short sale package must be provided to the lender. Although requirements vary from lender to lender, most lenders require the following information:

• Detailed financial statement outlining income and expenses
• Short sale hardship letter explaining the events that caused you to become delinquent in mortgage payments
• Current bank and investment statements
• Current year tax return
• Realtor listing agreement
• Signed sales contract
• Estimate settlement statement (HUD-1)
• Proof of buyer’s financing

The short sale approval process is not for the faint of heart. It requires patience, tenacity, organizational skills and multiple phone conversations. However, short sales are far less damaging to your credit and less traumatic than the foreclosure process.

It is highly recommended to thoroughly educate yourself about the short sale approval process and work with qualified individuals who are well-versed in this type of real estate transaction. Short sale experts include Realtors, Real Estate Attorneys, Short Sale Specialists and Private Real Estate Investors.

Foreclosures in the country have pushed past over one million homes. Couple that with folks just trying to sell their home for whatever reason and there is a glut of homes in many markets. While this level is high it is within many historical swings of the past. The point of this discussion is to point out the incredible buyers market that exists in many areas of the country.

Arbitrage in the financial markets takes advantage of price differentials between more than one market. Money is made taking advantage of the differences. In real estate, with the benefit of trained Certified Property Managers and the like, there exists the potential to invest in areas, which are depressed and hold good value in the future. Like examining the financials of a company so the same type of play can be marshaled with investment situations across the country. In crafting offers, returns in the 25% plus range over say a two-year period must be factored in even consider the ramp up into these venues outside of one’s backyard. Finding deals in the backyard would be best, however, lacking that one must look elsewhere. In an example of buying a rental condo in a resort area that has abundant inventory and has plenty of foreclosures forcing prices down some investment play may be possible. If a rental condo is listed at $300,000.00 and has and existing mortgage of $280,000.00 with a pending foreclosure pressing the owner this might be a deal worth looking at. Owners with ARM mortgages with accelerating payments and/or other pressures have come to bear on owners who find themselves in a fix. Many of these condo rental properties with onsite rental offices make for a decent cash flow. In some water front properties the gross rents will approach $30,000 plus per year. In trying to negotiate with a lender with a foreclosure action in hand it is best to have ones own financing or cash to bring to the table. That lender will not cut the price (mortgage) if they are being asked to hold the mortgage. In this example, a proposed “Short Sale” would be probed as a possible action. In this case, the owner receives nothing. The owner may save a foreclosure nick on their credit but that’s it. The lender on the other hand will be offered an offer in the $240,000 range IF the return is figured. The lender takes a $40,000 plus hit on the deal with additional costs for legal fees, past payments, late charges, etc. in addition to the “short” settlement. This is a big hit for the lender. However, Real Estate Owner (REO) properties have to be liquidated. If the lender foreclosed and sat on the condo for another six months and took another hit at sale time, the proposed $40,000 plus hit starts to look pretty good.

An investor needs to determine the condition of market place in a year or two. The economy still has strength, employment is strong, so then it is a question of what will be happening in the market down the road. If that analysis comes up positive then one would continue on the track. An outside force on these waterfront investor condo properties will come to into play as when possibly the dollar falls against the Euro or Pound. Those buyers coming into the market with stronger currencies will see these situations as strong buying opportunities and prices may spike back up. A Realtor needs to market to these buyers immediately. In addition, with stronger currencies abroad vacations in these waterfront condos can almost look cheap with a good deal of safety. A few years down the road, the rentals could be pumping and the demand could be up for these specific properties which can be rented when not being used by the owners. Naturally, there is no guarantee that this will play out exactly that way, but it is an educated analysis basis on the facts currently in hand. When depreciation, interest deductions and other factors are put into the equation, perhaps a $40,000 “short” is not enough. Perhaps it will take a little more. In any case, an investor’s numbers should be shared with the lender to shore up the case for the “short sale” and give a little cover to the work out specialist who is signing off on the deal. The lender will have several BPOs (Broker Price Opinions) of the value as several AVMs (Automated Value Models) to further peg the value. However, if things have not been moving with say six months exposure to the market place, then the lender may be compelled to pull the plug.

Much like when the accelerated depreciation plug was pulled in the 1986 Tax Code, properties must stand on their own. Limited Partnerships and REITs were being offered with low (50% LTV) leverage to realize any kind of cash flow. In this case, a highly leveraged mortgage would insure a negative cash flow. Thus the return on investment will be calculated on a low leveraged situation. The 25% plus return then would be possible. Each case needs to be turned inside out before making an offer. If there has been several price reductions over the listing period with offers of paying all the closing costs and such, then this will garner further investigation. To save a lot of time, the question phased as: “To save us both a lot of time, I’m looking to buy at a deep discount from a motivated seller or a lender who will consider a deep “short sale. I’m very liquid in cash and can close quickly. Is there any shot at a deal on this property?” If not move on.

This glut of properties won’t be here forever. It took a few years to absorb the Savings and Loan fiasco and major write-downs that took place, but it was absorbed and money was made by many. The original owner being in an overly leveraged mortgage situation may have cast the initial foreclosure situation. High leverage kills when the underlying financing is an Adjustable Rate Mortgage in a rising interest rate market. Cash flow disappears. The bleeding begins.

It’s no place for the faint of heart. Like arbitrageurs in the financial markets, it takes a strong will, liquid cash and a good feel for the current market and the future market and how it will all play out. The climate for a play is here and now in some targeted areas. Over 1,000,000 foreclosures, a glut of listings on the market, a falling dollar making attractive situational buys to foreign borrowers makes for a play now. “Knock, knock.” “Who’s there?” “Deal” “Deal Who?”

“To Deal Or Not To Deal, That Is The Question”

Dale Rogers
www.BrokenCredit.com
www.sellerhelpsbuyer.com

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