AG Settlement Starts the Clock on Texas Short Sales

Mortgage servicers will be kept to strict short sale timelines agreed to under the state Attorneys General foreclosure settlement this week.

Along with the penalties and relief for borrowers, the five largest mortgage servicers must adhere to a set of new standards. Servicers will form internal groups that will conduct quarterly reviews and gauge compliance. North Carolina Banking Commissioner Joseph Smith will approve the groups and monitor the reviews.

Among the standards, however, are new requirements for short sales.

Servicers are required to give a decision to a borrower within 30 days of receiving a completed short sale request package.

The internal group must review all short sale requests in the first two months of the quarter, according to Exhibit E in the settlement filed this week. And if a servicer takes longer than 30 days on more than 10% of the requests, the firm is considered in “potential violation.”

The settlement also requires a servicer to notify a borrower within 30 days if any documents are missing from the request package.

Servicers will also be required to notify a borrower if there is a deficiency payment needed before the short sale is approved, including an approximate amount.

If more than 5% of all short sales approved in a given quarter did not include this disclosure, the bank would be in violation.

“If a real estate broker can get a checklist from the bank detailing what documentation is needed, everything can be provided up front, and the bank will be required to give a thumbs-up or a thumbs-down within 30 days. That’s not a bad deal,” said Chris Hanson of the short sale specialist Hanson Law Firm.

Short sales became notoriously arduous, lengthy, and oftentimes fraudulent process since the foreclosure crisis struck in 2007.

There were 88,303 short sales in the fourth quarter, up 15% from one year prior, according to RealtyTrac. The short sales completed in the fourth quarter took an average 308 days since the borrower entered foreclosure, down from 318 days in the previous three months.

“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” said RealtyTrac CEO Brandon Moore in a fourth quarter report.

The Treasury Department released the first national standards for short sales under its Home Affordable Foreclosure Alternatives program, which began in 2010. Its timeline matches the AG settlement.

According to HAFA guidelines, a servicer must consider a borrower for HAFA within 30 days of the borrower either failing a Home Affordable Modification Program test or requesting consideration for a short sale.

Chase said it completes short sales – from receiving full documentation to approval – in a little more than one month.

But under the settlement, there is some enforcement to the guidelines.

When a servicer fails any servicing standard metric, including the short sale timeline, representatives must meet with a monitoring committee overseen by Smith. The servicer will have the right to correct any potential violation by installing an action plan, according to the settlement.

If the potential violation is not cured, a servicer could face a penalty up to $1 million and another $5 million fine for repeat violations.

Changes in Bank of America Short Sales

As Bank of America continues to enhance the short sale process, real estate agents will notice changes when initiating a transaction in Equator, beginning March 11.

What Is Changing:

New fields will be required when initiating short sales in Equator. Agents should be prepared to provide the following information regarding the loan and the homeowner’s situation:

  • Loan Number
  • New: Borrower First Name
  • Borrower Last Name
  • New: Property Best Contact Telephone
  • Reason for Default
  • New: Do you have a signed purchase contract?
  • New: What is the property’s primary purpose?
  • New: Who currently occupies the property?
  • New: When was the property last occupied by the homeowner?

How This Change Will Improve the Short Sale Process:

Providing this information upfront will help Bank of America identify if the homeowner is eligible to participate in the federal government’s Home Affordable Foreclosure Alternative (HAFA) program. If the homeowner is eligible, Equator will generate a message informing the agent that the homeowner must contact Short Sale Customer Care at 866.880.1232 to discuss their interest in the HAFA program. Although several attempts to contact the homeowner will be made, agents are encouraged to ask the homeowner to contact Bank of America as soon as possible, which will speed up the process.

Foreclosures decrease in 2010 due to short sales and modifications

Nevada saw a 19 percent decrease in foreclosure starts in 2010 — the first drop in four years — as more short sales and loan modifications were approved, an annual summary from San Francisco-based Fore- closureRadar showed.

The online foreclosure tracking firm counted 86,010 filings of new foreclosure actions last year, down from 106,425 in 2009. They’re up from 75,814 and 38,690 the previous two years.

California and Arizona foreclosure filings fell 33 percent and 18 percent in 2010, respectively, while Washington and Oregon had 14 percent and 10 percent more.

A number of factors have slowed the foreclosure process in Nevada, including programs such as the government’s $75 billion Home Affordable Mortgage Program, or HAMP, and the state’s foreclosure mediation program.

Officials from the mediation program on Thursday announced $300,000 in grants to provide education classes and free legal advice for Nevada homeowners facing foreclosure.

Investors flipped foreclosures for solid profits in the first half of the year as buyers hurried to take advantage of the tax credits, ForeclosureRadar Chief Executive Officer Sean O’Toole said Thursday.

However, the housing market began to slow when the tax credit expired at the end of April and the government’s push for loan modifications waned, he said.

The “robo-signing scandal” also led to a dramatic drop in foreclosure sales toward the end of the year. Bank of America completely halted the foreclosure process for nearly two months.

As a result, Nevada experienced a 6 percent drop in foreclosure sales to 42,828 in 2010, compared with 45,420 in 2009, ForeclosureRadar reported. Arizona’s foreclosure sales dropped 26 percent and California’s sales dropped 6 percent. Oregon and Washington were up 39 percent and 14 percent, respectively.

O’Toole said it’s possible Nevada will see an increase in foreclosure filings and sales this year, but not a wave.

“I expect to see a trickling out of foreclosures,” he said. “Foreclosure levels are at an all-time high in absolute numbers, but they’re at a historically low rate as a percentage compared with the people not making a payment, so it’s a weird conundrum.”

The foreclosure cloud will probably hang over Las Vegas for at least another two years, Las Vegas housing analyst Larry Murphy said. Roughly 20 percent of Las Vegas homeowners with a mortgage are 90 days delinquent on their payments and three-fourths are “underwater,” or owing more than their homes are worth.

Lenders are reluctant to foreclose on a property because they don’t want to become the landlord, but they’ll foreclose before they reduce the principal mortgage balance because “it’s in their DNA,” the president of Las Vegas-based SalesTraq said.

He reported 21,499 bank repossessions in 2010, a 10 percent decline from 24,000 the previous year. The median price of a real estate-owned, or bank-owned, home sale was $110,000, compared with $118,000 for a nondistressed home.

A survey this week from the Nevada Association of Realtors showed that most Nevadans were not aware of federal and nonprofit programs designed to help them avoid foreclosure. More than 60 percent of those surveyed said they had never heard of the Home Affordable Foreclosure Alternative program.

Al Astraus, 82, said he’s “heard rumblings” about HAFA, but nobody has told him how to apply for the program. He bought a $310,000 home in Las Vegas in 2006 and is current on his payments, but worries what will happen when his five-year adjustable-rate mortgage resets in April.

“There appears to be practically a conspiracy to accelerate foreclosures, not prevent them,” he said. “That’s leading to the demise of the American middle class. We will become a second- or third-rate country.”

Only 3 percent of homeowners facing foreclosure said they used the Nevada foreclosure mediation program or found it helpful, the Realtors’ survey found.

The program received more than 8,000 requests and mediated about 4,200 cases in its first year, with 46 percent of homeowners approved to stay in their homes, said Verise Campbell, deputy director of the mediation program. Another 16 percent came out with an agreement to vacate the home through a short sale, “cash for keys” or deed in lieu of foreclosure.

“At least they know when they’re leaving,” she said.

The grants announced Thursday include $49,250 to Legal Aid Center of Southern Nevada for foreclosure education; $76,680 to Legal Aid Center for the “Ask-a-Lawyer” program; $75,000 to Nevada Legal Services; $76,680 to Consumer Credit Counseling Services; and $31,185 to Washoe County Senior Law Project.

“Ask-a-Lawyer” allows homeowners to talk with an attorney about their situation without having to spend thousands of dollars unnecessarily or become potential scam victims, Campbell said.

Nevada Legal Services has scheduled free monthly foreclosure information classes beginning Feb. 8 in English and Feb. 17 in Spanish. More information on the classes is available at www.nlslaw.net.

District Court Judge Elizabeth Gonzales said the mediation grant is a major step toward working with Nevada homeowners to find an alternative to foreclosure and to find good legal help.

Do Tenants Have Protection in Short Sales

Question: I have rented a house for several years. The current owner told me that he is going through foreclosure. He says that he is about to conclude an agreement to allow a “short sale” of the property, which I understand allows the house to be sold for less than the amount of the mortgage. I thought there were special protections for tenants who are caught up in foreclosures. Are there any special protections for me if there is a short sale?

Answer: There is a federal law, the Protecting Tenants at Foreclosure Act, which gives additional rights to “bona fide” tenants living in a property that changes ownership due to a foreclosure. This law requires a minimum of 90 days’ notice to month-to-month tenants after the foreclosure has been completed. Tenants who have a bona fide lease are entitled to remain until the lease expires.

These protections apply only after the foreclosure has been completed. In Texas, foreclosure is completed when a trustee sale has occurred, resulting in a new legal title to the person or company that purchased the property at the trustee sale auction. The current owner has no standing to control the trustee sale.

A short sale occurs as a result of a voluntary agreement among the current owner, the new owner and the lender, whose permission is required. The purpose of the short sale procedure is to avoid the trustee sale and find a new owner before the old owner’s rights are extinguished by the trustee sale.

Unfortunately for you, this means that the additional protections of the foreclosure act will not be available to you because the foreclosure was never completed. The new owner taking title pursuant to the short sale becomes your new landlord and can decide to continue your tenancy or terminate it pursuant to the usual 30-notice period, or a 60-day notice period if you have been a tenant for more than one year.

HAFA Provisions

  • Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
  • Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
  • Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
  • Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
  • Uses standard processes, documents, and timeframes/deadlines.
  • Provides the following financial incentives:
    • $3,000 for borrower relocation assistance;
    • $1,500 for servicers to cover administrative and processing costs;
    • Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders, on a one-for-three matching basis.
  • Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

Making a Texas Short Sale Offer

Although some of your initial offers will be accepted, you must also be prepared if the lender rejects your offer. Just because your first offer is denied does not mean that the deal is dead. This is now the perfect opportunity to learn precisely what you have to do in order to close the short sale.

The first thing you will want to do before making another offer is find out from the lender exactly why the first offer was rejected. Here are several key factors that may result in your offer being rejected.

  • They will not net the required amount needed to justify accepting your short sale offer. Simply speaking, your offer was too low!
  • The lender is adamant that they can do better waiting for a better offer or foreclosing on the property.
  • They do not agree with the terms of your contract or net sheet.
  • The loan is government insured and therefore they are protected against a foreclosure.
  • The investors of the loan are asking for more money to close out the loan.
  • You tick the loss mitigation rep off so bad that the last thing they want to do is help you.
  • The hardship was not proven enough to persuade the lender to accept a short sale.
  • The lender would like to explore alternative payment options with the homeowner instead of doing a short sale.
  • Your offer was much lower than what the BPO assessed the house for. This is another example of your offer being too low.

These are just some of the reasons you may get from the lender for your short sale being rejected but the main thing to remember is that you must at least probe and find the exact reason why. I can confidently say that the main reason your short sale offer will be rejected will be because the offer is too low. Remember, the lender’s number one priority when doing a short sale is how much money they will net. The best way to find out how much the lender needs to net is to just ask! Once you identify the right loss mitigation rep you can simply ask:

“How much do you need to net if we agreed to a reasonable short sale offer?” Will the lender tell you how much? That is to be determined after you ask the question. The point is that you will never find out unless you throw it out there. Even if you don’t find out initially, the next best time to ask is prior to the counteroffer. You want to start and maintain a constructive dialogue with the loss mitigation rep where you are constantly probing for information that will determine what your best offer will be.

When I do short sales, I mainly develop my initial offer based on how much equity or profit I want to make with each deal. However, from time to time when I’m preparing a counteroffer I use a formula to help me come up with the most accurate guess on what I think the lender is willing to accept. If used correctly, this formula alone will more than pay for the price of this course 1000 fold.

Here it is…

Step 1: I take the estimated or actual BPO amount or the value of the house, based on the comps then multiply that number by 85%.

Example:

$175,000 (Estimated BPO value) X 85% = $148.750

Step 2: I then take the number I got and multiply it by 92%

Example:
$148,750 X 92% = $136,850

If this were an actual deal, I would use this final number or something close to give me my counteroffer amount. Although I have reason to believe that the lenders use a similar formula when they determine the amount they are willing to accept on a short sale, I cannot say that this is exactly it.

I do know that this formula does two things.

It gives me a calculated number to use for my initial offer or counteroffer.

It allows me to breakdown to the lender how I came up with my offer.

Be resilient yet realistic when making your counteroffers. Understand that it may not stop with the first counteroffer. You may have to counteroffer a 3rd or 4th time just to get the amount down to where the lender feels comfortable to accept. At times it may only be hundreds of dollars that you are negotiating. If you are game for a strategic a methodical approach to negotiating your offers you can always use my 3 step approach to getting your offer accepted.

Step 1: The first offer will be used to get the number that you and the lender are negotiating down to tens of thousands.

Step 2: The first counteroffer will be used to either close the deal or get the number that you and the lender are negotiating within thousands.

Step 3: The second counteroffer will be used to either close the deal or get the number that you and the lender are negotiating within hundreds. Usually at this point, the lender is the most flexible and the loss is obviously not as great.

Another thing to consider when determining your counteroffer is if in fact it even makes sense to offer one. Sometimes the lender is non-negotiable and will only accept what they will accept. Period! If this is the case does it make sense to continue trying to persuade someone who is not willing to work with you? You have to make that decision on a case by case basis. The most important thing to remember when making your counteroffer is that the deal has to make sense for you. I’ve seen investors get their short sale accepted but fail to agree to an amount that is highly profitable.

Like I mentioned, I cannot determine the value of your time and effort. That is something that you must decide, but I can say that short sales are big money deals and if you are making offers that do not put a lot of money in your pocket you are probably leaving it on the table for someone else to enjoy.

Texas Short Sale Exit Strategies

I know what you are thinking… “The title of this blog does not make sense. How can you leave a place before you ever even arrive?” Please allow me to take the next few moments to discuss how exiting before entering is not only possible but should be considered as the single most important aspect of a short sale transaction.

The motivation to write this article came from the countless amount of feedback that we have received from readers regarding Short Sale Exit Strategies. I will soon make available more detailed information on specific exit strategies. These will be methods that I strongly suggest you follow depending on your individual geographical market and more importantly your realistic goals and expectations.

For now, what I’m about to share is focused on the importance of making sure that your exit strategy is formulated before you begin the negotiation process. It is counter-productive to do it any other way. Let me explain.

1. The main reason is although your goal is to make a profit, you should always consider the fact that the homeowner is putting a part of their well being in your hands. You do have a moral requirement when doing short sales. The last thing you want to do is put an individual or family in a risky or uncompromising position. Suppose you don’t close the deal? Who does it affect more? Therefore, it’s extremely essential that you have a game plan before you assume that type of responsibility.

2. The next reason is that once you have the acceptance letter in your hands you will be working with a limited amount of time. You will want to spend your time working on your next deal or preparing the house for sale or rent, not putting together your exit strategy. Be proactive not reactive.

3. Lastly, if you determine what your exit strategy will be ahead of time and begin putting it together you are more likely to close your deal for maximum profit within a timely fashion (45 days max.). It’s always possible that the deal falls through your hands because of lack of preparation.

All three of these reasons help to justify the importance of a well thought out plan. What’s the purpose of getting the acceptance letter if you can’t close?

I also want to remind you that you are not allowed to assign a short sale. So if you expect to negotiate the deal and then pass it on to another investor don’t waste your time. It will always be stated on your acceptance that the agreement is not transferable or assignable, therefore you must come up with another option if you want to do a quick sale of the property. I’ve shared a few creative ideas related to quick sales or flips that has worked for a select few individual investors. I’ll also be sharing these ideas with you in the near future.

Too many times investors make the mistake of going through the entire negotiating process without even considering what the possible options are for the property. I emphasize the “s” because one of the major benefits of exiting before entering is that you will often come up with multiple exit strategies. You increase the chances of having more than one way to profit from your hard work.

I personally feel that it gives me more of an edge as I begin my discussions with the lender. I also gain a better understanding of my earning potential because I’ve taken the time to estimate the numbers based on what exit strategy I’m using. All exit strategies do not breed the same amount of return. Consequently, you may find that although it is possible for you to negotiate the short sale it may not be a deal worth pursuing. There may not be enough profit on the table once you exit or the deal is just too risky for you to invest in.

Short Selling Second Mortgages

Many of the properties that you come across will have two mortgages with two separate banks. If you are just getting started, I strongly recommend that you target properties with single mortgages. Negotiating one mortgage is always easier because a second mortgage means that you are now responsible for negotiating two short sales instead of one. However, if finding homeowners who only have a single mortgage is not a realistic option, you must be prepared to successfully discount two properties.

The first thing you will need to know is that in the event of a foreclosure, the bank who holds the 1st mortgage is considered the primary lien holder and will always receive the proceeds from the sale. If there is a second or third mortgage on the property these banks are considered secondary lien holders and will not receive anything from the sale.

With that being said, your negotiating power is much greater when attempting a short sale on a second mortgage. If the secondary lien holder is made aware of an upcoming foreclosure and you make it clear to them that the primary lien holder has already accepted a short sale the ball is now in their court to decide whether they are willing to accept a discounted payoff to salvage something from the mortgage instead of possibly receiving nothing. The reason I say “possibly receiving nothing” is because it is also possible that once the secondary lien holder realizes that the primary lien holder has accepted a short sale they may attempt to go behind your back and negotiate their own deal with the primary and cut you out of the transaction. To help avoid any unethical business practices do not reveal who the other mortgage company is, just provide the necessary proof that a short sale has been accepted by the primary lien holder and begin your negotiating from that point.

The second thing you need to do is compile a list of all of the reasons why the lender may consider your discounted offer. You will want to particularly make a note of any repairs, decrease in property value, other foreclosures in the area, crime and vandalism, and slow or no market activity. At this time you can also prepare a hardship letter for the homeowner to help justify the short sale.

Next make copies of the homeowners W-2, tax returns, bank statements, and pay stubs. There is a chance that the lender will not ask for these documents since they are the secondary lien holder. However, they may ask for a copy of your acceptance letter that you received from the 1st lien holder along with a sales agreement and net sheet. If you have an acceptance letter from the 1st lien holder you can fax it to the 2nd lien holder as proof but be sure to white out the name of the lender, the discount amount, and any other information throughout the document that may disclose who the 1st mortgage holder is and how much was accepted. Although the 2nd lien holder will request and often demand to know the exact payoff, do your best to keep this information confidential. Let the lien holder know that you respect the homeowner and the 1st lien holder and it would be unethical to disclose personal information. The lender often will understand and appreciate your business ethics and not push the issue. Other times they will be very firm on their requests and it will be your job to be creative enough to give them what they want and still not put yourself in a compromising position by sharing the wrong information.

If you have not received your acceptance letter from the 1st lien holder, prepare an alternate letter stating that you have verbally received acceptance of the short sale along with the estimated date that the deal will be closed. Sometimes a letter like this will be sufficient but if it doesn’t you may be forced to come up with an actual acceptance letter.

Even if you have an acceptance letter it is still a good idea to send a personalized offer letter along with you proposal.

Lastly, you will now need to prepare your sales contract and net sheet. You will write up the contract the same way you did for the first mortgage the only difference is that the total percentage of your discount will be significantly higher. With the first mortgage you will want to discount the mortgage 30-50%. However, with the second mortgage you will only want to offer a small percentage of what is owed. For example, if the second mortgage has a total balance of $35,000 you will only want to offer $1,000. As a rule I start my offer around 3% of the total balance and work my way up from there if necessary. A large percentage of my deals with second mortgages are accepted on the first offer. If the bank rejects my offer I counter by increasing my original offer by 1-2%.

Example:
$40,000 (second mortgage balance) X 3% = $1,200 initial offer
$40,000 (second mortgage balance) X 5% = $2,000 counteroffer offer

It is possible that both the 1st and 2nd mortgage can have similar balances. If this is the case the same strategy will apply. The only difference will be the amount that each lien holder receives from the short sale.

At first it may be hard to grasp the concept that the 2nd lien holder would accept such a small amount to release their mortgage. The reason they are typically open to making a deal is because being in a secondary lien holder position is always risky. Since a foreclosure basically assures that they will get nothing, the lender is usually motivated to try and salvage something out of their investment and will strongly consider accepting a short sale.

 

 

Texas Short Sale Fraud | Are You Committing It?

Given increased defaults and declining property values in certain locations, the mortgage industry is experiencing an increase in short payoffs, sometimes called short sales. In fact, over the last two years, short payoff volume at Freddie Mac has grown more than 1,000 percent (2007-2009). This upward trend in volume leaves the market ripe for incidences of short sale fraud.

What is a short sale?

A short sale occurs when a borrower cannot pay the mortgage on his or her property and is permitted to sell the property for less than the total amount due, at a loss to the lender, investor and/or insurer. All parties consent to the mortgage being paid “short,” primarily because the property does not need to go through foreclosure. Please note that many legitimate short payoffs take place in the real estate market.

What is short sale fraud?

According to a member of Freddie Mac’s Fraud Investigation Unit, a slight variation of our general definition of mortgage fraud also defines short payoff fraud – “Any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known.” Misrepresentations in these schemes may include the buyer of the short payoff property, a subsequent transaction at a higher price, and/or the selling borrower’s hardship reason used to qualify for the short payoff. In many instances, the short payoff fraud will involve a “facilitator,” engaged by either the listing agent or the selling borrower, to assist with negotiating the transaction.

How is short sale fraud committed?

There are many variations of short payoff fraud. The example below is just one way this type of mortgage fraud can occur.

  • A seller (delinquent borrower) owes $100,000 on a property that is worth $80,000.
  • The short payoff facilitator negotiates with the bank to accept a $70,000 offer to purchase the property. In several instances, Freddie Mac has seen that this offer will be made directly by the facilitator or through an entity under his/her control.
  • The lender/investor accepts the offer for $70,000.
  • The facilitator neglects to disclose to the lender/investor that there is an outstanding offer between the facilitator and a second end-buyer for $95,000.
  • Both transactions close on the same day with the net difference being pocketed by the facilitator and increasing the lender/investor’s net losses.

At first glance, this may look like a legitimate short payoff. However, in this example, the fraud is the failure to disclose the second, higher offer. The facilitator is willfully withholding important information the same way a scam artist would, and the lender does not realize they are walking into a premeditated short payoff fraud scheme. Because the facilitator is deliberately withholding the higher offer, Freddie Mac also experiences a larger than necessary loss on this sale.

Short Sale Fraud Prevention Red Flags

Remain alert to the following flags, which may suggest short payoff fraud:

  • Sudden borrower default, with no prior delinquency history, and the borrower cannot adequately explain the sudden default.
  • The borrower is current on all other obligations.
  • The borrower’s financial information indicates conflicting spending, saving, and credit patterns that do not fit a delinquency profile.
  • The buyer of the property is an entity.
  • The purchase contract has an option clause to resell the property.

Short Sale Fraud Prevention

The following protective measures are recommended in order to detect and mitigate the severity of short payoff fraud:

  • Review all short payoff documentation carefully, including the sale contract. This helps determine if there is an option clause to resell the property at a higher price without notifying the lender.
  • Draft a short payoff arm’s-length affidavit/disclosure notice for all parties involved in the short payoff to help avoid any hidden contracts, or side agreements. The parties involved should be, but are not limited to: the buyer, seller, listing agent, selling agent, short payoff negotiator(s)/facilitator(s), and closing agent.
  • Solicit information from your borrower.
  • Inquire if the borrower is aware of any other parties involved with the short sale other than real estate professionals.
  • Is there a short sae negotiator/facilitator involved?
  • Is the borrower aware of any other purchase contracts on the property?
  • Require an executed and signed IRS Form 4506-T, Request for Transcript of Tax Return,from each borrower and process the form to determine if the borrower’s qualifying income is accurate.
  • Order an interior Broker Price Opinion (BPO) and review all other BPOs that have been ordered on the property (drive-bys and full interiors) to establish a high/low value variance. The BPOs should include a past and present Multiple Listing Service (MLS) listing history, as this will determine if the property was relisted in MLS while the short payoff is being processed.
  • Review the Freddie Mac Exclusionary List to see if the parties to the short payoff are on the list. Seller/Servicers can access the Exclusionary List via the selling system, MIDANET®, MultiSuite®, and Loan Prospector®.
  • Immediately notify Freddie Mac if you are aware of a second purchase contract for a higher price.

Texas Foreclosures and Texas Short Sales Go Hand-in-Hand

Did you know that Texas foreclosures and Texas short sales actually go hand in hand, tied at the hip so to speak. This is because amid the current crisis of the real estate market and the home loans crisis—which is putting many lenders out of business all together—foreclosures and short sales are actually a marriage of sorts. One that offers struggling home owners with a second chance at clearing their loans to the bank and starting over once again on the long pathways to financial freedom.

Foreclosures and short sales are seemingly one and the same theses days as many homeowners about to lose their homes make a last minute deal with the banks that in turn allow them to sell their homes for less than they currently owe. This makes the home a lucrative investment for investors and new home seekers, who will hop on the deal in a heartbeat and save the homeowner from a foreclosure. So to say that foreclosures and short sales are not a dynamic lending duo of the modern day mortgage crisis would be a vast understatement.

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