Post on 22-Nov-2014
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Leading The Way ForSuccessful Short Sale
Closings!
Leading The Way ForSuccessful Short Sale
Closings!
Important DisclosureImportant Disclosure
• This presentation is designed to provide accurate and authoritative information with regard to the subject matter covered.
• It is provided with the understanding that the presenter is not engaged in rendering legal, accounting, or other professional advice.
• If legal advice or other expert professional assistance is required, the services of a competent professional person should be sought.
What Is Laurus Title GroupShort Sale Processing
What Is Laurus Title GroupShort Sale Processing
• A team of experienced and focused individuals put together to offer value oriented real estate services including short sale processing and education.
• Professional debt reduction negotiators throughout the country.
• National breadth with outstanding, personalized service.
• Simple and effective short sale tools and vendor relationships.
• A team of experienced and focused individuals put together to offer value oriented real estate services including short sale processing and education.
• Professional debt reduction negotiators throughout the country.
• National breadth with outstanding, personalized service.
• Simple and effective short sale tools and vendor relationships.
How Did Laurus Title GroupLaurus Title GroupShort Sale Processing Short Sale Processing
Come About?
How Did Laurus Title GroupLaurus Title GroupShort Sale Processing Short Sale Processing
Come About?• In order to give its customers every possible
advantage in this dynamic, exciting and ever changing real estate market.
• In response to its customers’ frustration with “doing it themselves.”
• In response to its customers’ frustration with unqualified 3rd party ‘negotiation’ companies.
• Wanting to find an efficient way to get the correct information to its customers.
• In order to give its customers every possible advantage in this dynamic, exciting and ever changing real estate market.
• In response to its customers’ frustration with “doing it themselves.”
• In response to its customers’ frustration with unqualified 3rd party ‘negotiation’ companies.
• Wanting to find an efficient way to get the correct information to its customers.
The Common Thread… Laurus Title Group
The Common Thread… Laurus Title Group
• Laurus Title Group is a leading national provider of title, escrow and transaction management services with Corporate Offices in Canton, Ohio. (Cleveland / Akron Area)
• Laurus Title Group specializes in national title and escrow services for short-sale and pre-foreclosure residential and commercial properties.
• Laurus Title Group provides its services to Banks, Realtors, Investors, Attorneys, Buyers and Sellers.
• Laurus Title Group is a leading national provider of title, escrow and transaction management services with Corporate Offices in Canton, Ohio. (Cleveland / Akron Area)
• Laurus Title Group specializes in national title and escrow services for short-sale and pre-foreclosure residential and commercial properties.
• Laurus Title Group provides its services to Banks, Realtors, Investors, Attorneys, Buyers and Sellers.
Why Are We Speaking?Why Are We Speaking?• This is what we do
• We have transactional knowledge
• We are a unit based provider of service(s)
• We have real, behind the scenes experience
• We are experts at cleaning up the “Guru” messes and misinformation situations
• We have seen almost everything, but we are always witness to new stupidity as it occurs
• This is what we do
• We have transactional knowledge
• We are a unit based provider of service(s)
• We have real, behind the scenes experience
• We are experts at cleaning up the “Guru” messes and misinformation situations
• We have seen almost everything, but we are always witness to new stupidity as it occurs
DefinitionsDefinitions
DefinitionsDefinitions
• From the Latin fiducia, meaning "trust," a person who has the power and obligation to act for another under circumstances which require total trust, good faith and honesty.
• Characteristically, the fiduciary has greater knowledge and expertise about the matters being handled. A fiduciary is held to a standard of conduct and trust above that of a stranger or of a casual business person. He/she/it must avoid "self-dealing" or "conflicts of interests" in which the potential benefit to the fiduciary is in conflict with what is best for the person who trusts him/her/it.
• From the Latin fiducia, meaning "trust," a person who has the power and obligation to act for another under circumstances which require total trust, good faith and honesty.
• Characteristically, the fiduciary has greater knowledge and expertise about the matters being handled. A fiduciary is held to a standard of conduct and trust above that of a stranger or of a casual business person. He/she/it must avoid "self-dealing" or "conflicts of interests" in which the potential benefit to the fiduciary is in conflict with what is best for the person who trusts him/her/it.
Fiduciary Duty
Source: Law.com
DefinitionsDefinitions• A
Seller in distress / foreclosure
• B Buyer in the first transaction
Seller in the second transaction
Also known as the Investor
• C Buyer in the second transaction
Also known as the end buyer
• A Seller in distress / foreclosure
• B Buyer in the first transaction
Seller in the second transaction
Also known as the Investor
• C Buyer in the second transaction
Also known as the end buyer
DefinitionsDefinitions• Flipping
“ Illegal property flipping is a practice whereby a recently acquired property is resold for a considerable profit with an artificially inflated value, often abetted by a lender’s collusion with the appraiser”
May 2003 Mortgagee Letter 2003-07. Office of the Assistant Secretary of Housing – Federal Housing Commissioner
• Flipping
“ Illegal property flipping is a practice whereby a recently acquired property is resold for a considerable profit with an artificially inflated value, often abetted by a lender’s collusion with the appraiser”
May 2003 Mortgagee Letter 2003-07. Office of the Assistant Secretary of Housing – Federal Housing Commissioner
DefinitionsDefinitions• Flipping
“ Property flipping generally refers to purchasing existing properties with the intention of immediately reselling the properties for a profit. It is not illegal per se. When, however, an immediate resale is accompanied by acts of fraud or misrepresentation, including but not limited to appraisals with inflated property values and other misleading or fraudulent documentation, it can result in fraud.”
December 2005 Newsletter from Fannie Mae Assistant General Counsel for Regulatory Policy.
• Flipping
“ Property flipping generally refers to purchasing existing properties with the intention of immediately reselling the properties for a profit. It is not illegal per se. When, however, an immediate resale is accompanied by acts of fraud or misrepresentation, including but not limited to appraisals with inflated property values and other misleading or fraudulent documentation, it can result in fraud.”
December 2005 Newsletter from Fannie Mae Assistant General Counsel for Regulatory Policy.
DefinitionsDefinitions• Closing
the final phase of a transaction, esp. the meeting at which procedures are carried out in the execution of a contract for the sale of real estate.
• Closing
the final phase of a transaction, esp. the meeting at which procedures are carried out in the execution of a contract for the sale of real estate.
DefinitionsDefinitions• Escrow
a written agreement (or property or money) delivered to a third party or put in trust by one party to a contract to be returned after fulfillment of some condition
• Escrow
a written agreement (or property or money) delivered to a third party or put in trust by one party to a contract to be returned after fulfillment of some condition
DefinitionsDefinitions• Simultaneous Closing
No such thing. You cannot file 2 deeds at the same time.
• Simultaneous Closing
No such thing. You cannot file 2 deeds at the same time.
DefinitionsDefinitions• Back to Back Closing
The closing of one escrow transaction after another in the proper order.
You have two (2) separate escrows. You are fully independently funding
the first transaction. No ‘Pass Through’ funding allowed.
• Back to Back Closing The closing of one escrow
transaction after another in the proper order.
You have two (2) separate escrows. You are fully independently funding
the first transaction. No ‘Pass Through’ funding allowed.
Back to Back ClosingBack to Back Closing
You are up front and honest with both the short sale lender and the end buyer’s lender.
No money or other consideration goes back to the seller.
Your buyer is a legitimate Buyer.
You are up front and honest with both the short sale lender and the end buyer’s lender.
No money or other consideration goes back to the seller.
Your buyer is a legitimate Buyer.
DefinitionsDefinitions• Note
a paper acknowledging a debt and promising payment; promissory note.
• Note
a paper acknowledging a debt and promising payment; promissory note.
DefinitionsDefinitions• Mortgage
A temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt.
A contract or deed specifying the terms of a mortgage.
The claim of a Mortgagee upon mortgaged property.
• Mortgage A temporary, conditional pledge of
property to a creditor as security for performance of an obligation or repayment of a debt.
A contract or deed specifying the terms of a mortgage.
The claim of a Mortgagee upon mortgaged property.
DefinitionsDefinitions• Lien
the legal claim of one entity upon the property of another entity to secure the payment of a debt or the satisfaction of an obligation.
• Lien
the legal claim of one entity upon the property of another entity to secure the payment of a debt or the satisfaction of an obligation.
DefinitionsDefinitions• Deficiency Judgment
a judgment in favor of a creditor who has not satisfied the full amount of a claim against a debtor.
• Deficiency Judgment
a judgment in favor of a creditor who has not satisfied the full amount of a claim against a debtor.
DefinitionsDefinitions• Loss Mitigation
The process of reducing the principal debt due and reducing the lender’s overall loss exposure.
• Loss Mitigation
The process of reducing the principal debt due and reducing the lender’s overall loss exposure.
DefinitionsDefinitions• FedEx
When it absolutely, positively has to be there overnight
Overnight Priority Express Service
Know your local offices and drop off commitment times
This can sometimes save your deal
• FedEx When it absolutely, positively has to be
there overnight
Overnight Priority Express Service
Know your local offices and drop off commitment times
This can sometimes save your deal
DefinitionsDefinitions
• Disclosure
The act or process of revealing or uncovering.
• Disclosure
The act or process of revealing or uncovering.
DefinitionsDefinitions• Title Insurance
Financial coverage on property for unknown events that have happened in the past which effect ownership of that property.
• Title Insurance
Financial coverage on property for unknown events that have happened in the past which effect ownership of that property.
DefinitionsDefinitions• Commitment
The commitment that a title insurance company makes to issue title insurance for a property based upon the fulfillment of certain obligations.
Also known as a Preliminary Title Report
Shows outstanding Liens and Claims against a property that are of record.
• Commitment The commitment that a title insurance
company makes to issue title insurance for a property based upon the fulfillment of certain obligations.
Also known as a Preliminary Title Report
Shows outstanding Liens and Claims against a property that are of record.
DefinitionsDefinitions• Water Hold
The amount of money held in escrow for the payment of water and sewer bills that may or may not be due.
• Water Hold
The amount of money held in escrow for the payment of water and sewer bills that may or may not be due.
DefinitionsDefinitions• “Seasoning “
• Belongs on a Chicken or a Steak!
The period of time the current vested party (current owner of record) has been in title.
Currently, the only ‘true’ seasoning requirement is that the A to B transaction must have closed and recorded so that a new title commitment showing B in title can be prepared and submitted to the C lender for final loan approval
• “Seasoning “
• Belongs on a Chicken or a Steak!
The period of time the current vested party (current owner of record) has been in title.
Currently, the only ‘true’ seasoning requirement is that the A to B transaction must have closed and recorded so that a new title commitment showing B in title can be prepared and submitted to the C lender for final loan approval
DefinitionsDefinitions
• Pass through funding
When the funds from the second transaction are used to close / payoff the first transaction. This type of funding is illegal.
The first transaction must be independently, fully funded.
• Pass through funding
When the funds from the second transaction are used to close / payoff the first transaction. This type of funding is illegal.
The first transaction must be independently, fully funded.
“All You Need Is a Title CompanyThat Will Work With You!”
“All You Need Is a Title CompanyThat Will Work With You!”
FraudFraudFraudFraud
Beware of The Guru’sBeware of The Guru’s
• Make Thousands of $$$ Easy……
• Buy from ME!
• I’ll give you FREE bonus!
• Buy from ME!
• Make Thousands of $$$ Easy……
• Buy from ME!
• I’ll give you FREE bonus!
• Buy from ME!
What Is a Short Sale?What Is a Short Sale?
• The willingness of a lender or creditor to accept less than the amount they are owed.
• A simple concept to understand but complicated in its implementation.
• This is not a logical process. There is no standard time frame for completion.
• The willingness of a lender or creditor to accept less than the amount they are owed.
• A simple concept to understand but complicated in its implementation.
• This is not a logical process. There is no standard time frame for completion.
The Short Sale ProcessThe Short Sale Process
• A long, strange process that defies explanation
• Contract date? What contract date?
• The lender said I’ll have it tomorrow…and tomorrow never comes.
• We will show you how to get through it.
By getting your ducks in row.
• A long, strange process that defies explanation
• Contract date? What contract date?
• The lender said I’ll have it tomorrow…and tomorrow never comes.
• We will show you how to get through it.
By getting your ducks in row.
What Are the Short Sale Challenges?What Are the Short Sale Challenges?
• Very few banks and loan servicers own their loans, so they may not have the ultimate say-so in negotiations.
• There could be another investor and maybe a mortgage insurer involved. All have to sign off to approve the Short Sale.
• TIME!
• Delays in approval and closing!
• Second mortgage, judgment and/or tax lien holders also have to agree to the short sale and release their lien interest. Often times the senior lien holder has certain limits as to how much a junior lien holder can receive.
• Obviously, this process can become complicated.
• Very few banks and loan servicers own their loans, so they may not have the ultimate say-so in negotiations.
• There could be another investor and maybe a mortgage insurer involved. All have to sign off to approve the Short Sale.
• TIME!
• Delays in approval and closing!
• Second mortgage, judgment and/or tax lien holders also have to agree to the short sale and release their lien interest. Often times the senior lien holder has certain limits as to how much a junior lien holder can receive.
• Obviously, this process can become complicated.
Why Would a Lender Accept a “Short Sale”?
Why Would a Lender Accept a “Short Sale”?
• $40,000.00 was the average loss on a financially-distressed property. (Pre-2007 meltdown figures)
• The sooner the property is sold, the greater the recovery.
• Reduction of liability and carrying costs.
• REO is always the worse chance of recovery.
• Lenders know a property shows best when it’s in move-in condition.
• $40,000.00 was the average loss on a financially-distressed property. (Pre-2007 meltdown figures)
• The sooner the property is sold, the greater the recovery.
• Reduction of liability and carrying costs.
• REO is always the worse chance of recovery.
• Lenders know a property shows best when it’s in move-in condition.
Why Would a Homeowner Wantto Do a “Short Sale”?
Why Would a Homeowner Wantto Do a “Short Sale”?
• They owe more than the house is worth
• Less damage to their credit report
• No record of the completed foreclosure
• Reduction of debt
• Move on with their lives
• ? ? ? ? ? ? ? ? ? ? ?
• They owe more than the house is worth
• Less damage to their credit report
• No record of the completed foreclosure
• Reduction of debt
• Move on with their lives
• ? ? ? ? ? ? ? ? ? ? ?
Why Would a Realtor Wantto Do a “Short Sale”?
Why Would a Realtor Wantto Do a “Short Sale”?
• Increased listings – More opportunity
• Increased sales – Ability to accept lower offers
• Increased commissions
• The new paradigm
• That’s the business that is out there
• Increased listings – More opportunity
• Increased sales – Ability to accept lower offers
• Increased commissions
• The new paradigm
• That’s the business that is out there
What Are “Realistic Expectations”?
What Are “Realistic Expectations”?
• It’s going to take more time
• It’s going to cost more money
• Something will always come up
• Calculate fair profits into deals and deals will get done
• It’s going to take more time
• It’s going to cost more money
• Something will always come up
• Calculate fair profits into deals and deals will get done
AffidavitAffidavit
• Notice of the short sale situation
• Acknowledgment and disclosure of the seller’s understanding of the nature and terms of the transaction
• No hiding / Everything is in the open
• Written simply, so it can be understood
• Recording the Affidavit is not required
Funding the A to B TransactionFunding the A to B Transaction
• The A to B transaction must be a fully funded, independent transaction and cannot draw upon the funds of the B to C transaction.
• Tell the closing agent in advance how you will be providing those funds so it knows how to expect to receive them.
• The A to B transaction must be a fully funded, independent transaction and cannot draw upon the funds of the B to C transaction.
• Tell the closing agent in advance how you will be providing those funds so it knows how to expect to receive them.
DisclosureDisclosurenoun.
1. The act or process of revealing or uncovering.
2. Something uncovered; a revelation.
noun.
1. The act or process of revealing or uncovering.
2. Something uncovered; a revelation.
DisclosureDisclosure
• Say what you know to be true.
• Evading the truth only puts off the inevitable.
• Be proactive in relaying the nature of the deal.
• Disclose early, close on time.
• Disclose late, you may never close at all.
• Say what you know to be true.
• Evading the truth only puts off the inevitable.
• Be proactive in relaying the nature of the deal.
• Disclose early, close on time.
• Disclose late, you may never close at all.
Disclosure Situations Realtors
Disclosure Situations Realtors
• Subject to a short sale
• Tell the realtor who the seller is.
• Direct the buyer to a lender w/o “Seasoning Requirements.”
• Include “subject to” language in your exit contract.
• Subject to a short sale
• Tell the realtor who the seller is.
• Direct the buyer to a lender w/o “Seasoning Requirements.”
• Include “subject to” language in your exit contract.
Disclosure Situations The End Lender
What If…
Disclosure Situations The End Lender
What If…
• The end lender requests to see the payoff letter? Show it to them
• The end lender wants to see the A-B contract? Show it to them
• The end lender wants ‘A’ to sign the 2nd contract? Have ‘A’ sign the contract
• The end lender wants ‘A’ to sign the final HUD? Have ‘A’ sign the final HUD
• The end lender requests to see the payoff letter? Show it to them
• The end lender wants to see the A-B contract? Show it to them
• The end lender wants ‘A’ to sign the 2nd contract? Have ‘A’ sign the contract
• The end lender wants ‘A’ to sign the final HUD? Have ‘A’ sign the final HUD
Disclosure SituationsThe A Seller
What If…
Disclosure SituationsThe A Seller
What If…
• A is going to find out the details sometime – Disclose now, prevent problems later.
• Hide nothing.
• Tell them – You are in it for profit and your plan is to resell the home immediately.
• Explain how the process works – Step by Step!
• Have them sign the Affidavit.
• File the Notice of Option Contract.
• A is going to find out the details sometime – Disclose now, prevent problems later.
• Hide nothing.
• Tell them – You are in it for profit and your plan is to resell the home immediately.
• Explain how the process works – Step by Step!
• Have them sign the Affidavit.
• File the Notice of Option Contract.
Disclosure SituationsThe Short Sale LenderDisclosure SituationsThe Short Sale Lender
• Lie to them and you are committing FRAUD
• Disclose, but don’t over disclose
• More is not always better
• You have the right to resell the property, do not make the resale a contingency to the contract
• Lie to them and you are committing FRAUD
• Disclose, but don’t over disclose
• More is not always better
• You have the right to resell the property, do not make the resale a contingency to the contract