Matteson, IL

Being a Realtor we often have to be all things in a transaction. Today I am asking for a break from all Loan Officers working with Buyers or potential Buyers. When qualifying the client , speak in terms the buyers can understand. Many will not ask questions because they are too embarrassed to appear that they are not getting what you are saying. But most do not understand, how do I know? They call me to break it down in terms they can understand.

I know in this industry like most industries we have our own terminology. Sometimes we need to slow down and remember that we are talking to someone who may know nothing about financing a home. The breakdown in communication can cause lots of confusion. New buyers especially have a hard time understandings things such as points, how property tax credits work, APR, debt ratios etc. Slow down and pretend you are talking to someone who knows nothing....it would help us all!

As a Realtor, I get this question all the time....are there any grant programs available to help me purchase a home? Of course, if I am aware of one, which I usually am....I share this information with the buyer especially if they need assistance with down payment, closing costs or property tax reduction, after all as a Realtor I want to help my buyer realize her dream. The next question I usually get, is how come myMortgage Loan Officer did not tell me about it?

Good Question..how come? Most Loan Officers are looking for a quick close......and most grants require waiting for approval from whomever is providing the grant. There are many programs in most states that are receiving money from the federal government to help buyers who need help.

I was reminded of this today from one of fellow Realtors who had a listed property that my buyer was interested in, but the high property taxes were a concern that would make her payments higher than she could afford. After expressing this to the listing agent...she came back quick with the answer,t"here are lenders who provide MCC Tax credits".....who? What? What are you talking about Willis? To make it even better for my buyer, one of the lenders was the one she was pre-approved by. Back to my original question, why didn't her Loan Officer tell her about this, knowing that she was looking to buy in a low price range, knowing that high property taxes could disqualify a lot of homes for the buyer? Why?Why?Why?

I was told this story by a fellow frustrated agent. Ironically....the seller was my client before being switched to her by our mutual Short Sale Attorney....this is a sad story of a seller trusting and being loyal to her attorney.

I received a call from a Attorney who specialized in negotiating Short Sales to list a Short Sale from a referral. Listed it, received two contracts that went no where with the bank.....this was two years ago. Received another call from the Attorney saying the seller was not happy.....so instead of firing themselves (they were the ones negotiating with bank), they fired me and assigned the listing to another agent who became a friend of mine as the transaction progressed.

By this time, the new agent was able to list the property at a much reduced price and received a offer $50,000 under the listed price...she submitted it with an addendum that reads, if another offer comes in higher than the current offer, the highest offer would be presented. Knowing that the bank would eventually reject the two low offer, the listing agent submits the higher offer, but found she could only submit to attorney, not seller.....because the attorney informed her that she was cut off from communicating with the seller, who by now had relocated to another state. The seller had no way knowing at this point that a much higher offer had come in....one that the bank would probably accept. Frustrated the listing agent tried to plea with the attorney to look at the higher offer (this buyer was even willing to pay attorney fees to get the house)..but the attorney said no and continued to negotiate....the bank finally after months turned the low ball contract down, the seller filed bankruptcy and was very salty toward the agent. It was revealed during the process to the listing agent that the attorney was doing the Short Sale gratis....

Now the house is on it's way to foreclosure and the seller never got to short sell her house! She trusted her attorney and was very loyal....yet she may never know what really happened!

Across the street from me lived a family who were always updating their home. They seem to have the latest gadgets, gizmo's, furniture, etc. I even went over to check out the kitchen when it was being gutted (the home is only 4 years old) and updated to the latest kitchen design (this was last year). Imagine my surprise when I came home one evening and found a handmade For Rent sign in the yard. My Realtor detective radar kicked in...and there on the county records was a Lis Pendens notice of default. It seems it was dated several months ago. Umnnnn..........

As a neighbor I wanted to reach out.....as a Realtor I needed to reach out....but what would I say? You're renting out your pre-foreclosed home?

Here's the real shocker....after leaving my literature and business card and trying to catch up with my neighbor..to no avail...........here comes the moving truck and there goes my neighbor. A new neighbor is moving in (seem like nice enough people, after all the rents in my neighborhood cannot be cheap...because the homes were only built four to six years ago. But for some reason I was feeling blue....what to do?

More detective work found the home listed on the MLS and rented by a Realtor I happen to have a lot of respect for. But did the Realtors do their homework. After all...I live in a judicial state and our MLS records shows homes in Lis Pendens...and behold their it was..in bold writing for all to see. In the Remarks section, it stated that the homeowner was downsizing. Why would a Realtor list or rent a home that is clearly in pre foreclosure status? Anyone have an answer? What is a Realtor duty in this situation?

If you are a buyer, seller or Real Estate Agent....there is something you should know about Short Sales.

There are four types and you need to know what type of Short Sale you are entering into if you are going to buy one, sell one or become one.

I have been doing Short Sales for the last five years, have even been written up about them in several magazines but I learned something new recently. Here are the four types of Short Sales you need to be aware of:

1. The Traditional Short Sale: this is the one most Realtors have been helping homeowners who are in trouble sell their home for less than what is owed on their mortgage. The lender or investor approves the seller, accept the contract offer and it closes...eventually. (sometimes taking months, some stretching into a year..yikes!)
2. The U.S. Treasury Short Sale...this is the one with the alphabets..called HAFA (Home Affordable Foreclosure Alternative) whose guidelines were released in November 2009 and recently updated February 1, 2010. It has many advantages for Sellers, Realtors and Buyers. A.For Sellers, they may receive $3000 relocation assistance. B.The Foreclosure sale must be suspended while eligibility is determine. Sellers cannot be required to sign a note or pay any additional amounts to satisfy liens. C.The Short Sale is Pre Approved. This takes more time on the front end of the transaction, but less time after a purchase contract is accepted by the seller, a big advantage for buyers of short sales. D.Purchase agreements are approved or denied within 10 business days. Servicers are now required to communicate approval, disapproval, or a counteroffer no later than 30 calender days after receiving a sales contract, a Alternative Request for A Short Sale and a signed Hardship Affidavit. If the short sale is not successful, a deed in-lieu of foreclosure may be possible with the seller receiving $3000 relocation assistance or being able to lease the home back at below market rent if it is a Fannie Mae loan.
3. The Fannie Mae HAFA Short Sale. The same criteria is used as the U.S. Treasury if Fannie Mae is the investor, but there are some differences. The home cannot be vacant for no more than 90 days (one year on US Treasury), MORTGAGE cannot exceed 31% of borrowers gross income. Fannie Mae also deals with subordinate lien holders differently than the US Treasury. The big difference is Fannie Mae will allow the seller to lease the home back from them at below market rents to keep property occupied.
   
4. The Freddie Mac HAFA Short Sale. If Freddie Mac is the investor, the seller may be required to continue to pay monthly payments equal to 31% of the borrowers monthly income. Also you must apply for the HAFA approval before you get a contract or you will wind up doing a traditional short sale.
   

The trick to all of this is to know which kind of Short Sale the seller is eligible for. Most HAFA short sales can be entered into the Equator system. The first thing you must do is find out who the Investor is on the mortgage note. You can now find that out through the Fannie Mae and Freddie Mac websites to determine if they have ownership. For a list of participating servicers and to learn more about these programs go to www.makehomeaffordable.gov. Learning these programs can make short sales easier for everyone. Short Sales are here to stay for awhile...they have gone mainstream.