San Diego Short Sale Experts - Glen Henderson - Realtor

Here are a few additional approvals we have recently received in the last month... For all of you that are discouraged with short sales and the process, they do close if you're willing to hang in there or are working with a team that understands them.

San Diego Short Sale Experts - www.SDShortSaleExperts.com

Short Sales Ban NOT Related to Real Estate

Last Friday, Securities & Exchange Commissioner Christopher Cox made a dramatic move today to show that the SEC is doing something: banning short sales of 799 financial stock.

"This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress," Cox said. The ban went into effect immediately and expires at midnight on October 2, 2008.

NOTE: THIS HAS NOTHING TO DO WITH REALTOR AND INVESTORS NEGOTIATING A SHORT SALE, OR REDUCTION IN PRINCIPAL AMOUNT OWED ON A LOAN.

Let me make this very clear: this ban on short sales has nothing to do with real estate short sales that we're primarily focused on. PLEASE FORWARD THIS E-MAIL TO REALTORS AND INVESTORS YOU KNOW, AS THERE IS MASSIVE CONFUSION RIGHT NOW. A short sale when it comes to the stock market is generally considered this: short sellers borrow stock in a company that they don't actually own and then sell it, hoping that they can buy the stock back at a lower price and make a spread on the difference. This leads to wild swings in a stock price, and perhaps an exaggerated movement--and such was the case this last week when financial stocks plunged.

So remember, the ban on short sales has absolutely nothing to do with the “short sale” of homes!

San Diego Short Sale Experts – www.SDShortSaleExperts.com – Real Estate & Realtors

Beware of Short Sales with Franklin Credit in the second lien position. (We haven't worked with them in the first position, so I can't comment on that.)

Our seller was a single mother who bought a condo in Chula Vista, one of San Diego's hardest hit areas. She has run into financial troubles and is not able to afford her home anymore. Both of her loans are purchase money loans, meaning they were non-recourse. The first with ASC and the second with Franklin Credit.

ASC was owed almost $351k and we negotiated & receive an approval of a $217k payoff (A $134k loss), with a payoff to Franklin of $3,000 (above average for many seconds). At that payoff, about an $80k loss. Franklin declined this offer and declined further offers at $5k and $10k. In a couple week period of unreturned phone calls, unknowledgeable "loss mitigators", and declines, we began contacting upper management.

We went all the way to the CFO, CEO and COO of Franklin Credit. Eventually, we were able to correspond with the COO (through his assistant). They countered back at full repayment of the second at over $700/month. We explained that there's a reason our client was behind on payments and completing the short sale, she didn't have money. Negotiations continued and we were eventually told that they would not agree to a short sale unless they received full repayment of the balance at closing, or in the form of a promissory note. We explained to them that these were non-recourse purchase money loans and they would receive nothing if the property went to foreclosure. They didn't care. We tried to explain our client's hardship and that she was trying to do the right thing by completing the short sale instead of just walking away. They didn't care. No matter what we tried, they didn't care.

One theory we've heard on this is the second mortgage companies that do this will lose less in the end. A lot of the time, the seller DOES sign the promissory note. Even if a huge portion of them go bad (50%+) they'll still end up getting more in the long run from those that take the soft note and pay vs. taking a token of $1,000 or nothing at all at foreclosure.

The "well they'll get zero if there is a foreclosure" doesn't work in many of these cases because people that get to the point where a promissory note is being offered are the kind of people that are actively looking for a solution. They are the kind that will take the promissory note to get out of the situation and most will probably pay it. After all, they are only working a short sale to save their credit in their own minds in most cases. Who wants to save their credit and then go bad on a promissory note in 2 years and ruin their credit again?

The theory is the banks may end up getting more overall if they adopt this position and hold their line. I don't agree with this theory at all and it's unfortunate that they will hurt these homeowners that are facing financial hardships and actively working towards a solution for everyone. In addition, instead of receiving a few thousand and being able to write the loan off, the bank will lose further months of interest and receive nothing at closing.

And even further, they could care less about how it is affecting the homeowner and what their situation is.

From this point further, any client we sit down with in the initial consultation that has a loan with Franklin Credit, we will make them aware that Franklin will ONLY complete the short sale if they receive a full payoff or full promissory note. If the client is not willing to sign that, we will not take on the short sale.

Unfortunately, there are the few clients that we just won't be able to help.

So beware of Franklin Credit and make sure your clients are aware.

Here are the basic steps to use, in order to complete a SUCCESSFUL Short-Sale with Countrywide.  We have gone through a lot of trial & error to learn the same information that's being provided to you below.  This can help take your short sale approval time from months, down to 30-60 days.

PREFACE:

a) MAKE SURE that you send a complete package the FIRST TIME!  The package the Countrywide requires is the same as any other bank and the good thing is, they don't require and special forms.

For those of you unfamiliar, the package should include:
- Purchase Contract (this includes copy of earnest deposit, buyers loan approval and proof of funds to close)
- Comps
- Estimated HUD
- Listing Agreement
- Authorization Letter
- Financial Worksheet
- Hardship Letter
- 2 Years Tax Returns with W2's
- 2 Months Bank Statements
- 1 Month of Paystubs

And make sure to include this for EVERY PERSON on the loan.

b) MAKE SURE THAT EVERY PAGE THAT YOU FAX TO COUNTRYWIDE HAS THE LOAN NUMBER, ADDRESS, AND PAGE NUMBER.

A simplified explanation of Countrywide's process is:

- First, Countrywide gathers the financial data and offer price verbally.
- If it passes, it is referred to the loss mitigation department of a short sale
- If it passes the minimum offer, an appraisal is ordered.
- After the appraisal is returned, a negotiator is THEN assigned and you can negotiate. The biggest slowdown lately has been getting the negotiator to look at the file.

STEPS:

1. Fax Authorization to Release to 805-520-5019

2. Call the HOPE team at 800-669-6650, OR 877-744-7691, OR 800-669-6607. Tell them you faxed in authorization, have a short sale package to submit and you're calling to give them the financial information they need to process the short sale.  (If you don't complete this process and only fax in the package, it can sit there for weeks without anyone looking at it or it being assigned. )

3. They will input the financial info into the system AND the offer price. At that point, they will tell you whether it has been approved by the system for a short sale or not. If it has, they will then instruct you to fax in the complete short sale package.

4. Once it has been "approved for a short sale", Fax in the COMPLETE short sale package (an authorization again) to the Short Sale Department at 800-658-0395.

5. In about 2-5 days (time varies,) call the short sale department @ 866-880-1232 and confirm it has been received. They will use their computer to verify all documents required are on file and that the OFFER AMOUNT IS WITHIN THEIR COMPUTER SYSTEM'S GUIDELINES TO ORDER A BPO. If they have received everything needed, the BPO should be ordered. If it hasn't been ordered, call back daily until it is, each time asking to have it ordered.

6. If you had to send something additional in, call back and repeat step 5 in 24-48 hours

7. Call back 48 hours AFTER the appraisal is completed. Call the SHORT SALE DEPARTMENT DIRECTLY: 866-880-1232. I can take up to 5-7 business days for the appraisal to make it back to Countrywide depending on how quickly the appraiser completed the report & sent it back.

8. Ask them about the status of BPO/Appraisal and if it has been assigned to a negotiator. If not, push them to assign it and try to get the BPO amount out of them if you can (80% of the time they will say they can't give it to you. Sometimes slip and give it. Also know that once they give you a counter-offer, their policy is that they CAN give you what the BPO came in at.)

9. From the time the appraisal is received by Countrywide, they have 7-10 business days for it to be assigned. If it goes past this time frame, ask them to email a "team supervisor" about and "escalation" of the file.

10. If it HAS been assigned to a negotiator, ASK THEM WHO THE NEGOTIATOR IS AND GET THE NEGOTIATOR'S FULL NAME INCLUDING MIDDLE NAME/INITIAL.

11. Email the negotiator using the name you just got from the SS department, in EVERY Format listed below:

If the name is John Anderson Doe

John_Anderson_Doe@Countrywide.Com
John.Anderson.Doe@Countrywide.com
John_A_Doe@Countrywide.com
John.A.Doe@Countrywide.com
John_Doe@Countrywide.com
John.Doe@Countrywide.com

In the email, include the loan number and some sort of urgency in the title. In the body, include all the homeowner information to help the negotiator know you mean business. Ask them to look at the file, that the BPO was already completed AND received by Countrywide, that all you are waiting on is the counter-offer or acceptance letter, and that the buyers are ready and able to close by the end of the month. Include your contact information.

12. Check your email and find out which emails bounced back as undeliverable. Document which one(s) didn't bounce, those are probably the good ones. Use those to follow-up until you speak to the negotiator.

13. Call back the SS Department 866-880-1232 and find out the status of the file. Ask if the negotiator has any notes on file.

14. Follow-up, follow-up, follow-up.  "Be the squeaky wheel" until you speak to the negotiator.

15. Ask the negotiator what the best method AND TIME to contact them is, and use that method from that point on.

16. Negotiate the sales price.

17. Once the negotiator receives all documentation and the price/terms are agreed upon, the file will then go to the investor for approval. Depending on the investor, this can take anywhere from a couple of days to a couple of weeks.  The only way to know the investor is by asking.

18. While the file is with the investor, follow up every couple of days with the negotiator and/or with the short sale department to check status.

19. Once the investor signs off on the file, the negotiator will contact you and the approval letter will be issued.

20. Get SS acceptance letter

21. Close

*TIP: The department that the SS Department calls to order appraisals is called the "MultiQueue Dept." They are the people between the Appraiser and the SS Department. They're good to contact if an appraisal was completed but not on file for a long time or if you need to find out who the appraiser is: 800-222-9944

Hopefully this helps some of you help more homeowners and saves you a LOT OF TIME AND MONEY trying to do deals with Countrywide.

San Diego Short Sale Experts - www.SDShortSaleExperts.com