Return to flip book view

The ACG Road Map

Page 1

A Good Plan Is Like A Road Map:It Shows The Final Destination And Best Way To Get There.Your Short Sale888-934-3444 | www.acgnow.com

Page 2

A short sale happens when you owe more on the property than what you can sell it for and you receive approval from all lien holders to accept a lessor than full amount pay off. In other words, if all lien holders that cannot be paid from the sale agree to accept less than the amount owed on the debt, and the home is sold; this would be known as a short sale.What is aShort Sale2

Page 3

3Why Short Sale?1 Fannie Mae Announcement 08-16: Michael A. Quinn, Senior Vice President, Single-Family Risk Officer2 Fannie Mae Announcement 08-16: Michael A. Quinn, Senior Vice President, Single-Family Risk Officer3 Mortgagee Letter 09.52, 4155.1 Chapter 4.C.2. Short Sales4,5,6 Short sales are currently not explicitly reported on a credit report.Future Fannie Mae Loan (Primary Residence)1A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years.A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed mortgage after only 2 years.Future Fannie Mae Loan (Non Primary)2An Investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years.An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.Future Loan with any Mortgage CompanyOn any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 that asks "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" This will affect future rates.There is no similar declaration or question regarding a short sale.FHA - If current before executing a short sale, a homeowner may apply for an FHA loan immediately. If the homeowner is late a before short sale execution, They will be eligible for FHA loan after 3 years.3Credit Score Score may be lowered anywhere from 250 to over 300 points. Typically this will affect score for over 3 years.Only late payments on mortgage will show, and after sale, mortgage is normally reported as 'paid as agreed', 'paid as negotiated', or 'settled'. This can lower the score as little as 50 points if all other payments are being made. A short sale's effect can be as brief as 12 to 18 months.Credit HistoryForeclosure will remain as a public record on a person's credit history for 10 years or more.A Short Sale is not reported on a person’s credit history. There is no specific reporting item for 'short sale'. In most cases a loan is typically reported 'paid in full, settled' or 'paid as negotiated'.Security Clearances Foreclosure is the most challenging issue against a security clearance outside a conviction of a serious misdemeanor or felony. If a client has a foreclosure and is a police officer, in the military, in the CIA, has a security job, or any other position that requires a security clearance in almost all cases clearance will be revoked and position will be terminated.On its own, a short sale does not challenge most security clearances.4Current Employment Employers have the right to actively check the credit regularity of all employees who are in sensitive positions. A foreclosure in many cases is ground for immediate reassignment or termination.A short sale is not reported on a credit report and is therefore not a challenge to employment.5Future Employment Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment.A short sale is not reported on a credit report and is therefore not a challenge to employment.6Deficiency Judgment In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment.In some successful short sales, it is possible to convince the lender to give up the right to pursuit a deficiency judgment against the homeowner.Deficiency Judgment (amount)In a foreclosure, the home will have to go through an REO process if it does not sell at auction. In most cases this will result in a lower sales price and longer time to sale in a declining market. This will result in a higher possible deficiency judgment.In a properly managed short sale, the home is sold at a price that should be close to market value. In almost all cases it will be better than an REO sale resulting in a lower deficiency.ISSUE FORECLOSURE SUCCESSFUL SHORT SALE

Page 4

List property for sale- Obtain offerBroker Price Opinion (BPO)Ordered & ComletedBPO Analyzedby BankApproval ObtainedFrom BankClosing ProceduresSUBMIT OFFER & DOCSGet Authorizationwith Lender0 Days 15 Days 30 Days 45 Days 60 Days 75 Days 90 Days 105 Days 120 DaysSubmit Short SalePackage to LenderOBTAIN HOME VALUATION ANALYZE OFFER CLOSING ESCROW CLOSEDINITIATESHORT SALE PROCESS BEGINSPROPERTY SOLDThe Short Sale Process and StepsNow that you know what a short sale is and why it’s indeed a better option, most short sales will follow the same process, so it’s important to know how it all works.. Below is a typical step by step timeline for short sales and a list of other factors that may cause a delays beyond the typical time period expectations.HERE ARE SOME FACTORS THAT COULD CAUSE DELAYS:Additional Judgements or LiensMissing DocumentsBank RepresentativesBuyer WalkingInaccurate Valuation (Bank)Clouded TitleLack of Cooperation from Homeowner or BorrowerServicing Release (When a mortgage servicer changes)Bankruptcy3rd Party Auction Programs forced by Servicer4AVERAGE SHORT SALE TIMELINE

Page 5

1. Listing the property – Putting the property on the market is very important and most times a servicer requirement.2. Collect Documents – Both the homeowner and agent must collect their own set of documents in order to complete the short sale package.WHAT ARE MY NEXT STEPS?When you short sale with us,you are in control of the sale, not the bank.Documents required from thelisting agentComplete short sale application – incomplete applications will delay the process.Fully executed, current listing agreement – completed, signed and dated by the homeowner/seller and listing agent.Fully executed Wells Fargo listing addendum – signed and dated by the homeowner and listing agent.Fully executed purchase contract – signed and dated by the homeowner/seller, listing agent, buyer and the purchase agent.Important note: In instances when the purchase contract has not expired and that will not expire prior to closing. If the contract has expired or will expire prior to closing, an addendum extending the closing will be required.Estimated net sheetSome items may not be permitted per investor and/or mortgage insurance (MI) guidelines, including short sale processing fees, home warranty, pest inspectioon, home inspection, natural hazard disclosures and repairs.Most investors limit seller-paid closing costs to a maximum of 3% of the purchase price.Documents required from thehomeowner/sellerFinancial worksheet – including all monthly expenses; signed and dated within the last 60 days.Hardship letter – explaining why the homeowner is unable to pay the mortgage; signed and dated within last 60 days.Letter authorizing the listing agent to access information on the homeowner’s account – must be dated and include the following information from the homeowner:Last four digits of his/her Social Security numberSignatureFull mortgage account numberProperty addressOther documents supporting the hardship, as well as financial documentation required by the lender.Last two years of tax returns – signed and dated by the homeowner.Pay stubs for the last 30 days.5