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Kevin is flying alone today. He’d like to chat regarding a couple different things today. To begin with, we would like to re-examine yesterday’s blog concerning HAFA. We talked about the lack of effect that HAFA, or anything with four letters, has on the short sale market. With regarding 15 separate people responding yesterday, we found exactly zero closed HAFA short sales. So, as we acknowledged yesterday, HAFA is basically not a game changer. We even got a comment that declared that a realtor was on day 67 of their 15 day HAFA process. That was funny. It has not been impactful to the short sale market despite what others may have claimed.

The second thing that we would like to chat concerning is a little internal document that we were given from a representative of Bank of America. I do not believe that this is a Bank of America specific form. I believe it is an investor specific form. This document is an impact analysis. We wanted to share a few things at you from this impact analysis. It has the borrowers information, how much the loan total is, the origination amount, the home worth today, and the offer amount. This document also shows what they believe the residence would sell for as an REO. Nonetheless, here is the bombshell. The projected marketing costs on this $271,000 home is almost $34,000.

You want to keep this stuff in mind when you are told by your negotiators that they will take the residence to foreclosure. The lender will never get extra capital from an REO. It costs them too much money to take a residence to foreclosure sale.

One final reminder for our Crush It Short Sale Lecture. Friday, August 13th we are hosting our session. You certainly do not want to miss this session. It is being taught by guys that are in the trenches closing short sales. So, if you are a Phoenix area realtor or even somebody who understands the value of this class and is willing to fly on a plane to get some big education in the short sale business, you will not want to miss this session.

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We are going to chat about mindset again today. We have noticed a tendency on our preferred social media website, facebook. Coincidentally, facebook recently surpassed 500 million users. So, that is a magnificent lead generation technique on mindset Monday. Simply ask the 23 customers that we received through facebook and closed on.

The concept that we would like to speak about is that we have noticed a lot of realtors on facebook that are complaining. We aren’t mad at them because many of them are our friends. Still, we see a lot of the status updates about which lender you hate. Also, there are a lot of status updates asking if anyone has a good contact at this specific lender or that specific bank. In light of these facebook postings, we would like to bring people back to the January 2nd episode.

The theory that was discussed on that installment was to do something atypical. This is not an episode to get mad at realtors. The aim is to not get caught in a rut doing the same thing all of the time and hoping for atypical results. You will have to do something out of the ordinary.

One of the things that we recommend to agents is to chat to somebody unique at the lender. If you are wondering how to do that, sample jigsaw.com. We get emails all day for acquaintance details. It is essential to note that we will never answer with contact information, but we will usually answer with a suggestion to try jigsaw.com

Just one example of doing something different, Fred couldn’t get a lender employee to stop talking today so he just started pushing buttons on the phone. It probably wasn’t the most mature thing to do. Nonetheless, he was doing something unique. If what you have been doing isn’t getting you the outcome you desire, try something unique. The worst thing that can happen is you will still not get the results you desire.

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Kevin and Fred are hanging out at Taco Surf in Pacific Beach, California. Fred actually held his wedding reception at Taco Surf. If you are ever in the San Diego vicinity, you should check out Taco Surf. The reason Fred is having such a belated lunch today is because he has exhausted numerous hours this morning babysitting foreclosure sale dates.

The first folder, serviced by Metlife for Freddiemac, has been a menace during the entire process. The first time we attempted to close this folder, MetLife sought to foreclose. So, we went to Freddiemac and they gladly postponed the auction date. However, the purchaser on that transaction fell through after inspections. At the moment we have a new buyer and we submitted that agreement at the conclusion of June. We have been working with Metlife to get them each and every one of the documents that they needed until last week. Last week they notified us that they could not delay the foreclosure sale date because it was extremely late. So, this morning, Fred had to call Freddiemac yet again to get the foreclosure auction date postponed. Freddiemac, once again, gladly postponed the sale date and sent Metlife an email asking them to defer the auction date for an extra 60 days because the offer on this house is more than the BPO. It definitely makes you conjecture what Metlife is doing in the short auction business.

The second folder, dealing with Chase, has been very frustrating. Fred was told last week that the sale date has been deferred and all is good. Fred has spoke to a couple of people that have been very cooperative and pleasant, but the trustee has already told Fred that the home is going to foreclosure auction tomorrow. Fred called the trustee for the second time today and he inveterate that it is positively going to auction.

At last, the Chase worker called Fred back and confirmed that the sale had not been delayed. Actually, Chase deferred the sale internally, but Chase forgot to get authorization from the backer. So, Chase had to go to the backer and request that they sale date be postponed.

We are not picking on any servicers or investors, but we need other realtors to recognize that you must verify foreclosure auction dates with the trustee. Trust no one inside the banks and corroborate everything.

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We have some first-class stuff today. Reading the New York Times this morning, we noticed that we are hearing the expression “strategic default” lots more recently. Strategic default is basically letting your house go into foreclosure. The home owner decides not to make payments because the worth of your house has gone downhill. The home owner might also not be making payments since in time they will not be able to make payments. So they are only speeding up the inevitable.

Core Logic came up with some remarkable data on what the rich are doing with their money and what some of the middle class are doing with their wealth. More than one in seven home owners with million dollar loans are critically deliquent. Below a million dollars, the statistics are just one in twelve homes. Core Logic chief economists believe that the wealthy are a little more brutal. Fannie Mae and Freddie Mac are begging home owners to keep making their mortgage payments, but the wealthy are not obligated to do so.

Investment houses with an initial mortgage over a million dollars, have a deliquency percentage is 23%. For cheaper investments the deliquency percentage is around 10%. The affluent and successful are less vulnerable to the dishonor and fear mongering used by the gov’t and mortage banking industry to keep underwater home owners from acting in their financial best interest.

It is interesting that the article says bad stuff about the affluent making this business choice. Many lenders are addressing strategic default. We do not make a stand on either side of it. Nonetheless, the rich are making a good business choice. If the middle class was a little more economically well-informed, maybe they would make the similar choice.

Minnesota Short Sale Shift can answer your questions. We are Minnesota’s Foreclosure Avoidance and Short Sale Specialists.

Get more help from short sale Realtors, Josh and Sarah, at Short Sale Shift presented by the Short Sale Specialists of Minnesota

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First and foremost, comment on today’s video at shortsalepowerhour.com and you will have the chance to be entered into a drawing for free flip flops from the boys at Group 46:10

We are going to chat regarding a commission disagreement that we had on a folder that was being handled by Bank of America. The backer on the folder was HSBC. The folder was rejected regardless of the offer being the same as the BPO. We came to find out that they sold the loan to Condor Capital.

Condor Capital is an asset management group that sells REOs and buys unattractive stuff and they capitalize on it. They are more of an investor in this business out for profit. They didn’t necessarily do any loans. So, Kevin officially began working with them on July 1st.

Condor Capital reviewed the papers and noted that the commission was at 6%. They asked that we cut the commission to 5%. They actually wanted to make the commissions 5% of their net sales price, which was buy price minus the buyers closing expenses. Kevin replied to them telling them that he was not willing to do that. He knew that they liked the offer because they had earlier told them it was a first-rate bid.

Condor Capital replied that their policies just permitted them to give 5% commissions. If Kevin didn’t accept that ruling, they would simply foreclose on the property. This foreclosure proposal got Kevin a smidgen disturb.

It was clear that they were out to make more money rather than find a win-win situation for both entities. Kevin explained that he can get them a lesser bid and accept the lesser commission, but that wouldn’t be a win-win situation for either party. The rules they were using were not in the best interest of either party. At the end of the day, you have to set up policies that help all parties productively complete deals.

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Last Friday we spoke about a commission dispute with Condor Capital. They aren’t actually a servicer of loans. They are essentially a buyer of loans. They label themselves a scratch and dent lender. It turns out that Condor Capital goes out and buys up the most awful loans out there for a specific proportion of the due balance. Then they pass them off to their loss mitigation squad and try to turn a profit. They do this through closing short sales and other techniques.

The loss mitigator that we talked with last week was animated about the deal with Fred because he knew his business was going to make a profit. However, the real catch here is that the loss mitigator receives a percentage of Condor Capital’s earnings on the contract. He’s not only getting a bonus for completing folders, but essentially getting a percent of the revenue.

So, when you are working with Condor Capital, bear in mind that the negotiator is making a commission on the arrangement. This in all probability leads to some added incentive for the negotiator. You may want to reconsider some of the techniques that you use when negotiating a short sale with Condor Captial. Take a little atypical slant with Condor Capital because they are getting a profit and you are getting a profit. So do your best to work with them.

There will be tons of visitors coming up in the next few episodes. So be sure to check out the next several days of videos for a few exceptionally unique visitors.

Also, a reminder, that August 13th we will be hosting an additional Crush It Short Sale seminar in Phoenix. It does not matter if you have seen us live before, we have so much original content to share with you. If you can’t make it, send your negotiator or transaction director. We will blow your brains and magnify your production!

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Today we are going to chat about the number one question that we attend to every single time that we deal with a short seller. Do I have to miss a payment? The short sellers that we deal with that are previously missing payments do not normally ask. Nonetheless, the ones that are being proactive often ask this question.

regularly the home owner thinks that they could take cash out of savings or take money out of retirement or borrow cash from relatives. They suppose this may be necessary to keep their credit score up. FHA in reality requires that the file is 31 days late. That is one of their necessities, that the home must be late in order to close. We are discovering it more commonly. Investors are requiring the folder to be late.

We believe this may be the circumstances since they have so many files to deal with. So, they do not concern about the files that are up to date because they need to deal with the folders that are already late. We are also hearing that several banks are telling home owners that call the bank that they must be late for the bank to even look at the file. This is accurate for both loan modifications and short sales.

Is it doable to get a short sale completed without being late? It may be viable if the circumstance is extreme or it is inevitable that the payments will be late. More and more however, we are discovering that you need to be late to close a short sale.

Tune in once more tomorrow when we chat more about short sales and the process of doing a short sale. If you are considering the short sale as a remedy to your current circumstances it is better to be proactive than wait for the lender to mail that horrible letter.

Minnesota Short Sale Shift can answer your questions. We are Minnesota’s Foreclosure Avoidance and Short Sale Specialists.

Get more help from short sale Realtors, Josh and Sarah, at Short Sale Shift presented by the Short Sale Specialists of Minnesota

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From the very start, shortsalepowerhour.com has spoken about the outback mindset. The outback is a answer oriented mindset to recognize processes that don’t work and generating answers for them. Most people in a short sale deal are dedicated to saying I can or I can not do this based on what somebody else has told them.

We would like to talk about the HAFA program which rolled out April 5th. It was believed to be a game changing course. The HAFA program, in my opinion, has been a immense disappointment. That’s not to say that people haven’t qualified for HAFA, but the point is that the predefined criterion standards are a slap in the face. The whole idea has been missed because nobody understands the program even though the information is out there.

So, sellers come to us and say, “Hey I heard i can get $3000″. That is the instigation for the program and it leads to an opportunity for an emotional situation and creates more sufferers.

About a month ago, I was up in Scottsdale at a huge event where Matt Vernon, Bank of America official, chatted about short sales and the troubles that they have had with them. During the meeting he brought up HAFA and I laughed at him. I laughed because HAFA has been a complete fiasco. Interestingly though, according to Matt Vernon, Bank of America has committed themselves to producing their own process that is similar to HAFA to speed up the process and incentivize the home owner. The hope is that the short sale practice can be whittled down from 120-150 day short sale down to 60-90 days.

Two years ago, based on results, Coach Collard hated you guys at Bank of America. It is incredible to see that you are talking about direction and you are making things happen. We appreciate the fact that you are candidly communicating with short sale brokers. Stick to the results and make it happen.

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Yesterday we started chatting about strategic default and an Experian report. So, lets keep the theme going with a narrative from Fannie Mae that says they will start punishing house owners that are strategically defaulting and allowing their properties go to foreclosure. Here are the changes they are implementing.

The following guidelines apply to conventional loans. Presently the waiting time for buying a property after a foreclosure is 5 years. As of October 1st 2010 the waiting period will be extended to 7 years.

Summary of Waiting period Requirements

-Bankruptcy Chapter 7 or 11 = 4 years

-Bankruptcy Chapter 13 = 2 years from release date

-Multiple Bankruptcy Filings = 5 years if more than one filing in the previous 7 years.

The Requirements for Deed in Lieu of Foreclosure, Preforeclosure Sale, and/or Short Sale are reliant on the loan to value

- with a maximum loan to value of 80% after 2 years.

- a maximum loan to value of 90% after 4 years and

- is back to “normal” after 7 years

So, we have to ask Fannie Mae what makes a strategic defaulter. They say that they will be launching investigations. They have enough to worry about without beginning investigations.

As Kevin states, the house owner has a contractual option to strategically default. So, what does Kevin mean by contractual alternative to strategic default?

As a borrower, you have an alternative to make payments every month. If you do not pay, the lender has a solution of foreclosure. Additionally, the lender can agree to a short sale.

If you glance at your deed of trust there is a portion in that paperwork about the remedies. When you put your signature on a deed of trust and note you are not promising to pay a mortgage. You are simply promising to abide by the policies of the contract.

Very purely stated, if you choose to not to pay, the contract allows for the bank to foreclose and file a deficiency judgment.

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Today’s focus revolves around a story written by Jon Prior. The item was written on the subject of the quickness of short sales. Deutschbank just ranked banks as to how fast they closed short sales.

GMAC pulled down the first spot by completing short sales, on average, sixty days from the day the loan became 2 months delinquent. Wells Fargo, which placed third in the rankings, averaged eight months to close a short sale. Wells Fargo has grown its home prevention team by more than 140% since the beginning of 2009. The bank hired more than 10,000 people to help lighten the short sale pile and curb foreclosures. That is a massive number!

Bank of America presently has 1500 and they are adding an extra 1500, to help out. Nonetheless, Bank of America uses the Equator system which streamlines the practice quite a bit.

For prime mortgages GMAC conducted short sales the fastest, averaging roughly 6 months per contract. The next fastest servicer was Citigroup, averaging approximately 7 and a half months per transaction.

So, the piece mentions GMAC, Citigroup, Wells Fargo, and Bank of America. On the other hand, there was a bank missing from this report, namely, Chase bank. That is because Chase absolutely refuses to have a streamline method. The rest of the major banks have improved their short sale method.

It’s good to know that GMAC, CItigroup and Wells Fargo are doing well with short sales. If you are having difficulty at one of those 3 banks, remember that the heads of these businesses want their processes to progress. So, if you are escalating at any of these banks, the supervision is very accommodating.

Short sale FAQs and more.

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