Florida Short Sales Archives

New Laws for Freddie Mac Short Sales

Friday, May 17th, 2013 at 10:02 am  
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freddie_mac_short_salesI have been doing short sales for a long time and I have watched the industry change regarding Trusts, Options and Arm’s Length Affidavits.  Recently, I read that effective January 1, 2012 Freddie Mac is not allowing flipping on short sales and is looking to hold all parties liable if they are aware of reselling the property for a higher price.

The funniest thing is they call it “flopping” which I believe was a typo from a secretary that just carried on and on throughout their paperwork.  In addition, they don’t specify the time line in which you can resell the property for property.  The purpose of the Arm’s Length Affidavit has always been that the seller is not getting the discount for their benefit and staying in the house.  “Make sure you read your Arm’s Length Affidavits and check your sellers loans at www.freddiemac.com/mymortgage to see if it is a Freddie Mac Loan.

Bank of America approximately 2 years ago had placed a requirement on the new buyer that they were to hold the property for 30 days before being able to sell the property again.  GMAC and Wells Fargo has placed a requirement on the new buyer to hold the property for 90 days before reselling the property.   Remember, it is the investor underneath the mortgage companies guidelines not always the mortgage company.  However, I have found that the mortgage companies are starting to adapt these requirements in their own company policies.

When BOA included the 30 day hold provision in a payoff letter, I argued the fact that they are trying to put a deed restriction on the property.  However, they never put that wording in the deed so how in the world would anyone ie.  the new second buyer know that there was a requirement of the first buyer to hold the property for a time period.  They wouldn’t but the first buyer does know and has signed an Arm’s Length Affidavit stating the terms for the purchase.

I have always taken the stand that the Banks/Mortgage companies are the ones who send out their bpo agents/appraisers to advise the companies the value of the properties.  So even as an investor if you made an offer at $100,000 because that is your MAO “Maximum Allowable Offer”, they had determined based on market value provided by their eyes and ears (bpo agents/appraisers) how much they would be willing to sell the property for.

Therefore, if an investor got a good deal and all your paperwork submitted to the short sale lender says you intend to resell the property for profit then you are “ok”.  Until, these Arm’s Length Affidavits are adding additional wording.

NOW, the Arm’s Length Affidavit forms that they are having everyone sign ie:  Seller, Buyer, and Realtors all state the following on Freddie Mac deals even before January 1, 2012:

1.  Each signatory to this Affidavit expressly acknowledges that the Lender is relying upon the representations made herein as consideration for discounting the payoff on the Loan(s) which is secured by a deed of trust or mortgage encumbering the property.

2.  Each signatory to this Affidavit expressly acknowledges that any misrepresentation made by him or her may subject him or her to civil liability.

I/We declare under penalty of perjury under the laws of the State of whatever that all statements made in this Affidavit are true and correct.

Additionally, I/we fully understand that it is a federal crime punishable by fine or imprisonment, or both, to knowingly and willfully make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq.

I have also seen certain wording in the Arm’s Length Affidavits that you are NOT aware of another contract whether it is verbal or written to sell the property for a higher price.

I am just saying be careful when you are acting as an Investor and a Realtor as the big bad Banks are looking to blame someone for their mistakes.  Don’t stop buying real estate, learn the changes that the Banks/Mortgage Companies “INVESTORS – ie Freddie Mac” are starting to require so you don’t get to the Title Company and sign something that you didn’t understand that can hurt you later.  You just hold the property for the time frame necessary to make a profit!

 

Happy Negotiating!

God Bless,

Kimberlee Frank

www.SellFastRealty.com

www.ForeclosuresGonewild.com

www.RealEstateJunkie.com

www.ShortSaleNegotiating.com

Like me on www.facebook.com/foreclosuresgonewild

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Fighting over Credit Card Lien Releases on Short Sales

Sunday, May 12th, 2013 at 10:41 pm  
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Bidding on a homeWorking on short sales is always exhilarating when you receive updated title work which shows there are additional liens against the property.  Many Realtors, Investors and Short Sale Negotiators aren’t knowledgeable or prepared to fight the fight against Credit Card Liens on short sales.

I recommend that the first thing you do when working a short sale is to order a title commitment which will do a search to see if there are any liens on the property.  Are you aware that the title companies also do a name search for your Seller and Buyer?  When a name search is done against the Seller, any outstanding judgments or liens show up on title.  In addition, the title company is to order a lien search against the property for water, sewer, and code violations which cost approximately $140.

Due to the cost, this additional lien search is done right before closing.   I always recommend that the Realtor or the Investor make a personal call to the water, sewer and code violation departments as soon as they start negotiating their short sale. By making the personal call, you can minimize some costs versus have the title company search for you.   Some counties provide this information online.  However, don’t depend on your inexperience of checking liens on the property, I would highly recommend that you contact the County Department and talk to a live person for confirmation.

After a name search is run on the Seller, if there are any outstanding credit card judgments they will have to be paid off at closing in order to give clear title to the Buyer.  Unfortunately when dealing with credit card judgments, you have to deal with attorneys that represent the credit card companies.  Many attorneys are not aware of how a short sale is done.  They are only driven to get the Seller to pay money for a full satisfaction or get 50% of the balance for a partial release which allows the Seller to sell the house but still be responsible for the difference.

Right now I am fighting this battle.  I have a property wherein the Seller purchased the property with a Chase Mortgage in her own name.  She transferred the property into the Trust as she had attended too many seminars and assumed this was the right way to do it.  Unfortunately, when she did she didn’t include the marital status of all parties on the Deed so we had to chase the previous seller to clear up title by signing an Affidavit stating their marital status.  NOTE:  To all investors who are preparing their own paperwork, make sure that all parties have the marital status of all parties.  The property was originally homesteaded so it pulled in the husband as having an interest pursuant to the guidelines of the title company.  The homestead exempt was lifted and placed on another property now making this an investment property.

However, because she was married at the time of the purchase, the title company’s underwriter will not insure the property unless all liens are released.  This also included the liens against the husband, even though his name is not on title.

In addition to short-saleing the 1st lien, I have 6 additional liens to negotiate partial releases which would release the liens against the property but the seller and the husband would still be responsible for the difference.  LISTEN TO THIS:  The short sale lender is Chase and is awarding the Seller $30,000 as an incentive to do a short sale!!!  Since their loan was taken out in 2007, I believe that this loan has all the mistakes as cited in the www.60minutesovertime.com Robo signing incident.  The short sale lender normally does not allow the Seller to contribute any funds towards lien releases except this lender is allowing the sum of $500 per lien release to be paid out of the incentive just to get the deal done.  The short sale was approved for February 25, 2013 and the short sale lender will not give us an extension until we provide them with a Letter of Direction from the Seller stating that each lien holder would receive $500.00 paid from Seller’s $30,000 incentive and copies of each of letter stating that the liens will accept the $500.00.

I am dealing with Citibank (credit card) that is in 3rd position as a lien holder that is owed approximately $32,000.  I have spoken twice to the attorney to get them to accept $500.  They have denied it twice even though I showed them that Chase is taking a discount of $600,000 and the other liens are accepting the $500, which their liens are much higher than Citibank.  So what do you do???

The attorney that I have been dealing with claims he has submitted this information to his client, Citibank, and that they want $15,000 to settle.  I have explained that is not going to happen because the short sale lender is dictating how much they can receive.  The attorney stated to me that this is their only chance to get paid as they know that the husband can file bankruptcy and then they get $-0-.  I have a letter from a bankruptcy attorney for the husband stating that he, in fact, was going to file bankruptcy but … if I informed the attorney of this fact, then they would not settle for less.  I informed the attorney that I don’t want a full satisfaction, where it totally releases the liability of the husband, but instead I want a partial release.  I am getting nowhere with this attorney.  I asked for a supervisor and will fight the good fight with him to see if I can get him to get it released.  However, my experiences with attorneys are that because they are debt collectors they don’t understand the short sale guidelines, so they will not settle.  I have even asked for a release for $500 and a payment plan for the difference and the attorney’s answer was “No.”  So … what do you do?  I went straight to the credit card company’s main office asking for their legal department.  I have done this plenty of other times with other credit cards.  I know if I can speak with someone in the legal department at the main office of Citibank who has the authority to accept the $500 and explain the situation, they will advise their attorney to accept the lien release and may even, if need be, accept a payment arrangement.  The last call I made like this to Target’s legal department on another deal, we did a 3 way right then and there and we got it approved.

My other options are that the buyer pays some money towards the debt, the Realtors contribute and the title company reduces their fees so they can also contribute.  This is my last choice because this is a flip.  If this was a listing where I was acting as the realtor, then the buyer would be my first choice, since the buyer will benefit from the purchase of the home.

Moral of the Story:  Don’t give up on any lien releases!  You need to do is talk to the right person which is always the Plaintiff (credit card company) and tell them the situation.  You always have to go around the attorney and go directly to their client.  Many times the attorneys, because it doesn’t meet their guidelines or it doesn’t make any common sense to them to accept $500, will not even send it to their clients as their job is to get as much as they can or just deny the offer and still get paid from their client.

Just to let you know some numbers on the deal, the buyer is purchasing it for $160,000, it needs about $30,000 in repairs and in the end the property will sell for high $350,000.  These are projections and just because there is a huge profit doesn’t mean that I shouldn’t continue to fight the good fight.  You may say, “with all that profit, why not just give ‘em what they want and pay off the liens and you will still make money?”  I don’t leave any money on the table.  If there’s room to negotiate for a larger profit, then I will fight the good fight!

I hope this article helps all you Short Sale Investors, Realtors or Negotiators out there as I never give up on a deal!  Remember the most important thing is to get title work as soon as you start the file and ask for an update in 60 days when you know you are getting near a closing date.  This way, you will not be fighting a fight when a foreclosure sale date is in the near future.  I always say “all crazy deals make me wanna smoke, drink and swear” and I don’t do any of those things.  Well….gotta go have a cigarette!

Happy Negotiating!

Kimberlee Frank

www.SellFastRealty.com

www.ForeclosuresGonewild.com

www.RealEstateJunkie.com

www.ShortSaleNegotiating.com

Like me on www.facebook.com/foreclosuresgonewild

Like me on www.facebook.com/sellfastrealty

 

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Helping Sellers Survive the Foreclosure Roller Coaster Ride

Wednesday, May 8th, 2013 at 12:32 pm  
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forclosure floridaGoing through a Foreclosure action and losing your home is a very stressful situation for anyone.  Until you walk in those shoes yourself, it’s hard for an Investor or Realtor to understand what a Seller is facing in their day to day life.  I would like to share how a Seller feels during this process so that you can really begin to understand the Seller’s experience.  It IS a scary roller coaster ride and you can help deter them from crashing and burning at the end!

Owning a home has always been the American Dream.  Sellers become very emotionally attached to that “dream home.”  They work their tails off, save as much money as they can, and make the big purchase.  Unfortunately, the adjustable rate mortgage was introduced to our economy which allowed Sellers to purchase the home of their dreams with little money down, interest only payments with the Sellers knowing that in 3 to 5 years they will have to refinance their home to a fixed 30 year mortgage in order to keep it.  When the housing market crashed, it affected everyone drastically.

Many people found themselves without a job ie. realtors, mortgage brokers, developers, contractors and many more people in different occupations.  Can you image if you had a 700+ credit score and then suddenly you weren’t able to make your payments on your home, car, credit cards, and purchase food or clothing for your family?  This is such a humbling experience that many Sellers don’t survive.  Everything they have worked for their entire life is gone!  This situation has crushed many dreams and is still occurring daily.

First off, the Seller should not have purchased a home with an adjustable mortgage rate and counted on the economy to increase the equity in the home enough to be able to re-finance.  However, with the persuasion of the mortgage broker, spouse, friends and maybe family, the Seller thought “It will be alright I can do this!”  Now that everything is crumbling down around the Seller, their pride is stopping them from taking the correct step and doing a short sale.  The Seller receives multiple telephone calls a day from a debt collector whether it is for the mortgage payment, car payment, credit card payment, etc.  The Seller (male) is starting to have family issues as it was his job to earn income to support the family.  A Seller (female) may also be in the same position as in this economy it takes two incomes to raise a family, send their kids to college and to pay all the bills.

Many Sellers lose faith in their religion as they don’t know who else to blame for the fact that they are losing their home.  In reality, it is the economy’s fault and no one else to take the blame.  It’s just life.  This is hard for Sellers to realize.  In addition, Sellers start having health issues, they argue more often, drink more, kick the dog, beat the kids and their safe and stable family life turns into CHAOS.  This is nothing to scoff at, laugh about or take lightly.  Foreclosure destroys families and lives.  Many Sellers end up in divorce, kids start failing in school or they totally move out.  The family quits going to church.  The family unit and the individuals literally fall apart.  Sellers need our help to understand the entire short sale process and how it can truly benefit them…..especially the fact that it is FREE, and they are in control of their destiny versus walking away or staying in the house and still letting it go to foreclosure.

When you contact Sellers, you need to be aware that they are expecting someone who wants money from them.  They are barely scraping by and now we say we want to buy their home.  Where will they go?  You need to remember that these Sellers are on a roller coaster ride from “heck” and don’t know how to get off or aren’t even sure that they want off, because they are not informed about all of their options.

I always teach that you, the Investor or Realtor, will have to help the Sellers understand the process, meet with them a couple of times and, more than likely, will have to counsel them during their stressful situation.  I like to set their expectation right from the beginning which is “doing a short sale allows you to control the bank’s outcome.”  What I mean by that is in my contract it states “This offer is subject to the underlying lenders taking a discount acceptable to the Sellers and the Buyers.”  This way, if at the end of the short sale, the short sale lender wants money from the Sellers or the deficiency judgment is not waived, the Sellers can back out of the deal!  And by the way, if you’ve taken my course, your Sellers will not pay any money and their deficiency judgments should be waived.  This alone makes a Seller feel warm and fuzzy and in full control.  As for you, well, this statement may not make you feel warm and fuzzy.  I only work on transactions that will be a win for the Seller, win for the buyer, win for the bank, and win for the Realtor.  Using this motto will help you excel in your business.  I provide excellent service and teach my student to do the same; therefore, we all have high referral rates and you should, too!

 

So, the next time you are dealing with a Seller who still owes you paperwork in order to do the short sale, please recall this article and remember what kind of day are they going through.  How can you help them provide what is needed to process the short sale?  Is it, I will come to your house and we do it together?  Should I email it to you and do you have enough ink in your printer to print it out or should I overnight it to you with a return label self addressed and paid?  We are here to provide a service……so provide an excellent service to them.  I provide excellent service; therefore, I have an excellent referral rate. J

I know as an Investor and Realtor it is a struggle to deal with Sellers and short sales.   However, if you are willing to do what it takes to get the deal done by truly helping the Sellers, then you will not only make money, you will also help a Seller from owing a deficiency judgment for 25 years and maybe help stabilize their family again.  The Banks are going to go after these Sellers and we must approach this with a mindset that “enough is enough!”  Help the Seller out and explain the short sale process and remember, they need you more than you need them.  However, without your help and persistence they would not have made it through this ugly time.  Feel proud of helping the Sellers re-build their world, save their family and move on with the next chapter in their life.  I am proud of you!!!

 

Happy Negotiating!

 Kimberlee Frank

www.SellFastRealty.com

www.FreeFactsAboutForeclosure.com

 

 

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