Short Sales. Vice President. Lincoln, Nebraska April 12, 2011

Transcription

1 Short Sales A guide to working with Wells Fargo Abel Fregoso, Jr Vice President National Field Short Sales Manager Lincoln, Nebraska April 12, 2011

2 Strategic Partnership Wells Fargo and Our REALTOR Partners Wells Fargo s primary concern and obligation is to our customers and investors. Our goal is to exhaust all efforts to help customers remain in their homes through various workout options. Once home retention efforts are no longer an option, Wells Fargo continues to work diligently to provide alternatives to foreclosure through short sales or deeds-in-lieu of foreclosure. Our last resort is to foreclose. Our partnership with experienced real estate brokers and their agents, familiar with the management of distressed real estate, is key to our success and commitment to quality service. Our REALTOR Partners expertise helps us to deliver timely solutions to assist customers, minimize losses to investors, and help to rebuild and stabilize our communities. These are unprecedented times in our industry, and now more than ever it is critical that we partner together as leaders in driving solutions and results to help in the recovery of a strong housing market. Our REALTOR Partners help us by providing their: - Familiarity with local market trends and community goals - Established relationships with the real estate community - Expert knowledge in short sale and REO liquidations - Strong customer service and communication skills 1

3 Short Sale as an Excellent Alternative to Foreclosure A Short Sale is a solution that allows the customer to sell the home for less than total amount owed. When all home retention solutions have been reviewed and exhausted, we immediately begin working with the borrower to determine if a short sale or deed-in-lieu can be accomplished. A Short Sale Benefits Everyone Customer Benefits Alternative to foreclosure with planned & graceful exit, Wells Fargo or Investor pays closing costs and incentives in certain cases, credit report reflects Settled for Less than Owed. Buyer Benefits Usually home is in better condition than buying a foreclosed property. Wells Fargo Benefits Average of 10% savings over REO, reduced losses and corporate advances, eliminates nonperforming asset. Junior Lien Holder Benefits Higher debt payment resulting from short sale versus foreclosure transaction. Community Benefits Occupied and maintained properties, stabilizing neighborhoods, preventing vandalism and other crime. 2

4 Short sale initial participants Homeowner Servicer Initial participants Home- owner s REALTOR Buyer Buyer s REALTOR 3

5 Participants approving a short sale Homeowner Junior Lien Holders Homeowner s REALTOR Private Mortgage Insurance Company Short sale participants Buyer s REALTOR Investor Buyer Servicer 4

6 Why is each Short Sale process so Different? 5

7 Wells Fargo Proactive vs. Reactive Short Sales. Get us involved early in the process Notify Wells Fargo Home Mortgage (or the appropriate servicing lender) as soon as the listing contract is signed This allows us to complete the property valuation and borrower financial evaluation prior to receiving the offer. This significantly reduces the short sale decision time on a submitted offer. Streamlining process through Equator 6

8 Partnering with Wells Fargo 7

9 HAFA Continues to Evolve (Home Affordable Foreclosure Alternatives) HAFA changes announced by Treasury on December 28, 2010 Supplemental Directive Effective February 1, 2011 Servicers are no longer required to verify a borrower s financial information or to determine if the borrower s total monthly mortgage pmt exceeds 31% of borrower s monthly gross income If borrower is less than 60 day delinquent, income docs will be collected to require borrowers to be >31% HTI to determine imminent default HAFA Program

10 HAFA HAFA Program Vacant Property vacant or rented for not more than 12 mos Release of Subordinate Liens Servicers are no longer limited by the 6% cap w/respect to payments to each subordinate lien holder. The $6k aggregate cap still applies. Prohibits the servicer from requiring i a reduction in the real estate commission Requires borrower to be fully released from future liability for the debt 9

11 What the Sellers REALTORS need to know Wells Fargo will Work with REALTORS to make sure the property is appropriately priced. Follow up until an offer to purchase is received Ensure that a deal meets investor and MI company guidelines Present the file to the investor and MI company for their approvals if not delegated Who would not be an eligible buyer Anyone with a close personal or business relationship to the homeowner, including family, friends, neighbors How to possibly reduce the timeline Submit all required documentation in timely manner. Allow the appraiser timely access to the property Due to the complex nature of the sale, the process does not follow those of a typical real estate transaction Note: A promissory note may be required by the investor, MI company or junior lien holder to offset the loss. 10

12 What REALTORS need to know A short sale approval is good for only 30 days If the closing does not occur within 30 days: The entire short sale package may need to be resubmitted with updated information, and/or The approval process may need to start over REALTOR commissions are based on investor rules Generally 5 6% If dual agency applies, maximum commission is 5%; however, commission may be capped at 3% with some investors Some investors operate on a reduced commission structure Actual commission can be confirmed during the introduction call Buyer concessions Buyer concessions must be approved by the investor. 11

13 Homeowner Steps Steps to a quick decision with Wells Fargo Step Description Documentation Contact the Wells Fargo Home Mortgage Short Sale 1 Counseling Team. Be prepared to discuss financial information and participate in pre-foreclosure counseling Brief, written explanation of the financial hardship Completed financial worksheet, to be faxed to the customer by the Short Sale Phone team after contact is made, and Real estate professional contact information (if applicable) Lender / Investor may also require: Updated home owner credit report 2 updated pay stubs (tax returns for self employed) Signed approval for 4506T (IRS access) 2 Hire a REALTOR and provide listing agreement 3 Process begins by obtaining a home value and collecting required documentation (customer should refer to the Short Sale Guide from Wells Fargo) Make sure to respond in a timely manner to your 4 REALTOR and lender REALTOR or Homeowner inquiries should be directed to the Negotiator assigned to the file. 12

14 Listing Agent Steps Steps to a quick decision with Wells Fargo Step Description It s critical that you are as accurate as possible in your market value assessment. Be aware of how much is owed on the property p and whether the seller is in default on any mortgage g liens, taxes or association dues. Make sure to include: Prorated interest charges and any pre-payment penalties Costs to close such as real estate commissions, etc. Introduction call with lender to discuss: Commissions Fees and costs Pricing the property Timeline Ensure that all agents/parties involved understand the transaction is a short sale and set the expectations for the timeline to close (30-60 days) 4 5 Receipt of/accepted offer Watch deadlines for approval and for closing after approval REALTOR or Homeowner inquiries should be directed to the Negotiator assigned to the file., April 2010 Presented by: JK Huey, Senior Vice President 2009 Wells Fargo Bank, N.A. All rights reserved. Restricted. 13

15 Realtor Hotline for Loan Servicing Default Liquidations Escalations AM 10PM CST Mon Fri Questions? 14