Breaking Short Sale News | New Treasury Department Shortsale Guidelines….
Harris Real Estate University students (and future students)…here is the information about that we have been promising you…
As you know we have been offering short sale training for years and years now. We were the first national coaching company to teach agents how to do short sales…and we are by far the largest. Thousands of agents have received their ASD (Accredited Shortsale Designation).
UPDATE: We created these 2 new videos for you….what you need to know about the changes with Short Sales
Video 1:
Video 2:
Why am I telling you all of this?
Simple, because rarely do we have the opportunity to share with you information that is this exciting…this ground breaking…and (frankly) this rule changing.
In October we reported that there were massive changes coming that would make 2010 the year of the short sale.
Drum roll please…here is the info:
* No reduced commissions! Lenders can’t ask or demand brokers lower their fees.
* Lenders to PRE-APPROVE short sales.
* Lenders must FULLY RELEASE borrowers from any future obligation (no more deficiency judgment fear!)
* No more money out of pocket demands from second lien holders….or any payback of the debt what-so-ever.
* Borrowers who do a short sale will be PAID up to $1500 to do a short sale! (read that one again)
* Seconds to receive no more than $3,000 TOTAL from the sale.
Bottom line, 2010 is the year of the short sale. if there was any doubt in your mind that being a short sale specialist…having your ASD (Accredited Shortsale Designation) was optional……these ground breaking changes to the entire short sale industry will 100% convince you. There should be no question in your mind that short sales are simply one of the best ways to truly be of service to others and earn an amazing income for doing so. We have made it easy for you. Watch the FREE How-To list Short Sales video and then download the FREE Short Sale Secrets book NOW.
From Inman New Features:
The Obama administration has released long-awaited guidelines for a program that will provide incentives for loan servicers and homeowners to engage in short sales when borrowers who are eligible for the Home Affordable Modification Program (HAMP) don’t qualify for a loan mod.
The guidelines prohibit loan servicers from demanding that real estate brokerages reduce the commission stated in the listing agreement as a condition of approving a short sale — a practice that’s been a sore point with many real estate agents.
Troubled borrowers interested in exploring a short sale will also be allowed to receive preapproved short-sale terms prior to the property listing, and servicers must agree to fully release them from future liability if the sale goes through.
The incentive program, which includes payments to second-lien holders who often stand in the way of short sales, was announced in May, but issuance of the guidelines was stalled over legal concerns.
Troubled borrowers who agree to a short sale or deed-in-lieu of foreclosure will receive up to $1,500 to assist with their relocation expenses. Loan servicers and investors who sign off on payments to subordinate lien holders will earn up to $1,000 for successfully completing a short sale or deed-in-lieu.
Subordinate lien holders are limited to recovering no more than $3,000 from sale proceeds, although those who object to the cap can engage in short sales outside the program.
Jeff Lischer, the National Association of Realtors’ managing director of regulatory policy, told the groups’ members last month at their annual conference in San Diego that the incentives should make a difference but won’t be a cure-all for foreclosures.
Watch the FREE How-To list Short Sales video and then download the FREE Short Sale Secrets book NOW.
Separately on Monday, Treasury and the Department of Housing and Urban Development (HUD) kicked off a program intended to help convert as many of the 375,000 borrowers who have received trial loan modifications into permanent ones (see story).
In order to “hold (loan) servicers accountable for their commitment to the program,” they will be required to submit schedules for making a decision on each HAMP-eligible loan. Servicers failing to meet performance obligations under a servicer participation agreement may be subject to monetary penalties and sanctions, the Treasury Department said in announcing that initiative.
The initiative also offers new Web tools for borrowers, including links to all of the required documents and an income verification checklist to help borrowers request a modification in four easy steps.
Some economists and housing analysts have warned that lenders’ foreclosure prevention efforts aren’t keeping pace with deteriorating loan performance.
An industry coalition of mortgage servicers and investors, HOPE NOW, says its members have provided 2.1 million loan workouts in the first eight months of 2009. While nearly half of homeowners entering the foreclosure process in in 2007 ended up losing their homes, only about one in three do today, the group said.
But the number of homes in foreclosure or headed there continues to grow. A record 14.1 percent of homes with mortgages were at least one payment behind or in foreclosure at the end of September, according to the latest numbers from the Mortgage Bankers Association.
Nearly one in 10 loans outstanding on one- to four-unit residential properties — a seasonally adjusted 9.64 percent — were delinquent, up from 9.24 percent at the end of June and 6.99 percent a year ago.
Another 4.47 percent of outstanding loans were in the foreclosure process, up from 4.3 percent at the end of June and 2.97 percent a year ago.
MBA Chief Economist Jay Brinkmann said delinquencies and foreclosures continue to rise despite the recession having ended in mid-summer, “because mortgages are paid with paychecks, not percentage-point increases in (gross domestic product),” and unemployment remains high.
Over the last year, the ranks of the unemployed have increased by about 5.5 million people, Brinkmann said, increasing the number of seriously delinquent loans by almost 2 million.
Prime, fixed-rate loans accounted for the largest share of foreclosures starts and were the biggest driver of the increase in foreclosures, Brinkmann said. One in three foreclosures started in the third quarter were on prime fixed-rate loans, and those loans accounted for 44 percent of the quarterly increase in foreclosures, he said.
The foreclosure numbers for prime fixed-rate loans will get worse, he said, because they also represent most of the recent increase in loans 90 days or more past due, but not yet in foreclosure.
Watch the FREE How-To list Short Sales video and then download the FREE Short Sale Secrets book NOW.
More than 4 million loans were in foreclosure at the end of September or “seriously delinquent” — more than 90 days past due, the MBA said. That’s slightly more than the total number of homes currently on the market, although there’s some overlap between the numbers.
Brinkmann said he expects delinquency and foreclosure rates will continue to worsen before they improve. It’s unlikely the economy will begin adding jobs until sometime next year, he said, and then only at a very slow pace.
When the economy does begin to add more jobs, those jobs probably won’t be in regions of the country with the biggest excess housing inventory and the highest delinquency rates, Brinkmann said.
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Was there a date mentioned for when the banks must comply with the new regulations?
Hi,
We are working on a video about this today…but, Jan 2010 is our understanding.
2010 IS the year of the Short Sale!
Tim
Everytime I think the rules have been established, they change again. Maybe this is what Obama meant by change?
Some of these changes may affect sellers, buyers and Realtors beyond the immediate intended consequences. For example, in my opinion (and only in my opinion), there exists the possibility of banks having to raise mortgage rates and possibly other fees in order to recoup at least some of the costs that they are going to be required to absorb. Let’s face it, they are in business to make money and ultimately must answer to their stockholders. As we all know, raising mortgage interest rates generally LOWERS real estate prices, and we run the risk of expanding the downward spirial. So on the surface, while the plan appears to work for sellers, buyers and real estate agents, it doesn’t hold up when a systems analysis approach is applied over time.
Additionally, as more “marginal” owners qualify for short sales, prices will drop across the board.
I am NOT an economist or a financial advisor; just applying common sense thought to the plan. This is what happens when you tinker with the free market.
When will this be discussed on webinar or training call?
Jan 2010…..as in NEXT MONTH!
Hey Ray,
Jules and I have been working on a video about this….and we planning on holding an ‘Emergency’ Short Sale call…next week.
One thing is FOR SURE…2010 IS the year of the short sale!
Tim
We keep reading that these are “guidelines.” Soooooo, how much teeth do they have in terms of getting the banks to follow them?
And Amy…THAT IS THE QUESTION!
My issues with new “guidelines” they are not required, lenders have a choice to opt in. Start date 4/15 or sooner if lender prefers.
Only first is allowed to not seek a deficiency.
I’ve done HREU Short Sale training 4 years ago – don’t think there was a designation then….. the whole thing is a mess and there really isn’t much end in site — at least not in my market.
Hi Susan,
You are..of course..100% correct.
All the best well intentioned laws and rules can’t force anybody or anything…especially lenders…to do what is best for the homeowners.
That will never change.
Over the next couple days Julie and I are going to release a few videos…first video is about SS and the new guidelines….the next video is
going to be (more or less) transcriptions of conversations I have had with 3 major (big-boys) banks..how they plan on using the guidelines.
(By the way, all told me that they are getting ‘massive’ political pressure not to foreclosure.)
Designation..we have had it for 3 years…just never did a good job letting agents know about it. They have been on the University site since 07!
You can have the designation…the logo…use of it etc. Have a few press releases you can use as well.
Hope you are still kicking rear! Let me know if we can do anything for you! (miss your emails)
Tim
Does your Agent Short Sales coaching include the CDPE Designation?
YES….our coaching does earn you the ASD….note: we have been teaching agents how to do short sales for years…longer than any one else.(by far) I know there are a ton of new guys out there offering
Short Sale info. You have to be smart and make the right decision.
For example:
1) are you learning from someone who actually SOLD real estate…As in…a Realtor?
2) how long has your ‘designation’ been around. The other designation’s web site starting in December of 2008! Check us….1997.
3) What exactly are you getting for your $500-600 with the other designation? Get the hard facts and COMPARE. (As you may know you can get started with us and get your ASD for only $97)
4) Ask around your office…call other agents….find out what THEY thought of their experience with the other designation. You need to find out directly from other agents what their real opinions are….(many of our new students are coming from the other designation…needing more information, education and training. They tell us the other designation is very basic.
5) The other designation is NOT a NAR designation….is NOT somehow approved by any banks….is NOT required by RE/MAX…be careful!
If you need any other questions answered…call 866-422-9497…or you can email me directly Tim@HarrisRealEstateUniversity.com
Very interesting news. I would like to see the actual news print from the Department of Treasury. Can you send me the link? I have over 20 shortsales on the market with Coldwell Banker. This is BIG!
No later than 04/10 but, most will start Jan 1st.
Tim
Here ya go:
DOWNLOAD Treasury Department plan NOW.
I was told recently by TCF Bank, that they are not required to follow any government guidelines for MOD or Short Sales. They are not insured with FNMA, FMAC, or HUD. So if they do sell short, a deficiency judgement is almost certain.
How to respond?
Hi Ray,
There never has been…never will be…a lender who won’t negotiate some arrangement for some repay of their loss in exchange for no judgment. Assuming the lender is a small, local bank who loans their own money. Not a Fannie/ Freddie owned loan. Lets also make it so the loan is non-purchase money is 100% recourse…lets add to this…just for fun…the borrower/ seller HAS assets..can make the payment but, simply wants out of their upside down home.
Lets call this..worst case scenario.
You get the first to release…accept the SS offer….they also agree to not go after the borrower post SS close. No deficiency. Second, wants their pound of flesh. Borrower is shorting the second for $250,000. Here is what you do…
Propose to the 2nd that the borrower pay them back 10% off the loss over 7-10 years at 1% (or less). In exchange, no deficiency. The bank will agree to this 99.9% of the time because…going after the borrower post SS close is A) Expensive B) If they do get the judgment…they still have to collect. So all in the cost of going after the judgment is very high. Add to this the potential ‘political’ fallout from doing this lenders perspective.
In most cases you will never have to deal with this situation because most lenders will use the new guidelines. IF they aren’t (like our example) you can still work the deal like I suggested.
Remember…this is crucial…ALWAYS make it clear to your client that you are neither a CPA/ Tax guy/ Accountant or an attorney. You should always have your clients speak with said professionals.
Hope all of this helps!
Tim
Ive been a Real Estate agent for 22 yrs, Wow how things have changed. I have been on both sides, Ive worked for the Buyer, and I have worked for the Seller, With bank owned properties and short sell properties. Some has worked smoother than others, depending on who the Lender is. Leaving out that I am a agent…. And just a tax payer in the USA, And we have bailed these big lenders out… they do not go by any rules but there own. Some one needs to govern them in some way. I hope there are changes in TIME IS OF THE ESSENSE. The lender will let an offer sit for a month in a half with no answer, Do they want to foreclose? It is very frustating for all involved. I have gotton a hold of my congressmen. I would suggested everyone do the same. Together we can change it. United we stand divided we fall. Missouri Realtor. Sheila
I took 2006 short sale coaching may I know if I am entitled to get that CDPD certificate.
I am really thankful for sharing the knowledge. I loved short sales.
I’m starting to get referrals from Lenders to do short sale to homeowners in my area.
Yes..call our office 866-422-9497 and ask for Ruschele.
Tim
You state no more reduction in commissions as a condition of short sale approval. I have one in progress right now WellsFargo, has stated they can do it because I have both sides of the deal, the no reduction is only for two sided transactions. And when questioned about the new ruling on no reduction they came back and said the Treasury Dept told them it was allowed if one agency was getting both sides of the deal. So instead of getting the full 6% commission according to the listing contract. I am forced to accept 4.5% or not get the deal approved.
Hi Bruce,
That isn’t true.
Matter of fact..at last look…nothing in HAFA about commissions.
Also, IF this is a GSE owned loan the servicer MUST pay you 6%.
Escalate the file….looks like the processor of this SS..may be a little mis-informed.
Tim