Distressed property made up over 35 percent of all sales in Cook County in the first quarter of 2010. Foreclosure filings are on the rise in the six-county Chicago region, which means more of your clients are going to need to sell short, and more of your buyers will be putting offers on short sales. By knowing how to successfully negotiate a short sale, or working with a group who has a proven track record for success, you will be able to stay ahead of the game and have a thriving business in this tough economic time. By following the 10 tips below, we guarantee that you will get approvals more quickly, keep all parties involved happy, see more of your short sales close and streamline your short sale business.

Submit a complete short sale package to the lender. Make sure to include all documents that the specific lender will ask for so that they don’t have to come back and ask you for more and slow down the process. A complete package will help your file move through the system at a faster rate.

Make sure your seller is the “wing man” throughout the short sale process. Maintain a great relationship with your sellers and be sure they are available to provide you with any documents you may need quickly. Do not be afraid to have your seller step in and call the bank to express hardship or plead for an auction date to be postponed.

Time is of the essence and follow up is key. Get any documents or information that the lender requests back to them ASAP and follow up on the short sale every few days.

Attend every BPO and be prepared. The BPO (Broker’s Price Opinion) is one of the most important pieces of the short sale, as it is a key factor in determining the offer the bank will accept. Attend every BPO, get there early and bring relevant comparables, a listing history, a list of repairs, a repair estimate and any other documents that will support your offer. Also, let the BPO agent know what the offer on the property is in case they are not aware.

Know the ins and outs of your sellers’ situations. Know the following regarding your sellers’ properties and loans: If there is mortgage insurance, if this is their primary residence, who the end investor is on their first mortgage, how many loans are on the property, if there are any other liens on the property that they know of, is this the second mortgage and HELOC, if the property is a condo and if the sellers are current on their HOA dues.

Pull title right away so there are no surprises. Pull title as soon as you get the listing for the short sale property, that way you know what you are dealing with and can assure the title is clean. If there are issues, you can deal with them while the short sale is being negotiated, rather than having a deal fall apart at the last minute.

Know how to speak to your clients about deficiency judgments, promissory notes and 1099s. Remember, you are not a lawyer and should not give legal advice. You are also not an accountant, but you should definitely know all about deficiency judgments, promissory notes and the possibility of a 1099. Know about The Mortgage Forgiveness Debt Relief Act of 2007 and how to explain this to your clients. Becoming a resource for your clients on the potential consequences of a short sale will gain you trust and referrals.

Patience is a virtue. Every lender is different and every file is unique. Do not make any promises to your sellers or buyers about how long the short sale will take. Keep buyers and sellers on board by encouraging patience from every party involved and continue to give status updates on the progress of the short sale.

Make sure you have a savvy team closing your deal. Behind every great short sale negotiator is a great attorney and title agent. Make sure your closing team is experienced in closing short sales, as there are so many fires that need to be put out, especially after the approval has been received. With a savvy and experienced team, you will see more deals close and save yourself a lot of stress.

Make sure your buyer is prepared. Communication with your buyer’s agent is crucial, and make sure he/she is in the loop throughout the short sale process. Double check that the buyer is moving forward with meeting conditions of his/her loan, especially if the loan is FHA, as these take more time than conventional loans.

Tom Kelly, a real estate journalist from the Seattle area, quoted Ted Jones of Stewart title in a recent article. He used this quote:

Ted Jones, chief economist for Stewart Title, said he is concerned that interest rates could rise if title companies cannot prove the actual owner of a foreclosed property.

Given the inaccuracies in foreclosure processing, coupled with the inability of lenders to foreclose without both the deed of trust and promissory note in hand, title companies could walk away from deals because they fear lawsuits. Original notes are typically sold into the secondary market and are difficult to locate.

Now I’m confused. I didn’t think title companies had to prove ownership. I thought title companies based their decisions on public record. If the record says Mr. and Mrs. X own the property, then that’s who owns it. Or if the record says Lender ABC owns the property then thats who owns it. I think there is precedent for title companies not being responsible if there is an error in the public record. It seems a pretty big leap from the possibility of a mishandled forclosure for which a title company refuses to issue a policy to a rise in interest rates because a lender can’t get insurance. Really? How many deals is a title company going to refuse because of a “inaccurate foreclosure proceeding”? How will the title company know that the proceeding was faulty unless there is a complaint by the mortgagor.

Relax Ted. Do you really think mishandled foreclosures are going to cause interest rates to go up. Lenders are not going to let sloppy paperwork negate their foreclosures. If the homeowner didn’t make the payments then he needs to get out of the house. Title insurance companies are not going to walk away from title deals. They are insurance companies – they insure deals with the potential for problems. It is what they do.

I am a bit concerned about the MERS situation of trying to foreclose a mortgage without the original note. But I keep going back to the fact that if the homeowner didn’t make the payments, then he should not be in the property. Everything else is wrangling by the attorneys trying to make a buck on technicalities.

Posted via email from Title Insurance
Continuing Ed for Title Agents

Main

Mortgage Fraud Blog – Title Agent Charged for Failing to Pay Off Mortgages

November 18, 2010 admin

Anthony V. Weis, 45, Phoenix, Maryland, pleaded guilty to wire fraud in connection with a mortgage fraud scheme to defraud lenders of approximately $3.7 million in just eight months.

According to Weis‘s plea agreement, Weis was the president and a shareholder of Maple Leaf Title LLC (MLT), a real estate title agency located in Towson, Maryland. Weis directed MLT employees in 13 real estate closings conducted between February and September 2009 to withhold the payoff checks from institutions that held the existing mortgage loan notes on the properties. In each instance, the settlement statement sent to the borrower’s lender falsely represented that the payoff was being made.

In an effort to conceal the fraud scheme, Weis caused monthly mortgage payments to be made to the banks holding the mortgage notes. Believing that the bank had been paid off as a result of the settlement, the borrower stopped making monthly payments on that mortgage. And since that lender was receiving monthly payments, it had no reason to notify the borrower of any delinquency. However, because Weis was unable to send checks in every case where he had misappropriated the payoffs from escrow, a number of MLT clients received delinquency notices for non-payment of the mortgage note. A few were threatened with foreclosure and were forced to hire attorneys to prevent being ejected from their homes.

Because the existing mortgages had not been paid off, the liens against the property were not removed and a title free of pre-existing liens and claims (clear title) could not be passed to the new lender and borrower. An insurance company had issued title insurance policies to the borrowers guaranteeing clear title. As a result of Weis‘s criminal conduct, the title insurance company ultimately paid out $3.7 million to financial institutions that held mortgage notes.

Weis faces a maximum sentence of 30 years in prison followed by five years of supervised release and a fine of $1 million. U.S. District Judge Catherine C. Blake has scheduled sentencing for February 4, 2011, at 10:15 a.m.

via mortgagefraudblog.com

Posted via email from Title Insurance
Continuing Ed for Title Agents