Did You Know: Loan Screw-ups

FYI—Loan Screw-ups

It is important that you know some of the ways the servicer of your loan frequently fails in their responsibility to handle their job as they should. Their failure could give you the reason you need to block a pending foreclosure. There are many things they do wrong or fail to do at all but the more common items include:

• Failing to make timely payments from your escrow account
• Failure to aggressively work at a loss mitigation attempt when requested to do so
• Sending you inconsistent letters demanding payment
• Failing to honor forbearance agreement (not you—them)
• Failing to give you proper notice of a servicing transfer and your rights related to that transfer
• Failing to properly apply payments during the transfer period, possibly creating a default
• Failing to provide a timely or complete response to a qualified written request
• Choosing to apply force-placed insurance when you, in fact, already had coverage in place
• Returning mortgage payments
• Improperly placing your payment in a suspense account
• Posting your payment late and/or misapplying your payment
• Threatening foreclosure when, in fact, you are not delinquent
• Charging excessive fees for the use of attorneys, inspections, etc
• Charging fees for services which have not YET been performed
• Creating a default by misapplication of the payments you have sent in

This is just a partial list of things which servicers do on a regular basis which can wreck havoc with your loan. At the least, it can be an inconvenience. At the worst, it can actually cause you to be in default and in foreclosure through no real fault of your own. It happens. Even when you have actually missed mortgage payments and are struggling to keep your home, the loan servicer is still required to handle the account with certain fairly standard and reasonable guidelines. Too often, they fail to do so and you end up getting the short end of the stick. Unless consumers demand they stop the unfair practices and produce documentation of how they have handled your file (via a qualified written request) they will continue to operate like they all got training in the wild, wild west where anything was okay.

What should you do if you suspect your servicer is not dealing with you fairly?

Step One: File a qualified written request following guidelines discussed elsewhere on this blog. (Do additional research on the web; see this entry on Buying TIME from our blog).
Step Two: Try to find an attorney who will represent you in challenging their right to foreclosure.

You must move quickly and with a firm action plan so that you don’t become another foreclosure because the consumer didn’t know that they could fight back.

The “Buying TIME” Foreclosure First Aid Kit, available at www.DovePublishingHouse.com would be of great benefit to you as well.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

FYI: Demand Your Note

Demand Your Note

An option for interrupting the foreclosure process which is gaining widespread attention and use across the country is called “demanding the note”. Demand the note means quite simply that you, the borrower, demand that your lender provide you with the note you signed agreeing to the loan.

You have the right to make such a demand. In fact, many courts across the country (especially where judicial foreclosure is required) REQUIRE that the party who initiates the foreclosure provide a copy of the note at the time of the original filing in order to establish that it is a legitimate debt. Unfortunately, many consumers are not aware that demanding to be provided with a copy of the note which establishes that the person demanding repayment has the legal right to do so is both a reasonable request and within the scope of their legal rights.

Cough it up…OR Compromise

Let’s say, just for the sake of discussion, that your lender or servicer could not find the note. Perhaps because your loan has been bundled with hundreds of thousands of other loans in a mortgage-backed security or perhaps because they do not really own it. Perhaps they are not the real party of interest. In that case, their ability to collect on the default is problematic since they can’t prove you owe them anything.

There are numerous lawsuits across the country where consumers are demanding that their loan be rescinded because the note cannot be produced. That option is certainly one you need to consider. Whether rescission is your goal or you just want a reasonable, affordable workout, you are in a much better position to negotiate IF the lender cannot provide documentation of the ‘supposed’ debt. Let the lender either cough it up...OR...COMPROMISE.

Who’s Gonna Make Em?

Well now, that is an interesting question. Look up information on the Qualified Written Request which clearly states that the consumer has the right to request/demand ANYTHING related to the servicing of their loan by using a qualified written request. It is FEDERAL LAW which establishes the borrower’s right to submit such a request to the lender and the guidelines are very clear that whatever is requested must be provided. We will not go into details in this blog because there are several other places on this site and numerous others (National Consumer Law Center, Center for Responsible Lending among them) which will give you clarity on exactly what a QWR is and what the law has to say about it. E-mail Heather for recommended BEST PRACTICES for using this powerful document (homeownershipmatters@gmail.com).

With adequate research and time you can prepare this request by yourself but without taking a class on how to do so you might not get the best result possible. HOM offers classes as well as webinars on the subject; either would be immensely invaluable to you if you need to submit a request.

Do I need an attorney?

If you are wondering whether you should use an attorney, I strongly recommend a good attorney for this project. It would be a wise investment of money to help you with preparing for the biggest fight you are ever likely to get in.

Call your local bar association for recommendations or try to get references from your local REALTOR or title company.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

"How to Eat an Elephant"

How to Eat an Elephant

Not a very appealing thought is it? But doesn’t that describe how you are feeling as you try to make sense of the situation with your mortgage—like you are trying to swallow an elephant whole? There is a way to accomplish this though—let me tell you how.

I have been writing for many years so it should not surprise you that my minor in college was English. I have loved literature since I was 5 or 6 years old. (Long time ago and an entirely different story). During first year college one of my English textbooks was called ”Way Out—A Thematic Reader”. Awesome book. It included a short story “How to Dismount From an Elephant” which shared with great humor how to return to the ground should you find yourself marooned on an elephant sometime.

Your mortgage is behind, your finances in a mess and you can’t get a straight answer from the bank or anybody else for that matter. You are facing a challenge equilivalent to needing to “Eat an Elephant” with no clear idea where to start. I mean R E A L L Y.

• The ear is WAY UP THERE.

• The tail is totally unappealing even though you could reach it.

• The side is REALLY BIG.

• The toes are accessible but really DIRTY.

If you are facing a possible foreclosure (ELEPHANT)—may I suggest you take a position and declare—YOU’RE GOING DOWN!

Now where do you start? At the foot—those dirty toes—the foundation. He cannot stand—not for very long—if you create an emergency with a toe. We recommend the submission of a qualified written request as a way to command his attention. There is ample information about the QWR on this blog as well as on the general web. For specific instructions, “Avoiding Foreclosure Using the Qualified Written Request” is another educational tool I have written which gives you step by step instructions on HOW to prepare this document yourself without incurring the expense of an attorney.

Develop a plan. Go to www.HOMPCI.org. Click on the Foreclosure/Loss Mitigation section and use the information there to figure our how to proceed. You need to know:

a. What to do if you are a ‘Frozen Borrower”

b. What to do NEXT if you are behind on your mortgage payment

c. How to ‘Buy TIME...’ to determine a strategy

The Home Ownership Matters Preservation Center, Inc is committed to being your foreclosure intervention resource. Materials are written with the average consumer in mind so they are easy to understand and while they deal with serious and sometimes difficult and/or legal issues, you will find them easy to understand. Many of the resources not only help you understand the issue but provide specific instructions for what can be done and how. Visit today, share the site with family or friends, and continue to visit as new material is being added continually. That’s www.HOMPCI.org.

"Remember, knowledge can be empowering!"

Mildred

WORD: QWR

Qualified Written Request (QWR)—is a very important tool for anyone who is in default. Under RESPA (Real Estate Settlement Procedures Act, codified as Title we USC & 2605 and Regulation X. 24 CFR & (TILA) 15 U.S.C. & 1601, et seq. The statutes provide penalties and fines for non-compliance or failure to answer your questions. You have the right to ask the lender to conduct an examination of your loan, perform an audit, and to provide complete and accurate documentation of everything related to payments you have made and how all payments have been applied. Lender must respond within 60 days, in writing to your request.

Is a wonderful tool to help you if you are in default on your loan. Under Federal regulations a lender must respond to a request from the borrower to give specific details about how the payments, which have been made, have been applied. It is not necessary that the request is in a specific format or that it contains specific language. It must however: 1) be written 2) include the correct name for borrower(s) 3) include account number. It should be sent certified mail and should be sent to any assignees and/or attorneys who have been affiliated with your account. You may simply ask for an accounting of all payments/disbursements, which have ever been made, or you may choose to use the detailed request provided. Or anywhere in between.

Look for more information on this coming soon to the HOM website: www.HomeOwnershipMatters.com.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

From the Desk of: Buying T-I-M-E

Never before has the expression “If I could just buy some time” meant so much to people. When you are facing foreclosure you need time to discover your options, analyze your situation and implement an action plan. Your most precious commodity is time…And it’s running out.

When your money is running out…

You don’t have time to wait for the trickle down effect of the stimulus package to make a difference in your personal situation. While the package will make a significant difference over the long haul for thousands of Americans, anyone who thinks it is going to quickly make a difference for EVERY American is kidding themselves. Facing reality is hard, but necessary. As a country, we have ignored hard truths with disastrous consequences for too long. Nothing will be gained by continuing to point fingers. However, we must immediately recognize that each of us has a role to play in correcting the serious housing problem we face as a country. (Even if your home is paid off, FREE and CLEAR). The housing market holds the key to stabilizing our country, so anything we can do to keep people in their homes is a step in the right direction.

First thing’s first...

DO NOT ABANDON YOUR HOME. Even when you are behind on your mortgage, no matter how far behind you are, DO NOT abandon your home until the entire legal process has been played out. You can stay in YOUR house until your right to possession has ended. Exactly when that time is will be determined by three (3) factors:

1. Type of foreclosure in your state: judicial or non-judicial
2. Whether you have a mortgage or a deed of trust
3. State statutes regarding sheriff or trustee sale and possession timeframes

Find out the answers to items 1, 2 and 3, and then abide by them. Make sure your lender abides by them as well. Things could improve while you are holding out. Hold on.

Things are changing radically and very quickly because of the magnitude of the housing problem. Your local courts could dramatically change the way they process pending foreclosures so that you have a chance to work things out with the lender. Stay in our home and fight for the chance to work things out. More banks are willing to work with borrowers today simply because they really can’t manage the huge backlog of homes which have already been lost to foreclosure. If you can present a viable plan, your chances of retaining home ownership are pretty good.

Second thing’s second…

I know you know that, but I needed to get your attention. Probably the second most valuable thing anyone will ever tell you to do to save your home from foreclosure is to

1. Demand the lender or servicer who is threatening to sue you for foreclosure produce the original note/deed of trust which says you owe them. In legal terms you are asking them to demonstrate that they are the “real party of interest.” In common language that means, prove I owe you. Prove you have the right to demand payments from me.
   
2. The most effective way to demand this documentation is with a “qualified written request”. You are entitled to request that and any other information you want which is related to servicing on your loan (any mortgage loan in the United States) under federal RESPA regulations. Details are taught in the workshop.

What Choices do I have????

Let’s consider the answer to that question. It is critical that you start with an honest inventory of your situation. How far behind are you? Do you have the resources to resume payments? If not now, when will you be able to do so? What do you want to do? What are you ABLE to do? Why should the bank consider your proposal? You’ll need to able to defend it as being reasonable, based on your current circumstances.

Space in this article will not allow me to go into detail but I will provide you with the options you can consider. Do further research on each of them, online, in the library, on websites such as HomeOwnershipMatters.com Or at the blog: HomeOwnershipMatters.blogspot.com.

1. Options to keep the house—special forbearance, loan modification or a partial claim. You need to learn what each of these means and how it works
2. Options to let the house go—short sale, assumption or deed-in-lieu. All of these options are better than foreclosure but you need to know exactly how they work to avoid creating yet another problem for yourself down the road.
3. Reverse mortgage could be considered, it could be your solution. Be sure to use a government backed reverse mortgage if you decide to use this option.
4. Receiving disability payments (if you have a claim pending) could make the difference. Hold on until you know what you will be receiving
5. Acquiring a roommate could change your finances—get started working on it (I mean a roommate who will PAY—not one who will add to your expenses)
6. Selling unnecessary items in order to cover the gap until you get a permanent solution. Ebay or Craigslist could bring in some immediate cash. (Stop crying—we are trying to save your home and Buy “T I M E”).
7. Some other solution which has not even occurred to me

“Answer” the summons

The summons is your official notification that the lender has moved to legal action. The court notifies you via the “summons”. Your response should be to the clerk of the courts, the lender/servicer and their attorney. It is critical that your answer be received within the legally stipulated timeframe in your state. It is strongly recommended that the answer be sent by certified mail, with a signature required. This is a task which you can handle on your own, with a little coaching.

Basically, an answer should acknowledge that you are aware of your situation and that you are working with the lender on a plan. Specify what that plan entails. If you are challenging whether or not the lender has the legal right to foreclose (due to failure to produce the original note or demonstrate that they are the “real party of interest”) this is your time to say so. The foreclosure is likely to be stalled based on the quality of a timely, well prepared “answer”.

Buying “T I M E” workshops offered…

Workshops to teach consumers what they can do to “save themselves” will be offered in cities across the country beginning in March. All workshops will be posted to the HOM calendar as soon as they are confirmed so look for one in your area soon. These workshops are 3 hours in length with an hour after for questions and answers. Attendees will leave with a comprehensive packet which details all the options outlined above as well as a sample “qualified written request” with complete instructions on how to use one most effectively. Each borrower who attends will also walk away with clarity on how to prepare an “answer” since this is also critical if legal action has begun.

Want to host a workshop in your town?

The commitment is simple and inexpensive. A workshop can be offered anywhere in the country if a host is willing to provide a suitable space and advertising to let the public know that the event will be held. There is no fee for the speaker (donations will be accepted) but expenses to the event must be covered. For a nominal expense you can offer a very valuable training which can save homes in your community. For details about what is required, please send an email to Heather at meade.heather@gmail.com.

Local initiative is needed

We all have high expectations of the new administration but our President has said repeatedly, and has demonstrated with his grassroots campaign, that the masses can make a difference, when they choose to become involved. If every person who reads this article would share it with the people in your personal database, you would help several people to avoid foreclosure.

If the leaders of organizations would share the articles and the link to the blog with your entire company, you might save not only their home but the home of some of their family members or friends. Driving people to the blog and website so that they can get practical, easy to understand information to help them with their personal choices could make a big difference. Anyone reading this who has the connections to have a workshop in your city or a program aired on Public Access or Government Access television or local radio show could reach thousands of folks with some concrete/self help which could make all the difference in your community. I am a teacher and a writer. I know the role I am to play. I ask each of you to find your role in helping our country get back on its feet. We must find some resolution to our housing problems.

“Working together, we can make a difference”

Copyright © 2009, Home Ownership Matters, LLC. All Rights Reserved.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments, or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

Q&A: Real Party of Interest

Q. I had been making payments for more than a year to Company X and fell behind on my mortgage payments by a couple of months. Today I got what looks like a foreclosure notice from a company I have never heard of before. The amount they say I owe is wrong and they are claiming that I have not made payments for the past 8 months. I don’t want to lose my home over some mistake but I can’t afford an attorney. Is there some way that I can figure out how to keep my home on my own?

A. There is a strong possibility that you may be able to block the foreclosure long enough to figure out what is going on. Your first step is to file an “answer” (see here) to all the correct parties.

Let’s cover some basics about the “real party of interest.” The real party of interest is the only entity or individual who can be the plaintiff in a lawsuit. Concerning your mortgage or deed of trust, the real party must either have purchased or otherwise have acquired legal ownership of the collateral in order to sue you as a plaintiff for non-payment of the debt. There is also a provision for a servicer who has been granted servicing rights “with assigns” to be the named plaintiff as well, since such a arrangement grants all rights to the holder as though they were the rightful owner. “Servicing rights only” does NOT grant one the power to sue for payment as a plaintiff in a foreclosure action.

In all cases, the named plaintiff should be able to provide documentation that they have the legal right to pursue you for payment. Send a qualified written request and demand that they provide such documentation. The documentation you need is a copy of the transfer of your note/deed of trust. Or proof that a transfer of servicing rights “with assigns” was made prior to the filing of the foreclosure. With so many lenders making transfers of files all the time, they have gotten really sloppy about these little details. Many times servicers are identified as plaintiffs in a foreclosure action when they have no legal right to do so. Challenge the validity of the action, not the truthfulness of your default. Additionally, dispute the amount declared to be in default and request documentation of all funds paid by you on the account.

Essentially I am saying that many foreclosures are processed and completed, folks lose their homes when the lawsuit was filed by someone who was not, in fact, the “real party of interest.” A consumer borrowed money from Bank X, who transferred the loan to Bank Y, who was then bought by Bank Z. Bank Z owned Bank Y, but your note is still held by Bank Y. Bank Z cannot legally be the plaintiff until there is a transfer of your SPECIFIC note to Bank Z.

It’s a simple concept once you think about it. Use an attorney if you don’t feel competent doing it yourself; but I think you could handle this yourself once you fully understand.

Copyright © 2009, Home Ownership Matters, LLC. All rights Reserved. "Answer Book in a Foreclosure Climate" by Mildred Wilkins, available in 2009 from www.DovePublishingHouse.com.

(Please e-mail Heather at homeownershipmatters@gmail.com with any questions, comments, or concerns you might have. We appreciate all feedback, comments, and especially your questions. Don't be shy!)

What's That Mean? (O-Z)

OCC- Office of the Controller of the Currency

PI– Principal and Interest

PITI- Principal, Interest, Taxes and Insurance

PMI- Private Mortgage Insurance

POB- Point of Beginning

P.O.C.- Paid Outside of Closing

PUD- Planned Unit Development

QWR- Qualified Written Request

RAL- Refund Anticipation Loan

REIT- Real Estate Investment Trust

RESPA- Real Estate Settlement Procedures Act

REO- Real Estate Owned

RTO- Rent-to-Own

SRA- Senior Residential Appraiser.

SREA- Society of Real Estate Appraisers.

SRPA- Senior Real Property Appraiser.

TILA- Truth-in-Lending Act

Y.S.P.- Yield Spread Premium. See Predator Lending Practices.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Did You Know: Foreclosure First Aid Kit

Foreclosure “First-Aid Kit”

Warning: Sales pitch about to follow

The core value of HOM is to reach consumers (private and professionals) with the information which can make a difference in real estate transactions. Rules, laws, regulations and mountains of other material which you’d need to wade through and then try to digest in order to make sense of your personal real estate dealings. My experiences, training and continual research help me to be able to give you the Reader’s Digest version.

The Foreclosure “First-Aid Kit” is a product designed to give you more expansive information on the use of the ‘qualified written request’ and other information which lenders and servicers would really prefer that you not have. The “Little Black Book” section of the kit is priceless if your lender is listed there.

As a consumer advocate I must continually walk the line between looking out for the interest of consumers who have been shafted by the financial markets and keeping myself accountable (as well as financially solvent) to live to teach and speak another day.

My intention in providing this CD for sale is to provide information which I have chosen (for a number of reasons) not to post directly on the website or blog, but instead to provide it to those who have benefited from the material which I have provided FREE and who think they could gain from the information shared within the first aid kit.

If you are personally facing foreclosure, or someone you know is in default and believe that foreclosure is a possibility, then you owe it to yourself to send for your copy of the CD today. Available for only 19.95, CLICK HERE to order yours today.

**Previous problems with distribution of the CD during 2008 have been corrected. Your copy will be mailed within 7 days of the receipt of your payment. Prompt shipment guaranteed or your copy is FREE.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

...From the Desk of..."Are You Ready to Intervene?"

Twenty Questions for Today’s Real Estate Professional

I was recently asked by the Charleston Trident Board of REALTORS® to differentiate the (FIS) Foreclosure Intervention Specialist certification from other short sale certification programs. Please know that the Board has offered both the (SFR) (Short Sales and Foreclosure Certification) and the (LMC) (Loan Modification Certification) certifications which are excellent programs.

Both have been widely attended in Charleston and I strongly encourage you to sign up for one or both at the next opportunity. Every single licensee should avail themselves of a basic short sale class so they have a rudimentary understanding of this ‘new’ transaction which is dominating the market in many parts of the country.

(FIS) will be offered for the first time in South Carolina beginning March 2010, courtesy of a FPR (Foreclosure Prevention and Response) grant from NAR. I think the operative word of distinction is ‘basic’ as compared to ’comprehensive’. This 30 hour program is designed for the agent who has decided to commit to getting an in-depth understanding of the various facets of handling these intricate transactions—the relationship connection, the Law, the Ethics, property valuation, the process, the negotiating, getting to the closing table, the downside, the resources needed, community partnerships, the self-study to continue to grow and much, much more.

Why offer (FIS)? Because hundreds of students who had taken either the 4 or 8 hour basic short sale training classes offered by Home Ownership Matters beginning in 2003 demanded more. More time, more expansive, more details. The course evolved and in 2005, the (FIS) certification was introduced in Ohio. Since then (FIS) has been approved for CE credit in six (6) states and there are graduates from twelve (12) states. States approved for CE include: Ohio, Indiana, Kansas, Nebraska, Colorado and Oklahoma.

30 hours, 700+ pages of material.

Tried and true methodology coupled with sound philosophy

from a former Fannie Mae Broker-Specialist

Updated regularly and state specific (Law section)

I decided the easiest way to say what you’ll learn is to pose the questions which will be addressed.

Are you ready to intervene?

1. Do you know how to distinguish a ’frozen customer’ from a potential short sale client? Do you currently use an intake form to determine who is a viable candidate for this type transaction and who is just not prepared for the commitment? Can you screen OUT the 60% of folks whom you should not list as short sales?

2. Are you prepared to analyze/distinguish the many HATS which may be required to help someone who is in default: the social worker, medical counselor, marriage counselor, human resources helper, spiritual advisor, budget counselor, salesperson extraordinaire, valuation expert, etc.

Are you real clear on what role you can and/or should play? Are you connected to/familiar with the community resources to address those needs which are outside of your scope of expertise? Do you currently utilize a referral form for this purpose? Can you see the potential for a fair housing complaint (or other complaint) without some standardized referral policy/form?

3. Do you know how to ‘handle’ the law while avoiding the ‘practice of law’? Do you clearly understand that it is necessary to understand some components of the law (and be able to explain them to your client) as part of a short sale attempt or an REO purchase?

4. Do you understand the impact of the seller filing bankruptcy on a potential short sale? The increased likelihood of a deed-in-lieu? Do you currently discuss this at the onset with your customer since it could/should end your relationship if they file later?

5. Are you familiar with the new Treasury guidelines for short sale—other than the fact that the commission cannot be reduced below 6%? Have you studied the guidelines? Do you understand them?

6. Are you familiar with the foreclosure law in your state? Is it a judicial or non-judicial process? What difference does it make? The guidelines for service on a defaulted borrower? Familiar with what the customary forms are and what they look like? Are you aware that violation of state foreclosure law can work in a borrower’s favor to gain extra time which could be used to facilitate a short sale? Or a reverse mortgage?

7. Do you have the expertise to accurately determine the value of a property in today’s declining market? Are you familiar with the professional BPO which is used as the industry standard (fanniemaebpo.com)? Could you complete one and do you understand why it can be much more accurate than the more commonly used CMA or market analysis? Are you clear on why accurate property valuation, from the beginning, plays such a critical role in the success or failure of your short sale effort?

8. Do you feel you clearly understand the unique protocol for short sales, not to be confused with REO and traditional sales? Who signs what? When? Presentation of offers? To whom?

9. Have you figured out what to disclose? To whom? And when?

Are the guidelines set by your Broker consistent with both Federal and state requirements/prohibitions on disclosure? Are you clear on the Who? What? When? HOW?

10. Are you familiar with your Board and Broker’s position on:

a. Disclosure—Who? When? How?

b. Commission—Who? What? When? How?

c. Signing of offers/amendments/price reductions—Who? When?

d. Presentation of offers—To whom? When? Signatures? Why?

e. Multiple offers—that is a whole other 20 questions

11. Does your brokerage utilize a set of disclosure forms which have been customized for the use with short sale scenarios? Are you familiar with them? Do you understand the protection that you may gain from covering the special risks associated with short sale transactions? Are you interested?

12. Do you understand the tax implications for a borrower who has completed a short sale? Please don’t tell me that you thought they were off scot free because the short sale was approved. (They are not) Do you have a referral to a tax accountant?

13. Have you read your state’s Seller Disclosure Law? Have you studied the state disclosure form? Does it include a reference to “threatened or pending litigation“? Or perhaps “notices from any Government or quasi-governmental agency”? Any “challenge to the title”? Are you clear on why any/all of these could forestall a short sale approval and therefore need to be disclosed?

14. Do you have clarity on the impact of a foreclosure on your customer’s ability to purchase down the road? Was that part of your discussion about the reason to consider a short sale in the first place? Have you discussed operating ‘in good faith’ as vital to the ability to keep the house on the market?

15. Is there a 2nd (or 3rd) mortgage? Are there other potential liens against the home (home owners’ association, taxes, personal judgment) which must be dealt with? Got a plan for how you are going to handle those? Do you know where to start?

16. Do you clearly understand the role of the Guarantor and/or the investor in determining whether or not a specific short sale can be approved? For that matter, do you know that the Servicer is merely a go-between hired to facilitate the administration of the loan but is NOT a decision maker? Who is? How can you find them? What are THEIR guidelines? Are they the same from Guarantor to Guarantor? Available in public records?

17. Are you familiar with the Qualified Written Request—backed by Federal Law (RESPA, no less) and the impact it can have as a ‘tool’ in delaying the foreclosure process if well-prepared? Used effectively and in a timely manner, you can gain valuable time to complete the short sale. We’ll cover that.

18. Has your firm/Broker created a “hold harmless” document which covers the scenarios which you cannot be responsible for with the clear understanding from your client that you will have no liability? Since the risk of lawsuit is pretty high with this new type of transaction, getting some understanding of what should be included and why should be paramount, I would think.

19. Have you identified as an agent/brokerage/Broker those scenarios which will require you to end the relationship? Have you established a policy concerning the need for a unilateral (not mutual) release? Under what circumstances, with what notice?

Certainly advance disclosure would be required: I would recommend at the inception of the agency relationship. We cover in detail during (FIS) training what I call the “Divorce Decree”. What happens if the client abandons? Files Bk? Enters into a deed-in-lieu? Refuses showings? Fails to cooperate in other ways? Policies should drive practices and both help to minimize liability.

Proper training and thorough understanding on each of these issues is paramount in order for you to be both effective at processing a short sale from beginning to end AND avoid the various opportunities to get yourself or your client into serious trouble along the way.

Short sales are the new reality for many markets around the country. They have become a major part of the market (along with REO’s) and becoming intimately familiar with how to process them successfully is paramount for any agent who wishes to thrive in today’s market.

If you do not already have clarity on ALL the issues which have been addressed in this article, then you are a prime candidate for the (FIS) certification program. Each of these will be explored and addressed during this 30 hour training program. You will leave with clarity on every single point covered here and will have the expertise to feel confident that you are representing your client with strong tools which have prepared you to be successful in getting the result you hope for and they deserve. YOUR knowledge base is a key component of your professionalism. Your success as a REALTOR® is tied directly to the caliber of your information.

Don’t miss an opportunity to learn, explore and interact with one of leading instructors on this timely topic. Her experience actually doing short sales, her time with Fannie Mae as a Broker-Specialist and expansive training (HUD, Fannie Mae, NeighborWorks, Legal Services, and National Consumer Law Center) can be invaluable to you.

Sign up today! Coming soon to a classroom near you!

Final Question

Is there someone in your office to whom you can refer a customer who needs short sale help? Within your firm? Maybe you can/should become that ‘Referral agent’ if you do not have the expertise today.

Are you Ready to Intervene????

*(FIS) is a registered trademark of Home Ownership Matters, LLC.

Other Foreclosure Resources

1. www.HOMwebinar.com

3. www.HomeOwnershipMatters.com — Calendar and Foreclosure/Loss Mitigation sections

4. www.nti.org — NeighborWorks America — Training Institute

5. www.consumerlaw.org — National Consumer Law Center

Mildred Wilkins

President of Home Ownership Matters

Author of “Your Real Estate Advisor”

available at: www.DovePublishingHouse.com

Toll-free 1 (866) 507-5105

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)