Freddie Mac Encourages Florida Short Sales

The Federal Home Loan Mortgage Corporation, more often known by its friendly nickname of Freddie Mac, recently hosted two events in South Florida for local real estate professionals. In this area, which includes Miami Springs and Davie, where the events were held, has approximately 40,000 homes that are lender-owned, and many more that are in some part of the foreclosure process.

The Freddie Mac events provided estate professionals with detailed information about the requirements for short sales. Freddie Mac, as well as Fannie Mae (the Federal National Mortgage Association), avidly promotes short sales over foreclosures. The events were intended to help real estate professionals who may not be as familiar with the short sale procedure gain some understanding of the intricacies of the process, in order to better serve homeowners.

The events discussed the various parties that are involved in short sales, and how agents interact with each of them. They described the short sale process, which is regulated.

They reviewed the required documentation, described what to cover in a pre-listing interview with the seller. When the mortgage is held by Freddie Mac, there are some additional benefits that can be gained. These include an enhanced payoff program, more willingness to look at all deals being offered, and an increased delegation to the seller’s server.

In Florida, the foreclosure process can take quite a long time, and often leaves homeowners with deficiency judgments, lawsuits that result from the unpaid mortgage debt. Short sales are a more appealing option because they protect against deficiency judgments. They are not necessarily less complex than a foreclosure, but they do benefit all the involved parties better.

The seller, and the neighborhood in which the home is located, avoid the stigma associated with foreclosure, which can lead to a snowball effect on the market. The mortgage insurance company is able to minimize its losses. The investor avoids the additional expense and effort of an REO. The real estate agent closes a sale, earning a commission and standing in the neighborhood.

Freddie Mac owns about 60,000 properties across the United States at the present time. They are strongly committed to selling to homeowners, rather than investors or those who purchase homes with the intention of flipping them. Currently, about 70 percent of the homes sold by Freddie Mac go to homeowners.

As many as 50% of mortgages go into foreclosure with no personal contact with the borrower. Freddie Mac is actively engaged in educating homeowners, agents, and lenders with the goal of reducing that number to zero. A study found that many homeowners are under informed about the options that are available to them when they are having trouble meeting mortgage payments.

Freddie Mac also hosts foreclosure prevention workshops for homeowners. A full list of dates and locations is available on the Freddie Mac website. These workshops cover all the options for staying in the home, including refinancing, forbearance, reinstatement, repayment, and modifications. They also cover the options for exiting the home gracefully, short sales and deed-in-lieu.

To Meet or Not to Meet…. The BPO agent

       There is no simple ”yes or no” answer to this question. Over the years I’ve tried many different approaches when it comes to handling the BPO agent. When I first started out in this business I would meet them at the house and provide them with a CMA on the property. I found that some agents would appreciate this while others resented the effort and they took it as me trying to tell them what to do resulting in a very high BPO. Other times I would provide them with a contract with the price that I wanted it to come in at. The challenge is to find out what kind of personality you’re dealing with because everyone’s different. Some agents are compassionate towards other people and when you explain the situation about the seller’s hardship and how you’re trying to help them, then they will also want to help. These agents will go the extra mile to try and get you the price you need in order to help the seller and get the deal done. However, there are other agents that are like dealing with robots. These agents don’t care, don’t want to know, and couldn’t care less about what the situation is. When I encounter someone like this, I don’t offer them any paperwork at all because not only will it not help but they will probably go out of their way to make the BPO higher than it should be.

        Another approach I’ve used that has worked well for me is to tell the BPO agent that the bank wanted me to do my own BPO report in addition to the one they’re doing. Remember, the BPO agent usually gets hired by an agency and they have no idea what the situation is. They can’t get mad or offended because you’re there to do a job just like they are. It’s very common these days for the banks to order 2 BPOs anyway and if they see me taking pictures of every single piece of damage in the house to put in my report, then what do you think they are going to do?  They don’t want their report to look less complete than mine so you can bet they won’t miss a thing either. In this situation you may even get a chance to share and compare notes.

        One of the most effective techniques I’ve used and still use sometimes is to be nice, play dumb and ask a lot of questions on how the process works. By doing this, I find out for sure if the agent is doing what he or she is supposed be doing. I will ask them things like “so you’re here to give a value according to a quick sale price right?” or “So what happens next after you complete your inspection?” This approach in non offensive and you will find out a lot about what type of personality you’re dealing with. I will even ask them at what price they think it will come in at if I feel comfortable enough with them. They worst thing they can say is “I’m not allowed to tell you that”.

        There are certain agents however, that no matter how nice or cooperative you try to be with them, they are just disgruntled and bitter on life and will actually go out of their way to mess up you’re deal. After a while you know exactly who they are because if you do a lot of short sales in the same areas you will get the same BPO agents over and over and it’s very easy to track which ones are good to work with and which ones are not. What I do with the bad ones is put them on my “Black List”. That way everyone in my office knows that when one of these names come up it gets handled differently. Whenever I get one that’s on my blacklist, I just don’t cooperate. When they call to set an appointment, I will usually tell them that the seller is out of town for a week or some other reason that will force them to turn it back over to the agency or bank since these reports are usually due in 72 hrs from the time they get assigned. Don’t get me wrong, this doesn’t happen that often and there are only a handful of agents on this list. However, if I know for sure someone is out to mess me up then they will be treated the same way.

       I hope I didn’t offend any BPO agents with this post but short sales are a lot of work and at the end of the day we should all be working together to clean up this housing market. The BPO is an intricate part of doing a successful short sale and if you are doing BPOs, you should understand that the banks are pretty much clueless and they are depending on you to help get them get the deal done. Try and find out about what the situation is from the agent and be part of the solution not the problem. 

Another Foreclosure Sale Stopped Just an Hour Before!

      At 9am this morning we received a frantic call from a buyer’s agent on a deal that we are closing at the end of this week. Supposedly the auction date of today August 1^st at 11am was put on hold according to One West Bank and we even had a motion to cancel letter from the foreclosing attorney. The agent was checking on line and found that the sale was still on schedule! After wasting time calling the lender and trying to get something done we only had one option left and that was to drive down to the courthouse with the seller and a stack of paperwork on the file including the contract, payoff letter, etc. and personally file a motion to cancel the sale. We got there at exactly at 10am with the sale scheduled for 11am. With less than an hour left before the sale we had the seller file a motion to cancel the sale together with all the paperwork and I’m happy to say that it worked!

     We’ve been working this short sale for months with constant communication with the bank and them telling us that the sale was on hold and everything was on track to close. It just goes to show that you can’t leave it up to them to do what they promise they would do. I’m not sure exactly who dropped the ball or if it was intentionally dropped, but I am sure that if we hadn’t taken action and gone down there ourselves to personally file the motion to cancel the sale, it would have gone to sale. Although we haven’t had a close call like this in a while, it was a good reminder to us that sometimes there is a huge disconnect between the banks and the court system and you just can’t leave it in their hands. The fact is that a $10.00 per hr negotiator doesn’t have anything at stake and they probably couldn’t care less about the seller losing their house or you losing a deal.

      The common belief is that you need an attorney to file this type of motion…not true. However, the seller needs to be with you or you must have a power of attorney from the seller. Also, you must have all the paperwork with you that support your claim because if the judge is still not convinced, he can still let the sale happen.

You HAFA Give It A Try!

Many of the agents that I speak with wait to start the short sale process until they have an offer. Big mistake!! Why wait?... Why not try and make some headway with banks before you even have an offer? Maybe the seller can go HAFA (Home Affordable Foreclosure Avoidance) program. The HAFA program offers full deficiency release, $3000 seller for moving costs once approved, and the bank is able to make a decision 10 days after they get an offer. Unfortunately, inexperienced agents would rather wait to get a buyer before even considering HAFA. Don’t wait…get the ball rolling, this will help you to put time on your side not the bank’s.

        

          Once you get a short sale file, research the options that are available for that seller and get moving on something. Most people aren’t even aware that the HAFA program exists so you should definitely find out if you can get them qualified. Even though I’m always the buyer on my short sale deals, I still try to exhaust every option I can to do what’s best for my client. Even if it means that I will make less money on that deal.

           In my experience I’ve found that if you make it not about the money…in the long run you’ll make more money. I’ve gotten countless referrals over the years by going the extra mile for people.