Short Sale Dirty Talk

Short Sale Dirty Talk

The FEDS are on the move again. Is it a good thing or a bad thing that more banks may close their doors due to their lending practices?

                                                           You decide....

I say look for cash buyers' verses new loans for your deals.

If you can't get cash, here are the steps YOU MUST take to get your deal done in timely to close.

1) Before your contract is signed make sure you have full contact with the buyer's lender.

2) Make sure you follow up on the inspection timeline.

3) Make sure the appraisal has been ordered. (all this within 7-10 days)

4) Contact your title company and ask if the lender has contacted them for title work.

5) Follow up with the Lender, Buyer's Agent (if there is one) and Title Company on a weekly basis. 

    
6) If you can, get the buyers contact information. (Hint: tell the agent the bank is requesting it)

7) After the title company has been contacted by the lender ask your title company for the processor's contact information. (A must)

8) All communication should be by phone and followed up by e-mail with all parties involved. (Buyer's Agent, Lender, Title Company)

9) If you are doing short sales as we are, you will want to schedule the buyers closing a min of 1 week before the payoff letter is due.

10) Make sure you get a copy of the HUD1 before you even think about closing. This is a prelim HUD1 that you request from the Title Company when you forward them the contract that you have received from your buyer. (Once you have the HUD1, review it thoroughly)

Take a look at this article that just came out. 

For those of you who may have never heard of the FHFA (Federal Housing Finance Agency) before, it is the Federal entity which oversees and regulates the mortgage behemoths known as Fannie Mae (FNMA) and Freddie Mac (FHLMC). The tally for delinquent mortgages is rising by the millions and FHFA is looking to offload its losses onto the financial institutions that sold them to Fannie and Freddie. Now, they have enlisted the services of some high powered attorneys to assist with the process.

For example, FHFA recently retained the firm of Quinn Emanuel (QE) to jump start its investigations. Using its expertise in business and banking litigations, QE has already subpoenaed JP Morgan Chase and has put Bank of America on notice for $47 billion dollars in poorly serviced loans. This investigation is broad ranging, as the FHFA is not solely pursuing institutions that sold mortgages to Fannie Mae and Freddie Mac, but also private label financiers who eventually packaged and sold mortgage backed securities to investors on Wall Street. As it stands today, banks and mortgage companies could be forced to buyback over $179 billion in soured mortgage products. To date, Fannie and Freddie have forced banks to repurchase over $6 billion in mortgages, and an additional $16 billion will be forced back on the banks in the next 12 months. During the boom years of 2006 and 2007, Fannie/Freddie purchased over $200 billion in subprime loans, of which the majority have gone sour. The FHFA is seeking to force repurchases on these mortgages too.

As one could assume, the banks don't want to buy back any mortgages. Accordingly, they are pushing back on FHFA/FHMLC/FNMA's buyback requests with fervor. Bank of America's chief has gone on record stating that "we will diligently fight this." Others have retained the best attorneys that money can buy to defend them tooth and nail. The unfortunate issue is that many of the buyback requests are legitimate. As a whole, the majority of these banks signed representations and warranties affirming that if any fraudulent documentation or faulty underwriting can be found in their files, the bank agrees to buy the loans back. Banks look forward to earning NII (net interest income) and not losing due to NIE (net interest expense). As repurchases mount, banks have to raise their loan loss provision, which accordingly drives down their stock price. This also leads to a need for additional capital. If the capital can't be raised, a bank can fold.

Indeed, the scariest part is how buybacks travel through the mortgage food chain. Just as many banks signed repurchase agreements with representations and warranties regarding the buyback of loans with fraudulent documentation, mortgage brokers, bankers and other forms of 'direct lenders' signed them as well. Accordingly, if Bank of America, Chase, Wells, or Citi is forced to buyback mortgages, they may seek their own remedies by forcing buybacks onto mortgage brokers, banks and direct lenders who originated the loans. I haven't personally experienced this myself, but I know mortgage brokers who were forced to buyback mortgages or go bankrupt. I don't know many people with an average of $350,000 lying around (per loan) to reimburse a lender.

As this mortgage mess continues to snowball, I see the buyback issue getting bigger while sucking in more people involved in the mortgage origination process. Ultimately, it may take us years to recover as Fannie and Freddie struggle to repay the American taxpayer the $148 billion that was borrowed to keep both entities afloat by pushing bad loans back down on the banks that originated them in the first place. As the loss provisions rise and the stock prices fall, more banks will push their junk onto mortgage bankers, brokers, and other direct lenders by enforcing their own representations and warranties. The smallest of these guys will file BK, Fannie and Freddie will continue to be propped up on the back of the tax payer, while banks will suffer losses and in many cases closes their doors. Oh, what a mess one weaves when they originate a fraudulent loan in order to deceive!

Published on Wednesday 2010

I have come to the realization that everyone in this market needs a Paradigm Shift. What is a Paradigm Shift you may ask? It is looking at something and creating a whole different way of completing a task or project. I have been creating Paradigm Shifts all my life!
 

Like just as simple as a statement "What comes out of your mouth goes into your pocket" or taking a project and shifting the thought pattern or action pattern a little and getting huge results that were opposite of what one would think would happen.

Well I have Done It Again!!! I have combined my short sale training and my short sale house buying business with a Brokerage Company called Nextage Diversified Realty. So now I have a "Short Sale in a Box, One Stop Shop."

You can learn from me or partner with me. You can use my negotiating team to do deals. You can use my Transactional Funding www.Funds4YourShortSale.com on deals if you are doing back to back closings as an investor or an agent when you learn my system. Whether you are a Realtor, Broker or an Investor, you can use my system to help you succeed in this down market. 

I am looking for the movers and shakers of this industry, Realtors, Brokers, and Investors because I have combined them all to blast through 2011 and finish 2010 with a bang!!

I do not care if you are broke, bad credit or thinking about being broke or having bad credit...I want to show you a new Paradigm Shift that will lift you up and Explode your Income in this last quarter and through next year!

So join me and my staff as we plow through the year and come out on top of this so called market shift or is it just a Paradigm Shift for more income to come to you...Get on board today!

 PS: This is the time when lenders are dumping the defaulted properties to get them off the books in 2010

Sincerely,

Hunter Paschall
Nextage Diversified Realty
407-772-2274
www.NextageDiversifiedRealty.com

 
 
 
 
Join Our Mailing List 
Thank your customer, tell them how valuable they are to you, but don't go overboard. Insincerity is easy to spot.