Throughout the country, and here in our real estate market of northern Middle TN, Fannie Mae and Freddie Mac are about to Streamline Short Sales.  The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to streamline the short sale process in order to help more homeowners avoid foreclosure.

This will include areas such as Hendersonville, TN, White House, TN Goodlettsville and Springfield Tennessee.  Additional areas of Middle Tennnessee will also benefit from this ruling.
 
The first stage of the new process will begin in June 2012. The new timelines include the requirement that mortgage servicer’s review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer.

 New guidelines will require the following:

 ◦Review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer and a complete borrower response package;

 ◦Provide weekly status updates to the borrower if the short sale offer is still under review after 30 calendar days;

 ◦Make and communicate final decisions to the borrower within 60 calendar days of receipt of the offer and complete borrower response package.
 
By the end of 2012, Fannie Mae and Freddie Mac will announce additional enhancements addressing issues such as borrower eligibility and evaluation,  documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.

If you have any questions on avoiding foreclosure or if you need to sell your home or are interested in buying a short sale email me at or give me a call at 615-969-1460

• Be proactive about the problem when the first warning signs appear.
• Contact your lender when you become aware that you have a problem.
• Read your mail. Not knowing does not solve the problem it just delays the final result and increases the pain.
• Contact a HUD approved housing counselor.
• Prioritize your spending. Pay the house payment and health insurance first.
• Look for ways to generate cash.
• Don’t get scammed by a private “foreclosure prevention specialist,” instead go to HUD to obtain valid information about foreclosure prevention.
• Contact a qualified REALTOR® to discuss the problem and to get advice

When faced with possbile foreclosure in Goodlettsville, Hendersonville or northern Middle Tennessee, the most important thing to remember is to ACT NOW.  Don't wait until you have missed several payments before making a phone call. 

One of the first phone calls you should make is to your lender to let them know you are facing a hardship.  They will give you some options to avoid the foreclosure.

When faced with foreclosure, look at your options:

Forbearance - Under this plan the lender may allow the borrower to skip a payment or make a partial payment if the borrower can suggest a reasonable plan to catch up on the amount in arrears.

Reinstatement – Similar to Forbearance but under this plan the borrower agrees to make a lump sum payment in the future to bring the mortgage “up to date.” 

Repayment Plan – If the borrower cannot meet the requirements of Reinstatement or Forbearance the lender may allow the borrower to catch up on what is owed by increasing the monthly payments until the missed payments are brought current.

Loan Modification Plan – Some lenders may be willing to do one or all of the following.

-Modify a mortgage by converting it to a fixed rate mortgage at a lower interest rate and  extending the years of the mortgage to reduce the monthly payments.
-Giving more years to pay off the mortgage and adding the missed payments to the balance  of the mortgage.
-Forgiving part of the loan amount to make the payments affordable.

Rent Your Home -  and make the mortgage payments to your lender.

Deed In Lieu of Foreclosure – Sometimes referred to as “Deed for Keys”. As with foreclosure, this plan does affect a person’s credit rating however, not as negatively as foreclosure. In order to enact this plan the loan amount must be lower than the anticipated sale price.  Many lenders require a 20% differential to make this work.

Cash for Keys – This plan works when there is equity in the property and the lender and the homeowner agree to exchange cash from the lender for the keys to the property.  The borrower walks away with cash and the lender owns a property that has enough equity to cover the cost.

Sell the Home – If the value of the property is greater than the loan amount it is a good possibility that the property could be sold. 

Upside Down Properties (short sales) This refers to those properties in which the mortgage is greater than the value of the property.  In this scenario the financial institution may be willing to forgive some of the mortgage to make a sale possible in order to avoid foreclosure.  

If you live in Goodlettsville, Hendersonville or northern Middle Tennessee, be sure to contact an experienced short sale Realtor®, Kim Blanton with Keller WIilliams Realty to assist you with your short sale questions.

Short Sales Get Shorter: New Deadlines to go into Effect

As a homeowner considering a short sale, it is important you understand the process.  Here is how to avoid common mistakes that agents and homeowners can make with a short sale.

1.  Mistake: Your Property is Priced Incorrectly

This is the most common mistake made with all properties, and the most common reason a property doesn’t sell.

Solution: Your Goodlettsville short sale qualified Realtor will present a detailed listing price strategy with you, allowing you to see exactly where your property should be priced based on its current condition, sales in your area, and most importantly, how much time you have left to sell.

2.  Mistake: Your Short Sale Package is Incomplete

This is one of the most frequently seen causes for the rejection of short sales proposals. Some agents do not understand the short sale process and what your lender will be looking for.

Solution: Your Goodlettsville Short Sale qualified Realtor should understand the short sale process in detail and be able to explain it clearly. The agent should also be able to communicate effectively with both you and your lender to produce a complete and cohesive proposal.

3.  Mistake: Lack of communication

As your property goes through each stage of the short sale process, an unqualifed real estaate agent can jeopardize the transaction by not properly communicating with everyone involved. As the homeowner, you may not know that your file has been delayed, and that you again may run out of time to close and avoid foreclosure.

Solution: Select a qualifed Realtor in the Goodlettsvile, TN area. The right agent knows exactly how to follow up to ensure that your lender’s issues are addressed in a timely manner, and will make certain you do not have unnecessary delays.

4.  Mistake: Not Enough Time

Your agent must understand the foreclosure laws in your area, and be able to show you an estimated timeline for the process, from start to closing. In some cases, certain information can be provided to lenders to postpone your foreclosure for weeks or months in order to negotiate a sale.

Solution: Make sure you provide your Realtor accurate information as to exactly how many payments you have missed and any correspondence you receive from your lender. 

5.  Mistake: Your package is not submitted correctly

If you do not follow the directions you receive from your agent on your hardship package, the loss mitigagation department is likely to throw your package in the trash.

Solution: Follow Instructions Closely. What ever your lender is requiring for documentation, be sure to provide your qualified Goodlettsville short sale Realtor with everything that is requried and do so in a timely manner

6.  Mistake: The Buyer’s Offer is Too Low

Many agents will encourage you to submit any offer that comes in. The reality is that a short sale is not the same as a fire sale. In order to have a legitimate chance of getting your deal approved, you must have an offer that is more attractive to the lender than a foreclosure.

Solution: The qualifed short sale Realtor will work with you to properly negotiate any offer that you receive to get ‘highest and best’ from each potential buyer. This ensures you are presenting the best possible solution to your lender. You will negotiate the offer, not the bank.  The misconception is that the bank negotiates with the buyer.  This is not the case, the lender will approve or dissapprove what is submitted to them.

7.  Mistake: The Buyer’s Contract is Not Strong Enough

Willingness to make an offer on a property does not mean that a buyer is qualified to purchase. The reality is that buyers need to be preapproved for financing, closing funds must be verified, and their ability to buy needs to be confirmed.

Solution:  Your qualified short sale Realtor should be familiar with what must be verified in order to qualify a buyer to submit an offer on your property. Don’t risk this process with an inexperienced agent who does not understand the short sale process.

This article was recently posted in a national real estate publication.

RISMEDIA, January 27, 2009-The national foreclosure moratorium imposed by Fannie Mae and Freddie Mac, major banks such as Citibank and Bank of America, and a host of state governments has created a "breather" for homeowners in default. By working with loan servicers, some homeowners will be able to modify their loan terms and stay in their homes. But many won't.

Not all borrowers will qualify for modified loans. Lenders are keenly aware of this, as well as the fact that foreclosing on a home is an expensive proposition: It can cost a bank $30,000 to $50,000 to foreclose on a home, plus carrying costs that equate to 1.0% to 1.25% of the value of each home per month. There is little enthusiasm for increasing bank-owned (REO) inventory in markets already saturated with foreclosed homes and falling prices.

As an alternative, lenders have new enthusiasm to ramp up the volume of short sales.

Short sales, as most know, are when the lender allows a distressed property to be sold at a price lower than the homeowner's mortgage indebtedness, with the difference forgiven. This relieves the homeowner of their ownership and debt burden without marring their credit report the way a foreclosure would. It also typically allows the new purchaser to buy into the neighborhood at a substantial discount . much more in line with the property's true, current market value. In other words, short sales facilitate efficient clearing of the market.

Historically, short sales have not been very appealing to lenders. The short sale is a complex process that requires an agreement by all the lien holders to accept the lesser amount owed by the original borrower. The paperwork and number of players involved in short-sale transactions can easily overburden a servicer who is already dealing with hundreds of thousands of loan modifications, REO dispositions, etc.

But now with over four million new loans in default in this cycle and six million more expected in early 2009 due to coming interest-rate resets, lenders such as Citibank, Bank of America and Wells Fargo are fired up for short sales.

As they see it, if just 25% of current loans in default could be sold through short sales it would stave off one million foreclosures (good for homeowners) and replace one million nonperforming borrowers with one million performing borrowers (good for lenders).

The industry's challenge to accomplish this is two-fold: Evaluating their portfolios to determine which homes are well suited for short sales, and processing the high volume of bulk sales.

So lenders are now assessing a distressed borrower's situation early in the loan modification process, calculating the sensibility of modifying the loan versus offering the property in a short sale or letting it likely roll into foreclosure. In cases where short sales are the best route, lenders are proactively assigning loans in bulk to be put through the short-sale process. (This phenomenon is strangely new to homeowners; in the past it was incumbent on them and their agents to initiate the short-sale process, not the other way around).

The second part of the challenge is how to process the actual sales, considering legacy technology solutions weren't built to handle either the volume or the complexity of today's short-sale transactions.

DepotPoint's TrackPoint, with a new short-sale module, is up to the task. TrackPoint is an online workflow platform that operates in a SaaS environment. The short-sale module can scale an outsourcer's or an asset manager's operation quickly to handle massive amounts of short-sale volume, reducing costs and elapsed time to complete transactions.

Already using TrackPoint featuring the new short-sale module is MMREM, Matt Martin Real Estate Management, which has facilitated more than 10,000 short sales as the nation's largest facilitator of short sales.

"Short sales are often complex, time-consuming transactions," said Matt Martin, President and CEO of MMREM. "In today's high-volume environment, managing them can be even more cumbersome than usual. REO TrackPoint featuring the new short-sale module simplifies and streamlines the process. It's the most comprehensive, efficient national online platform we've seen for managing and processing default properties."

MMREM has increased its short salle through-put by more than 300% by using TrackPoint with the short-sale module.

Tom Gordon is Executive Vice President of Business Solutions for DepotPoint, Inc., which brings greater efficiencies and cost savings to mortgage lenders, loan servicers, foreclosure attorneys and REO asset management firms that use the company's Web-based application suite, TrackPoint, to vertically process properties through foreclosure straight into REO management.

By Tom Gordon