Get documents about "ALM
Document Sample
Partnering With Access Loss Mitigation
April 22, 2009
Presented By: Richard Petz
Director of Realtor Services Division
Strictly Private and Confidential
Table of Contents
1. Introduction to Loss Mitigation
2. Homeowner’s Obligations & Responsibilities
3. Marketing to the Demographic
4. File Flow
5. Fees
1. Introduction to Loss Mitigation
Introduction to ALM
ALM works with distressed homeowners nationwide to avoid foreclosure and mitigate its associated
negative credit impact. ALM provides an array of loss mitigation solutions and services including loan
modification and short sale negotiation.
About Access Loss Mitigation Advantages to Partnering with ALM
National leader in short sale negotiation and Short sales are complex and time-consuming
loss mitigation
Leverage ALM’s relationships with lenders and
Operate in all 50 states expertise in the negotiation process
– Comprehensive understanding of rules and Expand the scope of your services
regulations applicable to each foreclosure
situation Increase your volume of property listings and
enhance your earning potential
Based in Los Angeles, CA
Focus on what you do best: selling properties
– Satellite office in New York, NY
We boast a 75-80% success rate
Assisted thousands of homeowners facing
foreclosure When we have offer, and buyer stays in
place
Realtor avg. 15-20%
Reduce legal risks
Education, Selling and Listing Agents
Introduction to Loss Mitigation: Definitions
A brief overview of loss mitigation definitions and terms.
Short Sale
– Pay less than owed
– Forgive the difference
Occasional promissory note (usually on seconds)
– Commission paid by lender
Loan Modification
– Modify the terms
– Interest rate, extend term, type of loan
– Short term solution (5-7 Years)
Have seen long term solution, not common
Deed-in-Lieu of Foreclosure
– Handing keys to lender
– Foreclosure credit hit
Foreclosure Basics
The following overview provides a basic summary of the key elements and concepts involved in
foreclosures.
Stages of Foreclosure Judicial vs. Non-Judicial Foreclosure
Pre-Foreclosure Mortgage deed vs. deed of trust
Borrower misses payments
Missed payment notices sent by lender Judicial:
– Foreclosure passes through the state or district court
Notice of Default (NOD)
– When homeowners default on mortgage, lender files
A document made public and states that the
claim to recover unpaid balance of loan
borrower is in default and legal action may be
taken (foreclosure) – Courts decide case, which typically takes 4-6
In Missouri a NOD is typically used as months, but sometimes up to a year
Missouri is primarily a Non-Judicial state
Non-judicial:
Notice of Sale – Foreclosure by trustee sale
Mailed the borrower twenty (20) days prior to – If homeowner defaults lender can notify the trustee
scheduled day of sale to start foreclosure
Must also be published in a newspaper within the
county – The trustee can then sell the property and transfer
proceeds to the lender
Foreclosure Sale (Auction) – Trustee sale is typically much faster than foreclosure
The sale is conducted by the trustee at public by judicial sale
auction for cash to the highest bidder Not tied up in courts
Redemption Period
If the lender is the winning bidder, the
borrower has one year (12 months) to
redeem the property
REO
Typical Foreclosure Timeline
The following is the typical foreclosure process for Missouri.
Pre-Foreclosure Foreclosure Post-Foreclosure
(Process Period)
Redemption Period: Mandatory redemption
0-14 days:
45-60 day notice: Notice of Default: A notice to homeowners period af ter the sale (12 months in MO). The
Borrower
lender sends out notif ying them that they have f ailed to f ulf ill borrowers have the right to pay of f the loan
misses
certif ied letter asking f or their payment obligations. Notice is f iled with along with any interest and penalties thus
payment
payment in f ull the county and put in the newspaper regaining the property. Regardless of who
takes possession of the property at the auction
(lender or new buyer), they must wait until the
Sale/Auction: the redemption period expires bef ore taking
property is auctioned- possession of the property
2-week of f to the public. If
90-day limit: Lender Notice of Sale: An lender does not
grace period
initiates f ormal of f icial receive its minimum Real Estate Owned (REO): If property is
f oreclosure announcement that bid, the lender takes not successf ully auctioned the lender has no
proceedings. Lender specif ies the time, possession of the option but to repossess the property, wait f or
transf ers the matter to place, and terms of property, and it the redemption period to expire, evict the
30-day outside legal counsel a f oreclosure sale. becomes a part of its previous homeowners (if necessary) and
notice: late- and attorney in charge real estate owned place it back on the market to try to recoup
payment f ees has a f oreclosure notice portf olio (REO) its losses
posted (NOD)
30-days 60-days 90-days 120-days 150-days 180-days 210-days 240-days 270-days
Borrower’s Options When Facing Foreclosure
A borrower essentially has only two basic routes to choose from when facing foreclosure: Stay or Go.
These options run from stopping foreclosure and keeping the mortgage, to being evicted.
STAY…
Reinstating the Mortgage
– Borrower brings mortgage current, pays late fees and penalties
Forbearance
– Lender may agree to allow homeowner to delay payments for a short period or negotiate a payment plan
Lender may offer a combination of reinstatement and forbearance, no payments for a short time then pay off later
Repayment Plan
– Enables homeowners to submit payment of a portion of the past-due amount and penalties with future payments until
the past-due amount and penalties are paid-off
Loan Modification
– A change in the term, interest rate, type of loan or principal reduction (very rare) of the note
Goal is to lower monthly payments making it affordable
GO…
Short Sale
– Agreement by lender to accept less than the principal owed as payment on loan. Also known as a short pay -off or a
pre-foreclosure workout
Deed-in-Lieu of Foreclosure (Voluntary Conveyance)
– Borrower voluntarily transfers title back to lender to avoid foreclosure. Lender releases borrower from mortgage and
repossesses the property
Bankruptcy
– Typically only pauses the foreclosure process (provides a “stay”). Eventually the property is repossessed
Other potential options
– Sell Home (if there’s enough equity to pay back loans)
– Refinance (through another lender that specializes in financing for homeowners facing foreclosure)
A Comparison of the Options
Foreclosure vs. Deed in Lieu vs. Short Sale.
Lender Expense Credit Implication Tax Implication
Average $50,000 + 30% 200-300 point reduction + No Some States Deficiency
reduction in home value as new home purchase for 7-10 Judgment, Issue 1099 for sales
Foreclosure REO years vs. loan difference
30% reduction in home 200-300 point reduction No Some States Deficiency
Deed in Lieu value as REO new home purchase for 7-10 Judgment, Issue 1099 for sales
years vs. loan difference
Sells for market value 40-80 point reduction from late Issue 1099 for sales vs. loan
Short Sale pays; can purchase home in a difference
year with credit repair
Short Sale Credit and Tax Implications
“I can’t give legal or tax advice. Please consult an attorney and accountant.”
Credit Implications
– Take credit hit from late pays not from the sale itself (40-80 points)
– Can purchase a new home in a year with credit repair
Paid as agreed vs. settled debt
Tax Implications
– Issue 1099-c for difference between sale price and loan value
– “Mortgage Forgiveness Debt Relief Act of 2007” (Expires 2012)
– Primary Residence vs. Investment Property
Debt was qualified principal residence indebtedness, you were insolvent immediately before the
discharge, or if the debt was canceled in a title 11 bankruptcy case. (IRS.GOV)
The Short Sale Process
Although every short sale is a unique transaction, the following outlines the typical steps in a short sale.
From offer submission to close an average of two to four months
Homeowner List Submit BPO / Negotiate
Defaults on Property Short Sale Assign Short Sale /
Payments For Sale Package Negotiator Sell Property
Homeowner Homeowner works ALM creates short The lender orders Lender agrees to
misses payments with expert and sale package; a BPO to accept offer, final
Lender initiates determines value assists determine value of details are
collection efforts of property homeowner in property and the negotiated
through CMA and gathering and minimum sale Lender receives
Homeowner BPO completing all price required
consults with approval from their
If total owed is necessary Lender assigns a investors, if loan
expert and paperwork;
determines short less than the negotiator has been sold to
property value, compiles all investor
sale is only option transaction
short sale is the All other liens on
The earlier the best option documents from
homeowners start realtor property (e.g.,
the short sale, the Homeowner puts Lender reviews second
higher the success property up for mortgages) must
sale package to be negotiated and
rate determine settled prior to
eligibility of short sale
sale
Lender reviews
and must agree to
final HUD-1
Managing Expectations
The biggest reason we see buyer and seller fallout is from not “Managing the Expectations” of our clients.
Typical Short Sale Timeline Managing Selling/Buyers Agents Expectations
● Week One ● Let the buyers agent know it will take…
― Borrower contacted by ― Takes 2-3 months for completion
• Negotiator • Determine buyer mindset
• Processing • Will buyer stay or go?
● Week Two • Explain the S.S. process
― Need listing agreement from you, executed ● Find multiple offers / (if MLS allows)
― CMA, HUD-1, Listing Agreement, COMPS ─ “Contingent with Short Sale Approval”
● Week Three-Four ― Even if we have an offer that looks fantastic….
― Procure offers, submit them to ALM ― We submit the lowest offer, swap out offers at the
end
― Processing will complete S.S. package with
borrower assistance ● HUD submission
― Always have your title rep pad the HUD
● Once we have fully executed offer and complete short
sale package ― Increase Title fees, overcharge for inspections
– Two-Three Months for Approval ● Once we have fully executed offer and complete short
sale package
– Two-Three Months for Approval
2. Homeowner’s Obligations & Responsibilities
Homeowner’s Responsibilities
These items are required for ALM to work on the homeowner’s file.
Homeowner fills out ALM paperwork
– Client agreement
– Property profile
– Letter of authorization
Gather Required Docs – Bottleneck for Submission of Offer to Lender
– Pay stubs
– Tax returns
– Bank statements
– Hardship letter
ALM Client Agreement
This document describes the services we provide and the terms of the agreement between our company
and our clients.
Title ALM Client Agreement
Client Agreement has industry disclosures
– Protects CBG and ALM
Legal document
– Must be signed by all borrowers
Property Profile
This form provides us the necessary information regarding the homeowner’s property, their loans, and any
outstanding liens.
Title Property Profile
Provides borrower / property snapshot
– Contact information
– Property information
– Mortgage information
– Additional liens
Letter of Authorization
This form authorizes the homeowner’s lenders to discuss their loans with representatives of our company
and allows our company to interact with their lenders on their behalf.
Title Letter of Authorization
Required for ALM to discuss borrower’s loan
with servicing company
Must be signed by all borrowers
– Complete one for each loan
First and second lenders
LOA is submitted to the lender upon receipt
Hardship Letter
An effective hardship letter sticks to the facts and is concise, straight-forward, and relatively simple. It is not
a good idea for the homeowner to blame the lender for their problems. It is a good idea to highlight how
they have exhausted all options available to them to repay their lender.
Anatomy of a Hardship Letter Sample Hardship Letter
Good Hardship January 1, 2009
To Whom It May Concern,
– One page
This is a hardship letter. Our loan number is 987-456-321. We bought our home
– What was catalyst two years ago and received a mortgage from your institution to finance 80% of the
purchase. At the time, we both had good jobs and a stable income. We have
always been financially responsible. Unfortunately, in October of 2006 I got laid off
– Show how borrower got into this situation from my job and since then I have been unable to find steady employment. Since
my unemployment benefits ran out we have simply been unable to afford to continue
– Short sale as a last resort making our mortgage payments. Our credit cards are maxed out. We have cut back
on all but the most necessary expenses but continue to struggle to keep up with the
bills and make ends meet.
Bad Hardship
We are now four months behind on our mortgage payments. We considered selling
– Blaming the lender our home, but property values in our area have come down greatly. As it turns out,
we have no equity left in our home and there is no way we could sell our home for an
amount that would pay off our mortgage in full. Even if we could sell at current
– Emotional market prices, we would first need to replace the roof (it is beyond repair), which we
cannot afford to do. We are late on our credit card and car payments, and have not
paid our utility bills for some time now.
– Not factual
Of course, we would love to keep our home, but given our current financial situation
If it makes sense the lender will accept it it is just not possible. Even if things turn around for us, we see no way that we can
make up for the mortgage payments we missed. We really want to avoid foreclosure
which will further damage our already ruined credit. We have exhausted all of our
savings and we have nobody left to turn to for help. Please do whatever you can to
help us out of this situation. Thank you for your time and consideration in this
matter.
Sincerely,
[signatures]
Michael & Samantha Jones
St. Louis, Missouri
3. Marketing to the Demographic
Marketing to the Demographic
There are many ways to approach the target market. Here are a few ways to find your ideal loss mitigation
client.
Who Qualifies How to Target the Demographic
Must be late or will be late Notice of Default
– Don’t tell client to be late – County recorder
– “If your financial situation does not allow you to pay – Newspaper
your mortgage than we can start working on your
Short Sale” – Mailers
Legal risk – Door knocking
Borrower has Asset’s Database marketing
– Case by Case situation – Contact past clients
– Lender will review – Talk to your Church, Synagogue
401k’s, savings, all assets taken into consideration – Talk to your local community
Legitimate hardship – The homeowners get a free service
– If it makes sense…. Paid by lenders
4. File Flow
File Flow
A brief summary of the file flow from CBG to ALM.
Consultation for Borrower
– Contact ALM representative
– Dedicated phone line for CBG
Phone- 877-552-7353
Fax – 888-900-8510
– Determine how to accomplish borrower’s goals
– Stay or go?
Loan modification or short sale
Stave off dreams of loan modification
Fax ALM required paperwork + Agent Identification Worksheet
– Client agreement
– Property profile
– Letter of authorization
(Homeowner Welcome Packet)
Agent will receive a confirmation of receipt
– Ask for additional documents
– Ask agent for quick summary of borrower situation
Selling Agent
As a selling agent you can still take advantage of our negotiation services and here is how…
Seller’s agent
– Find property for purchase
– Tell listing agent that you will make an offer contingent on it being negotiated by ALM
Call dedicated phone line- 877-552-7353
Invite listing agent to next webinar
– Fees
Same fee structure as CBG (discounted rate)
Split fees with listing agent
Ex. Property sells for 350k
– Split would be 15% from each side totaling 30%
Create realtor welcome packet for listing agent
Fax ALM required paperwork + Realtor Welcome Packet
– Client agreement
– Property profile
– Letter of authorization
(Homeowner Welcome Packet)
Agent will receive a confirmation of receipt
– All agents notified
5. Fees
Fees
Listing Side Commission
Short Sale Price ALM Compensation CBG Compensation
$100,000.00 or less $1,000 Remainder of commissions in excess of $1,000
$100,000.01 to $200,000.00 38.9% of commissions 61.1% of commissions
$200,000.01 to $300,000.00 34.5% of commissions 65.5% of commission
$300,000.01 or more 30% of commissions 70% of commissions
• All commission are paid by the lender
• The lender will not honor your listing agreement’s commission/ However Fannie and Freddie Paper
will honor listing up to 6%
• Commission is negotiated
• Some lenders have blanket commission policies
• Countrywide 5%
Summary of Topics
1. Introduction to Loss Mitigation
2. Homeowner’s Obligations & Responsibilities
3. Marketing to the Demographic
4. File Flow
5. Fees
QUESTIONS??
Send them to: realtor@accesslossmitigation.com
Partnering With Access Loss Mitigation
April 22, 2009
Presented By: Richard Petz
Director of Realtor Services Division
Strictly Private and Confidential
