All Forum Posts by: Ron S.

@ Kathy - While you may be one of those "intelligent" negotiators, Banks don't "do short sales without agents all the time". You may work for a local/regional institution that doesn't require it to be listed with an agent but, it sure won't be a Fannie/Freddie property and if you are regulated by NCUA or the FDIC and don't negotiate short sales within acceptable, "Arms Length" parameters, I wouldn't want to be a part of your next compliance exam.

If you take the altruistic motives of the OP you portray out of the situation, he's not "helping him rectify his situation", he's trying to purchase a property that he thinks will be a financial win to him. Nothing wrong with that but let's call a spade a spade and not put some Ghandi'esque spin on it.

And there IS something that makes the homeowner have to list it with an agent. A requirement from the lender and/or Fannie/Freddia also know as the U.S. Treasury Department. They require it be listed under all but the most detailed and exceptional circumstances that are well documented.

Presentation is nice but that's never going to be sufficient all by itself. There are many other required elements to a short sale. Presentation is only one. The best presentation in the world isn't going to make a sure sale go through if it doesn't meet the requirements of the investor/lender/servicer.

"Having the property signatory approval level" is a perfect reason WHY one should list the proeperty with an agent, so the rest of the deal can be reviewed and confirmed to be a proper transaction. All of my negotiators recommend a deal after an exhaustive financial analysis and after verifying that all the requirements of a short sale are met (Like being listed with an agent, executing a 4506T, providing a hardship letter, bank statements, tax returns, Arms Length affidavit, budget, etc..) and then signing off and verifying all of the requirements are met so that when its all done, a subsequent audit from an outside entity or regulatory agent will confirm that it was done properly and NOT just because some talented negotiator thinks it should have been done. Is it the highest and best offer (How woudl you know if it's not listed)? Is it going to close? Did the negotiator run OFAC on ALL parties to the transaction? Is it better than foreclosure? Does it meet minimum net proceeds requirements in the NPV calculations to proceed? Is it arms length? Is anyone getting an inside deal not available to the public at large? Is there PMI? Does the investor need to approve the deal? Does the insurer (If applicable)?. Is it a cash deal or is there financing and if there is financing is the bank (Or whatever financial institution it is) financing their own short sales (That's another can of worms)?

I understand what you are saying and yes, an educated negotiator can make or breaks a deal but that negotiator needs to follow the rules and make sure that everyone else follows the rules and yes, there are rules. If your lending institution gives you delegated authority to approve any deal you feel is a good deal without any oversight whatsoever, I'm not sure that practice would be to the benefit of the institution in the long run.

The redemption rights belong to the former homeowner in a judicial foreclosure sale. There are no redemption rights in a non judicial foreclosure.

I think it's worth the viewpoint of the end side of the transaction. Assuming it doesn't go short sale and does go REO. The REO asset manager is going to list at fair market value and sell it on the open market. Are they going to list and sell it in 12 months? If that is what the market holds, yes but, if the market in the area is 90 days, and the REO stigma is minimal, denying a short sale at a 20% discount, taking the property into REO and preparing it for open market. All things being equal, that's going to be a full sale in 90 days if current trends continue...and based on today's economic factors, current trends will continue.

@ Denise - Excellent post. While it may work for the big 5 across the board, I wouldn't say it's the only methodolgoy used or that it works well universally for all banks.

Yes, we all do an NPV but the variables are different in each area (As you pointed out). We don't assume it will be worth the same at a minimum in a year. Many pockets of the country are still on a decline. That said, many are on an uptick in value and we factor that in our analysis.

Just as important (Military relocation notwithstanding) are the reasons for the short sale and the financial situation of the borrower. If they are sitting on significant liquid assets and/or have sufficient income but want out of a property because they don't like that they are underwater potentially or, don't like their current interest rate because market rates are better, well, we may decline a short sale.

A short sale is an alternative to foreclosure in the event of default. One of the options available that a lender may consider (I know, this is rhetorical).

By the way, we use a 12.5% discount factor in our modelling and we adjust quarterly.

I would add (Sorry, couldn't edit) that this equity protection tactic does not save a borrower from foreclosure, doesn't stop a foreclosure and doesn't stall a foreclosure if the transaction does not pay the foreclosing entity off before the date of the posted notice of sale.

Finally, I should clarify, there are no forms or rules related to the foreclosure side of this tactic. If a buyer of a property in foreclosure engages the seller in an equity purchase transaction, yes, there are rules and timelines and forms but again, This has nothing to do with the foreclosure, the borrower in foreclosure or the property in foreclosure. These are all requirements of the buyer and at the risk of being redundant, don't impact the foreclosure one way or the other if the loan is not paid off.

I wouldn't go spending too much time on the "Equity Purchase Agreement" tactic. There is no short cut and there is no shared equity, participation agreement or anything like it that will circumvent the default process. There is no form the law requires (I'd love to see where you came up with that) and as far as the foreclosure sale and borrower are concerned, there is no "5 day cooling off period". I think you have your sides of the equation confused with a buyer and a seller in foreclosure.

If you are a borrower and you are in foreclosure, you either sell it and pay the loan off before the foreclosure sale or, you reinstate it before the foreclosure sale or, if you qualify, you modify it, before the foreclosure sale date (You do have a right to have the foreclosure process stopped while in review for any alternative to foreclosure provided the notice of sale has not been inssued).

If you do not do any of the above, you lose any legal right to reinstate the loan once you are within 5 days of the sale. Once in five days, pay it off or lose it.

The only part of Robert's post that was good advice was to know the foreclosure laws. I would respectfully recommend that you follow your own advice Robert. The advice, forms and procedures you gave, have no relevance to anything regarding a foreclosure in the state of California.

@Robert, Character? Sadly, character is not a lending criteria. I get your point but that's not what we look at. We look at credit, capacity and colateral. Credit kind of denotes character but it has nothing to do with ethics and morals, it has to do with history. Did they pay their bills. Their score will answer that. Also, there is NOTHING ilegal about buying a home from someone in foreclosure and renting it back to them. If it's a SHORT SALE and an investor buys it, and lies about renting it back to them on the closing paperwork, THAT's ilegal but there is nothing about renting it back if they buy it from the current owner. Whether they should do it or not is another story because as you pointed out, if they didn't pay their lender, chances are they aren't going to pay the investor.

Dion, you are incorrect. I suggest you read the rulings and their updates before opinning so strongly. I've foreclosed before 120, had it challenged and survived the challenge on multiple ocasions. And it's not because i'm any good at my job, just because the rules allow me to do so.

Death of all obligors - Can file NOD provided there are no legitimate successors prior to 120 days.

Loan made to a non natural entity - Can file the NOD without the 120 day rule

Ilegal transfer of ownership - Can exempt you from the 120 day rule.

Senior or subordinate lien holder is already in foreclosure, lien holder can join and file NOD prior to 120 even if their loan is current.

Short and sweet and to the point...and correct Wayne...

@Dion - Thanks but, that's not a rule, just a proposal and while I think it's a great proposal, it still doesn't apply to the OP. She's not a successor in interest for the purposes of the proposal in your link. The borrower did not transfer ownership to her. Per the link, the definition is: “[o]ne who follows another in ownership or control of property.” Black’s Law Dictionary (9th ed. 2009). For the purposes of this proposal, the Bureau is referring to successors in interest who have been transferred a legal interest in a property securing a mortgage loan from a borrower on the mortgage loan; the successor in interest may not necessarily have assumed the mortgage loan obligation (i.e., legal liability for themortgage debt) under State law, and the servicer may not necessarily have agreed to add the successor in interest as obligor on the mortgage loan.

I think this is why attorneys exist. To extract money out of people who interpret things differently.