Short Sales For Real Estate Professionals

1. MAXIOM California Realty Maxiom Agents. Maximum Results.

2. MAXIOM California Realty Maxiom Agents. Maximum Results. Introduction to Short-Sales for the Real Estate Professional 2009 Source: Freddie Mac Copyright © 2009 Maxiom California Realty All Rights Reserved

4. Background and key statistics on delinquencies and workouts

5. Real estate professional’s prospective on current environment

6. Retention and Liquidation Workout Options

9. Avoiding foreclosure when homeownership retention is not possible

10. Reducing credit losses while maintaining neighborhood values

12. Personal Communication MAXIOM California Realty Maxiom Agents. Maximum Results. What percentage of loans are placed into the foreclosure process without any personal contact being made with the borrower? 5% 10% 25% 35% 50% Source: Freddie Mac Copyright © 2009 Maxiom California Realty All Rights Reserved

14. As property values decrease, there will likely be an increase in the number of short-sales which will keep REO inventories down and preserve neighborhoodsSource: Freddie Mac Copyright © 2009 Maxiom California Realty All Rights Reserved

16. Many real estate professionals are new to the short-sale experience

19. 90-days or greater continue to grow

21. Housing stock with high inventory

24. 75% of Loan Modifications ‘cure’ for good

25. 70% of late stage repayment plans fail versus 40% of early stage

26. Servicers report that less than a 50% contact rate with borrowers that went to foreclosure sale

27. Roper survey showed the majority of borrowers do not contact their Servicers, but are willing to talk to a financial counselorSource: Freddie Mac Copyright © 2009 Maxiom California Realty All Rights Reserved

29. Short-term or long-term forbearance

30. Repayment plan

31. Loan modification

34. Make whole preforeclosure sale

35. Short-sale

36. Deed-in-Lieu of foreclosure

38. What Is A Short-Sale? MAXIOM California Realty Maxiom Agents. Maximum Results. A short-sale is when the net proceeds from the sale of a property are insufficient to cover the mortgage obligations and closing costs and the seller is unwilling or unable to cover the variance. Property Value $350,000 Total Amount Due – 1st TD $420,000 Sale Price $340,000 (97% of Value) Brokerage fees & closing costs ($30,600) (9% of Sale Price) Less homeowner paid costs $1,000 Payment to $50K – 2nd TD ($3,000) Net Proceeds $307,400 (88% of Value) Shortage/Loss ($112,600) 20% MI Claim (100% of claim) $84,000 Shortage/Loss ($28,600) Source: Freddie Mac Copyright © 2009 Maxiom California Realty All Rights Reserved

40. MAXIOM California Realty Maxiom Agents. Maximum Results. Parties In A Short-Sale Agents Seller Loan Servicers Mortgage Investor Mortgage Insurer Buyer Housing Counselor Primary Pool Junior Lienholders Buyer’s Lender HOA Liens Source: Freddie Mac Copyright © 2009 Maxiom California Realty All Rights Reserved

42. Seller contributes to minimize the loss based on ability

43. Seller avoids foreclosure

44. The investor and the MI company minimizes losses

45. Real estate professional closes an additional sale

47. MAXIOM California Realty Maxiom Agents. Maximum Results. Who Benefits From A Short-Sale? MI Company Neighborhood Servicer Investor Homeowner Real Estate Professional Source: Freddie Mac Copyright © 2009 Maxiom California Realty All Rights Reserved

49. Avoids a foreclosure on credit record

50. Avoids the pursuit of a deficiency or a deficiency judgment

55. Increases listing inventory

58. Avoids an REO on portfolio loan

59. Potential investor incentives for completed Short-Sales

60. Avoids expensive servicing costs incurred on delinquent loans

65. Allows existing homeowners to keep refinance efforts

68. Discuss other workout options

69. Obtain payoff statement

70. Determine all contingencies at time of listing (subject to lender approval, etc.)

73. Start with first trust deed

74. Communicate with junior lien holder(s) and know their payoff requirements

75. What is required by the seller’s servicer (loss mitigation department)

78. Seller financial statement

79. Statements – bank, investments, retirement, etc.

80. Recent pay stubs or P&L/Tax returns if self-employed

81. Estimated Seller Closing Cost / HUD-1

82. Complete purchase contract signed by all parties

83. Buyer FNMA DO/DU or AUS equivalent approval

86. Separation/Divorce agreement or court documents

87. Comparative Market Analysis with model match homes sold, REO, pre-foreclosures, cancelled, and expired

88. HOA & Property Management Information

92. Closing costs and brokerage fees

95. Have better or recent comparable sales available

96. Obtaining buyer loan approval through reputable lenders

97. Must be arms length transaction – notarized affidavit if unclear

98. Know who the owner (investor) of the loan note

99. Present market value offers

100. Negotiations with all junior liens holders

103. Seller receives no rebate, proceeds, or commission from sale

104. Include Power of Attorney when sending HUD-1 to servicer

106. Certified True Final MAXIOM California Realty Maxiom Agents. Maximum Results. Who certifies the Final Settlement Statement (HUD-1) as “Certified True Final”? Servicer Closing Agent Real Estate Broker Investor Title Company Source: Freddie Mac Copyright © 2009 Maxiom California Realty All Rights Reserved

108. Executed promissory note must accompany HUD-1

109. Do not reduce seller cash contribution for closing cost

112. Continue to educate homeowners to avoid foreclosure

113. Retention options

114. Liquidation options

115. Real estate professional competency development

116. Training

117. Educate

118. Seminar / Workshops

119. Conferences

121. MAXIOM California Realty Maxiom Agents. Maximum Results.

Short Sales For Real Estate Professionals

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