On April 2, Bank of America announced the latest round of changes to their short sale process. The changes, aimed at streamlining and expediting the process, include new requirements for initiating a short sale and changes to Equator.
Beginning April 13, 2012, Bank of America will require the following five forms to be submitted to initiate a short sale:
Bank of America Third-Party Authorization Form
IRS Form 4506-T – Request for Transcript of Tax Return
60-day Estimated HUD-1 (or HUD-1 with closing date if shorter than 60 days)
Signed Purchase Contract including Buyers Acknowledgement and Disclosure
Bank of America Short Sale Purchase Contract Addendum
If you currently have a short sale file with Bank of America, you will need to complete any outstanding tasks in Equator before April 13. Look for the tasks titled “Submit Short Sale Offer,” “Upload Offer Documents,” and/or “Upload Supporting Documents.”
If these tasks are not complete by April 13, you may be required to re-upload all documents to match the new system (that means five new documents, even if you were only missing one). Your file may also be declined, depending on your open tasks time compared to average timelines.
In addition to these new requirements, Equator will change to allow tasks (after short sale is initiated) to happen simultaneously, rather than sequentially.
We don’t want anyone to be taken by surprise. For full coverage and to make sure you’re as prepared as possible for the changes, join us for an exclusive webinar “Bank of America Short Sale Alert: Changes May Result in Lost Files!”
Last month, Bank of America announced a pilot program that will provide some distressed property homeowners with a new foreclosure alternative. This new “Mortgage to Lease” program will allow homeowners facing foreclosure to remain in their homes by converting from home ownership to rental.
In this program, participating homeowners will transfer their home titles to Bank of America for forgiveness of all outstanding mortgage debt. Then Bank of America will lease the home to the former homeowner for up to three years at a rental price less than their mortgage payments, making payments affordable. After the three-year rental period, Bank of America will sell the acquired houses to investors.
For now, the “Mortgage to Lease” program will only affect 1,000 specifically selected Bank of America customers in Arizona, Nevada, and New York. During this initial phase, Bank of America will explore customer, community, and investor reactions and assess the feasibility and practicality of expanding the program.
In order to qualify, the homeowner must meet the following criteria:
Have a Bank of America loan without junior liens
Be delinquent 60 days on their mortgage payments
Be “underwater” on their mortgage
Must have exhausted other foreclosure alternatives
Foreclosure must be eminent
And the homeowner must be occupying the home
Because this program has received national media attention, you may receive questions from homeowners about it. If you do, you can simply explain that this program is tiny and for now will affect less than one-tenth of one percent of all the homeowners with a problem. Remember, Bank of America will be hand-selecting and notifying homeowners for the initial launch.
UPDATE: Bank of America is adding new requirements to their short sale process starting April 13. Alex will give you all the details April 10 on a special, critical update broadcast. Register for the broadcast at http://www.cdpelive.com/120410-bofa.
In October’s CDPE Industry Broadcast with Bob Hora, SVP Mortgage Servicing Executive at Bank of America Home Loans, Hora affirmed Bank of America’s commitment to streamlining their short sale process.
In keeping with this commitment, Bank of America is simplifying their third-party authorization process for short sales.
On March 20, Bank of America released a standardized Third-Party Authorization form to be used on all Bank of America short sales beginning April 14, 2012.
Bank of America will accept other forms until April 14; however, we recommend implementing the form on your next Bank of America short sale!
For those of you who are CDPEs, you should continue to use the “CDPE Short Sale Authorization to Release Information Form” with home owners’ associations, second lien holders, or anyone else you need information from as our contains information specific to those types of organizations.
Major news in the short sale and housing industry! On Friday, March 9, the Obama Administration announced updates to the Home Affordable Foreclosure Alternative (HAFA) program. Created in 2009, HAFA is a government-sponsored initiative assisting all Home Affordable Modification Program (HAMP) eligible homeowners in avoiding foreclosure through short sales and deed-in-lieus.
The HAFA updates will go into effect on June 1, 2012, and will allow more distressed homeowners to seek assistance. Most importantly, the deadline for submitting for HAFA eligibility will be extended a full year, from December 31, 2012, to December 31, 2013.
Other major changes from March’s updates to the HAFA program include:
The removal of occupancy requirements. Previously, HAFA required homeowners to have lived in the property within the last 12 months.
$3,000 relocation incentives will be limited to properties occupied by an owner or tenant at the time of the short sale.
Mortgage payments will be allowed to exceed 31% of the homeowner’s gross monthly income. This update will allow a homeowner to stay current on her mortgage and still qualify, minimizing the overall impact to her credit.
Secondary lienholders may receive up to a maximum of $8,500, up from $6,000 previously.
And one of the most dramatic changes: The Credit Bureau Reporting will be Account Status Code 13 (paid or closed account/zero balance) or 65 (account paid in full/a foreclosure was started), as applicable.
With these updates, a homeowner can be current on their mortgage, qualify for HAFA, continue to make their payments, and execute a short sale with minimum impact on their credit!
Sign up for our webinar “Has Your Short Sale Stalled? Secret Strategies to Escalate Your File and Get a Resolution Fast!” where we will add a BONUS section on HAFA to cover the updates in depth. Register at http://www.cdpelive.com.
February 28th, 2012 in Alex Charfen by Alex Charfen
I just finished reading “Take the Stairs” by my good friend Rory Vaden, which recently hit these bestseller lists:
#1 on Amazon worldwide
#1 on Barnes and Noble all categories
#1 on USA Today business
#1 on Wall Street Journal hardcover business
#2 on New York Times hardcover
Finally someone has convincingly and definitively taken on the topic of discipline and how it is the single most important factor in your success!
The title of today’s blog post comes from Rory’s book, and it reminds me of what Rick Lara, my high school speech coach, used to say – “You’re only as good as your next speech.”
I have this hanging above the door in my office as a constant reminder that we celebrate achievements but it is what we are yet to achieve that defines us. As CEO of an 80+ person company and leader of a 40,000+ member organization, I have to earn my spot here every day.
Rory’s book focuses on achieving success through discipline, and I think it’s especially relevant to those of us who work in real estate. Very few agents earn an hourly wage or salary; most get paid for their results. I’ve seen far too many agents fail because they spent their time on the wrong activities—something Rory calls “Creative Avoidance.”
No matter how you define success, it requires self-discipline. In “Take the Stairs,” Rory explains how we live in an “escalator world” that’s filled with short cuts, quick fixes, and distractions, making it all too easy to slide into procrastination, compromise, and mediocrity.
I asked Rory to answer a few questions about his concepts for our blog readers. I hope you find his insights as enlightening as I did.
To meet Rory in person, be sure to register for our Breakthrough Conference
in Las Vegas on July 15th – 18th where he’ll be one of our keynote speakers!
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Q1: According to your experience, what is the key to success?
It seems that the only thing that ALL successful people have in common is that they have developed the ability to do the things that they know they should be doing in the moments when they don’t feel like doing them. In other words success isn’t about choosing to take the escalator; it’s about choosing to Take the Stairs. In a word I sum it up as discipline. The discipline to do the things we know we should be doing even when we don’t feel like doing them. But self-discipline isn’t as hard as we think – when we think about it the right way.
What we noticed is that the most disciplined people in the world don’t like discipline more than the rest of us, and they aren’t disciplined out of some weird masochistic pleasure for seeking pain. Instead, they simply process their choices through a different set of criteria from the rest of us. In other words, they think about it differently (in 7 specific ways outlined in the book) and that enables them to make choices that most people can’t normally get themselves to make.
Q2: How did you get to where you are? How is your personal experience one that lends itself to the study of self-discipline?
When I was 5 years old my mother put me into martial arts, and by age 10, I became the youngest black belt in Colorado…to ever get beaten up by a girl! I used to argue with my mom “I don’t like this! It isn’t fun for me! And this isn’t something I enjoy!” and she’d always say back “That’s OK Rory, enjoying it isn’t a requirement of doing it.” So, being raised by a single mom, she taught me to put a lot of faith in self-discipline.
Then when I went to college I worked with The Southwestern Company. I spent 5 summers away from home, waking up at 5:59 am, taking ice cold showers, and knocking on doors 14 hours a day, 6 days a week, on straight commission, paying all of my own expenses, selling educational children’s books door to door. It was the most rigorous and challenging thing I’ve ever done, but I made over $250k in 5 summers and Southwestern taught me the skills and character I needed to be successful in life.
Q3: One of my favorite things in your book is the concept of creative avoidance. What is it, and how do we watch out for it?
Creative Avoidance is a new and much more pervasive form of procrastination that is subtly different. Procrastination is consciously choosing not to do something that we know we should be doing. But what most professionals are really struggling from today is unconsciously filling the day with menial work or trivial work where they can be working long hours, in lots of meetings, answering lots of emails but really they are nothing more than busy just being busy.
Distraction is a dangerously deceptive saboteur of our goals. It’s amazing how much time we lose to mindless minutiae that really doesn’t forward our progress to completing anything substantial. One of the key strategies presented in the book is learning how to ignore the small stuff temporarily so you can focus in on the big stuff. The book also works hard to empirically quantify some of the impacts of the various forms of procrastination, which helps readers ultimately realize that anything that wastes our time is a waste of our money.
Q4: One of the most popular concepts you share is your Rent Axiom. Can you explain that?
It always cracks me up because at the end of every keynote presentation or interview I do people are always thinking “you’re right Rory. I’ve known for a while that there are some changes I need to make in my life and I need to do some things differently. So let’s say I start choosing to Take the Stairs and I start making sacrifices, and paying the price, and start being disciplined…how long do I have to do that for?” Makes me smile.
The truth is we never get to stop being disciplined. Now that doesn’t mean that our life will be one great big giant trip to the gym or that we’re only going to eat foliage for every meal but the reason we never get to stop being disciplined is because of something we, at Southwestern, call the rent axiom. And it says, “success is never owned, it is only rented; and the rent is due every day.” And even though it sounds like bad news at first, if you embrace that attitude as truth then you’ll enter into your commitments understanding that the change you are about to make is not a temporary one but a permanent one. Something magical happens and that is that your appetites begin to change. Until one day what was once a challenge to get yourself to do later becomes the very thing your body craves and what was once a sacrifice to give up later isn’t even much of a temptation.
Q5: Tell us about your “Take the Stairs tour.” What is it all about?
We decided with all of the momentum of this book that we should do something more productive then just go around to bookstores and beg 3 friends to come out to get their book signed. So instead we are taking a tour bus across the country to 20 states between Feb 20 and Mar 20 to support Youth Character Education. We are hosting 2.5 hr FREE events in every city where members of the community come to a live event at a local venue (high school auditorium, college, church, etc) WITH their teenagers and I teach all 7 strategies of self-discipline and the Take the Stairs mindset. We then collect a $10 suggested donation at the door and give 100% of the money we raise that night right back to that local school district foundation or some other local youth charity that supports character education. Our plan is to hopefully raise at least $10,000 at each event and over $250k total for the whole tour.
Anyone can register, its absolutely free (other than the suggested donation), and we are inviting people to come with their teenagers (8th grade and up) so they can do something fun together as a family and learn about the importance of self-discipline together. The complete list of tour locations where they can register and all of the information is available at www.takethestairstour.com
For awhile now, we’ve instructed agents on government incentives available to distressed homeowners who opt to do short sales. Such programs include the Home Affordable Foreclosure Alternatives (HAFA) program, which provides up to $3,000 to assist the borrower with relocation fees.
In recent news, major publications including USA TODAY and CNNMoney have spotlighted the incentives provided by banks. These incentive programs, which offer anywhere from around $2,000 to upwards of $35,000, are intended to provide homeowners with the resources and motivation to pursue a short sale.
As banks look to ramp up short sales, such incentives are becoming more frequent. JPMorgan Chase began their incentive program last year, for example, and Bank of America (which plans a 60-70% increase in short sales this year) piloted a program in Florida this past December. Wells Fargo offers incentives as well, though primarily in states where the foreclosure process is particularly lengthy.
For banks, short sales can be a cheaper alternative to foreclosure. The foreclosure process is lengthy and costly, so much so that providing up to a $20,000 alternative for a short sale is still a cheaper option.
In USA TODAY’s article “Lenders paying borrowers to do short sales,” Jim Gillespie, chief executive of Coldwell Banker, is quoted as saying “It’s a lot cheaper to shell out $10,000 or $20,000 to someone than it is to go through a long foreclosure.”
In addition to the cost of the foreclosure process itself, foreclosed properties sell for less than short sales on average. According to the National Association of REALTORS®, foreclosed properties sold for 22% less than conventional sales, while short sales sold for around 14% less.
We’ve said it before, and we’ll say it again: This year looks to be the year of the short sale. Make sure you’re prepared!
For more information on the distressed property market and tips for listing a successful short sale, watch a free preview of the CDPE course. Click here to watch!
The Obama administration announced its latest plan to help troubled homeowners, enabling an estimated 3.5 million underwater mortgage holders to refinance at today’s historically-low interest rates.
However, experts speculate the proposal—which is expected to cost up to $10 billion and would be paid for by imposing a fee on major banks—could have a difficult time getting Congressional approval.
This proposal follows a string of government-initiated programs that have had mixed success, including the Making Homes Affordable Program. The difference is, Obama’s latest plan would assist borrowers with private (non-government backed) loans.
Under the current proposal, to be eligible borrowers must:
Have not missed a mortgage payment in the past six months, and have no more than one late payment in the six months prior;
Have a credit score of 580 or higher;
Have a current mortgage balance within loan limits for FHA-insured loans in their communities; and
The property must be their primary residence
As an agent, it’s important to understand the details and restrictions of the program so you can effectively advise your clients on their options. This proposal is already getting a lot of attention by the media, and distressed homeowners may view this as a viable solution to their problems.
However, it’s important to remember that this program would require Congressional approval, which may never happen. If you have clients who are on the edge, if they are facing foreclosure and desperate for help, don’t let the media talk of this proposal distract them from finding a real solution.
Yesterday, the Justice Department and 49 out of 50 state Attorneys General announced a settlement agreement with 5 of the nation’s largest banks in the Robo-signing and Mortgage Service Fraud scandal that first came to light in late 2010.
The settlement, worth $25 billion dollars, was the largest government negotiated industry settlement since the Tobacco Industry settled in 1998.
In the Settlement, $5 billion is earmarked for $2000 payments to be distributed to borrowers who were illegally foreclosed on between January 1, 2008 and December 31, 2011. The remaining $20 billion will be used to help homeowners who are currently in danger of losing their homes by helping with loan modifications, principle reductions, refinancing, short sales, relocation assistance and other alternatives.
Join us on February 16th, 2012 for an Industry Broadcast, which will give you all the details of the agreement and what it means for agents and their clients. Click here to register!
Current studies show that over 6 million homeowners in the country are potentially facing foreclosure. However, initiating the conversation to find out if a homeowner needs your services can sometimes be uncomfortable or even offensive. That’s why we have a refined a script that works well in any situation, whether you are on the phone or in person, and we call that script the “Distressed Property Rescue Script.”
It’s simple, effective and most importantly it makes homeowners feel comfortable to open up about their situation. This is not a sales call, or a referral call; it’s a rescue call.
Here’s the script:
“Do you, or someone you know, owe more on your property than what it is worth and you don’t know what to do?”
This may sound like a simple question, but each word is designed to elicit a specific response.
Let’s take a look at this script and explain why each section is important.
“Do you, or someone you know.”Adding the part “someone you know” is non-accusatory and let’s the person off the hook. It may also trigger a memory of someone they know who is in trouble which allows you to connect to their market.
“owe more on your property than what it is worth.” Leaving out the words “foreclosure” or “short sale” are important because studies have shown that 65% of homeowners do not understand these terms or know what they mean. They do understand, however, that they are late on payments and that is something they can definitely relate to.
“you don’t know what to do?”This last section is the most important part. Foreclosure is an ambiguous term, one the homeowner may not relate too or even understand. Not knowing what to do has personal implications that every person can recognize, so by communicating in a way that has meaning you help people open up.
When CDPE’s call qualified clients and use this script they report 5 out of 10 and in some cases 10 out 10 calls resulting in referrals.
Begin calling past clients today. Use this script to generate more listings and, more importantly, help someone in your database that already knows you.
Mortgage modification scams made the list of the Better Business Bureau’s Top Scams of 2011, with more than 20,000 complaints. Sadly, there are countless organizations out there preying on desperate homeowners.
That’s why trained, qualified real estate agents are needed now more than ever. The nationwide network of more than 35,000 CDPE-designated agents has helped hundreds of thousands of homeowners find a dignified solution in difficult times.
But distressed homeowners aren’t the only ones being targeted. Unfortunately, even well intentioned agents have been caught up in increasingly sophisticated mortgage fraud scams.
Don’t let it happen to you! Join Alex Charfen for a FREE Webinar:
[FREE Webinar] Short Sale Fraud – What One Agent Didn’t Know that Cost Him His License
Wednesday, January 25 at 2:00 p.m. EST
The bad news? Foreclosure levels were artificially lowered due to delays following the robo-signing scandal. However, those delayed foreclosures will likely reappear in 2012.
“There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011,” said Brandon Moore, chief executive officer of RealtyTrac.
Fortunately, both the financial and government sectors are more committed than ever to finding alternatives to foreclosure, including short sales. In fact, Bank of America expects a 60-70% increase in short sale closings this year.
Agents need to be prepared to assist distressed homeowners during the upcoming surge in foreclosure filings. If you’re not already a Certified Distressed Property Expert®, you’re missing out on an incredible opportunity to serve your community while growing your real estate commissions. Click here to watch a FREE PREVIEW of the CDPE Designation Course to find out how you can get started today!
Fannie Mae revealed its new Unemployment Forbearance Program, which mortgage servicers are required to implement by March 1 for all Fannie Mae-owned and backed loans.
Servicers can now provide up to six months of relief for eligible unemployed borrowers without Fannie’s review and approval. Borrowers may also apply for an additional six months of forbearance, for a total of 12 months.
To find out if your loan is backed by either GSE, use the “Fannie Mae Loan Lookup” or “Freddie Mac Loan Lookup” tools on the Useful Links section of our website.
Effective Feb. 1, Freddie Mac is giving mortgage servicers expanded authority to provide six months of forbearance to unemployed mortgage holders without prior approval, and an additional six months (12 months total) with prior approval. This new policy essentially doubles the previously offered forbearance period.
It’s important to note:
This applies to Freddie Mac-owned or guaranteed loans only.
There is ACTION required. The homeowner must contact the servicer to request the forbearance.
Delinquent borrowers in an existing short-term forbearance plan can be evaluated for an extended forbearance term under the new policy. Again, homeowners will need to contact their servicer to apply.
In an effort to shorten overall cycle times, Bank of America has reduced the window for submitting a backup offer on a short sale from 14 days to eight days after the initial offer becomes invalid.
Once a backup offer becomes necessary:
Contact your short sale specialist immediately to let him or her know you have a backup offer to submit.
Within eight calendar days, resubmit the listing data, submit the short sale offer, and upload the offer documents and supporting documents.
Note: All backup offers will require approval, regardless of similarities to the previous offer.
If no backup offer is available:
The short sale will be closed in Equator by your short sale specialist.
You should return to marketing the property.
You may initiate a new short sale in Equator when you receive a new offer on the property.
Their findings indicate “the national housing recovery will continue to be gradual and slow without any significant changes in markets.”
Veros predicts up to four percent appreciation in the strongest markets, including Fargo and Bismark, North Dakota; the Washington, D.C. area; Honolulu, Hawaii; and Anchorage, Alaska.
Veros projects the five weakest markets—which include areas of California, Nevada and Florida—to depreciate five to six percent over the next year.
While this is welcome news for the country’s strongest markets, the reality is, 1 in 5 homeowners are underwater on their mortgage. For many of them, the recovery isn’t coming quickly enough. Housing prices remain 33% below 2006 levels, so even at four percent appreciation, millions of homeowners remain in serious peril.
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