Short Sale Negotiation Basics

Short Sale Negotiation

Negotiation through the loss mitigation department will be the key factor in getting your new home at a deep discount.

If opportunities emerge in which lenders can sell distressed properties without registering big losses, they will do it.

For example, consider that a homeowner with a $200,000 mortgage is late on his or her loan payments and is facing foreclosure. With the consent of the homeowner, you offer his or her lender $150,000 as full payment for the loan, which is accepted. That means you instantly save $50,000 on a real estate investment.

This is a short sale.


Getting started

Negotiating a short sale with a lender can be a complicated. But with careful research and patience, it is possible for you to earn big profits with short sale deals. Naturally, closing the first one will be the most challenging.

The first step in this process is to identify potential investment opportunities on Foreclosure.com, which offers more than 1.2 million listings across the nation.

Preforeclosure properties are ideal because you can make more money with them versus homes that are already bank-owned.

To be most successful, we recommend reaching out to homeowners who are more than three payments behind on their mortgages. At this point, each of these homeowners has received a Notice of Default (NOD) and is very close to losing their home. Time is running out and the chances of them curing the loans and making up the back payments are slim.

The homeowners understand this and may be grateful for your assistance. The lenders understand this, too, and are motivated to recoup their losses as soon as possible.



Calling lenders

It’s important to gather as much information as possible about the properties and the homeowners prior to getting on the telephone with lenders. Because when you do get a lender representative on the line, he or she will have questions.

Using the contact information contained within the listings you have targeted from Foreclosure.com, it’s time to call a lender and inquire about the possibility of a short sale agreement. Traditionally, the “Loss Mitigation Department” will handle these types of requests.

If you can’t get in touch with anyone, move onto the next listing. The negotiating can begin only when you get in touch with the right person.

Once you have reached a representative for the lender, inform him or her that you represent the homeowner. This is all you need to say — avoid revealing that you are an investor. The representative will usually want basic information about the property, the homeowner and the proposed deal. He or she will also want to know the value of the property and the financial situation of the homeowner (borrower).

Aside from making the initial introduction, the goal of this conversation should be to request a short sales or workout packet. This packet will provide you with everything you need — instructions, forms and procedures — to close a successful short sales deal.


Broker’s Price Opinion (BPO)

Lenders generally hire local real estate brokers or appraisers to evaluate properties in the foreclosure process prior to selling them at public auction. These are referred to as a Broker’s Price Opinion (BPO).

Essentially, a Realtor® — based on the condition of the home and current market conditions — provides the lender with an estimate for the value of the property. The BPO is the key piece of information that a lender will rely on to make a decision regarding a short sale.

The lower the estimate, the better it is for you.

Lenders want to get rid of distressed properties as soon as possible, but they aren’t going to sell them for ridiculously low prices Many short sales, in fact, fall through if the BPOs come in too high. When properties are in good condition, it is hard to convince lenders that they are worth much less than the appraised values.


Hardship letter

Most lenders will request a hardship letter that details the reasons a homeowner has not made his or her mortgage payments. This is a bit strange because the borrower who is in default must prove that he or she is broke and unable to afford the payments.

This is a fairly extensive request, which may require the homeowner to submit pay stubs, tax records and other personal financial records, along with the letter. It is essential that you submit everything that is requested.

Otherwise, your offer will not be accepted.

Creating an effective and compelling hardship letter requires creativity. Without lying, the letter should paint a very bleak picture of the situation. If neither you nor the homeowner possesses decent writing skills, it may be in your collective best interests to seek the assistance of a professional — it’s worth it.


HUD-1 settlement statement

A lender will generally require a written contract between you and the homeowner. A preliminary HUD-1 settlement statement will reassure the lender that the homeowner isn’t receiving any cash from the deal.

The HUD-1 form requires you to itemize all charges imposed upon you and the homeowner for the real estate transaction. Essentially, it is a complete list of the incoming and outgoing funds.

The contract should be written so that you pay all costs associated with the deal. And, that the “net cash” to the homeowner is the precise amount of the short pay to the lender.

If you have difficulty completing the form, a title or escrow company may help you prepare it in advance of the closing.


Supporting materials
A lender will often agree to a bigger discount if a property requires significant repairs. The more work that needs to be put into the property, the less it is worth and the harder it is to sell on the open market.

Hire a professional(s) to appraise the home and provide you with a bid for repair estimate (the higher the better). This is not a requirement because as mentioned above, the lender will get its own BPO. However, providing independent appraisals and comparable sales information that support your offer are critical.

There are other things you can also do if the home is not in ready-to-move-in condition.

Always remember, it is in your best interests to submit with your paperwork as much negative information about the property as possible. For example, newspaper clippings that discuss “bad news” nearby or in the neighborhood can help reduce the price of the property in negotiations.


Waiting for an answer

It usually takes about three to six weeks to receive an answer from the lender once you have submitted the HUD-1 settlement statement and all of the other supporting materials.

It’s always good to call the lender to ensure that he or she has received the information, as well as make it clear that you are always available to answer questions and provide additional information, especially if something is missing.

If the auction date for the property is approaching, ask the lender to extend it until he or she has had time to consider your offer. If your offer is legitimate, the lender will almost always grant your request.

Learn how to Flip and Rehab

Learn how to Flip and Rehab from Armando Montelongo from the hit A&E show , Flip This House.

Internet millionaire Armando Montelongo of armandomontelongo.comlaunched a new site called Armando Montelongo.com.

This site is catered to one market,entrepreneurial people and business opportunity seekers.
"The site is there for all types of people who want tomeet with other who have some of the same business interests. It caters to any type of opportunity, investment clubs, franchises, Network opportunities, Day traders, you name it and the site caters to it.

With so many filters on the internet, even legitimate subscriberemail is getting blocked, which unfortunately rendering newsletters somewhat ineffective leaving opportunity seekersno valid or cost effective way to find or communicate with each other.

ArmandoMontelongo.com is very different in that it allows people to communicate in real time audio and video conferencingin a secure environment.

People can join free knowing that others on the site will enjoyhearing about their opportunities.
You can visit the site at http://thenoteservice.armandomontelongo.com

Sub Prime Lending

Subprime Lending

Typically, subprime loans are for persons with blemished or limited credit histories. The loans carry a higher rate of interest than prime loans to compensate for increased credit risk.
Many have questioned why minorities appear to be over-represented in the subprime lending market. Studies reveal that even in upper-income African-American neighborhoods one is one-and-a-half times as likely to have a subprime loan than persons in low-income white neighborhoods. In neighborhoods where Hispanics comprise at least 80 percent of the population, they were 1.5 times as likely than the nation as a whole to have a subprime mortgage loan.

Some allege this disparity to be attributed to subprime lenders purposefully marketing to African-American communities-what some have called reverse redlining. They allege lenders will provide loans to these communities, but at a higher cost and with less favorable conditions.

Some facts about subprime lenders:

• Home refinance loans account for higher shares of subprime lenders' total origination than prime lenders' originations
• Subprime lenders originate a larger percentage of their total originations in predominately black census tracts than prime lenders
• Subprime lenders are more likely to have terms like "consumer," "finance," and "acceptance" in their lender names

Proponents of subprime lending

Individuals who have experienced severe financial troubles are often labelled as higher risk and therefore cannot obtain conventional financing. These individuals may have had job loss, previous debt or marital problems, or unexpected medical issues. Often, these events were unforeseen and cause a major setback in finances. As a result, late payments, charge-offs, repossessions and even foreclosures may result.

Due to these previous credit problems, these individuals may be precluded from obtaining any type of loan for an automobile. To meet this demand, lenders have seen that a tiered pricing arrangement, one which allows these individuals to pay a higher interest rate, may allow loans which otherwise may not occur.

From a servicing standpoint, these loans have higher collection defaults and experience higher repossessions and charge offs. Lenders use the higher interest rate to offset these anticipated higher costs.

Provided a consumer will enter into this arrangement with the understanding that they are higher risk, and must make diligent efforts to pay, these loans do indeed serve those who would otherwise be underserved. The consumer must purchase an automobile which is well within their means, and carries a payment well within their budget.

Criticisms of subprime lending

Capital markets operate on the basic premise of risk versus reward. Investors taking a risk on stocks expect a higher rate of return than do investors in risk-free Treasury Bills, which are backed by the full faith and credit of the United States. The same goes for loans. Less creditworthy subprime borrowers represent a riskier investment, so lenders will charge them a higher interest rate than they would charge a prime borrower for the same loan.
To avoid the initial hit of higher mortgage payments, most subprime borrowers take out Adjustable-rate mortgages that give them a very low initial interest rate of around 4%. But with annual adjustments of 2% or more per year, these loans typically end up charging around 10%. So a $500,000 loan at a 4% interest rate for 30 years equates to a payment of about $2,400 a month. But the same loan at 10% for 27 years (after the adjustable period ends) equates to a payment of $4,470. A 6-percentage-point increase in the rate caused slightly more than an 85% increase in the payment.

RealtyTrac publishes the largest and most comprehensive national database of foreclosure and bank-owned properties

RealtyTrac publishes the largest and most comprehensive national database of foreclosure and bank-owned properties, with over 1 million properties from nearly 2,500 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate and The Wall Street Journal’s Real Estate Journal.




“Foreclosure activity subsided somewhat in June after hitting a 30-month high in May,” said James J. Saccacio, chief executive officer of RealtyTrac. “And the drop in activity was fairly broad, with 33 states reporting month-over-month decreases. Still, the foreclosure rates in most states remained substantially above last year’s levels.”

Foreclosure Filings Still Up 87 Percent From June 2006

Foreclosure Filings Still Up 87 Percent From June 2006


A total of 164,644 foreclosure filings - default notices, auction sale notices and bank repossessions - were reported in June, down 7 percent from the previous month but still up 87 percent from June 2006. The national foreclosure rate for June was one foreclosure filing for every 704 U.S. households. "Foreclosure activity subsided somewhat in June after hitting a 30-month high in May," said James J. Saccacio, chief executive officer of RealtyTrac. "And the drop in activity was fairly broad, with 33 states reporting month-over-month decreases. Still, the foreclosure rates in most states remained substantially above last year's levels."

Your Options Against Foreclosure

Foreclosure may occur. This is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued. If that happens, you not only lose your home, you also would owe HUD an additional amount.

Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if possible.

Q: What Should I Do?
DO NOT IGNORE THE LETTERS FROM YOUR LENDER. If you are having problems making your payments, call or write to your lender's Loss Mitigation Department without delay. Explain your situation. Be prepared to provide them with financial information, such as your monthly income and expenses. Without this information, they may not be able to help.
Stay in your home for now. You may not qualify for assistance if you abandon your property.
Contact a HUD-approved housing counseling agency. Call (800) 569-4287 or TDD (800) 877-8339 for the housing counseling agency nearest you. These agencies are valuable resources. They frequently have information on services and programs offered by Government agencies as well as private and community organizations that could help you. The housing counseling agency may also offer credit counseling. These services are usually free of charge.
Q: What Are My Alternatives?
You may be considered for the following:

Special Forbearance. Your lender may be able to arrange a repayment plan based on your financial situation and may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you have recently experienced a reduction in income or an increase in living expenses. You must furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.

Mortgage Modification. You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem and can afford the new payment amount.

Partial Claim. Your lender may be able to work with you to obtain a one-time payment from the FHA-Insurance fund to bring your mortgage current.

You may qualify if:
your loan is at least 4 months delinquent but no more than 12 months delinquent;
you are able to begin making full mortgage payments.

When your lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay your lender the amount necessary to bring your mortgage current. You must execute a Promissory Note, and a Lien will be placed on your property until the Promissory Note is paid in full.

The Promissory Note is interest-free and is due when you pay off the first mortgage or when you sell the property.

Pre-foreclosure sale. This will allow you to avoid foreclosure by selling your property for an amount less than the amount necessary to pay off your mortgage loan.

You may qualify if:
the loan is at least 2 months delinquent;
you are able to sell your house within 3 to 5 months; and
a new appraisal (that your lender will obtain) shows that the value of your home meets HUD program guidelines.

Deed-in-lieu of foreclosure. As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but it is not as damaging to your credit rating as a foreclosure.

You may qualify if:
you are in default and don't qualify for any of the other options;
your attempts at selling the house before foreclosure were unsuccessful; and
you don't have another FHA mortgage in default.

For More Info, check out The Note Service

Understanding Foreclosure - Foreclosure Scams

Bankruptcy foreclosure fraud is a growing problem that threatens the integrity of
the bankruptcy system as it takes advantage of families in distress. The United
States Trustee Program is working hard to identify bankruptcy foreclosure scams
around the country and to take appropriate action through criminal referrals and
civil suits. Be especially alert to the following:

> Equity skimming: In this type of scam, a "buyer" approaches you, offering to
get you out of financial trouble by promising to pay off your mortgage or give you a
sum of money when the property is sold. The "buyer" may suggest that you move
out quickly and deed the property to him or her. The "buyer" then collects rent for a
time, does not make any mortgage payments, and allows the lender to foreclose.
Remember, signing over your deed to someone else does not necessarily relieve
you of your obligation on your loan.

> Phony counseling agencies: Some groups calling themselves "counseling
agencies" may approach you and offer to perform certain services for a fee. These
could well be services you could do for yourself for free, such as negotiating a new
payment plan with your lender, or pursuing a pre-foreclosure sale.

> Probably the most widespread foreclosure scam involves the use of
foreclosure notices to identify individuals facing the loss of their homes. The scam
perpetrator contacts the home owner, advertising "mortgage assistance" or
"foreclosure counseling" and promising to work out the home owner's problems
with the mortgagee or to obtain refinancing for an up-front fee typically ranging
from $250 to $850. The perpetrator may direct the home owner to "fill out some
forms," including a blank bankruptcy petition. The perpetrator subsequently files a
bankruptcy petition in the home owner's name. The bankruptcy petition invokes the
automatic stay, the imminent foreclosure is postponed, and the home owner stops
receiving collection calls and letters.


In most cases, the perpetrator does not tell the home owner about the
bankruptcy petition, instead convincing the home owner that foreclosure activity
has ceased because mortgage problems have been worked out. The perpetrator
may tell the home owner that he or she might receive a notice from the court, which
should be ignored. The home owner may even be told that the perpetrator has gone
to court on the home owner's behalf. No one appears at the Section 341 meeting,
the case is dismissed, the foreclosure goes forward, and the home is lost.
The United States Trustee Program welcomes information that will help detect
bankruptcy foreclosure scams, and is indebted to those trustees, judges,
clerks, secured lenders, bankruptcy attorneys, and private citizens who
report suspicious fact patterns. They coordinate with all participants in
the bankruptcy system to eradicate this destructive form of fraud. You
can find information online about the United States Trustee Program at
http://www.usdoj.gov/ust. For Your Information Foreclosure Scams
For - Understanding Foreclosure -
Sources: Federal Citizen Information Center, HUD, VBA, USDOJ
You'll appreciate the difference!
Fidelity
National
Title
Insurance

Commercial Real Estate Futures

The Chicago Board of Trade, the No. 2 U.S. futures mart, said on Monday it will launch commercial real estate futures on Feb. 21.

The new contract, based on the Dow Jones U.S. Real Estate Index, will allow market participants to bet on changes in the real estate sector of the stock market and manage commercial real estate exposure, the CBOT said.

The futures will reflect the value of the index, which is comprised mainly of real estate investment trusts, securities that track the underlying commercial real estate market.

Contracts will be cash-settled and trade on CBOT's electronic platform. The exchange plans a market maker program to create liquidity in the new product.


CBOT should get its product to market before the Chicago Mercantile Exchange, the largest U.S. futures exchanges, launches a related product.

CME said in September it was teaming with Global Real Analytics to launch commercial real estate futures and options based on a series of GRA indexes — national and regional, and for four separate property types. A launch is still expected in the first quarter.

CME already trades a suite of housing derivatives based on the S&P/Case-Shiller home price indices.

Loan Broker

Loan Broker

The Loan Broker Program
Yes -- Now you can arrange residential loans and commercial loans without a license and without experience!

THE NUMBER ONE FINANCING REQUEST IN EVERY STATE!
AT LAST! An easy-to-follow, step-by-step program that will teach you how to prepare Fannie Mae loan packages. A Fannie Mae loan package is the standard mortgage loan application package used by lenders throughout the country today. These lending institutions sell their mortgages to the Federal National Mortgage Association, better known as the Secondary Market, who then sell their mortgage-backed securities on Wall Street. Our training manual will take you step-by-step through the entire underwriting guidelines in preparing Fannie Mae loan packages. Each and every form will be specifically outlined and described with easy-to-follow instructions. YOU WILL LEARN HOW TO PROCESS LOAN REQUESTS THAT ARE IN THE GREATEST DEMAND IN EVERY STATE TODAY! AND NOW YOU CAN DO IT WITH NO LICENSE AND NO EXPERIENCE.

A LOAN BROKER can easily earn $100K/year. Be your own boss or our associate. Free consultation. Earn more in one month than some earn in one year... We'll show you proof of income. NO EXPERIENCE NEEDED. Wes-State Mortgage, Inc. - SINCE 1976

YOU WILL BE A REALTOR'S DREAM COME TRUE!
Are you aware of how many houses are sold each month in your city? If you contact your local real estate multiple listing service, you will be astonished to find out how many houses are sold in your city each and every month. Two or three hundred houses for a city of 100,000 population is average. The realtors who sell these houses must help arrange financing for their clients in order to have their sales closed. Can you imagine what an asset you would be to realtors for their sales? Only a few realtors referring their sales to you can mean 10, 20 or 30 clients per month, which in turn CAN MEAN $2,000, $4,000 OR $8,000 PER MONTH EARNED AS A RESIDENTIAL LOAN BROKER. Some residential loan brokers today are processing $1,000,000 in loans per month and at only 1% loan fee, the earnings would be $10,000 per month. You can earn from 1% to 3% of the total loan amount of each deal closed.
THAT'S ONLY THE BEGINNING OF THE HUGE FEES THAT CAN BE EARNED WITH THIS PROGRAM!!
START WITH MINIMUM INVESTMENT!
Our program is designed to operate with a MINIMAL OUT-OF-POCKET EXPENSE AND INVESTMENT TIME. In fact, all you really need to get started immediately is a telephone, an address, and our complete program which includes easy-to-follow, step-by-step instructions and camera-ready forms that you can use to reproduce. An example of each form is completely filled out and explained in detail so that you can fully understand each and every part of it.
REAL ESTATE - THE AMERICAN DREAM!
Owning a home has been a dream and major goal for every American family and residential loan requests are in bigger demand today than ever before. THERE HAS NEVER BEEN A BETTER TIME TO ARRANGE REAL ESTATE LOANS THAN TODAY! Since interest rates are lower than they have been in a long time, more homes are being sold and more residential starts in new housing construction is evident throughout the country. Realtors, builders, developers, buyers, and sellers will ALL be needing your service. A GREAT DEAL OF MONEY IS WAITING TO BE MADE BY SOMEONE LIKE YOU. The Residential Loan Broker Program can mean enormous profits and a huge success for you. You can get in on the ground floor of this high income opportunity now.
WHAT KIND OF FINANCING CAN YOU ARRANGE WITH THIS PROGRAM?
first and second mortgages
15 or 30 year fixed rate loans
up to 95% loan-to-value financing
adjustable rate mortgages
refinancing existing homes
condominiums
one to four family homes
residential: owner occupied
residential: non-owner occupied rental properties
loans for the purchase of foreclosed properties
You will learn how to prequalify loan requests in only a few short minutes. Our program will teach you the basic formula used by Fannie Mae underwriting lenders. ...And, are you a homeowner and need financing, or are you in the market of purchasing one to four family homes? You will be able to arrange your own financing and save!
Mortgage rates are lower today than they have been in a long time. All of the homes that have been built and/or purchased are financed at a higher rate than you can obtain today. Even at two percent interest savings on a $75,000 mortgage can mean savings of as much as $125 per month on mortgage payments. That is approximately a $45,000 savings over the life of a 30-year fully amortized mortgage. This simply means that millions of homeowners are just waiting to refinance their homes so that they can enjoy the savings on their mortgage payments.
OUR PROGRAM INCLUDESNO LICENSE, NO EXPERIENCE ANDMULTI-STATE FUNDING CAPABILITIES!
Our complete easy-to-follow, step-by-step instruction manual includes absolutely everything needed to get started immediately.
1). Glossary -- Terms and abbreviations most commonly used in real estate.2). General overview of The Residential Loan Broker Program.3). Setting up your office -- can be done at home.4). Choosing a business name.5). Registering your new business.6). Code of ethics.7). Stationery and business cards.8). All forms needed to submit a residential loan request.
A). Residential Loan ApplicationB). Request For Verification of EmploymentC). Request For Verification of DepositD). Loan Processing ChecklistE). Lender Guideline SheetF). Schedule of Real Estate OwnedG). Fee AgreementH). Credit Report AuthorizationI). Loan Submission Form
9). Residential loan organization guide.
A). Loan-to-value ratiosB). Prequalifying clientsC). Conforming loan amountsD). Usable income and verificationE). Qualifying ratiosF). Amortization chartG). Calculating PITI payments
10). How to determine the amount of loan a client qualifies for.11). Private mortgage insurance.12). Samples and detailed explanations for completion of forms.13). How to find borrowers.
A). Newspaper advertisingB). Word-of-mouthC). RealtorsD). Direct letters
14). How to find lenders.
A). Our Residential Lender Directory lists the major lenders that fund the following type of loans: confirming, non confirming, credit problem, home equity, high LTV, and more.B). Lending sources in your communityC). Direct letters
15). Processing a loan request.
A). MarketingB). Documentation needed for a loan submission
16). How much can you charge?17). Loan closings.18). Lien instruments.
A). What is a mortgageB). What is a trust deedC). Difference between the two
We are proud to include the following testimonialsfrom people who have registered with our program.
"I can't say enough about how much I like your program. It is easy to understand!" -- G.J., Little Rock, Arkansas
"I would like to take this opportunity to thank you for sharing your knowledge and resources of the mortgage business with me. It is because of people like you that make America what it is today." -- M.M., Rapid City, South Dakota
"I must tell you this, I have seen a lot of written training materials and I have been involved in preparing similar material myself, and your brokerage package is excellent. I am truly impressed!" -- W.M., Westville, Indiana
ARE YOU SINCERE IN IMPROVING YOUR FINANCIAL POSITION? Whether you are after $2,000.00 per month part-time, or $5,000.00 - $8,000.00 and up per month full-time, THIS UNIQUE EXCITING BUSINESS OPPORTUNITY CAN CHANGE YOUR LIFE! Residential loans are the number one loan requests in the United States today! Here is your chance to grab your share of the HUGE PROFITS AVAILABLE in this BIG DEMAND broker business. Take advantage of our professionally compiled program today!

http://www.thenoteservice.com

Home Business Opportunities

Working from home is the ultimate experience. There are many different fields and choices to choose from. Travel to real estate, online stores to ebay, and the list goes on. When deciding on this profession, one must choose a pay scale and a working time frame. A budget is also a good idea. Advertising is a key component. There are big hitters and there are nickel and dime run of the mill work from home opportunities that will give you slow but enough income. For more info, check out http://www.thenoteservice.com/home-business-opportunities.html for some great starting points.