Short Sale Chicago

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The KMC Blog, 12/05/2011

The Proper Short Sale Application

We are again honored to have Christopher Reale, Director of Short Sale Operations at Lepizzera and Laprocina Title and Escrow Services, as today’s guest blogger. He is an expert on the short sale process and will share his knowledge with us on a regular basis. – The KCM Crew

In any business, whether it be real estate or other, in order to be successful one must have a systematic approach to their craft. This holds true when putting a short sale transaction together. During our 5 year tenure negotiating short sales, we have found that some Real Estate professionals lack such an approach.

I learned early in my mortgage career that if I submitted a lackluster credit file to my underwriting department I would receive lackluster results. These results included denied files, upset underwriters and a processing department that wanted to throw the file back on my desk faster than I wanted it submitted.  I quickly remedied the situation after a conversation with a very good friend who is a million dollar producer in the financial services industry. He shared with me his systematic approach when handling his clients. He did not sway from this system. He applied the approach to every client that he spoke to. He did the work up front, asking every detailed question imaginable on his fact finding sheet. He left no stone unturned. Though sometimes monotonous in nature, this systematic approach allowed him to implement a solid financial plan for his clients and provide the bridge to a solid financial future.

I quickly adopted a similar approach with my clients. I was able to come up with a systematic approach to my origination method that was both trackable and attainable. I left no stone unturned when speaking to my clients. I made sure I over documented the credit file and provided a complete and accurate credit profile to my underwriting department for every client I had the pleasure of writing a loan for. The results were amazing. I was pushing files through underwriting with transaction speeds never seen before and I was making allies doing so. When the processing and underwriting departments received a file from me, they knew it would only have to be touched one time and a conditional approval would be granted. They actually wanted to receive files from me rather than wanting to throw them back on my desk.  Success!

I share this information because the short sale application process is very similar to the loan origination process.

However, if you take a shot gun approach rather than a targeted systematic approach to the process, you will set yourself up for failure.  Below are the documents one must attain to make sure the short selling bank does not throw the file back on your desk when submitting the file for short sale approval:

Financial Information

  • Tax information
    • Two most recent 1040′s
    • Two most recent W2′s
  • 60 days of current bank statements
  • 30 days of current pay stubs or commission check stubs
  • If self employed-pay stubs or YTD profit and loss statement
  • Monthly budget/financial statement signed and dated same day as P&S

Hardship information

  • Hardship letter dated signed same day as purchase contract
  • Any docs supporting the actual hardship
  • Medical bills
  • Child support or alimony payment information. Divorce decree or child support order

Mortgage & Other Relevant Property Information

  • 1st Mortgage statement
  • 2nd Mortgage statement if applicable
  • Recent Real Estate tax bills
  • Recent condo association bills if applicable
  • Any recent water or sewer bills

Other Pertinent Documentation

  • Authorization form
  • Short sale disclosure
  • Waiver of conflict if representing the buyer
  • 3 recent comps
  • Listing agreement
  • Offer/P&S
  • Listing history
  • Buyer proof of funds letter or Pre Approval letter

It is important to understand that the above documents are required for almost every short selling bank. There are also bank specific forms that, in most cases, must accompany the above. You may contact your negotiator or the bank directly to obtain the bank specific documents. However, if you make an attempt to structure a document checklist with the above documents and systematically approach every short sale file with the idea of fulfilling that checklist, you will soon see that the short sale process will be one which will prove to be lucrative. The end result will be a happy buyer, seller, production team and, of course, bank negotiator. After all, a systematic approach to the short sale process will alleviate the negotiator throwing the file back on your desk for deficient information. In fact, they will be eagerly awaiting the next file with your name on it!

Christopher Reale

About The Author
Christopher Reale is the Director of Short Sale Operations at Lepizzera and Laprocina Title and Escrow Services. He has over a decade of experience in the mortgage industry. Lepizzera and Laprocina has negotiated over 1000 successful short sales and has currently over 400 short sales being negotiated.

December 5, 2011 Posted by | Uncategorized | 1 Comment


Road Map to a Housing Rebound

U.S.News & World Report LPBy Meg Handley | US News – Fri, Dec 2, 2011 10:38 AM EST

If you’re a homeowner these days–and almost two thirds of Americans are–the housing market generally doesn’t fall into the realm of pleasant dinner conversation.

The once-booming industry has been bruised and bloodied from nearly every angle: Home prices have plunged 30 percent nationally over the past five years, millions of Americans have lost their homes to foreclosure, and millions more are on the brink with underwater mortgages. Still others are seriously delinquent on their home loans.

Things are bad, maybe the worst they’ve ever been, but there’s likely to be more pain before there are any real gains for the housing market, experts say, primarily because of the giant inventory of homes on the market and the certainty more will be coming through the pipeline over the next few years.

Still, the U.S. economy is resilient. The recovery has absorbed a debt-ceiling fiasco at home, a near financial meltdown in Europe, and political chaos in the Middle East. The job market is also improving, consumers are spending more, and corporate balance sheets remain healthy, all of which are critical for the housing market to rebound.

[See a slide show of 6 ways to fix the housing market.]

The remaining puzzle piece is time and how much of it the housing market will need to recover. Here are some other hurdles the housing market needs to overcome before a rebound takes root:

Job growth/broader economic gains. After a bumpy several months, the employment outlook has started to improve, with the private sector adding more than 200,000 jobs in November, according to payroll firm ADP. That’s certainly good news, but we’re not out of the woods yet. The national unemployment rate is still sky high at 9 percent and the pace of job growth needs to double before it translates into the broader economic growth needed to bolster a housing recovery.

“The situation in the housing market is tightly bound with what’s happening in the broader economy,” says Stan Humphries, chief economist at Zillow. “A broader economic recovery is going to have to precede a recovery in housing. Really, job growth is so essential for housing demand.”

Particularly important is the unemployment rate among young Americans between 25 and 34 years old.

“These are the people that are forming households and buying their first homes,” says Jed Kolko, chief economist at Trulia. Due to the bad economy, more young Americans have been “doubling up,” moving in with friends or living at home to ride out lean times. That’s put the kibosh on demand, according to some, which is part of the reason why there’s still so much housing inventory to work through.

Clarity on foreclosure processes. A group of states has banded together to sue lenders and mortgage servicers over what they claim to be improper foreclosure practices. Awaiting rulings in those suits, lenders have held back on foreclosures, slowing the pace and increasing the backlog. The longer it takes to get clarity on how to proceed with foreclosures, the longer it will take to clear that inventory and the longer it will take for housing prices and the broader housing market to recover.

[Pending Home Sales Surge.]

Faster foreclosure processes. Getting homes that are likely to be foreclosed upon or homes that already are in foreclosure to the market is key to exposing the nation’s shadow inventory, which has been keeping prices depressed around the country.

“The longer this goes on, the longer the foreclosure inventory will perpetuate and the longer we’ll be stuck in a rut,” says Anthony Sanders, professor of real estate finance at George Mason University.

The attorneys general investigation has slowed down the foreclosure process, lengthening the time it takes to get delinquent loans through the pipeline and on the market to be sold. But speeding up the foreclosure process is a double-edged sword. More foreclosures will further bloat the housing inventory, driving down prices even more.

But that’s to be expected, says Chris Flanagan, strategist at Bank of America. “The implications of what we’re seeing is that you have to have prices go down before they go up,” he says. “At a minimum, things need to make it through the pipeline. Having it sit there is a dead weight on the economy and it ultimately creates more downside potential because of the backlog.”

Reduced inventory. Next on the to-do list is to clear out the massive housing inventory the United States has. Especially with the influx of homes likely to come on to the market when foreclosure processes finally get ironed out, we’re going to have a lot of stock to deal with. But reducing the supply of homes should help boost prices in the long run, and price appreciation is good for the housing market.

“There really has to be a way to clear the excess inventory out there,” Sanders says. “[Banks and servicers] know how to do it. It’s called lower the price. The problem is they don’t want to lower the price too much because they’re very nervous about taking huge losses.” Huge losses sometimes leave the taxpayer on the hook, making the entire issue intensely political, Sanders adds.

[Huntsman: Shut Down Fannie and Freddie.]

Other experts say the government has a different role, a role facilitating financing for government- and bank-owned properties. The Federal Housing Finance Agency has thrown around a couple of proposals for dealing with these assets, but nothing has been finalized.

“It would help a lot to have some government-sponsored financing of these [properties],” Flanagan says. “It would help them in the end if they allowed more investors to come in.”

Converting foreclosures into sales would help stabilize neighborhoods and home values, Flanagan adds, and, in some cases, improve the availability of rental homes, a sector of the market that has seen an uptick in demand as the foreclosure crisis hit.

Increasing rents. The completion of the cycle comes when rent increases to a point where it’s more attractive to buy a home than to continue renting. With affordability at record levels, when the jobs market recovers and the economy finds its footing, more renters should turn into homeowners, which will reduce the supply of homes and help stabilize prices.

Huntsman: Shut Down Fannie and Freddie.

Pending Home Sales Surge.

See a slide show of 6 ways to fix the housing market.

December 5, 2011 Posted by | Uncategorized | Leave a comment


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