My Short Sale Club

Short Sale Package Basics

Tue, 01 Jul 2008 17:18:28 -0500

What is a short sale? It is a transaction where a mortgage company agrees to accept a payoff on a property that is less than the actual amount owed.

What are the typical components of a short sale package?

Authorization to Release Information – This document is signed by the homeowner and authorizes the investor/Realtor to speak with the mortgage company on behalf of the homeowner. It is the first document you need in order to get the process moving.

Hardship Letter – This is a letter composed by the homeowner that explains to the mortgage company the circumstances that have led to the missed mortgage payments. The homeowner needs to make it clear that there is no hope of curing the default and a short sale is the only option. It is best if this letter is hand written, but a typed letter is fine. The letter should be at least one page long and be emotionally moving

Hardship Proof – These are documents that support the hardship letter explanation. For instance; a repossession slip, a layoff pink slip, doctor bills, death certificate, divorce papers, bankruptcy papers, police report, etc…

Financial Statement – This is a one-page document that states the monthly income and expenses of the homeowner. This includes food, utilities, clothing, car, phone, etc…

Bank Statements – Most mortgage companies will require the last two months bank statements for both checking and savings. They are interested in verifying the deposits and withdrawals against the financial statement.

Pay Stubs – Most mortgage companies will require the last 2-3 pay stubs to verify income. If the homeowner is unemployed, include a single signed document stating such and that pay stubs do not exist.

Tax Returns – The last two years federal tax returns are always required. They do not need the entire tax return, just the first two pages. If tax returns were not filed, include a single signed document stating such.

List of Repairs – Let the mortgage company know what costs would be incurred to bring the property up to market value. An automated rehab costing tool can help provide professional estimates and you don’t have to rely on a contractor to do all your estimates.

Listing Agreement – Mortgage companies always request a listing agreement; if you’re a real estate agent doing the short sale for the commission, this is no problem. However if you’re an investor, it would be better if the property wasn’t listed in order to maintain profit margins. You'll need to convince the bank that a listing agreement is not needed since a purchase agreement is already in place you’ll be further ahead.

Purchase Agreement – Have the homeowner sign blank purchase agreements so you can negotiate quickly and resubmit new purchase agreements immediately. A signed blank agreement means you’ll only need to change the offer amount and date before resubmission.

Net Sheet – The Net Sheet itemizes all closing cost and provides a bottom line number the mortgage company would receive at closing. Mortgage companies will request a Net Sheet or HUD-1. Over 99% of the time a Net Sheet is easier to create will be accepted even if they demand a HUD-1. A HUD-1 will be provided just prior to closing and will be prepared by the Title Company or Real Estate Attorney.

These are the most typical documents in a short sale package, however there are others such as Economic Information, CMAs, Police Reports, Code Violations, etc… that can really help support your low offer.

Foreclosure Prevention for Homeowners

Sat, 19 Apr 2008 12:58:07 -0500

Homeowners Assistance Association (HHA) is a Non-Profit organization that helps homeowners avoid foreclosure. Their staff of professional mitigators will negotiate with mortgage companies to workout various solutions that allow homeowners to keep their homes.

HAA is one of the largest and most powerful Foreclosure Mitigation firms in the United States. They have affected hundreds of resolutions on the best possible terms for the homeowner! They’ve successfully dealt with some of the most extreme situations. Don't think your situation is beyond repair!

HAA does NOT recommend that our clients use Bankruptcy protection to settle matters (85% of all bankruptcies fail). They do NOT buy homes, they do NOT refinance loans and they do NOT offer dangerous lease-back contracts to their clients!

Request a FREE CONSULTATION and have HAA's expert staff can provide you with:

Answers to the questions you may have, including an explanation of the programs available to help you prevent foreclosure and get back on track.
HAA can also provide you with proven techniques that may help you increase your income and improve your financial situation, to help you qualify for the assistance you may need to help prevent foreclosure and keep your home.
And once the Foreclosure Prevention Resolution process has been completed, HAA can help you with refinancing and restructuring your debt.

HAA keeps you updated on the progress of your case.
Their dedicated staff and website continually updates all clients throughout the entire Foreclosure Prevention process.

Mortgage Hardship Letter - Sample #3

Sun, 13 Apr 2008 19:54:57 -0500

February 8, 2004

ABC Mortgage, Inc

San Diego, California

Attn: Loss Mitigation
Re: Loan # 123456789

Dear Loss Mitigation Representative,

I have fallen behind on all my bills because I was in an auto accident last year. I have been in rehab for the last 3 months and have not been unable to return to work. My doctors said that it’s unlikely that I’ll be able to go back to work and I’ll be filing for disability. My wife was unable to cope with my condition and the lack of money and all the associated stress and she decided to leave me two weeks ago. I’m by myself without money or help.

Mortgage Hardship Letter - Sample #2

Wed, 02 Apr 2008 09:38:17 -0500

July 2, 2006

Big Mortgage Company
P.O. Box 123-0102
Dallas, TX.

Acct: #8897261109

Dear Sir,

I am writing this letter to request consideration for a compromise offer for the sale of our home at the above address. I am active duty with new orders transferring me to Cumberland, MD as of August, 2006. Because of the current depressed market in California, our home is worth less than the loan balance of $183,000.00 (approx.) We have received a fair market value offer of $169,125.00. This is the only offer we have had since our home was placed on the market. With closing costs and realty fees, we will be about $28,000.00 short at closing.

Redemption Period Short Sales

Thu, 20 Mar 2008 18:28:33 -0500

Do you know what what a "Redemption Period" is?

Following a foreclosure sale, some states allow the homeowner one final chance to keep their home by giving them more time to completely payoff the mortgages on the property. Some states allow and additional 75 days after the sheriff sale while other states allow up to 12 additional months.

If you're an investor, this is a very important information for you to know about your state.

Let's face it, if a homeowner wasn't able to reinstate the loan (bring all payments current) before the sheriff sale, it's highly unlikely they will be able to pay the full loan amount during the redemption period. Therefore, most families decide to just stay in the house payment-free for the entire redemption period.

For the bank, it's bad enough that they haven't been paid for the past 6-8 months during the foreclosure process, now they won't get paid during a lengthly redemption period. And when the back finally does take possession of the property they need to make repairs, list the property and wait another period of time hoping it will sell.

Because of this, many banks will consider a short sale on properties after the sheriff sale and during the redemption period. If you are working on a deal in a redemption period state you can possibly work on properties even when homeowners contact you after the sheriff sale has already happened.

Furthermore, if you're working on a deal where the sheriff sale is close at hand and you need time to get a short sale package together, make sure the bank knows you're in a redemption period state. In many cases, the bank will permit you to move forward with the short sale.

Make sure as you build your case in your short sale package cover letter, you clearly document the losses the bank will incur during the redemption and resale periods. These cost are usually substantial and have a dramatic effect on the net amount the bank can expect to receive. Use this fact to you advantage as you negotiate you best deal.

Here's a few long Redemption Period States:

AL - 12 mo.
ME - 12 mo.
ID   -    6 mo.
IL    -    6 mo.
IA -    6 mo.
KS -    6 mo.
MI   -    6 mo.
MN -   6 mo.
ND -   6 mo.
UT -   6 mo.
VT -   6 mo.

Mortgage Hardship Letter - Sample #1

Fri, 07 Mar 2008 09:54:33 -0500

April 5, 2004

Big Mortgage Company
P.O. Box 99100
Houston, TX

Re: Loan #4728432 and #4742507

Dear Representative,

I am writing this letter to explain what has happened in our lives that has brought us to this point. As you know, our accounts #4728432 and #4742507, for the property located at 133 Maple Bark Dr., Gaines, MI are far past due.

Free Short Sale Offer Calculator

Mon, 03 Mar 2008 15:53:14 -0500

Check out the My Short Sale Club.com Free Short Sale Offer Calculator.

This simple calculator is an easy tool you can use to help you determine your short sale offers to the bank. Of course, not every investor will agree with the numbers produced by this calculator, that’s because every investor is different and have different risk tolerances. However, I think it's a good tool to begin the offer calculation process.

Hardship Letters

Thu, 28 Feb 2008 10:35:04 -0500

Every Short Sale package requires a Hardship letter created by the homeowner. This is a letter that explains to the mortgage company the circumstances (hardships) the homeowner has experienced that have caused the current default. This letter can be handwritten or typed and should be at least one page in length. The letter should be heart-felt and should state clearly that the homeowner needs to sell the property.

Hardship reasons may include the following:

Divorce
Severe Indebtedness
Unemployment
Death
Illness
Medical Expense
Forced Relocation
Loss of Income
Economy
Military Service
Neighborhood Problems
Inability to Rent
Inability to Sell

If a homeowner provides you with a letter that is difficult to read, I'd suggest that you type it up and submit both the hand written and typed letter. This will make it easier for the Loss Mitigation Representative to review the package.

How To Do A Short Sale - (from work)

Mon, 18 Feb 2008 10:50:13 -0500

    Are you ready to make $10,000 -$20,000 on a short sale deal and actually do it from your current work place with absolutely no risk?

    That's exactly what I did over 5 years ago when I first started in the Short Sale game. It was so easy, I couldn't believe more people weren't doing this. I had just returned home from my first short sale training class where I paid $600 to learn the step-by-step short sale process and I began to take action.

    I followed the marketing techniques I had been taught and within a few days I had my first short sale lead. The homeowner was facing foreclosure on a house valued at $80,000. I continued to follow the plan and met with the homeowner in order to gather all the necessary documentation. Once I had all the paperwork all I really needed to do was make phone calls and send faxes. This is easy, anyone can do that. I could even do this from work during my breaks and lunch. And that's exactly what I did!

    Now I understood that the process can take time, but it was only a few minutes every few days making a phone call during my break. So even if it took two or three months to negotiate a deal, I could easily do it while I kept my full-time job. I continued to follow the short sale process I was taught and within two moths that bank had agreed to accept $21,000 as payment in full. I was SHOCKED! This was just my first short sale and I negotiated this great discount. I continued to follow the training and arranged for a closing and found a rehab buyer.

    My buyer was very excited to buy this house from me for $36,000. He was getting a great deal and I was too. I went to closing and had my title company conduct a double-closing. I was actually able to use my buyers cash to close my short sale deal and the just minutes later sell the property to my rehab buyer. I made $15,000 on my very first short sale by making phone calls and sending faxes from work and didn't need any of my own money. An extra fifteen grand in just 3 months, that's an extra $60,000 per year. Heck, just imagine if I were doing short sale 40 hours a week and working on more than just one deal.

     I have been training investors how to do exactly what I did 5 years ago. I recently put all this information on to MP3 audio files along with all the forms and scripts necessary to work on short sale deals anywhere in the country. I spent $600 for this information and made $15,000 three months later. Did you think that was a good investment? Absolutely! I've made hundreds of thousands more since from the same initial education, you can do the same, it's easy to do... you just need to know how.

    Get started today and allow me to teach you step-by-step for less than 1/4 of what I paid to get started.

Beach Living - The Short Sale Way

Fri, 15 Feb 2008 12:44:59 -0500

Well it's the middle of February and depending on where you live, cabin fever is running high. The snow, the cold, the continually gray sky, the salty roads, the ice... YUCK! I'm sure you're asking yourself, "Why do I live here?". I need a sandy beach, sunny skies, 80 degrees and a tropical drink - STAT.

The good news is that, as a short sale investor you could live on the beach every single day. You do realize you can do short sales on any house from any location in the country, right? Just to prove this, back in 2005 when I was still living in the frigid north, I decided to take a vacation in the Florida Keys and thaw out my soul. I took all my short sale files with me and made calls to Loss Mitigation while I was pool side. Sunglasses, coconut tanning oil, a cabana and short sale deals. That's the way you do it.

On the fourth day of my experiment I had a double closing on a short sale 1200 miles away where I was buying/selling the house for $500,000 after getting the bank to accept $396,000. All the closing documents were faxed to the resort and I signed everything at the pool and faxed everything back to the title company. Originals were sent back overnight mail. Without a hitch, I made $104,000 on a property in a different state while living on the beach.

Of course, I realized I didn't need to spend another minute in the gloomy, frigid and depressing cold. Now I work on short sales on properties all across the country and a majority of the are properties valued at over $1,000,000. Let's face it, it's just as much work to do an expensive house as it is to do a junker. But the expensive house has much more room for profit.

So, when are you going to get serious about Short Sales and start making some real money? Can you see yourself working from the beach or any other place of your choice? You can do it, you just need to take that first step. Get some training and then jump in with both feet (while keeping you day job) and do a short sale on a $100,000 junker. Make some money, build your confidence and eventually you can join me on the beach. I've got a nice little drink with an umbrella waiting for you.

Short Sale Getting Started Checklist

Sun, 03 Feb 2008 13:18:05 -0500

Educate yourself in the Foreclosure and Short Sale process
Get Business Cards that identify you as the Short Sale Expert
Join a local Real Estate Investment Clubs (REIA) and network
Visit MyShortSaleClub.com regularly
Establish a marketing budget you can stick to for at least 6 months
Create a marketing strategy - (Pre-foreclosure, Post-Bankruptcy, Letters, Signs, Referral,etc…)
Find a mentor or coach who can help you avoid mistakes and train you faster
Just dive in and start - You'll learn so much more by doing
As soon as you feel comfortable in your knowledge, find an opportunity to speak at a REIA club about Short Sales (This will help establish you as a local expert and begin to get many referrals from newer investors)
Be patient, persistent, and positive

Mortgage Refinancing - Short Sale Leads

Fri, 01 Feb 2008 18:14:12 -0500

Some of my friends are mortgage loan officers who get calls all the time from people trying to refinance their home. Obviously this is a very ordinary scenario, however an ever increasing number of these people are calling to refinance because they need to lower their mortgage payment and avoid foreclosure. With Adjustable Rate Mortgages adjusting upward every month, homeowners are not able to keep pace with the higher payments. Naturally, many individuals start shopping for a mortgage refinance option to a fixed rate 30-year mortgage.

Unfortunately, due to varying circumstances many homeowners will not be able to qualify for refinancing. This could be due to a drop in property value, current income, the ever changing mortgage underwriting guidelines or the most likely reason, the homeowner is already 2 or 3 payments behind on a house with very little or no equity.

Without a refinance option my loan officer friends refer my services to their lost client. They explain to the homeowner that I specialize in short sales and how a short sale might be a solution for them. This is a great option for the loan officer too, since he can still offer some help even if the mortgage refinance is rejected. These are great leads because they come by way of referral from a mortgage loan officer they already know and trust. The homeowners naturally call me for a consultation.

If you want great short sale leads, start making friends with mortgage loan officers or other individuals in the mortgage industry that can refer business your way on a very consistent basis.

A Good BPO is Critical

Fri, 18 Jan 2008 20:33:24 -0500

If the bank is going to accept your very low offer, then they need to believe that the house value is very low too. In the case of most short sales, the bank will order an interior BPO (Broker’s Price Opinion) or an appraisal to determine value. You need to push the bank for an interior BPO if they don’t do this voluntarily. Getting the bank to order a BPO should be your primary focus when starting a new short sale file.

Make sure the bank knows that YOU are the point of contact for scheduling the BPO or appraisal. This is CRITICAL!

Initial Calls to Loss Mitigation

Tue, 15 Jan 2008 21:01:36 -0500

To get the ball rolling on your short sale, you’ll start by calling the customer service number provided on the homeowners payment stub. If this number is unavailable, you may need to Google the mortgage company’s phone number. The objective of the first call is to obtain a fax number where you can send the “Authorization to Release Information”.

Here's a typical script...

Major Mortgage Meltdown

Wed, 09 Jan 2008 22:28:49 -0500

Foreclosures are on the increase across the country and so is the opportunity to buy properties at steep discounts though the use of short sales. The refinancing boom over the prior five years, especially those refinance loan programs with teaser and adjustable rates, had set the stage for a major mortgage meltdown. With homeowners opting to pull equity out of their homes through 100% first and second mortgage financing, they left themselves vulnerable to economic slow downs and property depreciation. Consequently, adjustable rates mortgages adjusted up faster than properties were appreciating and in short time, many individuals owed more in mortgages than their house was worth.