The funniest thing is they call it “flopping” which I believe was a typo from a secretary that just carried on and on throughout their paperwork. In addition, they don’t specify the time line in which you can resell the property for property. The purpose of the Arm’s Length Affidavit has always been that the seller is not getting the discount for their benefit and staying in the house. “Make sure you read your Arm’s Length Affidavits and check your sellers loans at www.freddiemac.com/mymortgage to see if it is a Freddie Mac Loan.

Bank of America approximately 2 years ago had placed a requirement on the new buyer that they were to hold the property for 30 days before being able to sell the property again. GMAC and Wells Fargo has placed a requirement on the new buyer to hold the property for 90 days before reselling the property. Remember, it is the investor underneath the mortgage companies guidelines not always the mortgage company. However, I have found that the mortgage companies are starting to adapt these requirements in their own company policies.

When BOA included the 30 day hold provision in a payoff letter, I argued the fact that they are trying to put a deed restriction on the property. However, they never put that wording in the deed so how in the world would anyone ie. the new second buyer know that there was a requirement of the first buyer to hold the property for a time period. They wouldn’t but the first buyer does know and has signed an Arm’s Length Affidavit stating the terms for the purchase.

I have always taken the stand that the Banks/Mortgage companies are the ones who send out their bpo agents/appraisers to advise the companies the value of the properties. So even as an investor if you made an offer at $100,000 because that is your MAO “Maximum Allowable Offer”, they had determined based on market value provided by their eyes and ears (bpo agents/appraisers) how much they would be willing to sell the property for.

Therefore, if an investor got a good deal and all your paperwork submitted to the short sale lender says you intend to resell the property for profit then you are “ok”. Until, these Arm’s Length Affidavits are adding additional wording.

NOW, the Arm’s Length Affidavit forms that they are having everyone sign ie: Seller, Buyer, and Realtors all state the following on Freddie Mac deals even before January 1, 2012:

1. Each signatory to this Affidavit expressly acknowledges that the Lender is relying upon the representations made herein as consideration for discounting the payoff on the Loan(s) which is secured by a deed of trust or mortgage encumbering the property.

2. Each signatory to this Affidavit expressly acknowledges that any misrepresentation made by him or her may subject him or her to civil liability.

I/We declare under penalty of perjury under the laws of the State of whatever that all statements made in this Affidavit are true and correct.

Additionally, I/we fully understand that it is a federal crime punishable by fine or imprisonment, or both, to knowingly and willfully make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq.

I have also seen certain wording in the Arm’s Length Affidavits that you are NOT aware of another contract whether it is verbal or written to sell the property for a higher price.

I am just saying be careful when you are acting as an Investor and a Realtor as the big bad Banks are looking to blame someone for their mistakes. Don’t stop buying real estate, learn the changes that the Banks/Mortgage Companies “INVESTORS – ie Freddie Mac” are starting to require so you don’t get to the Title Company and sign something that you didn’t understand that can hurt you later. You just hold the property for the time frame necessary to make a profit!

Happy Negotiating!

God Bless,

Kimberlee Frank

www.SellFastRealty.com

www.ForeclosuresGonewild.com

www.RealEstateJunkie.com

www.ShortSaleNegotiating.com

Like me on www.facebook.com/foreclosuresgonewild

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I recommend that the first thing you do when working a short sale is to order a title commitment which will do a search to see if there are any liens on the property. Are you aware that the title companies also do a name search for your Seller and Buyer? When a name search is done against the Seller, any outstanding judgments or liens show up on title. In addition, the title company is to order a lien search against the property for water, sewer, and code violations which cost approximately $140.

Due to the cost, this additional lien search is done right before closing. I always recommend that the Realtor or the Investor make a personal call to the water, sewer and code violation departments as soon as they start negotiating their short sale. By making the personal call, you can minimize some costs versus have the title company search for you. Some counties provide this information online. However, don’t depend on your inexperience of checking liens on the property, I would highly recommend that you contact the County Department and talk to a live person for confirmation.

After a name search is run on the Seller, if there are any outstanding credit card judgments they will have to be paid off at closing in order to give clear title to the Buyer. Unfortunately when dealing with credit card judgments, you have to deal with attorneys that represent the credit card companies. Many attorneys are not aware of how a short sale is done. They are only driven to get the Seller to pay money for a full satisfaction or get 50% of the balance for a partial release which allows the Seller to sell the house but still be responsible for the difference.

Right now I am fighting this battle. I have a property wherein the Seller purchased the property with a Chase Mortgage in her own name. She transferred the property into the Trust as she had attended too many seminars and assumed this was the right way to do it. Unfortunately, when she did she didn’t include the marital status of all parties on the Deed so we had to chase the previous seller to clear up title by signing an Affidavit stating their marital status. NOTE: To all investors who are preparing their own paperwork, make sure that all parties have the marital status of all parties. The property was originally homesteaded so it pulled in the husband as having an interest pursuant to the guidelines of the title company. The homestead exempt was lifted and placed on another property now making this an investment property.

However, because she was married at the time of the purchase, the title company’s underwriter will not insure the property unless all liens are released. This also included the liens against the husband, even though his name is not on title.

In addition to short-saleing the 1^st lien, I have 6 additional liens to negotiate partial releases which would release the liens against the property but the seller and the husband would still be responsible for the difference. LISTEN TO THIS: The short sale lender is Chase and is awarding the Seller $30,000 as an incentive to do a short sale!!! Since their loan was taken out in 2007, I believe that this loan has all the mistakes as cited in the www.60minutesovertime.com Robo signing incident. The short sale lender normally does not allow the Seller to contribute any funds towards lien releases except this lender is allowing the sum of $500 per lien release to be paid out of the incentive just to get the deal done. The short sale was approved for February 25, 2013 and the short sale lender will not give us an extension until we provide them with a Letter of Direction from the Seller stating that each lien holder would receive $500.00 paid from Seller’s $30,000 incentive and copies of each of letter stating that the liens will accept the $500.00.

I am dealing with Citibank (credit card) that is in 3^rd position as a lien holder that is owed approximately $32,000. I have spoken twice to the attorney to get them to accept $500. They have denied it twice even though I showed them that Chase is taking a discount of $600,000 and the other liens are accepting the $500, which their liens are much higher than Citibank. So what do you do???

The attorney that I have been dealing with claims he has submitted this information to his client, Citibank, and that they want $15,000 to settle. I have explained that is not going to happen because the short sale lender is dictating how much they can receive. The attorney stated to me that this is their only chance to get paid as they know that the husband can file bankruptcy and then they get $-0-. I have a letter from a bankruptcy attorney for the husband stating that he, in fact, was going to file bankruptcy but … if I informed the attorney of this fact, then they would not settle for less. I informed the attorney that I don’t want a full satisfaction, where it totally releases the liability of the husband, but instead I want a partial release. I am getting nowhere with this attorney. I asked for a supervisor and will fight the good fight with him to see if I can get him to get it released. However, my experiences with attorneys are that because they are debt collectors they don’t understand the short sale guidelines, so they will not settle. I have even asked for a release for $500 and a payment plan for the difference and the attorney’s answer was “No.” So … what do you do? I went straight to the credit card company’s main office asking for their legal department. I have done this plenty of other times with other credit cards. I know if I can speak with someone in the legal department at the main office of Citibank who has the authority to accept the $500 and explain the situation, they will advise their attorney to accept the lien release and may even, if need be, accept a payment arrangement. The last call I made like this to Target’s legal department on another deal, we did a 3 way right then and there and we got it approved.

My other options are that the buyer pays some money towards the debt, the Realtors contribute and the title company reduces their fees so they can also contribute. This is my last choice because this is a flip. If this was a listing where I was acting as the realtor, then the buyer would be my first choice, since the buyer will benefit from the purchase of the home.

Moral of the Story: Don’t give up on any lien releases! You need to do is talk to the right person which is always the Plaintiff (credit card company) and tell them the situation. You always have to go around the attorney and go directly to their client. Many times the attorneys, because it doesn’t meet their guidelines or it doesn’t make any common sense to them to accept $500, will not even send it to their clients as their job is to get as much as they can or just deny the offer and still get paid from their client.

Just to let you know some numbers on the deal, the buyer is purchasing it for $160,000, it needs about $30,000 in repairs and in the end the property will sell for high $350,000. These are projections and just because there is a huge profit doesn’t mean that I shouldn’t continue to fight the good fight. You may say, “with all that profit, why not just give ‘em what they want and pay off the liens and you will still make money?” I don’t leave any money on the table. If there’s room to negotiate for a larger profit, then I will fight the good fight!

I hope this article helps all you Short Sale Investors, Realtors or Negotiators out there as I never give up on a deal! Remember the most important thing is to get title work as soon as you start the file and ask for an update in 60 days when you know you are getting near a closing date. This way, you will not be fighting a fight when a foreclosure sale date is in the near future. I always say “all crazy deals make me wanna smoke, drink and swear” and I don’t do any of those things. Well….gotta go have a cigarette!

Happy Negotiating!

Kimberlee Frank

www.SellFastRealty.com

www.ForeclosuresGonewild.com

www.RealEstateJunkie.com

www.ShortSaleNegotiating.com

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Going through a Foreclosure

Owning a home has always been the American Dream.  Sellers become very emotionally attached to that “dream home.”  They work their tails off, save as much money as they can, and make the big purchase.  Unfortunately, the adjustable rate mortgage was introduced to our economy which allowed Sellers to purchase the home of their dreams with little money down, interest only payments with the Sellers knowing that in 3 to 5 years they will have to refinance their home to a fixed 30 year mortgage in order to keep it.  When the housing market crashed, it affected everyone drastically.

Many people found themselves without a job ie. realtors, mortgage brokers, developers, contractors and many more people in different occupations.  Can you image if you had a 700+ credit score and then suddenly you weren’t able to make your payments on your home, car, credit cards, and purchase food or clothing for your family?  This is such a humbling experience that many Sellers don’t survive.  Everything they have worked for their entire life is gone!  This situation has crushed many dreams and is still occurring daily.

First off, the Seller should not have purchased a home with an adjustable mortgage rate and counted on the economy to increase the equity in the home enough to be able to re-finance.  However, with the persuasion of the mortgage broker, spouse, friends and maybe family, the Seller thought “It will be alright I can do this!”  Now that everything is crumbling down around the Seller, their pride is stopping them from taking the correct step and doing a short sale.  The Seller receives multiple telephone calls a day from a debt collector whether it is for the mortgage payment, car payment, credit card payment, etc.  The Seller (male) is starting to have family issues as it was his job to earn income to support the family.  A Seller (female) may also be in the same position as in this economy it takes two incomes to raise a family, send their kids to college and to pay all the bills.

Many Sellers lose faith in their religion as they don’t know who else to blame for the fact that they are losing their home.  In reality, it is the economy’s fault and no one else to take the blame.  It’s just life.  This is hard for Sellers to realize.  In addition, Sellers start having health issues, they argue more often, drink more, kick the dog, beat the kids and their safe and stable family life turns into CHAOS.  This is nothing to scoff at, laugh about or take lightly.  Foreclosure destroys families and lives.  Many Sellers end up in divorce, kids start failing in school or they totally move out.  The family quits going to church.  The family unit and the individuals literally fall apart.  Sellers need our help to understand the entire short sale process and how it can truly benefit them…..especially the fact that it is FREE, and they are in control of their destiny versus walking away or staying in the house and still letting it go to foreclosure.

When you contact Sellers, you need to be aware that they are expecting someone who wants money from them.  They are barely scraping by and now we say we want to buy their home.  Where will they go?  You need to remember that these Sellers are on a roller coaster ride from “heck” and don’t know how to get off or aren’t even sure that they want off, because they are not informed about all of their options.

I always teach that you, the Investor or Realtor, will have to help the Sellers understand the process, meet with them a couple of times and, more than likely, will have to counsel them during their stressful situation.  I like to set their expectation right from the beginning which is “doing a short sale allows you to control the bank’s outcome.”  What I mean by that is in my contract it states “This offer is subject to the underlying lenders taking a discount acceptable to the Sellers and the Buyers.”  This way, if at the end of the short sale, the short sale lender wants money from the Sellers or the deficiency judgment is not waived, the Sellers can back out of the deal!  And by the way, if you’ve taken my course, your Sellers will not pay any money and their deficiency judgments should be waived.  This alone makes a Seller feel warm and fuzzy and in full control.  As for you, well, this statement may not make you feel warm and fuzzy.  I only work on transactions that will be a win for the Seller, win for the buyer, win for the bank, and win for the Realtor.  Using this motto will help you excel in your business.  I provide excellent service and teach my student to do the same; therefore, we all have high referral rates and you should, too!

So, the next time you are dealing with a Seller who still owes you paperwork in order to do the short sale, please recall this article and remember what kind of day are they going through.  How can you help them provide what is needed to process the short sale?  Is it, I will come to your house and we do it together?  Should I email it to you and do you have enough ink in your printer to print it out or should I overnight it to you with a return label self addressed and paid?  We are here to provide a service……so provide an excellent service to them.  I provide excellent service; therefore, I have an excellent referral rate. J

I know as an Investor and Realtor it is a struggle to deal with Sellers and short sales.   However, if you are willing to do what it takes to get the deal done by truly helping the Sellers, then you will not only make money, you will also help a Seller from owing a deficiency judgment for 25 years and maybe help stabilize their family again.  The Banks are going to go after these Sellers and we must approach this with a mindset that “enough is enough!”  Help the Seller out and explain the short sale process and remember, they need you more than you need them.  However, without your help and persistence they would not have made it through this ugly time.  Feel proud of helping the Sellers re-build their world, save their family and move on with the next chapter in their life.  I am proud of you!!!

 Happy Negotiating!

Kimberlee Frank

www.ForeclosuresGonewild.com

Today is a great day to tell anyone and everyone you see and know Happy Valentine’s Day. Many of the Sellers that are upside down on their home are stressed out and don’t know what to do.  First off, I want all Sellers to know that when they got a loan from the bank their money was given to the bank from an investor.  This investor could be a trust, reit, or maybe the government.  The bank guaranteed the investor or group of investors a set interest rate.  Many Sellers are attempting a loan modification hoping to keep their house.  I always ask my Sellers if could wave my wand what do you want from the bank.  Most of them will answer that they want the bank to reduce their balance on their loan or they want a certain amount for their monthly payment.  Here are some facts I want to share this Valentine’s Day with the Sellers:

1.  During a loan modification the bank is still continuing with the foreclosure.

2.  I have not spoken with a Seller yet that got a reduction in the value of their home on a homesteaded property and I have done over 500 short sales.

3. The monthly payment the Seller wants makes no sense.  They are not considering how much their taxes and insurance is on the property nor are they considering the interest that will be charged for the loan amount.  Example:  Seller owes $300,00,000 on the loan at 4% for 30 years is $1,432.25  – Yearly Taxes are $3,000 per year $250.00 a month – Insurance is $1,500 per year – $125.00 per month -  Total monthly payment NOT INCLUDING HOA (homeowners association dues) would be $1,807.25.  Many Sellers want a lower payment than this amount because they can’t afford it.

4.  I have only seen the bank take the monthly payments that they are behind plus interest, late fees and attorney fees and add it to the end of the mortgage and/or change it to a 40 year mortgage.  Which would make their monthly payment $1,253.82 on the loan plus taxes and insurance would be $1,628.82.

So on Valentine’s Day I just want to let all the Sellers going through this difficult time that your home is where your heart is and may God Bless you during this difficult time.

So should a Seller do a short sale? First you need a good negotiator working on your file.  Benefits of a short sale:

1.  The Forgiveness of Debt Act which expires on December 31, 2013 allows Sellers who own their properties as homestead to waive the tax ramifications should the bank forgive the debt.  Up to 1 Million Dollars for a Single Individual and $2 Million Dollars for a married couple.

2.  The Bank will report the short sale on their credit report as being settled for less.

3.  The Sellers may receive some money to relocate.

4.  The Sellers may not have to pay a cash contribution or a promissory note.  Again this depends on your negotiator/realtor.

5.  The Bank will not go after the Seller for the difference if you get a full satisfaction otherwise they have the right to collect on the Seller for up to 25 years.

6.  The stress is gone and they have relocated into a bigger and better home most of the time.

I would recommend on this Valentine’s Day that a Seller give their family and themselves the gift of decision.  Please read my Special Report on Foreclosure which talks about all your options.  www.FreeFactsAboutForeclosure.com

Again your home is where your HEART IS and your family will go wherever you go.

May this Valentine’s Day you find peace.

Kimberlee Frank – Broker

www.SellFastRealty.com

The time line for a short sale varies from 90 to 120 days if you submit the lender a “complete” short sale package. Since short sales are dominating the market, the Lenders are creating more streamlined processes to conduct smoother short sales. If you do short sales, then I am quite sure you have heard of the online system called “Equator.” Equator allows all of the short sale paperwork to be processed electronically through one common venue, versus traditional and random faxes and emails. Having a file processed online avoids the common objection from the short sale lender of “We didn’t receive the documents.” Effective January 1, 2013, the newest lender that has started to use Equator is Chase. The following lenders and servicers are presently using Equator: 1) Bank of America, 2) Chase, 3) Wells Fargo, 4) GMAC, 5) Nationstar, 6) ASC, 7) Carrington Mortgage, and 8) Homeward Residential Services.

The Equator System assigns applicable tasks to each party (Agent, Negotiator, Closer, etc) including a deadline in which to complete each task. I like the fact that the lenders can no longer say “Oh, we never got that paperwork.” However, I don’t like the fact that they are tracking our information. Nationstar has taken the collection of Buyer’s information to a whole new level. They require all Buyers to fill out a loan application even though they most likely will not be using Nationstar as a lender. This application has been mandatory and this has not been waived on any of my files. If you are a Buyer on any property, you are required to provide your name, address, telephone number, DOB, SS#, assets, employment history and more. This is regardless if you are purchasing for investment or personal use and if you are getting a mortgage or paying cash.

I believe that the lenders are collecting data against all Buyers and will soon share with each other how many deals each Buyer has purchased. I had one student inform me that once he purchased over 10 properties from Bank of America, he was no longer allowed to purchase any more in his name, his wife’s name or company name. Therefore in the future, when all lenders work as a team, they will share all of this information and limit the amount of deals that an Investor can purchase. Wells Fargo started using a system called CoreLogic approximately 2 years ago which allows them to simultaneously check to see who was applying for a mortgage at the same time they were conducting a short sale. This caused Investors a hardship even though they fully disclosed to Wells Fargo their intention to buy, resell and/or fix the property, if they used my paperwork. Many short sales were not approved at that time and many Investors had no idea WHY? Some of the lenders frown on the fact that Investors are purchasing the property and would rather sell the house to a homeowner.

You would think that the lenders, since they are funded by Investors, would understand how we Investors work. We don’t buy properties at full value, as we are not going to live in the home. This is a business and we can’t make the Seller’s problem our problem by paying full value. It is the Investors, like us, that are helping the lenders get money and not go under.

Now is the time to purchase short sales and if you haven’t started you have 10 years to ride the wave, so do it now! Align yourself with a good Mentor and take flight just like many Investors around the world.

Happy Sailing,

Kimberlee Frank

www.ForeclosuresGoneWild.com

Recently, I was in the process of purchasing a property where I needed to get an extension on the short sale approval letter.  The reason was that the Homeowner Association advised us that, pursuant to their by-laws, their 35% ownership of investment properties had been reached and only homeowner occupants can purchase the property.  The servicer for the lender was Seterus.  I received a brand new approval letter for the same exact buyer as before, but with a few different statements:

1.  The purchaser cannot resell the property within 30 days of the short sale settlement date.  The purchaser cannot resell the property for greater than 120 percent of the short sale price within 90 days of the short sale settlement date.

2.  The deed conveying the property to the purchaser should be amended, in compliance with applicable state law, to include the following provision:  “Grantee herein is prohibited from conveying captioned property for any sales price for a period of 30 days from the date of this deed.  After this 30 day period, Grantee is further prohibited from conveying the property for a sales price greater than $88,800.00 until 90 days from the date of this deed.  These restrictions shall run with the land are not personal to the Grantee.”

WOW!   Now the short sale lenders are really placing a deed restriction on the property, as it is being included with the recorded deed because previously the purchaser or seller would have to sign a document either a short sale approval letter and/or arms length affidavit acknowledging this agreement.  This allowed many investors to do two closings using two different title companies and literally ignoring the deed restriction thinking that no one would know about the deed restriction since nothing was filed in public records.  Well, the game is over ladies and gents, if you played that game, which I never recommended.  Some of the lenders are now requiring it on the deed which also controls your profit.  This particular loan was an FHA loan.

Am I saying that all lenders are going to follow suit with these new restrictions?  I would assume a few will jump on board, such as Bank of America, Wells Fargo and GMAC.  You will need to be sure on your short sale deals that you know how long you will have to hold the property and make sure you have enough profit there to hold it.  Please take the time to read every lender document thoroughly and if there is wording that you would like removed, ask them to remove it.  I can’t guarantee you that they will, as they did not do so on my transaction, but you won’t know if you don’t ask.

What this really means is that you will need to buy at the right price and hold for the right number of days in order to profit BIG in the short sale arena!  However, there are ways around getting your buyer in at the time of closing, which I will share in my next article.  Until then … read your paperwork!!

Kimberlee Frank

www.ForeclosuresGoneWild.com

Now is the perfect time to purchase and resell short sale properties.  Why do you ask?  Our market is filled with many homes in which the Lenders are willing to accept short sales, due to all of their major mistakes made at the time the Homeowner obtained financing.   Homeowners that financed homes from Lenders such as Bank of America, Wells Fargo, GMAC, CitiMortgage and Chase from 2006 to 2008, have major mistakes in their Lender’s paperwork.  Lenders are reaching out to Homeowners asking them to do a Short Sale or a Deed-in-Lieu.  However, many of the Homeowners aren’t aware of the fact that they can’t do a Deed-in-Lieu if they have a second lien, and if they owe Homeowners Association dues, they may still be liable for the difference.  Homeowners Association dues are a personal debt against the Homeowner that need to be satisfied in full so that if a house is deeded back to the Lender the Homeowners are no longer responsible for any more dues.  There is a statute which states that the Lender that forecloses on the property will be responsible to pay only 1 year of Homeowners Association dues.  When conducting a short sale, this statute has little or no meaning to the short sale Lenders, meaning they may not agree to even pay a full year.  I have seen Homeowners deed their property back to the Lender only later to find out that they are still liable for the difference owed on the Homeowner Association dues.

TRUE STORY:  On one of my deals, Nationstar would not agree to pay the full year of past HOA dues, even though the statute states they are responsible for that.  To add to that, the A/C didn’t pass inspection and needed repairs.  Deal killers?  If you aren’t experienced…..yes.  And I wasn’t about to give over $500 from my profit.  When you know what you are doing, you can even get the sellers to help close your deals.  Yes, the sellers who have NO MONEY.  Well, I closed this deal on Friday, August 31^st!

Having the Homeowner take control of their property is the best thing that they can do, versus letting it just go to foreclosure.  They can decide whether they want to short sale the property, make sure that all liens are paid off, and confirm that there is no one able to come back after them, versus letting the Lender and/or Homeowners Association chase them for up to 25 years.  Yes, I said 25 years!  The lien holder has the right to file a Complaint in order to obtain a Judgment for the balance still owed to them plus interest and attorney fees for up to 5 years from the initial foreclosure action.  Once a Judgment is obtained, then it is valid for 10 years and after the 10 years, they can re-certify the Judgment for another 10 years.

TRUE STORY:  An Investor friend from out of state had her Agent negotiate her short sale instead of using me.  Her Agent negotiated a lien release only for her 2^nd lien.  Now Chase Bank has been calling her every day for the last 21 months.  Yes, she closed in December of 2010 and they are still pursuing her. 

This leads me to my next point.  Many Homeowners are downright tired.  They are tired of being taken advantage of; it has affected their health, confidence, financial situation and their family.  Investors and Realtors need to learn how they can help the Homeowner by either purchasing or selling their home and obtaining a full satisfaction of all liens.  I’ve heard many Investors and Realtors say that they do not want to negotiate a short sale.  I believe everyone should know the tricks that each Lender plays and understand the negotiating processes whether they choose to negotiate the transaction personally or have someone else negotiate.  Having someone else negotiate a transaction without your full understanding of the entire process and the tricks the Lenders play is like handing your checkbook to someone you don’t know and letting them write whatever check they want.  If you want, you can make the check payable to me!

Understanding the Homeowner’s financial situation and hardship will help you obtain a short sale.  Lenders believe that all Homeowners are bad people when, in fact, bad things happen to good people.  Homeowners decide to hide money, hide their IRA’s and 401ks, or not disclose ownership on secondary properties.  They don’t understand that the lender can pull their credit report reflecting mortgages on other properties and showing minimum payment amounts on their debts.  They don’t understand that their pay stubs reflect money being placed into their 401k and their tax returns may reflect dividends paid out to them on their investments.  Having a Homeowner who is honest about their financial situation will help you get your deal done with less bumps, bruises and denial.

As Investors, it is important to know your exit strategy.  The Lenders have started to include deed restrictions from 30 to 120 days to the new buyer wherein they are not allowed to resell the property to another individual.  So, what do you do?  Investors are purchasing the property and lease-optioning to their end buyer during this time frame.  This process can be very tricky and Investors should be reading all the terms written on their Arm’s Length Affidavit and Short Sale Approval letter to make sure that they are complying with the terms of the short sale.  Should the Buyer/Investor not comply with the terms of the Arm’s Length Affidavit and Short Sale Approval letter, the Lender has the right to cancel the short sale terms in the future and continue to pursue the Seller.  In addition, lease-optioning to your end buyer may work as long as your terms, dates, and compliance with your Arm’s Length Affidavit and Short Sale Approval letter are all in coordination with each other.   I call these the “moving parts” of the transactions.  Just like a car, if any part doesn’t fit properly with another, or if you put diesel fuel in a BMW, the car dies.  I have reviewed some of these “deadly” transactions and saved many students from making major mistakes due to lack of knowledge and lack of compliance.  Had they closed their deals as they originally structured them, they (and their Sellers) would have been seriously affected financially and legally in the future.  Another reason that it is a perfect time to do short sales is because competition has decreased.  Investors and Realtors are shying away from short sales due to the ever changing requirements.  Good money isn’t easy, in any business, but hard work definitely pays off!

TRUE STORY:  An Investor friend brought me a disaster deal that she had structured and she was in way over her head.  The property was in a trust, there were two wholesalers involved with no clear understanding about how they were each getting paid, and the purchase agreement was written up with a cash buyer who was actually getting a hard money loan.  If I hadn’t stepped in, restructured the whole deal and funded it for her, she would have been facing serious legal ramifications in which she was totally clueless.  She didn’t have a Seasoned Mentor and she was using an old program from last year that was missing the crucial pieces of how to structure a complete transaction.  This left her guessing and taking advice from some wholesalers who were only in it for the money and not even on title…..scary!

There are 14 steps to a successful short sale.  Missing any one of these steps will turn your deal into a trash deal costing you time and/or money!

Step 1:  Having a complete Short Sale Package per each mortgage company’s requirements

Step 2:  Knowing the real reason why the Seller is behind on the payments

Step 3:  Understanding the true and accurate financial status of the Seller

Step 4:  “Successfully” meeting the BPO/Appraiser

Step 5:  Knowing the Investor (Lender), the type of loan and the specific requirements

Step 6:  Knowing if there is Private Mortgage Insurance (PMI) on the loan and the name of the company

Step 7:  Asking the right questions to the negotiator to get the response you need

Step 8:  Knowing the experience of the negotiator

Step 9:  Knowing the procedure of each mortgage company for the short sale

Step 10: Knowing if the negotiator receives a bonus for the short sale

Step 11: Understanding every single line of the HUD and what items must be included at first submission

Step 12: Determining if the negotiator is lying or telling you the truth

Step 13:  Keeping a list of names, numbers, email addresses of the Negotiators and if they are Good, Ugly or Helpful.

Step 14:  Comparing the approval letter with your HUD for accuracy and understanding terms

Learning all the tricks of the Lenders by having the right Mentor, whether you are an Investor or a Realtor, will put CA$H in your pocket without having mistakes.  Short Sales are changing on a weekly basis and Investors are trying to keep up.  What was acceptable last week is longer applicable this week!  Many Investors are using old techniques that use to work that are no longer working.  They are not reading or understanding the documents that they are signing which is resulting in dangerous consequences.  I provide you with a step-by-step process that fully discloses your intent.  I teach you the “Ah-ha’s” and the “Ouches” on short sale transactions.  Join me at this month’s meeting at IRC and find out how you can avoid some of the major mistakes that other Investors are making when it comes to purchasing and reselling short sales.  This will be a night of teaching and sharing.  Please be sure to bring all your questions, as I will answer them all!  Of course, those who want to take their real estate career to the next level, you will have a chance to partner with me!  How would you like to have my office do all the master negotiating and funding of your transactions?  Come and spend 8 hours with me for a ONE Day Training Event on Saturday, September 29^th, where I will take you step by step from A – Z through a short sale and how to turn Trash deals into CA$H deals!  I look forward to seeing you all there!

Kimberlee Frank

www.ForeclosuresGoneWild.com

1. When they are willing to sell the house for what they owe.
2. When the house is upside down and you can’t pay as much as they owe on it.
3. When they are too far behind on their payments that you can’t make it up and keep it as a rental or subject to deal.
4. When the monthly payment amount is more than you can get for rent.
5. When the house is trashed and the cost to rehab it is too high for the return investment.

5 TIPS TO NEGOTIATE ON SHORT SALES WITH THE BANK

1.  Know how much is owed for Homeowners Association Dues – banks only like to pay up to 12 months on HOA LIENS not balances
2. Know if the home will have to be sold Cash or can go FHA – Repairs are important if the house can only be sold as a cash deal then you are able to use this during your negotiations.
3. If your offer is denied, ask them where the offer has to be?  If that is too high, split the difference in the middle and see if they think they can get this approved based on that price.
4. Knowing what type of loan you are dealing with ie. Fannie Mae (90-92%) , Freddie Mac (90-92%) doesn’t like investor buyers, FHA (88%), PMI (may require a promissory note) on the property – being knowledgeable as to the percentage that they are willing to take as a net on the deal and/or purchase price along with if they will even consider an investor as a buyer in a corporation name.
5. If there are repairs needed on the home – you will need to have a repair bid estimate to send in to the negotiator to dispute the repairs that the BPO Agent/Appraiser did not include on their value.

New Laws for Freddie Mac Short Sales – by Kimberlee Frank

I have been doing short sales for a long time and I have watched the industry change regarding Trusts, Options and Arm’s Length Affidavits.  Recently, I read that effective January 1, 2012 Freddie Mac is not allowing flipping on short sales and is looking to hold all parties liable if they are aware of reselling the property for a higher price.  The funniest thing is they call it “flopping” which I believe was a typo from a secretary that just carried on and on throughout their paperwork.  In addition, they don’t specify the time line in which you can resell the property for property.  The purpose of the Arm’s Length Affidavit has always been that the seller is not getting the discount for their benefit and staying in the house.  “Make sure you read your Arm’s Length Affidavits and check your sellers loans at www.freddiemac.com/mymortgage to see if it is a Freddie Mac Loan.

Bank of America approximately 2 years ago had placed a requirement on the new buyer that they were to hold the property for 30 days before being able to sell the property again.  GMAC and Wells Fargo has placed a requirement on the new buyer to hold the property for 90 days before reselling the property.   Remember, it is the investor underneath the mortgage companies guidelines not always the mortgage company.  However, I have found that the mortgage companies are starting to adapt these requirements in their own company policies.

When BOA included the 30 day hold provision in a payoff letter, I argued the fact that they are trying to put a deed restriction on the property.  However, they never put that wording in the deed so how in the world would anyone ie.  the new second buyer know that there was a requirement of the first buyer to hold the property for a time period.  They wouldn’t but the first buyer does know and has signed an Arm’s Length Affidavit stating the terms for the purchase.

I have always taken the stand that the Banks/Mortgage companies are the ones who send out their bpo agents/appraisers to advise the companies the value of the properties.  So even as an investor if you made an offer at $100,000 because that is your MAO “Maximum Allowable Offer”, they had determined based on market value provided by their eyes and ears (bpo agents/appraisers) how much they would be willing to sell the property for.

Therefore, if an investor got a good deal and all your paperwork submitted to the short sale lender says you intend to resell the property for profit then you are “ok”.  Until, these Arm’s Length Affidavits are adding additional wording.

NOW, the Arm’s Length Affidavit forms that they are having everyone sign ie:  Seller, Buyer, and Realtors all state the following on Freddie Mac deals even before January 1, 2012:

1.  Each signatory to this Affidavit expressly acknowledges that the Lender is relying upon the representations made herein as consideration for discounting the payoff on the Loan(s) which is secured by a deed of trust or mortgage encumbering the property.

2.  Each signatory to this Affidavit expressly acknowledges that any misrepresentation made by him or her may subject him or her to civil liability.

I/We declare under penalty of perjury under the laws of the State of whatever that all statements made in this Affidavit are true and correct.

Additionally, I/we fully understand that it is a federal crime punishable by fine or imprisonment, or both, to knowingly and willfully make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq.

I have also seen certain wording in the Arm’s Length Affidavits that you are NOT aware of another contract whether it is verbal or written to sell the property for a higher price.

I am just saying be careful when you are acting as an Investor and a Realtor as the big bad Banks are looking to blame someone for their mistakes.  Don’t stop buying real estate, learn the changes that the Banks/Mortgage Companies “INVESTORS – ie Freddie Mac” are starting to require so you don’t get to the Title Company and sign something that you didn’t understand that can hurt you later.  You just hold the property for the time frame necessary to make a profit!

I will be writing you a lot during this December and will be converting a lot of my email and video contact with you to different programs ie. infusionsoft and talkfusion so … make sure you look for me and opt in.  My goal to you is to send you out at least 2 great tips a week!  I know this is a lot of tips, however, I know you all need to make a change in 2012 so I am going to help you get there.  I have so much planned for you it is going to blow your socks off.

So … stay tuned!

God Bless,

Kimberlee Frank

www.ForeclosuresGoneWild.com

www.SellFastRealty.com

www.RealEstateJunkie.com

Ever wonder how much you earn per hour by the time you close a short sale deal?  The industry has transformed from being extremely difficult without standardization to becoming streamlined with a specific system per lender.  Many investors hate the idea of doing short sales because of the fallacy that they are so time consuming.  Is this true…literally?  Have you ever broken it down per deal?  The time you actually spend on 1 deal versus the cash you earn is really quite exciting!

The market got tighter with fewer houses for sale, making it a Seller’s market.  The Lenders slowed down their foreclosure processes, in my opinion, due to the Presidential Election.  Now that the election is over, the lenders are going to be pushing really hard to get the foreclosures through.

I want to teach you a step by step process of how my students and I buy and sell short sales and the true time involved to make a profit of not less than $20,000.00.    In this article, I am not withholding any secrets to my or their success.

Let’s Break It Down:

Step One:  Find a Seller.  Mail letters to a pre-foreclosure address list from a list provider www.ReiaFax.com.  TIME:  4 HOURS

Step Two:  Seller calls Student/You.  Complete my Seller Information Sheet.  Each question on my Sheet is crafted to pull specific information from the Seller that will allow us to creatively construct multiple offers (not just short sales).  TIME:  3 HOURS

Step Three:  Prepare Seller Paperwork.  Go to your county website for ownership and correct legal description of the property from the deed on record.  TIME:  1 HOUR

Step Four:  Meet the Seller at the House.  Be sure you take pictures, do an inspection on the property for repairs, have Seller sign paperwork and collect their financial information.    TIME:  3 HOURS

Step Five:  Send Seller Packet to Kimberlee Frank’s office.  My office will process, submit and negotiate your short sale for you.    TIME:  1 ½ HOURS

Step Six:  Lender orders BPO (broker price opinion) or appraisal.  Prepare BPO Package in advance, including repair bid, comparables, crime reports and articles.  TIME:  2 HOURS

Step Seven:  Meet BPO Agent.   Be sure you arrive early and follow my 13 steps For a Successful BPO, as this is where many short sales blow up.  TIME:  1 ½ HOURS

Step Eight:  Call Lender for Short Sale Status.  Receive counteroffers and reply back to bank with buyer’s highest and best offer.  TIME:  3 HOURS

Step Nine:  Short Sale Approved.  Match approval letter with HUD Settlement Statement.  Many costly mistakes occur because HOA dues and code violations are not approved or bank allowance is decreased on the short sale approval letter.  TIME:  ½ HOUR

Step Ten:  Exit Strategy.  As my Partner, we flip it to an end buyer or buy and rehab it.  You will need to market the house for an end buyer based on your desired profit.  You will hold an open house auction providing you with 30 to 50 buyers.  TIME:  12 HOURS

Step Eleven:  Prepare Purchase Agreement for cash end buyer.  TIME:  1 HOUR

Step Twelve:  Attend Both Closings.  At the A to B closing, you purchase property from Seller, then at the B to C closing you sell property to end buyer.  TIME:  2 HOURS

An average deal profit is $20,000 with 34 ½ hours invested, equaling a $579.71 hourly wage.  So, completion of one short sale takes less than 1 week at a full-time job.  Can you handle that?  Just think if you pass the negotiating off to someone else like a title company who does the negotiating for free, what your hourly rate will be.   Now just fill the pipeline and do it over and over again and just think how much money you will make.  You tell me, should you be closing on short sales?

Come join me on December 13, 2012 at 6:00 p.m.  to learn how I will give you a Power Push into 2013 allowing you to make a boatload of money with short sales!

Kimberlee Frank

www.ForeclosuresGoneWild.com

407-888-3255

admin@ForeclosuresGoneWild.com

This Wednesday at 9:00 PM ET/ 6PM PST, I’m doing a LIVE call to show you how to build your team the right way using Virtual Assistants for everything from bookkeeping to appointment setting, data entry to calling your clients, building your buyers list, filling out offers, listing coordination, transaction coordination, flyer creation… and just about anything else you need help with!

I will even show you how to get the first 40 hours for free!

****Absolutely nothing will be sold on this training****

In fact when you attend, you will get a FREE  virtual assistant for 40 hours for free.

You don’t need to buy anything to get the 40 hours for Free.

No hype!

No strings!

We are only doing this event live 1 time so don’t miss it.

Yes it will be LIVE for real. Michael AND I will both be answering your questions LIVE as well!

Register here right now before it fills up! Remember, it’s on February 1st, that’s Wednesday at 9PM EST!

Mark your Calendar:

DATE:  WEDNESDAY, February 1, 2012

TIME:  9:00 P.M. TO 10:30 P.M. EASTERN TIME

CLICK THIS LINK TO REGISTER:  https://www3.gotomeeting.com/register/380289134

I’ll see you there!

God Bless,

Kimberlee Frank

www.ForeclosuresGoneWild.com

www.SellFastRealty.com

www.RealEstateJunkie.com