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ritabradley01
3159 Posts |
 Posted - 10/10/2008 : 2:01:27 PM
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Quick questions (or trick questions) :)
1. When a client does a short refi can he roll the costs of doing the loan into the loan or does he have to pay out of pocket?
2. If one were to obtain a deed in lieu of foreclosure for a client, how would one get paid?
I'm asking about these scenarios only for clients who have no other options. |
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ritabradley01
3159 Posts |
Posted - 10/10/2008 : 5:06:29 PM
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| Is there anyone out there? |
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MortgageBoarder
3976 Posts |
Posted - 10/10/2008 : 5:15:11 PM
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Rita it will vary case by case. If they do a short-refi via H4H, they will have to pay the costs out of pocket. Otherwise, it will depend on the lender and the individual case whether or not they are required to bring any funds to the table.
As far as how you get paid on a Deed in Lieu, you don't unless the client pays you a fee. Our mitigation process includes loan mod, short refi, short sale, and deed in lieu. The client pays the $3500 fee up front, so whatever mitigation we get the lender to go with, we are still paid.
Again, we are a law firm and this is fully compliant, so you will have to do your research as far as how the DRE feels about charging an up front fee for services such as these.
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crankyusi
658 Posts |
Posted - 10/10/2008 : 5:20:46 PM
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As far as how you get paid on a Deed in Lieu, you don't unless the client pays you a fee. Our mitigation process includes loan mod, short refi, short sale, and deed in lieu. The client pays the $3500 fee up front, so whatever mitigation we get the lender to go with, we are still paid.
Again, we are a law firm and this is fully compliant, so you will have to do your research as far as how the DRE feels about charging an up front fee for services such as these. [/quote]
Yeah, you're a lucky dog working for an attorney. Regarding the short sale, does your firm "earn" its fee when the existing lender "agrees" to allow the property to be sold for $x (and doesn't require a new buyer to complete its purchase), or do you earn your fee when a new buyer completes the purchase? Hoping you see this before HHH starts. |
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MortgageBoarder
3976 Posts |
Posted - 10/10/2008 : 5:27:08 PM
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Francis I don't think I understand your question. We obtain the fee up front, because we are encompassing ALL mitigation services. Most of our clients would prefer not to short sale, so we use that as our 3rd best option. If they do end up going the short sale route, we then list it with one of our RE Agents and the fee that they already paid equates to a reduced sales commission for the agent.
Is that what you were looking for? |
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Captain Mortgage
1721 Posts |
Posted - 10/10/2008 : 5:31:57 PM
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Rita, when you do a short payoff, the paperwork is typically sent with an estimated HUD statement that the bank can go off of. Make sure to include all of your closing costs on there as well as a loss mitigation fee.
Side note for short sales: Put the loss mitigation fee on line 703 and not on 1303. They usually decline it if you put it under "additional charges" |
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crankyusi
658 Posts |
Posted - 10/10/2008 : 5:32:45 PM
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Let me rephrase......
Let's say you charge your client $3,500 upfront. If it turns out a short sale is the best solution, do you go to the client's lender and convince them to accept a short sale price of say $200k (which is sufficiently low to sell in the open market) which involves a loss to the bank that is owed $325k (a loss of $125k). Even if the home isn't eventually sold for $200k (again, that's a legit price in the open market), does your firm earn the $3,500 for getting the bank to agree to a $200k price. |
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MortgageBoarder
3976 Posts |
Posted - 10/10/2008 : 5:35:57 PM
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Yes, our firm gets to keep the fee once the bank AGREES to the negotiated sale price. From there, it is up to the RE Agent to move the property as quickly as possible to complete the transaction.
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crankyusi
658 Posts |
Posted - 10/10/2008 : 5:42:31 PM
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quote:
Originally posted by MortgageBoarder
Yes, our firm gets to keep the fee once the bank AGREES to the negotiated sale price. From there, it is up to the RE Agent to move the property as quickly as possible to complete the transaction.
Sweet deal. (and beneficial too for the client so they don't need to play the waiting game when a real buyer steps up to the plate) |
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Captain Mortgage
1721 Posts |
Posted - 10/10/2008 : 5:50:08 PM
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quote:
Originally posted by crankyusi
quote:
Originally posted by MortgageBoarder
Yes, our firm gets to keep the fee once the bank AGREES to the negotiated sale price. From there, it is up to the RE Agent to move the property as quickly as possible to complete the transaction.
Sweet deal. (and beneficial too for the client so they don't need to play the waiting game when a real buyer steps up to the plate)
well not really. What if the balance is 700k and they accept a payoff of 500k but the house is only worth 350k. Did you really follow through with your end of the deal? On all of my short sales I don't get paid unless the house sells. Even on top of that if my fee gets cut off the hud, I'm stuck getting around .25% from the realtor. I only do short sales for the company I'm at though and not for any outside offices.
Edit: since a lot of my posts have been questioned lately. I've sucessfully done 3 short sales, about 40 short-refis, and 2 loan mods. Not very big numbers compared to some of these companies out there, but I have an idea of what needs to be done and how it needs to be done. |
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MortgageBoarder
3976 Posts |
Posted - 10/10/2008 : 5:53:11 PM
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We would gauge whether or not the offer makes sense. If it doesn't we certainly would not take it on leading the client to believe they will actually be able to sell the home. This is probably a case which would more than likely end up going to Deed in Lieu or end up giving the client a refund because nothing can be accomplished.
quote:
Originally posted by Captain Mortgage
quote:
Originally posted by crankyusi
quote:
Originally posted by MortgageBoarder
Yes, our firm gets to keep the fee once the bank AGREES to the negotiated sale price. From there, it is up to the RE Agent to move the property as quickly as possible to complete the transaction.
Sweet deal. (and beneficial too for the client so they don't need to play the waiting game when a real buyer steps up to the plate)
well not really. What if the balance is 700k and they accept a payoff of 500k but the house is only worth 350k. Did you really follow through with your end of the deal? On all of my short sales I don't get paid unless the house sells. Even on top of that if my fee gets cut off the hud, I'm stuck getting around .25% from the realtor. I only do short sales for the company I'm at though and not for any outside offices.
Edit: since a lot of my posts have been questioned lately. I've sucessfully done 3 short sales, about 40 short-refis, and 2 loan mods. Not very big numbers compared to some of these companies out there, but I have an idea of what needs to be done and how it needs to be done.
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crankyusi
658 Posts |
Posted - 10/10/2008 : 5:58:51 PM
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quote:
Originally posted by Captain Mortgage
[well not really. What if the balance is 700k and they accept a payoff of 500k but the house is only worth 350k.
I would expect the "worth $350k" to be the approximate price goal for the short sale negotiations. $500k "agreed" price clearly doesn't benefit the homeowner, only the fee-earning mod firm. Thus, in my example, I mentioned open-market pricing as a target for short sale negotiating. I'd expect some type of justification for the "agreed" price in the short sale negotiations. |
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Captain Mortgage
1721 Posts |
Posted - 10/10/2008 : 6:00:26 PM
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| Cranky and MtgBoarder, what line do you put your short sale fee on the HUD? Or do you collect it all up front? |
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crankyusi
658 Posts |
Posted - 10/10/2008 : 6:03:23 PM
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quote:
Originally posted by Captain Mortgage
Cranky and MtgBoarder, what line do you put your short sale fee on the HUD? Or do you collect it all up front?
As of today, my contract is for Loan Mods only, and I do collect upfront. |
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MortgageBoarder
3976 Posts |
Posted - 10/10/2008 : 6:15:17 PM
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All fees are up front with us.
quote:
Originally posted by Captain Mortgage
Cranky and MtgBoarder, what line do you put your short sale fee on the HUD? Or do you collect it all up front?
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ritabradley01
3159 Posts |
Posted - 10/11/2008 : 09:05:44 AM
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quote:
Originally posted by MortgageBoarder
Rita it will vary case by case. If they do a short-refi via H4H, they will have to pay the costs out of pocket. Otherwise, it will depend on the lender and the individual case whether or not they are required to bring any funds to the table.
As far as how you get paid on a Deed in Lieu, you don't unless the client pays you a fee. Our mitigation process includes loan mod, short refi, short sale, and deed in lieu. The client pays the $3500 fee up front, so whatever mitigation we get the lender to go with, we are still paid.
Again, we are a law firm and this is fully compliant, so you will have to do your research as far as how the DRE feels about charging an up front fee for services such as these.
The loss mitigation company that I market for is also attorney based but I'm not sure if they provide this service or not. |
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ritabradley01
3159 Posts |
Posted - 10/11/2008 : 09:19:32 AM
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quote:
Originally posted by crankyusi
quote:
Originally posted by Captain Mortgage
[well not really. What if the balance is 700k and they accept a payoff of 500k but the house is only worth 350k.
I would expect the "worth $350k" to be the approximate price goal for the short sale negotiations. $500k "agreed" price clearly doesn't benefit the homeowner, only the fee-earning mod firm. Thus, in my example, I mentioned open-market pricing as a target for short sale negotiating. I'd expect some type of justification for the "agreed" price in the short sale negotiations.
Thanks you guys for the info.
This might be a good place to plug appraisal services-an excellent appraisal would provide the justification Cranky is talking about. Just make sure you don't hire a "number hitter". You need a real appraiser for this job. :) |
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crankyusi
658 Posts |
Posted - 10/11/2008 : 10:21:12 AM
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quote:
Originally posted by MortgageBoarder
Yes, our firm gets to keep the fee once the bank AGREES to the negotiated sale price. From there, it is up to the RE Agent to move the property as quickly as possible to complete the transaction.
Justin, similar for the short refi? Your firm earns its fee once the bank agrees to a payoff amount, and the lender doesn't care if the borrower stays in the home as long as they get their $xx ? |
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crankyusi
658 Posts |
Posted - 10/11/2008 : 10:22:52 AM
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quote:
Originally posted by ritabradley01
This might be a good place to plug appraisal services-an excellent appraisal would provide the justification Cranky is talking about. Just make sure you don't hire a "number hitter". You need a real appraiser for this job. :)
Yes, a "number hitter" would mean one of the party's is going to eat some unnecessary dough. |
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MortgageBoarder
3976 Posts |
Posted - 10/11/2008 : 10:25:53 AM
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Right... fee is paid up front, then "earned" upon goal obtainment. 
quote:
Originally posted by crankyusi
quote:
Originally posted by MortgageBoarder
Yes, our firm gets to keep the fee once the bank AGREES to the negotiated sale price. From there, it is up to the RE Agent to move the property as quickly as possible to complete the transaction.
Justin, similar for the short refi? Your firm earns its fee once the bank agrees to a payoff amount, and the lender doesn't care if the borrower stays in the home as long as they get their $xx ?
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ritabradley01
3159 Posts |
Posted - 10/11/2008 : 10:30:18 AM
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quote:
Originally posted by crankyusi
quote:
Originally posted by ritabradley01
This might be a good place to plug appraisal services-an excellent appraisal would provide the justification Cranky is talking about. Just make sure you don't hire a "number hitter". You need a real appraiser for this job. :)
Yes, a "number hitter" would mean one of the party's is going to eat some unnecessary dough.
Exactly. I can even imagine someone getting sued over it. |
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crankyusi
658 Posts |
Posted - 10/11/2008 : 10:34:58 AM
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quote:
Originally posted by MortgageBoarder
Right... fee is paid up front, then "earned" upon goal obtainment.
Best seller? :) |
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ritabradley01
3159 Posts |
Posted - 10/11/2008 : 11:42:31 AM
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Appraisers should start getting a lot of calls from LOs doing short re-fis. After all, many claim to not be able to do their own comp checks so how will they know what price to offer the lender without an appraisal?
I sound bitter because I am. |
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MortgageBoarder
3976 Posts |
Posted - 10/11/2008 : 11:47:23 AM
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It still baffles me that so many LOs don't know how to do their own comp check. Then again, they are probably the same LOs who are not familiar with loan docs. 
quote:
Originally posted by ritabradley01
Appraisers should start getting a lot of calls from LOs doing short re-fis. After all, many claim to not be able to do their own comp checks so how will they know what price to offer the lender without an appraisal?
I sound bitter because I am.
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ritabradley01
3159 Posts |
Posted - 10/11/2008 : 2:13:55 PM
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I'm just hoping to get some calls from LOs who don't know how to do comp checks. The company I work with is very good at evaluating shortsales and foreclosure properties for pricing purposes and we may be able to help LOs stay out of hot water.
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crankyusi
658 Posts |
Posted - 10/11/2008 : 2:18:39 PM
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quote:
Originally posted by ritabradley01
I'm just hoping to get some calls from LOs who don't know how to do comp checks. The company I work with is very good at evaluating shortsales and foreclosure properties for pricing purposes and we may be able to help LOs stay out of hot water.
And even if a LO knows how, sometimes an independent 3rd party is a good buffer just in case. Maybe publicly mention the price range you charge, and the geographical areas you cover. |
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ritabradley01
3159 Posts |
Posted - 10/11/2008 : 2:53:32 PM
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Thanks Cranky,
A short re-fi appraisal will be a great tool for LOs and homeowners alike. Both will feel confident that the offer being made is reasonable because if it isn't the bank won't accept it and everyone will lose out.
As for a buffer, how much an LO is looking for will vary. It is up to each LO to make that call.
A desktop appraisal for short re-fi purposes may work well for tract housing and very simple assignments. Keep in mind that desktop appraisals are limited to some extent, mainly because there is no way to know for sure what the condition of the property is without an inspection. We will endeavor to obtain information from the homeowner but we are limited to some extent by their knowledge of home defects and their honesty level.
A full interior inspection appraisal would work best as "insurance", especially for non-tract, older homes, homes in mixed neighborhoods etc.
For obvious reasons an interior appraisal will hold up better in court but either type will show that the LO did their due diligence to ensure that both the bank and the homeowner were dealt with fairly. Here's the pricing for shortsale or short re-fi appraisals:
Desktop Appraisal for an SFR or Condo........$100
Interior Appraisal for SFR or Condo..........$350 $300 for BO members.
Interior Appraisal for Units (no desktops for these)$500+
Sky Enterprises covers much of southern California-Counties include, Orange, Riverside, Los Angeles, San Diego and western San Bernardino. We can help you find good appraisers in other areas too.
Maybe I should post this in the announcement section too. :)
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