MatthewDickason – First Home, First Loan http://www.firsthomefirstloan.com Helping to make home ownership a pleasant reality Wed, 29 Nov 2017 19:49:16 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.1 The “Real Story” on Short Sales http://www.firsthomefirstloan.com/the-real-story-on-short-sales/ Tue, 12 Nov 2013 19:13:46 +0000 http://www.firsthomefirstloan.com/?p=1378 With the exit of a few big firms from the short sale facilitation arena, they have not only left a hole in the market, but they’ve also allowed for some terrible misconceptions to spread across our profession. Unfortunately, the reasons these firms gave out as to why they have stopped short sales have caused lots of misinformation to circulate. Here is the “THE REAL STORY” as to what the law for facilitation is. 

The Law as of today:

Exemption for Real Estate Broker/Agent – Section 7-1-1001 was amended to add subparagraph (6) below went into effect July 1, 2013:

(6) A real estate broker or real estate salesperson not actively engaged in the business of negotiating mortgage loans; however, a real estate broker or real estate salesperson who directly or indirectly negotiates, places, or finds a mortgage for others shall not be exempt from the provisions of this article;

 

Exemption for Attorneys still in effect – Section 7-1-1001(5) HAS NOT CHANGED as of August 19,2013:

(5) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator;

 

There has also been concern that the Georgia Department of Banking and Finance (DBF) has changed its position and interpretation. That is simply not correct. You may search the DBF website for the only change relative to short sales — which is the addition of (6) above. It is my understanding that DBF has been providing telephonic and email clarification since this became a hot topic back in August.

However, the operative word other law firms are hanging their hats on is “negotiating”. The law firms still doing facilitation, including Dickason Law Group, only facilitates the flow of information from the seller to their bank pursuant to the attorney’s role in title clearance. They do not represent the seller and they do not negotiate anything. This role has been reviewed and approved by Rod Carnes, the head of the Georgia Department of Banking and Finance. Dickason Law Group now has 9 full time facilitators, a dedicated closing team with 3 closers, and an account manager specifically for short sales. The existing firms doing facilitation without negotiating view the exit of the larger firms as an incredible business opportunity.

 

This is the DBF site with it’s Mortgage Law and Rules:

http://dbf.georgia.gov/mortgage-laws-and-rules

 

The only change in the law with respect to short sales is the addition the amendment providing an exemption to real estate agents.  See DBF site:

http://dbf.georgia.gov/sites/dbf.georgia.gov/files/related_files/document/ChangestoGRMA-2013LegislativeSession.pdf

 

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How to Buy a Short Sale, Part 1 http://www.firsthomefirstloan.com/how-to-buy-a-short-sale-part-1/ Mon, 10 Jun 2013 05:04:15 +0000 http://www.firsthomefirstloan.com/?p=546 There are many deals to be had out there right now as a home buyer. Some of these deals include realtors advertising homes as a “short sale.” But be warned, a potential short sale buyer needs to have one specific and important trait; patience. A short sale happens when the seller’s lender is willing to accept less than what is owed by the borrower, thereby releasing the lien it holds on the property. This can result in a tremendous deal for the buyer. However, the short sale process can often take 6 to 8 months to complete, and in some cases even longer.
The reason for the sometimes lengthy process is that lenders are not in a tremendous hurry to realize a substantial loss on these loans. In fact, many lenders will not even consider allowing a short sale until they view the seller as a foreclosure risk. A “red flag” for the lender to realize this risk is when a borrower misses a payment or two. Once the first mortgage payment is missed the lenders begin to call and send letters of delinquency. During the missed payment period, some borrowers will hire a realtor to try and sell their home. These realtors, normally a Certified Distressed Property Expert (CDPE), can compare the values of other homes in the neighborhood and set a sales price. Once a reasonable offer is received by the seller, the CDPE, with the help of the closing attorney, will submit the short sale package to the lender. The package includes information to let the lender know that the seller is going through a financial hardship. Accompanied by the declining home value, this may encourage the lender to let the sale go through at a price less than what is owed, rather than risk an even lower amount in foreclosure.

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How to Buy a Short Sale, Part 2 http://www.firsthomefirstloan.com/how-to-buy-a-short-sale-part-2/ Mon, 10 Jun 2013 00:24:09 +0000 http://www.firsthomefirstloan.com/?p=556 The short sale package includes a letter of hardship, bank statements, tax returns, pay stubs, etc, which are meant to disclose a bona fide financial hardship. The ball is now in the lender’s court. The lender will review all these documents for accuracy and eventually order a Broker Price Opinion (BPO) from an independent real estate agent. This price opinion is based on the condition of the home, as well as other comparable homes in the neighborhood. It would seem that a favorable BPO would be the near the end of our process, and this is sometimes the case. However, the lender can take up to 3 months to approve or disprove the short sale package even with a favorable BPO. The lender will also require the documents submitted to be up to date. Depending on the length of the process, the seller may submit the same documents multiple times (to be reviewed by the lender) which further adds to the length of the process.
While the short sale process can be lengthy, having patience and knowing what to expect can save a lot of headaches. In sum, here are a few things to keep in mind that will make the process easier to take:
• Hire a realtor that is familiar with the short sale process and/or is a Certified Distress Property Expert.
• Be prepared for a long process and waiting periods.
• When making offers on a short sale include a Short Sale Addendum which allows the you to back out prior to and after a lender has sent written approval for the short sale.
• Make escrow start after the lender has approved the short sale so that your earnest money isn’t tied up for the entire process.
• Get an appraisal and inspection after the lender has approved the short sale so that you don’t pay for these before it is approved.

Buying a short sale can be a long and arduous process, but also a profitable one. Having patience and understanding the process can alleviate any undue stress and can be a great way to own a profitable investment property or an affordable new home.

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