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GREATER INDIANAPOLISMORTGAGE BANKERS ASSOCATION(“GIMBA”)Abandoned HomesHomes in ForeclosureShort Sales
John B. Flatt, Attorney / PartnerNELSON & FRANKENBERGER, PC 15 Years ExperienceSmall Local to Large National InstitutionsGSEs & USDAJBF is not a Representative of any clients today
LENDERS v. SERVICERS Lender v. ServicerLender and Servicer, one in the sameLender / Servicer, separate entitiesLoan Servicer for MBS Bank of New York as Trustee for XYZ Trust GSE’s Large Servicer Ex’s: Nationstar Mortgage, OcwenLoan Servicing, Greentree
Foreclosure / Regulatory Landscape Foreclosure long process Title v. Lien Indiana judicial foreclosure state Lower #’s of FC’s initiated Longer process for default loans / foreclosures Consumer Financial Protection Bureau (CFPB):Federal Mortgage Regulator, enforcement thru IN AG CFPB 120 day Rule, generally Loss Mitigation Requirements with Servicers Right to a Settlement Conference (court appointedfacilitator?) , multiple conferences?
Short Sales Short Sale: Mortgage company agrees to acceptless monies than what is owed in exchange forreleasing its mortgage against the property Tax Consequences: 1099 Form for deficiency –client should consult with Accountant (MortgageForgiveness Debt Relief Act 2007 expired)
“Headwinds/Hurdles” to Short Sales Agent needs written authorization from clientand submit to Lender/Servicer Need to submit COMPLETE Loss MitigationApplication to Lender/Servicer
“Headwinds ” to Short Sales cont. Investor Requirements? Waterfall process (RI - MOD – SS - DIL?)Pooling & Servicing AgreementSeller/Servicer Guide for GSEsApply for exception/exemption from the Investor?
“Headwinds ” to Short Sales cont. Fraud?- Affidavit required?- All parties sign, including Agents Lien issues – negotiate releases? Borrower contribution?-Cash?-Promissory Note?- 500 minimum FNMA/FHLMC (8/1/14)
Suggestions Send all relevant documents to foreclosure attorney, aswell as the Lender/Servicer Follow-up re Application status (Servicing Resources) Clients should utilize Attorney, or, at a minimum acertified housing counselor (free)IN FORECLOSURE PREVENTION NETWORK877-GET-HOPE (877-438-4673)www.877GETHOPE.org
John B. Flatt, Attorney / PartnerNELSON & FRANKENBERGER, PCContact Information:Phone # 317-844-0106E-Mail: john@nf-law.com
Kennie SlaytonMainSource BankLender/Servicer Perspective ConcerningForeclosures, Abandoned Housing & ShortSales
Short Sale Packages Complete package required- checklist of documents required- incomplete package cannot be reviewed,and will be denied Borrower’s portion of application- application document- hardship letter & affidavit
Short Sale Packages Cont. Borrower’s Portion cont. 30-60 days of income documentation- W-2’s- Pay-Stubs- profit & loss statements- award letter for social security, etc. 2-3 months of bank statements Signed Tax Returns
Short Sale Packages Cont. Realtor’s Portion Purchase Agreement, include all counter-offersShort Sale AddendumCopy of Earnest Money CheckArm’s Length AffidavitAffidavit by Owner (MSB reqt)Settlement Statement / HUD-1Market Analysis, Appraisal or Valuation
Deed-In-Lieu of Foreclosure If Short Sale not possible, a Deed-in-Lieu ofForeclosure (“DIL”) may be an option DIL requirements Application document Hardship letter / affidavit 30-60 days of income documentation 2-3 months bank statements Signed Tax ReturnsNOTE: Borrower may receive 1099-C for deficiency
Borrower Contributions Lenders/Servicers requiring a ‘Contribution’from borrowers towards deficiency realized froma Short Sale or DIL Contribution requirement based on thefollowing criteria Credit score Current debt to income ratio Contribute up to 20% if cash reserves are greaterthan 10,000
Borrower Contributions Contribution Criteria cont. Contribute up to 10% if cash reserves are greaterthan 5,000 Contribute up to 6 times the borrower’s totalmonthly mortgage payment Interest free note up to 60 months Exception: Borrower’s financial hardship due todeath of borrower, or either primary/secondarywage earner in the household Exception: Military / Service Members
Lender/Servicer Suggestions Work Closely with Seller Advise Sellers to maintain payments and HOADues Help with completion of package Have borrower sign 3rd party authorization Keep in constant contact with lender/servicer Assist with contribution negotiations Seek help from experienced short sale peers
Lender/Servicer Suggestions Cont. Note that military / service members havespecial programs and requirements Note that transition from short sale to DIL mayeliminate your commission Understand short sale process and thatapprovals are typically condition based Understand DILs are typically condition based
Kennie SlaytonMainSource BankCONTACT INFORMATION Phone: 812-662-3243 Email: KBSlayton@mainsourcebank.com
Indiana judicial foreclosure state Lower #'s of FC's initiated Longer process for default loans / foreclosures . IN FORECLOSURE PREVENTION NETWORK 877-GET-HOPE (877-438-4673) www.877GETHOPE.org . John B. Flatt, Attorney / Partner NELSON & FRANKENBERGER, PC
