Learn about investors
As agents, we never planned to get into the title insurance business. Yet, studying the title report and making sure that you are able to clear all the liens in title is a vital part of the short sale transaction.
We also have never spent so much time focusing on the final settlement statement, crunching and re-crunching the figures to assure that the seller’s mortgage lender gets the net amount that they request.
Another thing that we never paid too much attention to before is the seller’s mortgage lender. Obtaining the name of the mortgage lender is one of the first questions that I ask a seller or a seller’s agent when evaluating the short sale. The next question that I ask is about the investor.
You may recall from your real estate courses that many major lending institutions are merely servicing companies. That is, they provide mortgage servicing for the mortgages that are actually owned by investors.
‘Investor’ has become a buzz word in short sale transactions. Many times the short sale processor at a bank will tell you that s/he has submitted the file to the investor for final approval. Or, other times you might hear that the investor will not pay for any pest control work on any of the short sale properties. Phrases like these indicate that the bank is servicing a note and does not own the note. Frequently, these servicers are merely ‘go betweens’ that prepare and submit information to the investor for a final decision about the short sale approval.
Fannie Mae and Freddie Mac are also investors. Knowing whether the seller has a Fannie Mae or Freddie Mac loan can be crucial to the short sale transaction. For one, both now participate in the HAFA program. So, a seller with a Fannie Mae or Freddie Mac mortgage who participates in a short sale may receive some great incentives. Additionally, if the loan is with Fannie Mae, agents are guaranteed their full commission (not to exceed six percent). Lastly, sometimes with Fannie Mae and Freddie Mac, there are strict rules guidelines with respect to the foreclosure date. Frequently, these investors do not approve the postponement of a Trustee’s Sale (foreclosure sale) in order to entertain the short sale.
There’s so much more to a short sale than just taking the listing. You now need to pay attention to title, escrow, and even the mortgage itself. Nevertheless, working short sales is a great way to become a master listing agent, take more listings than ever before, and consequently fuel your real estate career for years to come.
Here are a few helpful tools: