1 Short Sale Basics Realtors Edition We save homes one at a time. ”

● What Is The Short Sale Process ● Requirements For Any Successful Short Sale ● Transaction ● What Will The Servicer Allow or Not Allow ● New Opportunities For You In Short Sale ● Listings & Closings ● New HAFA Program 2

WHAT IS A SHORT SALE? Short Sale Scenario: Home Is Worth $100,000 Mortgage is $110,000 Agent Lists It For $100,000 And Sells It For $100,000 After Commission And Closing Costs Of 8%, There Is $92,000 To Satisfy Mortgage, Servicer Discounts Mortgage $18, Short Sale Scenario: Home Is Worth $100,000 Mortgage is $110,000 Agent Lists It For $100,000 And Sells It For $100,000 After Commission And Closing Costs Of 8%, There Is $92,000 To Satisfy Mortgage, Servicer Discounts Mortgage $18,000.

WHAT IS A FORECLOSURE? Foreclosure Scenario: ● Home Is Worth $100,000 ● Mortgage is $110,000 ● 9 Months To Foreclose & Resale ● Legal Fees $1,500 ● Lost Interest $4,500 ● Taxes, Insurance, Maintenance, Utilities and Secure the Property -$3,000 ● Commissions & Closing Costs $8,000 ● Servicer Losses $27,

FORECLOSURE LOSS ● Mortgage Servicers Are Trying To Reduce REO Inventory And Losses Due To Foreclosure ● Average Foreclosure Loss $50,000 or More ● Servicers Want to Double Short Sales. ● Opportunities for Servicer, Homeowner and Agent. 5

LISTING A SHORT SALE PROPERTY ● Servicer Does Not Own The Property And Does Not Tell You What To List Property For. You And Homeowner Determine The Price. ● Our Short Sale Advisors can help with pricing the property. ● List Property Subject To Short Sale Approval And Be Familiar With Your Local MLS Rules. 6

Start gathering the information on your listing appointment SHORT SALE REQUIREMENTS Homeowner Qualifies For A Short Sale With A Complete Short Sale Package ● Listing Agreement ● 2 Years Tax Returns (Signed) ● 2 Months Recent Pay Check Stubs w/YTD ● 2 Months Recent Bank Statements w/Bank Logo ● Mortgage Statement(s) ● Hardship Letter ● Financial Worksheet ● Authorization Filled Out and Signed/Dated ● HOA Statement, if applicable ● Order Payoffs on Mortgages 7

WHO DETERMINES THE OFFER FOR LENDER? ● You And The Homeowner Negotiate The Best Possible Offer for the Lender. ● Homeowner Should Reject Or Counter Unreasonable Offers. ● Servicer Expects: Fair Market Value. ● Have Homeowner Accept The Offer “Subject To Short Sale Approval.” 8

WHO NEGOTIATES WITH THE SERVICER ● Servicer and weRshortsales.com have the same Goal- NO Foreclosure ● Our staff will negotiate all loans with the servicers. 9

SUBMITTING THE OFFER ● Complete Package ( to: ● Signed Offer ● Buyers Pre-approval Letter Proof of cash on hand –if a cash offer ● Listing Agreement ● Short Sale Package ● 2 Years Signed Tax Returns (signed) ● 2 Months Recent Pay Check Stubs ● (if self-employed a Profit & Loss is required) ● 2 Months Recent Bank Statements ● Hardship Letter ● Financial Worksheet ● Authorization Signed & Dated ● Include Comps /Pictures/Articles/MLS Sheet Do Not Leave Anything Out! 10

FEES NOT PAID The Following Fees will generally Not Be Paid ● Repairs ** Property is Sold “AS IS”** ● Inspection Fees, Pest Inspection Fees, Pest Repairs ● Fees Normally Paid by the Buyer Including Tax Service Fees ● Survey Costs ● Junk Fees ● Utility Bills/Unless a Lien on The Property ● Buyer Closing Costs in Excess of 3 % 11

FEES THEY WILL CONSIDER PAYING ● Property Taxes ● Owners Title Policy ● County Documentary Transfer Tax (if applicable) ● Settlement Fees/Closing Fee ● Commission **May Be Reduced**Negotiable ● Junior Lien Holders **Must Be Negotiated For Release** 12

● Junior Liens May Accept $1,000- 5,000 To Release The Property ~ ● They May Not Forgive The Debt ~~ ● They May Ask The Seller To Sign Unsecured Promissory Note JUNIOR OR 2 ND LIENS 13

ANOTHER OFFER – MI COMPANY What do you do when another offer comes in? Do we resend the entire package Do we have the homeowner accept the new offer Depending on the Servicer up to 3 offers can be submitted at one time. What happens if there is an MI (mortgage insurance) company involved? This take longer to get approved Can I call the MI company 14

GETTING YOUR SHORT SALE APPROVED ● We Need To Demonstrate To The Servicer That It Makes Sense To Approve The Sale. ● We Provide The Documentation Needed To Justify Their Decision. ● Help The Servicer Understand Your Market, The Property And It’s Condition So They Can Make The Right Decision. ● Have Pictures And Comparables. ● We make Servicer Aware Of Your Marketing ● Efforts And Pricing History. 15

SERVICER’S PERSPECTIVE ● Servicer Expects Fair Market Value. ● It Is The Duty of The Servicer To Obtain The Highest Possible Net Amount. ● Loss Mitigation Departments Get Evaluated Based On Minimizing Their Losses. ● Servicer May Ask Us To Reduce Commissions. ● Servicer Must Document Why They Are Discounting The Loan. 16

WHY SO LONG FOR AN ANSWER? ● Servicer Needs To Verify The Value Of The Property ● Servicer Will Order An Appraisal ● Servicer Will Order A BPO ● Servicer Needs To Get Approval, Based On How Big The Discounted Amount Would Be 17

FORECLOSURE TIME LINE HAS NOT STOPPED! 18 IMPORTANT!. Let WeRshortsales.com know when there is a foreclosure or a sale date ! The Foreclosure Process will continue while the property is listed and even during the negotiations of a short sale. We will ask for a postponement of the foreclosure sale if we have an offer pending. Do not assume that the LENDER or weRshortsales.com is aware of the foreclosure sale!

POSSIBLE TAX CONSEQUENCES There May Be A Tax Liability Created By Either A Foreclosure Or A Short Sale. Have The Homeowner Talk To Their Tax Advisor. Seller Receives a 1099 For Discounted Amount. File Form 982 If They Are Insolvent 19

BENEFITS TO THE SELLERS  Homeowner Does Not Have A Foreclosure  Homeowner Avoids The Humiliation Of A Public Sale.  Homeowner Completes Their Original Commitment With Integrity.  Possible Smaller Tax Liability. 20

WHAT I HATE ABOUT SHORT SALES!!! ● Shorter Time Frame To Market Property Before Foreclosure Sale Date. ● Servicer Believes The Property Is Worth More. ● Servicer Requiring Additional Information. ● Lack Of Communication With The Servicer. ● Length Of Time For Servicer To Approve ● Unmotivated, Uncooperative Sellers. ● Title Issues. ● Servicer Wants To Limit Commissions. 21

Too Many Liens Value 3 REASONS YOU DON’T CLOSE Ego 22

THE GOOD NEWS! ● Servicers Really Do Want To Participate In More Short Sales. ● You Will Get Referrals From The Sellers. ● Sellers Really Do Need Your Help. ● The Servicers Have The Same Goal And We Are On The Same Team. ● We are here to help you through the short sale process. 23

YOUR SOURCES OF BUSINESS ● WeRshortsales.com Assignments ● Notice Of Defaults, Or Notice Of Lis Pendens From County Recorder ● FSBOs In Newspaper or Rentals or Expired Listings ● Get Referrals From Other Professionals, ● Lenders, Title or Escrow, ● Organizations That You Belong To ● Agents You Network With Around The Country ● Word Of Mouth ● Consider Doing A Seminar At A Local Library 24

● Lenders Are Using Interior BPOs Or Appraisals to Set The Value ● Servicers Are Hiring and Provide Training To Their Loss Mitigation Specialists As Fast As They Can. ● All Servicers Have Publicly Stated That They Want To Double Their Number Of Short Sales. PROCESS IMPROVEMENT 25

CONTACT INFO WeRshortsales.com Ask For Short Sale Packets and Addendums for Each Servicer