We were invited to attend the WinDS REO Conference in Las Vegas last month where I was one of the speakers.
One of the benefits we had was being updated by asset managers, HUD and banks.
The Freddie Mac Road show was at the conference. Jason Root who is the director of the short sales for Freddie spoke to us about important updates and some facts about Freddie that are not really reported about.
Freddie Mac’s first goal is home ownership. They want people to stay in their homes if they can. Freddie Mac agrees that home ownership is good for the economy and good for families.
In 2010 Freddie Mac approved 38,000 short sales.
In 2011 it is projected that there will be a 20% to 25% increase in approved short sales.
We always say there are two sides to every story and also there is more to it than just approving a short sale.
After Freddie Mac gets a short sale package they will have an answer back to the servicer in 5 days or less. This is of course, assuming that the short sale package is complete and has been thoroughly reviewed by the servicer and the MI company if there is one.
If the servicer is telling you that it takes 3 weeks to hear back from the investor and that investor is Freddie Mac, they are lying about it. Now, if it still has to go to the MI company then yes, it could take 2 to 3 weeks to hear back from the MI company. Freddie Mac’s turn around time is 5 days or less.
Freddie Mac wants to get short sales approved and does not want to foreclose if they can do a short sale. They understand that a short sale is better for the agents, the homeowners, the buyers, the neighborhood and the community than an REO property.
Now, if you are an agent and you submit a short sale package to the servicer don’t go calling up Freddie a day later asking if they have a package because that is NOT how the system works. Agents who do this are clogging up the system. Jason was telling us about an incident where he received a phone call from an irate agent who wanted to know if the short sale package she had sent in had been approved yet by Freddie Mac. She said that she had been calling the bank over and over again and they never returned her call back. When he asked her, when did she submit this short sale package? she said, ” I sent it to the bank this morning at 9 a.m. It is 4 p.m. now and I still have not heard anything from the bank telling me whether the short sale was approved or not.” Seriously!! Get some education on short sale processes if you are in this category.
The other calls that Freddie gets a lot of are agents who call up demanding to know what is going on with a short sale package only to find out from Freddie that the short sale is not a Freddie owned note at all but rather is owned by Fannie Mae. They are two separate entities. Make sure you know who the note owner is before you start calling. I guess this does not surprise me any more when we still get agents to this day who don’t know the difference between a short sale and a bank owned property.
Some servicers do have full delegation authority for Freddie mac files. Not all of them do.
To be approved for HAFA for a Freddie file- the borrower has to be 60 days delinquent on their mortgage.
However, to do a regular short sale the borrower does NOT have to be late on their payments. Write that down! The Borrower does NOT have to be late to do a short sale.
Freddie Mac does NOT waive rights to deficiencies however they DO NOT pursue judgments unless they discover FRAUD was involved in the transaction. That is right from the director of short sales, Jason Root.
If you go buy another house right after you do a short sale, Freddie is not going to come after you, according to Freddie Mac.
Freddie Mac will NOT interfere with your listing agreement. They will NOT reduce your commission. The maximum commission they allow is 6% and unfortunately, this is also the case on very small sales.
Freddie Mac also does not refer borrowers to specific agents or agents with specific designations. We really like that. Freddie Mac says that the investor or the servicer DO NOT own the property and therefore the choice to do a short sale and the choice of agents is totally up to the borrower and they have no plans in interfering with that choice.
They understand that they are NOT a party to the contract.
Nestor and I brought up the fact that the servicers are the ones holding up the process and not doing things correctly. We also understand that there is a contractual fiduciary relationship between the servicer and the note owners/investors. They have a signed contract so it is not as easy as just being able to fire a servicer for doing a poor job.
So Freddie Mac Road Show goes around the country to the servicers places of business and is training their negotiators how to do short sales. The servicers had to hire a lot more people but those people need to be trained. So Jason and about 9 or so other employees are taking a proactive approach and doing the training themselves.
Freddie Mac will pay out a maximum of 6% up to 10% of the second note to the second note holder. This is their policy for right now and there is no plan on changing that any time soon. They understand that this can create problems for the short sale closing however this is a moral hazard approach that they have chosen. The second is going to get nothing at a foreclosure sale.
This does not mean that you should call Freddie for every short sale where they own the note. Go through the servicer. Go to the negotiators’ superiors, take it to the executive office and then as a last resort you can call Freddie at 1-800-FREDDIE.
Some servicers also are now being given full delegation authority to postpone foreclosures on behalf of Freddie Mac without having to go to Freddie for those requests and rulings.
Freddie Mac says they want to do short sales because:
Jason said on behalf of Freddie that they appreciate the real estate broker and agent community, they look to the agents to solve problems and take short sale listings. Jason is a sincere person and we appreciate his time very much in giving us these Freddie Mac updates for short sales.
Forewarning, this is a true story. It illustrates why you should not list your Wellington short sale with agents who are NOT experienced in closing short sales and much less, don’t even know what a short sale is all about.
We got a call from a distraught seller who lives in another state and owns an investment property that he needs to short sale here in Florida.
Here’s the story of the listing agent (not a professional Wellington Short Sale Agent) The agent who listed the property knows that the property has a tenant in it and that tenant needs 24 hours notice for showings. This agent knew this information prior to signing the listing agreement. This agent refuses to set up the showings for the owner because the agent says that is just too many phone calls to make. So the owner sets up the showings with the tenant.
My first question here is why don’t you have a showing desk to set up the showings, a virtual assistant or a receptionist to make these calls for the showings if this is too much work for this agent?
Next, the agent is NOT doing the short sale, this agent only listed the property and does not know anything about short sales nor did this agent do any preparatory work with the seller in getting him on the same page for doing a short sale. This agent did not interview the seller. This is beyond sad.
Instead this agent has some SHORT SALE company doing the short sale. But this short sale company is NOT a FLORIDA short sale company. This short sale company has only spoken to this seller once. The seller is in lis pendens. The short sale company told the seller that his lender canceled the foreclosure because he is doing a short sale! What a load of crap!
We are going to post on what attorneys say about agents who take short sale listings and know nothing about short sales next week.
So here is a seller who is in foreclosure and this short sale company nor the agent ever advised him to go seek the advice of a foreclosure defense attorney to defend him in this foreclosure suit. OH MY! MY BLOOD IS BOILING!!!!
So the agent puts this property that is in foreclosure temporarily off the market because this agent does not want to deal with the tenant and refuses to cancel the listing yet is not doing fulfilling the agents part in this entire fiasco. Does this agent not know that time is of the essence here????
Next, we checked out this SHORT SALE Company! They are not listed as a corporation in Florida. They do not have a business license here. And to top it all off-
Florida law says that you can NOT handle short sales in Florida unless you are a licensed real estate agent, a licensed loan originator or an attorney!!!! So this SHORT SALE company is illegally handling this seller’s short sale who did not know any of this.
So we have an agent who does not have a clue nor does this agent even seem to care that this man is going to lose his home to a foreclosure and a short sale company who is illegally handling or should I say NOT handling his short sale and giving him incorrect information about his foreclosure status.
How do they sleep at night?????????????
Takeaway: Use a fully qualified Wellington short sale agent when engaging in a Wellington short sale for your home. agents who are NOT experienced in closing short sales and much less, don’t even know what a short sale is all about.
In Wellington, Florida, short sales comprise just over 19% of the real estate market for Wellington listings. Time and again, we have successfully closed short sales throughout the state of Florida. As short sale agents, we service all of South Palm Beach County, Wellington, FL homes for sale, West Palm Beach FL real estate, Royal Palm Beach and all surrounding areas. Whether you are in a distressed property in Ft. Lauderdale, Miami Beach, Downtown West Palm Beach or anywhere in south Florida real estate markets, we can help.
If you’re thinking about a short sale and wonder if a short sale is right for you, why not start out by getting in touch with the agents with the best, long standing track record as Wellington Short Sale Agents and Florida short sales?
Nestor Gasset and Katerina Gasset, top performing Wellington short sale agents, are always ready to help you in your short sale decision and if a short sale is right for you, you can be sure that they are intimately familiar with what it takes to succeed in negotiating this challenging process to a successful conclusion by orchestrating and negotiating with potential buyers, lenders and banks to everyone’s best outcome.