Chicago Short Sale

1) “…groups of investors calling themselves a ‘Trust Company’…ask the homeowner to quitclaim their home’s deed to the trust, saying they will negotiate a short sale.” Unfortunately, some of these groups never do. Instead, “the trust pays off the loan amount at less than the full amount without negotiating with the lender or getting the lender’s approval, so the lender goes after the seller for the difference even though they no longer own the home.” (An ethical company is one that if they use a trust it is only after they obtain an Approval Letter from all lien-holders and the trust is not activated until the actual closing occurs in which the homeowner actually sells their property. Utilization of a trust prior to closing is merely a way for an investor to gain control of your homeowner clients and only serves to place your homeowners at the mercy of the investor).2) Another scam involves the “sale of the home to a straw buyer, who would borrow against the home’s value and pocket the money. The original owners were told their payments were brought up to date, allowed to stay in the home, and were promised that they’d be able to buy it back from the investor.” Only to later learn that “the home’s equity was gone and [that they were] unable to afford to buy it.” A pre-foreclosure short sale and owner-leaseback can indeed be an effective way to avoid foreclosure and give your homeowners the ability to save their home, unfortunately often such arrangements are fraught with fraud. If you or your homeowners are approached by such an offer, be sure to get everything in writing. Have a real estate attorney review it and thus protect yourself and your clients. This can work, but you must ensure that the investor group you are working with is both fair and ethical.Here are some tips that might help you when choosing a Loss Mitigation Firm to partner with:

1) Ensure that the sole service of the company is Loss Mitigation.

2) See if they have a referral network of other professionals they work with.

3) Where does the company’s focus lie? Are they just in it for money for themselves are they focused on helping those who really need their help? An ethical company will have the desire to make you as the realtor a “Hero to your homeowners.” And most importantly of all the primary mission of the company will be to save homeowners from foreclosure and get a fresh start in life.

4) Ask the company if there are any other alternatives besides a short sale. A morally-sound company will help you explore other foreclosure-stopping alternatives besides just a short sale.

5) Does the company require your homeowner to deed their house to a trust? If they do understand why to the fullest extent.

6) Will the company let you and your homeowner see the HUD? Will they tell you exactly how much they stand to make or will they tell you “it depends.” (An ethical company will disclose all fees in advance, will put everything in writing, and will let both you and your homeowners examine all short sale documents at any time).

7) How will the company keep you informed during the long process? Will they give you a way to track your file’s progress as it progresses?

Will the company fight for your homeowner to get a Waiver of Deficiency or Satisfaction of Mortgage? If the homeowner’s lenders don’t agree to such a request, then your homeowner could end up still owing the difference between the short sale proceeds and the balance of the mortgage(s). The result, your homeowner really didn’t benefit from the short sale at all!. (An ethical company will make it the purchase contract contingent upon all lien-holders agreeing to provide a Waiver or Satisfaction. Yes, it will make the loss mitigations more difficult for them, but to do anything less would be a disservice to the homeowner).

9) An ethical company will admit that there are no guarantees. And a better one will tell you WHY sometimes deals don’t work out and what they are doing differently to continually improve. The market constantly changes, your loss mitigation company must be able to adapt to the ever-changing lender requirements.

10) Examine the company’s website. It’s hard for a tiger to hide his stripes. When you look at their website, it will become pretty evident where their focus lies. If they are really about helping others, the site will be more focused on providing information and solutions versus just about making money.