Expert Slides
The following slides are the ones we would like you to present at the Home Buyers Seminar. Please review them and the handouts that accompany this. Note the provision made for you to provide additional slides for your presentation. If you wish to include more information, please let me know.
Definitions
• Short Sale * – Short sales are defined as a transaction where title transfers; where the sale price is insufficient to pay the total of all liens and costs of sale; and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies.
*Defined by NAR
Definitions
*Defined by NAR
• Foreclosure * - The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
Definitions
• REO * – An abbreviation for Real Estate Owned, and is industry jargon for foreclosure property repossessed by banks or lenders. If a lender or bank is the highest bidder at a foreclosure auction — or if no third party bids at the auction — the property reverts back to the lender and becomes an REO. REOs are owned by banks.
* Defined by Realtytrac.com
Timeline for Short Sales, Foreclosure and REO Sales
Homeowner defaults on loan (60 or more days in arrears)
Lender sends Homeowner Notice of Default
Property goes to Sherriff Sale/Auction
If no other winning bids, Bank buys back property at Sherriff Sale/Auction
Property is now Bank Owned (REO) and listed for sale.
A short sale or loan modification may happen within this time period, stopping the property from going into foreclosure.
Pre-Foreclosure Foreclosure REO
After You Make an Offer
1. The Seller makes the initial decision.
– All offers are first presented to the Seller who makes a decision.
2. If applicable, Attorney Review still applies.
– Attorney Review runs its normal course before Lender approval.
3. A completed short sale package is submitted to the Lender for approval.
– In order to facilitate a smooth approval process with the Lender, some attorneys may suggest that the Buyer complete home inspections before Lender approval.
The Lender’s Response
The Lender can do one of several things:
• Refuse the offer, either with or without an indication of what net proceeds would be acceptable.
• Ask the Seller to bring some or the entire shortfall to escrow.
• Approve the offer.
Why Might My Offer Be Rejected?
Many conditions will factor into your offer including, but not limited to the servicer of the loan, location of the property, outstanding loan balances and current market conditions.
Source: Realtor Magazine online 5/08
Advantages of Buying an REO over a Foreclosure
• Access to property for inspections.*
• A quick sale is possible.
• Clear title is likely to be conveyed upon closing.
• No redemption timeframe.
* Bank will typically only address repairs needed by the municipality and/or buyer’s lender to settle.* Bank will typically only address repairs needed by the municipality and/or buyer’s lender to settle.
REOs: Seeing the Property
• Unlike Foreclosure properties, buyers have access to an REO property and the ability to have a home inspection.
• The condition of REO properties may reflect some neglect and the need for repairs.
REOs: Seeing the Property
• Insert additional Title/Attorney Slides here.
