Well last week I received a very interesting assignment from Titanium, I was asked to offer the home owner a "VOLUNTARY" Short Sale and cash for keys. In the past I have received assignments where I have to deliver the home owner bad news that their modification was not approved and encourage them to do a short sale, but never cash for keys. Also the other type of assignment that I have received in the past is the deed in lieu with the lease contract, and the lease contract or cash for keys for tenants.It is interesting to be in the middle of this evolution in the default mortgage industry. I was reading today that most lenders are embracing short sales, according to NAR 10% of all transactinos last year were short sales, and the number might increase this year. Also the number of home owners in default status keep on raising, and since most of the lenders are trying to stay away from the toxic inventory, we might see an increase on short sales, some of the new laws and regulations are pushing the lenders to approve the short sales quicker, the only problem is that the buyer's lender has to charge less or find a way to roll in the closing cost, or the buyer will need to cover the closing cost, the way it should be. Since most lender only allow a max of 3% for seller's contribution, and most seller's don't have money to offer any type of contribution.I just wonder how many new combinations of REO/ShortSale/Rent Options type of assignments will come up in the future. It seems that at this point mostly is trial and error, and because some of these assignments are like a mix of the "traditional" REO and loss mitigation and new ingredients throw in the mix, I like to call them HYBRID assignments, because technically they are one thing, but the procedures are similar to something else.About my assignment the home owner is an investors that has moved out of the state, and the house is a vacant boarded up shell, so I didn't get to list that property.Please share some of your experience with this type of hybrid assignments and what work and didn't in your situation.
SraM, a DIL is also called a friendly foreclosure, property doesn't have to be in short sale, modification or even late in the mortgage, this is a way for a home owner to turn the property to the bank without going though the foreclosure process, the advantage is that it doesn't cost them anything like a bankruptcy, the way it shows in the credit report is different than a foreclosure, but it harms it a lot, borrower can possible ask the bank for lease option and if you are the agent helping with that, you might try to develop a relationship with the loss mitigation and ask to be the property manager, but they already may have a company doing that for them.
Disadvantage is that credit suffers, it is supposed to harm it more than a short sale, it would be wise for your client to talk to lawyer, but the lawyer might convince your client to do a bankruptcy, or might charge hourly fee for the consultation. If the property has HOA or IRS liens, then the bank wont accept the DIL.
If the borrower is late or has problems paying the mortgage this is the best to worst things that can happen to both borrower and bank
1. Loan Modification, borrower keeps the house, bank keeps the loan, you will have a future client who will appreciate your honesty and interest to help them. In Maryland agents can't do modifications, so I always refer them a non-profit housing counselor for help, I am sure every city has one.
2. Short Sale, if negotiated right borrower will get out of a bad situation, bank will take a hit, but save in legal fees, time, possible acquiring a property that is destroyed, vacant, and loose more money on the sale, etc. Realtor makes money on the commission, local governments make money on the sales tax, etc.
3. Deed In Lieu, borrower gets out of bad situation credit report takes a big hit, also might have to pay property liens. Bank saves money on legal fees, but now has a vacant property that can be vandalize, etc, has to hire some one to do maintenance and inspect property until it is sold. The only realtors that make money are the REO agent who will get the listing in the future, possible the outsourcer, and the buyer's agent.
4. The F word, Foreclosure, the only one making money here are the lawyers, and the REO agents, outsourcers, preservation, etc. Borrower credit is destroyed, possible consequences of loosing government clearances that can affect their future. Bank takes a loss here too. Communities takes a loss with a vacant house, property values dropping, etc.
I had a homeowner ask me about deed-in-lieu vs. a short sale. I think they have to try to short sale first before deed in lieu is possible. Does anyone have experience with this and do they give them any cash for the deed in lieu?
Comments
Disadvantage is that credit suffers, it is supposed to harm it more than a short sale, it would be wise for your client to talk to lawyer, but the lawyer might convince your client to do a bankruptcy, or might charge hourly fee for the consultation. If the property has HOA or IRS liens, then the bank wont accept the DIL.
If the borrower is late or has problems paying the mortgage this is the best to worst things that can happen to both borrower and bank
1. Loan Modification, borrower keeps the house, bank keeps the loan, you will have a future client who will appreciate your honesty and interest to help them. In Maryland agents can't do modifications, so I always refer them a non-profit housing counselor for help, I am sure every city has one.
2. Short Sale, if negotiated right borrower will get out of a bad situation, bank will take a hit, but save in legal fees, time, possible acquiring a property that is destroyed, vacant, and loose more money on the sale, etc. Realtor makes money on the commission, local governments make money on the sales tax, etc.
3. Deed In Lieu, borrower gets out of bad situation credit report takes a big hit, also might have to pay property liens. Bank saves money on legal fees, but now has a vacant property that can be vandalize, etc, has to hire some one to do maintenance and inspect property until it is sold. The only realtors that make money are the REO agent who will get the listing in the future, possible the outsourcer, and the buyer's agent.
4. The F word, Foreclosure, the only one making money here are the lawyers, and the REO agents, outsourcers, preservation, etc. Borrower credit is destroyed, possible consequences of loosing government clearances that can affect their future. Bank takes a loss here too. Communities takes a loss with a vacant house, property values dropping, etc.