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EXPAND YOUR HORIZONS Make the Right Connections

EXPAND YOUR HORIZONS Make the Right Connections. “My Home is Half-Way Under Water and I Cannot See the HORIZON!”. My Home is Half-Way Under Water and I Cannot See the HORIZON!”. Thanks to our “Session Committee Members” Barbara Springer, CRP/GMS/CMS - Executive Vice President

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EXPAND YOUR HORIZONS Make the Right Connections

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  1. EXPAND YOUR HORIZONS Make the Right Connections “My Home is Half-Way Under Water and I Cannot See the HORIZON!”

  2. My Home is Half-Way Under Water and I Cannot See the HORIZON!” Thanks to our “Session Committee Members” Barbara Springer, CRP/GMS/CMS - Executive Vice President Relocation and Referral Services - @ Properties Larry L. Sontag, CRP – VP Business Development Fidelity Residential Solutions

  3. My Home is Half-Way Under Water and I Cannot See the HORIZON!” Moderator Barbara Springer, CRP/GMS/CMS - Executive Vice President Relocation and Referral Services - @ Properties Panelists Sue Keck - Director Executive Compensation Emerson Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group Wells Fargo -

  4. Sue Keck Director Executive CompensationEmerson

  5. Policy – Established to Encourage Fast Home Sale Pre Decision Reports List at 105% of two BMA most probable sale price Home Sale Incentives - AVO $10K/7.5K - BVO $7.5K/5.0K Loss on Sale – 80% up to $50,000 Sue Keck – Director Executive Compensation Emerson

  6. Loss on Sale – Negative Equity Calculation Example – Negative Equity of $15,500 Loss on Sale $50,000 Fed @ 25% -12,500 MO @ 6% - 3,000 FICA/Medicare (5.65%) - 2,825 Balance 31,675 Negative Equity Repay -15,500 Net Payment to transferee $16,175 Sue Keck – Director Executive Compensation Emerson

  7. Negative Equity Calculation Example – Negative Equity of $40,000 Loss on Sale $50,000 Fed @ 25% -12,500 MO @ 6% - 3,000 FICA/Medicare(5.65%) - 2,825 Balance 31,675 Negative Equity Repay 40,000 Balance Due Company ($8,325) Sue Keck – Director Executive Compensation Emerson

  8. Tine K. H. Dickey Senior Vice President CRP/SGMSFidelity Residential Solutions

  9. Thanks for attending our session Fidelity Residential Solutions (FRS) – provides title, equity, closing and inspections to the relocation industry as well as national closing management services for REO (Real Estate Owned) properties The national title company is in a unique position – they see the good the bad and the ugly by working with “all” vendors in the industry - Realtors, lenders, buyers, sellers, attorneys, investors, REO servicers, etc. Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions

  10. Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions State of the National Household * • Approximately 1 in every 4 homes (27%), with a loan in the USA, are underwater or at/near negative equity position (within 5%) • 3.86 Million homes remain in “Shadow Inventory” (90 + days delinquent) • HUD, FNMA and FHLMC (GSE’s) avoiding foreclosing (REO) • Average number of days for processing foreclosure (nationally) • 631 average days (Sunshine states can add as much as 50% more) • HUD owned inventory at 70,000 in March 2011, currently at 30,000 • REO totaled 700,000 in Q3 2008 - 500,000 as of Q3 2011 • GSEs and Lenders look to alternative solutions (REO last resort) • *Source: Fannie Mae, Freddie Mac, FHA, FDIC, CoreLogic, Zelman & Assoc.

  11. Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions USA Home Appreciation

  12. Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions Negative Equity Draining Your Talent Pool?

  13. Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions MBA Statistics - Interest rates are at 60 year historic lows (4%)

  14. Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions MBA Statistics - Purchase Index (Number of new weekly loan applications) During peak years (2003-2006) “Index” ran in 400-500 range

  15. Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions What does all of this mean to the “Relocation Industry”? • Expensive - Loss on Sale • Drains ability to move the “RIGHT” talent or candidate • REO moratorium & shadow inventory (min 3.86 Million homes need to sell or rent) • Potential to depress values for an extended period especially in certain geographical areas of USA (experts say 5-7 years) • Current avg. home appreciation still running flat or near < 2%

  16. Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions What does all of this mean to the “Relocation Industry”? • Evaluate Policy (is Loss on Sale the only option?) • Interest rates currently favor selling • Purchase index is showing signs of improving sales • GSE’s and lenders have a vested interest to help borrowers • They must reduce delinquency and shadow inventory all while trying to avoid foreclosure • Government, GSE’s & private industry continue to offer “New” programs • Laraine will touch on the “Waterfall Options” available to distressed borrowers

  17. Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions There are many turns in the road that will get you to your destination… Which one is the “Right Direction”?

  18. A view from the closing and REO side Short Sales are a viable option with a bad reputation… Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions

  19. Why is Short Sale a “Bad” Word? Limited industry experience Realtors are not lenders, they would rather be selling Absence of a uniform process and application system Inconsistency - multiple lenders, Mortgage Insurers (MI), End Loan Investor requirements, borrower qualifications, federal forms, etc. with different guidelines All of the above……..Time kills deals!!! Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions

  20. Suggestions that help create short sale success Borrower should be directed to use a facilitator with “core competency” Experienced facilitator (closing100’s of short sales a week or month) Realtors may have a “Back Room” that only focuses on short sales or have partnered with an experienced facilitator firm Consult with your RMC Important keys to success – “Pre-decision” of borrower by facilitator Single point of contact for RMC, Broker and Borrower BPO and complete borrower application is a must Facilitator cannot be paid for negotiation services unless short sale is closed (GBO is considered a viable offer) Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions

  21. Laraine L. DavisVice President/Community Development Wells Fargo Social Responsibility Group

  22. Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group • We originate 1 of every 4 and service 1 of every 6 home loans in the U.S. • More than 92% of our mortgage customers remain current on their loan payments. • Our combined foreclosure and delinquency rates are significantly lower than industry averages .

  23. Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group Refinance (current balance at new rate and/or term) • Fannie Mae and Freddie Mac loans (HARP 2.0) or for certain Wells Fargo-owned and serviced loans • No loan-to-value ratio limit in many cases • Loan must be current with good payment history • Principal balance remains, but borrower can take advantage of lower interest rates • Does not need to remain owner’s primary residence

  24. Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group Modification (for servicer-owned loans) • Principal forgiveness possible to achieve affordability. • Borrower must be facing financial hardship resulting in payment challenges. • Relocation alone may not constitute a qualifying hardship. • HAMP Tier 2 will allow modifications on second homes and investment properties (likely available this summer). • Fannie Mae, Freddie Mac and FHA do not currently allow principal reduction on their loans.

  25. Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group Short Sale • Lender/investor agree to accept sale proceeds less than principal balance due. • Junior lien holders, mortgage insurer, etc. also may need to agree. • Borrower generally must be facing financial hardship resulting in payment challenges. • Relocation alone may not constitute a qualifying hardship.

  26. Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group Other Considerations • Principal forgiveness and short sale may have tax consequences. • All options may result in reporting to credit bureaus or impact ability to obtain credit. • Modification and refinance do not relieve obligation to repay existing loan. • Borrowers should obtain tax, financial and legal advice.

  27. Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group Industry Data (since 2009) • 1.1 million HARP refis to date industry wide; 100,000+ to borrowers with LTVs > 105%. • 4.2 million loan modifications completed. • 63,000 HAMP PRA modifications reducing principal $68,000, or 31%, on average • Approximately 1 in 4 borrowers have negative or near negative equity nationwide (3Q11). • Wide range depending on state; High is NV at 63%, low is NY at 9% • Missouri about average at 21%

  28. Panelist Q & A

  29. “We hope you have better expanded your horizons” Thank YOU!

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