Steps in the Listing Process in Short Sale


  1. Contact the servicer or visit https://www.homepathforshortsales.com and select “Request List Price Guidance.”
  2. Expect a BPO and appraisal to be performed on your client’s home. The BPO and appraisal results will help set the recommended list price.
  3. Fannie Mae now requires both a BPO and an appraisal, which may take up to three weeks to complete. Let the borrower/seller know that a BPO agent and appraiser will need access to property. Any delays in homeowner response or inability to gain access to the property will delay receipt of a recommended list price.
  4. List the property at the low end of the fair market value determined by your comparative market analysis (CMA) as “Active” in the MLS.
  5. Although you may have the property listed at a price you believe to be accurate based on your CMA, advise your client that an agent and appraiser will need access to the property to complete the BPO and appraisal. Any delays in homeowner response or inability to gain access to the property will delay receipt of a recommended list price.
  6. Fannie Mae or the servicer will provide a recommended list price in accordance with maintaining property values using a BPO and an appraisal.
  7. After completion of a BPO and appraisal, contact your client’s mortgage servicer for the recommended list price. The price may be where you have it currently listed or the price may need an adjustment. If you believe the property price is too high or too low, you may escalate your concern to Fannie Mae through https://www.homepathforshortsales.com.

Contesting a Value Assigned by the Servicer or Fannie Mae

If you believe that the recommended list price Fannie Mae has given is inaccurate, you will need to contest the value. Before you submit an inquiry about an active short sale to Fannie Mae, make sure you have all the information you need:

  • Your name, phone number, and e-mail address
  • Real estate brokerage name
  • Borrower’s/seller’s property address
  • Loan number(s) (servicer and/or Fannie Mae’s)
  • Servicer name
  • Signed Borrower Authorization Form (authorization to release financial information)
  • Property foreclosure sale date (if known)
  • Your point of contact at the mortgage servicer as well as the contact’s phone number and e-mail address
  • Gross offer amount, if you have an offer*
  • List significant value-related issues (e.g., the property has a septic system, foundation problems, and/or defective drywall)
  • Your recommended value
  • 3–6 comparable properties sold within the last six months with listing history and agent comments—traditionally the servicer does not want short sales or foreclosures to be used
  • Any additional documents from this list to support the case:
  • Borrower’s/seller’s appraisal
  • CMA report with comp photos, descriptions, and listing history
  • Inspection report with color photos of repairs
  • Contractor estimate(s) with color photos

 

If you have a borrower/seller who has not made initial application with Fannie Mae for a preapproval (i.e., submitted the Form 710), you may submit a Borrower Response Package with the short-sale offer.

  • Freddie Mac Standardized Short Sale
    • The steps in the Freddie Mac Standardized Short Sale listing process are very similar to the Fannie Mae process with the exception of setting a list price. Freddie Mac is not involved in setting the price. It is up the listing agent to prepare a CMA and discuss list price with the borrower/seller. Once the servicer receives the short-sale contract, a valuation will be obtained electronically by the servicer. The valuation will include the Freddie Mac minimum net proceeds amount. If the proceeds of a sale meet or exceed the Freddie Mac minimum net proceeds amount, the servicer will be able to approve the short-sale contract price and proceed with the transaction.
  • Non-GSE Traditional Short Sale
      1. Have the borrower/seller complete the appropriate Authorization to Release Information form.
      2. Contact the lender or servicer to determine its protocol for doing short sales.
      3. Generally, you will list the property at fair market value and the lender or servicer has no more involvement until there is a signed contract with a buyer.

      If the lender/servicer does not get involved in setting the price at the time of listing, one of the listing agent’s primary goals is to price the property so the seller receives an offer from a qualified buyer with a realistic chance of closing. Some agents advertise short sales at unbelievably low prices with the hope that a buyer will be enticed to submit an offer. Other agents set the list price too high to attract an offer. Still others list the property at what the seller needs rather than what the property is worth. The proper price should be fair market value. Fair market value is the price a buyer will pay and a seller will accept for a property under reasonable and ordinary conditions. This definition assumes an arm’s-length transaction; meaning that the buyer and seller are not related to one another and neither is under any pressure to complete the transaction. However, when under pressure, such as the need to immediately relocate, either the buyer or seller may entertain a price that differs substantially from what would be considered otherwise.

  •  FHA Pre-Foreclosure Sale (PFS)
    • The borrower/seller must submit the Request for Pre-Foreclosure Sale and Affidavit to the lender or servicer. The lender or servicer will also require financials and other documents to allow them to approve the borrower/seller for a short sale.
    • The borrower will receive an Approval to Participate form, which will state the price the home is to be listed for as well as the net amount that will be acceptable for approval of the short sale.
    • The investor delays foreclosure to allow for the pursuit of the short sale for four months from the date of the Approval to Participate letter.
    • The borrower/seller can list the property at any time during the process. They do not need to wait for the Approval to Participate to be issued.
    • The property must be listed by a licensed real estate broker, in a local MLS if one is available for that area, and the broker cannot be related to the seller.
  •  VA Compromise Sale
    • VA does not require any paperwork prior to the time a contract is accepted on the property. However, it does have requirements for doing a short sale:
      • The property must be sold for fair market value.
      • The closing costs must be reasonable and customary.
      • The compromise sale must be less costly for the government than foreclosure.
      • There must be a financial hardship on the part of the seller.
      • On loans that originated on or before December 31, 1989, the lender must be willing to write off any debt above the max guaranty.
      • There must be no second liens or other liens (unless the amount is insignificant).
      • In situations where there are second liens or other liens, the seller can request that the lien holder consider releasing the lien and converting the loan to a personal loan.
  • U.S. Treasury HAFA Short Sale
      1. The property must be listed with a licensed real estate professional who regularly does business in the community where the property is located.
      2. Either a list price approved by the servicer or acceptable sales proceeds will be stated in Short Sale Notice to the borrower/seller.
      3. The property must be listed for not less than 120 days and may be extended for up to a total term of 12 months.
      4. The borrower/seller is responsible for property maintenance and repair.
      5. The servicer must have a policy on re-evaluation of value and reconcile any discrepancies between the servicer’s independent assessment of value and the market value data provided by the borrower/seller or the borrower’s/seller’s real estate broker.
      6. If the new value determination is less than the value determined by the initial Short Sale Notice (SSN) to the borrower/seller, the servicer must notify the borrower/seller and real estate broker in writing and confirm the new list price or acceptable net proceeds based on the new value. Servicers may not increase the minimum net proceeds required until the expiration of the terms of the short-sale notice (120 days).
  • Servicer response times:
    • The servicer must consider the borrower/seller for HAFA within 30 calendar days of receiving the request.
    • If the servicer is unable to respond within 30 days, the servicer must send a written status notice to the borrower/seller on or before the 30-calendar-day deadline.
    • The servicer must then follow-up with written updates every 15 calendar days until the servicer is able to provide a short-sale notice or DIL agreement.
    • The borrower/seller has 14 calendar days from the date of notification to contact the servicer by verbal or written communication and request consideration.
    • The servicer must notify the borrower of HAMP if the servicer determines that a loan modification could be an option.
    • If an executed contract is submitted with request for short sale, the servicer must respond within 10 business days along with the Hardship Application or request for mortgage assistance (RMA). The servicer must approve the request for short sale within 30 days or notify the borrower/seller with written status updates every 15 days until the request is approved or not approved.

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