As published in Scotsman Guide's Residential Edition, October 2011.
For many Americans, the dream of owning a home has turned into a nightmare. High unemployment and a dire housing market have left millions of Americans watching helplessly as their home’s value plummets, often well below their outstanding mortgage principal. Those in the worst situations cannot keep up with their payments.
When past clients default on their mortgage and have no chance of refinancing, mortgage brokers and originators should earnestly attempt to help. This will not only build your reputation as a caring professional, but it also can lead to future referrals and repeat business.
Building a network of real estate professionals who specialize in distressed properties can greatly increase your success. Get to know agents who are certified to handle short sales and loan modifications.
If distressed clients wish to stay in their home, the agent can attempt to perform a loan modification. Ensure that the agent sets appropriate expectations for the homeowner. Avoid working with agents who make unlikely guarantees regarding the success of a modification. Also, seek agents who do modification work for free.
Some agents will do modifications for free to avoid legal challenges; because many modifications fail; and because it only takes a few minutes with the right tools to prepare the documents needed.
When mods fail
When modification attempts fail, the next foreclosure-avoidance option should be a short sale. When real estate agents work on short sales, they often try to sell them for less than competing listings. This should attract more buyers.
By building relationships with real estate agents and offering them incentives other companies can’t provide, mortgage brokers and loan originators can generate new business quickly.
There’s an abundance of short sales in today’s market and a maze of complexity to wade through. Mortgage originators and real estate agents can ease the process for buyers and sellers by working together. This can keep attorneys’ fees to a minimum and lessen the headaches for everyone involved.
Whether working on a loan modification or short sale, communication counts. Loan originators can strengthen their interactions with real estate agents and clients by using online tools and sharing resources that help agents determine the property’s value through broker price opinions more easily or close short sales more efficiently. This should foster the relationship and lead to future cooperation.
Look for technologies that agents can use to grow their short-sale business. This can include online resources that allow agents to prepare all the documents needed for a short sale or loan modification quickly. Some tools allow agents to enter details about the property, owner, mortgage and other information. Afterward, the system prepares documents automatically.
Some systems also allow homeowners to complete much of the needed information themselves in a secure environment. Involving homeowners in the short-sale or loan-modification process increases their understanding and the likelihood of success.
When building relationships with real estate agents, seek those with a proven commitment to hard work and client satisfaction. The best agents are honest, trustworthy and qualified. They also should have experience with loan modifications and short sales and be able to negotiate terms without attorney assistance.
Erik Wind is the owner of EWDC,
a software company that has specialized in real estate applications since 2005. Wind’s software is widely used by real estate brokers, mortgage companies and attorneys. He recently created ShortSaleSpeedway, a system used by real estate professionals to negotiate short sales and loan modifications on behalf of homeowners facing foreclosure. Reach Wind at firstname.lastname@example.org or (516) 882-6930.