Susanna “Susie” Kunkel, RA, SFR, CDPE · Deed-in-Lieu of foreclosure If foreclosure is inevitable…this may be a better option for you… please check with your lender on what

Susanna “Susie” Kunkel, RA, SFR, CDPE

Susanna Kunkel, RA, SFR, CDPECell: 808-652-2879 / [email protected]

www.SusieKunkel.com


www.SusieKunkel.com

Susanna “Susie” Kunkel, RA, SFR, CDPE

www.Kauai-ShortSales.com

What you’ll learn – for Sellers� What’s your best option? Loan modification,

deed-in-lieu of foreclosure, short sale

� What is a short sale?

� Top 10 Myths about short sales


www.SusieKunkel.com

� Top 10 Myths about short sales

� How a short sale works

� What’s in a short sale package

� Our goal – for you to have options that might help

What you’ll learn – for Buyers� How to purchase a short sale or bank owned

foreclosure (REO)

� Preparing for successful negotiations

� What to expect when making an offer


www.SusieKunkel.com

� What to expect when making an offer

� How to find short sales

Short Sale – what’s that?� A homeowner is “Short” when:

A borrower owes an amount on his property that when combined with closing costs and commission is higher than the current market value.


www.SusieKunkel.com

than the current market value.

� A short sale occurs when:A negotiation is entered into with the homeowner’s mortgage company or companies to accept less than the full balance of the loan at closing. A buyer closes on the property and the property is ‘sold short’.

The Foreclosure Process� Default: A missed payment, or default is the only way a

property can enter into the foreclosure process. This be a missed payment for a mortgage, taxes, condo association or homeowners association.

� Legal Notice: The lender or foreclosing party must notify the


www.SusieKunkel.com

� Legal Notice: The lender or foreclosing party must notify the owner that they are entering into the foreclosure process.

� Bank Sale or Auction Date: The homeowner is informed that he/she has a bank sale or auction date at which the foreclosing mortgage company will gain control of the property.

� Redemption Period: This is a period of time in which the homeowner may present payment to the bank and regain possession of his property.

Why not just “walk away”?

� Many times friends and family suggest to simply “walk away”…

� While this may feel like an easy way to end a difficult


www.SusieKunkel.com

� While this may feel like an easy way to end a difficult situation, there are many reasons it’s worth taking the effort to avoid foreclosure

5 Reasons to avoid foreclosure� You will always have to disclose that you have had a

foreclosure on any mortgage application and many job applications you submit in the future, and this can negatively impact future mortgage rates. This is the only credit item that is asked specifically and does not


www.SusieKunkel.com

only credit item that is asked specifically and does not rely on what is on your credit report.

� Credit scores are lowered by 300+ points and a foreclosure is the most devastating credit issue you can have in relation to future credit availability. A foreclosure is the one credit report item that is almost impossible to have ‘repaired’.

5 Reasons continued…� Your lender can seek a deficiency judgment against

you and collect for any amount they do not recuperate at bank sale.

� Security clearances and government positions


www.SusieKunkel.com

� Security clearances and government positions including but not limited to military and law enforcement can be jeopardized by a foreclosure.

� You may still be responsible for any deficiencies after foreclosure for an indeterminate time, this can land you in never ending collections.

Options for homeowners at risk of

foreclosure

� Reinstatement

� Forbearance

� Mortgage Modification

� Short re-fi


www.SusieKunkel.com

� Forbearance

� Sell the Property

� Rent the Property

� Refinance

� Deed-lieu of foreclosure

� Bankruptcy

� SCRA

� Short Sale

Deed-in-Lieu of foreclosure

If foreclosure is inevitable…this may be a better option for you… please check with your lender on what they are willing to offer.


www.SusieKunkel.com

are willing to offer.

� Homeowner gives the deed back to the bank

� Only works when there is one mortgage

� Mortgage company typically has no further recourse

10 Myths about Short Sales� Takes forever to close

� I have two mortgages –no way it will work!

� I’ll still owe the bank

� It’s embarrassing

� Banks would rather foreclose

� There’s not enough time


www.SusieKunkel.com

� I’ll still owe the bank

� Banks won’t accept a low offer

� I have to be behind on my payments

� There’s not enough time before foreclosure

� I can demand the bank not issue a 1099-C

� Any REALTOR can do a short sale

Who’s involved in a short sale?� Homeowners-

provide copies of notes, prepayments & loan balances.

� Additional Lien Holders(2nd loan, AOAO, Taxes)

� Title Company(neutral third-party,


www.SusieKunkel.com

balances.

� Listing Agent- letter of authorization signed.

� Loss Mitigation Officer

� Trustee (bank or mortgage company)

(neutral third-party, manages the escrow)

� Appraiser or BPO(Brokers’ Price Opinion, done by a neutral third-party)

What’s in a short sale package?� Copy of recent mortgage

statement for all lenders.

� Copy of any delinquency notices, notice of

� Past two months paystubs

� Past two months bank statements


www.SusieKunkel.com

notices, notice of trustee’s sale, notice of default - other lender doc

� Last 2 year’s tax returns

statements

� Last six months Profit and Loss (if self employed)

Note: these are examples, other documents may be required.

How do short sales work?


www.SusieKunkel.com

How to buy a short sale� Importance of a knowledgeable buyer’s agent

� Do your homework - know the market(Is a deal really a deal???)

� Is the price real - is it approved?


www.SusieKunkel.com

� Is the price real - is it approved?

� Expect the unexpected

� Pursue multiple properties

� Be patient

Prepare for success� Pre-approved or all cash offer

� Proof of cash fundsRemember – you’re negotiating with a bank!

� Local lender makes for a stronger offer


www.SusieKunkel.com

� Local lender makes for a stronger offer

� Escrow deposit may be necessary prior to formal opening of escrow (required by the lenders)

What to expect when making an

offer?

Short Sales REO or Bank Owned

� Seller approves offer – then sent to lender who has final

� Bank responds within 2-3 days.


www.SusieKunkel.com

sent to lender who has final approval

� Long waiting period before response

� Seller cooperates throughout escrow – sellers’ disclosure, inspections, etc. Motivated to assist buyer.

days.

� Many times, multiple offers –you’ll be notified to bring your “best and final” offer

� No sellers disclosure

� Suggest having an inspection done prior to making offer

Documents

Susanna “Susie” Kunkel, RA, SFR, CDPE · Deed-in-Lieu of foreclosure If foreclosure is inevitable…this may be a better option for you… please check with your lender on what