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

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Presentation on theme: "EXPAND YOUR HORIZONS Make the Right Connections “My Home is Half-Way Under Water and I Cannot See the HORIZON!”"— Presentation transcript:

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 Compensation Emerson

5 Sue Keck – Director Executive Compensation Emerson 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

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

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

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

9 Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions 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.

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 Q ,000 as of Q –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 ( ) “Index” ran in 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 Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions A view from the closing and REO side Short Sales are a viable option with a bad reputation…

19 Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions 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!!!

20 Tine K. H. Dickey - Senior Vice President, CRP/SGMS Fidelity Residential Solutions 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)

21 Laraine L. Davis Vice 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 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 Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group

24 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. Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group

25 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. Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group

26 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. Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group

27 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% Laraine L. Davis - Vice President/Community Development Wells Fargo/ Social Responsibility Group

28 Panelist Q & A

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


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