Loss Mitigation for Selling Agents

1. Loss Mitigation for Selling Agents May 7, 2009 Presented By: Richard Petz Director of Realtor Services Division Strictly Private and Confidential

2. Table of Contents

3. 1. Introduction to Access Loss Mitigation

4. ALM works with distressed homeowners nationwide to avoid foreclosure and mitigate against its associated negative credit impact. ALM provides an array of loss mitigation solutions and services including loan modification and short sale negotiation. Introduction to ALM About Access Loss Mitigation Advantages to Partnering with ALM • National leader in short sale negotiations • Operate in all 50 states • Comprehensive understanding of rules and regulations applicable to each foreclosure situation • Based in Los Angeles, CA • Satellite office in New York, NY • Assisted thousands of homeowners facing foreclosure • Short sales are complex and time-consuming • Leverage ALM’s relationships with lenders and expertise in the negotiation process • Expand the scope of your services • Increase your volume of property listings and enhance your earning potential • Focus on what you do best: selling properties • We boast a 75-80% success rate • When we have offer, and buyer stays in place • Reduce legal risks • Education, Selling and Listing Agents • Pre-qualification for borrowers

5. Foreclosure Basics The following overview provides a basic summary of the key elements and concepts involved in foreclosures. Stages of Foreclosure Judicial vs. Non-Judicial Foreclosure • Pre-Foreclosure • Borrower misses payments • Missed payment notices sent by lender • Notice of Default (NOD) • A document made public and states that the borrower is in default and legal action may be taken (foreclosure) • In Missouri a NOD is typically used as Missouri is primarily a Non-Judicial state • Notice of Sale • Mailed the borrower twenty (20) days prior to scheduled day of sale • Must also be published in a newspaper within the county • Foreclosure Sale (Auction) • The sale is conducted by the trustee at public auction for cash to the highest bidder • Redemption Period • If the lender is the winning bidder, the borrower has one year (12 months) to redeem the property • REO • Mortgage deed vs. deed of trust • Judicial: • Foreclosure passes through the state or district court • When homeowners default on mortgage, lender files claim to recover unpaid balance of loan • Courts decide case, which typically takes 4-6 months, but sometimes up to a year • Non-judicial: • Foreclosure by trustee sale • If homeowner defaults lender can notify the trustee to start foreclosure • The trustee can then sell the property and transfer proceeds to the lender • Trustee sale is typically much faster than foreclosure by judicial sale • Not tied up in courts

6. Although every short sale is a unique transaction, the following outlines the typical steps in a short sale. The Short Sale Process From offer submission to approval takes an average of two to four months Homeowner Defaults on Payments List Property For Sale SubmitShort Sale Package BPO /AssignNegotiator NegotiateShort Sale / Sell Property • Homeowner misses payments • Lender initiates collection efforts • Homeowner consults with expert and determines short sale is only option • The earlier the homeowners start the short sale, the higher the success rate • Homeowner works with expert and determines value of property through CMA and BPO • If total owed is less than the property value, short sale is the best option • Homeowner puts property up for sale • ALM creates short sale package; assists homeowner in gathering and completing all necessary paperwork; compiles all transaction documents from realtor • Lender reviews package to determine eligibility of short sale • The lender orders a BPO to determine value of property and the minimum sale price required • Lender assigns a negotiator • Lender agrees to accept offer, final details are negotiated • All other liens on property (e.g., second mortgages) must be negotiated and settled prior to sale • ALM knows guidelines for liens • Lender reviews and must agree to final HUD-1 • 75-80% success rate

7. 2. How to Identify a Good Negotiator

8. How to Identify a Good Negotiator When considering making an offer on a short sale property we need to determine the competency of the negotiator working on the file. In most cases the Listing Agent will be negotiating the file on their own with little to no experience. Questions to ask the Listing Agent • How many Liens on the Property? • Multiple liens = Much more difficult to close • Steep learning curve • Have they negotiated with this specific lender before? • Each lender has their own process • You can close with Litton all day but Countrywide is a nightmare • If the Listing agent cannot answer these questions to your satisfaction then give us a call • How many short sales have you negotiated? • They should have worked on more than 4 files • Success rate will be very low…. • Out of those short sales how many closed? • If the agent has closed less than 50% of their files be wary • Do not ask “how successful are you” • You will not get a useful answer • How long has it taken them to close there files? • If longer than 4 months the property will likely go to foreclosure before its completed

9. Managing Expectations The biggest reason we see buyer and seller fallout is from not “Managing the Expectations” of our clients. Typical Short Sale Timeline Managing Listing Agents Expectations • Week One – Rush the File • Borrower and Agent contacted by • Negotiator • Processing • CMA, HUD-1, Listing Agreement, COMPS • Submit offers to ALM • Processing will complete S.S. package with borrower assistance • Once we have fully executed offer and complete short sale package • Two-Four Months for Approval • Let the Listing Agent know it will take… • Takes 2-4 months for completion • Is the seller cooperative? • Do they want to sell or would they like to keep if possible? • Explain the S.S. process • Just because they are doing a short sale does not mean they know how it works • If there are multiple offers we can still help • Most buyers walk, marathon process • If your buyer stays in place they will get the property

10. 3. What We Need To Get Started

11. These items are required for ALM to work on the homeowner’s file. Homeowner’s Responsibilities • Homeowner fills out ALM paperwork • Client agreement • Property profile • Letter of authorization • Realtor fills out Realtor Welcome Packet • Gather Required Docs – Bottleneck for Submission of Offer to Lender • Pay stubs • Tax returns • Bank statements • Hardship letter

12. This document describes the services we provide and the terms of the agreement between our company and our clients. ALM Client Agreement Title ALM Client Agreement • Client Agreement has industry disclosures • Protects Brokerage and ALM • Legal document • Must be signed by all borrowers

13. This form provides us the necessary information regarding the homeowner’s property, their loans, and any outstanding liens. Property Profile Title Property Profile • Provides borrower / property snapshot • Contact information • Property information • Mortgage information • Additional liens

14. This form authorizes the homeowner’s lenders to discuss their loans with representatives of our company and allows our company to interact with their lenders on their behalf. Letter of Authorization Title Letter of Authorization • Required for ALM to discuss borrower’s loan with servicing company • Must be signed by all borrowers • Complete one for each loan • First and second lenders • LOA is submitted to the lender upon receipt

15. Hardship Letter An effective hardship letter sticks to the facts and is concise, straight-forward, and relatively simple. It is not a good idea for the homeowner to blame the lender for their problems. It is a good idea to highlight how they have exhausted all options available to them to repay their lender. Anatomy of a Hardship Letter Sample Hardship Letter • Good Hardship • One page • What was catalyst • Show how borrower got into this situation • Short sale as a last resort • Bad Hardship • Blaming the lender • Emotional • Not factual • If it makes sense the lender will accept it January 1, 2009 To Whom It May Concern, This is a hardship letter. Our loan number is 987-456-321. We bought our home two years ago and received a mortgage from your institution to finance 80% of the purchase. At the time, we both had good jobs and a stable income. We have always been financially responsible. Unfortunately, in October of 2006 I got laid off from my job and since then I have been unable to find steady employment. Since my unemployment benefits ran out we have simply been unable to afford to continue making our mortgage payments. Our credit cards are maxed out. We have cut back on all but the most necessary expenses but continue to struggle to keep up with the bills and make ends meet. We are now four months behind on our mortgage payments. We considered selling our home, but property values in our area have come down greatly. As it turns out, we have no equity left in our home and there is no way we could sell our home for an amount that would pay off our mortgage in full. Even if we could sell at current market prices, we would first need to replace the roof (it is beyond repair), which we cannot afford to do. We are late on our credit card and car payments, and have not paid our utility bills for some time now. Of course, we would love to keep our home, but given our current financial situation it is just not possible. Even if things turn around for us, we see no way that we can make up for the mortgage payments we missed. We really want to avoid foreclosure which will further damage our already ruined credit. We have exhausted all of our savings and we have nobody left to turn to for help. Please do whatever you can to help us out of this situation. Thank you for your time and consideration in this matter. Sincerely, [signatures] Michael & Samantha Jones St. Louis, Missouri

16. 4. File Flow / Customer Service

17. Seller’s agent Find property for purchase Ask Questions to find negotiation competency level Tell listing agent that you will make an offer contingent on it being negotiated by ALM Talk us up, put us in a position to win Call dedicated phone line- 877-552-7353 One of our sales reps will contact listing agent bring them on board Fees Same fee structure as CBG (discounted rate) Split fees with listing agent Ex. Property sells for 350k Split would be 15% from each side totaling 30% Create realtor welcome packet for listing agent Fax ALM required paperwork + Realtor Welcome Packet Client agreement Property profile Letter of authorization (Homeowner Welcome Packet) Agent will receive a confirmation of receipt All agents notified Selling Agent As a selling agent you can still take advantage of our negotiation services and here is how…

18. 5. Fee Structure

19. Fee Structure Listing Side Commission Splits • All commission are paid by the lender • The lender will not honor your listing agreement’s commission/ However Fannie and Freddie Paper will honor listing up to 6% • Commission is negotiated • Some lenders have blanket commission policies • Countrywide 5%

20. Table of Contents

21. QUESTIONS?? Send them to: realtor@accesslossmitigation.com Loss Mitigation for Selling Agents May 7, 2009 Presented By: Richard Petz Director of Realtor Services Division