EXPAND YOUR HORIZONS Make the Right Connections

EXPAND YOUR HORIZONSMake the Right Connections

“My Home is Half-Way Under Water

and I Cannot See the HORIZON!”

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

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 -

Sue Keck Director Executive

CompensationEmerson

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


Loss on Sale – Negative Equity• Calculation Example – Negative Equity of $15,500

Loss on Sale $50,000Fed @ 25% -12,500MO @ 6% - 3,000FICA/Medicare (5.65%) - 2,825Balance 31,675Negative Equity Repay -15,500

Net Payment to transferee $16,175


Negative Equity• Calculation Example – Negative Equity of $40,000

Loss on Sale $50,000Fed @ 25% -12,500MO @ 6% - 3,000FICA/Medicare(5.65%) - 2,825Balance 31,675Negative Equity Repay 40,000

Balance Due Company ($8,325)

Tine K. H. Dickey Senior Vice President

CRP/SGMSFidelity Residential Solutions

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.


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 Q3 2008 - 500,000 as of Q3 2011– GSEs and Lenders look to alternative solutions (REO last resort)

• • *Source: Fannie Mae, Freddie Mac, FHA, FDIC, CoreLogic, Zelman & Assoc.


USA Home Appreciation


Negative Equity Draining Your Talent Pool?


MBA Statistics - Interest rates are at 60 year historic lows (4%)


MBA Statistics - Purchase Index (Number of new weekly loan applications)During peak years (2003-2006) “Index” ran in 400-500 range


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%


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


There are many turns in the road

that will get you to your destination…

Which one is the “Right Direction”?


A view from the closing and REO side•Short Sales are a viable option with a bad reputation…


• 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!!!


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)

Laraine L. DavisVice 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 .

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



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.



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.



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.



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%



Panelist Q & A

“We hope you have better expanded your horizons”

Thank YOU!

EXPAND YOUR HORIZONS Make the Right Connections

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