All Forum Posts by: Ted Akers

Michelle,
Welcome to BP. You will find a ton of information here in the wholesale, REO, and short sale forums, as well as many others.
To Your Success,

Jason,
Welcome to Bigger Pockets. You will find it to be a wealth of both information and contacts.

The US Treasury Department on November 30th announced plans on how to streamline Short Sales. Most agree, although the administration continues to spin it as a success, that the Making Home Affordable program has been less than optimum. Over 650,000 temporary loan modifications have been approved yet much fewer have been approved for permanent modification status, and stories abound of homeowners in the temporary modification status being foreclosed upon with no explanation. Here is a summary recap of the changes that have been enacted:

Qualification:
- Must be the homeowner’s principal residence.
- The mortgage must be less than $729,750
- Homeowner is delinquent on the mortgage or “default looks likelyâ€.
- Homeowners mortgage payment exceeds 31% DTI based on gross income.
- The Loan must have closed before 1/1/09.

The qualification of “or default looks likely†seems to indicate that the borrower does not have to be in default in order to qualify for a short sale, just that a default looks likely. It will be interesting to see mortgage servicer responses, and Treasury’s enforcement, to short sale requests when a default “looks likely†but the borrower is not yet late.

Changes enacted:
- $1000 to lenders.
- $1500 to sellers for closing costs or moving expenses.
- Up to $3000 to junior lien holders for release of their lien.
- A minimum of 90 days and up to 1 year to market and sell the property.
- No foreclosure may commence during the marketing period allowed above.
- Servicers may not lower agent commissions after an offer is received.
- Standardized paperwork
- Servicers may not charge borrowers fees to participate.
- the Short Sale Must Fully Discharge the borrower !!!!
- A Short Sale request is to be approved or denied within 10 days

This is positive news for short sale investors as it shifts emphasis toward short sales, allows a defined marketing time without risk of foreclosure to the borrower, prevents reductions in realtor commissions, drastically shortens time frames, fully discharges borrowers, and apparently allows for submission prior to being in default.

Links for related articles from:
Reuters: http://tinyurl.com/yk64mbs
Yahoo News: http://tinyurl.com/ydm43yg
API: http://tinyurl.com/yj35shj

Correction to the last post. The original information is correct regarding specific stock eligibility. Any stock or ETF with $50k daily trade volume is eligible

Welcome to BP. You will find it a wealth of information and contacts. I fund back-to-back wholesale deals for less than 2.00 pts. Non-qualifying to 100% of the A-B purchase when you have an end buyer.

Welcome to the site. You are in an active part of the market.

Correction to my last response. Any stock is eligible with 50,000 shares daily trading Volume. Treasuries and Municipals are also eligible. The LTV is underwritten based on volume and volatility, so thinly traded and more volatile stocks may underwrite to less than 80%. Likewise, stocks with high volume and low volatility by be approved above 80%. Underwriting/Commitment is typically within 48 hours and closings within a week. Yes, ETF's are eligible and are underwritten on the same criteria discussed above.

Understood, it is substantially more proceeds than a traditional margin loan (typically 50% of value). That is correct though, if the value drops below 80% (the Loan repayment) at any time there is no traditional margin call or additional collateral required. It is eligible for any traded security with trading volume above $50k per day. OTC or international markets are also ok, but may be at lower Loan to Values. I should have mentioned in the post that stocks in IRA's or 401K's are typically not eligible. The LTV and the rate of interest are determined by the specific stocks involved. LTV's are actually possible up to 85%, but somewhat rare so I chose not to include it in the post.
Thanks.

At the end of the Term you have the option of repaying the 80% of value loan, or walking away without recourse. So if the value went to 70%, you recieved 80% of value but are free to not repay the loan - without recourse. If value declines only 10%, it is in your interest to repay the 80% loan as there is equity. However, if you cannot repay at that time the stock is relinquished, again no recourse on the Loan.

NONRECOURSE / Non-Qualifying, 3.00%-5.00% I/O quarterly
80% Loan-to-Value Secured by Stocks
(More aggressive than standard Margin Loans)
LTV and rate determined based on specific stocks you own. $50k min.
Loan Term is 3 yrs. – stocks are tied up for the Loan Term.
Cash now but retain upside potential. Defer capital gains versus selling stock now.
Limits downside – similair to a stop-loss.
Nonrecourse – can walk if value below 80% at end of Term.
Cost is 5pts. – net from proceeds
(if stock achieves 1.67% appreciation/ yr. then break even).
Can also be used to leverage current stock position:
Example: $150,000 in Stock can be leveraged to $260,150 in Stock or a combination of Stock and Cash.

For a commitment call or fax stock statement to [phone number removed]