Short Sale PresentationAvoid legal pitfalls

Processing from A to Z

Rules to Follow

Presented by:Gaylene Rogers LonerganJoel BroylesLonergan Law Firm, PLLC

Gaylene Rogers Lonergan – Principal Attorney, Lonergan Law Firm, PLLC

Gaylene Rogers LonerganGaylene Rogers Lonergan is the founder of the Lonergan Law Firm, PLLC, a real estate law practice and real estate closing office. She is also the owner of the Lonergan Fee Office of Attorneys Title Company. Gaylene has more than twenty-five years of experience in dealing with virtually every aspect of real estate law, banking, mortgage and title transactions. She is a Board Certified Residential and Commercial Real Estate Attorney,* a Certified Title Insurance Associate, and a native Texan. The Lonergan Law Firm, PLLC is a full service real estate boutique firm, with attorneys specializing in real estate, litigation, collection and bankruptcy, among other specialties. The firm is an Accredited Business with the Better Business Bureau and a certified Woman Owned Business by the Women’s Business Council – Southwest.

Gaylene is also co-owner of Texas Real Estate Investors Circle, the largest real estate investment association in the Dallas Fort Worth Metroplex, with over 1100 members to date. Gaylene has served as an associate with the Real Estate Practice Area of Winstead McGuire Sechrest and Minick, P.C., as well as in-house counsel for Bank One, Texas, N.A. In these positions, Gaylene was involved with all aspects of real estate law, including real estate lending, acquisitions, leasing and sales. She was previously National Business Unit Counsel for another major national title underwriter, where she was responsible for advising escrow staff regarding legal issues across the United States, as well as Texas, and assisted with complex commercial closings and provided underwriting support.

Gaylene is a graduate of Texas Tech University (B.A. History, 1979), Texas Tech University Graduate School (M.B.A., 1983), and the Texas Tech School of Law (J.D., Cum Laude, 1983). While attending Texas Tech, she was a member of the Texas Tech Law Review and a member of The Order of the Coif honor society.

Gaylene’s current and past affiliations include:

American Bar Association, Real Property SectionState Bar of Texas, Real Property and Probate SectionDallas Bar Association, Real Property SectionSouthwest Women’s Business Council (certified as a Woman Owned Business)North Dallas Chamber of CommerceTexas Tech Ex Students AssociationNational Association of Professional WomenBetter Business Bureau Accredited Business *Board Certified, Commercial and Residential Real Estate Law, Texas Board of Legal Specialization

Joel Broyles – Broker and Director of Short Sales - Lonergan Law Firm, PLLC

•Processed, Negotiated and Brokered over 500 short sales since 2002.•Entrepreneur with seven years experience working with national retail banks, private mortgage banks and mortgage insurance firms on consumer-side mitigation services and consulting.• Proven business development manager. Developed high-end, systematic client advocacy programs.•Currently manages multi-million dollar short sale pipeline in California and Texas•Licensed 2004, broker since 2006•University of Texas at Austin – BBA

Dallas/Ft. Worth Home Prices: S&P Case-Shiller Index

How Big is the Short Sale Market?• 570 properties listed as short sales in MLS (11am on Dec. 8, 2010)

1.3% of all listed properties (even allowing for error, we’re missing it)

• 43,972 total properties in MLS (11am on Dec. 8, 2010)

• 5.43% of DFW-area homeowners were 90+ days behind on their mortgage in August 2010 (Core Logic, Nov 3, 2010)

• There have been a record 57,764 foreclosures in the DFW area so far this year, which was up 2% over last year (Core Logic , Nov 3, 2010)

• 64,522 total properties SOLD in MLS (11am on Dec. 8, 2010)

# Homes Sold, Shorted & Foreclosed

The Short Sale Gap: % of Foreclosures in Collin County above 85% LTV – 1/10 to 4/10

How to Identify a Short Sale• How long has the client owned the home?• How much did they put down?• What kind of loan do they have? FHA, VA,

Subprime, Fixed vs. Variable• How much do they owe their lender?• Are they current on their mortgage?• How many loans do they have?

Benefits to Sellers on Short Sales• Avoid deficiency judgment – bank’s legal ability to

seek balance owed• Avoid damage to credit vs. foreclosure on deed-in-

lieu of foreclosure• Stay in home while sales/negotiation process takes

place (money, time, schools, convenience, etc.)• Mortgage Debt Relief Act 2007 – don’t owe the IRS

for forgiveness of debt as income• Possibly qualify for up to $3,000.00 moving

expenses under HAFA

The Short Sale Process - Overview

How to Prepare the Package

Submitting the Package

Negotiating Offers

6 Rules of Successful Short Sales1) Understando Clients needs come firsto Put all information on the tableo Do the analysiso Don’t promise what you can’t delivero Decisions are based on long-term value 2) Anticipateo Banks are bankso 300-1000 files per desko Nothing happens unless you make it 3) Facilitate Involvemento Between you & clientso Loss mitigation / short sale departmentso Title companieso Buyerso Buyer’s mortgage company

6 Rules of Successful Short Sales(cont.)

4) Take Controlo Get on recordo Set realistic expectationso Daily progresso Help those who want to help themselves 5) Be Relentlesso “Never give in--never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honor and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.” –Winston Churchill 6) Obey the Law of Prosperityo Returns are in proportion to what you give in service o For every action, there is an equal and opposite reaction o You cannot become enriched unless you enrich others first o Do more than you have to

Avoid Legal Liability

What you don’t know can hurt you, your client and your company…”I didn’t know” won’t make you friends.

What’s a deficiency judgment and who can pay for it?

What happens to credit?

I thought the IRS wasn’t involved in short sales? US Treasury Department runs HAFA…and the IRS…and the banks!

People in pre-foreclosure are at the end of their rope…and they can act like it.

Negligence is real. 12% close ratio is a hard one to explain…so is 50%.

Legal Nightmares “Keller Williams, agent named in lawsuit” - …Defendant claims a short

sale of her home… resulted in her owing the bank more than $50,000 and the sale price was below comparables…The charges allege negligence, breach of fiduciary duty and breach of contract”…Ann Arbor Business Journal May 11, 2010

“Agents create a potential future lawsuit for themselves, and their broker on each and every short sale transaction where they directly communicate with a seller’s lender and/or give a seller advice on issues other than the sale of their property”… Active Rain.com May 14, 2010

“A Short Sale May Not Mean You are Home Free” – Homeowner sued by second lienholder for $65,000 one year after short sale. Borrower “fully believed National City understood they weren’t going to get paid”…Wall Street Journal, April 30, 2009

“Seller’s Agent held liable to Buyer for failure to disclose sale was a short sale” – Seller’s agent owed buyer affirmative duties of honesty, care, good faith and fair dealing and disclosure . . . “When an agent or broker is aware of necessity of short sale requiring lender cooperation, the agent or broker has a duty to disclose the state of affairs to buyer.” Holmes v. Summer, October 6, 2010 (California Court of Appeals)

Make More Money With Less Effort and NO LIABILITY!We Each do 10 Deals/Year

Referral to Us

We’ll close 8 We’ll pay 25% of 2.5-3% $150,000 * .025 * .25

$937.50 per deal 8 closed: $7,500

Deals Worked: 0 Hours Worked: 8 Liability: 0% Wage: $937.50/hour

Do it Yourself

You’ll close 1-2 You’ll get paid 2.5-3% $150,000 * .025

1 closed: $3,750 2 closed: $7,500

Deals Worked: 10 Hours Worked: 400 Liability: 99.9% Wage: $9-18/hour

LEVERAGE YOURSELF What Can YOU do with all those extra 392 Hours Each Year?

More Sleep?

Lead Generation – How many more deals could you do?

Buyer Representation

Time doing what you love to do…while making more money!

Read, exercise, time with family, learn new language, whatever!!

Disclosures & Fees: Fee: 1% at closing

Disclosed to seller’s lender through separate disclosure upon submission of short sale On all preliminary HUD-1s and final, approved HUD-1 No up-front fees – all fees contingent on closing

ALL offers received will be submitted to short sale lender No offers will be withheld

Non-Encumbrance Policy If short sale lender will not allow for fee, sale will NOT be encumbered by firm

Gaylene Rogers LonerganPrincipal AttorneyLonergan Law Firm PLLC12801 North Central Expressway, Suite 150Dallas, Texas 75243grogers@lonerganlaw.com214-503-7509

Joel BroylesBroker and Director of Short SalesLonergan Law Firm PLLCjbroyles@lonerganlaw.com214-233-0752http://www.youtube.com/watch?v=jt_6tP0-1JE