audio conference

Audio Conference

February 22, 2010

Understanding the New Rules of the Short Sale Game:

What Major Players Are Doing to Increase Activity

An Audio Conference from

2601 Klingle Rd., NW Washington DC 20008

(202) 363-2069 www.campbellsurveys.com

Copyright © 2010. All Rights Reserved.

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Understanding the New Rules of the Short Sale Game – 2/22/10 Audio Conference

Copyright © 2010. Campbell Communications, Inc.

Monday, February 22, 2010 The "Understanding the New Rules of the Short Sale Game: What Major Players Are Doing to Increase Activity" audio conference will be held Monday, February 22, 2010 at 3:00 p.m. EASTERN DAYLIGHT TIME, 2:00 p.m. CDT, 1:00 p.m. MDT, and 12:00 p.m. PDT. The conference will last 90 minutes.

These Panelists Will Provide Critical Information and Insights:

• Kimberly Dawson, Vice President-Group Operations Manager, Foreclosure and Real Estate Management, Bank of America

• Diana Stauffer, Vice President, Short Sale Division, Wells Fargo Home Mortgage

• Gwen Oberg, Vice President, Loss Mitigation Liquidation Department for Wells Fargo Home Mortgage

• Robert E. Kimble. Senior Director, NPL Servicing & Pre-foreclosure Sale Liquidations, Freddie Mac

• Thomas Popik, Director, Mortgage Industry Research, Campbell Surveys • Guy Cecala, Publisher, Inside Mortgage Finance (moderator).

Thank you for participating in " Understanding the New Rules of the Short Sale Game: What Major Players Are Doing to Increase Activity ". This conference manual contains important information you will need to prepare for the audio conference. This conference manual contains: Dial-In Instructions for Accessing the Conference. Audio Conference Tips for Q&A Conference Agenda Thomas Popik: Biography and Contact Information Kimberly Dawson : Biography Diana Stauffer: Biography Gwen Oberg: Biography Robert E. Kimble: Biography Guy Cecala: Biography and Contact Information Presentations: Tom Popik – Nationwide Survey Data on Short Sales Kimberly Dawson – Short Sale Overview Diana Stauffer – Field Short Sale Program Robert E. Kimble – Short Sale Options

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DIAL-IN INSTRUCTIONS FOR ACCESSING THE CONFERENCE 1) Call 1-866-764-2642 approximately 10 minutes prior to the conference start time. 2) Enter your unique four-digit PIN number, followed by #. Your unique PIN number can be found in your confirmation email. 3) You will hear hold music until the conference starts, or connect directly to the conference if it has already begun. Please Note: If for any reason you get disconnected, simply call in again using the same phone number and PIN. If you have trouble with your PIN, stay on the line and an operator will assist you. The above PIN can be used by only one registrant. Each registration entitles you to ONE phone line at ONE location where an unlimited number of listeners can participate using a speaker phone. Conference Details The "Understanding the New Rules of the Short Sale Game: What Major Players Are Doing to Increase Activity " audio conference will be held Monday, February 22, 2009 at 3:00 p.m. EASTERN DAYLIGHT TIME, 2:00 p.m. CDT, 1:00 p.m. MDT, and 12:00 p.m. PDT. The conference will last 90 minutes.

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AUDIO CONFERENCE TIPS FOR Q&A Participants are on "listen only" mode unless they choose to participate in the live Q&A. If you are using a speakerphone, put the phone on MUTE for the best sound quality. However, if you choose to participate in the live Q&A:

• Be sure to UNMUTE your phone when it’s your turn to ask a question so there is not a pause in the conference, and so that the moderator does not pass you over for the next question.

• Lift the handset while asking your question for best sound quality. • Be sure there are no loud background noises in the room while asking your

question. We encourage you to ask questions of our panelists. There are two ways to do so:

1. At any time before or during the conference send an email to [email protected].

2. There will be a live Q&A session after the speakers’ presentations.

The operator will give instructions to call in

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Conference Agenda

Tuesday, December 8, 2009 (Eastern Daylight Time)

3:00-3:05 PM Guy D. Cecala, Publisher, Inside Mortgage Finance Publications,

Inc. Conference welcome and introduction.

3:05-3:20 PM Thomas Popik, Director, Mortgage Industry Research, Campbell Surveys

3:20-3:35 PM Kimberly Dawson, Vice President-Group Operations Manager, Foreclosure and Real Estate Management, Bank of America

3:35-3:50 PM Diana Stauffer, Vice President, Short Sale Division, Wells Fargo Home Mortgage

3:50-4:05 PM Robert E. Kimble. Senior Director, NPL Servicing & Pre-foreclosure Sale Liquidations, Freddie Mac

4:05-4:30 PM Question and Answer Session

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Thomas Popik is a principal at Geosegment Systems, a market research firm specializing in the mortgage industry, based in Nashua, NH.

He also serves as director of mortgage industry research at Campbell Communications, a marketing and research company based in Washington, D.C. Campbell conducts continuing business-to-business syndicated research in real estate and financial markets. In the past year Tom and Campbell have conducted three national surveys of real estate agents on housing and mortgage issues.

Tom brings 18 years of experience and perspective on the mortgage industry and has written extensively on the topic of short sales and other distressed property issues. His recent national TV appearances include CNN, CBS News, and Fox Business News. Tom is often quoted in the national print media, including the New York Times, Wall Street Journal, and Washington Post.

CONTACT

Thomas Popik Principal Geosegment Systems Corporation 52 Millyard Technology Park Nashua NH 03060 Phone: (603) 595-4400x201 [email protected]

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mailto:[email protected]�



Kimberly Dawson is Vice President and Group Operations Manager for Bank of America. She manages the Short Sale and Foreclosure Bidding processes. Kimberly has twelve years of default experience in Foreclosure, Bankruptcy, REO and Short Sale. Kimberly holds a Bachelor of Arts from The University of Texas.

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Diana Stauffer is a Vice President and nineteen year veteran with Wachovia, a Wells Fargo Company. She manages the Field Short Sale Group, an industry leading team that provides personalized and local assistance to Realtors and sellers on short sale transactions. Diana's geographic territory covers California, Arizona and Florida. Her previous experience includes management of Loan Origination, Underwriting and Appraisal organizations.

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Gwen Oberg is the Vice President of the Loss Mitigation Liquidation Department for Wells Fargo Home Mortgage Service Portfolio located in Fort Mill, South Carolina. During her 19 year tenure she has worked in many different avenues of the mortgage business including fulfillment operations in prime, subprime, relocation, and reverse mortgages. She received her Masters Degree in Strategic Business in April 2008 and enjoys the challenging environment the mortgage industry is now faced with.

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Robert Kimble is the Senior Director of Non Performing Loans Servicing – Pre-Foreclosure Sale Liquidations. He leads an area responsible for all foreclosure and bankruptcy functions, designated counsel, default reporting, short sales, damaged and distressed assets, servicer performance, fee and cost over-allowables, penalties and incentives. Kimble has been with Freddie Mac for 14 years, holding various positions of increasing responsibility in the company’s Default Asset Management and Operations Divisions. Prior to joining Freddie Mac, Bob was a Default Manager at ITT Residential in San Diego, CA. Bob graduated from the University of Maryland and holds a Bachelor of Science degree in Business Administration/Accounting

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Guy D. Cecala is the CEO and publisher of Inside Mortgage Finance Publications, Inc., a Bethesda, MD-based company that he founded in 1984. The company produces 8 newsletters, numerous special reports and a large amount of original research and statistics related to mortgage finance.

The company’s oldest and largest circulation newsletter is Inside Mortgage Finance, a weekly publication devoted to all aspects of the residential mortgage business. Other newsletters include Inside MBS & ABS, Inside B&C Lending, Inside FHA Lending, Inside Regulatory Strategies, Inside Mortgage Profitability, Inside The GSEs, and Mortgage Market Update.

One of the company’s key products is the Inside Mortgage Finance MBS Database, a tracking system for all agency and publicly offered non-agency MBS securities. This as well as quarterly surveys of the* top 100 mortgage lenders in the country forms the basis for the company’s widely used national rankings of key players in the primary and secondary mortgage markets. The company’s mortgage market statastics are regulary used by financial regulators, including the Federal Reserve Board.

Guy is frequently quoted in the Wall Street Journal, the New York Times, the Washington Post, the Los Angeles Times, USA Today and other major newspapers as well as Bloomberg and Reuters. He also has appeared on the NBC Today Show, NBC Nightly News, CNBC, ABC News, CBS News, Fox Business News, PBS Nightly Business News, CNN, the BBC, CBS Radio and NPR as an expert on the U.S. mortgage market.

He is a recipient of the Newsletter and Electronic Publishers Association’s “best investigative reporting” award. Mr. Cecala earned a B.A. degree in English and political science from Boston College, where he graduated magna cum laude. He also holds a M.A. degree in journalism from the University of Maryland.

He also serves on the Specialized Information Publishers Association’s board of directors as an executive officer.

CONTACT

Guy D. Cecala Publisher Inside Mortgage Finance Publications, Inc. 7910 Woodmont Avenue, Suite 1000 Bethesda, MD 20814 301-951-1240 [email protected]

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Presentation

Thomas Popik

Principal

Geosegment Systems Corporation

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1Copyright Campbell Communications.www.campbellsurveys.com

Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions

Trends in Short Sales

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© Copyright Campbell Communications.All Rights Reserved.

2

19.8% 18.1%

15.0%

12.8% 12.3% 12.4%13.4%

17.9% 16.0% 16.1%

14.5%12.6%

13.1%

13.8%12.5%

12.9%13.7%

15.1%

12.4%

13.7%

15.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10

Damaged REO

Move-In Ready REOShort Sale

Short Sales Become the Leading Distressed Property SegmentPe

rcen

tof B

uy-S

ide

Tran

sact

ions

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Copyright Campbell Communications.www.campbellsurveys.com

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$290,101

$243,978

$221,561

$122,631

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

Non-Distressed Short Sale Move-In Ready REO Damaged REO

Aver

age

Sale

s Pr

ice

Average Sales Price—January 2010

15


4

19.6

15.0

8.6

6.9

0.0

5.0

10.0

15.0

20.0

25.0

Short Sale Non-Distressed Damaged REO Move-In Ready REO

Tim

e on

Mar

ket i

n W

eeks

Average Time on Market—January 2010

16


5

3.43.3

3.0

1.9

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Damaged REO Short Sale Move-In Ready REO Non-Distressed

Num

ber o

f Offe

rsAverage Number of Offers—January 2010

17


6

99.0%

95.9%

94.4%

91.3%

86.0%

88.0%

90.0%

92.0%

94.0%

96.0%

98.0%

100.0%

Move-In Ready REO Damaged REO Non-Distressed Short Sale

Aver

age

Sale

s to

Lis

ting

Pric

e

Average Sales to Listing Price—January 2010

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7

2.80%

2.85%

2.69%

2.79%

2.58%

2.66%

2.80% 2.81%

2.40%

2.45%

2.50%

2.55%

2.60%

2.65%

2.70%

2.75%

2.80%

2.85%

2.90%

Damaged REO Move-In Ready REO Short Sale Non-Distressed

Average Commissions—January 2010

Buy-Side

Listing-Side

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Copyright Campbell Communications. www.campbellsurveys.com

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14.6%25.9%

53.9%

31.3%

31.8%

58.9%

35.8%

44.5%

53.6%

15.2% 10.2%

24.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Damaged REO Move-In Ready REO

Non-Distressed Short Sale

Perc

ent o

f Tot

alWho Is Buying Properties in January 2010?

InvestorFirst-Time HomebuyerCurrent Homeowner

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Short Sale Comments “[T]he short sales are increasing as the A-paper people are now realizing just how bad this

economy is and the damage to the value of their property. Even if they haven't lost their job(s) and can afford to keep it, some homeowners are now CHOOSING to short sale rather than pay a couple hundred thousand in mortgage, more than the property is worth.”

“Lower-priced properties such as foreclosed homes and some short sales are receiving most of the attention, and multiple offers are common on the best-priced properties. It is actually difficult to win the deal when you represent a buyer seeking the most attractive deal for a specific type of home in a specific region of town. For those low-priced homes, it is like a seller's market. At the same time, there seems to be almost a separate market for the traditional sales and higher-priced short sales. In this ‘parallel’ market, the time on market is long and is not yet decreasing. It is a buyer's market with small number of buyers. In the same neighborhood, one similar home may receive multiple offers while the other one is not even being shown. Buyers are almost without exception seeking great deals.”


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Survey Question on Managing Short Sale Listings

“Some homeowners attempting a short sale are not motivated to perform necessary actions such as making accurate financial disclosures, writing a hardship letter, keeping the house in presentable condition for showings, contributing to closing expenses, and/or signing deficiency notes. In some cases these individuals exit the short sale process and decide to wait for foreclosure. In your experience as a real estate agent, is there any way to identify these unmotivated individuals upfront before investing several months of time in listing a short sale property?”


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Insights Regarding Homeowner Financial Disclosures

“As a listing agent is it definitely possible to identity these individuals up front. The financials including hardship letter need to be done at the outset. If not, forget it.”

“If they do not get you the required documents within the first week, I will withdraw the listing. They are already not cooperating and it won't get better as the process moves forward.”

“I will not list (actually put on the MLS) a short sale property until the sellers have completed ALL the financial disclosures, hardship letter and other necessary info for their lender.”

“It would be a face to face meeting with all the forms and information that they need to complete. If they are not willing to attempt to complete this within 5 days, I would say they are not going to complete the process.”

“When the Seller does not respond IMMEDIATELY by providing necessary paperwork, let them go.”

“I rarely get a homeowner that gets through the process without my just sitting down with them & doing it all step by step, especially the hardship letter. I have to ask them questions about their situation and then ask them how they could write that.”


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Summary

Short Sales Are Growing Dramatically! Short Sales Have Become the No. 1 Distressed Property

Segment High Short Sale Prices Mitigate Lower Commissions Expect 4-5 Months to Sell a Short Sale Expect 3 Offers for Every Completed Short Sale Most Short Sales Are Bought By First-Time

Homebuyers Using FHA Financing If You Are Listing a Short Sale, Make Sure To Get The

Financial Disclosures Up Front


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For More Information

Contact John Campbell:– [email protected]– (202) 363-2069

Website:– www.campbellsurveys.com

Copyright Campbell Communications.www.campbellsurveys.com

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http://www.campbellsurveys.com/�



Presentation

Kimberly Dawson

Vice President-Group Operations Manager, Foreclosure and Real Estate Management

Bank of America

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Short Sales

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Today’s presentation will cover

• The role short sales play• Complexities, common obstacles to a short sale• New initiatives• Technology and concepts in development

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3 Bank of America: Proprietary

Advantages and Disadvantages

• Bank of America’s first goal is to determine if a homeownership retention solution is available.

• A short sale may provide advantages as a last resort to foreclosure

• Possible disadvantages include:– Potential tax liability– Seller may be asked to sign a promissory note or contribute to

the loss – Time-consuming process

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The Current Environment

• We are in a very high volume situation today• Doubling the number of short sale offers each year• We have taken several steps to meet the demand• Nevertheless, process can take 3 months+

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Why is the short sale process so lengthy?

• Traditionally, the process doesn’t begin until an offer is received

• An appraisal must be done• The offer must reasonably meet the current market value• The buyer must qualify• Must be an arm-length transaction• The mortgage investor must approve each offer• Third-party approvals (mortgage insurance and/or second

liens)

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60-70% Fallout after Approval

• Low-ball offers• Fake offers• “Shopping around”• The complex, time-consuming process

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Steps already taken to improve the process

• Increased staffing and updated training• Dedicated short sale call center – 866.880.1232• Establish a value review

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Cooperative Short Sales

• Proactive outreach to customers• Offering a pre-approved short sale solicitation• After offer is submitted, approval within two weeks• Similar in approach to HAFA, but wider in scope

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REOTrans/Equator

• Streamlines process• Upload documents• Improves communications• Tracks short sale process

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Once you create an account, you will receive a password.

You must login with email and password.

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The Due/Completed Date is color coded for easy status recognition.

Green – task is on timeYellow – task is almost overdue

Red – task is overdue

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This page displays detailed information about the property.It also lists all tasks for this property. The color coding in the Due/Completed Date field show the status of the task. Gray tasks mean they have been completed.

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There is a message link in the upper-right corner of the page. Click this link to review and send messages to the negotiator.

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The OFFERS link takes you to the offer site if the negotiator responds with any changes you submit. The fields are color-coded for quick view.

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Using REOTrans as a Borrower

The Borrower uses REOTrans to:• Provide the initial offer• Identify an Agent• Provide contact information• Provide financial information• View status of the loan

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Ways to Minimize Processing Time

There are factors that you can be aware of to help minimize process time, ensure

1. Contact with the servicer as early as possible2. Customer Financials are in PDF format3. Documents are accurate and completed as early as

possible4. Purchase Offer is a legitimate offer and fully executed5. Purchase Offer is the best possible at fair market value to

mitigate loss for lender to an REO sale6. Purchase Offer has listing information and comparables to

support price.

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Factors that Delay Processing Time

Some factors that can maximize the process time include:1. Change of Buyer of Agent at anytime in the process may

cause it to revert to an earlier step. Please notify Bank of America as soon as there is a change.

2. Investor/Mortgage Insurance Approval is needed if Bank of America is not fully delegated to approve the short sale.

3. Lack of Release on Outside Second Lien must be received prior to issuing an approval letter.

4. Customer has filed bankruptcy; therefore the trustee must provide a court document that approves the sale of the short sale.

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18 Bank of America: Proprietary44

19 Bank of America: Proprietary45



Presentation

Diana Stauffer

Vice President, Short Sale Division

Wells Fargo Home Mortgage

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Field Short Sale ProgramDiana Stauffer

Short Sale Division,Wells Fargo Home Mortgage

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Short Sale Field Rep Program Objective

Wells Fargo Home Mortgage desires to provide local real estate agents with personalized service and information related to its short sale process.

2

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Importance of localized Wells Fargo Home Mortgage short sale teams To create a front line for Wells Fargo’s current short sale

campaign to help provide information to potentially troubled homeowners and their Realtors

The local Short Sale Team reviews the benefits of a Short Sale with homeowners which may be a better option to foreclosure when modification efforts have been exhausted

Explain Short Sale option to homeowners facing a negative equity scenario

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Importance of localized short sale teams

Local Short Sale Managers are in your area to develop relationships with local REALTORS® to improve the customer experience and the results

Available local contact for REALTORS and borrowers to review strategy, submit offers and close the transaction

On-site property and seller interviews by Short Sale Manager

Responses in 7-10 business days

Average closing from start to finish 37 business days

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Wells Fargo Home Mortgage’s short sale campaign Series of mailers sent to customers experiencing payment

difficulties

Outbound call campaigns for customers who have been denied for a loan modification request

Short Sale Marketing Letter – in most instances, the estimated minimum net is provided up front

$5,000 Seller incentive for a Short Sale*

Campaign references working with a REALTOR to assist seller with the sale

* For a limited time only, please consult your local short sale field rep on availability

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What does this mean to you?

Professional local contact available to help facilitate the short sale review and closing of the sale

Efficient turn time for approval

A Short Sale transaction that will close in the same time frame as a regular purchase

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52

Benefits of a short sale

Potential Borrower benefits Avoid a lengthy and stressful foreclosure process

Provides the seller with some control

Seller incentive (if qualified and available)*

Short Payoff (SPO) can help preserve neighborhood market values and reputation

Future borrower benefits Based on Fannie Mae guidelines (dated 6/25/08), seller can apply for a

mortgage with a Short Payoff (SPO) in 2 years, vs. 5-7 years for a Foreclosure

Avoid the stigma of Foreclosure

Customers can move forward with their lives

* For a limited time only, please consult your local short sale field rep on availability

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You’ve listed the property — what’s next?

1. Contact a Field Short Sale Manager

2. Once notified of the listing, the Field Short Sale Manager will order an Appraisal

3. Field Short Sale Manager sets up appointment to evaluate the seller’s eligibility for a Short Sale by completing an in-person interview

4. You move forward with marketing the property

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Next steps

Contact Field Short Sale Manager – email contract and estimated HUD

Short Sale Manager to provide SPO demand to Realtor and Homeowner with “minimum net” within 48 hours of receipt of appraisal1

SPO demand valid for 45 days in most cases.

1Demand will be sent once contract has been sent to Wells Fargo Home Mortgage. The 48 hour time frame indicated above assumes the contract has been returned allowing the demand to be sent to realtor and homeowner.

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Considerations for the listing REALTOR®

Buyer scrutiny

Actively market property

Work with Jr. Lien Holder

Look for surprises — back taxes, delinquent HOA fees, liens, etc.

Make the property saleable — rehab/property/staging

Make it easier on the seller — moving package; provide rental information; schools, etc.

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Still focusing on REO?

Short Sale adds to your customer database

Helping to preserve the neighborhoods you specialize in

Future referrals — customers may be eligible to purchase another home in two years instead of seven with a foreclosure1

Full commission paid for market or above market offers2

1 Based on Fannie Mae guidelines (dated 6/25/08), seller can apply for a mortgage with a Short Payoff (SPO) in 2 years, vs. 5- 7 years for a Foreclosure

2 Pending any borrower-paid or lender-paid Private Mortgage Insurance (PMI), or junior liens. If loan has either, the PMI company and/or junior lien holder must also approve the short sale contract and sales price. In addition, a bankruptcy filing makes the short sale subject to approval by the applicable bankruptcy court/trustee.

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57



Presentation

Robert E. Kimble

Senior Director, NPL Servicing & Pre-foreclosure Sale Liquidations Freddie Mac

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Short Sale Options for Freddie Mac LoansRobert Kimble, Senior Director of Liquidations

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In This Market, Short Sales Are A Growing Part of Our Foreclosure Avoidance Toolkit

Campbell Communications Short Sale Audio Conference

Single-Family Alternatives to Foreclosure

Short sales have grown more than 600% over the last two years

0

50,000

100,000

150,000

200,000

2007 2008 YTD Sept. 2009 2009 HAMPResults

Pre-Sales Forbearance Repay Plans Loan ModsTrials Completed

Source: Freddie MacHAMP Results as of 11/30/2009

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The Administration’s HAFA Program Gives Us Additional Tools to Help Struggling Borrowers


Overview of Treasury’s HAFA Program

Begins April 5, 2009

To qualify, borrowers must:

Have been considered for other foreclosure prevention options

Meet HAMP eligibility

Be either delinquent or current

Servicer will set monthly mortgage payment during marketing period – not to exceed 31% of the borrowers gross monthly income

Servicers receive $1,000 incentive for short sales and deed-in-lieu

Borrowers receive $1,5000 relocation assistance

Borrowers are released from first mortgage lien within 10 business days from the date the servicer receives sale proceeds

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We Will Continue to Offer Our Classic Short Sale and DIL Programs

Freddie Mac Classic Short Sale & DIL

Eligibility Criteria Borrowers who are delinquent or in danger of imminent default

No need to be HAMP eligible

Borrower Contribution Maximum possible contribution toward any deficiency from the sale in cash and/or promissory note

Documentation Non-uniform documents industry-wide

Property Valuation Servicer orders an interior BPO using the 90-day “as is” marketing value

Price is based on a market sales comparison using the as-is value

Minimum Marketing Period 90-days after listing property with real estate agent


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Ensure that the property is accurately listed and marketed effectively

Work to obtain an offer that is at or near the Fair Market Value

Work with a borrower to make contact with the Mortgage Servicer

Help the borrower in submitting all needed documentation

Assist in negotiating the deal with subordinate lien holders, borrowers, and others involved in the transaction

Ensure that sale is an arms length transaction

Work to facilitate and accelerate the closing process

How to Get a Freddie Mac Short Sale or DIL


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