Short Sales
A guide to working with Wells Fargo
J.K. Huey, CMB, AMP
Senior Vice President
Wells Fargo Home Mortgage
National Association of REALTORS®
New Orleans, LA
November 7, 2010
Strategic Partnership – Wells Fargo and Our REALTOR® Partners
Wells Fargo’s primary concern and obligation is to our customers and investors. Our goal
is to exhaust all efforts to help customers remain in their homes through various workout
options.
Once home retention efforts are no longer an option, Wells Fargo continues to work
diligently to provide alternatives to foreclosure through short sales or deeds-in-lieu of
foreclosure. Our last resort is to foreclose.
Our partnership with experienced real estate brokers and their agents, familiar with the
management of distressed real estate, is key to our success and commitment to quality
service. Our REALTOR® Partners’ expertise helps us to deliver timely solutions to assist
customers, minimize losses to investors, and help to rebuild and stabilize our communities.
These are unprecedented times in our industry, and now more than ever it is critical that
we partner together as leaders in driving solutions and results to help in the recovery of a
strong housing market.
Our REALTOR® Partners help us by providing their:
- Familiarity with local market trends and community goals
- Established relationships with the real estate community
- Expert knowledge in short sale and REO liquidations
- Strong customer service and communication skills
1
Short Sale as an Excellent Alternative to Foreclosure
A Short Sale is a solution that allows the customer to sell the home for less than total amount
owed. When all home retention solutions have been reviewed and exhausted, we immediately
begin working with the borrower to determine if a short sale or deed-in-lieu can be accomplished.
A Short Sale Benefits Everyone…
Customer Benefits
Alternative to foreclosure with planned & graceful exit, Wells Fargo or Investor pays closing costs
and incentives in certain cases, credit report reflects “Settled for Less than Owed.”
Buyer Benefits
Usually home is in better condition than buying a foreclosed property.
Wells Fargo Benefits
Average of 10% savings over REO, reduced losses and corporate advances, eliminates nonperforming asset.
Junior Lien Holder Benefits
Higher debt payment resulting from short sale versus foreclosure transaction.
Community Benefits
Occupied and maintained properties, stabilizing neighborhoods, preventing vandalism and other
crime.
2
Primary Concerns or Myths Surrounding Short Sales
Top concerns provided through external surveys and our own internal escalated complaints.
Primary Concerns and Myths
 Difficulty of obtaining mortgage financing – appraisals a special sore spot.
 Fall-off in First Time Homebuyers affects overall demand.
 Banks are holding shadow inventory in the hopes values will increase.
 Lost documentation, multiple submissions.
 Short sale process takes too long and I lose potential buyers.
There are a number of decision makers involved in a short sale – the
more parties involved, the more complex the process becomes. All
parties must be aligned before the home can be sold, i.e., investors,
second lien holders, and mortgage insurance.
Most importantly, this is not a typical buy-sell transaction.
3
Partnering to Improve the Short Sale Process
We have worked to improve our processes and communications regarding short sale
transactions. We hear your concerns and are working diligently to reduce the completion
timeline and improve communication.
Internal Improvements to Short Sale Process:
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Staff resources have been increased by 57% over the last 12 months to ensure forecasted volumes can be
managed.
Proactive marketing efforts to provide information and education on short sale workout alternatives to customers.
Wells Fargo is leveraging new technology to provide a direct portal access for agents and customers.
Our field negotiator team and branch offices are expanding to support more difficult markets for customer face-toface assistance, and for seminars and training for agents.
Prioritization of short sales when buyers are eligible for Homebuyer Tax Credit.
Wells Fargo is Persistent and Continuously Focused on Third Parties to Improve the Short Sale
Process
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Wells Fargo has led discussions with Fannie Mae and Freddie Mac, resulting in increased delegation authority,
foreclosure prevention, and streamlining processes. These efforts have resulted in industry wide solutions.
We have partnered with Treasury to provide guidance on rules for the HAFA program.
Expanding our REALTOR® Finder Tool to leverage experienced agents in all markets for referring our customers.
Participation in Congressional Hearings and other government meetings to further educate and inform on existing
processes and concerns.
Communication and Education

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Multiple communication materials have been prepared for HMC’s, Agents, Customers and Real Estate Consultants
Cinemeetings were conducted to provide consistent information across the country to address concerns and
provide detailed steps necessary to complete a successful short sale.
4
Home Affordable Foreclosure Alternatives
Presentation for the National Association of Realtors
November 2010 l Making Home Affordable
HAFA Overview
Home
Affordable
Foreclosure
Alternatives
(HAFA)
• Provides alternatives—Short Sale (SS) and Deedin-Lieu of foreclosure (DIL)—when home retention
options are exhausted.
• Standardized process offers graceful exit to
proactive homeowners:
–Releases homeowner from future liability.
–Provides $3,000 relocation assistance.
–Encourages cooperation from subordinate lien
holders.
• Effective April 5, 2010 – Dec. 31, 2012.
November 2010 l Making Home Affordable
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HAFA Servicer Participation
HAFA rules
apply to nonGSE servicers.
• All 124 HAMP-participating servicers required to
develop written standards for HAFA application.
– Servicers must apply HAFA standards
consistently.
– Participating servicers listed at
MakingHomeAffordable.gov.
• Benefits to servicer and investor:
– $1,500 servicer incentive
– $Up to $3,000 reimbursement to investor for
release of subordinate liens
November 2010 l Making Home Affordable
7
HAFA Eligibility Criteria
Homeowner:
Loan:
• Amount owed on 1st mortgage
• Is owner-occupant
equal to or less than $729,750
• Property may be vacant <90
days if homeowner required to • Mortgage originated on or
before January 1, 2009
relocate 100+ miles for work
• First mortgage payment (PITI +
homeowner association/ condo
fees) is greater than 31% of
homeowner’s monthly gross
income
Homeowner must not have not been convicted within the last 10 years of any one of the following in connection with a mortgage or
real estate transaction: felony larceny, theft, fraud or forgery; money laundering; or tax evasion.
November 2010 l Making Home Affordable
8
HAFA Short Sale
HAFA Short Sale
releases
homeowner
from future
liability for debt
• Servicer allows homeowner to sell property for
less than full amount due on mortgage.
• Servicer accepts payoff in full satisfaction of
mortgage.
• Servicer approves short sale terms prior to listing
using standard forms and specific timeframes.
• Alternatively, servicer may approve short sale at
homeowner request for property already on the
market.
November 2010 l Making Home Affordable
9
HAFA Pre-Approved Short Sale Process
Trigger
event
occurs
Servicer has 30
calendar days
to offer
consideration
under HAFA
(or HAMP).
Homeowner
has 14
calendar days
to respond
with request
for
consideration
for HAFA (or
HAMP).
30 DAYS
14 DAYS
Servicer has
reasonable
amount of
time to
determine
minimum
acceptable
sale amount
and to offer
SSA to
homeowner.
REASONABLE
TIME
Homeowner
has 14
calendar days
to return SSA
to servicer.
Homeowner
and/or listing
agent has
minimum of
120 calendar
days to
market
property.
14 DAYS
120+ DAYS
Homeowner
and/or listing
agent has
three
business days
to submit
offer with
RASS or
ARASS to
servicer.
Servicer
has 10
business
days to
approve
the offer.
10 DAYS
3 DAYS
Servicer
schedules
closing for no
less than 45
calendar
days. Upon
closing,
homeowner
receives
$3,000
relocation
assistance.
45+ DAYS
Homeowner …
• Does not qualify for a Trial Period Plan
• Does not successfully complete a Trial Period Plan
• Is delinquent on a HAMP modification
• Requests a short sale or DIL
November 2010 l Making Home Affordable
10
HAFA Deed-in-Lieu of Foreclosure
HAFA DIL
releases
homeowner
from future
liability for
debt.
• Homeowner voluntarily transfers ownership of
mortgaged property to servicer in full satisfaction
of the total amount due.
• Servicer may require homeowner to list and
market property before agreeing to DIL.
• Homeowner provides marketable title, free and
clear of other mortgages, liens, and
encumbrances.
• HAFA incentives also available on Deed-to-Lease
options.
November 2010 l Making Home Affordable
11
HAFA & Hardest Hit Funds – 18 States Plus DC
Six states have
Short Sale
programs:
• California
• Nevada
• Ohio
• Oregon
• Rhode Island
• South Carolina
For the list of participating State Housing Finance Agencies, go to
FinancialStability.gov/roadtostability/hardesthitfund.html.
November 2010 l Making Home Affordable
12
HAFA Challenges
Working to
make HAFA
better. Treasury
listens to
industry
feedback.
• Borrower with an offer in hand unwilling to
submit HAMP eligibility documentation.
• 31% DTI limits borrower eligibility.
• Properties vacant longer than 90 days.
• Subordinate lien holders unwilling to release
borrowers from liability.
• Subordinate lien holders hold out for greater
than 6% or $6,000 payoff.
November 2010 l Making Home Affordable
13
HAFA Resources
HMPAdmin.com
provides HAFA
guidelines,
borrower
documents, and
a way to get
answers to your
questions.
Get help with questions about HAFA at
ssdil@hmpadmin.com.
November 2010 l Making Home Affordable
14
Trusted Advisors Escalate Tough Cases
HAMP Solution
Center helps
trusted advisors
with cases that
are difficult to
resolve.
Visit the HAMP Solution Center at HMPadmin.com.
November 2010 l Making Home Affordable
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Discussion/Questions
Thank You
November 2010 l Making Home Affordable
16