Short sales are one of the most exciting acquisition strategies in real estate. Short sales are all about getting property at good prices by solving people’s problems. Short sales are win-win multiplayer transactions. Here are the parties involved in a short sale. Complete them all and you will be rewarded!

home owner
Foreclosed properties tend to have title problems. Officially, the owner is the person listed on county records as the owner of the property. The ownership of the property is displayed in the document known as the “deed” or “title”. The easiest way to find out who owns the property is to get a trio from a local title company. The best way to confirm that all parties have ownership rights to a property is to read the title report.

Properties often have more than one owner. This is because the property may be co-owned by a married couple, friends, or business associates. This will be immediately apparent in writing. However, the deed may not show all current owners because owners may be added to or removed from the title through quitclaim deeds or other similar instruments of title. That’s why when it comes to finding all the owners of a property, nothing beats a title report.

The homeowner is not necessarily always the same person as the mortgagor. This is not unusual with properties in foreclosure.

mortgagor
The mortgagee is the person who took out a loan and secured it with the foreclosed property. The mortgagor is the person legally responsible for paying. The best way to know who the mortgagee is is to see the document known as the “deed of trust” or “fideicomiso”. The mortgagor will appear as “grantor”. See sample.
Often with foreclosed properties, the mortgagor and the owner are not the same person. Below are some examples of the cause of this situation.

• Ownership is “transferred” to someone else without refinancing. Properties that have been purchased “subject to existing financing” have this problem.
• Properties where, due to divorce, where there are two owning mortgagors, one of the owners has “relinquished claim” to the other person without refinancing. Under both of these conditions, the mortgagor who resigned, claimed the property, or transferred the property to someone else has no ownership rights to the property, but remains fully responsible for the mortgage.

creditors

Creditors are all institutions, companies or individuals secured by trust deed or lien on the property. Creditors secured by a property can include banks, individuals, municipalities, homeowners associations (HOAs), ex-spouses claiming child support, etc.

Properties in foreclosure often have more than one creditor. To buy a property in a short sale, the investor needs to negotiate and reach an agreement with each of the creditors, one by one. The best way to confirm who all of the insureds are is to review the title report.

Loss Mitigation Officers
This is the bank representative assigned to resolve problems associated with a delinquent loan. When it comes to banks, the loss mitigation officer is the person with whom short sales are negotiated. Loss mitigation officers work for the bank’s loss mitigation department.

The loss mitigation department is the unit of the bank in charge of avoiding, reducing and minimizing losses due to bad debts. Most banks have a loss mitigation department, separate from everything else. Loss mitigation officers are debt collectors. As such, any information provided to them will be used to collect the debt.

Trustee
The receiver is the person or entity in charge of executing the property as a lender. The trustee is usually a law firm engaged in performing default services for lenders. Some of these companies, such as Northwest Trustees, Regional Trustees, and Cal Western Reconveyance, are very large, have hundreds of employees, and are foreclosing on several hundred properties at any one time. Other firms are smaller real estate law firms.

The specific function of the trustee is to execute, in accordance with the law, on behalf of a lender, to collect a debt. In addition, depending on the specific agreement with the lender, the following additional services are additionally performed.

• Provision of payment statements
• payment collection
• Short sales negotiation
• Collateral preservation (lock up and winterize property if vacant)

For more information on fiduciary services, please refer to the following fiduciary websites.

• Northwest Trustees – http://www.northwesttrustee.com
• Regional Trustees – http://www.rtrustee.com
• Bishop, White and Marshal – [http://www.bishoplynchwhite.com]

Trustees largely because of how accessible and easy to deal with they are. Some of them, like North West Trustees, have easy-to-use websites, a dedicated assigned representative available with a direct phone line, and a quick response time. Others can only be reached via 1-800 numbers with multiple menus to go through, long waiting periods, and no specific representative to deal with. Unfortunately, when it comes to dealing with the trustee, there is no other option. You have to work with whoever you have to. Therefore, the profit potential of the transaction must justify it.

Additional Link Headers
These are other creditors or lenders secured by the property. These include first mortgages, second mortgages, judgment liens, tax collateral liens, city and county taxes, homeowners association (HOA) liens, contractor mechanical liens, etc. The best way to locate them is in the title report.

By far the most common type of additional lien holder is the second mortgage lender secured by a delinquent property on which the first mortgage is foreclosed. Most of the good short sale profit opportunities come from this situation. In these circumstances, the second mortgage lender is forced to discount because they will most likely lose more principal if the property is sold at auction. That’s why second mortgages always have a higher interest rate than first mortgages.

title company
A title company is a neutral party that examines title, issues a preliminary title report, acts as escrow (or settlement) agent, records documents, and issues title insurance policies for a transaction. The core business of most title companies is selling title insurance and closing real estate deals. Escrow is the closing of a real estate transaction when all required documents and funds are placed with a third party for processing and disbursement.

Escrow Agent or Officer
The escrow agent is the representative of the title company who is dedicated to closing a transaction. This is the person who will handle, on behalf of the title company, all the documents and funds necessary to close a transaction. Escrow officers are regulated by the state and the title company they work for. An escrow agent willing to work on short sale transactions is one of the most important and valuable members of the investor team prior to foreclosure. Not all escrow agents are interested in working in short sales.

evaluate
An appraiser is a licensed professional third party who estimates the dollar value of a property. An appraisal is the estimated dollar value of a property based on a detailed study of the property.

Appraisers participate in determining the value of the foreclosed property only when requested by the bank. This is usually when the loan is guaranteed by the government, about 30% of the time. Appraisals cost more than $400 and broker price opinions cost less than $100. Either way, they give the same result because they both use the comparable value method to determine the value of a property.

BPO appraisers and realtors are typically hired by the bank through a third-party company dedicated to exclusively serving this need in the foreclosure industry. One of the largest companies dedicated to this is Asset Valuation and Marketing (AVM). Companies like AVM have a large group of BPO appraisers and realtors. The main difference between an appraisal and a BPO is that the appraisal is a formally presented and printed study of the value of the property.

BPO real estate agents
BPO stands for “Broker Price Opinion”. BPO realtors are real estate agents who provide opinions on property prices. Due to the price difference, lenders usually contract for BPO instead of appraisal.

Brokers who do BPO are generally in the business of listing bank-owned properties. These real estate agents are generally paid less than $100 for each BPO. The main reason a real estate agent wants to do BPO is to get property listings from the bank. The problem is that this creates a conflict of interest. For them, the more properties returned to the bank, the better. However, the chances of the same real estate agent who did the BPO getting the property listed if it is foreclosed on are slim. That is why it is good to always be professional and on good terms with the BPO real estate agent.

(C) 2006 -2007 Advanced Real Estate Concepts, LLC., Portland OR. All rights reserved. http://www.bestshortsales.com