• are there any restrictions on the
• what are the property’s biggest
issues? For example, are there roofing, electrical, plumbing, rodent or
as borrowers search for the right
property, financing should be a big
part of their decisionmaking. as their
mortgage broker, the best advice you
can give them is to finance within
their means. Overstretching their financial capabilities and being overextended in debt payments is a recipe
If borrowers take their financial
commitments seriously, their ability
to service their debt must be an ongoing concern. as they consider financial options, another important factor that will impact their purchase is
the past few years’ credit crunch. Not
only has there been less liquidity, but
tighter underwriting standards have
made it more difficult to get a loan.
So what are their financing options?
They may request an adjustable-rate
mortgage, but be sure to advise them
of the potential increase in payments
if the loan’s interest rate increases
when it resets.
you also can help clients get a
construction or rehab loan, depending on the costs of the improvements, and then transfer them into
a permanent loan.
The Federal Housing administration’s
203(k) loan can be an option for
those who qualify. Keep in mind that
loan amounts for the 203(k) program
range from $5,000 to $35,000, certain requirements must be met, and
there are currently a limited number of lenders offering it. Visit sctsm.
in/203koverview for more details
about the program’s requirements.
When helping potential borrowers,
have them consider the worst-case
scenario. Can they afford a higher
rate? What if they can’t sell the property in two or three years?
If their answers to these questions
point to an ability to service the debt,
then they likely will not encounter
difficulties in the future. On the other
hand, if borrowers decide to take a
chance and today’s low interest rates
are all they can afford, or if the property value must increase significantly
to create a profit, a precarious position already exists.
• • •
Today’s real estate market has enor-
mous opportunities for those who
purchase distressed properties
wisely. Mortgage brokers and loan
originators can tap that opportunity
by working with potential investors.
By helping prospects make smart
choices before and during the lending
process, you can increase their profit-
ability and your own. •
property investors in which your
Realtor partner discusses short
sales and the benefits of owning investment property. after
the Realtor’s presentation, you
can discuss the financing requirements. appearing in front of an
audience of potential clients can
significantly enhance your credibility while growing your book
« SHORT SALES continued from page 44
Short sales may increase by as much
as 50 percent this year because of
the Home affordable Foreclosure
alternatives program (HaFa), according
to a Buffalo, N.y.-based servicer that
determined that as many as 91 percent
of previously ineligible homeowners
might now be eligible for a HaFa short
sale. Clearly, the time to partner with
the right professionals and to learn
about short sales and investment-fi-nancing parameters is now. •
The Distressed Property Institute
Launched in 2008, the Distressed Property Institute offers two designations to
real estate professionals: the Certified Distressed Property Expert (CDPE) and
the Certified Investor agent Specialist (CIaS). Here’s a bit more about each:
• cdPE designation: Real estate agents with this designation are trained to
help distressed-property sellers, to deal with absentee owners, to perform
short sales and to fully address homeowner needs. They also are educated
on what lenders require when considering a short sale and know how to
navigate through the process efficiently and effectively.
• ciaS designation: This designation was launched this past October specifically for real estate agents who work with real estate investors. agents with
the CIaS designation are trained to guide investors through purchases of
investment properties, securing financing and managing the property when
it is leased to a tenant. These agents are instrumental in introducing investors to short-sale and other sellers.
Mortgage brokers seeking to help finance short-sale and other distressed-property transactions would benefit from developing referral partnerships
with real estate agents holding one or both of these designations. For more
information, visit cdpe.com.