The Distressed Market Continues to Change.
Make Sure You Are Changing with It!
The distressed real estate market continues to change, and the warning signs are becoming harder to ignore. This month, we examine why published delinquency numbers may not reveal the entire story, which loan vintages offer the strongest short-sale opportunities, what we learned at the Five Star Conference and why HOA liens may be one of the best overlooked sources of new business. We also review the latest mortgage-performance numbers and explain what every CSSE agent should be doing now to prepare for the growing demand ahead.
IN THIS ISSUE
- Why Today’s Delinquency Numbers May Be Hiding What Is Really Happening
- Loan Sales and Servicing Transfers Can Create Reporting Gaps
- The Truth About “Delinquent Mortgage Lists”
- Where to Find Short Sales: Watch the 2019, 2023 and 2024 Loan Vintages
- Why Some Homeowners Have Less Equity Than Public Records Suggest
- Short Sales Are Moving Onto Everyone’s Radar
- HOA Liens: An Overlooked Source of Short-Sale Leads
- The Number That Concerns Us Most: Borrowers Reaching 90+ Days Delinquent
- What the Latest Mortgage-Performance Numbers Mean for CSSE Agents
- Equator Update: Make Sure Clients Can Find Your CSSE Designation
- Special CSSE Certification and Equator Agent Elite Discounts
Why Today’s Delinquency Numbers May Be Hiding What Is Really Happening
One of the most important things every real estate professional needs to understand is that mortgage delinquency data does not always reflect what is happening in real time.
There is often a significant delay between a homeowner falling behind and that delinquency appearing in the reports we follow.
That delay is especially important right now because of the number of mortgage servicing transfers, portfolio sales and nonperforming-loan sales taking place throughout the industry.
When a large portfolio of loans is transferred from one servicer to another, the process does not happen overnight. Although the new servicer must be prepared to accept payments as of the effective transfer date, planning, transferring data, reconciling accounts and completely boarding a large portfolio can take several months, especially when the portfolio contains delinquent or otherwise complicated loans.
There is also a great deal of confusion about the 60-day credit-reporting protection following a “servicing transfer”.
Under RESPA and Regulation X, for 60 days after the effective transfer date, a borrower cannot be treated as late when an on-time payment was mistakenly sent to the old servicer. The borrower cannot be charged a late fee, and the new servicer cannot report that transfer-related payment as delinquent.
This is not a blanket prohibition against all credit reporting for 60 days. A servicer may still report accurate information, including a delinquency that existed before the transfer or a payment that was genuinely missed and was not sent to either servicer.
Operationally, however, many servicers take an extremely cautious approach during the transfer and boarding period. Some may suppress or delay certain reporting for 60 to 90 days while accounts are reconciled and servicing information is verified.
That means the delinquency numbers we see today may already be months behind the actual condition of the loans.
The Truth About “Delinquent Mortgage Lists”
This brings us to another subject every CSSE agent needs to understand.
There is no publicly available list containing the names of borrowers who are 30, 60 or 90+ days behind on their mortgage.
Mortgage companies and servicers cannot simply disclose private borrower-payment information to real estate agents, investors or marketing companies. A homeowner’s financial difficulty generally does not become part of the public record until some type of public action occurs, such as the filing of a Notice of Default, Lis Pendens, foreclosure complaint or another document required by that state’s foreclosure process.
A legitimate pre-foreclosure list is normally created from those public filings.
The problem is that some companies advertise what they call “mortgage delinquency lists” or lists of homeowners who are supposedly behind on their payments.
Those companies do not have access to the borrower’s actual mortgage-payment history.
They are using predictive algorithms.
They combine public records, property information, loan characteristics, estimated equity, credit indicators, demographic information and other available data to predict which homeowners may be experiencing financial distress.
Those predictions may identify useful prospects, but they are not verified delinquent loans. Some of the homeowners may be behind, some may be facing other financial problems, and some may be perfectly current.
Agents should understand what they are actually purchasing – before spending money on one of these lists.
Ask the provider:
- Is this based on an actual recorded foreclosure filing?
- Is it a Notice of Default, lis pendens or another public filing?
- Is it merely a predictive-distress model?
- What information is being used to generate the prediction?
- How frequently is the data updated?
- How does the company verify its accuracy?
Do not pay a premium for a so-called “delinquency list” under the assumption that it contains confidential lender information. In nearly every case, it does not.
More importantly, you do not necessarily need to purchase one of these expensive predictive lists.
The CSSE Marketing Module already gives you the tools and information needed to identify many of the same characteristics yourself. You can target the loan vintages, property types, equity positions, borrower groups and local financial-pressure indicators most likely to produce future distress.
You can also build relationships with the professionals who often encounter struggling homeowners before a foreclosure is filed, including:
- Bankruptcy, divorce, probate and foreclosure-defense attorneys.
- Housing counselors.
- Tax professionals.
- HOA and condominium professionals.
- Insurance agents.
- Other real estate agents.
- Past clients and members of your community.
The goal is not simply to obtain another list.
The goal is to recognize financial distress earlier, educate homeowners about their options and become the local professional people trust before foreclosure becomes their only remaining alternative.
The public foreclosure lists show you where the market has already been.
Understanding servicing transfers, loan sales and early distress indicators can help you see where the market is going.
HOA Liens May Be One of the Best Overlooked Sources of Short-Sale Leads
We explained earlier that there is no public list showing everyone who is 30, 60 or 90+ days behind on their mortgage.
A borrower’s mortgage-payment history is private. Until a Notice of Default, lis pendens, foreclosure complaint or another public foreclosure document is filed, agents generally cannot verify that the homeowner is delinquent.
Companies selling so-called “mortgage delinquency lists” are usually using predictive algorithms. Those lists may be helpful, but they generally do not contain verified private payment information.
HOA and condominium association liens are different. – Very Different!
Once an HOA lien or HOA foreclosure action is recorded, it generally becomes part of the public record.
That makes HOA lien filings one of the strongest – and most overlooked sources of potential distressed-property business.
Most agents are not monitoring these records.
They are all chasing the same foreclosure lists, calling the same homeowners and competing with investors, wholesalers, attorneys and every other agent purchasing the same data.
Meanwhile, HOA lien filings may identify homeowners experiencing serious financial pressure before their mortgage foreclosure becomes public.
An HOA lien does not automatically prove that the homeowner is behind on the mortgage.
However, it is a very strong indication that something is wrong.
Most homeowners do everything possible to prevent an HOA lien from being recorded against their property. The original unpaid dues may be only part of the problem. Once the account is sent to collections, the homeowner may also face:
- Late charges.
- Interest.
- Fines.
- Collection expenses.
- Attorney fees.
- Lien-recording costs.
- Foreclosure expenses.
A relatively manageable HOA balance can quickly grow by another $3,000 to $5,000 or more, once attorneys and collection companies become involved.
If a homeowner cannot resolve the account before it reached that stage, there is a good possibility that they are facing broader financial problems.
They may also be struggling with their mortgage, property taxes, insurance, credit cards, auto payments or other household expenses.
They may not yet be in mortgage foreclosure, but they may still need help.
Start Monitoring HOA Filings in Your Market
Every CSSE agent should learn how HOA and condominium liens are recorded and searched in their local market.
Depending upon your state and county, these records may be found through:
- The county recorder.
- Clerk of court records.
- Public lien indexes.
- Civil court filings.
- HOA foreclosure filings.
- Local legal notices.
- Title and property-record databases.
Search for liens and foreclosure actions filed by homeowners associations, condominium associations, association management companies and the law firms that regularly represent them.
Research the property, estimated value, mortgage history and other public information. Then use the homeowner-focused outreach tools provided in the CSSE Marketing Module.
Do not approach the homeowner by accusing them of being behind on their mortgage.
Instead, explain that you specialize in helping homeowners evaluate their real estate options when HOA liens, assessments, mortgage problems or other financial pressures make it difficult to keep or sell their property.
Lead with education and assistance.
These homeowners may need:
- An explanation of how an HOA lien affects a sale.
- Help determining their approximate net proceeds.
- Assistance obtaining and reviewing the HOA payoff.
- A conventional sale before their financial condition worsens.
- A short sale if the total debt exceeds the property’s net value.
- Coordination among the mortgage servicer, HOA, attorneys and closing agent.
- Immediate assistance if the HOA has already started foreclosure.
This is exactly the type of complicated situation where a Certified Short Sale Expert provides real value.
You Already Have the Advantage—Use It
The conversations at Five Star confirmed that lenders, servicers and asset managers are preparing for more short sales and coordinated sales.
The addition of HOA training for both agents and institutional professionals confirms that these liens will play a growing role in distressed-property transactions.
The opportunity is no longer theoretical.
The industry sees it. The lenders see it. The servicers see it. Your competitors are beginning to see it.
As a Certified Short Sale Expert, you already have the head start.
Start monitoring HOA liens and HOA foreclosures in your market. Review the expanded CSSE training. Use the materials in your marketing module. Begin reaching these homeowners before every other agent discovers the opportunity.
Do not wait until everyone is chasing the same lists.
The agents who act now will be the ones positioned to help these homeowners and receive the business as this market continues to grow.
Add CSSE to Every Other Platform, Too
Equator is currently able to display and search the CSSE designation directly. Many other servicing, valuation and asset-management platforms do not yet have a dedicated CSSE field.
That does not mean you should leave the designation off your profile.
During the Five Star Conference, we spoke with numerous clients who use platforms other than Equator. They are aware of the Certified Short Sale Experts program, understand the training our members receive and want a way to identify CSSE agents.
The simplest solution is to add CSSE immediately after your name on every platform you use.
For example:
Jane Smith, CSSE
Update your name or professional-title field wherever permitted on:
- Servicing and asset-management platforms.
- Valuation and BPO platforms.
- REO registration systems.
- Referral networks.
- MLS and brokerage profiles.
- LinkedIn and other professional profiles.
- Your email signature.
- Your website and online biography.
If the platform does not permit credentials in the name field, place Certified Short Sale Expert® prominently in your professional summary, qualifications or certification section.
Clients cannot search for a qualification they cannot see.
More lenders, servicers and asset managers are preparing for short sales and coordinated sales. They are learning what the CSSE designation means, but it remains your responsibility to make sure they can identify you.
Take 30 minutes this week and update every professional profile you maintain.
A client searching for a short-sale professional should immediately see that you are trained, certified and ready to accept the assignment.


