Keith Junor is a Licensed Realtor and Mortgage Broker in Florida with 17 years experience. He authors a Blog at www.The expertsinrealestate.com that gives timely advice on buying and selling, credit repair, mortgages and foreclosure. He can be reached at kj1010@bellsouth.net
Archive for Short Sales
Jan
18
Some Advice On How To Avoid Foreclosure
Posted by: | CommentsEspecially in today’s economy, thousands of people are struggling to pay the bills. This, unfortunately, includes dealing with the threat of foreclosure on their homes. It is possible; however, to avoid foreclosure. Follow these few guidelines to avoid having your home taken away from you.
The very first thing you should do, when you run into trouble, is call your mortgage company. You will need to, specifically, talk to someone in their Loss Mitigation department. Explain your personal and financial situation to them. Plan to divulge information you may not want to share, and be ready to give them proof.
Mortgage companies are prepared to deal with many different financial hardship situations. Depending on your specific situation there are several different options that the mortgage company can take with you. One of the most common is known as forbearance. This action allows you to repay missed payments.
Other approaches are available. Mortgage companies may give you another loan for the late amount, add the late amount onto the end of the mortgage, or even consider waiving a payment. All of which are fully dependent upon your exact situation.
You may not have even considered this, but some people leave their home as soon as they think they will lose it. This; however, will put you in a place where you can no longer be assisted. There are counseling agencies, in your area, designed for helping with these particular cases. They are more than willing to help, providing you still reside at the property. Take all the help you can get.
If your mortgage company has already formed a Notice of Default, your options have just lessened. At this point you will have a much more difficult time getting assistance from anyone, including your mortgage company. One of the only options you have, if you want to save your credit, is to sell your house. Problem is, you might not get enough money and you still have to pay off the remainder of the loan. On the other hand, a few grand is way less than a house.
There are a couple other options, at this point, but they will you’re your credit almost as bad as the foreclosure would. Just keep in mind that you have options. Acting before things get out of hand is your best option and will be the one that works for you. Do not let things get to the point that there is no return. If you want to avoid foreclosure, work with your mortgage company immediately.
Learn how to avoid foreclosure by using short sales. Head online today and you can learn how a short sale will help you out.
Dec
31
Short Sales-frequently Asked Questions
Posted by: | CommentsSan Diego Foreclosures For Sale
Answers to the Most Frequent Asked Short Sale Questions
1. Q Will I be eligible for a short sale if I have 2 mortgages?
A Yes- The majority of short sales involve 2 lien holders. They both have to agree and be satisfied. If only the first lien holder is paid off after closing, the second mortgages terms has to be re-negotiated and resolved.
2. Q How Many Payments do I have to Miss to Qualify for a Short Sale?
A None—-In the later part of 2007—Most major lenders began to accept offers of a short sale from sellers that had never missed a payment or been late.Their personal situation had changed.
3. Q Will I be Responsible for Additional Income Taxes for the Difference of Loss to the Bank?
A No in most cases. It was true in the beginning of short sales; but now the rules have changed. Consult with your CPA or tax Attorney. The law has been changed so that most people are not responsible for any additional taxes.
4. Q Will I have Trouble Qualifying for a Short Sale If I Owe More Than My House is Worth?
A No If your debts are greater than your assets and you cannot make your payments; then you will qualify for a short sale. It’s that simple.
5. Q Is There Time for a Short Sale Before the Foreclosure Process Begins If I Have Only Missed One Payment but Know I will Miss A Lot More?
A It varies in each state. A rule of thumb is; 6 months to a year. A well priced short sale usually sells and closes in less than 120 days.
6. Q Is A Short Sale Right for Me If—I Have The Resources to Pay All or Part of the Negative Amount Owed. I Don’t Want to Ruin My Credit. I Just Can’t Make My Payments Any Longer.
A In this case; it would be better to work out a repayment plan with the first lien holder. The monies you have will more than likely be used to pay the 2nd lien holder. They will release the lien. The property can be sold and closed in a regular manor.
7. Q Does the Lender Have to Approve My Home Before It Be Listed As A Short Sale?
A No There basically is no such thing as being short sale approved by any lender. The approval occurs after there has been an accepted offer.
8. Q Will Property Taxes Still Have to Be Paid If I do A Short Sale?
A Yes Property taxes always will have to be paid. Each lender has different policies and it will depend on the specific agreement you reached while negotiating the short sale. So, either yourself or the lender will be responsible for paying the property taxes.
9. Q Why Doesn’t my Mortgage Insurance Pay The Deficiency Amount?
A . Mortgage Insurance is not for the protection of the owner. It only protects the lender. In most short sales there are 2 lien holders and NO mortgage insurance.
10. Q Who Pays the Listing Agent’s Commission?
A The bank will pay all commissions along with the usual closing costs.
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Dec
25
Navigating A Short Sale
Posted by: | CommentsSan Diego Foreclosures For Sale
A short sale represents a great opportunity for a homeowner who owes more than their home is worth. Ideally, it gives them a chance to sell their home without owing the difference to their lender. As home values continue to decline, short sales have become one of the most viable solutions for millions of underwater homeowners who are facing foreclosure. Unfortunately, it is very difficult to successfully negotiate a short sale with most lenders today.
A short sale can also benefit the community in which the home is located. Foreclosed homes often stay vacant for many months before they are finally sold. Lenders have a policy of not performing any maintenance or repairs on a foreclosed property. As a result, the home begins to deteriorate and causes the values of surrounding properties to drop. When a short sale is purchased by a buyer or investor, the property is often fixed up and inhabited rather quickly, as these individuals have some real stake in the property. They will not let the property fall apart over time. Thus, the surrounding homes’ values will not suffer.
A short sale is only for the patient, however. A typical short sale process can take months without any guarantee of even being approved by the lender. It’s not uncommon for a month or two to elapse without an update from your lender. It’s important to recognize that the banks are understaffed and overwhelmed with homeowners seeking assistance with their mortgage payments. Homeowners who have second mortgages on their property will have an especially difficult time negotiating a successful short sale. They usually negotiate each mortgage separately, so it becomes doubly long and difficult to accomplish a short sale. You must also prove to your lender that you are incapable of staying current on your payments or paying off your mortgage in full. Your lender will also demand to see the contract between seller and buyer to ensure they are receiving all of the proceeds from the sale. Another point to consider is whether you will have any tax implications after a short sale. The IRS may consider the debt forgiven as income and tax you accordingly. A good attorney or accountant can assist with this. Between foreclosures, short sales, and loan modifications, the banks are beyond their limits. The best way to ascertain if you will qualify for a short sale is to determine how much you will be “short” on the sale.
Here is a basic way to determine just how “short” you will be on your short sale.
1. Home Value/Worth: Determine the approximate value of your home. A good way of doing this is to enlist a real estate agent to perform a Comparative Market Analysis on your property. A Comparative Market Analysis (CMA) is an in-depth analysis of a home’s current value by comparing properties in its surrounding area that have been sold, current listings, expired listings, and pending sales. A real estate agent uses a combination of these tools to estimate the value of a home.
2. Cost of Sale: This is where you calculate the approximate cost of a short sale. A property sale can include expenses such as broker fees/commissions, advertising costs, legal fees, and closing costs.
3. Total Value of All Loans: Calculate how much you owe on your property (this can include second mortgages, home equity loans, etc. ).
Next, subtract the total amount owed on the property and the estimated cost of the sale from the expected sale revenue. The number remaining is how much you will owe after the sale. This number is a good indicator of your chances of having a short sale approved by the bank. An experienced real estate agent can assist with this.
Here is a brief example:
1. Estimated Current Value of Home = $175,000
2. Amount owed on first mortgage: $200,000
3. Amount owed on second mortgage: $50,000
4. Estimated Sale Cost: $5,000
- Add up values 2,3,and 4 = $255,000
- Subtract from expected sale revenue (#1)
- =$80,000. This is the amount you are “short” and will need your lender to forgive.
Anyone can negotiate a short sale on their own, but this could be detrimental to the outcome. Having a professional negotiate a short sale for you can significantly increase your chances of success. With so many fly-by-night companies cropping up, it’s becoming difficult to hire someone you can trust. A law firm is always the best option when seeking to hire someone to negotiate on your behalf. A law firm is familiar with your State and Federal laws, and is also bound by them. Most lawyers will not risk their license and livelihood to make a quick buck off a consumer. Your lender will also take requests from a law firm much more seriously, and your short sale can move along much more quickly. An important obstacle to avoid during a short sale negotiation is a Promissory Note. A promissory note is essentially a promise to pay the bank back the difference after a short sale. This is very bad for the homeowner trying to negotiate a short sale, because it leaves them responsible for the balance of their loan. An attorney can assist a homeowner with dealing with a Promissory Note, but there are no guarantees.
Fortunately, lenders are beginning to understand the benefits of a short sale. The Comptroller of the Currency showed that lenders completed three times the amount short sales in the 4th quarter of 2008 than in the first quarter of 2008. Now is the best time to try to negotiate a short sale with your lender. They have begun to realize that in many cases a short sale is a better alternative to foreclosure. After a foreclosed home sits and falls apart over time, it becomes extremely difficult for the lender to sell it at a competitive price. A short sale also gives the homeowner the responsibility of making their home “sale ready” to increase the chances of selling the home for a fair price. This helps the lender recoup more money than they would from attempting to sell a foreclosed property that has fallen apart over time.
If you would like more information or need assistance with a short sale, please contact the CreditLawGroup at (800) 508-0041
Smith & Gromann, P.A./CreditLawGroup is a national law firm concentrating on providing representation to consumers, including those affected by the current mortgage and debt crisis. We provide cost-effective and accountable representation on the matters of: Foreclosure Postponement, Loan Modification, Mortgage Document Audits, Refinance and Transaction Services, Shortsale/Payoffs, IRS Debt Negotiation, Real Estate Tax Appeals, Credit Repair, & Debt Settlement. We are a real law firm representing clients under federal and state law. Don’t trust your future to unlicensed “consultants” and generic companies. With a law firm you can assure that your interests are properly represented on what are critical legal matters.
The hiring of a lawyer is an important decision that should not be based solely on advertisements, Before you decide, ask us to send you free written information about our qualifications and experience. This blog subject to the terms and disclosures set forth at www.creditlawgroup.com
Dec
17
What Are Real Estate Short Sales?
Posted by: | CommentsSan Diego Foreclosures For Sale
In many parts of the country, home prices doubled during the period from 2000 to 2005. During this same time, creative financing programs (e.g. zero down payment, adjustable rate loans, interest only loans, option ARMs loans, negative amortization loans, etc.) gained popularity and helped some people buy homes who would not normally qualify based on their income, debt level and credit history.
Most real estate markets are now cooling, and some are even experiencing declining prices. In times of dropping real estate prices, the amount owed on a loan by some homeowners may actually exceed the value of a property. If homeowners cannot make their monthly mortgage payment, there is a potential for default on the loan and foreclosure of the property by the lender.
The term “short sales” is used to describe a situation in which a homeowner is at risk of defaulting on their loan, and the lender agrees to sell the property below the original appraisal price in order to avoid foreclosure. Most lenders do not readily agree to short sales, although exceptional circumstances such as a homeowner losing his/her job or the death of a wage-earning spouse may make some of them more open to doing so.
If a property is sold as a short sale, the lender recoups at least a portion of the original loan amount, the homeowner avoids the stress and stigma of foreclosure, and the new homebuyer gets a property below its original appraisal price. If a short sale doesn’t work, then the property usually goes into foreclosure.
Short sales may be an emerging trend as the rate of foreclosure is rising dramatically across the nation. According to Business 2.0 Magazine, the top 10 foreclosures markets are:
1. Greeley, CO
2. Detroit, MI
3. Miami, FL
4. Indianapolis, IN
5. Fort Lauderdale, FL
6. Denver, CO
7.Dayton, OH
8.Dallas, TX
9.Fort Worth, TX
10.Atlanta, GA
The credit of homeowners may be impacted after a short sale, but it all depends on how the lender reports the outcome. Some lenders report a partial loan repayment as full payment of the debt due, which does not adversely impact the credit of the borrowers. Other lenders report the sale as “settled,” which adversely and significantly impacts the borrower’s credit. The other problem is that the portion of the loan amount forgiven by the lender may actually count as taxable income by the IRS.
In summary, a successful short sale has some potential positive benefits (e.g., homeowners avoid foreclosure, lenders recoup at least a portion of the loan amount, new homebuyers gets a property at below the original appraisal price, etc), but there are also many negative consequences. Some of these potential negative consequences include: the negative impact on borrower’s credit, negative impact on the value of other similar homes in the neighborhood, and that the amount forgiven by the lender may be taxable event. Homeowners having difficulty making their monthly mortgage payment may benefit from talking to a real estate agent who is experienced in short sales.
Dec
10
Deed-in-lieu-of-foreclosure and Keeping Good Credit
Posted by: | CommentsSan Diego Foreclosures For Sale
Nowadays a lot of people are investigating deed in lieu of foreclosure.
In this process which is also called grant deed in lieu of foreclosure, or just deed-in-lieu, you give your property back to your mortgage lender the easy way. You sign a grant deed transferring title to your lender.
In return, the lender stops the foreclosure that is going on.
You do not need to be in foreclosure to do a deed in lieu. But lenders won’t pay attention to you in many cases unless you are in foreclosure or at least are delinquent. This is not always the case, though, depending on the lender.
What people do not realize is that certain points must be negotiated when you talk about a deed in lieu with your mortgage lender.
How will they report your credit to the credit bureaus?
Most of the time, unless you negotiate otherwise, a deed in lieu is reported as a foreclosure. It’s no better on your credit report than letting your house go to a trustee sale or sheriff’s sale.
The mortgage company will insist that they can’t do anything about this, but they can. They can report, ideally, “PAID – SATISFACTORY” but if they are unwilling to do this, “PAID – SETTLEMENT” is okay too. You don’t want a foreclosure on your record. The lender can’t do anything about a public record but they can change how they report your credit.
Ask them about “unrated” or R0, which is even better. The loss mitigation person may not know what this is but it is really nice because it removes any late payment reports and other derogatory information.
The other thing you can negotiate is that they will not pursue you to cover the deficiency in what they get when they finally sell your house, and what you owe. This is crucial because otherwise what is the sense of doing deed in lieu of they expect you to pay for their financial losses?
Remember that deed in lieu doesn’t solve your lender’s problem. They want the money not your house. If they accept your deed in lieu of foreclosure, they must fix your house and sell it. That can cost them a lot of money.
Some estimates are that lenders recover only $0.68 on the dollar lent out when they do a foreclosure. So you can see why the last thing they want is your house.
That’s why I suggest you check out options. Consider whether you should instead do a short sale or a deed in lieu of foreclosure or perhaps must sell your home in nine days even where there are seemingly no buyers
I wish you the best of luck in your situation and although I wish I could be more encouraging about a deed in lieu of foreclosure, short sales are more likely to pan out for you these days.
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