New guidelines should streamline short sales

Posted on April 20, 2012 by LAURA KEY

Area brokers and real estate agents will tell you that more short sales – an 11th-hour effort for homeowners to avoid foreclosure – are being executed this year.

The strategy in the past had been mired by communication breakdowns, prompting many a would-be buyer and Realtor to bemoan there is nothing “short” about a short sale.

So this week’s announcement by the Federal Housing Finance Agency directing Fannie Mae and Freddie Mac to streamline the short-sale process can only help.

The efforts will come in stages, with the first phase taking place in June.

Among the new guidelines is that mortgage servicers review and respond to requests for short sales within 30 days from receipt of a short-sale offer.

Slow responses from lenders, poor communication with a lender rep, and repeated requests for documentation were common gripes cited by agents in a California Association of Realtors’ survey of short sales released last year.

Other things servicers have been ordered to do under the new guidelines are provide weekly updates to the borrower if the short sale offer is still under review after 30 days; and make and communicate final decisions to the borrower within 60 days of receipt of the offer.

The new streamline rules would also apply for deeds-in-lieu and deeds-for-lease.

Source: David Benda’s Blog http://blogs.redding.com/dbenda/archives/2012/04/new-guidelines.html

4 Myths About Short Sales

Posted on March 6, 2012 by LAURA KEY

I don’t have a serious enough hardship to qualify for a short sale.

Today, it’s harder to “Not” qualify, than it is to Qualify. There are numerous ways to qualify for a short sale and a borrower does not have to be behind on payments. If a borrower can show that they are struggling to make payments or are facing some other type of hardship such as a divorce, tenant moving, job transfer, medical emergency, decrease in pay, etc., then a bank will seriously consider approving a short sale.

I’ll be responsible for the difference between what I owe and what my home sells for.

CA Senate Bill 458 (Now CA Civil Code 580e) No-Recourse Short Sale Bill was passed on July 15th, 2011. It specifically requires all lenders, including Junior Liens and HELOC’s, to forgive the remaining balance after a short sale is completed. This is a major victory for upside down homeowners in CA and can allow short sellers to breathe a sigh of relief by not having to worry about their lender pursuing them for money after a short sale. There are a few exceptions and some other minor details. Contact us TODAY find out more about the new Senate Bill 458 and how it will affect you after a short sale. 800-399-9659

My credit will be ruined if I do a short sale.

A short sale can actually save your credit. It is treated by your lender as a “settlement of debt”, and as opposed to a foreclosure, it is infinitely easier on credit and for a much shorter period of time.

I will owe taxes on the amount of loss that the bank takes on my short sale.

This can be avoided most of the time. As an example, if your lender accepts $100,000 less than what you owe them they may report this amount to the IRS, and you will be taxed on that $100,000 as ‘ordinary income’ at the end of the year. Good news is there are many ways to avoid this tax, including recent legislation. You can research the Mortgage Forgiveness Debt Relief Act of 2007 or see if you qualify for “Insolvency”. Contact your tax advisor.

Short Sales – Pros

1. CA Senate Bill 458 No-Recourse Short Sale Bill was passed on July 15th, 2011. It requires and guarantees you will be forgiven on all debt after a short sale in CA

2. If your property is 100,000 dollars upside down, you get rid of the liability now. If you do a loan mod and then have to sell your house in two years, you may still be 100,000 dollars upside down or worse.

3. Within a few years your credit rating may recover and you may be in a position to purchase property in a down market.

6. You may get to live rent free for a while.

Short Sales – Cons

1. You may not be able to buy a house for a little while. (Average 1 to 2 years)

2. You will have to move eventually.

3. You may damage your credit (Though much less than a foreclosure)

4. You have to deal with the hassle of the selling process.

Source: http://www.sandiegohopenow.com

The Most Important Short Sale Do’s and Don’ts

Posted on January 25, 2012 by LAURA KEY

Do educate yourself. This is THE most important thing you can do. Short sales can be complicated. You need every bit of information you can get when you jump into the short sale process.

Don’t wait until it’s too late. If you drag your feet and hide from the fact that you’ve stopped making mortgage payments, it will cost your credit rating and it will put any chances of a short sale in risk.

Do be diligent. There have been very closable short sales that fail because the homeowners either stop responding to their agents, stop returning paperwork, stop returning phone calls, stop caring, etc. It can be a difficult process, but at the end of it you will be free of the mortgage, the upside-down house and your financial future will have a better foundation.

Don’t stop taking care of your home. Yes, you will be moving, but if you stop mowing the lawn or keeping the place tidy, that unkemptness will discourage any potential buyers.

Do keep paying your HOA dues! Any unpaid HOA dues will need to be settled either before or at the close of a short sale escrow. Sometimes the buyer or the first lien mortgage bank will contribute to these outstanding bills, but not every time. And Home Owner Associations will send your defaulted HOA bill to a collection lawyer who will slap you and your property with their own outrageous charges.

Don’t rent your home out. In these economic times there are unsavory renters, many of them lost their own homes, that don’t mind giving you the first month’s rent and a security deposit, only to never pay you another payment. You lose the house to foreclosure, but they live rent free for the foreseeable future.

Do your homework when choosing a real estate agent or broker when you go to list your house for a short sale. The wrong short sale agent can ruin your chances of avoiding foreclosure. Short sales require diligence, confidence and an unmatched work ethic. Find that short sale REALTOR that knows her stuff, knows how to work and knows exactly what the banks want to approve your short sale.

Don’t think that you need a real estate agent that knows your neighborhood to short sale your home. In a short sale transaction, it’s about the short sale negotiation and working relationship with your lender(s), not that your home’s location is special compared to the listing around the corner. Out-of-area agents easily price properties using a Comparative Market Analysis (CMA). In fact, banks regularly pay agents and real estate brokers a minimal fee, usually $50 or $75, to price out-of-area properties for them. Your local neighborhood real estate agent may not be the right person. You need a tough and knowledgeable short sale specialist.

Do expect to move soon, or not for months. When your home receives an offer that is just the start for your short sale transaction. But the bank could decide to approve your short sale right away, which means you may only have 30 to 45 days to relocate. But, the approval process could take up to three to six months! Don’t move prematurely. It makes no sense to pay rent while your home sits empty. Communicate with your agent and keep updated on where the short sale process is.

Don’t stop paying your water bills, sewer bills or trash bills! Any unpaid bills may slow down or stop the short sale process.

Do consult your tax man or even a tax attorney when considering a short sale. Even the best short sale agents are not legally allowed to advise on tax implications of your particular situation, and the best short sale real estate agents don’t. A tax accountant CPA or real estate attorney has a better understanding and the legal right to advise you on such matters.

Don’t think that you must have a real estate attorney to execute your short sale. Most times these lawyers don’t understand real estate or the short sale process as well as an experienced short sale agent does. In fact, many if not most of these lawyers offering short sales require an upfront fee to process your short sale. real estate agents and brokers only collect commissions from the proceeds of the sale, which comes out of the bank’s pocket, not yours.

Do let your real estate agent put a yard sign in the yard. Yard signs tell buyers trolling streets looking at neighborhoods and houses that yours is a possible candidate.

Don’t make viewing appointments unavailable and hard on buyers and their agents. The more potential buyers that see your home the better chance of short selling it and avoiding foreclosure. Make that home as available to buyers as possible!

Do yourself a favor and remember that millions of Americans are going though their own short sale, or unfortunate foreclosure. This economy is dreadful, and many are experiencing financial hardships and your particular situation is nothing to be ashamed of.

Don’t apply for a home equity line of credit or any other type of credit. If you own other properties that have equity, refrain from pulling money out of any of them during a short sale approval. Your bank and any of your bank’s back-end investors will dig deep into your credit history and find this activity. This kind of action says you are just out for your own financial bottom line, and yes, they will take offense to that.

Do a quick pick up of toys, laundry and any other items lying around when a buyer’s showing appointment is scheduled. Buyers will criticize your messiness like your mother-in-law, and worse, it could affect their offer which in turn could affect your short sale!

Don’t make the mistake of thinking a foreclosure is not much worse than a short sale. It is. A foreclosure will decimate your credit; it will keep you from owning another home for years and it will be a part of your financial incompetence far more than you hope it won’t.

Do keep your hardship letter short and sweet. Explain your situation as-matter-of-factly as possible. Then your bank will look at your finances, tax filings and other documents to verify and support your story. But DO NOT include in your hardship that you bought your home for more than it’s worth. The bank does not care your home is underwater. The bank is losing money too.

Don’t strip the house of its fixtures or other potentially valuable assets. Taking the pool system, or the ceiling fans or the beloved touch-action faucets will degrade your home’s marketability, and for what? A few hundred bucks will not make the financial blow of foreclosure any softer.

Do all your paperwork and return to your real estate agent in a timely matter. Short sales can die if the proper paperwork is not supplied. It’s a silly way to screw your short sale, but it happens all the time.

Don’t use a short sale negotiating company. They will charge you large upfront fees that they don’t have to return to you even if they do not complete the short sale. And these companies aren’t held up to the same Department of Real Estate code of ethics that real estate agents and REALTORs are. In fact, some banks will not work with them!

Do call and communicate with your bank(s) and let them know you are attempting a short sale. They have thousands of mortgages defaulting, and if they don’t know you are pursuing a short sale, your property may automatically be classified as a pre-foreclosure. Not keeping your mortgage holder informed of the status of your short sale can help expedite your house to foreclosure which will not help your short sale.

Don’t violate the bank’s At Arm’s Length requirement for the short sale. The Arm’s length agreement required from the short sale lender prevents you from “renting the house back”. To avoid any fraud or risk that can result in the bank coming back at you for the balance of your loan. Do it by the book and follow the rules. The risk is not worth it.

Do know that credit card companies may decide to pull your credit due to foreclosure. When a foreclosure shows up on your credit, it says that you are in financial distress and your credit risk increases dramatically.

Don’t think you can’t short sale if you own other properties. This is a common mistake many multiple property owners make. A bank will more than consider a short sale even if you own two or more homes.

Do clean the home and property when you move out. Remove any trash, debris and take or dispose of any of your personal property. The condition of the property before transfer can have a negative effect on the buyer and their desire to own the home, and give them a reason to back out. Cleanliness is next to Godliness, and Sold Short Sales!

Don’t assume the information about short sales you read on the internet is always correct. There are many real estate professionals, and many not-so-professional individuals, giving advice regarding short sales. Some do not have a clue how to handle a short sale, let alone give advice on the subject. Your best bet is to call and talk to any prospective short sale experts. Get a feel of their knowledge base and real estate confidence, and above all else only hire a real estate short sale agent with experience.

DO CALL 360 Realty for more information. We are Short Sale Experts! 1-800-399-9659

Source: Garrigus Real Estate Blog

Short Sales and Deficiencies in California

Posted on January 24, 2012 by LAURA KEY

This is not news, but it IS critical for any Seller thinking about listing their home as a Short Sale in California in 2012. Remember the MOST critical thing..the Debt Forgiveness Act expires on 12/31/2012. Will it be extended? Most likely. However..do you want to take that chance? Read on for a recap of our anti-deficiency law, 580e. It’s a fantastic protection for Short Sale Sellers in California!

One of the first things my Short Sale Clients ask me is, “How does the Deficiency work?” What they mean as a Short Sale Seller is, “Am I going to be sued for the deficiency by my Lender?

In a word, “no!”

The year of 2011 saw a very spescific change to the anti-deficiency law for the state of California. Section 580e of the California Code of Civil Procedure came into effect on Jan. 1. This law generally prohibited a FIRST TRUST DEED LENDER from obtaining a deficiency judgment. This law applied to 1-4 residential units.

Then on July 15, 2011 a bill was introduced that greatly broadened the powers of section 580e.

Now section 580e covers many types of mortgage loans for 1-4 residential units, including..

Purchase Money
Rate and term refinance
Cash-out refinance,
Owner occupied
Rental
Second home or vacation home

(This Law has it’s exceptions! Other types of liens such as judgment liens, tax liens, or HOA liens are NOT exempt from deficiency pursuit by the note holders!)

WOW! Lots of encouragement from the Government to do a Short Sale instead of a Foreclosure.

So..you are protected from the second lien holder pursuit as well now. Your Lender may NOT..

Collect a deficiency
Have a borrower owe a deficiency
Request a deficiency judgment
Require a borrower to pay to get a short sale approved
Require a borrower to waive their rights

Tips:

Sellers: Although a Short Sale Lender cannot demand you contribute to get your short sale done, you may offer to pay something to get a deal to work.

Buyers: Carefully consider before you write your offer, HOW MUCH money a Lender is being asked to write off. Sometimes, if a Lender has to write off a huge deficiency, they COULD choose to not do a Short Sale and pursue their other options. Not a huge likelihood in California..but think about it.

Source: JANUARY 24, 2012 BY Kim Kelly

A Southern California Short Sale May be your Best Option Short Sale – If you have a Hardship

Posted on January 11, 2012 by Stephan Sabbah

Foreclosure Alternatives

One of the biggest mistakes some people make at this point is being too
attached to their property. This will cause heartache, heart attacks, and a huge amount of stress.

Let me start off by sharing a true story of a very good friend of mine, Roman.
Roman was too proud to tell me of his situation, and had no idea that I could have helped him. At the time, he was in his mid 30′s and suffered a heart attack during the foreclosure process of his home. Roman paid someone, who called them self a “professional” to do a Loan Modification, while the lender, behind his back…turned around and foreclosed on his home.

This incident that happened to Roman is what motivated me to go help people in this situation. I need to get the word out that a house is a commodity as well as a home. When times like this happen your house should be treated as a commodity and be sold so that the family can move on, pay less for rent elsewhere for a few years, and get back on top of things. How you handle things from this point can make or break you in the near future and for years to come. You can not ignore the problem you face.

We all know someone like Roman, who does construction, and has been affected by this housing crunch. It is no secret that locally, here in Riverside County, Southern California, our economy has taken a significant hit. Many people have not only lost their jobs but the businesses that hired them have also gone away as well.

It is of no fault of the average citizen to lose their property to foreclosure.
The banks set this up long ago by having special loan programs creating a bubble that had to burst. The result of that bursting bubble is smart people short sell their homes while others do nothing.

The following is the most common options someone facing foreclosure can do along with the pros and cons…

Short Sale
Short Sales have been proven to be the number one alternative to Foreclosure.
If a homeowner owes more on their property than it is currently worth, then they can ask a qualified REALTOR Broker to market and short sell their property.

A Short Sale requires the property to be on the open market and the homeowner must have a financial hardship to qualify. Hardships can be defined as a change in the financial stability of the people on the loan, between the time the home was purchased and the time of the short sale.

Acceptable short sale hardships include but are not limited to: mortgage payment increase, job loss, cut in pay, cut in hours, unemployment, divorce, excessive debt, forced or unplanned relocation, and more.

* Pros: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. This also keeps foreclosure off the individual’s public record, and in many cases will allow the homeowner to avoid a deficiency judgment.

The Borrower may qualify for another mortgage in as little as 2 – 3 years (as opposed to 5-7 years for a foreclosure).
NO DEFICIENCY IN CALIFORNIA ON SHORT SALES http://www.car.org/newsstand/newsreleases/sb458 check the law to be sure you are covered – California sb458

50% Short Sale Success Rate
Currently July 2012 success rate based on single family homes sold as short sales vs single family homes listed as short sales 516 Listed, 256 Sold.

Very Close to 50% SUCCESS RATE - based on the area So Cal Homes Realty Services. This is basically saying your odds of short selling your property is about half, whereas a year ago they were about 33% or one in three, and two years ago the odds were around 12.5% or one in eight.

* Cons: Short sales can be a trying process in which a homeowner is best served by contracting with a qualified real estate agent to guide the way. You can not short sell your house to a friend, family member, or anyone you know. You cannot collect any money from the short sale of the property unless you do a special short sale known as HAFA Short Sale.

HAFA Short Sale
A HAFA Short Sale – Home Affordable Foreclosure Alternatives has some different options in a short sale where as the buyer gets up to $3,000 at the close of escrow. A lender will pre price the property for sale on a price that the bank will accept for the short sale.

I believe it might be wise to apply for the HAFA short sale with the bank, but be ready to deny the HAFA portion and see what the bank wants. You have an option ( a small time frame ) to deny the HAFA portion and remain in control.

* Pros: you get up to $3,000 at the close of escrow to help cover moving expenses. NO DEFICIENCY IN CALIFORNIA ON SHORT SALES http://www.car.org/newsstand/newsreleases/sb458/

50% Short Sale Success Rate
Currently July 2012 success rate based on single family homes sold as short sales vs single family homes listed as short sales 516 Listed, 256 Sold.

* Cons: Banks generally do not like following government guidelines unless they set it up for themselves. So… lenders tend to have a way of making this short sale far more difficult to do. Generally a lender will pre price the property 10% above market value, killing the option of selling the property and in the contract of the HAFA arrangement you have automatically agreed to do a deed in lieu or voluntarily give up your property in as little as 120 days.

Loan Modification
Homeowners can apply for a Loan Modification of terms to reduce monthly payment. I call this a banks trap. You will be trapped in your home for a long long time. The payments will go up in a few years just after the benefits to short sell go away.

* Pros: Allows homeowner to avoid foreclosure and stay in the home.

* Cons: Your credit report is Dinged quite heavily right away, when you apply for a Loan Modification. Fewer than 10% are granted Loan Modifications. It requires that a homeowner qualify for the new payment and will often require full documentation. The Lender has to be actively pursuing modifications. No lenders are known for giving Principle Loan reduction, so you still owe the same amount plus fees, back interest, etc. This turns most existing loans into a 40 Year loan in which you will be on the hook for and be unable to sell the property at any time until you have positive equity. This could be 10+ or so years. Should you sell at any time after January 2013, if you are upside down by 200,000 and your property sells, it will be like paying taxes on 200,000 of regular income for that year. You Must pay tax on any difference. The IRS and the California Franchise Tax Board will be after you to collect for the rest of your life with penalties and interest, adding each and every day, and Bankruptcy is not an escape for Tax issues. There will be no forgiveness after the end of 2012! Contact a CPA and verify this Tax information.

Reinstatement

A reinstatement may seem like the simplest solution for a foreclosure, if you happen to have thousands of dollars laying around in the bank. The homeowner requests the total amount owed to the mortgage company to date and pays it. This can be done and will reinstate a mortgage up to five or six days prior to the final foreclosure or trustee sale date.

* Pros: Does not require the mortgage company or lender’s approval.

* Cons: Requires that a homeowner be able to pay all back payments, fines and fees. Usually causes people to borrow more money from family or friends to get further into debt.

Forbearance or Repayment Plan
Lets say you were out of work for a couple of months, but now you are working and things are fine. During that couple of months you were unable to pay your bills.
A forbearance or repayment plan involves the homeowner calling the lender and asking to get caught up by requesting a forbearance. Most lenders may do this but they will only do this once and you must have an excuse that is verifiable, such as you were out of work for two months and now you are caught up. Yes it will cost you some money. What doesn’t?

Pay back the mortgage company over a period of time. You would be typically making the current mortgage payment in addition to a portion of the back payments they owe. Keep in mind the bank has to approve of this situation.

* Pros: Allows the homeowner to make back payments over time.

* Cons: Requires that a homeowner be in a financial position to pay not only their current mortgage, but also a portion of the back payments owed. Mortgage companies will require a homeowner to qualify with documentation for forbearance.

Rent the Property or Rent out Rooms
We all know renting out the entire property usually will not cover the mortgage payment. In Some cases it may, and making up the difference may not be that difficult for you. I know many have elected to rent out rooms of their home to make up the difference and are doing well with it. There is an adjustment period to get use to one another but this is a very viable option.
If you do not have a hardship for a short sale this may be your best option.

* Pros: Allows you to keep your home.

* Cons: The issues that can arise with a rental property are many, and rent often does not cover the full cost of property ownership and maintenance. Renting a home out to others will cost you more as they are not the owner will not care as much as you do.

Deed in Lieu of Foreclosure
Also known as a voluntary foreclosure, a deed in lieu allows you to return the property to the lender. The Lender must approve of this option. If there are second liens, tax liens, personal liens,etc this is usually not an option. This is usually best done with a Real Estate Attorney. This option is really not any better than a foreclosure.

When a bank offers you a deed in lieu, think what are they asking you. They are asking you to bail and save them money and just foreclose on your property.
They usually get what they want from you, and fail to give you anything they have offered you such as moving expenses.

* Pros: Sometimes a real estate attorney can negotiate a successful deed in lieu, in a manner whereas the lender will forego their right to a deficiency judgment. This is usually with the help of a qualified Real Estate attorney and paying their fees.

* Cons: Requires you to vacate the property, hire an attorney, and a deed in lieu will usually be reported to credit bureaus the same as a foreclosure.

Bankruptcy
Some think Bankruptcy is some magic solution to to stop lenders from foreclosing on your house. At best it may stall the lender around 30 – 45 days. That is not a huge gain considering you just filed for Bankruptcy. If you have non-mortgage debts that cause a shortfall of paying your mortgage payments and a personal bankruptcy will eliminate these debts, bankruptcy, may be a viable solution.

If you are considering disposing of your property it may be wise to wait until you have disposed of the property before you file for bankruptcy. Using Bankruptcy to keep your property may not be wise. Using bankruptcy to think it will stop lenders from taking your house is a myth.

* Pros: Does not require lender approval.

* Cons: If a homeowner cannot afford their mortgage payment, a bankruptcy will barely stall—not stop—the foreclosure process. Bankruptcy can be costly, is damaging to credit scores, and can only be declared once every seven – ten years. Most banks know how to get around this in a very short amount of time. Ruins credit. Life will became much more difficult in some ways.

Refinance
If you have sufficient equity in your property and your credit is still in good standing, and you have a documented income, you may be able to refinance your mortgage.

* Pros: In some cases, you can lower your payments.

* Cons: In today’s market, a refinance will almost always raise mortgage payments, and is an expensive process. Usually, must show a reliable source of income. Refinancing a home costs money.

Service Members Civil Relief Act (Military Personnel Only)
If you are a member of the military and experiencing financial distress due to deployment, and you can show that your debt was entered into prior to deployment, you may qualify for relief under the Service Members Civil Relief Act. The American Bar Association has a network of attorneys that will work with you in relation to qualifying for this relief.

* Pros: If qualified, this may lower payments on your consumer debt in addition to mortgage payments.

* Cons: Must be active in the military to qualify.

Sell the Property
Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.

* Pros: Allows homeowner to avoid foreclosure and keep some of their equity.

* Cons: Selling in a down market is not the best time to sell however it is far better than foreclosure.

Foreclosure
Over 60% of the homeowners who are behind in their payments are afraid to read their mail and do nothing, thereby letting their property go to foreclosure.
Most vacate their home long before their property is even taken and suffer down the road with tax issues for the property is no longer considered their principle residence.

* Pros: Allows homeowner to move on and no longer have a house payment.

* Cons: Where do I begin? The song, “It’s no fun being an illegal alien” comes to mind on what life may be like for those who go through foreclosure. Credit issues of this magnitude is a difficult thing to shake. If this is your first option and you have tried to do nothing else, I would be very shocked. You can at least try something. In most cases foreclosure is not the fault of the homeowner, due to loss of work in our economy. These are the people I want to help the most.

Strategic Foreclosure
The decision, to walk away from their property and let it go to foreclosure.

* Pros: Allows people to walk away from their property and run from their problems.

* Cons: These are people who simply give up. They probably give up on everything. Their word or their word on a contract means nothing. Can anyone ever trust them? These people aid to destroy our economy, and way of life more so than those who are not in control of their situation.

It is wise to consult with a REAL ESTATE ATTORNEY, a REALTOR, and a CPA to figure out your best options.

Source: Harold Sharpe, SoCal Homes Realty

Will 2012 Be the Year of the Short Sale?

Posted on January 5, 2012 by LAURA KEY

Many people say that 2012 will be the year of the short sale. There are lots of reasons that short sale sellers might be getting off the fence and selling their homes as short sales in the coming year.

First off, the Mortgage Forgiveness Debt Relief Act of 2007 is set to come to an end. Through this program that is slated to help those with debt forgiven between 2007 and 2012, many folks are alleviated of a significant amount of taxable income. However, for transactions closing after 2012, short sale sellers will not have the advantage of protection from tax liability. For some, that could be a big bummer.

Another reason that 2012 may be the year of the short sale is because there are many wonderful short sale incentive programs that can pay short sale sellers up to $35,000 in order to participate in a short sale (depending upon the mortgage lender and investor note holder). Some programs include the HAFA program, the Bank of America Cooperative Program and several independent programs stemming from the major lending institutions. For a prospective short sale seller, money might be a key motivator in 2012.

Also, there’s that new HARP 2.0 program, a refinance program for responsible borrowers. If that program is anything like any of the other Government programs (such as HAMP and HAFA), it might be doomed for failure and bring about yet another faction of short sale sellers—those who thought they would qualify for a refi, but did not.

So, it seems to me that there will be lots of folks poised to participate in short sale transactions. However, will the banks be prepared to accommodate them and process the short sales quickly and efficiently? Now that might be a question for the Magic 8 Ball®.

by MELISSA ZAVALA on JANUARY 3, 2012

Short Sales and 2012

Posted on January 5, 2012 by LAURA KEY

By all indications, it appears that 2012 will be a year with even more short sale listings … and closings than 2011. Some of the major banks have embraced the idea that short sales can be a bit more profitable than letting houses sit for months on end and then ultimately end up in foreclosure.

With the number of real estate transactions on the upswinghere in the Auburn, WA, south King County, and Pierce County areas, it only makes sense that we’ll also see more short sale transactions.

Around the water cooler, I’m hearing that some real estate brokersare fed up with the lengthy and time consuming process of working with short sale clients and have decided not to work with short salesany longer.

I can sure understand that attitude! Short sales are difficult, at best, and so many short sale listings never manage to close, whether due to unrealistic price expectations on the part of lenders, the physical condition of so many homes, buyers that get tired of waiting and walk away, or lenders that refuse to even look at offers (let alone counteroffer) thus letting a house ultimately go to auction.

Working short sales requires a team of experts that know what they’re doing and can address objections and legal issues as they arise. Agents must know the various programs involved, what the various banks require as far as what and when paperwork must be obtained, and how to counsel their clients. My team of experts, including lawyers, title reps, and escrow officers, know what they’re doing. We’ll be here during this upcoming 2012 year to answer your questions about short selling, listing your home at a price attractive to short sale buyers and to the banks involved in the process.

Call me when you have questions. I’ll do my best to answer them so that you can develop a strategic plan for moving forward – whether that involves short selling your house, keeping it, or allowing it to go through foreclosure.

December 30, 2011 by Gabrielle Nemes www.gabriellenemes.com

Real estate roundup: Californians in foreclosure limbo – Facing Foreclosure!

Posted on November 16, 2009 by Stephan Sabbah

A rising number of Californians are finding themselves in financial limbo, having defaulted on their mortgages but still living in their homes, a new report has found.

The report by Foreclosureradar.com (registration required) found that while the number of properties scheduled for foreclosure sale increased last month, lenders continue to postpone the sales rather than foreclose.

After three months of declines, the number of houses taken back by banks in October rose by 22.2% from September and 20.95% from October 2008. Despite that jump, the number of foreclosures remains 42.6% below a peak reached in July 2008, from which time the inventory of scheduled foreclosures has grown 131.36%, according to the report.

“While we continue to see a steady stream of properties entering foreclosure, relatively few are completing the process and being sold at auction,” Sean O’Toole, chief executive of ForeclosureRadar.com, said in a statement. “The bigger picture is that more and more homeowners are finding themselves upside down in foreclosure limbo, some hoping for a loan modification or short sale, while others are just waiting for a knock on the door.”

Of all postponements, 87% of them were made at the request or with the agreement of lenders, compared with 10% postponed due to bankruptcy. The majority of loans foreclosed upon in October 2009 were originally made between January 2005 and December 2007, according to the report.
– Alejandro Lazo LATIMES.COM

Please contact 360 Realty for solutions at 800-399-9659

Short Sale Q&A

Posted on March 16, 2009 by Stephan Sabbah

What is a real estate short sale?

A little-known alternative, once more commonly used in the real estate downturn of the early ’90s, is the “short sale,” which works like this: A homeowner falls behind on his or her mortgage payments, usually due to a job loss, rising debt payments, or both. Facing a situation in which the home value has fallen and cannot be sold for the amount of the mortgage owed, 360 Realty works out a deal with the lender to sell the home for whatever the market will bear. If the amount of the sale is for less than the amount owed on the mortgage, the lender gets the proceeds and discharges the remaining debt.

Also known as a real estate short pay-off or a pre-foreclosure workout, a short sale is an agreement with a lender to accept less than the amount owed by a borrower via a sale of the property to a third party.

- What are the advantages of a short sale vs. a foreclosure?

While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect their credit rating, at least short sellers avoid having a “debt discharged due to foreclosure” on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to several years to qualify for a mortgage at a reasonable rate.

Short sales show up on a credit report as a “pre-foreclosure in redemption” status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as “discharged.” People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months. So, if buying a home is a future goal, then a short sale is the better option for many families.

- My mortgage payments are late and I maybe facing foreclosure. Is the Short Sale option available to me?

360 Realty understands as a homeowner unable to make your mortgage payment or dealing with the possibility of facing foreclosure can be a stressful experience and an emotionally painful time in your life. If you are currently behind on your mortgage payment – or predict that you will soon be unable to continue making your mortgage payments – you’re not alone: you do have an option.

360 Realty will assist you to identify and implement the best possible Short Sale solution helping you to avoid foreclosure. After a thorough review of your situation by one of our Short Sale specialists, we will work your lender to come up with the appropriate solution. 360 Realty will diligently negotiate to secure a fair and equitable solution with your lender.

Many distressed homeowners simply give up and give in to the foreclosure process, often without being fully aware of the Short Sale option available to them.

- Will the Short Sale cost me anything?  There are no out of pocket fees associated with the short sales. The borrower’s current lender usually pays 360 Realty for the real estate services provided.

- What criteria must I meet to be considered in a “hardship” situation?   Borrower will usually to prove a “hardship” and therefore unable to continue making payments on the mortgage. A hardship situation is one that is the result of some extenuating circumstance that forces the borrower into a position where they can no longer afford their mortgage payments. While every situation is different, some frequent examples of hardship include:

Decrease in the value of the home

Unemployment or loss of primary income source

Inability to work due to health crisis

Mounting medical expenses

Employment relocation

Failure of business

Bankruptcy

Death of spouse or significant other

Divorce or separation

- What do I need to do to get started?  In addition to the homeowner proving hardship, lenders require a specific set of supporting financial documents to consider a short sale. Contact 360 Realty today and one of our specialists will help you get started.

- When should I begin the short sale process?  Immediately, foreclosure and short sale situations tend to be extremely time sensitive and consuming for negotiations. The sooner we can begin the negotiations with your lender, the greater the chances of a successful resolution. There is no need to wait until the lender sends you a notice of default or initiates formal foreclosure proceedings against you. Time is of the essence!

- What effect will a short sale vs. a foreclosure have on my credit?  While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect their credit rating, at least short sellers avoid having a “debt discharged due to foreclosure” on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to three years to qualify for a mortgage at a reasonable rate.   Short sales show up on a credit report as a “pre-foreclosure in redemption” status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as “discharged.” People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months. So, if buying a home is a future goal, then a short sale is the better option for many families.

- How long does a short sale typically take to process? May the process be expedited if I am facing foreclosure or an auction date has been set?  All short sale situations are unique and follow their own timeline. Typically a short sale is completed within one to four months from the time we have a complete short sale package ready to present to the lender. The timing depends on how fast we can begin negotiating with your lender. If you are imminently facing foreclosure or even if an auction date has already been set, the process can certainly be expedited and we may even have the lender postpone the auction date. Please contact us today for a free consultation with one of our Short Sale Specialists so that we can be of immediate assistance to you.

- Why would my lender agree to a short sale?  In most distressed mortgage situations, foreclosure is a last resort for all parties involved. The homeowner and the lender usually want to avoid foreclosure at all costs. That is why a short sale is advantageous to foreclosure and lenders are typically very motivated to pursue a short sale prior to foreclosure.   A short sale gives the lender the ability to cut its losses upfront thereby avoiding the expense and time of a foreclosure and potentially greater losses. Lenders want to make loans; they do not want to be in the business of owning and managing real estate. Whether the lender chooses to go through with a foreclosure or agree to a short sale, they are taking a loss either way, but in many cases they would take less of a loss with a short sale and resolve the matter in a comparatively shorter time frame. In nearly every case, a short sale offers a significantly better return on the lender’s investment than a foreclosure does.

- What is your relationship with lenders? Why shouldn’t I negotiate with my lender directly?  360 Realty works as independent third-party short sale negotiator. Our experience and professionalism ensures homeowners and lenders that we will be the driving factor of the short sale process.   We firmly believe that just as most borrowers use a professional to initially get into a mortgage, it is in their best interest to do so if they are in the unfortunate position that they need to get out of a mortgage. If proactive, you only get one shot to negotiate your way out of foreclosure through a short sale process, and while it is nearly impossible to negotiate with the lender yourself, it is highly unadvisable. Let our professional team represent you through the short sale process.   Most lenders’ loss mitigation departments are understaffed, and the overworked loss mitigators are usually overloaded with all parties vying for their attention. Unfortunately, the loss mitigator can be very difficult to get a hold of, and when you finally do get through, you have very little time with which to make your case. Furthermore, the added stress of foreclosure in itself makes it difficult for a homeowner to effectively negotiate their way out of foreclosure.   Because we work with all lenders and represent homeowners from all across the country, and since we specialize in loss mitigation, we understand how to collect, prepare, and effectively present the information that lenders require to seriously consider a loss mitigation solution such as a short sale. We have excellent working relationships with the lenders’ loss mitigation departments and we will leverage our network and expertise to help you solve your problem.

- Why should I use 360 Realty to help me?  Our expert short sale specialists are highly trained in this often complicated process. We operate in every state and have a comprehensive understanding of all the ins-and-outs and rules and regulations applicable to each foreclosure situation. It is this unique combination of industry-leading expertise, impeccable professionalism, and extraordinary customer attention which enables us to offer the highest level of service to our clients.

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