Learn the In's and Out's of the Short Sale Market

Short sales can take a lot of time. I will help you get through this.

Laura Russell — Mon, 18 Jul 2011 17:00:46 +0000

As a primary resident, you may be eligible for a short sale through HAFA (Home Affordable Foreclosure Aternative). Contact me with any questions. Take a look at the timeline to look at the process.

Timeline for HAFA Short Sale

Options to Avoid Foreclosure

Laura Russell — Wed, 13 Jul 2011 22:55:56 +0000

Foreclosure is one of the most devastating financial challenges that a family can face and one that many times can be avoided. The options available to residents for foreclosure are many, including but not limited to short sales. Following is a brief explanation of these solutions:

Reinstatement

A reinstatement is the simplest solution for a foreclosure, however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender’s approval and will ‘reinstate’ a mortgage up to the day before the final foreclosure sale.

Forbearance or Repayment Plan

A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

Mortgage Modification

A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage.

Rent the Property

A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, can convert their property to a rental and use the rental income to pay the mortgage.

Deed-in-Lieu of Foreclosure

Also known as a “friendly foreclosure,” a deed-in-lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property.

Bankruptcy

Many have considered and marketed bankruptcy as a “foreclosure solution,” but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.

Refinance

If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.

Servicemembers Civil Relief Act (military personnel only)

If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Servicemembers Civil Relief Act. The American Bar Association has a network of attorneys that will work with servicemembers in relation to qualifying for this relief.

Sell the Property

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

Short Sale

If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.

What is a Short Sale?

Laura Russell — Wed, 13 Jul 2011 22:53:20 +0000

A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.

But to be technical, here’s a more official definition:

A homeowner is ‘short’ when the amount owed on his/her property is higher than current market value.
A short sale occurs when a negotiation is entered into with the homeowner’s mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then ‘sold short’ of the total value of the mortgage.

For homeowners to qualify for a short sale, they must fall into all of the following circumstances:

Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

This seems simple enough, but it is a complicated process that takes the expertise of experienced professionals. Find a CDPE in your area by clicking here. Together, you can identify all possible options and, when possible, a CDPE can assist you in the quick execution of a short sale transaction.

Now You Can Substitute a New Buyer for One Who Walked Without Restart

Laura Russell — Wed, 13 Jul 2011 22:41:16 +0000

Great news for short sales! Bank of America will allow backup offers. See below:

As an example of our commitment to improving the short sale process, Bank of America now allows real estate agents to submit a backup offer on a transaction if the original buyer has walked away from the sale. This means agents will no longer have to initiate a new short sale; instead, they can continue with the original transaction in Equator and work with the same short sale specialist. This change will save time by not having to repeat a number of process steps.

When a Backup Offer Is Ready

Agents should send a message to their short sale specialist via Equator when the original buyer is no longer interested in the property. The short sale specialist will then respond within two business days and ask if the agent has a backup offer ready to submit. If another buyer is prepared to make an offer, the short sale can proceed without having to repeat the short sale initiation steps. The short sale status in Equator will change to “Marketing,” and agents will be directed to complete the following tasks within 14 business days:

Complete the “Listing Data” task.
Provide the marketing description.
Review the marketing plan.
Upload the offer. (To do this in Equator, locate “My Properties,” then “Offers” and select “Place New Offer.”)

If the “Listing Data” task is not completed and the new offer is not uploaded within 14 business days, the file will be closed.

When No Backup Offer Is Ready

This new process applies only if there’s an available backup offer when a buyer walks. If a backup offer is not ready to be submitted, the short sale will be declined. In that case, agents should return to marketing the property and initiate a new short sale in Equator once another offer is received.

REALTOR® Magazine-Daily News-Fannie Revamps Rules on Delinquent Loans

Laura Russell — Thu, 09 Jun 2011 19:10:19 +0000

Fannie Mae is going to require mortgage services to act more quickly to avoid foreclosure. Click on article below

REALTOR® Magazine-Daily News-Fannie Revamps Rules on Delinquent Loans.

Short Sale vs. Foreclosure

Laura Russell — Tue, 07 Jun 2011 18:57:11 +0000

This is chart to help you understand if you should pursue a short sale or a foreclosure. Foreclosure Vs Short Sale – Fannie Mae