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If you're contemplating a short sale, you need a real estate agent with specialized training. Why? Because short sales are among the most complex and difficult of transactions.

Most real estate agents are trained to handle standard sales. Some have also tapped into the REO market, and know how to complete sales of bank-owned properties. But short sales differ from both of these in a number of ways.

Short sales depend on agreement between at least three parties, rather than just a willing buyer and seller. The seller's lender must sign off on any deal, making negotiations much more complicated. 

In today's world, most homes also have other encumbrances: second mortgages, home equity credit lines, and IRS liens, to name a few. Each of these must be addressed in a short sale negotiation, which takes extraordinary skill.

Short sales also have serious consequences for sellers that most people are unaware of:

• Sellers may have to pay taxes on the forgiven debt
• They may still be liable for the remaining debt after the sale!
• Their credit may suffer-depending on how the sale is reported

The short sale agent must address all of these issues from the beginning, and manage all the different facets of the transaction to a successful close.  Only a specialist with training and experience has the skill to do that.  Don holds FOUR certifications-and has successfully completed hundreds of short sales and was able to negotiate forgiveness of debt, for his sellers, sell their home at NO Cost to them..and help save their credit!

 

All Short Sale Certifications Are Not Equal
There are many short sale training courses available for agents-most of them written by other agents. What makes the PartnerFirst Pre-foreclosure Specialist Certification unique is its depth. The PSC course draws on the expertise of veteran short sale agents, mortgage lenders, default services specialists and other industry insiders to create a well-rounded view of the short sale process.

PartnerFirst only accepts enrollees who already have a track record of success-in short sales and real estate generally. So, when you list your home with a PSC agent, you can be confident you're getting the best in the field.

The PSC emblem assures you that your agent has completed the most thorough, rigorous education available. Don't trust your transaction to anything less.

 

 

 

 

 

Short Sales: Common Homeowner Questions and Answers

 

What is a short sale?
In the world of real estate, a short sale refers to the sale of real property for an amount less than the amount owed on the property. In the short sale scenario, the bank agrees to accept less than the full balance due on the debt, and usually "forgives" all or a large portion of the difference.

How will the short sale affect my credit?
Short sales are still a relatively new concept. Banks have the option of submitting the short sale to the credit bureau as "Paid in Full" or "Settled for less than full balance". As far as your credit score is concerned, there is no evidence whatsoever to support that a short sale will lower your credit score. Some have the idea that this is like a bankruptcy or a foreclosure. That's far from the truth! In a short sale, the lender is simply allowing you to pay less than you owe!

If you are currently behind on your mortgage or facing foreclosure, the short sale will actually help your credit! How? Because once you are approved for the short sale, all collection activity will STOP and you will avoid foreclosure! 

Who benefits from the short sale?
Short sales are a win-win situation. Lenders, mortgagees, and real estate agents all benefit from the successful short sale. Mortgagors get the majority of their money back, Mortgagees get the relief they need and are able to sell their property and avoid foreclosure, and real estate agents can facilitate the transaction and receive compensation (commission) from the sale of the property.

Why would banks forgive the difference?
To mitigate their losses, banks often accept a settlement of less than what is owed on the property. When faced with the option of getting the property "back" through foreclosure, a short sale often makes a much wiser business decision for the bank.

This sounds too good to be true!?
Not really. Things that are "too good to be true" usually don't make good economic sense. The short sale makes good common and financial sense for the banks who grant them. The fact of the matter is mortgage companies and banks are NOT in the real estate business. They are in the LENDING business. The last thing they want is that property back.

Cn FHA, Conventional or VA loans receive a short sale?
Yes! I have successfully negotiated short sales for each of these loan types.

What is "negative equity"?
Also known as being "upside down" negative equity is the difference between the value of an asset and the outstanding portion of the loan taken out to pay for the asset, when the latter exceeds the former. For example, if your car is worth $10,000 and you owe $15,000 on it, you would have a negative equity of $5,000.  Negative equity can result from a decline in the value of an asset after it is purchased.

Some areas decline in value. In other areas, prices may remain flat so that the properties in that area do not appreciate. If a seller wants to sell within 2-3 years of purchasing their property, they may be in a situation where they have negative equity.

Why does my property have "negative equity"?
Here are a few common reasons:

1. Person bought at the height of the market and the market has now declined or paid more than the property was worth.
2. The area has become less desirable for any number of reasons, so property values have declined.
3. Person purchased the home with little or no money down and wants to sell within a few years of purchase... and the property value has not increased during that time. Therefore, costs associated with selling the property may create a balance due at closing,
4. Person refinanced the home (with a high appraisal value) and now has little or no equity.
5. Person bought in a brand new subdivision or recently developed area that has not been fully developed or has not appreciated (or has depreciated) in value
6. The market is soft because there is too much builder (new home) inventory or too many existing homes on the market (buyer's market)

What if I owe what my home is worth?
Even if you owe exactly what your home is worth, you may still need to do a short sale in order to pay for the costs of the sale (agent fees, title policy, and other seller closing costs).

Why not just let my lender foreclose?
NO! What is the first thing banks do when they foreclose on a property? Hand it over to a real estate agent to get rid of it quick! The foreclosure process is a legal process. It involves attorneys and it costs MONEY. Once they get the property back via foreclosure they must often sell it for MUCH LESS than market value and pay agent commissions and all customary closing costs. Doesn't it make more sense for them to take at or a little below fair market value before foreclosing?

And, even when they do sell it through foreclosure... this does NOT remove your obligation to repay the remaining balance! It is not wiped away!!!

 

45 DAY SHORT SALE OR ELSE!

 

A new bill that would give servicers 45 days to respond to short sale requests was introduced in the in the U.S. House last week.

If passed into law, the Prompt Decision for Qualification of Short Sale Act of 2011, would "require the lender or servicer of a home mortgage, upon a request by the homeowner for a short sale, to make a prompt decision whether to allow the sale."

 If this sounds too familiar to you it may be because a similar bill was introduced in September of last year but the session ended before the proposal could be heard in the house.

 According to the text of current bill, upon submitting the required paperwork, including the contract with potential buyer, if the homeowner "does not receive from the servicer, before the expiration of the 45-day period beginning upon receipt by the servicer of such request and information, a written notification of whether such request has been approved, that such request has been approved subject to specified changes, or that additional information is required for such a determination, such request shall be considered to have been approved by the servicer."  That is pretty aggressive.  Probably too aggressive, although that is absolutely what is needed.  The biggest problem is that the mortgage servicing industry is not set up to approve short sales quickly.  It is too expensive (personnel, office space, equipment) and hard to gauge. 

 I'm not very hopeful the bill will pass and if it does pass, I suspect servicers will find a loophole in the rule.  I used to get excited when I read stuff like this.  Now I just blog, and move on.  The silver lining is that this bill does prove that there is a true desire to bring change to the default and pre-foreclosure process. 

 Remember HAFA, the Home Affordable Foreclosure Alternatives program, which was expected to encourage servicers to respond to short sale requests in 10 days or to offer borrowers SSA's in 30 days?  Somehow these timelines keep getting altered to benefit the servicers.

"The current short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure," said NAR President Ron Phipps

 "REALTORS® and consumers continue to raise issues about delays in the short sale process, because lenders are unable to decide whether to approve a short sale. After many months of delays, and with no response from lenders, potential buyers are losing patience and cancelling their contracts, often resulting in the property entering foreclosure. A short sale minimizes the negative impact on sellers and generally costs the lender less than a foreclosure," said Phipps.

Until further notice, keep fighting the good fight out there.  When servicers are forced to approve, reject, or counter short sales in 45 days or else it would be considered approved, I'll let you know!

 

 

Answers to 5 Common Questions About Default

Unfortunately, in today's slowly recovering economy, many homeowners continue to find themselves in financial trouble. As a Member of the Top 5 in Real Estate Network®, I, along with my team, have worked with many clients over the past few years to help resolve their financial dilemma in the best way possible. There are many options available to distressed homeowners -- unfortunately, most people are not aware of what these options are.

To help clarify confusion and shed light on optimal homeowner options, real estate finance expert Marian Anthony, answers five questions distressed homeowners often have:

1. Should I intentionally default on my home mortgage?
You've probably heard of people "intentionally" or "strategically" defaulting on their mortgage, willing to take the hit to their credit in favor of freeing up cash flow in the short-term. Rather than defaulting, however, homeowners should talk with their real estate professional about the potential for a short sale. A short sale could lead toward the debt showing as "settled" on your credit. Walking away and allowing the bank to foreclose still allows the second lender to render a judgment -- and possibly garnish your wages. You may also have to file for bankruptcy to recover from the credit nightmare.

2. As a borrower, what are some ways I can gain leverage with my lender?
One way to gain leverage with a lender is to establish a "substitute mortgage" -- a security pledge that is offered to the seller's lender with a third party for a lesser amount of the current payment. Over time, this will result in a significant amount of collected funds that can be used as negotiating leverage to release the borrower from the debt, or dictate terms for a favorable loan modification.

3. Why have loan modifications and foreclosures become the predominant answer for so many in distressed property situations?
The reason why loan modifications and foreclosures have become the answer for so many is because many real estate professionals erroneously consider the short sale process to be too complex. It is essential to work with a real estate professional who is equipped with the right forms and contact information, and who knows how to orchestrate a short sale transaction.

4. Why is a short sale strategy more advantageous than a foreclosure?
The reduced payoff in a short sale can release you from the debt obligation. This often allows you to re-establish your credit faster and re-enter the market much wiser. A foreclosure can ruin a homeowner's credit and take much longer to recover from.

5. I've heard borrowers in default need a 'General Public Disclosure?' Why?
Many people are not aware of the alternatives available to them when facing foreclosure. Knowing your options, as detailed on a General Public Disclosure document, can make all the difference in establishing a deal that's in the homeowners' best interest.

Remember that every distressed homeowner's situation is unique; therefore, it is essential to contact a real estate professional -- and often an attorney -- to determine the best possible solution for you. My team is happy to assist, so please feel free to contact us, and please pass this important information on to others in need.

 

To avoid public foreclosure, eliminate mortgage debt and rescue your credit rating, go to our website:  https://PelletierHomes.program3648.com  and let us help you!