The new exit strategy: A short sale

Posted by: Dean Foust on March 5, 2007

For all the homeowners who are upside down and can no longer make their mortgage payment (because of either a job loss, divorce, or an option ARM that’s resetting higher), up to now the only option was, well, letting the bank foreclose. That’s not a good option since a foreclosure sticks on your credit record for at least 10 years. But some experts are now advocating a “short sale.” This is a case of a distinction with a difference: If your bank agrees to a short sale, you then hire an agent to find a buyer for the house, you sell the house for a loss, and with the bank’s blessing, they agree to eat the loss (although they could still demand the homeowner make some kind of payment or share the loss).

That’s the really short version of how it works. It was this article in the Tucson Citizen that caught my eye and made me aware of short selling. The Tucson Citizen article, in turn, provides links to a couple of other articles that discuss short selling, one on EHow.com and another on a real estate lawyers site.

The experts say you’ll probably need to find a real estate agent willing to work for a smaller commission (which makes the bank a little more willing to absorb the loss), and you’ll also need to scale back your own spending. Putting expensive jewelry on your credit card will make a bank less inclined to do you any favors on the sale of your home. And be prepared that if your bank does absorb the loss, the IRS might treat that as taxable income and you’ll have to come up with the cash to cover the taxes.

Of course, the better option is to find some way to stay in the house—by first, seeing if the lender is willing to restructure the loan, or forgo a couple of monthly payments to help you get back on your feet. Apparently, more and more lenders are willing to make accommodations to avoid taking the property back. Banks hate to take over homes, especially in a declining market, so you shouldn’t underestimate the willingness of a bank to make concessions.

Reader Comments

Lord

March 8, 2007 4:34 PM

The IRS will treat this as income and tax you on it. Even if you can afford it, short sales and deeds in lieu of also stay on your record. Bankruptcy can clear the slate at least if no workout is possible.

River

March 9, 2007 12:40 PM

It's interesting to hear your comments, about banks trying to recapture some of their home loans when markets are this weak, because I remember in Alberta in the 80's home forclosures were at an all time high, as house prices fell below morgage values. This resulted in what was refered to as a "Quick Claim". The banks let you walk from the margage and home, if you turned the home ownership over to the banks. This saved the banks the cost of recovery. There was literally pages every week in the newspaper announcing 2nd. morgage forclosures. I wonder if this is about to occur in America. A side note: when home owners find their single most important asset being devalued on a monthly basis, they tend not to be stock market bulls..ab

Vince

March 29, 2007 1:52 PM

Do banks negotiate a reduced realtor fee for sale if that is too much for seller to pay given appropriate means test? If the realtor fee is the only cost issue for seller, will bank work out a deal to pay realtor commissions?

Alex Ben-Kori

May 5, 2007 3:52 AM

Hi Dean:
You're obviously quite experienced in general matters of finance (and undoubtedly able to teach me volumes), but I don't know what would lead you to think that short sales are new. I've been negotiating them for years. I don't know their history, but they definitely didn't just appear as an option.
Short sales have been a staple for investors for some time. (The following doesn't pertain to you, but) I'm surprised to see quite a bit of incomplete, or misleading information on short sales in the various media, given that they're straightforward and simple procedures (simple of course, doesn't imply easy). The worst thing about short sales isn't that they're complicated...it's that the buyer rarely has a chance to affect the decision-makers. We make the pitch, and no matter how reasonable it is, no matter how well we argue the merits of the offer, we wait for a response from someone we rarely get to speak to. Then the lender sometimes drops the deal in midstream, to sell to someone else. We can talk until we're blue in the face, but we almost never get to keep a relationship with the people in charge. Good people skills are important, but at some point, the door usually shuts on you, as the decision-making process goes to a closed room with anonymous number-crunchers. That's why the success rate in short sales is 50% 0r less, even when the offers are fair. But, as I'm sure you and many people suspect, the short sale process would seem likely to get a bit more expedient and user-friendly, as bank-owned inventories rise, available lending capital dries up, and the regulatory agencies loom over all these lenders who are going upside-down.
Thanks,
Alex Ben-Kori

eli tene

May 13, 2007 12:00 AM

I negotiate short sales since 1991. It is the best solution for the lender and the borrower in any case which the value is upsite down. It is the best chance for the borrower to save somehow his credit and rebuild it later. For the lender it means cash now vs. long after. Also, if lender forecloses on the property and not willing to work out a solution than it is a very common knowledge that they will net way less once they take back the property.

anthony romero

May 14, 2007 4:20 PM

I have a couple of clients now that are facing a short sell situation. We are aware of the 1099 tax situation, but have to clear one thing up. Are the costs to sell a home figured into the 1099 tax situation? Example, if the house balance is $440K and the sale is $400K, and the cost to sell is 11%, is the 1099 tax on the $40K difference? Or the $40K + 11% together? Please help.

John Brooks

May 18, 2007 8:12 PM

Anthony,

I teach Short Sale classes in SoCal and am setting up a new real Estate Agency specializing in these issues, so like a couple of the previous posters I am very familiar with the laws.

In regards to your question about the amount of the potential tax bite, it is based on the total loss to the lenders. In your example above, if the lender is paying the 11% for closing and commision costs that will be factored into their loss. They will send a forgiveness of debt 1099 at the end of the year for their total loss. This will include legal fees, arrearages, actual loss on the loan, etc. So your clients could easily end up with a bill that is double the $40k difference.

Short Sale negotiaters will attempt to have this waived as part of their negotiations. If they are insolvent, or have a zero net worth they can also fill out a tax form and eliminate this obligation. It is not an easy form to fill out and will probably require some specialized tax expertise, however it is well worth it if they think it would apply.

Congress is looking into the issue and it may well be that by the end of this year, foreclosures and short sales will be exempted from that provision. Good luck John

Megan

May 23, 2007 11:58 AM

I am looking at short sale as an option to get out of the sticky situation I got into with my condo. The investor that I am working with mentioned 20,000 being what she was going to attempt. What amount of tax will I be required to pay on that? If any? She did not mention that to me.

Mike Godby

May 24, 2007 4:54 PM

Hi I'm 14 days late on my mortgage payment.for a spec house. I am going to do a short sale. The lender just called today. I haven't returned the call yet. What are the steps I should be doing to accomplish this?

J Nunez

May 26, 2007 6:53 PM

I am a real estate broker. What are the laws or implications for me buying my clients house in a short sale?

Derek

May 27, 2007 4:11 PM

You cannot do a short sale on your own house. You should get a qualified investor to look at your situation.

sheila

May 28, 2007 4:21 PM

We are selling our house.The house payment is due on the 1st of the month and closing is on the tenth. what will happen if we dont make the payment on the first?

Kristian Alekov

June 1, 2007 11:17 PM

Regarding the 1099 forgiveness of debt, does anyone know anything more about "ghost income"? My understanding is that even if you did receive a 1099 from the lender, you still don't have to necessarily pay taxes on it at the end of the income, as long as you show that it is a "ghost income", or not "real" income to you. (you never received the bag of cash, in other words, it's just on paper that you made money)

Kristian Alekov

June 1, 2007 11:20 PM

Sheila, do not worry about not making the payment on the 1st, if you are selling the home on the 10th. Most of the Sellers don't pay the last month if they are tight on money, it's normal, and that would not affect your credit since 30 days late is usually the minimum late that gets reported. Even in case of 30 days or more, usually there are no consequences besides the fact that your principal and interest from the missed payment will affect the payoff of the loan and thus might reduce the expected income from the property you are selling by the amount of the missed payment, in case that the closing agent calculated your payoff based on you making that last monthly payment.

Kristian

June 1, 2007 11:25 PM

Derek,

I assume you mean "you cannot buy your own house on a short sale", right? Since you can actually sell your own house on a short sale, as long as you find someone that wants to buy it? You can definetely negotiate with the lender yourself...

maryanne larison

June 4, 2007 9:07 AM

Help... What happens to a renter of a house that the owner has posted a short sale for sale sign on? Do they have any rights if the house is sold ?

Lorine

June 4, 2007 12:01 PM

Is it better to have my realtor talk to my lender about agreeing to a short sale or should we do it. We just put our house on the market to try and sell and we are a few months behind on our mortgage. We just want out and the mortgage company just doesn't seem to really want to talk to us. They haven't started foreclosure yet. We just need advice.

Sandy Pope

June 4, 2007 9:08 PM

I have taken a series of Short Slae course for the Austin, Tx areas and have found with a system a short sale can be smooth and clean. The banks are more willing to help when the agent is educated with short sales. I am willing to help if anyone needs it 512-923-5214

Cheyenne

June 11, 2007 6:57 PM

Let's say the original purchase price of a home is $1,000,000 and a short sale is completed for $800,000. Is the individual that purchased the home at the "short sale" price taxed on the $200,000 as if it were some sort of income? or at all?

Dallas

June 13, 2007 9:23 PM

Will a short sale effect your credit like a disclosure? I have recieved conflicting information.

Bill Kanter

June 16, 2007 11:38 AM

How does the VA view a short sell that was not on a VA loan? And how long must a buyer wait before being able to buy their next property using a VA loan? I have heard one year or two years? What is correct?
Bill

TO

June 17, 2007 11:05 PM

I was in a tough situation and contacted a company to help me get through this. They helped me find a realtor, collect the financial paperwork, and get an offer on my house. They weren't investors, which was good for me because it made the amount I owed the bank less. The company was National Short Sale Center - www.shortsalecenter.com

Check them out if you're in the same position I was!

Carrie

June 19, 2007 8:16 PM

So I have seen a lot of questions regarding the tax that may be due, but not a % or # pertaining to how much. I may have a debt forgiveness of $70 to $80k max on a short sale. How much would I owe if I cannot waive the taxes? Thank you.

Joan

June 20, 2007 3:50 AM

I have submitted a short sale package- with exactly everything requested by the lender. We are investors and the house was not listed, so the bank will not owe commission. The sell date is July 3rd. We are offering 92% on the first loan. I call the bank every day and cannot get a negotiator on the phone. Please let me know what the "secret" is in getting the negotiator on the phone.

Thanks!

COLLEEN

June 21, 2007 9:41 PM

HI I AM REALTOR IN FLORIDA WHOM IS DOING ALL SHORT- SALES IS THERE A BETTER WAY OF GETTING THE LENDERS TO SEE THE MARKET AND THAT THE VALUES ARE NOT IN THESE PROPERTIES AT THIS TIME, IS THERE A BETTER PROCEDURE TO GETTING THEM TO EXCEPT AN OFFER?HELP I WANT TO QUIT.......COLLEEN MARKONIOS

JUANA

June 22, 2007 2:15 AM

HELLO WHAT HAPPENS IF YOU JUST file chap 7 bk and i want to do a short sale?

John McConnin

June 30, 2007 2:37 PM

Colleen it is wise of you to seek help - You are correct banks seem to be taking too much time with many of these short sales. Lawyers have more tools with which to hold the banks feet to the fire

I would suggest you get your homeowner in contact with a lawyer who may devise a comprehensive strategy. All situations are different but the negotiations should be set up so that the homeowner feels little or no further pressure. It should be the bank pushing the short sale through not the homeowner.

charles Thornton

July 3, 2007 6:41 PM

I live in California, and I have a 1 bed 1 bath condo in Boynton Florida. It's in good condition, and I would negotiate on the price, this short sale seems more complicated and longer than I would like.

Thanks, Chuck

Bill Burress

July 6, 2007 9:19 AM

I am a Florida Mortgage broker and what I have been seeing here is a lot of short sales and pre-foreclosures. Many folks are getting excellent deals on real estate at below market prices with the short sales in Florida.

jB

July 7, 2007 9:27 PM

Hi, I have found a property that the sellers agent is selling thru a short sale to cover off on bank liens. In this process, what is required from the sellers bank in terms of title since the seller and the bank potentially have title in the home? As a purchaser, what does the purchaser need to do different to consummate a short sale? Are their issues with the borrowers lender?

CP

July 10, 2007 3:40 PM

I was told by a RE agent that I need to list the house on MLS (through him) in order for the bank to take it seriously. Then, another investor dealing with short sales, said he would submit an offer (buying it himself) without listing it - do you think they would take it?..or should I trust the RE agent? I can't get anyone knowledgable on the phone from Wa Mutual. Also the RE Agent said not to pay on a house with zero equity so regardless of where to turn, it looks like we'll be 60 days late after July. I don't know who to trust - any advise is appreciated. We owe $200k, market assessment by 3 brokers said it was worth $165k and we already put 25k into house renovations over the last 5 years. We're tired of money out the window and husband relocated and I'm unemployed - Help...anyone?

Colleen Samuels

July 11, 2007 7:44 PM

I tried selling my house in a short sale to no avail, the bank is now foreclosing on my home and the auction is taking place August 3rd. After that will the bank keep digging into things to try and sue me or will they usually just let it go. I just want ot be done with this and not let it carry on. Any knowledge on this.

MariaT

July 12, 2007 10:08 PM

I live in CA and we just put our house on the Market, we owe 504k and listed the house 499k, my lender says that i need to at least show that Iam trying to sell the house and after one month, if nothing, to call them back...so does that mean I do the "short sale" process with them directly and my other concern is.... we have another property also in CA and its an "investment" property, we have tenants living in it....i know i will be short and dont have the money up front to pay on the house i am living in, will the lender put a lien on my investment house

MariaT

July 12, 2007 10:20 PM

I live in CA and we just put our house on the Market, we owe 504k and listed the house 499k, my lender says that i need to at least show that Iam trying to sell the house and after one month, if nothing, to call them back...so does that mean I do the "short sale" process with them directly and my other concern is.... we have another property also in CA and its an "investment" property, we have tenants living in it....i know i will be short and dont have the money up front to pay on the house i am living in, will the lender put a lien on my investment house

Laura

July 16, 2007 4:10 PM

We made a short sale offfer on a condo that has been on the market for awhile. We want to purchase it for our son. We made a fair offer, our real estate agent submitted the package to the listing agent right after Memorial Day. We still have not heard back from the seller lender - the seller entered foreclosure at the end of June. This is the most frustrating process - I can't understand why the lender won't get back to us...

addis

July 16, 2007 5:04 PM

Hi
My wife and I made an offer on a foreclosed house. It has been over three months no and we have not heard anything from the bank. Since then we told out of the three offers that were submitted there are two left, ours and one other person. Our realtor has been communicating with the saler's realtor. First we were told that the Bank said that it takes 30 days then 45 days then now we have been told business days. Is any time limit on when the bank should get back to us? Is there anything we can to get an answer?

Susan Milner

July 18, 2007 5:12 PM

Great discussion. We are working to help owners sell their homes who are facing foreclosure.

Many lenders are willing to work with us but this is a time consuming process. Banks have lots of guidelines & procedures that must be followed.

It has been our experience that when the owner calls themselves they are told to try to sell the house through a Realtor. Then some banks will start working with us right away while others want an offer first.

Each bank is different. Some won't work with us at all.

Also, for the question posed as whether to work with an investor or a Realtor...I know a few investors doing this in our area also and they are still using Realtors to list the house so the bank can see that they have been listed.

If anyone needs some help in the SW Florida area let our team know.

johan

July 18, 2007 6:09 PM

as far as banks getting back to you, banks are slammed with short sale requests so if they deny your offer they will not call you but close the file,
Short sales are along process and getting the bank to give you a call back is like pulling teeth from a running horse. You will need someone really experienced to pull it off if you opr your client are facing foreclosure.

Bill Burress, Cincinnati Mortgage,LLC of Florida

July 19, 2007 11:17 AM

For those who can no longer pay their mortgage, a short sale is much better than a foreclosure when it comes to credit reporting. We can work with the buyers of the short sales. It's a longer process because of the negotiations with the mortgagee but the rewards can be great for the buyers who have the patience.

ALEX SERRANO

July 19, 2007 3:48 PM

SEND ME INFORMATION

Ron Pool

July 19, 2007 11:37 PM

By far, I am no expert on short sales but, as a SC Realtor I can tell you that I have had some experience with banks and REO (foreclosed) properties. Banks don't like to own property. They deal with money and are very unemotional about it. The best way to get a timely response from a bank is to make a fair market offer on a property you're interested in. Too many people make a 'lowball' offer on a property and wonder why they don't get an immediate response from the bank. Many banks also operate "by committee". At a given point in the review process there may not be one person who can answer or resolve questions about the offer until that review process is complete. Your best option is to use a professional, knowledgeable REALTOR(C) to assist you in making a purchase offer and doing the negotiating for you. Usually, the seller will pay all of the agent fees/commissions also.

Brian Holden

July 20, 2007 9:53 AM

Reading the comments above it is clear there is a lot of misinformation and confusion regarding Short Sales. Although they have been around for a long time the curent market situation, particularly here in South Florida, is creating a flood of them.
I would advise anyone to discuss their situation with an experienced Realtor. Short Sales are not a part of real estate basic training but there are a number of educational seminars a Realtor can take to get up to speed. Lenders will pay a reasonable commission, usually 5%, and even a Loss Mitigation fee of $1,500 to whoever completes the required paperwork, so Realtors have an incentive to get involved in Short Sale situations.
The basic requirements for a Short Sale are a Listing Agreement with a Realtor and a Sales Contract from a Buyer which are submitted to the Lender along with a Hardship letter from the Seller explaining why they cannot continue to pay the mortgage and supporting documents such as tax returns, bank statements, information and photos of the home and comps supporting the offer. The way mortgages are sold, the lender can be anywhere in the country and certainly not aware of local real estate conditions.
If the package is complete, the Lender will order a BPO, or Broker's Price Opinion, from an independent Realtor. Ths BPO is the key to the whole process. If it is too high, the Lender will not accept a low offer. Your Realtor can meet with the Agent doing the BPO and offer information supporting the offer, such as the average time on market of comparable homes, recent selling prices and point out any defects in the home. Most Lenders will accept an offer lower than the BPO, but usually not much more than 10% lower, though that will vary depending on the company.
The sales contract should specifically state that the offer is contingent on the Lender accepting the purchase price in full and forgiving the Seller the deficiency on the mortgage. There can be tax consequences but if the Seller is truly in a difficult finacial situation they can be avoided - an accountant should certainly be involved in that question.
This does all take time and Lenders are swamped, expect at least 2-3 months before a sale can be finalised, even if the Lender accepts the first offer. If they do not, the price can be negotiated, IF you can get hold of anyone at the Mortgage Company to talk about it.
I am a Realtor, a Broker Associate in South Florida and am involved in short sales. It is a detailed but fairly straightforward process that can work to benefit Buyer, Seller and even the Lender. The Buyer gets a good price on a home, the Seller gets to avoid the disruption and credit hit of a foreclosure and the Lender avoids the delay and expense of foreclosing on a property they don't want to own.

Brian

July 20, 2007 12:42 PM

True, the banks are slammed with short sales and foreclosures, but they often rely on misinformation or don't do what is in their own best interests. We have seen them take so long to make a decision, the buyer backed out and found another house. We have seen them refuse to accept an offer that netted them everything back except for a large prepayment penalty! And lastly, we have seen them refuse our offer of 174K, because a misinformed agent did a BPO on the home, and set the value @ 185K, so the bank would not accept less than that! Well, now the bank owns the home, and it is languishing on the market @ 165K. A prudent person or organization would feel foolish, but not this bank! They are quickly becoming a major property owner in our county, due to foolish antics such as this!

gazelleintense.com

July 20, 2007 6:14 PM

dave ramsey talks about them quite a bit... he says if your behind on payments a short sale is better than a deed in lieu, and certainly better than a foreclosure.

Kimmen Torehov

July 21, 2007 12:10 AM

Good discussion on short sales. I used to do lots of them 10 years ago here in Southern CA and now they are back. My advice to potential short sale sellers: go with an experience real estate broker whom has done them in the past. Remember that is worthwhile do get your situation evaluated to see if you qualify for a short sale.

Sara

July 21, 2007 9:26 PM

I am in the process now of purchasing a property in Tampa, Florida through a short sale. The property was 100% financed in 2006 with a 70% 1st mortgage with WaMu and a 30% 2nd mortgage with Ocwen. The owner is 8 months with no payments and facing foreclosure. We offered Ocwen 25k on a balance of 170k and they accepted almost immediately. We offered WaMu the original loan amount (with late fees and unpaid payments the balance is 20k higher). It took WaMu 30 days to assign a negotiator (just found out her name and phone number). But I still haven't heard from WaMu. Anyone have any advice??? If WaMu makes a counter-offer I think I can make up the difference with a reduced offer to Ocwen (since they will take 0 if it goes to foreclosure). The foreclosure has been filed, but the auction date probably won't be scheduled for several more months. Anyone done this type of deal before and have any advice? If WaMu likely to accept an offer for the original loan amount. It seems to me like that is in their best interest.

MIRELA ROMAN

July 23, 2007 3:20 PM

I am a RE broker in SW Florida and I am interested to learn about Short sale and foreclosures.Who is teaching and where?Prefer close to Naples area.Thanks.
Mirela

Jessica

July 26, 2007 1:24 PM

We own a condo in SE florida it we just can't afford anything, mortgage, taxes, HOA, ect. We are interested in a short sale. we owe 215K and we think our place would only sale for 175K at the most. We can not afford any costs associated with closing. we want to just walk away from this? we have also thought about forclosure. how does a short sale affect your credit score? down 200 points? down 100 points??

thx

YB

July 29, 2007 5:54 PM

Our tech support guy's mother is mentally ill and is facing foreclosure. Last year she tapped her equity with a neg amortized loan. My business partner and I want to help this guy by offering the bank a short offer and ask them give us a better loan w/o closing cost. Then we want to have our guy rent to own and fix the place out of his own pocket. He should be able to qualify for a loan in 2 years...Do you think the bank will go for our offer. I'm trying to be creative without putting out much cash or closings costs. Any thoughts?

Steven Wagner

August 1, 2007 10:26 AM

SHORT SALE – Are the REAL! – Let me be direct. Yes lenders will do short sales. The question how to get into their minds to know what amount they will short sale the home for.

I’ve been doing short sales in Florida and been finding home after home I’m trying to discount are being denied by the lender and taken back by the lender at the Auction. One would think if the owner owes $ 250,000.00 on house and the market says the house in today’s market is valued at $ 190,000.00 to $ 200,000.00. So you offer the lender
$ 140,000.00 which is 30% of the Fair Market Value. You would think the lender would be happy with this offer and this would be a done deal.

But it’s not because one thing that is not discussed in your forum on short sales is the BPO (Brokers Price Opinion) or appraisal the lender orders. Most of these are drive bys. This is were they person doing the BPO drives by and pulls up comps on that house and gives this information and report to the lender.

It’s important to get this person INSIDE the home to show them the defects or problems of the house. The PROBLEM is most people and even those doing short sales don’t understand what’s going on behind the scenes. The lenders controls the entire process and if they don’t like the BPO they will pressure that BPO agent to increase the price or they may not accept the BPO price and the lender will mark it up any way.

So really the success of the short sale is based on this BPO or appraisal. So, using the above numbers the BPO comes back on this house at $ 210,000.00. Your offer was $ 140,000.00 the lender may decline your offer because they want you to be close to THERE NUMBER.

Now remember the market says this house will sell for $ 190,000.00 to $ 200,000.00 and the lender wants you to counter. So you counter in small amounts over time and finally come to an offer to the lender for $ 165,000.00, which is about 20% of the $ 210,000.00 BPO.

First in Florida or other places this house may not sell at $ 190,000.00 to $ 200,000.00 the market may be so bad that the home may only sell if listed to sell or in this example lets say that price is $ 180,000.00. Now your offer still looks good, but the lender may still decline the offer and your wondering why.

In their MIND they’re looking to get close to THERE NUMBER of $ 210,000.00. I’ve tried to build a case that the market doesn’t call for that it calls for this house selling at $ 180,000.00 and you go on building your case on why but yet they turn you down. So one would think let’s increase my offer to $ 170,000.00 but if the house isn’t selling at $ 180,000.00 and the lender doesn’t see that even with pulling comps or comparables your not going to WIN because the lender has there own agenda. The lender is set on thinking they can get $ 210,000.00 no matter what you try to document and show. Now what I don’t understand is why ANY LENDER would not take the $ 165,000.00 instead of taking the home to AUCTION. One would think this was and is a good offer to the lender. One would think that if you could buy this and sell this to someone for $ 180,000.00 you made good money.

One would wonder why the lender would not accept this offer and be willing to take this to AUCTION and take the property back. One would think taking the property back would COST the lender more money in the LONG RUN, taxes, up keep, holding cost, lost of interest, lost of monthly payments, they have to set 2x to 6x the amount of this asset aside in a reserve they can not use, etc…

I’m getting to long here. Bottom line is this the PEOPLE need to know these LENDERS play so many games and continue to victimize the people that they really don’t care. The other problem is the over inflated prices the BPO are giving to the lender and if the lender doesn’t like that price they will order another one until they get the price they feel is right, the lenders will tell the BPO what price they want so your already beating your head against the wall because the LENDER is paying for this and they often dictate what they want.

What I have found is more and more of these homes are being taken back at the AUCTION than they are being short sale because the other problem is there are so many people out there trying to take advantage of the market that have NO IDEA WHAT THEY ARE DOING.

You can blame the GURUS for this. They continue to market How to be rich in buying Foreclosures. These GURUS offer courses that are so vague and offer NO SUPPORT or help when you buy their course. Yes they will provide support if you pay them more money to mentor you. I’ve brought deals to them and told them if they help me I will give them 70% of the deal. I’m just looking to get a start because I don’t have $ 4,000.00 or $ 20,000.00 to have you coach me and every one of those GURUS I spoke to refuse to help me unless I put up more money for there help. If you want names I’ll give them to you.

It’s best to STAY AWAY from these GURUS and find someone out there like my self in your area to work with you and help you with support and direction and in return split the profits with that person. You might even get hands on training.

The GURUS are the BLAME for teaching people and flooding the market with people that DON’T KNOW what they are DOING and these people can not close causing the LENDERS to become more SKEPTICAL of the so called SHORT SALE person doing the SHORT SALE.

In FACT I head this is why most of the lenders are taking homes back because of those people that are trying to do SHORT SALES after buying a course or attending a work shop that could not close on the deal.

The GURUS are putting person after person out in the market that doesn’t have a clue what they are doing making it harder for those that do. They lack teaching you how to submit or put the documents together, how to negotiate with the lender, what the lender is looking for in the short sale package.

They LACK a lot of STUFF that is important for you to understand and know about the short sale process. I’m being direct and HONEST. They make it sound so EASY and have someone stand up and say I made $ 40,000.00, but what you don’t find out is what that person had to pay for coaching or mentoring. I’ve been kicked out of one seminar because I was trying to net work and share courses so I can get a start in this business. They didn’t like the idea of me networking with others because they wanted me to spend $ 20,000.00 on their coaching program.

How many more people are these GURUS going to produce that have no idea what they are doing that in the long run may cause changes in the law that effect the honest person trying to make a living.

I think these GURUS are making MORE MONEY putting on training events, selling their courses than they are doing in ANY SHORT SALE. I bet there not even doing short sales themselves.

I would like to CHALLENGE ANY GURU out there to come to FLORIDA and show me they can do a SHORT SALE.

I know NOT ONE OF THEM will take me up on my offer because their making so much money off of us STUPID people like my self that bought into their gimmicks.

Not one of them I believe any more are HONEST and ETICAL. If they were HONEST, ETHICAL and concern about your SUCCESS and making sure the SHORT SALE process is done right and that your successful they would provide the needed support.

After all they claim to be MILLIONARS and one would think they could afford to help with providing the right information to see us succeed. At least ONE would THINK that. But that’s not the case.

Patrick F. Fleming

August 2, 2007 8:24 AM

I am the principal broker for WorldSelect Real Estate in NY. My firm started doing BPO's three years ago and within the last 12months we have been retained to list and sell REO properties throughout the Hudson Valley of NY.

My advice to newcomers is to find the best mentor in your area. Even if you have to give up some of your commission, it is well worth the sacrifice to learn from a pro.

Patrick F. Fleming
Managing Partner
WorldSelect Real Estate
800.790.0939
www.wselect.com

Daniel Gonzalez

August 7, 2007 2:03 PM

I'm currently in Chapter 13 for the next five years- Every month is a struggle to pay the mortgage and the plan payments. Will a short sale help me to still keep the house to lower my monthly payment or do I lose the house? Who do I talk to first about a short sale on the property?--I'm confussed!

jan

August 7, 2007 7:20 PM

LOL...so many ? and so many answers.
1. find out the laws that pertain to foreclosures and short sales in your state.
2. banks won't negioate until in default.
3. call loss and migtigation department..speak to the person in charge of your default and keep in contact with this person once a week.
4. ask for a short sale packet...send the info. they ask for
5. you negiate ONLY! not your realtor...you put the offer in and let the bank counter back. dont let the realtor control the listing.
6. sorry realtors but listing with an realtor isn't always good but the bank will take you serious if it's on the mls...pay the fee to list and mention it's a short sale!
7. don't exspect any offers until a month before court (california)...find out the laws in your state.
8. know your LAWS...in California non-judicial they can't come after you if you have a conventional loan...equity YES for the difference
PRIVATE sale is the best in California...try to short.
9. most banks won't short sell because they have insurance with the mortgage companies and the insurance will cover theirs losses...that's why they reject loans but as the rates grow higher less want to carry the homes.
10. why do i know so much? I have dealt with realtors, lawyers on both matters and this is what i've learned.

Cindy

August 10, 2007 1:18 PM

I own a house in Florida. I could have sold my house a year and a half ago for atleast $200,000. I wanted to sell but I was talked out of it by most people I discussed it with. The market has dropped so much that I can't even sell my home for what I owe $128,000 now. My fiance moved out leaving me to pay the bills 100% on my own and I no longer receive child support from my ex-husband who is ordered to pay. He is out of the country so there is no way to make him pay. I can no longer afford my home and am 4 months behind on payments. The mortgage company has not started foreclosure. I am reaching out for help and found out about a short sale. It seems to be a very slow process but if I am going to lose my home to foreclosure anyway, do I have anything to lose? The short sale company did not mention owing taxes on the money that is a loss to the mortgage company. How would I possibly pay taxes on $40,000 or $50,000? Anyone with advice, please contact me!

Sandy

August 13, 2007 2:43 PM

WOW, I so agree with Steve Wagner!!!! There are many people who "try to HELP". They charge you to get to the middle of the lake then leave you with no direction! Most of the phone calls I get and people I hort sales you are doing and ask nation wide what "is really going on"!

Brian Holden

August 13, 2007 9:33 PM

For Cindy- and anyone facing foreclosure. As Cindy says, there is one very important alternative to avoid the foreclosure and that is the Short Sale. A Short Sale is a proven way for a homeowner who owes more than the house is worth to avoid a foreclosure and the subsequent credit hit.

I would advise anyone facing foreclosure to discuss their situation with an experienced Realtor. Short Sales are not a part of real estate basic training but there are a number of educational seminars a Realtor can take to get up to speed. Lenders will pay a reasonable selling commission so Realtors have an incentive to get involved in Short Sale situations.

The basic requirements for a Short Sale are a Listing Agreement with a Realtor and a Sales Contract from a Buyer which are submitted to the Lender along with a Hardship Letter from the Seller explaining why they cannot continue to pay the mortgage and supporting documents such as tax returns, bank statements, information and photos of the home and the Comps, or comparative home prices supporting the offer. The way mortgages are sold, the lender can be anywhere in the country and certainly not aware of local real estate conditions.

If the package is complete, the Lender will order a BPO, or Broker's Price Opinion, from an independent Realtor. Ths BPO is the key to the whole process. If it is too high, the Lender will not accept a low offer. Your Realtor can meet with the Agent doing the BPO and offer information supporting the offer, such as the average time on market of comparable homes, recent selling prices and point out any defects in the home. Most Lenders will accept an offer lower than the BPO, but usually not much more than 10% lower, though that will vary depending on the company.

The sales contract should specifically state that the offer is contingent on the Lender accepting the purchase price in full and forgiving the Seller the deficiency on the mortgage. There can be tax consequences but if the Seller is truly in a difficult financial situation they can be avoided - an accountant should certainly be involved in that question. This does all take time and Lenders are swamped, expect at least 2-3 months before a sale can be finalized, even if the Lender accepts the first offer. If they do not, the price can be negotiated.

I am a Realtor, a Broker Associate in South Florida and am involved in Short Sales. It is a detailed but fairly straightforward process that can work to benefit Buyer, Seller and even the Lender. The Buyer gets a good price on a home, the Seller gets to avoid the disruption and credit hit of a foreclosure and the Lender avoids the delay and expense of foreclosing on a property they don't want to own and that would negatively impact their ability to make more loans.

Nichole

August 15, 2007 1:58 AM

What are the legal implications...what if you have assets that you do not want to put to make payments on investment property...Can the lender go after that? Should all assets be put in a trust?

Linden Moe

August 15, 2007 4:47 PM

Short Sales Are Complicated and not as easy as everyone here makes them sound. Here is the truth ,you can't even get the real loss mitigation people on the phone.

I am a realtor and investor. So I teach realtors , investors and homeowners that need help. My best advice get some
info first,the bank likes to deal with professionals.

Kay

August 15, 2007 8:09 PM

Does any of this apply to manufactured homes? We are both in our golden years and illness has forced us into a bad position. The hs. pymnt is doable, but the cost of rental lot has gone up and we an no longer afford it. We both became "un-hinged" due to failing health. We put house up for sale last yr and had to get through
the winter. We again put house in hands of park salespeople and altho it shows beautifully, we haven't sold it...
We just need to get out of here, and the bank has gone along with us by giving us a 2 month break and bringing %rate down by 1% over the past 5 yrs.
What's the worst thing that can happen? Banker told us to keep it in the hands of park salespeople (they get 10%) aand to try to sell it for less than we paid for it and then some. Even if the salesperson sells it, we will be in a situation of making no $$ whatever. They have brought no one here in past 3 weeks and are selling new models that differ very slightly from our own...I KID YOU NOT, EVERY OTHER HS IN THE AREA OF 1 BLK. IS UP FOR SALE oops. This is a lovely park, but they aren't going to sell our house when they can move the new ones. We are at a loss as to what we can do. It's 1653 sq. ft. and I can no longer keep it up, nor afford it...any suggestion from you will be much appreciated.
Thank You
Kay in IL.
p.s. I know this differs slightly from real estate, but we cannot move this, as it has an attached 2 car garage..we owe 66,000. and paid 84,000. it has been professionally decorated with faux painting also(another bit of useless information.)

Stephanie in WV

August 21, 2007 5:23 PM

We may be looking at a short sale. My husband is full time military and we are moving to California since , so far, he cannot get re-stationed in DC. So we have to sell----some how.... So the short sale,, our mortgage lender is willing to deal. But my questions are simple but no one thus far can answer them, Katie Couric we need your investigative expertise PLEASE:) and your contacts to assisst us
One: Exactly what happens to your credit when you short sale?

Two: Can the mortage company choose not to report it as a short sale to the credit bureau?

Three: Can the mortgage company tell the credit bureau not to report it or only to take it off in x number of years?

Four: This "ghost money" that the seller doesn't actually receive and the bank forgives, why would a person owe taxes on it?

Five: If the federal government requires taxes on the money on the short sale isn't this going to push homeowners to foreclosure instead and REALLY ruin the market as well ruin our lenders?

Six: How do you prove you do not have the ability to pay the taxes? People have made references but people are in need of exact information.

Seven: Has anyone thought about taking legal action towards a Real Estate agent, or appraiser or lending institution who allegedly pushed prices, appraisals and loans through for higher than market value assuming the market was going to continue to sky rocket? And not have based their information on fact?

I am calling the IRS tonight and ask the ins and out at leat as far as taxes go
There are more questions............
Seriously Katie---help---see if you can straighten all this out for the people who are partially informed, and put it out there for everyone to understand so our economy doesn't become any worse.

I know this is long, but the housing market is a serious issue,

Take Care Everyone and Good Luck to all

Triandafilos Tsouridis

August 21, 2007 9:28 PM

It sounds like we need a detailed explanation on how one in default attempting a short sale who avoid having to pay tax on forgiven amount and claim insolvent.. What would be the criteria to be insolvent.. Must a bankruptcy be filed to be insolvent.. or just expenses exceeding income.. what wording can be used in P&S agreement to make sure they wouldnt come after homeowner with 1099..?

Who wants to learn more about real estate investing in pre foreclosures, forclosures, REO's and short sales.. drop me an email..

Tricia

August 21, 2007 10:25 PM

I have submitted an offer on a home listed as a short sale. My offer was for $130,000 which was list price for the property and I made it contingent on the seller paying closing cost. My offer was submitted in June and it is now August. I found out today that the seller bank just received in the title and is awaiting the appraisal. There are 2 comps on the same block currently listed for about $146,000.

My question is do you think I beat myself out by offering asking price? Is it normal for the buyer to get the seller to pay closing when it is a short sale? Also, is there something else that my realtor should be doing to speed this process up?

April

August 23, 2007 10:59 AM

Our double wide mobile home on an acre is in an area where there are many foreclosures. The house is in excellant condition but we owe $51,000 and other homes are selling for $35,000. A realtor suggested a short sale to get out of the house. We are not behind on any payments so is this the option we should use to get out of the home? We are financially able to purchase another home but would this prevent the purchase of another home>

Chris Benson

August 23, 2007 5:04 PM

What is the Real answer on the anti deficiency laws out there concerning a SHORT SALE? especially for 2nd's or home equity's. it's such a grey area. not even attorneys can give me a straight answer.

Diane

August 25, 2007 5:08 AM

I am looking for someone with experience to guide me through this short sale process. I have a property in Illinois and I am currently living in Massachusetts. I am 2-3 months behind in mortgage payements on my Illinois property. It is now rented but that does not cover the whole monthly mortgage.

I am looking for someone who has extensive experience. Any advice on how to find someone? I am also going to call a short sale company that I found on the internet. Any advice or recommendations would be appreciated.

Alicia

August 27, 2007 1:13 PM

Brian Holden, how can I get in touch with you?? I am just now beginning to explore the possibility of doing a short sale on my home.. I live in East Fort Lauderdale and am approaching a situation where I need to figure something out quickly. I have a realtor already, (someone who I trust and have used in the past) and he knows about short sales, but he's not overly experienced with them. He suggested I talk to my lender (rather, the people who I got the mortgage through, the brokers..) and see what advice they offered first. How can I get in touch with you? I need to find out as much as possible to see if this is even a feasible option for me.. you can reach me at sterlina@gmail.com thanks!!!!

Omar Taborda

August 27, 2007 10:49 PM

I am a Real Estate Agent doing Short Sales in South Florida. It is sad to hear what people are going thru. It is like a bad dream, I get calls everyday from people that donot know what to do. I am here to help anyone. Just should me an email I will have one of my team members help you out. To the INVESTORS out there, remember that if you have Equity in your Primary Property, the lender may not accept your short sale request. I would suggest you get a line of credit and get some of that chas out. Here to help.

GOD, please give direction and wisdom to anyone in problems due to a financial situation. Onyl thru you we can get out of troubles. We give you our all problems GOD you are in control. GOD bless everyone

Lisa F

August 28, 2007 12:19 PM

I have a question regarding a short sale. My husband and I are getting divorced, and it was my husbands solution to opt for a short sale. I was really against this because the reality was that we had no problem making the payments, and I felt that we should hold out until the market got better. However he wants to expedite the divorce process so I am faced with allowing him to do a short sale. Our situation is that he took out the loan to build the house last year and I am only on the title to the house. I am listed on the Mortgage as his wife, but did not sign the promissory note. I have three questions:

1. Will the short sale affect my credit?

2. Could the lender come after me for the balance of the mortgage?

3. Will I face any tax liabilities?

My husband wanted me to sign over my portion of the house to him, and the real estate brokers that he consulted with said that I should to avoid any liability in connection with the mortgage and short sale. Is this accurate? I met with a divorce attorney to stated that she did not see how I would be liable if I am not on the note. I just need some clarification on this. If it helps we live in Palm Bay, FL.

Deborah

August 28, 2007 2:36 PM

I am looking for a good realtor in the Naples, Florida area who is very up on the "short sale". Please contact me. Sunnut5@hotmail.com thanks

maria

August 29, 2007 1:22 PM

Tengo menos de 20 dias para vender mi casa, no tengo mucho conocimiento en como funciona el Short Sale y si yo misma como dueno puedo hacerlo.
Tengo un comprador potencial que me ofrece 170,000 pero la casa me costo 245,000 como hago la negociacion con el banco y si tengo que parar los taxes fantasma a la venta
Gracias por la ayuda que puedan proporcionarme

zuzana

August 29, 2007 3:32 PM

Iam doing a short sale, I bought house a year and half ago for $333000 and lender wants for a house $320000 (CHASE), I got offer for $307000, just one and house was listed for over 100 days. Lender is being unreasonable and doesn't want to taje the offer. What can I do? My agent told him there is no way we can get better offer. House is currently listed on MLS for 299000 but noone is buying it, only this one offer I have and lender turned it down. What can I do, where can I ger advice what to tell lender. Should I file bankrupcy?

Kimberly Sperling

August 29, 2007 9:21 PM

Hello. I am a real estate agent in Minnesota. Sounds as though there is much confusion and many questions about short sales. I deal with many short sales and have calls daily regarding these. It is important to have an experienced Realtor to help negotiate these for you with the bank.

Typically, it is easier to attain a short sale if: the market value of your home has decreased AND you have a case of hardship such as: job loss, pay cut, family hardship such as divorce or health issues AND you have depleted (or never had) significant assets.

The lender does not want to own your home. They have significant costs to reclaim and resell your home....attorney fees, holding costs, taxes, utilities, expenses related to an increase in foreclosures within the banks portfolio, reselling fees (yes, they have to hire and pay a realtor too), etc. They would rather YOU sell your home.

You cannot do a short sale without a valid purchase agreement. So, you need to list your property (preferably with a realtor). You need a purchase agreement from a buyer. Your agent negotiates with the buyer. You sign the purchase agreement but it is contingent on "lender approval."

The realtor does a net sheet (showing the bank what they will get) and negotiates with the bank for you (you must give this approval in writing to the realtor or they cannot do this). The realtor must "plead your case" and tell the bank why they should accept this agreement. The realtor must be factual and accurate on property condition and seller circumstances.

The bank accepts the deal and sends a letter detailing what they have agreed to. This acceptance has taken me 24 hours to 2-3 weeks total. The realtor must be savy and adept at this negotiation or it will take months. The realtor must call the contact in loss mitigation daily (or several times a day until there is acceptance).

The realtor then get the letter and gives this to the closer to process the closing. The letter should detail: 1. the amount the bank is accepting 2. how the bank with categorize this (ex. paid in full, satisfied, settled and satisfied, etc). These different options will affect your credit differently. 3. it is VERY IMPORTANT that the letter state the bank is accepting this as a final settlement of the loan. If that is not stated in some form in the letter the bank can seek the remainder of the deficiency from you later. In that case, they are only releasing the title but NOT YOUR OBLIGATION. Please, make sure you have this IN WRITING from the bank.

Yes, there are taxable consequenses to a short sale. You will get a 1099C at the end of the year from the lender for the deficiency. This is considered income even though you did not recieve it. There are talks of changing the law on this but as of right now, it is income. Please seek tax advise regarding your situation with an accountant.

Good luck everyone! Anyone in MN feel free to contact me for selling (or buying) short sale properties.

Kimberly Sperling
www.KimberlySperling.EdinaRealty.com
KimberlySperling@EdinaRealty.com

P.S. LISA F (AUG 28) I agree with your attorney. If you are not on the note, the mortgage is not on your credit. Tax liability would be subject to your states laws on marital liabilities. I would seek legal and tax advise for that and get any agreements with your husband IN WRITING. I would also suggest getting your own realtor to give you a market evaluation BEFORE you sign over any interest you have in the property. Good luck! Sorry to hear about the divorce!

Robert Aldana

August 30, 2007 3:26 AM

I invite you to view my interview with CPA Manuel Alvarez on my television show "Let's Talk Real Estate!" as we discuss the tax consequences of a Short Sale and Foreclosure. You can view the show online at:

http://www.letstalkrealestate.com/ltretelevision.htm

It is also available in Spanish. Best of luck!

Robert Aldana
REALTOR and Host of TV & Radio's "Let's Talk Real Estate!"
www.letstalkrealestate.com

Brian Holden

August 30, 2007 10:18 PM

Since I posted my Blog here on Short sales several people have been trying to contact me for more information. I think between my post (copied here) and Kimberly's we pretty well cover Short Sales. I've seen first hand how difficult a foreclosure situation can be and am happy to talk with anyone facing that situation. I can be contacted at RealBritFL@aol.com or at 561-818-1017 anytime.

Anyone facing foreclosure should be aware that there is one very important alternative to avoid the foreclosure and that is the Short Sale. A Short Sale is a proven way for a homeowner who owes more than the house is worth to avoid a foreclosure and the subsequent credit hit.

I would advise anyone facing foreclosure to discuss their situation with an experienced Realtor. Short Sales are not a part of real estate basic training but there are a number of educational seminars a Realtor can take to get up to speed. Lenders will pay a reasonable selling commission so Realtors have an incentive to get involved in Short Sale situations.

The basic requirements for a Short Sale are a Listing Agreement with a Realtor and a Sales Contract from a Buyer which are submitted to the Lender along with a Hardship Letter from the Seller explaining why they cannot continue to pay the mortgage and supporting documents such as tax returns, bank statements, information and photos of the home and the Comps, or comparative home prices supporting the offer. The way mortgages are sold, the mortgage holder can be anywhere in the USA or even overseas and certainly not aware of local real estate conditions.

If the package is complete, the Lender will order a BPO, or Broker's Price Opinion, from an independent Realtor. Ths BPO is the key to the whole process. If it is too high, the Lender will not accept a low offer. Your Realtor can meet with the Agent doing the BPO and offer information supporting the offer, such as the average time on market of comparable homes, recent selling prices and point out any defects in the home. Most Lenders will accept an offer lower than the BPO, but usually not much more than 10% lower, though that will vary depending on the company.

The sales contract should specifically state that the offer is contingent on the Lender accepting the purchase price in full and forgiving the Seller the deficiency on the mortgage. There can be tax consequences but if the Seller is truly in a difficult financial situation they can be avoided - an accountant should certainly be involved in that question. This does all take time and Lenders are swamped, expect at least 2-3 months before a sale can be finalized, even if the Lender accepts the first offer. If they do not, the price can be negotiated.

I am a Realtor, a Broker Associate in South Florida and am involved in Short Sales. It is a detailed but fairly straightforward process that can work to benefit Buyer, Seller and even the Lender. The Buyer gets a good price on a home, the Seller gets to avoid the disruption and credit hit of a foreclosure and the Lender avoids the delay and expense of foreclosing on a property they don't want to own and that would negatively impact their ability to make more loans.
All this information and more is available at the web site www.foreclosuresfloridaforeclosures.com

Elizabeth Dickman

September 1, 2007 1:02 PM

I just need to know how or approximately how much one needs to pay on a short sell deficiency balance of about 45K? Does the Irs work with you? I know it's considered additional income, but how does that affect your taxes? Also, could the lender let this deficiency go? And if I still worked out a payment plan with the lender, does it still get reported to the irs?
sorry...just confused and scared.

Elizabeth Dickman

September 1, 2007 1:11 PM

I just need to know how or approximately how much one needs to pay on a short sell deficiency balance of about 45K? Does the Irs work with you? I know it's considered additional income, but how does that affect your taxes? Also, could the lender let this deficiency go? And if I still worked out a payment plan with the lender, does it still get reported to the irs?
sorry...just confused and scared.

Sandy Miniz

September 4, 2007 3:48 PM

I closed on a new house before I could sell my old one. I got caught up in this housing fiasco and nobody is looking to buy at the moment. The old house has been in the market for 6 months already. I will be paying two mortgages in about two months which I cannot afford. Can I short sale the old home without implicating the new one? What is the tax implication on the old one? I need advise or whare can I go for advise

Ken Wagner, Realtor

September 6, 2007 11:39 AM

So many questions and so little time. Please drop me a note for more specific info..
About me:
I'm a Realtor in Southern California with Century 21 Superstars and C21 Award, the #1 C21 brokerage in the world. I have been designated by my company as the listing agent for a division of agents and staff specific to selling Short Sale properties.
I can be contacted at help@ShortSaleAdvocates.com, or though the web site.
A few bits for general advice:
- a shortsale is usually much better for a home owner/borrower than a foreclosure.
- Taxs: a 10-99 form (income) will be filed regardless of short sale or foreclosure. See a CPA or Tax Attorney to determine your actual liability. However, the tax liability should be less for the short sale vs. the foreclosure for numerous reasons.
- Bankruptcy: is a seperate but intertwined issue. This may be neccessary for some going into short sale. This will commonly stop the foreclosure process until the bankruptcy is resolved. Again, speak with an attorney for your situation.
- Short sale with other properties: can possibly occur provided the property for sale is a purchase money property. No refinancing.
- A short sale should only be considered if the other final alternative is foreclosure.
- A short sale will typically do far less damage and for far less time than a foreclosure. This saves the borrower untold barrels of cash in higher interest fees and denied credit.
- A short sale settles the debt with the lender, so there is no right for 'deficiency judgement' for the lender. They can't sue the borrower for their loss.
- A home owner that is on time with their payments may still be able to do a short sale.
- A home owner considering doing a short sale should hire a realtor and brokerage that has specific knowledge, resources and dedication for managing short sales. Choosing a realtor wisely will mean the difference between a very unpleasant outcome and a good likelyhood of a much better outcome. This should not be a learn on the job opportunity for your cousin Vinny.
- Investors: I'm not big on investors and short sales for either side. The bank owned properties, probates and other discounted properties fullfill the need for the investor. For the seller, an investor in California means that both the listing and buyer's agents have to sign off on non-representation agreements with the investor. Well meaning legislation that removes the professionals that carry big E&O policies from the situation. So, it can raise the risk for the sellers with an investor involved. Perhaps the state will adopt a better way to work with investors for these properties.
- Please, please, please act as soon as you realize there is a problem. I would much rather help a future client be able to avoid losing their home altogether by giving free advice on getting a loan modification from their lender or some other alternative than taking a short sale listing. However, as a client told me a few weeks back, I am like the bankruptcy attorney of real estate. I help people get through a bad situation in life with the least amount of damage to their finances, marriage and emotions.
Take care,
Ken Wagner
ShortSaleAdvocates.com
800-935-7887

mwm

September 10, 2007 7:00 PM

Sorry but short sales are generally bad for homeowners. I'll admit that investors do like them but I have yet to see an investor live up to the claim of "saving the borrower's credit". Once a loan is 90 days delinquent, the mortgage company usually reports "forclosure process started", which is the same thing as a foreclosure to most lenders in the mortgage arena. Even if the homeowner isn't behind at the time of the short sale, most lenders report the loan as "settled for less than amount due", which is roughly translated to "foreclosure" by the rest of the mortgage industry.

I have been in the mortgage business for 28 years and have actually helped negotiate short sales. The seller has ALWAYS come out on the short end. Not only do they get taxed on the write-off portion of the mortgage (regular income), they lose any chance of regaining their equity when the market comes back. Their credit now sucks, they have a whopping tax bill (usually turns into a tax lien), and they lost any chance of getting some appreciation in the future. And they're on the street 2-3 months sooner than if they just went through the foreclosure process. For the most part, they're locked out of home ownership for another 3-4 years.

The loan modification (aka "forbearance agreement") is a much better process but be aware that this still usually affects their credit in a derogatory manner. At least it allows them to keep their equity and interest write-offs. I expect that more lenders are going to be willing to work with modification agreements. Just be aware that this is a detailed process. They don't just grant a modification because someone says, "pretty please".

If the modification doesn't work, they should consult a bankruptcy attorney, especially if they have a dependable income and some equity in the property. In most cases a wage-earner plan (chapter 13), they get to keep their home and can pay back the arrearages in small payments over several years. Of course, bankruptcy doesn't help their credit but, believe it or not, it's better than a foreclosure when it comes to mortgage lending. One other little bit of positive news is that a bankruptcy eliminates the taxability of the write-off and totally eliminates the possibility of a deficiency judgment if the property goes through to foreclosure.

Another option available as of September 4 is an FHA fixed rate loan. If they have fallen behind strictly because their interest rate went up on a variable rate mortgage, FHA allows them to refinance even with the arrearages. I'll admit, this stop-gap measure isn't terribly practical but it may help some folks in a bind.

The final option is foreclosure. In most states, it takes at least 120 days for a mortgage holder to foreclose. In most cases, it actually takes longer. At least the homeowner can save a little cash for their rental deposit while they're waiting for the process to finish. In this scenario, the longer it takes, the better. The homeowners just need to be resigned to the outcome and make appropriate plans. And real estate professionals NOT TO WORRY. The property will become available shortly and you may be able to represent the homeowners in a rental transaction. Even more valuable is potential referral business you could get from these folks by doing the very best thing for them.

Finally, in most trust deed states, deficiency judgments are extremely rare. Unless the lender forecloses judicially (usually takes 6 months, costs a bundle, and requires an additional 6 month right of redemption), the basic assumption by the courts is the lender gets the property, the borrower gets to walk. This is the idea behind the trust deed. I know there are cases showing that deficiency judgments occur, they are just extremely hard for the lender to win and rarely result in any gain so they usually don't pursue them.

Just in case someone wants to argue with me about the damage of foreclosure vs. bankruptcy, here are some underwriting guidelines:

FHA:

Borrower is eligible IN a chapter 13 bankruptcy after 12 months of on-time payments. If the borrower has a foreclosure process, it is typically a 3 year waiting period.

Sub-prime:

Most lenders will consider a borrower between 1 day and 12 months after a bankruptcy. All but the "hardest" of lenders want 3 years to pass from a foreclosure.

Conventional "A" paper:

FNMA / FHLMC will consider a borrower with at least 2 years of good reestablished credit after a bankruptcy in special circumstances and 3-4 years in any other circumstances. Most of the automated approvals I have worked with pretty much kick out anyone with a foreclosure within the last 5-6 years.

My focus has been primarily sub-prime most of my career so I'm intimately familiar with these issues. In some cases, it was my own money hanging out in the loan. I know this isn't good news for short sale advocates but it's the truth. In my opinion, short salers should focus efforts on offers to the bank or purchasing the property at the courthouse steps. It's actually less effort and turns out better for most involved.

Jodie

September 11, 2007 10:17 AM

My husband and I are working with a lady in foreclosure. We have offered her bank a short sale. We have already gotten together a huge packet of info. the bank needed. They sent someone to appraise the home and the appraiser told us that our offer is very fair. The bank lady told us that they are just waiting on the title to come back. We now have been waiting for about a month and a half. How long does this process usually take?

Georgia

September 11, 2007 9:40 PM

Can someone tell me what the difference on credit reports are for:
Deed in Lieu
Short sale (before foreclosure sale)
Short Sale (during redemption period)
Full Foreclosure
Bankrupcy
Thanks
Georgia
AddedValueRealty.com

Kimberly Sperling

September 12, 2007 12:02 AM

To MWM: Each state is different and therefore homeowners need to get legal and tax advise on their specific circumstances.

I disagree strongly that short sales are bad. They can be a Win-Win for buyer, seller and lender.

Typically, homeowners are late on payments and in the foreclosure process already when a short sale takes place. There is no "additional" derogatory notes regarding a short sale other than how the bank chooses to categorize it. The loan is paid (maybe not in full). It is better than a completed foreclosure.

"Regaining" equity may never happen or could be years in the making. If purchasing a home is as easy as you say, homeowners could also just buy another home later and "regain" equity with that house. If someone can't make payments, they can't make them.....no matter if or when they could get a "regaining equity" payoff from their house.

Forbearance agreements buy time. They stop payments or decrease payments for now (short period of time) and then repayments start up again later, sometimes with a higher principle balanced owed or larger payments to make up the missed ones. If there is no equity (which is why you are doing a short sale in the first place), there is no need to "keep the equity." Forbearance agreements are an "okay" short term fix for a short term problem. It IS best to try to work with your lender as a first avenue though.

The FHA loans you speak about have drawbacks. Homeowners have to qualify for them and need 3% equity in their home. This new program only is available for SOME of the people needing it because of the qualification guidelines.

In Minnesota no one usually goes to buy a property at the court house steps. The lender is the only one that shows up. Our redemption period here is 6 months! You can't mortgage the property, don't have title (only the sheriff certificate), the homeowners still live there and you end up with who-knows-what-shape house in 6 months!

To homeowners: Real Estate Attorneys are the most impartial advise givers, in my opinion (and no, I am not one). They can most effectively explain the pros and cons of your circumstances and options. Sometimes bankruptcy is the better choice. Most often it is not.

To Jodie: The only thing I can think of for the "title to come back" would be that the bank can not convey title because the redemption period is not up (therefore the owner still owns the home). Unless the seller agrees to sell to you during this time, the bank cannot sell it to you until the redemption is over or the owner conveys title in some other way to the bank.

Title searches and updates typically only take a few days in my state and are completed by a closing agent or attorney prior to closing.

Kimberly Sperling

September 14, 2007 9:13 PM

For anyone who is interested, here are the FHA Loan guidelines for the new program to help homeowners:

"To qualify for FHASecure, eligible homeowners must meet the following five criteria:

1. A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
2. Interest rates must have or will reset between June 2005 and December 2009;
3. Three percent cash or equity in the home;
4. A sustained history of employment; and
5. Sufficient income to make the mortgage payment."

Rafaela

September 16, 2007 11:41 PM

GMAC refused to make and adjustments to my mortgage despite a $700 monthly increase in property taxes and homeowners insurance, said the investor wanted his money. Then Washington Mutual (who I've never heard from or had contact with) filed foreclosure, asking court for reinstatement of a lost note.
I filed a response asking for dismissal: no note, no foreclosure.
My Realtor is suggesting a short sale, but I can't afford additional taxes or closing costs.
Am I better off letting the two mortgage companies figure it out, hope for a market change or try short sale?
Single working mom just trying to keep a family home and get a decent credit score back, so I can carry on.
We didn't make this mess. It seems that the mortgage companies should take some responsibility, not just throw us out of our homes.

Daina

September 17, 2007 11:02 PM

I've had my home on mls and with 3 different realtors over the past year with no success in selling. At this point I'm behind on 1 1/2 payments and have no way of paying especially since I live in another property,(this one is now vacant). I discussed short sale with my realtor and bless her heart she's trying, but isn't experienced in the area. The bank states they refuse to let us know whether they will consider a shortsale or not. They simply state to "find a buyer and submit an offer". Well, this is all fine and good exept without having some idea of what the bank might except its difficult to find the proper listing amount. Any advise on what I can do at this point. I'm very worried that foreclosure or bankruptcy is in my near future if I don't get this sold now.

Minnesota

September 18, 2007 10:07 AM

Everyone,

The information here has been really helpful.

Kimberly Sperling, Im located in Shakopee with property in Woodbury and will be contacting you soon to get more advice.

melanie jimenez

September 20, 2007 1:49 AM

I live in San Diego County and have my condo up for a "short-sale" we are 45 days past due on housepayment. Notified lender we are up for sale, so far no problem or harrassment. My question is regarding HOA fees. We are relocating before our credit is too bad to rent and avoid the higher deposits or embarrassement and difficulty in explaning our live to people. Since we are on the market and moving, do we need to continue the HOA payments, and if we miss or don't pay, what can we expect? thanks

Darlene

September 23, 2007 9:49 PM

Situation:
I am in the market for a condo in Florida and need to move quickly due to a job situation. I found a unit, my agent asked the seller's agent directly if it was a short sale situation because I do not have the time to deal with a short sale process and they said no. I made an offer, we went back and forth and have come to an agreement and have a signed contract. We were set to close at the end of the month when "Out of nowhere" the sellers agent comes up with some story about how the seller owes more and may not have the money for the difference in costs. Now I am unsure of my rights. What kind of timeline am I looking at and what rights do I have in this situation.

Eli

September 24, 2007 6:28 PM

This article and its comments have been very informative, thank you. My parents purchased an investment home in California about 2 years ago--at the time they were both employed and able to hold steady jobs. Their financial situation has changed substantially: They are depending solely on social security income, their original loan was an ARM (so the mortgage payments have risen), the bank would not enter into a forbearance agreement, the value of the property has declined substantially since the purchase--a comparative propery was valued at 400k+ 2 years ago and has been on the market (falling in value) for the past 2 years to 275k (at current asking price). Dad is currently talking to a morgate broker who is pitching short sales.

I have a few questions/concerns:

1. I know they will not have the income or the credit to turn around and repurchase the property--so the property will be lost, correct?

2. If the bank does aggree on a short sale then they will have to report the debt forgiveness as income on next years tax return. Well, they are only allowed to earn $12,960 before their benefit is reduced by 50% of the amount over the limit. Will reporting the debt forgiveness on a tax return affect their social security benefit?

3. In a situation like this are they better off filing bankruptcy?

4. The same mortgage broker is also asking dad to sign for a short sale on the broker's behalf. The mortgage broker has some condos he bought at the peak of the market and can no longer afford to carry them, he is now asking dad to turn around and purchase his property thru a short sale. There is something fishy about his offer I just don't have the expertise to tell what it is. Can anyone tell what this guy is up to or if he is genuinly trying to help my folks out?

All your help is appreciated, thank you.
em805@juno.com

Eli

September 24, 2007 6:56 PM

I'd like to add to my previous post:

Is my parents primary residance in any danger? Can the bank or the IRS attach any kind of debt to their primary residence? Are they in danger of becoming homeless?

THERESA

September 27, 2007 6:43 AM

Does anyone know of a reliable course for Realtors in Short Sales in North Carolina?

Amy

September 28, 2007 6:19 PM

This so called post from TO sounded good at first so I called. Then I spoke to a guy named Travis. I did some research online and found out that Travisd Olsen is the president of the short sale center. Obviously he posted his own comment acting like a homeowner. What a scam. Is there any real help out there for us homeowners?

Melissa

September 29, 2007 11:40 AM

I would like to know just how an "agent" get's involved in this short sale- does the homeowner in this type of problem need to sign the title or deed over to this "agent" even to a trust? a little explanation regarding this would be very helpful.

A little about my situation: we are coming close to forecluosure for our home in central Florida.We have been in touch w/ an agent who has explained the short sale process but in his case he wants us to sign the title over to a trust under his company's name. Has anyone heard of this? How does it work?

Dan Holbrook

September 29, 2007 1:23 PM

I have done training for the real estate industry on short sales and own a company that does lender negotiations for realtors. I'm doing a 3 day boot camp for real estate agents on short sales. I have a turn-key marketing, lender negotiating and deal evaluating program for Realtors that can be purchase. I have spoken to 3,000 real estate agents in the last 8 weeks about short sales and distress real estate. I beleive that the short sale is the only card left to play that can stem the tide of foreclosures and save the lenders, consumers and the real estate industry. You can get more information at shortsale support.com or paydirtseminars.com. I have been trying to educate lenders and realtors to the benefit and in fact their responsibility to be part of the solution here. If the present course of the market and mood persists the weight of foreclosures are going to crush the market. Interesting statistic in California. foreclosure rates have increased just over 200%, yet during the same time period the volume of loans taken back by the lender at the foreclosure sale has increased from $500 million to $3.5 billion. Most of these properties have not yet hit the market. And then the adjustments of ARMS - $1.3 trillion in the next few years. If you are a realtor with a skillset to be part of this solution, you will be in the wrong business in the next few years.

TINA PARKINS

September 29, 2007 8:14 PM

I HEAR AND AGREE W/ STEVE WAGNER AND I WAS WONDERING IF THERE IS A SHORT SALE COURSE YOU WOULD RECOMMEND. I AM A REALTOR AND LIVE IN SOUTH FLORIDA- WEST BROWARD AND I AM SEEING SO MANY BUT I JUST CAN'T SEEM TO FIND ONE THAT IS NOT A MONEY MAKING SCHEME, ANY SUGGESTIONS?
MY EMAIL IS IMAGINEHOMES@YAHOO.COM
THANK YOU

Sandy Areguello (Pope)

October 1, 2007 6:53 PM

There is a lot of information on here. I have tried to come out here and periodically read what people are writing.

If I was someone trying to short sale I would be very confused. A Short Sale is not a perfect solution, but if you are facing forclosure it is the closest thing to it.

As for the Taxes do a search for "Mortgage Tax Relief". That will answer a lot of those questions.

As for the banks won't talk to you or negotiate, this goes back to either find an agent who knows how to do them or your not asking the right questions.

I do short sales nation wide, outside of Texas I find an agent who is willing to be trained. I don't do short sales because they are making me rich. I am learning and doing short sales, because THAT is where the market is going.

Short Sales are long, hard, and frustrating. Sometimes the banks work with you sometimes they don't. If you know what your doing you get more success than failure. In the end of the day if you saved someone from forclosure and able to help them repair their credit, it is all worth it.

I have gotten many phone calls and I have helped MANY people from Florida, California, Arizona, and in my home state Texas. I only charge 30% of your 1st successful short sale (the bank pays this) to coach an agent through a short sale. Most companies want to be paid upfront. For non-realtors, I can even help you Short Sale through my Short Sale consulting company. Feel free to call or write: 512-923-5214 or buyfromsandy@pieceofaustin.com Even if you just have questions!

Rose

October 2, 2007 3:38 AM

I'm in the beginning of a short sale of my property in Northern CA. First, Melissa in Florida you have to have a buyer to buy your property before you can have a short sale.
None of the realtors here seem to REALLY know anything about short sales, including my agent, I guess because they have no experience? I've learned a lot here...Thank You. I'll tell you what's happened for me. First contact your lender and tell them you might be going into foreclosure, they'll send papers wanting to know all about your financial situation, taxes, income and how and when did this happen to you. You submit all the information they want, called a short sale package, and your realtor submits information including the purchase agreement, pre-qualification letter from the buyer, listing agreement, etc. The bank who owns your mortgage sends someone out to appraise your property (this is where my short sale is now). So the rest is just what I've heard and read. Depending on the apprasial and the buyer's qualifications the bank okays it or not. Then if they ok it, the deal goes through and you're issued a tax statement with the amount they forgave you (short sale) as income to you, so you have to pay taxes on that amount besides selling your home for cheap and getting dinged on your credit. Peachy isn't it? Supposedly it's better than a foreclosure. There is something called a deed in lieu of foreclosure, you're not behind on your payments yet, but expecting you will be, so somehow the bank will buy the house from you, but my bank said they only do that as a last resort. The banks don't want all these houses, because then they have to sell them and I think this is just the beginning of a bigger mess that Dan explains above. Melissa I haven't heard of what you're writing about and it sounds suspect to me...beware, call your lender and good luck to everyone. Oh there is a web site 995HOPE.org that was helpful to talk with a counselors who can help you out with the lenders and creditors, but after one talk I could never get them again, they're probably overwhelmed.

Drew

October 3, 2007 3:55 PM

Does anyone have an idea what impact shortsale would have on one's credit history? On an average, does anyone know how may points are normally deducted from your credit score in the event of a a) shortsale, b) foreclosure, and c) bancruptcy?

Sarah

October 3, 2007 5:19 PM

Is there any help for the BUYER of a short sale? Any advice? We sold our home in 5 days to make a noncontingent offer on a "short sale" home. We were told that it could take about 2 weeks to hear an answer. .. well its been 9 1/2 weeks and still NOTHING! We went from living in a 4 bedroom house, 2 baths and almost an acre...to living in a grandparents basement with our 3 year old! Last week we heard that the lender told the seller that everything is being forwarded to an attourney. Does this mean its going into foreclosure? The seller is now 3 months behind his mortgage. We have VIP status through our mortgage company, yet we are the ones living like we never paid any bills! All the while the seller gets to live in the house. Please help, we get no relief and barely any answers that make sense. Where would you assume we are at in this process? Are we getting close to an answer? The house is listed at 182,900 and we bid $179,000. We are the only offer, for the other offer walked after 4 weeks. Where is the buyers rights? HELP PLEASE!!

Robin

October 5, 2007 1:46 PM

Sarah,

Are there realtors involved with your purchase? If so, ask them to cut their fees to make up for the $3,900 difference in the short sale.

John

October 7, 2007 5:09 AM

Is there any bank insider that can step forward and give some serious information how the banks handle the short sale cases internally and what are the criteria for the seller to get qualified with the best prospects. Thank you.

Eric Linder

October 7, 2007 4:24 PM

I have an informational website with lots of information regarding short sales. My goal is to provide information regarding short sales that you would normally have to pay for for free.

Please let me know if there's something that you'd like to see on the site that isn't discussed.

-Eric Linder
www.ericlinder.com
ericlinder.com

David

October 7, 2007 5:13 PM

Sarah,

You singed-off your rights when you entered a contract with lender approval contingency and without time limit. I suspect the listing price is low. Because in a short sale, seller has no interest in the price, only in a quick sale. In other words, in listing low, the seller recruited you to help to push the lender to forgive his/her loan and to do it quickly.

The argument that yours is the only offer so the lender appears to be unrealistic about market conditions has some merit. But how many sellers, after months even years on the market without an offer, are still hoping for a turn-around? Lenders are people, too, and they, after all, may have other resources to tough it through.

John Youker

October 7, 2007 8:31 PM

I am a real estate broker in Ohio, affiliated with Keller Williams Advantage Real Estate, Dayton, OH.

In answer to Drew's comment: My understanding and experience has been that a short sale falls on the credit report as a "deficient payoff/settlement" and takes about 40 - 50 points off of the score. In one year, that falls off the report (you may have to call and ask for them to remove it). Unlike a foreclosure or bankruptcy that is on your report for 7 - 10 years and up to 200 points gone.

In response to Sarah: It could take up to 45 days to receive an answer. Banks are in NO HURRY to "give money away" in this situation. The banks created the mess we are in by loaning money to people who, under "normal" circumstances would have NEVER qualified for a loan or at least the loan amount they received; however, the banks seem, at this point to want to do nothing to repair the situation except STOP loaning money to people, which is what they have done by pulling the sub-prime and Alt-A markets. Now, that is not saying you will get it through, however, you should make sure whoever is negotiating with the bank is proficient in the short sale process and proficient in the rules of banking. The last thing a bank will do is speak with or negotiate with someone who does not speak their language or someone who hands in an incomplete file. We do these regularly, and our files range from 60 - 100 pages on each home. Does the bank read all of it - NO, but if they need something and have to look for it, you can bet the deal is off. We give them everything up front and they could make a decision on the spot, (but won't!) The bank will sometimes wait until the last hour to let you know, hoping that another offer comes in that may beat yours or drive the price up a bit - it is ALL ABOUT THE MONEY for a bank, but the reality is that the decision is still made by a human being, so there is always room for emotion and error - don’t forget that point.

In response to Robin: Asking the agent to cut his/her fee is not a "Bad" idea, but should not always be the first idea. Banks understand the cost of doing business, as most consumers do not. Many banks have made it a policy NOT to cut the commission of an agent as they feel that agents are their allies in helping to take care of the mess that is oput there with pre-foreclosure properties right now - after all, if you were an agent and had to do twice or three times the work (as a short sales is) to get the deal closed, you would want paid. Does your boss cut your pay when your company is not doing all that well? More than likely not, but the suggestion sounds good, so many people make it. The bank will see a full commission agent, with a complete packet submitted as a professional that they do not have a 2-week learning curve with and WANT to do business with them. Banks will typically always pay the average commission in a short sale, which, nationwide happens to be at 5.1% right now. Many agents, such as myself, ask for a full commission at 7% or even 8% due to the extra work involved, and many banks will pay it, but if a bank comes back with 5%, the agent should take it.

Roger Herrick

October 7, 2007 10:13 PM

There are several consideration in a short sale and each lender has its own specific process. You can see more info at www.contactherrrick.com

Greg

October 9, 2007 1:01 PM

mwm
September 10, 2007 07:00 PM
Sorry but short sales are generally bad for homeowners.


Sorry to disagree but your wrong, short sales give a 80-100 point hit, most people facing foreclosure are insolvent and won't have to pay taxes anyways, A bank will give them a very good rate with a clean credit report of 12-18 months after the sale. I have no clue where you get your info from. Also instead of a foreclosure, a short sale shows a future lender the party tried to do something instead of walking away, take a few credit counselling courses and apply for a new house loan and I guarantee most banks will give you a rate as good as someone with 700+ CREDIT.

Robin

October 9, 2007 7:55 PM

As to Sarah's situation: Sarah indicated that it has been 9 1/2 weeks since she made the offer on the house, and she does not know where the situation now stands. I agree with John from Ohio in that Sarah needs someone who is experienced with "short sales" to handle her situation. However, if only $3,900 stands in the way of the sale, and if the banks have not agreed to reduce their payoffs, then asking the realtors to reduce their fees is a way to resolve the matter. If the realtors are able to negotiate a "short sale," then I can see where they might feel they deserve the full fee. But, someone has failed in his/her negotiations here, and, as such, should not be rewarded for work that didn't produce the desired result. John, would you pay full commission to an employee who did not do his job successfully? Or, even if a realtor negotiating a "short sale" does everything right, but because the final decision is in the hands of the bank who refuses to cooperate fully, there is no sale... does your realtor still get paid for his/her work? No sale, no commission. And yes, a lot of companies do reduce the pay of their employees when the company does not do that well...by cutting bonuses, delaying pay raises, etc., regardless of fairness. In Sarah's case, due to lack of more specific information, I assumed that a realtor and seller/client had intelligently set the sales price at $182,900, an amount which would have covered all costs (payoffs incl.) associated with the sale, and that the acceptance of Sarah's offer of $179,000 created the short sale issue: difference $3,900. At 6% commission, the realtor (or realtors) makes $10,740. If realtor reduces the fee to cover the $3,900 (if two/$1,950/per), then the commission is still $6,840. I don't want to realtor bash, but a realtor makes a set percentage on a house whether it has been on the market for a day, or for 100 days, whether it has been shown 1 time or 100 times, whether there has been expensive advertisement or little advertisement, whether it is a $179,000 house or a $1,000,000 house (@6=60K), no matter how much or how little the realtor actually works for the fee or spends on listing it.
As for the lenders, they are not completely to blame for the current state of affairs. Yes, the zero interest loans implemented a few years ago, as well as other alternative financing, are causing problems now. But many who qualified for them at the time were able to read the fine print and were not cheated in that respect... some buyers were just as greedy as the banks. Other, buyers qualified for the loans/purchase/refi based on their incomes, credit score, and house value. They may have had a good financial situation when the got the loan. However, save for a few insulated markets in the country, the U.S. economy is in deep, deep trouble. I know of many borrowers who had great jobs, excellent credit, and high property values... until their companies closed or moved or "downsized." Additionally, many people who worked hard all their lives for a company, now retired with a "guaranteed" pension, find themselves without that which they had earned due to to corporate "restructuring," etc. Add in credit card interests, hidden fees, change at will contracts, depreciated car and property values, and the increased cost of health care... the current foreclosure situation is a result of all these factors and more... "a perfect storm."
Sarah, you need to have a talk with your realtor and the sellers' realtor to ask what they are doing to close on the house. If you do not believe they are capable of closing on the deal, you need to consult someone who can. Also, I know you feel pressured about your living situation, but have a little sympathy for the home owners... they may have no place to go. Keep calling your agent until you find something out. Good luck.

Anna

October 10, 2007 10:38 AM

I have been in the process for a short sale for months now. I put my condo in Southern Cali up for sale back in June and it is just now closing. I agree with everyone else that says you need to get a good Real Estate Agent to help with the short sale. My agent has been awesome in selling the condo and getting us a buyer as well as back-up buyers just in case the first one fell through.
My agent has done a great job at marketing and working with the lenders on my behalf to get the short sale approved. It took weeks to get a negotiator for the short sale. At first my short sale was denied, but my agent was very persistent and got it approved.
As far as the buyer is concerned...because they are getting a home at below market value, they are getting a good deal and are expected to wait it out knowing that it is a short sale and the lenders are very swamped with foreclosures and short sales. One of the contingencies is that it will take a lot longer than the normal 30 day escrows.

Rob

October 13, 2007 10:32 AM

Anna is correct. Having a strong realtor behind you to sell your home is critical to a successful short sale. My company is a nationwide short sale negotiator and we have strategic alliances with national real estate companies. Our realtor partners list the property at a price that will attract a buyer. We have found that many lenders are willing to accept these contracts if they are close to the fair market value price.

If you want more information on how we can help you or someone you know, please visit our website at www.NationwideShortSaleCompany.com

Thanks & Good Luck.

Radha

October 15, 2007 12:58 PM

My husband and I are looking to purchase a home that is in short sale. It is currently listed at $31K less than the mortgage (100% financing). Any advice to buyers looking to benefit from short sales? Does offering cash help?? Also, how does this affect a buyer's agent? Thank you.

VONN WILSON

October 16, 2007 1:39 PM

I have a pending foreclosure sale date of 10/19/07, and I also have a short sale in place. the First has agreed and the second
is playing hard ball. the 2nd asked me to
give them my paycheck studs, so I can take a unsecure personal loan for the balance.The sale date is on the 19th. Here it is the 16th and they still have not made a decision or given a approval to cooperate with the first on the short sale. In your opinion tell me what you think is going on.

Amy

October 16, 2007 7:17 PM

We are current on all of our payments. Well atleast at this point in the game. My husband and I bought at the boom of the housing market in Virginia Beach, VA. We now are looking at all of our finances (after many medical issues wiped out our $36,000 savings account)and we are seeing that there is going to be a problem in the near future. I am very concerned and we know we are in over our heads at this point. We are currently upside-down in our mortgage. We believe that our home would appraise for approx. $355,000. We bought our home 2 years ago for $345,000. We have 2 mortgages on our home. The first has a balance of $319,800 and the 2nd has a balance of $75,300. At this point we do not know what to do. We want to accept some of the responsibility of this matter. We just want to detach our 2nd mortgage from our home and just put it into an unsecured loan. We want to sell the house and hopefully putting money onto the unsecured loan as soon as the house sells. No one will talk to us. I just do not understand why they would not allow us to do this. We have always been on time with our payments and we make a good mount of money every month to cover the payments of the unsecured loan. If there is anyone out there that can tell me anything, I would be soooo grateful. Thank You.

rosa

October 16, 2007 9:49 PM

I am in the same situation as many of you, thanks for all the info. My loan payments just went up to $4400(bad ARM) I can't afford to make the next payment which is due Nov. 1st, I already called the bank and asked for the short sale paperwork. I am contacting agents now, I think i understand the tax implications, and I know I have good credit history when it comes to home mortgages, I have had and maintained 3 (2 investment and my owner occupied)for the last 4 years, so i think my credit will recover but should I make ANY payments to the bank in Nov. since what I could technically pay is about half the required payment and if it is going to show up as delinquent or late on my credit report would it be better to save all the money I can until this "short sale" is done?

Rose

October 17, 2007 12:06 AM

Well I wrote above about my short sale experience and the appraiser was coming...turns out the bank failed to tell me they needed $300.00 to get this started and here it is almost a month since I turned all the paper work in. I'm bummed as I can't afford to keep paying this mortgage, I hope this doesn't kill the deal.

Sarah

October 17, 2007 7:32 PM

HI I posted a comment on 10/3/07. We are still in limbo with the short sale. After posting my comment I couldnt locate this page again until today. Thank you for the many responses! The realtor took the house off the MLS and said that we have waited long enough so the house should be ours. Should I be suspicious of this? The seller offered to have us rent his house until everything was finished. We rejected because we still have not heard from the bank! We are nearing the 12 week mark and are beyond nervous. What can we do at this point? Is it common to take this long? How will I know if the house goes into foreclosure? I know the bank that has the mortgage is Washington Mutual. Any advice will be greatly appreciated!!!

Denise

October 17, 2007 8:03 PM

Short Sales are allowing sellers to bow out gracefully after being put in a no win situation. Sellers be ware you may have to pay tax on the difference between what you owe and what the bank takes.....they say iot's income. A joke but none theless true!!! Cash is always good terms are important. As far as commission to the realtor the banks are willingly offering 5% because of the added work and sometimes a realotr will put several deals together before the bank accepts one. Before doing the short sale route try foreberance or modifying your loan through the current bank. No need to use an attorney a mitigation company is the best for the job. Here's to this helping alot of people.

Roger Herrick

October 18, 2007 9:29 AM

For most consumers, buying a pre-foreclosure property from a private homeowner is the good option. It’s important that both the buyer and the seller see the situation as a win-win situation, in order to ensure a smooth process. In this case, the seller is able to get out from under a mortgage without destroying their credit rating, the lender is saved the time and expense of foreclosing on the property, and the buyer gets a below-market price on a home.

Roger Herrick
California Mortgage Broker
www.contactherrick.com

For more free articles www.contactherrick.com

charles

October 18, 2007 2:51 PM

Our vacant rental properties are pending foreclosure next month. We are trying to sell our rental properties and have received several short sale offers for slightly less than the BPO. The bank responded and said they would not even consider the short sale offers unless we personally sign a new promissory note for the loss amount. Since we already signed a promissory note when we originally got our mortgages, why would they ask us to sign a new one? What is the risk to us in signing a new note?

Seems like even the "Short sale" gurus can't asnwer this one. Properties are in Atlanta, GA and the bank is Chase Mortgage. Any suggestions?

Monica

October 19, 2007 12:53 PM

Can I purchase a home via short sale and rent it to the original owners?

Roger Herrick

October 20, 2007 5:58 AM

Charles,
A short sale is an agreement to accept less than the note outstanding. The bank apparently does not accept any short sale and is offering you some sort of full payback of the note. Not good. The only issue is how much of the debt forgiveness that you may pay taxes on. That is one for your accountant. Hopefully, a good one.

Monica,

Sure why not. Make sure that you have all of the agreements in writing. Verbal agreements in real estate mean nothing.

Roger Herrick
www.contactherrick
California Mortgage Broker

Robert

October 21, 2007 1:59 PM

Monica,
If you purchase a home via short sale, you are the owner so yes, you can rent it to whom ever you want.

I`m a Real estate Broker in Florida, I have done over 9 short sale deals last month alone. 1 thing i've learned is that no bank has the same method of negotiating a short sale. Banks prefer to see home owners list their homes first to show proof of an attempt to sell the home at a fair market value, it's a good idea to have a Real Estate agent with knowledge in short sales to negotiate on the homeowner`s behalf. MOst requirements from most banks to initiate a short sale are:
Hardship letter, letter authorizing a realtor to negotiate on your behalf, last 3 months of bank statement,last paystub,declaration page from your homoeowner insurance policy, letter authoring imediate access to the property for a BPO ( Broker`s Property Opinion). Most bank would prefer to recieve all these documets togehter with the listing contract and an offer on the property for purchase, this would tend to make the bank decided much quicker.Hope this info can help some of you out there. Good Luck! Any questions rb-homes@hotmail.com

Pamela

October 21, 2007 9:35 PM

How far in advance does the seller need to decide if he will do a short sale or not? He is going to try to bring money to closing, but I don't think he will have enough. We have it listed in MLS as "subject to 3rd Party approval," and he has contacted the bank, but he thinks he can just come up with enough to close without short sale. Also, how long does it stay on your credit history and how much better is it than a foreclosure or bankruptcy in repect to your credit score?

Jason

October 22, 2007 10:46 PM

I'd like to comment on how a short sale affects your credit.

I was put in a difficult situation in late 2005. I had recently built a new home and was relocating for a new job. The job offer included a "buyout" package as part of the relocation offer - which turned out to be significantly less than I owed on the home. I thought I was doing the right thing by approaching the mortgage company with the relocation company offer and attempting to get the mortgage company nearly all of the remaining balance of the mortgage - but I was wrong!

Two years later and I'm still unable to obtain credit. I have a decent credit score (just shy of 700), but the way the mortgage company has flagged the account on my credit report has been the sole reason for being denied credit the last 2 years.

The account is marked as a "charge-off", which apparently looks nearly as bad as a foreclosure and stays on your credit report for 7 years. According to the mortgage company and credit bureaus, this means that the mortgage debt was sent to collections and written off as a bad debt, regardless of the fact that the mortgage company got ~90% of the balance of the mortgage out of the short sale - It was a great deal for them, but a BAD deal for me.

Subsequent attempts to discuss this with the mortgage company went absolutely nowhere and now I'm stuck with red flag for another 5 years.

I'd highly recommend that anyone considering negotiating a short sale discuss this thoroughly with a legal professional that's a disinterested party in the transaction to understand the full ramifications of this decision - and get anything the mortgage company agrees to in writing for your records before doing anything!

Ana Herrera

October 22, 2007 11:38 PM

If you are looking to do a short-sale in California, allow me to suggest a great website with lots of answers. www.salvageyourcredit.com

What ever you do please make sure you hire a knowlagable realtor... That can make the difference between the lenders taking or dropping your deal...

Good Luck to all.

Ana Herrera

Gillian Kirkpatrick

October 23, 2007 9:47 AM

I have a general question on behalf of a buyer of a short sale. I am a realtor working with a buyer on a short sale. The lender is taking forever, and I know this is typical. The listing agent is in contact with the lender, and I think he is not aggressive enough. It took them almost 2 months just to assign the contract to someone, and now they won't give the listing agent the person's name! Do you have any idea how to speed the process along a little bit? Just call every day? I thought about writing the bank a letter explaining all the positives of my buyer's contract because I'm not sure the listing agent has done so. I'm not sure there is anything we can do if we can't get direct access to a contact person. But my buyer's loan approval will end on December 28th so I'm a little bit worried.

Thanks for any advice you can provide me.

Veronica P.

October 24, 2007 11:52 AM

In a short sale what happens if the 2nd lien holder does not approve the short sale? The owners took an equity line of credit which is now their 2nd. Does that affect the short sale process? What if the 1st approves it? Does the 1st pay the second their share? HELP!

Susan Milner

October 24, 2007 5:29 PM

Veronica,

If the second won't agree there is no deal. Anything else attached to the house has to get paid off or agree to accept less/nothing. The first is usually more willing to take a loss as they stand to lose a lot more if/when it goes into Foreclosure. Often times the second is gambling on the possibility that they'll get a promissory note, some type of payoff vs. nothing in a foreclosure.

Good luck.

By the way, we specialize in Short Sales in the Lee County, Florida market. Cape Coral, Lehigh Acres, Ft. Myers, and surrounding areas.

www.The-Extreme-Team.com
Susan Milner, licensed broker sales associate
Sellstate Achievers Realty Network, Inc.

Frank

October 24, 2007 9:41 PM

Is there anyone that has done short sales in Pennsylvania. I live near Philadelphia and want to find out about buying a home using the short sale process

Alex Souza

October 24, 2007 9:54 PM

Hi Veronica,

In the last few months I've worked at least 22 Short sales and my experience has been that when there is a second involved the lender who is in first position buys-out the second position, sometimes for as little as $1,500.00 regardless of what is owed on the second. That why I don’t worry if there is a second, the lender in first position will take care of that impediment, thus making it easier for you. The only time I would not suggest getting involved in a short sale is when there is a 3rd on title or a tax lien on the prop. A third position usually indicates a private party and 99.9% of the time they are not willing to sign off on the short sale forcing the home owner to file BK or go into foreclosure. I call it the "Screw You" move. And a tax lien, well a tax lien is the official dagger of death, I’ve never heard of Uncle Sam taking a back seat to anything.

Good Luck,

Alex Souza
www.califroniahomesbyalex.com

Alx Souza

October 24, 2007 10:16 PM

Gillian,

If it were I, I would run like the wind! I don't know what state your in, but right now there is a huge surplus of inventory in almost every state, so unless your getting a killer deal for your buyer, and by that I mean at least $80,000 off market value, I would not make your buyer hang around a deal that may not happen after all. You are aware that there is no guarantee a lender will accept a short sale. And if the listing agent is dragging his/her feet, that might be a clear indication that the deal might not be as solid as your being made to believe.

If you don't want to walk away from the deal, I would grab the bull by the horns and begin making phone calls regardless of whose feelings you end up hurting. Remember you have a fiduciary duty to your client...

Just ask yourself one question… How will your client look at you if you make them wait till December and the deal still ends up in the tank?

I wish you luck, but it looks like your doing all the worrying, and your counterpart is not being forthcoming enough to put you and your buyer at ease.

Alex Souza
www.californiahomesbyalex.com
alex@californiahomesbyalex.com

Alex Souza

October 24, 2007 10:48 PM

Greg
October 9, 2007 01:01 PM

Regarding: mwm
September 10, 2007 07:00 PM
Sorry but short sales are generally bad for homeowners.

Greg you hit it right on the nose, good for you. I almost; "no pun intended", flipped when I read mwm's comments. Unfortunately this is what’s going around in our industry these days and with so many real estate firms scarring the bejeebers out of their agents by feeding them erroneous information so they won’t go out and look for short sale deals.

All I know is that if you work your Real Estate business today like you were working it a year or two or even three years ago, you are in for a rude awakening. Today homeowners are looking for answers to their devastating situations and as real estate professionals we need to be there to answer these questions and offer solutions. It's not always a doom and gloom scenario if you can come up with a win-win solution.

We’re not car salesmen you know, although some people might beg to differ.

Alex Souza
www.califroniahomesbyalex.com
alex@californiahomesbyalex.com

Raymond

October 25, 2007 1:33 AM

I read a few articles that seem to say that the debt of forgiveness is not taxable on conventional loans in California because they are "nonrecourse" loans. In addition, deficiency of judgement is not allowed in nonrecourse loans because sellers are protected from personal liability.

Guthrie

October 25, 2007 5:52 AM

I work for a nationwide real estate investor and this is what I'm finding-

Many banks are quick to discuss the short sale IF the home owner is in default and IF the property has been listed for sale with a realtor for several months. Thus far, here is what the "short sale" package MUST contain:

-Financial statement of homeowner - this is simply an accounting of income vs. expenditures. It will usually include pay stubs and tax records as well.

-Hardship letter from homeowner - This needs to be an EXTREMELY detailed letter written by the homeowner as to why they need to use short sale as an option. Every event that led to the mortgage being behind and why they cannot continue to make payments even if the mortgage were current. You cannot be too detailed in this. The homeowner needs to "paint a picture" that details every aspect of their current situation.

-Real estate listing agreement - This is the contract between the realtor and the homeowner detailing the terms of the contract and the its overall length. NOTE - If the home has been on the market for 18 months with THREE different realtors, it is in your best interest to get all THREE listing agreements. This is to show the bank that a valid attempt has been made to sell the home.

-Signed sales contract. Banks may tell you they will negotiate a short sale, but they're not doing any negotiating or having detailed conversations about what they will or will not accept until there is a contract in place.

-HUD-1 or "net sheet" - In a nutshell this is the lender saying, "Cut the crap, what are we getting". This can be a copy of the HUD-1, but most banks will accept a written statement indicating in writing what they receive when they accept your short sale offer. So after fees, transfer taxes and real estate commissions have been paid, what's the bank get?

-Interior appraisal - This one is a little more subjective, but this is usually an appraisal done using houses ONLY IN THE IMMEDIATE AREA as comps. If the home is in a neighborhood, the only want homes that have sold in that neighborhood. If the home is outside of a subdivision, they only want to see comps from the same street or road, usually a "line of sight", meaning homes that can be seen from the subject property. It's best to use the actual MLS sheets and show the Days On Market. This will give the lender a good indication of what they face if they go to foreclosure. If the average DOM is 200 days (which is the norm where I am), a house at Sheriff's Sale is going to be greatly discounted.

This is not an end-all, be-all list. Each bank is different and each bank's overall financial picture is different. From start to finish a picture needs to be painted with every representative of the bank that is spoken to WHY this short sale is so necessary TO THE BANK. The homeowner needs to paint that picture, as does any investor that is in contact with them.

Pacman

October 26, 2007 11:35 AM

I haven't seen any homeowners here who have actually completed the process so I thought I would share my experience and offer some advice.

Get ahead of the shortsale!
Don't have to wait till you delinquent on payments. I completed my shortsale and NEVER missed a single payment. Came to razor's edge but made it. I asked the bank if they were wiling to report the sale to the credit agencies as simply "paid in full". Guess what? They DID! My credit actually went UP!

Be honest, look ahead, assess your situation, work with realtor and good attorney, get the best offer you can and bring it the bank with a well crafted and personal hardship letter. The realtor and attorney were key. Mine worked as a team and owe them - big time. Be very specific in you hardship letter and be brutally honest. The banks after all, are made up of people and some of them may actually have feelings, so don't hold back. Make it as personal as you can. Back it up with every piece of financial information you have and then some. My bank sent me spreadsheet. I was very thorough on that spreadsheet.

Let your realtor negotiate for you (assuming they have the experience). My realtor made certain that she meet the bank's appraiser personally at my house. I am sure that was absolutely key to the success of the short sale.

Be prepared for an extremely frustrating and stress-filled ride. From offer to closing was nearly 4 months for me! Banks do not call you. You can not get them on the phone. Weeks go by with no word at all. All the while your buyer is getting anxious and you are getting closer and closer to the day when you will be delinquent. Again, avoid this. Start early.

I liken the experience to running from a burning, collapsing building. When it is over and you are safe then it is all worth it.

I can't do anything about my tax bite ($40k)unless the debt forgiveness law passes. It is what it is. At least I got out of that building when I could.

Funny, had I sold my house and made $200 k I would meet the exemption for capitol gains and owe no taxes at all. (lived there as primary for over 2 years). Gotta laugh!

byathread

October 28, 2007 12:59 AM

Pacman

What is the first step for a successful short sale? Attorney, real estate agent, or contacting the mortgage company?

byathread

Russ Meyers

October 30, 2007 11:45 AM

We are Realtors in Jacksonville, Florida.

We put together a web site dealing with Short Sale Options - primarly directed at Florida Forclosures. It's a little dense (all text and no pictures) - but it might answer a lot of questions in the prior posts. It does have a section on tax problems with foregiveness of debt.

www.shortsalejax.com

Send us an e-mail if you have any questions.

Thanks

Russ & Betty Meyers, Realtors
Distinguished Realty
rvmeyers@comcast.net
www.meyersjax.com
www.shotsalejax.com

Alex Souza

October 30, 2007 1:03 PM

BYATHREAD

You need to start by contacting an experienced short sale realtor to asses if you will benefit by doing a short sale. Most lenders will not even talk to you until you have secured a purchase contract for your home.

An attorney might not give you the time of day unless you fork up some money upfront. A realtor works on commission which if a short sale is accepted by your lender, the realtor's commission will be paid by the lender as opposed to you. The realtor will have the resources to get your home on the market, and will also have the resources to qualify that potential buyer and get your lender to listen to you and approve your short sale sooner than later.

Good luck and make sure you interview the a number of realtors, not all realtors are proficient in Short Sales.

Alex Souza
www.salvageyourcredit.com

Pacman

October 31, 2007 11:50 AM

To: byathread

I had my home on the market for nearly a year and was readusting my asking price as I chased the market down. So for me it was first, my real estate agent. A Gem. She came to me with the short-sale idea. I then called the bank and they said they would not even talk to me without an offer, so I followed my realtor's advice and adjusted the price to where she felt it would sell quickly. It was below what I owed. Got an offer within 2 weeks and then called the bank and they sent me a form to complete to which I attached my hardship letter. Just before I sent it out I got an attorney aboard. One who had a long history working with my real estate agent. Along with my paperwork I also sent a letter authorizing my realtor and attorney to contact the bank directly. I actually got a call from my realtor that the short-sale was approved after she had followed up with them. 3 Months later, I was a week from closing and my buyers failed to obtain finacing ( I had already moved out and was under lease in an apartment). House went back up for sale and I got another offer within 2 weeks. Since all the paperwork had been done already the closing came 3 short weeks after that. I left out the several nervous breakdowns I had along the way but you get the picture. Had $800 left to my name that day. Feeling very thankful now. - Hope this helps.

Seth Mayer

October 31, 2007 1:50 PM

I am a mortgage officer in Orlando Florida and I have seen Short Sales save individual sanity. I work with a team of Realtors at Century 21 Richards Realty who are specializeing in Short Sales and REO transactions.

There is a large demographic of individual homeowners who would be considered a candidate for Short Sale!
I or our team here at Century 21 Richards Realty and Florida Atlantic Mortgage, INC would be happy to anwser and questions concerning the possibility of a Short Sale. We opperate in the greater Central and South Florida areas but would be honored to help out in any way I can.

Seth Mayer
seth.mayer@century21.com

Jen

November 1, 2007 5:12 AM

I am in the process of purchasing a property right now which is a short sale (although it has taken 4 months already to get the bank to approve)! Now the bank has finally sent an approval letter with a contingency that seller needs to sign a promissory note in order for the bank to accept the deal. Seller does not want to sign this for obvious reasons. After all, he has been living in the house motrgage free for almost 5 months now. I am wondering if it is legal for the banks to put such a contingency as part of their approval. Doesn't that seem to be against what a real short sale is all about, ie. forgiving and forgetting and moving on? Please advise.

Jason Alexander

November 1, 2007 5:49 PM

I am working with a realtor and we are trying to buy a home through this "short Sale" method. I have been waiting almost 2 weeks to hear something from the bank. Why is everything taking so long?

Lara

November 1, 2007 10:31 PM

We have a home in Plainfield, IL that has been on the market for over 2 years now. We bought a new home before selling the old one due to job relocation, and baby #3 on the way, & at the time thought we wouldn't have any problems selling our home in time(6 months later.) It has been 2 years and our home is still for sale. We have exhausted our saving, the equity in our new house, borrowed money from family and friends and have nothing left. We listed with a different realtor about a month ago, and mentioned doing a short sale. We listed it from 299,999 down to 279,999 and in a few days we get an offer.........235,000!!!! I owe about 260,000, is this normal for someone to come in and try to steel the property? My realtor said in this market my home is probably worth 270,000-280,000. If I take this offer to the bank, what are the chances of them approving it? After closing costs and commisions, I imagine it will be close to 50,000 short. I have great credit up to this point. I can afford to make Novembers payment, but what for? It's not like I am going to get that money back. I feel like I keep throwing it away every month when I pay. The market is not letting me get it back, and The bank is going to punish me for the turn in the market. Does anyone know about the short sale process in Illinois? Any advice????

Erix

November 1, 2007 10:35 PM

I am looking at buying a short sale in Cali and it has a listing price of 799,000 One the first, the amount owed is 775 and there is a 2nd for 190

Do I have to work with both the first and 2nd or will the 1st take care of the 2nd??

I am also thinking of offering 715 as the first offer... any thoughts?

Rose

November 3, 2007 11:20 AM

I'm writing about my process, see above. Well I'm 6 weeks into the short sale, the bank sent 2 appraisers and they came back with my house being worth $80,000 less than it was 2 years ago. The low ball offer we accepted is $30,000 less than the appraisal and $95,000 less than the original price we set. Lara, yes people are low ball offering just like my offer and I also feel like they are stealing my house. That's what this is all about now, the rich getting richer and the rest...well, we're losing our homes and nest eggs. The people buying my house have other properties and are very wealthy. Would they offer more...no. I felt the same way about paying last months payment and didn't because I need it more than the bank does. The government will bail the banks out. After being in the process I've started to believe this was all a big set up by the banks, they gave the brokers more to offer these adjustable rates and then the feds raised the rates every month for 2 years. And the credit was loose, just so many people could get involved. What do you think....so many weird things have happened these last few years, but I digress. My house has a first and second. Of course the first will do the deal, because there's money left for the realtors fee and they get paid in full and all along the bank employees in the loss mitigation told me they would negotiate with the second, but now that we're to the final bank person....they lied or ? Why don't the employees of the bank know what the process is? They will do nothing with the second, that's my problem. So already the second's employee has yelled at me. I'm probably in for a promissory note of $80,0000. The second is Chase and I've heard they're really bad to deal with. I'm thinking of Chapter 7 bankruptcy, because there's no way I can afford all this. Check it out Lara, you can keep your other house if there's not too much equity in it. I've already borrowed too much other money since my house wasn't selling and I didn't want to be behind on payments. Looks like I'm going to get dinged on my excellent credit, no matter what. I'm the loser here, this deal isn't giving me anything, and the banks have already made lots of money on me....I'll keep you posted.

Lindsay

November 5, 2007 2:09 PM

Lara,

If you provide the right info to your mortgage company, it is likely they will accept the lower offer. The key is acting fast and knowing what to say. The mortgage company is looking for certain information: Like showing the inability to continue to make payments. If they see that you can afford the payments, what would prompt them to take a payoff for less than what is owed? They know your credit is good, and they know you will do anything to keep it that way. You have to show them that if they don't accept your offer, their only option is an expensive foreclosure. Did you know that the average cost of a foreclosure right now is $40,000? The mortgage company has to pay all of those cost, then sell your home at auction. More than likely at auction they will not get near what you owe.
I have experience in Illinois and I would be happy to help you. I have been dealing with foreclosures and the prevention of them since long before foreclosures were a problem. My services are available nationwide.
Email or call:
info@homesafeusa.com
866-446-4051

Lindsay

Michael Hellickson

November 5, 2007 3:08 PM

Having negotiated Short Sales successfully since 1991, I have been asked by many why we are so successful at getting Short Sales approved by the lien holder(s) regardless of what part of the country the homes are in. Here are some of the obvious must haves:
1. Complete Package upfront.
2. Patience (many calls, long hold times)
3. Persistence.
4. Sharp negotiating skills.
5. Third party negotiator (like TheShortSaleCompany.com)
6. Pleasent attitude (especially when dealing with someone at the bank who might be less than polite).

Probably the single biggest factor for us has been our ability to negotiate many transactions with the lien holder at the same time. Banks like this because it allows them to close more transactions with less staff time. It also allows them to deal with someone who is intimately familiar with the Short Sale process. In fact, often times we find our staff will train the loss mitigators at the lenders! Ultimately, it is in everyones best interest to cose short sales rather than allowing the homes to be foreclosed upon. We handle hundreds of short sales Nationwide every month, so believe me when I tell you the banks do not want these back.

We network with real estate agents and investors all over The United States, and have seen HUGE success especially in the most recent 6 months with banks who are anxious to approve as many short sales as possible, as quickly as possible.

We see approvals all the time where the first is owed $500,000 the 2nd is owed $125,000 and the 1st discounts to $400,000 and the 2nd to as little as $1500. Sounds too good to be true, but it happens all the time.

We've even successfully negotiated with the IRS to get them down to next to nothing.

Sometimes it is necessary to negotiate with an ex-spouse, contractors who posses liens, bankruptcy courts, and the list goes on and on and on...

In the end, my recommendation is that you hire a professional short sale negotiator (who does NOT charge upfront fees). The good ones will take their ENTIRE fee at closing. This is usually paid as a referral fee by the real estate agents, and never comes out of the sellers pocket.

Feel free to contact me with any questions.

Michael Hellickson
Blogs@TheShortSaleCompany.com
www.TheShortSaleCompany.com
1-877-303-2972

Debbie

November 7, 2007 10:19 AM

I placed an offer on a short sale in the amount of 200,000. The house appraised at 232,000. I think the seller owes 201,000 on the loan. Do you think my offer was a good offer or do you think I should have gone lower on a short sale? I submitted the offer over a week ago. How long does it normally take before getting a response? I have never bid on a short sale before. I appreciate your comments.

Brenda

November 10, 2007 1:38 PM

I"m looking for someone that is willing to coach/teach the short-sale in Michigan {Detroit/downriver area}. Any info/guidance whould be of great help..Thanks

Liz Garcia

November 10, 2007 2:26 PM

Debbie,

I am an agent and negotiate short sales. In can take anywhere from 7 days to even a month to get a bank to accept a short sale. The important thing to know is that once they approve a short sale, the bank sometimes comes back and wants you to close within a very unreasonable time...I had one which wanted us to close in 6 days( weekends included). Just make sure you have reviewed and signed all disclosures, are doing your inspections, and working on the loan. As to your offer being good or bad, I think it is a very good offer.

Nina

November 11, 2007 9:57 PM

Is a short sale the answer for me? I bought my condo a year ago and the value has dropped at least $100k in the last five months. I was a realtor and had the worst year ever, so now i'm changing careers. I have renters in place and make all my payments on time and haven't defaulted, but I just can't afford this home anymore. I need to get a student loan next year, and i'm worried about how a short sale or foreclosure will affect my credit. Advise anyone?? Thanks.

Monique

November 14, 2007 1:44 PM

Question im in the middle of a short sale the realtor has accepted 2 contracts on the sale of my home lost one due to the long period of time my mortage company has taken to approbe the short sale now i Have another pending contract and the short sale has been submitted for approval BUT my mortage co want me to agree to pay back $25,000.00 for 10 years is that right. My defict is $31000.00 HAs not offer me a 1099 can you help

Joe

November 14, 2007 4:07 PM

Does anyone know of any realtors who specialize in foreclosures in the Washington, D.C. area?

Confused

November 18, 2007 2:42 PM

Has anyone ever heard of a short sale offer being countered by the owner before it goes to the bank?

We just went through that and I had never heard of it..

Help Me

November 20, 2007 1:34 AM

Please help! I am neogtiating a ss with a first and second mortgage. Second is with Ocwen. First has basically said ok, they just need an updated HUD 1. Ocwen--no where to be found.

Does anyone have any contact with Ocwen? Foreclosure is set for Dec 4.

Also, what info does anyone have about mortgage tax relief?

Help Help Help!!! Thank you in advance!

Brian Holden

November 20, 2007 1:41 AM

I see a lot has changed since I originally posted to this Blog last March. At that time very few people were aware of the Short Sale option to those facing foreclosure. I must have received over 20 emails from people looking for information but finding so much confusion out there. Luckily I was able to help some of them resolve their difficlt sitautions.
For any new readers, here's my original post:
Anyone facing foreclosure should be aware that there is one very important alternative to avoid the foreclosure and that is the Short Sale. A Short Sale is a proven way for a homeowner who owes more than the house is worth to avoid a foreclosure and the subsequent credit hit.

I would advise anyone facing foreclosure to discuss their situation with an experienced Realtor. Short Sales are not a part of real estate basic training but there are a number of educational seminars a Realtor can take to get up to speed. Lenders will pay a reasonable selling commission so Realtors have an incentive to get involved in Short Sale situations.

The basic requirements for a Short Sale are a Listing Agreement with a Realtor and a Sales Contract from a Buyer which are submitted to the Lender along with a Hardship Letter from the Seller explaining why they cannot continue to pay the mortgage and supporting documents such as tax returns, bank statements, information and photos of the home and the Comps, or comparative home prices supporting the offer. The way mortgages are sold, the mortgage holder can be anywhere in the USA or even overseas and certainly not aware of local real estate conditions.

If the package is complete, the Lender will order a BPO, or Broker's Price Opinion, from an independent Realtor. Ths BPO is the key to the whole process. If it is too high, the Lender will not accept a low offer. Your Realtor can meet with the Agent doing the BPO and offer information supporting the offer, such as the average time on market of comparable homes, recent selling prices and point out any defects in the home. Most Lenders will accept an offer lower than the BPO, but usually not much more than 10% lower, though that will vary depending on the company.

The sales contract should specifically state that the offer is contingent on the Lender accepting the purchase price in full and forgiving the Seller the deficiency on the mortgage. There can be tax consequences but if the Seller is truly in a difficult financial situation they can be avoided - an accountant should certainly be involved in that question. This does all take time and Lenders are swamped, expect at least 2-3 months before a sale can be finalized, even if the Lender accepts the first offer. If they do not, the price can be negotiated.

I am a Realtor, a Broker Associate in South Florida and am involved in Short Sales. It is a detailed but fairly straightforward process that can work to benefit Buyer, Seller and even the Lender. The Buyer gets a good price on a home, the Seller gets to avoid the disruption and credit hit of a foreclosure and the Lender avoids the delay and expense of foreclosing on a property they don't want to own and that would negatively impact their ability to make more loans.
All this information is available on the web site www.foreclosuresfloridaforeclosures.com

Brandon

November 26, 2007 11:29 AM

OK, not to beat a dead horse, but back to the foreclosure/short sale topic: I signed over the Dower rights to my husband's house (long process of divorce) and he is about to have is home in foreclosure. I was served a 28day legal document stating I may have interest in this property and how much is owed. They sent me paperwork that looks like I signed as a borrower (wife of the title holder)... no dower documents were sent or mentioned. It sounds like they are holding me responsible for the $. So, outside of the obvious issue of where is the dower document..and the 'something smells fishy here'... Can I, somehow possibly connected to this, offer a ss price? Can I do it through a trust or LLC? Can they come after my income for the 'ability to pay' the tax difference if someone else buys it? Can they take me under even though I have nothing too? Can he (the idiot x) file bankrupcy now..given this 28 day notice?
Sorry for all the Qs.. I am panicking here. I have been working and supporting these kids while he has been vacationing and cooking w/o even trying to get a job for 5 years and the thought of being somehow tricked into being responsible for his debts is putting me on the verge of postal. ANY HELP will be lovely and accepted in gratitude. THANKS!

paul

November 29, 2007 5:33 PM

i have situation. what do you do when yor 1st mortgage is 350K, 2nd 150K, 3rd 130K, house is under construction and your house is worth more or less around 300K? house is located in SW florida marco island.

Frank

November 30, 2007 1:46 PM

The house down the street was a shadey deal when it was sold 1 yr ago. Owner at that time got $450,000 but the new owners and realtor put $750,000 on the paperwork. First and second mortgage amounts totalled $690,000. Fast forward one year (house looks like a pit now) and they are looking for a short sale. Looks like they took the extra financing money and paid off their primary residence. House now is worth maybe $250-300,000 at the most because it has been let go terribly...it was never worth more than $450,000. How do the people involved in this dishonest mess get caught. Looks like the buyer gets a free pass. This is in SW FL

Bob Wilson

November 30, 2007 5:04 PM

"You need to start by contacting an experienced short sale realtor to asses if you will benefit by doing a short sale."

An agent is not qualified to give legal or tax advice, so is not qualified to assess the legal or tax consequences or benefits of a short sale.

If you are considering a short sale, you need an agent experienced with short sales to sell the house and you need both legal and tax advice. In California, there is now a short sale addendum that states that you are advised to get legal and tax advice PRIOR to listing your property.

As an agent in San Diego who has been doing short sales since the 90s, all of my clients must speak with an attorney versed in short sales, deed in lieus and foreclosures prior to moving forward with a short sale.

There are times when a short sale is not the best option. Most agents do not want to tell you that because then they don't get paid. Every situation is different.

Buyers beware. You are frequently at the mercy of the lender with a short sale. Time frames dictated in contracts mean little to most lenders.

Sellers - please make sure you get legal and tax advice from someone other than one who has a financial incentive in your decision to sell. You do not need 3rd party short sale companies if you have an agent experienced in short sales and access to legal and tax advice. These 3rd party companies only seek to take money from inexperienced agents. They can do more harm than good.

Agents, you need to be aware that there are law firms that are tracking every short sale transaction and will be contacting the sellers down the road. Many of these sellers will still be confused as to whether or not they made the right decision. Many who receive a 1099 in 2008 will be shocked, as will there agent when they get sued.

If you are advertising yourself as an expert, be careful what you say or publish online. If anything can be construed as providing legal or tax advice, watch out.

Bob Wilson

November 30, 2007 5:24 PM

"Has anyone ever heard of a short sale offer being countered by the owner before it goes to the bank?"

Yes. The contract is still between the buyer and seller, while subject to the lender's willingness to forgive the debt. It is in the seller's best interest to get the best deal possible, not only to increase the chances of approval by the lender, but to lessen as much debt relief or deficiency as possible.

John Henry

December 3, 2007 10:35 PM

I can't believe the sheer amount of stupidity on the part of people as displayed in this thread.

We have people claiming to be BROKERS who want a class on short sales - WTF? If you are a broker, you should know enough about RE and negotiations to figure out a short sale.

We have people talking about "Ghost Income" WTF? Forgiveness of debt has been treated as income for decades - it is not a new concept.

You shoul dhave to take a test to buy a house because clearly the bulk of Americans are too stupid to do so.

Rachel

December 5, 2007 8:45 PM

I am looking into a short sale on my home as my payment almost doubled with the interest rate increase and I was already struggling with the payment before that. I owe about $700k on the house and a recent valuation thought the place is only worth $550k at most. I would like to do a short sale to avoid having a foreclosure on my record but am nervous about the tax bill. I certainly cant afford to pay a tax on $150k. Any advice??

Also if I do a short sale on this property will this prohibit me from purchasing another home in the future? I would like to rent for maybe a year or two but then purchase a house that I can truly afford under a fixed mortgage with no surprises in the payment. Any advice in this area?

Thanks all, interesting discussions here.

Lisa

December 6, 2007 7:27 PM

Rachel 12/5/07 You don't say where you are. Be careful who you get to help you. I have done short sales for 10 years. I am very passionate about my job. So many people get scammed. If you don't have assets you are insolvent. The IRS has qualifications for these. Check with an account and make sure you get a good agent who has a relationship with lenders. I have so many agents that watch what I do and "want a piece" but they can actually hurt the process and you if they don't know what they are doing. Wish I could help.

Natalie

December 6, 2007 11:18 PM

Thank you all for this thread, I have found it extremely helpful.
I am in the same situation as many people. I had an income property in CA and the mortgage payment almost doubled. I now live in a different state and rent doesn't cover the payment.
I have found the banks to be extremely black and white and emotionless. They don't care what my situation is, if I can't pay in full at the end of 90 days late they are filing the NOD. It's been on the market since Sept to no avail.

My question is this:
I have a refinance loan, not a purchase loan, as well as a line of credit. What I understand is that if the loan is for purchase, they will forgive the amount left after short sale and can't take you to court for it, you just pay taxes on it. What happens if it's a refi? Will they make me sign a promissory note, or garnish my wages? Does anybody have real evidence of the rules?

Rosa, my advice: Save your Money. Most banks won't even take a partial payment. If the banks agree to work with you on a payment plan than by all means it may help, but get anything agreed to in WRITING. But if you're going into foreclosure, short sale or bankruptcy anyway, (you know you can't pay and the house isn't going to sell) you're credit is already toast. Save your money for an attorney. If you have to file for bankruptcy, you may need it.

Rachel

December 8, 2007 9:55 PM

Lisa (12/6/07), thanks for your response. I am in California and someone has told me to find a real estate agent who only deals with short sales so that I hopefully get someone who knows what they are doing. I will review the IRS guidelines and see what I can find from that end.

One other question based on Natalie's post. If I do chose to the do the short sale, what happens if the property does not sell? Does the lender upon approving to proceed with a short sale give you a certain time frame for which to accomplish and close the short sale? That could add misery to the situation if the home just doesn't sell for whatever price the lender agrees to take then I ultimately end up in foreclosure anyways. I know there are numerous properties on the market in my area so I don't know why a buyer would be interested in purchasing through a short sale. This is a very interesting discussion and good to see both sides of the discussions. Thanks.

Alin

December 10, 2007 2:56 PM

First of all, thanks to the knowledgeable people that posted very useful information in this thread.
I have a question from a buyer's prospective:
- 1 year old home, initially sold for $k809
- house was bought with 0 down, 80/20 both loans Countrywide
- seller moved out of state, didn't pay property tax on it ever, don't know for how long has been in default
- we placed a $k650 offer, accepted by the seller 2 months ago (we are first time home buyers with very good credit, pre-approved)
- our agent calls the listing agent every other day, the listing agent supposedly calls the bank every day
- BPO done, came up as $k690
- file moved from the mitigator to the "management", no counter offer though
- house on the market for 4 months, no other offers

We really feel like we are kept in the dark, would really prefer to talk directly to the bank and negotiate, things like offering to take our loan from them comes to mind. But the only feedback we get is "bank doesn't want to talk to anybody else" and "offer is too low".
I tried to call Countrywide and get through to the loss mitigation department but could only get to IQ<60 people that didn't even understand who was I trying to talk to (wishing me good luck with getting approved for a loan with their bank ;) ).
From my point of view, no counter offer could mean that the mitigator was OK with our price... The listing agent says it will probably not be approved because it's too low, but than again, he represents the seller.
Should I try again to get through to loss mitigation or just wait?
Any insight in how CFC treats short sales these days?

Thanks in advance,
Alin

sam

December 11, 2007 5:08 PM

I have a few questions about short sales. My house appraised for 395,000 last year. First mortage is 283K Second is 30k. Just lost my job with about 20k in savings. got married in Sept., wife is not on mortgage with excellent credit. I would like to try to stay in house, but it will eat up savings unless I can get a good job.
If I do short sale for will that affect wifes credit?

Jim Waddell

December 12, 2007 3:43 PM

Wow... tons of information on here. I spent last last 30 minutes reading all the comments. I am an experienced, Full Time, Real Estate Investor in Fairfield, CT. I would be happy to answer any questions and point you in the right direction.

Thanks,
JIM

Email - Jim@theREcafe.info

Juli

December 13, 2007 5:50 PM

Just a few comments here. First of all, after many months of researching short sales, foreclosures, and tax ramifications, I must say I am still confused but am now of the opinion that an improperly negotiated short sale is far worse for the seller than an outright foreclosure. I am now of the opinion that the only reason to do a short sale is to preserve some of your credit. However, depending on what the bank is willing to agree to, your credit could end up being severely dinged when all is said and done.

There is another dicey area with the short sale called "deficiency judgment." You must have an attorney (thus, costing the seller more money) to review your documents. It is an absolute necessity to get the bank to waive its right to pursue a deficiency judgment. Otherwise, there is no point to doing a short sale.

Lastly, I am now of the opinion that every realtor is really only working for himself/herself...sorry, realtors. They all are working for their own best interests. I saw my own "sweet" realtor turn into a monster overnight when the short sale was approved by the bank but with very poor terms for us, the customer. She pushed and pushed and yelled and basically had me more stressed out than I should have been. She clearly was working for the lender at this point and didn't give a hoot about my very basic and necessary requirements of the deficiency judgment waiver and a statement from the bank showing how it intended to report the short sale on the credit report.

When all was said and done, the buyers walked away and I am relieved. The bank took too long. My realtor showed her true colors and now I will go through foreclosure. At least with a foreclosure (non-judicial CA) I will not be liable for any deficiency judgment. This applies for all loans, regardless of whether they are recourse or non-recourse. The only time a recourse loan will get a deficiency judgment is if the bank chooses to foreclose judicially.

Bottom line: Sellers need to think twice before attempting to do a short sale. The bank will lie and try to intimidate you into signing papers with very unfavorable terms. The bank will also try to get you to come up with additional money (we refused). They will say their hands are tied but they are LYING. The realtor will also lie. Basically,trust no one. If you have the money to pay for a good attorney and the stomach for a short sale, then go for it! Otherwise, I am coming to the conclusion that it is preferable to go with a foreclosure (credit be damned; it's ruined by now anyway) and know that you are protected from a deficiency judgment.

Juli

December 13, 2007 5:53 PM

One last comment about the short sale vs. foreclosure. The tax ramifications are about the same no matter which way you choose. Therefore, the ONLY reason to do a short sale is to salvage your credit. Otherwise, the seller has nothing to gain and everything to lose if it's handled improperly.

Sue

December 14, 2007 1:11 PM

Can a family member such as a Son purchase property on a short sale?

Cathy

December 14, 2007 3:33 PM

Someone please give me a straight answer. I live in Wisconsin, in the beginnings of a divorce. There is absolutely no equity in our home and we are 2 months behind in payments. My husband has moved into a house he is renting and left me with pretty much all our debt. We have 3 young children and I work part time at home. I heard about short sale and have heard many different outcomes. I am possibly facing bankruptcy also. Can someone please help me?

Carlo Gobba

December 14, 2007 9:44 PM

With regards to those that think that foreclosure is the same as a short-sale (tax wise) that is incorrect. With a foreclosure, the banks can also go after the debtor for a deficiency judgement. With a short-sale, the bank gives their blessing on a short payoff. If the bank tries to go after the debtor later and the debtor is insolvent, the IRS website specifically states that they cannot pay the 1099-c that would have been issued.

Short sale=bruised credit for 2 years
Foreclosure=Damaged credit for 10 years

For Juli-
I say don't just list with any Realtor. List with a "Certified Short-sale Realtor" that has experience in this area. Knowing the definition of a short-sale does not qualify just any agent to deal with the banks and with a favorable outcome for you. Yes, an agent that does not know how to effectivily deal with the banks could result in a poor result or similar to foreclosure. Sorry to hear about your experience by the way.

Realtors are paid out of the transaction. NOT by the owner. The very definition of a short-sale leaves the bank taking less than the payoff of the mortgage so by virtue of that, the bank is essentially paying the real estate sales fee. That does not mean that the agent represents the bank either.

Deal with an attorney if you wish. An agent certified in short-sales may do a better job, is available many more hours than an attorney and only gets paid if successful. It's called a success fee.

Banks prefer to deal with Realtors. Realtors are members of the Local, State and National boards of Realtors. realtors deal with Errors and Omissions insurance so there is alot to loose here.

For Alin-
The listing agent works for the owner of the home and is trying to keep the foreclosure off the owners credit record, NOT the bank. The Realtor does not get one dime for all the effort put into this if it is not accepted either. The banks will NOT speak with the public when a property is in loss mitigation. The listing Realtor had to get written authorization with sensitive information all over it just to speak with the bank.(FYI)

For all-
The key with short sales is that there has to have been some sort of recent hardship to put the owner of the home in a possition for not being able to pay. (Not wanting to pay for a home that has decreased in value because of external factors may not qualify as a hardship.)

Tim

December 15, 2007 4:21 PM

Alin,

You will not be able to negotiate with the bank directly. You will need to get an written authorization from the seller (borrower). It needs to be faxed to the bank (Countrywide's loss mitigation fax number is: 800-658-0395). Then you can call them and start the negotiation. Fax usually take 48 hours to get posted to the account. So you need to wait. Once you are in the system, you can demand to speak to the manager, then to their manager and so on until you get someone that knows what you are talking about. I know it could be frustrating to speak to call center people. This is the only way you will get answers. Only after you get the authorization from the sell. If you need help or have any other questions, e-mail me at timakl@yahoo.com. I'll be very happy to help with all your shortsale questions. Tim.

Juli

December 18, 2007 11:05 AM

FOR SELLERS IN CALIFORNIA (and to Carl):

Let me clarify, if a foreclosure is non-judicial there is NO deficiency judgment. Doesn't matter whether your loan is recourse or non-recourse. As far as the credit impact, yes it does stay on your report for 7-10 years. However, it really only affects your rating for about 3 years. So while it is reported, it will carry less and less weight as the years go by.

Regarding short sales, the bank can levy a huge deficiency judgment against you unless you get them to agree to waive this. The bank will fight this so you will need an attorney to help you. If you can't get the bank to waive this, then it's not worth it to do a short sale. Better off going with a non-judicial foreclosure and worse credit rating but no deficiency judgment. Your credit will rebound in about 3 years.

Regarding 1099s, in California a bank can choose to issue a 1099 OR a deficiency judgment. They cannot do both. In the event of a non-judicial foreclosure, this means a 1099 only.

Regarding the 1099G, you can write off up to $250,000 ($500,000 if married filing jointly). You can take advantage of this write off once every 2 years (for any future sales).

Regarding the 1099C, if you are insolvent at the time the 1099C is recorded, you will be liable for NOTHING.

Bottom line: Get yourself a good tax attorney whether you do a short sale or foreclosure.

I hope this clears up some of the muddied waters.

Again, this pertains to non-judicial foreclosures in CALIFORNIA ONLY. Check with your state's particular rules. (A judicial foreclosure is far more costly for the bank and they are generally avoided. Plus the borrower has the right to redeem the property for up to one year following the foreclosure. Bidders know this and will usually bid lower than if it's a non-judicial foreclosure. Typically judicial foreclosures occur when it's a commercial enterprise.)

Hope this helps clarify things for sellers who are confused. Get yourself an attorney; this is a legal transaction. Real estate agents are not lawyers and cannot advise you on the law. If they try, they can be sued for "practicing law without a license."

P.S. Carl-The seller does pay the agent for a short sale. Maybe not straight out of their pocket, but they do pay. The amount of commission the bank was paying was going to be attached to our 1099C.

Alin

December 18, 2007 12:15 PM

Carlo and Tim,

Thank a lot for your comments. I understand now that it's about the bank's liability in regards to the seller's confidential information. It is however doubtful I would be able to get that authorization, the seller is already out of state and can only be contacted through the realtor.
I was wondering if the price we offered is ok? I've read that a common practice is to cover 10-15% of the second loan and 80-90% of the first loan, and also that the offer should be within 10% of the BPO. If that's correct, our offer is 5% below BPO and covers 20% of the second loan and 95% of the first loan. Of course, there is also the question of the unpaid property tax (about 20k$) which I'm not sure about.

Thanks,
Alin

Jerry

December 19, 2007 1:00 AM

My daughter married a soldier (Army). Together they bought a home in CA. Lived in it for about 8 months. He just got transfer orders to Germany, and recently had a child and lost her job (Lay off). The home they got into was way above their heads, but were able to purchase with the assistance of "Creative Financing" with CW. They couldn't afford to pay for home and are now 90 days behind. They were referred to a RA by a friend who recommended a "Short Sale". Homeloan was for 350k, short sale offer through their agent was 250k, offer signed and sent to CW. I feel they were deceived in thinking that they could afford this home. Does anyone have any expertise with a similar situation? Do you believe they will qualify as a hardship? Does his being in the military have any bearing?

Thank you for all the excellent reading and assistance you all provide to "Real Estate Dummies" like myself.

Camie

December 20, 2007 1:57 AM

I need help!!!!

I have three houses under my name only one belong to me.
One I co-sign with my father the other with my sister. Because I had really good credit, I was able to help them get their house, but I have nothing to do with the payments. The third houses belong to me and I’m having trouble keeping with the payment. My adjustable rate will start Jan 1, 2008. I live in Florida. The house has been listed for sale for at list three months and no offers have been made what so ever. I’m thinking of asking the lender to give up my deed. Offer a deed in lieu. I need help understand what could happened to their houses if I go thru with that or if I go thru with foreclosure of short sale. Please help. I’m more worried about them more then me. Please somebody help me understand what to do. HELP!!!

Will Weaver

December 21, 2007 1:05 PM

When working a ShortSale:

Now gang I’m an Active Realtor. There are Good honest hard working people loosing their homes. And we as Realtors need to help.

I teach a workshop called What Every Agent Needs to Know About ShortSales.


There are seminars out there that teach investors how to steal people homes. THAT’S NOT WHAT WE TEACH. There are companies that call themselves a Loss Mitigation company and they want you to give them your short sales because they say they have relationships with all the banks. That’s the biggest FARCE I have ever heard.

You can do this yourself.

No one has an inside Man. Everyone must go in the same door and go through the same process.

Lenders prefer to work with REALTORS. Not Investors or these so called Loss Mid companies. The Question is why?
1. You have a License with the state.
2. You subscribe to a Code of Ethics
3. You have E/O Insurance.
4. You have a lot to loose. (A Licenses if you commit Fraud)

Everyday were prospecting on how to find people to help. Our phone in the office rings off the hook. We can’t keep up.


Will Weaver

Lissandra

December 26, 2007 3:29 AM

The home we live in is soley on my husband's name( I am not on the mortgage or titel). We have been behind on the mortgage and it has been difficult to catch up. The home is in Las Vegas, NV and $430 is owed on the home. My husband is in the process of getting a loan modification, the interest rate will adjust in Jan. 2008. The current value of the home is anywhere betwenn $250K to $310K. My credit is good since I am not on the mortgage account, and a realtor I contacted suggested that we put our home up for sale and submit an offer under my name for what the home is worth so the payments can be more managable. It is possible for my to buy my husbands house through a short sale process. If we can't short sale it we will have to loose the home. Help

Mike

December 26, 2007 4:22 PM

Is there anyone in the Richmond Va. area that is willing to be a mentor. I have two deals that I do not know how to close.

Ken

December 27, 2007 11:20 AM

I am located in SanAntonio Texas and am interested in learning about shortsales from someone experienced in my area. I do not want to pay 5k to a company for books,cds,and on line or phone support.I do investing and would like to learn how to negotiate more equity from lenders from a close reliable source. I find deals and share them all the time. Lets make $$$ 210-274-4391

Chilipepr

December 28, 2007 3:22 PM

Lissandra, It is very unlikely that the bank would approve the shortsale to you. They usually require these to be arms length transaction.

Karen

December 29, 2007 8:07 PM

What is the latest update on the waiver of the 1099 for the loss to sellers?

Angel

December 30, 2007 11:39 PM

I CURRENTLY OWED MORE ON MY MORTGAGE THAN WHAT THE HOUSE IS WORTH. I AM CURRENT WITH THE PAYMENTS SO FAR BUT IT WILL READJUST TO AN UNAFFORTABLE PAYMENT IN 6 MONTHS. I FOUND ANOTHER PROPERTY THAT IS SELLING FOR 150K LESS THAN MY MORTGAGE AND I WANT TO BUY IT. WHAT WOULD THE CONSEQUENCES BE IF I BUY THIS CHEAPER HOUSE AND PUT MY CURRENT HOUSE ON A SHORT SALE OR LET IT GO TO FORECLOUSER?. WOULD MY BANK TRY TO REPOSES MY NEW HOUSE?

Kari

December 31, 2007 12:14 AM

We are in Michigan, just outside of Detroit. Our house was up for the last 6 months without one person looking at it. We know it is because we were asking more then what the area is now worth, but it's what we owe so we have no choice. I was laid off in June and our payments are up to date as of now. Does anyone know a good realtor in the area experienced in short sales? Will the mortgage company even consider a short sale if our payments are current? They know I was laid off and haven't been cooperative so far. Also, the house is only in my name, will my husbands credit be hurt by this? Thanks!

BIBI

January 2, 2008 10:24 PM

In Miami, when one buys a home at an auction do they have to have the full amount within 24-48 hours like it is in Illinois. What % does a buyer need to but homes at an auction. Again Miami. In Ilinois it's 5%.

BIBI

January 2, 2008 10:24 PM

In Miami, when one buys a home at an auction do they have to have the full amount within 24-48 hours like it is in Illinois. What % does a buyer need to but homes at an auction. Again Miami. In Ilinois it's 5%.

Erica

January 3, 2008 10:43 AM

I live in MA and having a very difficult time with paying my mortgage. The house is in my name alone and my husband and I are in the process of filing joint bankruptcy as he has been out of work for nearly 5 months. Needless to say the mortgage payments are about 4-5 months behind and I have since submitted my financial information the the homeowners assistance departemnt at both of my mortgage companies for a short sell. One company has yet to get back to me and the other has asked for a signed offer. I explained to them that I have not received an offer because the house is currently listed for more than what the house are selling for in my area, but less than what it is morgaged. I am a realtor (part-time) and I have my house listed, but I was not sure if I could list the house for any price. They informed my last night that I should list it for fair market value and send them any offers and tatke it from there. HOWEVER, they also informed me that they have started the forclosure process and it is now with an attorney. So, my questions really is- is it worth trying the short sell if my husband and I are claiming bankruptcy? Shoudl I just let the house forclose since the bankruptcy will go on my credit anyway? Do I bother getting another realtor to take it over or is it too late end just let it go into forcloser?
HELP!!!

Rose

January 4, 2008 2:12 AM

I've told my story here, see above, and that's been helpful, reading other people's experience and questions has been informative and interesting, thanks. Basically my house went for a short sale, on the market for 4 months and got only one low ball offer, waited for the first and second to approve the sale. The first never would admit it was going to be a short sale since they would be getting all their money plus commission for the realtor. The second approved the sale and only wanted the first to pay them $1000 and lose all the fees the 1st had tagged onto my defaulting loan and only give 3.5% commission. People, this took months to approve....3 months. Then the buyers dropped off one week before the 2nd gave terms. (bad buyers) And even though my realtor faxed the terms to the first anyway, not telling them the buyer dropped off, we still haven't heard from the first yet, almost 20 days later. They just don't care and I even called my closers supervisor, nothing. You talk to so many different people and one hand doesn't know what the other is doing, no one in the bank knows what's going on. There's no incentive to continue to try to sell the house anymore, even though I feel bad about it. I've incurred so much debt trying to keep the house, sell the house looks like bankruptcy for me. For those of you that don't know, President Bush has signed a law that you don't have to pay taxes on the 1099 from your foreclosed home. You come in with nothing, you go out with nothing. Welcome 2008

kris

January 4, 2008 8:58 AM

Hi-
When we met, my husband had a house in Kentucky and I have a house in Ohio. The houses were bought pre-marriage so neither of our names are on each others title. He just left the military and does not have an income at this point. His house has been on the market for over 8 months without an offer. He has just applied for a Short Sale through his lender. They are reviewing it now and taking a long time. My questions are:

Do we have to have a buyer lined up before we apply for a Short Sale?

What are the credit ramifications?

Is foreclosure more beneficial in the long run especially if we are going to live in my house for a few years?

Does anyone know any relators who specialize in Short Sales close to Louisville, Kentucky?


Thanks

shelly

January 5, 2008 10:59 PM

If I was to foreclose or do a short sale on one of my investment properties how would it affect my primary home and other invesment properties? This investment property is in Florida. I have a neg am loan on this one property because I thought I could sell in a few months but that has not happened and now I am upside down in value and also unable to rent the property for the payment, taxes, and insurance cost.

Martha

January 8, 2008 3:28 PM

I sold my home in May 07 through a short sale. I am a real estate paralegal & spent a great deal of time on the phone, daily, for 3 months to get the short sale to go through (all the while getting a divorce too) It all went through but we were at the closing table still waiting on the 2nd mortgage company to send their written assent to the deal. Bottom line is each person involved must take a hit, brokers, 1st mtg., 2nd mtg, seller etc.......
chin up & it'll work

Aaron

January 8, 2008 5:39 PM

I bought a house at auction only to find out after the auction that it was going to have to be a short sale. Has anyone had any experience with this type of situation? It would seem that although we paid a little less than the appraised value that the bank would be inclined to accept this price due to the fact it was already auctioned.

Now we're 75 days in to the process and still havn't heard anything from the bank. There are other properties I'm interested in purchasing but feel like I should wait for this deal.

Should I feel my chances of getting this approved are better than most or does this put me at a disadvantage?

scott

January 8, 2008 11:49 PM

Great news for primary home owners in a short sale situation but tax foreclosure not so good for second home owners! We will see what happens as it goes through the Senate and to the President’s desk.

SamIam

January 9, 2008 2:12 AM

Very Informative thread. I am working on two short sales and am implementing a program that has closed the deals before I will let You guys know if it works.
One tip I will recommend is that "when people say NO ,they are not saying NO, they actually mean I want to KNOW More"
Always take notes ,names ,extension #, also get a recorder and tell the person on the other end Your call is Monitored Sir/Madam. If lenders can monitor for quality services so can we.

Todd

January 9, 2008 5:24 PM

THE LAW IS SIGNED!!! There is no 1099 anymore on a 'gain' in a shortsale!

Do a search for and short sale relief www.phoenixrealestateguy.com

So if you owe 350,000 and you sold it for 300,000 you no longer are required to pay the tax on the 50,000 - 'gain'. The 'gain' was what they IRS saw this as, but G Bush has waived that. Long as the sale price of the home was less then 2 million dollars.

SHORTSALE woo hooo!

Sharmaine

January 10, 2008 4:17 AM

For Buyers of Short Sales in California:
Can the sellers come back later and take over their house again if they pay up, like in foreclosed homes?

Juli

January 10, 2008 1:37 PM

I have researched the 1099 law recently signed in by Bush. I can't recall the specific law number but you should be aware that the "forgiveness" applies only to original purchase money loans. Anyone who refinanced into a toxic loan (as we did) and then later foreclosed will not be eligible for this write off. So for those of us who are in this bind, your only hope of tax relief is if you are insolvent at the time the 1099C is issued (we are). However, you will need legal representation to prove this point.

I do have a question: There were state tax liens attached to our house that was just foreclosed. If the bank pays them, will they add that amount to the 1099? In other words, will we be taxed on our tax? They cannot remove them (they can try) but it unlikely the state will agree to this since we have no assets.

Juli

January 10, 2008 1:40 PM

To Sharmaine:

I do not believe the Sellers would have any right of redemption in the event of a short sale. In essence, you are selling your house in a "normal" way and are not entitled to it anymore than you would be if it were a regular sale. Also, in CA, it is unlikely that you would have right of redemption in a foreclosure . . .the only way that would happen is if the bank chooses to foreclose judicially (unlikely). We just went through our official foreclosure (1/7) and it was non-judicial. No right of redemption and no deficiency judgment. And we are relieved. Now we can rebuilding our credit.

Woodrow

January 10, 2008 4:22 PM

Any comments?

I'm an interested buyer (to live in not invest) in a home where the owner owes 650, 170, and 300 in that order for 1st, 2nd, and 3rd lien (3rd one is just private llc lender). The house is basically a shell right now with the brick mostly done and wood framing inside. As is the house is probably worth 750-850 (good location). I would probably offer as a short sale say 750. I got the basic concepts down for the process when there is 1 and maybe a 2nd mortgage. But given that there are 3, any advice as to how to approach negotiations with each of these lenders, or what to offer to each? Any input would be appreciated.

Mary Jean

January 10, 2008 7:07 PM

I'm considering a shortsale in the Northeast. First and second mortgage totalling $550,000. Value is $490000. Unsecured credit card debt of $30000. Never behind on mortgage payments and the house has been on the market over a year due to health reasons. We have not approached the second mortgage lender yet. My question is the only asset I have is a Roth IRA of $20,000. Should I cash that out and pay the unsecured debt, keep it for realtor fees or will the second mortgage lender look at it as they could have received that money and then deny me the short sale? Thanks MJ

Buby

January 11, 2008 4:36 PM

What is the first step in a shot sale ?

Davis

January 12, 2008 1:32 AM

Short Sales may be a necessary option for many homeowners to relieve their debt obligation rather than foreclose, but won't this just add to these homes being appraised less and less, and hurt our depressed economy? If you could find an alternative to keep your home by working an interest cancellation program, check out http://optimizemywealth.designingfutures.tv and leave your info.

Tiffany

January 12, 2008 6:24 PM

Mickey Mouse Blues
There are plenty of people living near Disney/Orlando facing foreclosures and short sales.
Can someone who has either been through foreclosure or the short sale process please tell us what this has done to your credit and ability to lease apartments, buy cars, and purchase another home? How has it impacted your FICO score so far?
Basically is there life after foreclosures/short sales?

Richard

January 13, 2008 8:28 AM

Most Common Question: "What do I do? - I can't pay my mortgage"

As an attorney, I receive plenty of telephone calls and visits from people that are no longer able to pay their mortgage on their home or investment property. They all have endless questions and usually tell me they are getting all sorts of advice that they don't like. They come to me to find their BEST solution, and I suppose they hope I am some sort of magician that can create an answer that they like.

The analysis of the problem is the first order of business. These questions revolve around the "why" are they behind on the mortgage. What situations (health, job, death, divorce, and catastrophe) triggered the problem? When did the problems arise? Are they current or delinquent with the mortgage? Are they in foreclosure? What are the repayment terms of the mortgage? Do they have assets that are in savings, other properties, stocks, bonds? Is this a matter of being "real estate rich and cash poor"? What is their income past, present and future?

We like to get a financial statement filled out by the client, which sometimes is like pulling teeth - people just hate filling out financial forms - so we made one that is very simple and tracks the 1003 without the fluff. The idea is to get a handle on the financial numbers and thus the situation from raw information. We do this because people in general and delinquent borrowers in particular have a hard time verbalizing and quantifying the monetary problem and why it is a problem.

Simply put, there are 4 solutions to the problem:

1. Let the house go into foreclosure. This is the most drastic response and is not a solution but a result. It ruins credit badly and the property and all equity is usually lost.

2. Modify the mortgage(s). If the borrower has the financial resources to permit a modification of the mortgage terms then this is the best of the bad solutions. Modification can come in many shapes, sizes and flavors. Think about reducing the loan balance (up to the amount allowed without prepayment fees) in exchange for an interest rate adjustment downward (great for those 12% loans). Sometimes these solutions require financial help from family and it may not make sense to owe more on the property than it is presently worth. But being "upside down" in value is something that is always going to happen in real estate. If the property is the primary home and the borrower expected to live in it for the long term, then being upside down for a few years is going to be long forgotten 10 years down the road. Like kidney stones, they will pass and the pain will be forgotten. Often the title must be clear since from a technical standpoint, there can be a new start point created for the lien of the mortgage and that mortgage must retain its priority over other liens and potential liens. Credit hit can be nominal to average, depending on the deal and modification.

3. Deed in Lieu of Foreclosure. Everyone talks about it but this is more difficult than one may think. In 30 years I can only think of a half dozen that we have worked successfully. The key here is the lender has to agree to take the deed and deal with the property itself (it would much prefer a short sale) and the title to the property must be clear. This usually means there should be only the one mortgage and there can be no liens and no judgments against the owners / borrowers. This is basically a foreclosure without the judgment of foreclosure. Credit hit can be substantial but not as bad as a full foreclosure.

4. Negotiate a Short Sale. It is surprising how many people call me - including owners, Realtors and sales associates - and don't know what a "short sale" means, much less how it works. Think back just 5 or more years and remember "loss mitigation". The term "short sale" is relatively new lingo for an old option lenders have used for decades. The concept is too simple:

a. house bought for $300,000

b. loans on house are $280,000

c. value of house is now $200,000

d. shortage of loan equity value is $80,000

In the above scenario if the owner needs to sell (because he or she can no longer make the house payments (taxes, insurance, utilities, interest, principal, and whatever) then typically the house needs to be sold. However, the mortgage is greater than the selling value of the house by $80,000. If the bank foreclosed, it could not expect to receive more than the house is now worth at a foreclosure sale. And the bank would also have the costs of attorneys, sales agents, real estate taxes, unpaid interest on the principal, insurance and maintenance on the home until it got sold and the costs of selling the home. For a house worth $200,000 in South Florida that could easily be another $30,000 after 6 months of the bank holding the property. Thus, the bank often recognizes that it is better off with a sooner sale outside of foreclosure - the "short sale". Shore sales have downsides for the borrower, primarily in potential income tax recognition and the potential for continuing liability on the "short" promissory note(s). However, the credit hit is substantially less than a foreclosure.

Which of the four scenarios is best for any particular borrower requires application of a firm understanding of the mechanics of the various processes. Be sure you use an attorney experienced in working with mortgage lenders, and a Realtor that understands and has the patience for short sales.

Be sure you understand what you (or your client) need and why you (or your client) need it before you make any decision about how to handle the matter - a bad situation does not need to become worse because you just "give up". There is always a solution - finding the best solution to a bad situation is something you (or your clients) need to carefully examine.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@FLORIDA-COUNSEL.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales

MK

January 14, 2008 3:32 PM

Question...If someone decides to go with a short sale on a NJ investment property that they are upside down on...can the bank go after other properties which the Borrower has equity in? Can they go after any other assets?

Rose M P

January 14, 2008 6:54 PM

Even if you go into foreclosure, the bank can and will likely file for a deficiency judgement in the attempt to collect on the note(s), this is true for both first mortgages and HELOCS right? Then what does this mean for the homeowner are they then forced into a bankruptcy?

BIBI

January 14, 2008 11:33 PM

My senior citizen parents were hood winked in Miami FL and now have a neg ARM loan on a property, and an upside down loan: 2 loans and both by Chase. I'm looking to have a short sale on the 3BR, 2.5 bath home. It's been listed since July so we now just need the buyer. It's $495,000.00. If you're interested in buying it please let me know through this thread. I've learned a great deal about short sales from reading these threads. The stories here are heart wrenching. We have to keep educating ourselves and getting information in order to solve our problems. To the professional, ethical realtors and tax attornys who have posted, a big thank you! I don't know how my parent's short sale is going to go but I am more confident having read all of these threads. I have a great deal more knowledge than I had before these threads to even attempt a short sale. No I'm not a realtor. I'm a teacher but I'm going to try and complete this short sale for my parents who got themselves in an awful situation.

GD

January 16, 2008 12:00 AM

I've been searching and searching for what I hope will be a simple answer. On a general basis, how long does a Short Sale stay on your credit? I've received two responses from local realtors but have found nothing online that confirms either one of their answers. I was first told 5 years and then I was told 3 years. Please help, I'm confused! (p.s. I live in Southern CA, Riverside County)

Need Help

January 16, 2008 8:09 PM

We are in a lease purchase situation where the landlord has stoped making the payements due her ARM coming due. We have never missed a rent payment and have put in a bid to buy the house. But she has said she will let in foreclouse rather than go thru with the short sale. Does anyone know what rights, if any, we have as tenates who have paid over $40,000 over the past 3 yrs to buy the house before it forecloses?

denise avila

January 17, 2008 8:09 PM

my sister is thinkingabout a short sell she wants to know if she sells her home will she owe for the rest of the money? do you continue to pay taxes on that and apayments shes confused and so am I?? if you file the 1099 form , it means you wont owe the bank the money?

eddie

January 18, 2008 1:54 PM

Ok,what if I'm an investor helping people that are going through foreclosure and the home owner is willing to walk away from to home due to hardship reason's, and the investor get permission form the home owner that it is ok for the investor to work out the a deal with the bank on starting a short sale on the property. the bank is contacted and is interested in the offer on the short sale and take things to t next level.the investor do the research on the property submit to the bank what the price should be lowered to inorder to beat the camp's in the area of the property.the bank sends the bpo to get the appraisal, gives the ok on the offer due to the result of the bpo.then the home is put back on the mils listing 30-40,000 more from what the bank lowered the price to,still being the lowest price in the area by 60 to 70,000. next the investor finds a buyer, assign the contract to the new buyer at closing,so it will be like a double closing,to were it first close to the investor and later that day close directly to the new owner.so the bank get their end of the deal the home owner walk away without going through foreclosure on the record,and the investor gets the back end on the money paying the realtor an additional closing fee for the second closing.everyone is happy profited and starting all over aging with a home owner at need. so is double closing possible??? someone please let me know.

Vanessa

January 21, 2008 9:42 PM

BIBI with the senior citizen parents -

Feel free to contact me at nbmortgagediv@aol.com for Q&A of whether a reverse mortgage combined with a short payoff may help your parents. Rest assured this is not a sales pitch of any type...I just happen to know a little bit about a lot of the discussions here (both professionally and personally), and may have some helpful input.

Fernado Bravo

January 25, 2008 8:57 AM

What is happening today?
Sellers and buyers are facing an increase in financial difficulties.
Many owners with adjustable rate mortgages (ARMs) or interest only loans are finding it difficult to make their payments.
Rising foreclosures rates throughout Florida and the rest of the country signal the seriousness of the problem.
A decline in sales prices over the past two years has left some sellers with little or no equity in their homes.
A typical sales associate may not understand the pre-foreclosure or short sale technique and may not notice the financial problem until after a listing presentation when the suggested price is less than what the seller owes.

http://www.thefloridahosrtsales.com

mike

January 26, 2008 12:06 AM

Ive been working with the short-sale program for more than 10 years now. I think it is an amazing program with benefits to all parties involved. The buyer gets the house at a discounted price, the lender saves money in the long run buy avoiding further foreclosure fees and avoids the risk of taking it to auction and buying the property back themselves, and the seller somehow manages to salvage whats left of their credit. Although easy as it may sound the percentage of succesfull shortsale transactions are less than 40%. i deffinetely think that will change do to the bubble burst that we're seeing now and years to come. ... A short -sale price today can eventually be retail or above retail the way the prices are going.. BE CAREFULL!!!!!!

Susan Milner, Real Estate Broker

January 26, 2008 9:12 AM

Everyone, the banks are getting easier & easier to work with on these short sales. This past week we closed on 2 short sales in Cape Coral & have another in Cape Coral scheduled to close this Monday.

If you need help with buying or selling a short sale in the Cape Coral, Florida area please feel free to contact us.

Yours in Success,
Susan Milner, licensed real estate Broker

www.the-extreme-team.com

Florida Future Realty, Inc.

Mo

January 30, 2008 11:40 AM

FYI,
We put an offer and the seller signed my contract, and We received the offer back with the seller’s signatures so we are doing our diligence to come to settlement.
We learned today that the two lenders have a problem with each other. ..Will our signed contract be considered as a binding contract?

Brian

January 31, 2008 6:13 PM

Sorry but just need to clarify some things for people who may be reading this. There was someone who said if nothing is working you can "clear the slate with a bankrupcy" I'm sorry but there is almost always a way to work with the banks and your loan. The thing is that a short sale is not "conventional" banking, and most of your bankers are by the book people that really don't think outside of the box for fear of the unknown. People please there are 10 million different ways to avoid forclosure and you should never ever file for bankrupcy. It doesn't wipe the slate clean, that is false and should not be taken as good advice.
One last thing if you have a FHA loan I believe that banks are more willing to negoiate because your loan is backed by the federal gov and your bank will take less of a hit.
Be creative people you're already in a unfavorable situation the worst they can say is no and then your no worse off
:-)

BIBI

February 1, 2008 6:58 PM

Do you have to be behind on payments to the market gets worse? What if you know you can't afford the negative arm loan payments much longer. Should I make my parents start missing payments now because 3 months from now they won't be able to pay this loan anyway. I want to be proactive but it seems that first you have to fall on your face, then the banks will work with you.

kate

February 2, 2008 9:59 AM

I'm in process of doing a short sale but have a credit score of about 784 in all 3 areas. Do I still have to wait 12-18 months to buy again? I have 2 adopted dogs and I am having a hard time finding anyone to rent to me with them. Am I doomed to live in my car?

SHANE

February 4, 2008 9:38 PM

I AM IN PRE-FORCLOSURE. I HAVE MET AN INVESTOR THAT IS OFFERING THE MORTGAGE COMPANY 80,000 ON A HOME I PURCHAESED FOR 215,000.00 APROXIMATELY A YEAR AGO. THE INVESTOR IS ASKING FOR ME TO SIGN THE DEED OVER TO HIM. THE NEGOTIATIONS ARE NOT FINAL YET. I JUST RECEIVED A PHONE CALL THAT HE WANTS ME TO START PAYING RENT THE MIDDLE OF TIS MONTH. ADDITIONALLY, HE WANTS ME TO SIGN A CONTRACT THAT I WILL PURCHASE THE HOME BACK IN ONE YEAR. THE INVESTOR FURTHER STATES THAT IT DOES NOT MATTER WHAT MY CREDIT IS LIKE ONLY THAT I MAKE ON TIME "RENTAL" PAYMENTS FOR 1 YEAR. DOES THIS SOUND LEGAL TO ANYONE. MY PAYMENTS ARE CURRENTLY 2000.00 MONTHLY WITH AN INCREASE COMING IN MAY. PLEASE HELP. IS THIS LEGAL?

Debbi

February 5, 2008 1:53 PM

Good afternoon. First of all, I'm so glad I came across this thread. It has been a wealth of info regarding short sales. Instead of filing for Chapt 13, I'm going to try a short sale. I understand I need to send my 2nd mortgage company a written authorization letter so that my agent can negotiate the sale on my behalf. Does anyone have a sample of this letter or any idea what should be put in this authorization letter? Thank you in advance for your responses and suggestions.

Stephanie

February 6, 2008 12:36 PM

My husband & I are trying to buy a home with a short-sale. It has been almost 7 weeks since our offer was accepted by the seller. We have heard nothing except that the bank ordered their first BPO 4 weeks ago, we don't know what the price was. We have been in the dark this whole time. Any ideas on how much longer we will have to wait. The sellers loan is from Washington Mutual....anyone worked a short sale with them?

JAY

February 8, 2008 1:31 PM

CAN ANYONE HELP OR RECOMMEND SOMEONE WITH OUR PRE-FORECLOSURE SITUATION.
WE WOULD LIKE TO SEE IF THE BANK WOULD TAKE A SHORT SALE ON OUR CONDO.
ITS PRESENTLY LISTED WITH A REALTOR , AND AN OFFER HAS JUST BEEN PRESENTED.
OF COURSE LESS THAN WHAT'S DUE.)IST @ 400,000 , AND 2ND @ 70,000, A HOME EQ)
ANY ADVISE. THE CONDO IS IN MIAMI , FL

mark

February 9, 2008 8:08 PM

HI,
I had gotten a divorce from my ex wife and after she decided she wanted to do a short sale rather than bakruptcy.Which I was for.She insisted on doing the short sale(this is in 06 mind you).I said fine if thats what you want fine but I want nothing to do with it.She said I had to go to a title company and sign off the house and loan which I did or thought I did.Now I just recieved(under my and new wifes name) a deficet of income increase saying I owe 8,600/00 for income I didnt claim in 06.This is appaling,my ex assumed all responsibility in the home adn said she insisted on doing the short sale and would deal with any reprocussions of it.So if its found I have to pay this I will sue her.P s we live in wisconsin
mark

Jana'i

February 10, 2008 3:25 PM

Well ok I guess this is sorta a long story so i'll try to keep it short and simple. Basically I really need your help...My fiance' purchased an investment property in , lino lakes, mn 2 years ago and he rented it out on a rent to own deal with contract for deed to a couple for a little over a year they were supposed to pay the mortgage payments but they never did so now in october of last year he found out through some research that his home was 18 months behind in payments and now in the Foreclosure process, the home has been turned over twice and is now with Ocwen homes ...but it's so far behind the bank won't even accept mortgage payments unless we can come up with the behind payments of at least $7,500. He bought the house for $530,000 but the market is only appraising the house now at $379,000. My fiance' doesn't want to lose his ass on this deal excuse my french. So I need some advice we have heard of a couple options ,
1) put it up for short sale

2) file chapter 13 bankruptsy so we can stop the foreclosure

3) or let it go to a broker for the cost of behind payments rent the home from them for 1-2 years and still stay in the home.

our situation is a desperate as we barely have ne income comming in right now as i'm on maturnity leave as i'm due to have our son next month, and my fiance' is only able to work when it snows enough.

the situation will get better as i work a FT and PT job and make pretty good money but i won't be able to go back to work for a couple months yet.

What should we do , what are our options i think the redemption period is up april 21st and well we need to figure out what to do before then?

PLEASE CONTACT ME VIA EMAIL AT
jtreuber@gmail.com

ne help or advice would be greatly appreciated thanks!
Jana'i

MickeyMD

February 11, 2008 12:52 PM

Anyone facing possible foreclosure should take immediate action; waiting only makes things worse.

For FREE help, contact NeighborWorks at www.foreclosurehelpandhope.org or call 1-888-995-HOPE (24/7).

Note that people on active military duty are entitled to a temporary reduction in interest rate and are protected from foreclosure until three months after active duty ends.

If you have an FHA/HUD loan, your lender is required to work with you.

For more information, see http://portal.hud.gov/portal/page?_pageid=33,717234&_dad=portal&_schema=PORTAL

Vittorio

February 13, 2008 10:12 PM

Hello shane,
First of all STOP what you are doing with this INVESTOR. It is FRAUD all the way. Do not sign the deed of your property to anyone. Remember that if you sign the deed, you are giving away the rights to your property, not the obligation to the bank. If the investor wants to help, he has to BUY the property first and then sell it to you a year later, if terms are alright to both parties. I have seen way too many unscrupulous people take advantage of others and I feel for them. Call an attorney (get a free consultation) or call your local Realtor that has knowledge about pre-foreclosures and short sales. They are the best people to talk to. I am taking short sale classes and If you need any advice e-mail me. I live in Miami, FL.

Tiffany

February 15, 2008 11:08 PM

wow. There is a lot of posting and a lot of helpful information on this page. I must tell you I have read everything that I could find on the internet about foreclosures and short sales. I know that I am not the only one out there, but feel like there is very little helpful informatin for those of us trying to do the right thing. To the gentlemen John Henry who feels it neccessary to remind us of the "errors" of our ways. Your kindness and understanding are appreciated; but unnecesary seeing as how we are already beating ourselves up over the current situation we are in otherwise we wouldn't be spending hours on end trying to find out the best solution for everyone involved instead of just walking away or giving up. The problem is in knowing who to trust. When people say they have been succesful I get excited, but then quickly remind myself that in order to be so lucky I first have to find a realtor and attorney that I can trust aren't going to screw me over.... That ought to be easy. Then I have to believe in good faith that the informationa and comments are from honest people. Here is the deal... Everything that we are reading here is based on either personal experience or 2nd hand knowledge or hear say.... see even if it happened to one person doesn't mean that it will happen the same way for you... It's a leap of faith people.... This is the conclusion that I have come to... I have been doing everything in my power ( i believe) to prevent my house from going into forclosure, including moving back in with my parents and renting out the entire house. Spent all of my 6 months of emergency savings. Just to be in a situation where I have no money, no job, and a house that is upside down.
I bought in SW fl 219 3years ago, owe 187 and If listed would be at 119. Now why on earth would I want to try and save this home I already don't get to live in it. I tried contacting the lender 3 months ago to tell them I wasn't going to be able to make the payments, they had no interest. Now those 3 months have passed and contacting the lender again, they still aren't interested in talking to me. They say I'm not in default sooo..... So what I want to save my credit, I want to sell the house I want to do the right thing. but you sure are making it difficult. I can bring the paperwork that they are asking for however I'm confused about somthing I read.... Do I have to have an offer in hand (short-sale) before I can present it to the lender Or can I fill out all the paper work and wait for someone to come in with an offer.... I don't know of anyone who is interested in purchasing my home so that didn't make any sense to me.... For any of those people who were able to succesfully sell their house in FLorida with a realtor and attorney... perhaps you could do us all a favor and give us a name.... After all the hard part is finding someone who is honest/has integrity/ is understanding in this difficult situation and who isn't out to take advantage of someone who is already in a difficult position.
After all of that is said and done. Being dilligant and persistant in your own pursuit of information is the only way to get through this. ASK ASK ASK.,... "They" are right you can walk away don't give anyone money... If they aren't giving you the answers you want say thank you for your time and LEAVE!
If it seems to good to be true it probably is. Take down names, numbers and information given. Nothing is easy and almost eveything takes work. So put in the time... Maybe you'll be one of the lucky ones... That's what I'm hoping for. Good luck to all those looking for answers. Keep doing research and dont give up.

Diana @ Atech Mortgage

February 17, 2008 6:45 PM

Shane,

I would be extremely careful in your situation. There are a lot of scam artists out there and your story sounds like it could be to good to be true. Remember, that signing a piece of paper saying you would buy back your property in a year doesn't mean you will even qualify to purchase it back. Please see a lawyer in your immediate area for advice and definitely before you sign ANYTHING!

If you need further assistance, call our office at (916) 735-0200 and speak to any one of our mortgage consultants.

Kate

February 18, 2008 9:36 PM

Hi,
Can I sale my house in "short sale" if I have join tenancy with my ex-business partner. He doesn't pay anything for 2 years, I paid all the payments(mortgage & expenses). This is 2 Family house.
Please help- I am already 1 payment behind.

stacy

February 19, 2008 1:06 AM

So I put an offer on a short sale and the lender excepted the offer, but they want to close in two weeks. my attorney said it can't be done and sumitted a letter to the lender, stating we need 30 days for closing. The two weeks is coming to an end in four days and the bank has not responded to the letter. my fear is that we will lose the house if we don't close in four days.

The lender wants a qucik closing but I can't do it, will they ever renegociate a closing date or is it their date or not at all?

Please help my real estate agent doesn't even know what to do!

Ben

February 19, 2008 7:22 PM

Hello everyone! When a foreclosure is looming it can be very scary and cause lots of unrest. I am a real estate agent in Utah and short sales is the direction I am working as I know it is a truly stressful and emotionally draining time, especially with everything else going on in your life.
I am creating a blog on myspace to answer several of the questions here as well as put other information relevant to the process of foreclosure (short sale isn't the only or always the best answer).
I am writing this today, after I post this so forgive me if you check the blog and it's still under construction.
(why myspace?) because it's free and won't take the time to design. The blog area is easy enough to post a topic like this and also has a built in comment feature for you to ask questions , comment, etc. The link is http://blog.myspace.com/index.cfm?fuseaction=blog.ListAll&friendID=30074377 copy and paste it all into your browser, or go to myspace.com/benandjoeshow and click on the blog on the right.

Ben

February 19, 2008 8:12 PM

After reading most of these and seeing there isn't a lot of answers I have decided to make a myspace blog with as much info regarding short sales as possible. I just started the blog now so it may take a couple days to really get the meat of information on there but I hope it helps to answer your questions. I have chosen myspace because the blog section is very easily setup for this kind of forum. It will allow you to ask questions, leave comments, etc and my to continually update the information for you!
the site is: http://blog.myspace.com/index.cfm?fuseaction=blog.ListAll&friendID=30074377
or myspace.com/benandjoeshow

Stephanie

February 19, 2008 10:37 PM

Stacy....how long did you have to wait for the bank to approve your offer? I am going on 9 weeks with no word.

Frank Borges LL0SA- Broker FranklyRealty.com

February 20, 2008 1:30 PM

Hey Dean,
I consider Short Sales to be "Fake Listings."

In our area only 1 in 20 close!

The seller puts some crazy low price to get in offers and the bank just says... NO.

I wrote an expose about it on http://blog.FranklyRealty.com

Frank Borges LL0SA- FrankyRealty.com

BIBI

February 20, 2008 5:39 PM

Vanessa
I sent you an email and am wondering if you can still help my senior citizen parents with an upside down mortgage.
Tiffany
You're so right. Who to trust is the question of the day. Why are we all in this pickle in the first place? Because there are a lot of people who are trying to make a quick buck off of real estate. Do you see all the infomercials right now on TV about Foreclosures making one rich. After this meltdown, people are still out there scheming. WATCH OUT! Like that double closing fiasco. That doesn't sound right at all. I'd be careful if I were you.

nz

February 23, 2008 3:26 AM

I had a short-sale on my property in vegas two years ago. I had a first and second mortgage from same mortgage bank. The short sale paid off the fist completely and only $1450 out of $47 on the second. But they did take $1450 on second.
A year later i am getting calls from a debt collector to pay the remaining difference(they say they bought the loan). I dont understand if i did a short-sale becuase i was in a har situation how can they ask for this difference is that what short-sale is for. Am i being scammed?

rick hanley

February 23, 2008 4:04 PM

Twice I have put in offers on shortsale houses in south fla I am not an investor just a guy trying to get a good deal on a house to live in yet both times Ive had real estate agents not the listing agent getting them for themselves for investment one I tried for an agent and her partner had offer on it plus 3 others is this legal for these agents to do this it seems to me that they have the inside track and can see what you offer and just offer a little more they get it and fatten their wallets and the average Joe can't get a deal I think the whole thing is a crock when the fox is guarding the hen house the fox always wins

BIBI

February 24, 2008 5:10 PM

Frank
I went to your blog and am disgusted by banks and what suckers we've been. My house is not affected by this mortgage crisis, my parents are who are 68 and 69 years old. They got caught in a scam in Miami and I've been trying to bail them out. At 68 and 69 foreclosure sounds like the answer.

Mark

February 26, 2008 2:50 PM

As a real estate broker with 25 years experience I have the following advice.
Firstly don't sacrific everything you have for a property that doesn't have equity in it. It mustn't be a fantasy equity but a reality-based one, i.e current sale prices in the area vs. your investment in your home. If you've lost, accept your loss and move on. Secondly, don't leave the responsibility of negotiating and follow-up solely to your broker or other people, do your own investigations and follow up with your mortgate lender yourself. Waiting two months for an answer is dangerous. Thirdly, brokers who are taking advantage of this situation are being unethical and need to look at themselves and ask whether they are prepared to profit off other people's misery. Concern yourself primarily with the first lender, and let them negotiate with the second or third lender as they are in a stronger legal position to do so. If you do a short sale, have the agreement vetted by your own lawyer to ensure that your lender won't still come after you for the shortfall after the sale, so that you are contractually off the hook. Finally, if you can let your property out and get a rental that is close to your repayment, then it is sometimes far easier to subsidise that shortfall while you move into something that is more affordable. Look at getting alternative income in, i.e. a second job or your own business. Remember, always seek advice, it costs nothing. Make an informed decision about your own future. Don't leave it in somebody else's hands and expect them to have your best interests at heart, brokers want to the deal for the commission, the employees at the lenders couldn't really be bothered and bankruptcy practitioners want you to file. The best person to look after your affairs is you. Good luck and remember the wheel turns.

pardy

February 28, 2008 6:19 PM


Since, the 7th of February I've negotiated my way through a substantial bank,including providing what ever necessary doc's(via the seller) or myself the(private investor)are/is required.

Today, Febuaury 28 the BPO is issued.

It's hard to see what all the fuss is about???? It's rather easy to accomplish.

And MY TAKE:

The banks are doing what banks normally do. It doesn't matter what %/# of non-judicial foreclosures, short sales, or new /refi's they finger thru. They see only paper with numbers.

Because of this "one only" reprieve in all of this debacle is the low interest rates, the banks are now srambling to finance new homes.
Value means nothing if you have to pay too much for it. And the banks don't give one hoot about value(for you) as long as they exchange papermoney and not lose. Do Banks care about our interest in values(individually) and not that of the Real Estate Industry?.

WHO ever got the notion that because a developer comes too town and builds half million dollar homes next door the appreciation in your home goes with increases in all property taxes and insurance premiums.

Who said you had to borrow against that new found money?

Who said that you now had to improve upon what was till that point perfectly functioning?

This is not a supply and demand industry. There is an overabundance of homes to be recycled for the next 100
years.

Bottom line, the banks do care about "your value". because you will always let them know when you need money.

If you want a new house overpriced by 200k and all the banks numbers match with industry standards you'll get it.

What gives with values? Who/what is the real culprit?

Brandy

February 29, 2008 2:24 PM

I also live in Central Florida and we are on our second offer on a short sale home. The only reason we are going with short sale homes is because the 10 houses on the mls that were in our price range are all short sale houses. You have to go 25k outside of our price range to get a "normal" sale home. All of the homes on our mls under $165 with 3 bedrooms are all short sales. Its horrific. The first one was listed at $160 and we put in $155 and they went with a higher offer. This time the home was has gone down in asking price over the time from $185 to $149 which is the asking price that we put in. We put in full mls asking price.
I feel that I am just wasting my time but I still want to have hope since there are no other homes for me to buy other then short sales. In the meantime since we didn't know that only short sales would be available to us we had to move out of our current rental (because we couldn't do a month by month and our lease was up) and into a month by month rental that is an hour and a half away from my Son's school and our jobs. The whole situation is just a bunch of negative words that I can't write on here. I really don't see why they put a house up for anything then what they will really accept for a house. I mean actually have the bank say we are only going to take this amount and do it all before you put the house up for sale to accept offers. In not stating the truth before hand you are getting home owners hopes up and you know darn well that your not going to accept any offer under a certain amount so why waste your own time looking at low offers when you know you'll only accept a certain full price. If the house was listed for $149 and we offered that full price then we should be a guarantee'd yes but it doesn't work that way. The house gets appraised and who knows what they owe on it and if it turns out that the house is valued at 200k or more we are getting a big fat No answer again.
I understand that everyone on the sellers side loves short sales because it gives you an out. But seriously I have not met an actual home owner ( not investor, not second home owner) a real first time home owner that has been able to purcahse a short sale.
All I can honestly say is please, please, please pray for me that somehow we get this home and I'll pray that you sell your home.
There isn't much more my family and I can do because we are paying triple in gas living so far away from where we work and go to school and we can't take any money out of our savings because it has to sit there to pay the downpayment when a deal actually goes through.

We are just sitting here being shammed all the way around and all we want to do is buy a home.

After all of this nonscence with these short sales I want to start a law of some kind that the truth needs to be told about these things and better laws and guidelines need to be made clear and the process needs to be better for information purposes for the buyers.

Sorry if I was a little emotional and negative about short sales but for sellers they seem like heaven and for buyers they are like hell.

Mimie

March 1, 2008 12:42 PM

I live in Southern California, we started the short sale process of our home on September 2007, we moved out of the house in October and started renting while our credit is still good at that time. We received an offer in November. While in process, the buyer backed out. Now we received another offer.

Heres's the scenario :
We owed 2 lenders a total of $570K

1st lender approved $390K
2nd lender still in process, no approval yet.

We hired a short sale consultant, and our realtor's contract is due to expire next week. After 6 months in the process, now we are being told that because we are behind with the property taxes (we were paying impound taxes to the first lender, we stopped paying since September '07) we will have problems with the deal unless we pay the property taxes due.

We have no money to pay the property taxes, do we really have to pay in order to sell the house? Please advise.

Ellen - Las Vegas

March 1, 2008 2:18 PM

What happens if you have a first and second mortgage and you want to do a short sale on your home? I understand mainly, you will be communicating with the first mortgage holder? Will the first and second mortgage holders be in communication with each other?

Maria Ady

March 1, 2008 5:17 PM

Hello,
I was wondering if someone could give me advice on our home. We owe $270,000 and the value is now $199,000. My lender said that they were doing a hike on my payment to almost $2300. I have a 4 payment option plan and I have been paying the minimum payment because my husband was layed off last year and he have been struggling to find a decent job. He decided to start his own business instead. We know that we will not be able to make this payment. I need to need if a short sale is a good option or if foreclosure is better. We have never been late on a payment for anything in our life and it's very hard for us to be in this situation.

Gurbakhas Singh

March 5, 2008 8:26 PM

I am an real estate agent in Virginia and want to handle short-sales. Which is the best training course one can take.
Thanks

Gurbakhas Singh

March 5, 2008 8:26 PM

I am an real estate agent in Virginia and want to handle short-sales. Which is the best training course one can take.
Thanks

Rick

March 5, 2008 11:14 PM

I saw a house the guy owes 360,000 its up for shortsale asking 200,000 how can this be posible that the mortgage holder would settle for 160,000 less then owed or is this just a sales gimmick realtors use to spark interest in a house knowing it wont sell it at that price

sharon

March 6, 2008 11:32 PM

hi
I was informed by my 2nd mortgage lender today that they would accept a short sale with certified funds for $1000. But they said I would still be responsible for the $65,000 deficit and that another bank department would call to set up a payment schedule. If I could afford to make payments on that amount I would probably not be doing a short sale to begin with.
So,do I accept their offer?? Can I try to negotiate a total write off on their part? I do not have income sufficient for rent and essentails and still give them a huge chunk every month. I only have SSDI as income and have limited resources. Any suggestions??

Jorge, National Real Estate Solutions

March 7, 2008 1:48 PM

With the current real estate slump that we are having all the banks are getting easier & easier to work with short sales. This past week we closed on 3 short sales San Diego and Los Angeles counties. If you need help with buying or selling a short sale in the in california contact us.

Cordially,

Jorge

More Short Sale Info

National Real Estate Solutions

Sarah

March 8, 2008 3:01 AM

I am in the process of doing a Short Sale. The first has agreed and the second is only agreeing if I sign a promissory note. My realtor has said that this is a better solution than a Foreclosure. However, does signing a promissory note a good thing when you cannot pay it? This is a little confusing, if I cannot pay it and it goes to collections would this cause my credit to be worse or better than a foreclosure?

Short Sale Advocates

March 8, 2008 11:08 PM

Maria Ady-
I'm yet to see when a foreclosure would be better for a home owner than a short sale.

Mimi-
I'm sorry you are having trouble with the short sale of your home. I'm also sorry that you apparently paid for a short sale consultant up front. Success is what should be paid for in this business.
As far as the liens go, 1st, 2nd and the property tax: all those should be negotiated as part of the settlement. So, the approval from the first should include a nominal pay off for the second and a complete pay off for property tax. The property tax in effect becomes the first lien.

The short sale process may take 3-4 months. This is usually just from lender foot dragging for approval.
You should have multiple offers on your property with a primary submitted and back up offers in case that one withdraws or cannot complete escrow.

Sellers:
A Short Sale should only be taken as an option when the alternative is Foreclosure. Only work with a Realtor that is a specialist is short sales. Don't ever pay a big fee up front, work with somebody that isn't licensed, never sign over your title until in escrow, or have anybody talk you into leaving the property until you are in escrow. Be very careful about investors, they are not there to help you and hundreds of scams are going on with distressed properties. Be careful!

Buyers:
Here's how I do things in California:
- escrow doesn't start and deposits are not made on any property until the lender's loss mitigator has verbally recommended the approval for short sale. (This is after the appraisal/BPO and a week or 2 before written approval.)
- You agent MUST show you market comparables so you don't overpay or low ball yourself right out of a home.
- Short Sales pricing should be comparable to the REO Bank Owned properties, but you pay with patience, not so much elbow grease.
- Be flexible when you can close. So, if you need to sell first. Then sell, rent and then buy. If you are renting, go month to month.
- If you are waiting for the bottom of the market, you'll find it about 3 months after we've started back up. So, find a home you can afford and be nice to the people that are selling. The people losing their home are your friends, family and coworkers.

Drop by the web site for more info or to get help with your situation:
www.ShortSaleAdvocates.com

Jay

March 10, 2008 6:37 AM

Hey Maria, the best option for you is to short sale. I did it a few months ago. This company by the name of National Real Estate Solutions helped me. You should check out their website and see if they can help you too.
www.nationalrealestatesolutions.org

Rojo

March 11, 2008 10:20 PM

I have a home that I am buying that is on short sale. The home was bought for by the current owner for 995K. He has 796K as first and 199 on the second. I am not sure how much is paid off so far. The house was supposed to go on auction on 12/21/2007. However, it never when to auction. The house is still owned by the individual who bought it.

The price they are asking for is 712K with a 15K donation to a church who is negotiating this deal with the bank. They are telling me that the bank has approved this price. I have a purchase and sale agreement signed from the owner. The agent for the sellign is telling me that we should hear back from the bank in 5-7 days.

I am concerned that i am not getting stuck in a scam of some sort. The house is very competetively priced. It is 15-20% below market price!

What do I need to be aware off?

Why would the house not go to auction when it was scheduled to?

What is up with the 15 donation to the church who is brokering this deal with the bank. Seems like the church helps homeowners and builders in distress. It is called Sanctuary Abode and it is in the seattle area.

Shelley K

March 13, 2008 2:23 PM

I am trying to purchase a short sale and we are within 10% of the original price and it is a fair offer as the market now stands.

We have not heard back from the seller's lender yer either. We set a limit of 30 days and that will be up in 3 days. Now that I read the stories, I am wondering if they didn't just send my offer straight to the trash.

I still don't understand why the banks don't approve these things. I've seen bank owned houses and they are so nasty I wouldn't touch them. People trash them when they leave and they stay vacant.

I hope I will hear something. but now I'm not counting on it.

NeedaNewHome

March 13, 2008 3:38 PM

I recently did a short-sale in May 2007, but found out that my Realtor knew very little about the entire process. In some cases, the homeowner can get small amount to help with relocation, but only if Realtor lowers commission. My Realtor dragged out the process by not knowing what to do. I had an FHA loan and the lender wanted 83% of the appraisal amount!

Thank God, I was able to sell!

lossmit

March 15, 2008 12:52 PM

I have been in chareg o making shortsale decisions for 2 banks in the past 4 years and worked just about every Wall Street Mortgage backed Secuiy Portfolio you can name. I can shed a little light from the banking end of the shortsale hastle.

The banks are willing to help those in need. The banks are not willing to help those trying to make a buck off the bank's loss. They are also not in the business of alleviating investor loss due to bad investment decisions or market trends. You don't see the stock market giving money back to people who made investment decisions that work against them. There has to be a true hardhship or the bank will not consider a loss of 10's of thousands per file for no good reason. I need a bigger house is not an acceptable hardship.

There are many factors that are taken into consideration when approving or denying a shortsale. One of these factors is the fact that some of these loans are serviced by an entity other than the actual owning entity. If the invesmtment entity that owns the loans in question does not allow shortsales, or denied the shortsale, the person at the bank or servicer you are dealing with is obligated to deny the file. Yelling, screaming, or leaving 18 voicemail messages explaining why your los mit rep is moron will not change matters, and will delay the files of those people who are really in need of help. If you are current on your loan, it is hard for the bank to put your loan as priority over someone who is about to be foreclosed on.

In the event the bank DOES own the loan you are working on. Here are some things to take into consideration.

A. 5% is the norm, not 6% or 7%

B. 1,000 dollar offers to a second mortgage normally only fly if it is an FHA, or Freddie Mac, Fannie Mae owned loan.

C. If you want an answer on the 31st. Don't submit your offer on the 30th.

D. Most banks deal on a national level. Keep in mind that yours is not the only file on there desk. Similarly, they will not KEEP your file for months on end until you get an offer, and they do NOT like to get offers piece by piece.

E. If you want a quick answer. Make sure you submit the information that was asked for, completley and ledgible. the volume is too high for your analyst to play detective. Show the numbers, and submit the documentation. Don't try to outsmart anyone by leaving information out because chances are, the rep will just say NEXT FILE PLEASE.

Shortsales can be a lucrative specialization for a Real Estate Agent, however, that agent must know what they are doing, how the banks operate, what documentation is needed, and be willing to get that documentation to the bank. The bank does not want a foreclosure to occur any more than the home owner. However, they are not under obligation to accept a shortsale, nor (because of the current shortasle volume, and the increased volume to come) are the banks willing to dilly dally around files and go back and forth. Offer, counter offer...approval or denial, off the desk. This is the way it has to be in order to help as many people as possible keep a foreclosure off there credit report. I hope this tid bit o info helps.

Tonylee4327

March 16, 2008 5:02 PM

I offered a full price for a short sale home.A very clear offer like "as is" and subject to lender approval.The seller agent wanted us to pay a fee of $2975 to a third party (not the seller lender) for helping the seller on the short sale package at close escrow.We rejected it and now we are wandering the seller agent/broker do not submit or send our offer to the short sale lender.Does he or she have the right of not submitting it.

Lynn

March 16, 2008 9:07 PM

Gurbakhas Singh,

Will Weaver does Short Sales seminars and he posted something on this site earlier.

http://activerain.com/dialoguewill

He has absolutely THE BEST hands on training for any Realtor serious about knowing the nuts and bolts of short sales. It'll take about 3 hrs. of your time and the cost is somewhere around $50. He will walk you through the entire process and his ethics and motivation are impeccable. Practical, hands-on, start-to-finish applications that will get your feet wet without botching up a homeowner's life forever! His credentials are superior and I would recommend him to everyone. If you can't get to see him in person, he does have some really phenomenal materials available for purchase that won't break anyone's bank. I doubt that Will would even recognize my name and I have no interest whatsoever, other than the possibility of being able to work with other knowledgable Realtors who understand and KNOW how to handle short sales as a profession.

I am sick and tired of agents who "dabble" in short sales only to cause their clients to lose their homes. Floyd Wickman (with whom I have no affiliation or first hand knowledge) developed this approach to short sales and I checked Will out to validate all the knowledge that I've obtained by hard work and enormous research. Short sales are not for the faint of heart and if you're in it simply for the money then you're probably not well-suited for them.

My advice is to get educated and KNOW your niche so that you can help not hurt the folks who turn to you in their darkest hours. If you don't know what you're doing refer your people to those that do!

For those of you who are in a possible foreclosure situation, don't rely on who you know - know who knows what you NEED to know to get your situation remedied.

There needs to be some sort of database for experienced short sale Realtors who can truly help people in every county. Does anyone know of one? Please email me if you do.

Lynn Garrison, Realtor, Citrus County, Florida lgarillescas@aol.com

Nikki

March 17, 2008 11:28 AM

We fell in love with a home that is a short-sale being offered at 495K. The owners owe 520K (230K+290K)There are comparisons but noting that had this large of sqft. The last home in the area was sold at 430K back in Jan but had about 500sqft less. How do we figure out a fair price but keeping in mind housing proces are continuing to fall? We were thinking of offering 400-420K but dont want to waste our time.
We are in Orange County, CA.
Thanks for any advice.

Blogsomebody

March 17, 2008 12:31 PM

What happens when you have a home that you cannot afford, but you have good credit. So you find a buyer who is willing to pay the current market value of $250 K , but you now owe the bank $275 K due to negative equity.. How can I sell it, and keep my credit. Can I do this ? What if I promise to pay the bank back later?

elena

March 17, 2008 3:28 PM

I am looking to do a short sale with an experienced realtor that said he knows of a company that negotiates the short sale for me but I would have to pay them $700. According to him we can get a pre-approval with the bank before we get an offer. Have you ever heard of this or am i been scammed.

Ralph

March 19, 2008 10:40 AM

I placed an offer on a short sale home 2 weeks ago. The house showed up this morning on realtytrac as a pre-foreclosure. Does this mean that the bank is going to go through with the foreclosure or only that the owner has received a notice of deficiency.. I guess I am trying to figure out if this is good or bad for me and the homeowner.. Any info is appreciated. I read this whole page and I guess I am just on information overload. I apologize if this specific question has been answered above..

Barbara - New York

March 20, 2008 8:03 PM

Good News! The Mortage Forgiveness Dept Relief Act of 2007 has passed congress and is signed into law. The elimates the "Phantom Tax" on foreclosures, short sales or other discharges of dept on a primary resisdence.

Mike Linkenauger

March 21, 2008 1:41 PM

If your realtor knew anything about short sales, he would work it himself for free. There are agents in most areas of the country that will do short sales for you who actually know what they are doing. The BANK pays for a real estate agent to work a short sale. I am also tired of real estate agents who dabble in short sales and who don't know how to make the deals happen. Unfortunately many agents force their sellers into foreclosure due to their own ignorance. I have a very experienced team of Loss Mitigation Consultants/Realtors in who specialize in Jacksonville Florida Short Sales. A good resource on short sales is www.FirstCoastShortSales.com

Mike Linkenauger

March 21, 2008 1:42 PM

Actually that site is www.FirstCoastShortSale.com

JACKIE

March 23, 2008 12:34 AM

COuntrywide denied 4 offers! They denied a stay (actually their lawyers did)and proceeded to foreclosure this past week. The opening bid CountryWide requested was 40K LESS THAN the offer from a cash buyer that we were lucky to have!
The cash offer was equal to the amount of my loan minus all the inflated legal costs associated. I don't understand the refusal much less the denial for a stay. I think the countrywide lawyers may benfit more from us going to foreclosure because they get paid more from their client.
Whatcan I still do? Do I have a case? How can Countywide come after me with a deficiency when I gave them a buyer! Do I have a case ?

Candy

March 24, 2008 4:52 PM

Understanding what ALL your options are is the best route to take. Keeping your home should be the first priority, not trashing your credit should be second. Getting on when all else fails...well...sometimes you have to do what you have to do!
I am a realtor in the Chicago area, a foreclosure specialist, a buyer agent and a person who sold their home cheap to get out of foreclosure.
I do counselling for those who are in financial striats and try to help you get educated in what would be best for YOU! The faster you act, the more options you have. I also do short sales, and these are where you get out of the loan because all else fails before foreclosure. ccaruso57@yahoo.com....e-mail over if you have questions or are interested in counselling or a short sale.

Short Sale Lies

March 25, 2008 10:49 PM

Does anyone tell the truth about the fact that a short sale ruins your credit? If you are just trying to get out of your home because you took an equity line and paid off all your credit card debt and think it would be great to walk away from it, think again. Your credit will be trashed and you will pay more than what anyone else pays to get credit. Stay put and pay your bills as agreed. It is delayed gratification but will pay in the long run.

David Petrovich

March 26, 2008 1:58 PM

Since mortgage loan servicers' hands are tied by securitization's red-restricitve tape,, they can not easily approve a preforeclosure short sale, or loan modification.

Fight Foreclosure!
http://www.wiley.com/WileyCDA/WileyTitle/productCd-047026764X.html

angie

March 26, 2008 10:00 PM

hi,
We placed an offer on a property and bank rejected. Bank came back with "counter offer " for $48,000 more we accepted. After waiting 3 months for an aproval letter to get loan moving they came back and said we decided to not take counter offer we gave you and let property foreclose unless you buyers pay another $ 20,000 more. Is there any ting we can do as they waisted our time? can we go to someone that can help us make our consumer rooghts be respected? we waised 3-4 months not on waiting for response as of received or rejucted. Waited after allready agreed on a price. Pls HELP!
BEST:)

Nathan M

March 27, 2008 11:11 AM

Just curious, do the banks operate these short sale type transactions with cars? I'm sure the bank doesn't want to own cars and some luxury vehicles get pricey enough to maybe be considered.

Any thoughts?

Heather

March 27, 2008 12:53 PM

Just wandering how a short sale affects your credit, and how lenders view short sales on your credit in light of the housing crisis?

We relocated 2 years ago to AL and have not been able to sell our home in GA. In that time, we have had 7 foreclosures in our neighborhood, bringing the value of our home down 140,000. Our realtor suggested a short sale but we are concerned about our credit. We have been current to date.

Candy

March 28, 2008 12:49 PM

Angie,
If your bank accepts an offer on a short sale, its the same as if anyone else backs out of a contract, its a breach. Call the attorney and force the sale on them. Some of the banks and lenders have attorneys working for them who do not have all the knowledge to be in this battle. Remember, everyone is going broke in this market...everyone!

dan w

March 28, 2008 6:52 PM

I am selling a house in Michigan soon. I selling because of work relocation to a different state, not because I can't make the payments. I really want to avoid renting the house after I move. I anticipate on being about 20-30K short of what I owe on the house. I am getting married in 3 months, and we won't have any savings when we get married. However, we will be making a very good combined income when we are married, and I anticipate we could come up with the 30K in 6 or so months after the sale of the house. What is the best option here? Maintain my perfect credit and persue a private loan for 30K, or persue a short sale?

Anthony

March 30, 2008 3:31 PM

With all due respect to Realtors and investors, I see and hear many stories about short sales. Many Realtors quickly jump in and tell the home owner to short sale their home without really knowing what a short sale really is. I recently looked at some pre-forclosures in NJ (I am a Realtor in New Jersey) for one of my clients. I called the agent and asked about the property. The agent actually told me that a short sale is when you fall 5-6 months behind on your mortgage. I tried to correct him, but he insisted he knew what he was talking about. Well that property ended up being foreclosed on by Wells Fargo. I feel bad for the homeowner who was mis-informed by the agent.

Short sales is not just going to a lender and offering $250K on a home where the seller still owes $400K. To negotiate the deal, the agent or whomever is negotiating with the lender, must back up their offer. A lender will not just take an offer because you want them too. Lenders take a look at how much they stand to lose if they go through with foreclosure and what they lose in a short sale. If the numbers work for them, they will approve the short sale. With the purchase contract, we also send the lender recent comps in the area. I also show them what they can expect to get should they foreclose on the property by showing the numbers of recent sales of bank owned homes along with any repairs estimates by a licensed contractor(s) plus other paperwork required by the lender. It's not a hard process, but everyone needs to be patient. I just got a short sale approved in January of this year for $90K less than what was owed. It took a few months of going back and forth, but it worked out.

If anyone is facing the possibilty of a foreclosure AND needs to sell, find a an agent who is experienced in short sales. Not all pre-foreclosures are short sale candidates. A good agent will go through the process with you step-by-step. As Lossmit says above "that agent must know what they are doing, how the banks operate, what documentation is needed, and be willing to get that documentation to the bank. The bank does not want a foreclosure to occur any more than the home owner. However, they are not under obligation to accept a shortsale..." You list a pre-foreclosure home with an inexperienced agent, get ready for the possiblity of foreclosure. All agents should do as much homework as possible on this as it is very lucritive if you know what you are doing.

Also, the The Mortgage Forgiveness Dept Relief Act does not pertain to everyone if you read it carefully.

I don't call myslef an expert, but I have done sucessfully gotten short sales approved, both as a realtor and as an investor. I currently have several properties that are in the short sale process and have setup some meetings this week with 7 others. I work in New Jersey, but I am willing to do the best I can to help answer any questions or concerns anyone might have. I can be reached at anthony.robaina@hotmail.com

Thank you and good luck to all!!!

Al Bush

March 31, 2008 12:52 PM

Guys,
I see there are a lot of questions here and no answers. What I am I missing?
Thanks,

Jim

April 2, 2008 10:14 AM

I believe that's "quit claim", not "quick claim"

(in response to some comments back)

Mike Linkenauger

April 2, 2008 2:57 PM

Short sales have to be taken on a case by case basis. I can't stress enough the importance of having a realtor who is VERY experienced in working short sales, and knows how to make them happen. I heard countrywide mentioned above. I just closed one yesterday with countrywide where the borrower owed $363K after fees, and the lender settled for $237K after costs, and the loan was only a year old!

The other most important issue in making a short sale happen is the BPO (brokers price opinion). The lender uses that to base what they will accept for the house. Having a realtor who knows the agents who do the BPO's and has some influence certainly helps with that.
As far as the effect on the credit, all of the late payments and notice of defaults are what can have the biggest effect. Either way, it is basically like getting run over by a truck VS getting run over by a freight train. Either way it has an impact.
We are certified Loss Mitigation Consultants who specialize in Jacksonville FL Short Sales
www.firstcoastre.com/professional589.shtml

Candy

April 4, 2008 1:13 AM

OK! Short Sales seem to be the norm these days. But they do not have to be. So far it has been in the lenders best interest to short rather than foreclose. The thing that is best before this...
1. Negotiating with your lender about lowering your interest rate, and this is good if you bought with an ARM. This the borrower can do themself. (AS before, each case is different, some people have the funds or had the funds to pay.)
2. Another is, "Forgiveness" if you have the income to handle a slightly lower amount, you can negotiate with the lender to forgive a few payments, usually no more than 3, but you need NOT be in foreclosure. This is not the same as forbearance.(This gets negotiated thru the loss mit dept and their attorneys)
The banks and others do not want your home or to have big losses.

Jesus Ramos

April 4, 2008 1:56 AM

I am a licensed Realtor assisting families in the New York Tri State Area, specializing in the Bronx County with short sales. My team of foreclosure specialist understands the in and outs of short sales A-Z. We also work closely with majority of banks and have a giant network of buyers & investors who purchase properties All Cash, and are willing to close in 7 DAYS! We utilize several exit strategies which successfully allow distressed home owners walk away free and clear with cash in their pockets! All deals are handled through my attorney who has 35 yrs of experience in Real Estate. If anyone in the New York area has any questions or in need of advice feel free to call me anyday! anytime! Call me today for a Brighter Tomorrow! I Guarantee It.
Email: Jramosre@aol.com
Tel: 917 302 4990

Justin

April 6, 2008 1:14 PM

Hi guys,

I have a question regarding property tax settlement within the short sale process.

The scenario is the homeowner didn't paid for his property tax of fiscal year 2007-2008. He missed the first installement due on 12/10/2007, and will miss the second installment due on 4/10/2008 for sure since he doesn't have any money for it.

If the bank approved the short sale with the offer from the buyer, does it mean the bank will pay for the overdue property tax? In common practice of short sale, who normally will pay for any overdue property tax? The homeowner, the bank (lender) or the buyer?

Please advise. Thanks,

Justin

April 6, 2008 1:24 PM

Hi guys,

I have a question regarding the property tax settlement within the short sale process.

The scenario is the homeowner didn't pay for his property tax of fiscal year 2007 - 2008. He missed the first installment due on 12/10/2007, and will miss the second installment due on 4/10/2008 for sure since he doesn't have any money left.

If the bank approved the short sale with the offer from the buyer, does it mean the bank will pay for the overdue property tax? In the common practice of short sale, who normally will pay for the overdue property tax? The bank (lender), homeowner(borrower) or buyer? Is it possible to close the short sale deal with the buyer if the overdue property tax is not settled with the government?

Please advise, Thanks.

kelly

April 7, 2008 12:14 AM

i am going through a short sale and i am closing at the end of the week

the mortgage company wants me to sign a promissory note to pay the differnce in payments over several years. i dont think this is right. so i put money down on the house, paid monthly notes, and i lost the house and now they want me to pay more???? is this right

Esmi

April 7, 2008 1:26 AM

Hi there....I have a question and would really appreciate if you could help. Our situation is very simple, we live in NH and own a home. We have an 80/20 loan and the big loan is adjustable so the rate goes up every 6 months. We are up to 8% right now and waiting for the next change in July. We are relocating to FL in June and need to sell the house asap. I got a job there and start in July, so there is no turning back. We contacted a real estate company which offered a free market analysis. According to the analysis our house is worth about $280K, and we owe about $315K. We need to sell and will be putting the house on the market some time this month after fixing some knicks and knacks. Our realtor claims that our only options would be to bring money at closing (assuming that we sell for less than what we owe....probably 20 or 30K less) or do a short sale. Hubby and I both have PERFECT credit.....score of at least 800 each. Short sale is not something that we thought we would ever have to consider.....but we have no money to bring to closing if we get a buyer willing to pay us something for the house. What other options do we have? We need to get rid of this house so that we can move and starting our new life over there. Please...some advice. Thanks in advance!!

heather

April 7, 2008 1:34 PM

We had two homes in Las Vegas that were foreclosed on. Prior to the foreclosure our realtor had investors make short sale offers which the bank rejected. Now that they have been foreclosed and re-sold at auction they ended up selling the homes for less then our offers were for. So now we have two foreclosures on our credit and it could have been avoided if they had accepted our offer. Can we sue the bank?

Sam_Seek

April 7, 2008 3:19 PM

I have all my 2nd mortgage, checking, Savings etc. with one bank.

Can the bank seize money in my savings account if they're loosing the complete 2nd trust during the short sale. Basically trying to find if my savings are secured with the same bank or more secured if I move them to some other.

Suzanne

April 10, 2008 7:05 PM

We live in a terrible housing market in CA. We did 80/20 with Wells Fargo for a brand new home 3 years ago and are moving due to job re-loc. We can't sell our house for what we owe...395k since same homes in our area are going for low $300's. Rentals are not moving either! We both have perfect credit of about 800 and are thinking of doing a short-sale. Questions are: What are the first steps? Do we call the bank first or list the property first? How likely is the bank to agree to short sale? Also, if we are to buy another home when we move and rent this one out, in a year or two when the market still is horrible, can we short sale the one in CA and will that affect our new home?

Thanks!

Mitch

April 15, 2008 1:28 AM

Heather, Your situation is unfortunate but very common, most likely your realtor was inexperienced and did not understand the importance of educating the bank and the BPO agent on the value of your home. If the brokers price opinion is to high it will be very difficult to get a short sale approved.
If anyone needs assistance with their short sale transactions please contact Colorado's top short sale company Premier Short Sales @ www.PremierShortSales.com

Bobby Gregory

April 15, 2008 9:17 AM

I feel very badly for those people who are upside down on their primary home mortgages, or who simply cannot make their payments on their primary home mortgages due to present economic conditions, and sincerely hope that our government steps in and takes measures to aid those needing help in keeping their primary homes.

As for the speculators (flippers, realtors, etc) who were responsible for driving up home prices in the first place during the last boom, and which has gone bust and now finds these same shysters crying for help, they don't deserve one red cent from us taxpayers, and are just getting what they deserve!!! It's just a crying shame that these unscrupulous people have placed the primary homes of ethical people in the upside down position that many of them are in now....

Having 35+ years of experience in real estate, and short sales in particular, any buyer soon learns that there is a lot of finger pointing when it comes to the lengthly delays typically experienced in the short sale process. But it just stands to reason, given that we're talking about a transaction that involves realtors, lawyers, bankers, and mortgage brokers, who represent the lowest forms of human life on this planet (realtors being by far the worst...), and who take pleasure in making money out of the misery being suffered by those losing their primary homes!!

The primary and secondary mortgage lending markets need to be completely revamped to prevent a repeat of what is going on in the real estate market right now in this country as a result of speculative greed, and laws enacted to protect the primary homes of individuals and families in this country. Until this happens, the fog of confusion and questions surrounding foreclosures and short sales will continue, and ethical people will continue to get the short end of the stick due to the greed of speculators, realtors, lawyers, bankers, and mortgage brokers, who only care about money, and who couldn't care less about keeping a roof over a families heads!!

Michael

April 15, 2008 4:29 PM

Quick Rule - Check your state laws. California short sales are far more favorable to the distressed seller then many other states...

kathy

April 16, 2008 9:17 AM

I'm coming to the closing part of my short sale and the bank wants a payment of 47k payable over 10 years. I'm 61 years old and don't know how I'm supposed to live on just under 1k a month,pay rent,food,pay utilities,pay 2 bils still owed on. I'm being crucified by the bank!

wanda messer

April 19, 2008 11:27 PM

I have set here for the past hour reading all the stories from everyone. We live in Central Florida, my husband is a retired banked worked in the work-out specialist area for years, handling problem loans, commercial companies in financial trouble and is now a realtor. We had talked about all of this in 2005 and knew there was trouble ahead, and it is here with a vengance. mortgage companies got greedy, mortgage brokers got greedy, there was a real feeding frenzy and all jumped into the fire to get a piece of the gold before it was all gone. We have homes in Central Fla, a lot owned by investors from out of state, coming in to make the millions by buying & flipping, that are sitting vacant, grass grown up, neighborhoods are being run down by homes that are not being kept up because of vacancy. One group of people you all are forgetting are the appraisers, they certainly did no one any good by appraising houses up so buyers could get 100% of a loan, and then a lot of these investors also got cash out at the closing table, example: buy a house for $600,000, appraised at $675,000, walk away from closing table with money in hand. We have seen houses for sale for $380,000, and then see sale closed for $500,000, and we know the house is not worth $500,000, no house in that neighborhood sell for $500,000, by the way that house is now in foreclosure. there has been a many dirty deals and now we are paying for it. Houses in Central Florida (Orlando) have depreciated in value, foreclosures and short sales are definitely going to affect the market value of the homes. People that bought in 2005 and 2006 are the ones that will be hurt the worst in the current market AS I have read in previous comments, and I do know this for a fact, you have to deal with aRealtor that knows what they are doing and knows their way around the banking industry, also, a realtor that is ethical and will be your mouthpiece to the lender, it is no longer just listing a house and selling it, especially in Fl. since there is a large percentage of homes that are short sells, it is also helpful to be schooled in the laws of bankruptcy. If anyone in Central Fl. needs assistance in selling their homes,
1. it is going to a difficult sale since values have decreased so much, 2. there is a lot of homes on the market and not a lot are selling. 3. getting people financed is also difficult, as mortgage companies have really tightened their requirements. in past couple years, if you could "fog" a piece of glass, you got a loan. but if you do need help you can contact Lewis at email address:L_Messer@bellsouth.net. send him an email, talk with him. If anyone is interested in buying in Orlando, there are certainly a lot of nice homes, new homes on the market for some real good prices. I feel the pain in your stories, and one of the most stressful situations is not knowing how to do something, especially when you don't know the ins & outs. Good luck to all of you and hopefully this depressed market will turn around, but there is certainly going to be a lot of pain before it is over.

Harold

April 21, 2008 12:17 PM

Thanks to all the home mortgage advisers and the kind people who give a hope and assistance to the homeowners in time of need. I keep myself asking and getting information about short sale.
Good luck to all.

Danny Haws

April 25, 2008 7:35 PM

Hello, could someone tell me what are the pros and cons of buying a short sell house? I live in Southern California. Thanks in advance for your information. Email address is danny.haws@csuci.edu

Lawrence

April 28, 2008 5:28 AM

Well, I think now a day's enterprenuers are thinking about trading businesses also. They are just developing a good business..or Buy a good business.. Develop it..& Sell the business.

CAROL

April 28, 2008 4:06 PM

can someone answer me a question please my husband had to get a job out of state and we are leaving in june like everyone else i found out my house is upside down by 75,000 we have already been approved for another house in the state we are moving to not realizing that we would have a problem selling our house. if we go short sale or foreclose can the bank put a lien on our new house? thank you for any answers

Patti

April 29, 2008 12:54 PM

I just have a couple of questions. Does anyone know just how long a house can be listed as a short sale? For instance, once a notice of default has been filed, is that when a home can be listed as a short sale? Here in Washington state, once a notice of default is filed, the current buyers have 30 days to bring things current with the lender or make arrangements etc. If they don't, a notice of sale is then served and in approximately 90 days the auction/sale takes place. Can this "short sale" still take place once the 30 day grace period is up?

janine

April 30, 2008 12:01 AM

I am in a H.O.A property,I am thinking about short sale what will happen with hoa fees if i do short sale? do i continue to pay HOA fees for as long as i am still living here?
PLEASE HELP!

Kristen Canova

May 1, 2008 12:43 AM

These comments have been so helpful to me. I am meeting with a short sale "specialist" tomorrow morning and it is nice to feel like I have armed myself with some information. Some of the questions that haven't been answered are really crucial to me, however. Like: Won't someone who has been through it please give me a realistic idea of how a short sell will affect my credit? Can I rent without too much hassle?

yun wang

May 5, 2008 10:36 PM

We are buying a short sale home. The seller is asking us to pay her 75K apart from the contract we are signed to pay for the bank. Is this legal? Is this something we should do?

Brian

May 8, 2008 2:55 PM

Is anyone familiar with the 70% rule? Also, if you don't know or use the 70% rule what's the average % LTV do you purchase homes for? One more thing, any of you from Jersey?

RAIMIS

May 9, 2008 1:40 AM

I JUST FINISHED MY SHORT SALE.LOOKS LIKE IITS STAY ON YOURS RECORDS FOR 6 YEARS .BUT IS MUCH BETER LIKE FORECLOSURE.
OTHER SIDE IS GOOD IF SOMEBODY WANTS TO BUY YOURS HOUSE EVEN ON SHORT SALE.....

Dee

May 9, 2008 6:53 AM

How does having PMI on your loan affect a short sale? Would the insurance cover any of the loss to the lender?

cass

May 14, 2008 7:55 PM

I am on the other end of a short sale....we made an offer on a house that is considered a short sale. we were told we would not recieve an answer for 30 days.after 45 days our realtor contacted the realtor and the next day we were told the offer was not accepted. I am not sure why as they gave us no explanation. We offered the full asking price, not a dollar less. Now we are having to search for another home....we have heard this is the 3rd rejected offer by wells fargo. what the hell do they want? the house has been sitting for 6months vacant and depreciating....

D

May 27, 2008 10:43 PM

I see all of these questions, with no answers. Why bother to ask? Does anybody have spellcheck? I have never seen so many mistakes. Sorry :(

Alexander Paykin

May 29, 2008 6:35 PM

All right, I am the President & C.E.O. of Option Next, the leader in short sales mitigations, and it's time to set the record straight. So by popular demand (OK, so maybe just at the request of 'D'), here are some answers then:

Cass: On May 9th, you asked about why the bank might reject your short-sale offer, even at 'full-price'. The answer is that the full asking price that the realtor listed the property at is not the same as everything owed on the property. It is simply the price the realtor listed the property at, figuring he would find someone to put in contract at that price, and then hope that the bank approves it... It reality, that price is probably much lower (as much as 40 or 50 percent) than what's owed on the property, and the bank did not want to take that big a loss. If your offer is anything short of fair market value for the property, the bank may choose to wait and see if it can get more at the auction. You have 2 choices: If you're willing to pay more, make a higher offer, if not, look for a different property. Also, when considering buying a short-sale property, ask the realtor if it's already approved for the short payoff. If it is, you shouldn't have to wait for anything. If it's not, ask the realtor if they plan on mitigating it themselves, or handing it over to a professional loss mitigation company. If the realtor says they will do it themselves, just walk away. Realtors rarely get a good short sale approved when compared to good mitigation companies, and most of them will be a waste of your time...

Dee: Generally, having a PMI will discourage the bank from bothering to negotiate a short sale. After all, if their losses are insured, they can just wait until the thing closes, and have the PMI pay most of the difference. However, some PMI companies are now requiring the banks to take reasonable short sales offers in an effort to mitigate damages. So the answer is, it might go either way. Depends on your bank and PMI company...

RAIMIS: You didn't really have a question, but to comment on what you said, it will stay on your record for 6 years, but a competent loss mitigation company should be able to refer you to a credit repair company which can make it go away much sooner...

Yun Wang: Paying the seller outside of closing is highly illegal! The entire concept of the short sale requires that the bank take all of the proceeds of the sale and the seller walk away with nothing. If you pay the seller separately, not only is the short sale fraudulent, but you are exposing yourself to many additional liabilities (i.e. tax liabilities, as the 75k you give the homeowner will not be reportable as a house purchase). Whatever you do, don't pay the seller separately in a short-sale!

Kristen Canova: The effect on your credit will not be too severe. You can expect a 10 to 50 point drop in your score, which can be wiped away in a credit repair. You should have no trouble renting, as long as you keep your rent amount with your means...

Janine: Homeowners' Association fees are independent of your mortgage and are technically your responsibility. However, if you are completely unable to pay them, the bank may choose to pay them out of the short sale proceeds, simply to make the deal go through. Pay them if you can...

Patti: A short sale negotiation can be instituted at any time, as long as the homeowner is still the owner of record. In other words, a short sale can be approved and completed 5 minutes before the scheduled auction. The more time you have the better, but it's almost never too late to try. Also, a homeowner can begin the short sale process before they are even in default. Banks allow a loss mitigation company to negotiate a short sale if the homeowner will soon be unable to make his mortgage payments. You don't have to wait until you can't afford your bills!

CAROL: If you do a short sale, as long as the property was your primary residence, the bank will not go after you for the difference. In the event of a foreclosure, it depends on the state, many allowing them to go after you personally... Short selling is almost always a better solution than foreclosing, but if you do choose foreclosure, consult a good attorney in your area...

Danny Haws: The advantages to buying a short sale are few. In fact, there is only one. The Price! The disadvantages are that it is a slow process and that after you spend time and possibly money (attorney's fees, inspections, etc.), the bank may reject your short sale offer and you have to start from scratch. Also, beware of the really cheap deals, they usually have a lot of damage and require extensive repair...

Kathy: If you can't afford the promissory note for the difference, Don't Sign It! Tell the bank the situation. By that, I mean, draft a full letter of explanation, explaining your hardship in detail and illustrating why you can't possibly make such a payment. Be as descriptive as possible and appeal to their compassion and humanity. Remember, the bank mitigators are people too, and they want to be able to sleep at night. If they realize how much of a hardship it is for you, they will try to work out some better alternatives, one of which may quite likely be a complete write-off of the difference owed...

Suzanne: The first step is to get a qualified loss mitigation company on your side. This is at no cost to you! The loss mitigation company should then refer you to a realtor who is well qualified in the short sale field. The realtor will list and market your property at the short sale discounted price, and the loss mitigators will negotiate with the bank on your behalf. You don't have to pay a cent for all this work, as it gets paid for by the bank as the real estate commission. That's pretty much it... As for the likeliness of approval, considering you need a drop of about 25-30%, I am reasonably confident that a good loss mitigation company can get it done. As for the effect on your credit: yes it's a black mark, but no, it's not that bad. Considering your current credit score, as long as you make all of your other payments on time, you should have no difficulty with buying another house or getting approved for other credit.

Sam_Seek: It doesn't matter where your cash is. You have to disclose all of your assets to the bank, and if you have too much in liquid assets, they simply won't approve the short sale unless you pay some of the difference. Keep in mind, as long as it's just some modest savings, the banks will not go after it...

Heather: No you can't sue the bank. It's their choice whether to accept an offer for less than you owe. They are never obligated to accept anything other than a full payoff. However, if your realtor did the negotiations for short sale on his own, and did not consult a professional loss mitigation company, you may have a case against the realtor. The realtor owes you a fiduciary duty, and unless the realtor is HIGHLY qualified in loss mitigation, part of their duty is the refer you to someone who CAN help, and not just to try blindly. Whether you can sue your realtor will depend on this: 1. How experienced and educated was your realtor when it comes to short sale loss mitigation? 2. Did the realtor conduct the mitigation properly? If you need some help in figuring out the answers to these questions, don't hesitate to call me, I'll explain it in more detail...

Esmi: Sounds like a short sale is your best bet. Don't worry too much about the credit consequences, they won't be too sever. Considering the other options are to turn in the deed in lieu of foreclosure (a terrible hit on your credit), or to foreclose (even worse). A short sale should not affect your credit too poorly, especially since the property wouldn't be shorted by all that much (10-20%). If you are going to go with a short sale, don't spend your money fixing anything! Banks approve short sales faster when a property is in poor condition, so don't spend the few bucks you have left fixing it up...

Kelly: Well, your question is a bit lopsided. Yes, you put down money, paid every month, etc. However, the bank gave you a loan. They put their money down, with the understanding that you'd give it back with interest. Is it right that you're telling them you won't? Right has little to do with it. The fact is, it is money you owe. You can refuse to sign the promissory note, and they may approve the short sale without it, however, this is at their option, and if you have the money to pay them back, then they'll see no reason why they should just give up on the loan they gave you. Remember, every problem has two sides to it. I'd consult a good loss mitigation company if I were you, since a good one can often get the bank to let go of the promissory note idea...

Well ladies and gentlemen, this is all the time I have for today's answer session. I believe I've covered every question asked between now and April 7th. If you have a question, contact me at apaykin@optionnext.com, call me at 888-311-NEXT(6398) x.801, or just go to www.optionnext.com, and drop us a line. We attempt to answer as many questions as we can, and are in the business of providing short-sale, short-refi, loan modification and other foreclosure alternatives by negotiating a fair and reasonable compromise with your bank...

Alexander Paykin, J.D.
President & C.E.O.
Option Next, Inc.
apaykin@optionnext.com
888-311-NEXT(6398) x. 801
www.optionnext.com

(c) Copyright May 29th 2008, Alexander Paykin, J.D.

KL

May 30, 2008 12:01 AM

WOuld a money manager/credit counseling help/know what happens AFTER, if I A)chose short-sale or B)Forclosure? With my foreclosure date fast arriving, I'm trying to find some kind of pro/con list. I've done many online searchs for short-sale / bankruptcy in Ohio (that's how I found this site) but my questions still aren't answered.
Who should I contact to find out how many credit points I'll lose; how long will this be on my credit; will this affect me in finding a rental home when they do credit checks; what about jobs (some do credit checks...) Sorry, I'm rambling...just frustrated no one in Ohio seems to know how to help....

Shelley

May 30, 2008 2:33 PM

I don't think anyone goes back and answers the questions and spelling nazis are not helpful.

That said: We are closing on our short sale house next week. Our loan is with the VA.

What you need is to have both your realtor and the seller's agent fully versed in short sales. They are a hassle and are time consuming.

It took the seller's lender 3 months before they countered our offer. We countered them back (something they prolly didn't expect) and that took another 2 weeks.

The funny thing is that once the bnk accepted our offer, they wanted to close in 30 days! The nerve.

Just have patience and get a good team. Banks are swamped with these and they only will talk with the seller's agent if at all.

I have heard that some banks will not even tell you that they haven't even considered an offer. Sometimes it's because it makes more sense to them to foreclose (owner had mortgage insurance) or they are just overwhelmed and are not working in their best interest.

It can work though.

vicki

May 31, 2008 8:10 PM

I started searching for an answer to a specific question today & stumbled upon this thread. I would like to say first of all, i'm so sorry to hear of everyones troubles that i've read on this page. We are also in a very bad situation. We moved here to SC from FL 7 yrs ago, found the perfect house but since we didn't know anyone here or have established credit, unfortunately we couldn't get a loan. However, it was a motivated seller & he offered to do a land contract until we could figure something out. In 2003 (since we're self employed, the banks would still not talk to us, we didn't fit in their "box")So we got hooked up with a broker who did get us a loan with one company who shortly thereafter sold the loan to Chase Mortgage. We did realize it was an ARM and we had at least 3 yrs to get established & refinance with a fixed rate. In October of 2005, 2 days before the closing for a fixed rate loan our business burned to the ground. (the bank was using our business along with our home as collateral) so since there was no business, there was no closing. We didn't have enough insurance on our business so we had to get a smaller loan from our bank to rebuild. It took over a year to rebuild and get back in business. In the meantime, our mortgage payment kept going up & up until it got to the point where we had to decide whether to keep paying on our house or pay the loan on the business. Well we had to eat so we needed to keep our business. I called Chase Mortgage right away when i knew things were going downhill to see if they would work with us for a few months by letting us make interest only payments or defer a payment? Anything at all. I was grasping at straws. They finally agreed to "split" the cost of an appraisal with us and said maybe they could do a refinance in house. We thought that was great so we agreed. Well what they didn't tell us was they were having one of their own appraisers do the appraisal. They called after the appraisal to let us know it was $3,000 less than what we owed and then said, "sorry there is nothing we can do for you". We put our house up for sale in June of 2007 with a realtor that goes to our church. She aggressively tried to sell the house but the economy just kept getting worse & on April 8th of this year we just told her there was no point in her wasting her time anymore. Foreclosure proceedings had already started in January. She tried to do a short sale but that didn't work either. No one is buying anything around here. In the state of SC they allow deficiency judgments and of course Chase is requesting a deficiency judgment against us. We hired a lawyer to represent us at the hearing to try & get the judgment waived. They refused! So that was a waste of money we didn't really have to spend. Our lawyer now tells us the only thing we can do is wait for the foreclosure sale & maybe if it's not sold for a fair market value he can go back & argue that point, BUT it will cost us MORE money for him to do that. In the meantime we have decided to try to sell our business. We've actually had more activity on that than the house. I guess now would be the time to ask the question i've been hunting for an answer to all day. If we sell the business as a lease/purchase (we actually have someone that is interested in doing it that way at least for 6 months) then he will be able to pay it off. Of course there would be a legal contract, etc. We have not had a final hearing on the foreclosure, the lawyer requested a 30 day extension which was up April 20th. No one has notified us of another hearing as of yet, but we wanted to try to sell the business before the house gets sold at auction so we would not own any other property for Chase to put a deficiency judgment against. I guess they would just put it against us personally? Our credit is already in the toilet! But if the house gets sold at auction before the 6 month time frame on the lease/purchase is up will it affect the selling of our business? Or will Chase put a judgment against the business since it wouldn't be totally in the other persons name yet? Does anyone have an answer to this or any suggestions? (i hope you can understand what i'm asking) I tend to make a short story long. Sorry! Any information would be greatly appreciated. Vicki

Vicki

June 2, 2008 7:15 PM

I started searching for an answer to a specific question today & stumbled upon this thread. I would like to say first of all, i'm so sorry to hear of everyones troubles that i've read on this page. We are also in a very bad situation. We moved here to SC from FL 7 yrs ago, found the perfect house but since we didn't know anyone here or have established credit, unfortunately we couldn't get a loan. However, it was a motivated seller & he offered to do a land contract until we could figure something out. In 2003 (since we're self employed, the banks would still not talk to us, we didn't fit in their "box")So we got hooked up with a broker who did get us a loan with one company who shortly thereafter sold the loan to Chase Mortgage. We did realize it was an ARM and we had at least 3 yrs to get established & refinance with a fixed rate. In October of 2005, 2 days before the closing for a fixed rate loan our business burned to the ground. (the bank was using our business along with our home as collateral) so since there was no business, there was no closing. We didn't have enough insurance on our business so we had to get a smaller loan from our bank to rebuild. It took over a year to rebuild and get back in business. In the meantime, our mortgage payment kept going up & up until it got to the point where we had to decide whether to keep paying on our house or pay the loan on the business. Well we had to eat so we needed to keep our business. I called Chase Mortgage right away when i knew things were going downhill to see if they would work with us for a few months by letting us make interest only payments or defer a payment? Anything at all. I was grasping at straws. They finally agreed to "split" the cost of an appraisal with us and said maybe they could do a refinance in house. We thought that was great so we agreed. Well what they didn't tell us was they were having one of their own appraisers do the appraisal. They called after the appraisal to let us know it was $3,000 less than what we owed and then said, "sorry there is nothing we can do for you". We put our house up for sale in June of 2007 with a realtor that goes to our church. She aggressively tried to sell the house but the economy just kept getting worse & on April 8th of this year we just told her there was no point in her wasting her time anymore. Foreclosure proceedings had already started in January. She tried to do a short sale but that didn't work either. No one is buying anything around here. In the state of SC they allow deficiency judgments and of course Chase is requesting a deficiency judgment against us. We hired a lawyer to represent us at the hearing to try & get the judgment waived. They refused! So that was a waste of money we didn't really have to spend. Our lawyer now tells us the only thing we can do is wait for the foreclosure sale & maybe if it's not sold for a fair market value he can go back & argue that point, BUT it will cost us MORE money for him to do that. In the meantime we have decided to try to sell our business. We've actually had more activity on that than the house. I guess now would be the time to ask the question i've been hunting for an answer to all day. If we sell the business as a lease/purchase (we actually have someone that is interested in doing it that way at least for 6 months) then he will be able to pay it off. Of course there would be a legal contract, etc. We have not had a final hearing on the foreclosure, the lawyer requested a 30 day extension which was up April 20th. No one has notified us of another hearing as of yet, but we wanted to try to sell the business before the house gets sold at auction so we would not own any other property for Chase to put a deficiency judgment against. I guess they would just put it against us personally? Our credit is already in the toilet! But if the house gets sold at auction before the 6 month time frame on the lease/purchase is up will it affect the selling of our business? Or will Chase put a judgment against the business since it wouldn't be totally in the other persons name yet? Does anyone have an answer to this or any suggestions? (i hope you can understand what i'm asking) I tend to make a short story long. Sorry! Any information would be greatly appreciated. Vicki

vicki

June 2, 2008 9:06 PM

Can an owner do a short sale on a house that has a first and a second mortgage and what are the steps?

vicki

June 2, 2008 9:07 PM

Can an owner do a short sale on a house that has a first and a second mortgage and what are the steps?

Ling

June 10, 2008 12:01 PM

To River's comment, it is called a "Quit Claim" as in you are giving up your interest in said property. I work for a real estate attorney and can not believe how many people are SO upside down and feel like it is someone elses fault. If you couldn't afford the home the you never should have purchased it.

Jess

June 10, 2008 12:02 PM

My husband and I are upside down on our house and are looking into loan modificaton or a short sale. In speaking to a couple of different people, an agent claimed that we could do a short sale on our home and we would not owe the difference at the end of the year due to a recent bill that had been passed. Has anyone heard of this?

Joshua Cahill

June 16, 2008 4:18 AM

Jess,

Yes, it's called the Mortgage Debt Forgiveness Act of 2007. For more information click here.

http://www.shortsalesettlements.com/mortgage_debt_forgivness_act_of_2007.asp

Crammer

June 18, 2008 11:14 AM

Comments like "you should have never purchased if you can't afford it" are useless. In a perfect world, if everyone were perfect and could see the future, yeah.. ok. but things happen like: loss of a job, illness, economic issues, etc.

It did happen, they did buy it, with perhaps flawed information or knowlege, but its a done deal. Lets focus on the solution.

SAC

June 19, 2008 8:28 PM

Can an immediate family member buy your home in a short sale process.

regina hunter

June 20, 2008 3:24 PM

how do i get intouch with john brooks, i need to take all of his classes...emailme702@gmail.com

Audrey

June 25, 2008 2:07 PM

A majority of people that are in foreclosure are being affected by the overall economy. Where I live in Cape Coral, Florida during the booming years many industries were flourishing. With that comes increased income. Many people, including myself, upgraded to more expensive homes because our income had doubled or tripled during that time. As the building industry has come to a stand still, so has the income. When ARM loans adjusted and income decreased it has obviously put many in a situation that they can't afford. We had 6 figure salaries from 2001-2007. We did not realize how the market would fall and last year I made 40,000. That is a big difference. We are in the moving industry. As people's homes doubled in value, they took that equity and upgraded. They could afford to hire movers because they had such an appreciation in their original home values over a short time.This is true for remodeling, adding pools, landscape etc. Other industries were affected as well, positively during that time and now negatively: real estate, attorney's,food establishments, teachers (as now people are leaving fast and they are loosing the jobs they were begged to move here for 3 years ago), land scape business,architects, builders, pool companies, dump truck drivers, contractors.......the list goes on. This is in response to Ling who said that they shouldn't have bought the home. Many purchased as their incomes were high not to realize that it would crash and their income would become non existent at the same time their mortgages increased.People are upset because they can not understand how we can have this huge boom and then have it crash. The media reports that it is because of loose lending habits and I feel as though many are blaming that. They are blaming them because during those years it gave a false sense of security that many had grown accustomed to. They thought, "Well this is great!" and spent accordingly not to realize that when the mortgages increased their income would cease as a result of these ARM's that went up 2-3 percent last year! That is a big change.I am glad to hear Ling criticize other's mistakes as Ling must be perfect!

Andrew P.

June 25, 2008 6:41 PM

To any short sellers out there, this question is for you. As I am considering working for a short selling firm, I will be expected to close a certain number of loans within a year.

Would someone be able to tell me what a fair number of loans closed in a year would be? Also, any high and low numbers?

Thanks in advance.

Ron

June 26, 2008 7:09 PM

Short sales are a complicated process this day and this article did a very good job of going over it and answering many of today's questions.
I spent many hours and a few days writing this article hopefully to add value to this post and help others to understand the process step by step, I hope you enjoy the article, due to how many people are dealing with this crisis right now I would appreciate if you share it with those most in need.

http://www.minnesotainvestors.com/blog/what-short-sale-information-minnesota-short-sale-process/

Gaby

June 27, 2008 11:05 PM

I live in SoCal. And purchased a house about 2 1/2 years ago. A year ago I started a business. I DID NOT TAKE A LOAN ON THE HOUSE TO DO THIS. MY PARENTS GAVE ME A LOAN. Now the economy has gone in the toilet. My business is in the red. I can not afford to pay myself, and thus my home. I spoke to realtor and my home is about 150K less than what i paid for it. He suggested a short sale.
MY QUESTION: Can the bank come after my business? Will I end up losing it too?

AM

July 1, 2008 12:06 AM

I'm an average person that knew little to nothing about real estate, foreclosures, and short sales. I was the breadwinnner of a family of 6, with a stay @ home wife, and living comfortably with well over a 6 figure income. Then I lost my job.

I knew there wasn't anyone else that was concerned about the potential foreclosure as we were. Therefore, I treated the process of learning about a "short sale" as a job. I read everything I could find online and studied it until I learned everything I could.

Firts,I hired the best real estate agent in my area (who knew nothing about shortsales). I made call after call until I got to the right person @ my bank (loss mitigation department). I recorded notes of every phone call and date and time. I kept everyone accountable and made them give me timeframes (in a nice way).

At the end, I saved some credit worthiness, saved some embarrassment, and saved some of my dignity. We were able to get the short sale completed.

If anyone wants a common mans advice on what to do, please post. I learned more about a "short sale" than I ever wanted to. Although many situations are different, I'd be happy to try to assist anyone through this and/or answer questions and pass along what I found helpful.

A few quick notes: no one in collections will help you with this. They know little to nothing about shortsales or care.

You must get 1 or 2 people to work with @ your bank or lender in the "loss mitigation dept". Mine was CitiFinancial. Build a rapport with them.

You must have your property listed for a reasonable amount of time.( @ least that's what I was told and had to do)

For the first time, you want your property to appraise for less. Your agent can help with the comps.

The bank may also want to know what you originally listed your property @ & what you've dropped it to, if you've had it listed for awhile.

The bank will want the number of showings possibly.(they did with me @ least)

You must be able to count on your agent for some timely documents and one that will get the property seen. I believe that is more important than an experienced person on shorts sales.The local expert on shortsales may not be the best agent for showings and providing documents quickly to you (very important for the short sale mitigator).

I didn't hire any "loss mitigation agency"...but again..all situations are different and you may choose too. They couldn't tell me anything I didn't already know.

The "loss mitigation dept" @ the bank stated they were "more willing to work with me because they could tell I was on top of it and knew their lingo..etc". I could obviously also speak for myself better than a third party. I told them how I was really working hard @ keeping the home in tip top shape for showings etc...meaning (bank..you are not going to sell it for more if it goes to foreclosure! Everything is being done to move it!!)

Most important!! You must have a hardship letter that is legite and you can back.

Hope this helps someone and I can save someone some of the pain, sleepless nights, and stress that losing your dream home can do to person and to a family.

That said, we feel very fortunate we were able to get the home sold via a short sale.

Good Luck and God Bless!

Aqeel Karim

July 3, 2008 5:38 PM

Can you sue your mortgage company if they denied your request for short sale. Based on the short sale price not being within market price. Only to sale the home 3 months later and the sales price ended up being less that what your short sale final price was? Essentially, my credit is shot because the mortgage didn't want to deal. And they ended up selling the home for 30K less than what my short sale final price was?
Short sale= 420K;
Final Price= 395K;
Market 440-460K;
Mortgage final sale=345K.

Gerald Garcia

July 10, 2008 8:08 PM

Short sales are God sent blessings. When people are at their wits end with no where to turn regarding their property and the lender. I'm the expert short sales person. Every short sale is different. Are you upside down? Did you lose your job or a loved one? Does some one have cancer or going through divorce. Do you have a first and second loan? Are their mechanical liens? My company has a 96% rate processing and completing short sales because we know how to get directly to the mitigation Department. We know what the the proper package that the banks need and expects for workouts on the mortgages.

We ALWAYS request t in writing that the bank will sign off on the short money so the distressed borrower has a fresh opportunity to start over and that gives them two years to build their credit back up. Bankruptcy follows you for seven years and you also have a hefty lawyer bill.

People most important thing to do is start with somebody as experienced as me as soon as you know you are in trouble. You have a 90 day hour glass of of sand after the NOT OF DEFAULT has been processed.

Did you know you don't even have to be delinquent in payments to start a short sale.
People, the banks are not in the Real Estate Business they don't want the properties they want to be cleared from them. They lose a lot more money by holding on to them.

Not all Short sales can be done but the majority can be negotiated,

YOU WANT TO KNOW THE REAL KICKER. I DO THE PROCESS AT NO CHARGE TO THE DISTRESSED SELLER. MY COMPANY NEGOTIATES MY FEE'S FROM THE BANK.

SHORT SALES KEEP ARE NEIGHBORHOODS FROM GOING TO WASTE. geraldgarcia@comcast.net

Fernando Herboso

July 10, 2008 10:26 PM

Short Sales are only the last option before a foreclosure. Before taking a short sale listing, I make sure that the seller has exausted all posibilities of a loan modification with the mortgage holder.
Fernando Herboso
Maryland Short Sales
www.ReallyNiceHomes.com

Danny

July 15, 2008 2:11 AM

Hi everyone,

I own a single family home in Chicago. I have first (adjustable ARM, interest only) and second mortgage on the house (little over 400K). The house has been on the market for over a year, now. Because I own more than the market value, I can’t get for the house enough to pay off the loans. I am looking for a way out of this situation because I have been struggling with my payments, (I am not late on my payments, yet), since the interest adjusted. I tried to keep up with the payments even by using my retirement funds (big mistake, but I just hopped that someone will buy it from me and my credit score will not be affected … didn’t work out this way). I still got my job, but after I’m paying all my bills I have 10%15% left out of my paycheck to spend on food and gas. It’s too stressful. I talked to an investment company to find me a buyer to short sale the house. It might not be a good idea for me because their interest is to pay as less as possible for the house. Not everything is quiet clear for me about the sort sale. I’d really appreciate if anyone could help me out here, before I make any other mistake:
Is a sort sale the best option for me? Am I going to be qualified?
What is a better option: an investment company or a realtor?
Is my first or second loan bank going to come after me for the difference?
Can I avoid paying the tax for the difference?
Appreciate your time and help.

Susan Webster

July 17, 2008 8:03 PM


I have been trying to finalize a short sale since Dec. 2007. The property is vacant, in terrible shape and was over valued even when the market was still booming. I owe $180k on it and listed it through a realtor and also hired a negotiator with National Short Sale Center. We submitted all the paperwork and received three offers in February. All considerably below what was owed on the mortgage but much higher than what the the house would actually sell for. We submitted all three to the lender and waited. It is impossible to speak with a human being at the lenders office. Even after you have been assigned someone they do not answer the phone or reply to messages. They sent a BPO agent to look at the house in March. He came back with a price of $180k. If I could get that I wouldn't be doing a short sale. We fired back comps, pictures, repairs estimates, etc. and they ordered another BPO. Two more months pass with no one answering our calls to the lender. Then the 2nd BPO comes back at $100k. By now two of the offers have backed out. One of them was for $100k. The only one left was for $75k. It is now July and the lender's negotiator we had has been fired and we have to start with a new one. We have no other offers and the last one standing is now waffling as well because it has taken so long. I am six months in arrears, property taxes are also past due and the house is condemned and being used as a drug hide out. I have boarded it up four times. I am recently unemployed. The lender has dropped the ball on this. They could have accepted the $100k offer and been done with this. Now it is likely to go into foreclosure because no one will buy it for the price they want. This is not my primary home. I bought it three years ago to help out a friend who lived there and whose mother owned the property but was about to be foreclosed upon. My friend was supposed to buy it back from me right after I bought it from her mother but she split and has not been heard from since. I have spoken with a real estate attorney about any recourse I have with making the lender respond and there is none. They hold all the cards. My negotiator from National Short Sale Center has never had to deal with such an incredibly unresponsive lender. Anyone have an in with Popular Mortgage Servicing in Cherry Hill, NJ?

Ray C.

July 26, 2008 5:43 PM

To Susan Webster..
Hi Susan, I work in the loss mitigation dpt of a major servicer, I see your situation repeat itself over and over again. I have been in real estate sales and lending for 23 years and I have seen this market 3 times already. I had always wondered why it was so incredibly painful to do these short sales and now, witnessing what goes on in the inside of one of these operations, I understand why.
One reason is, lenders being overwhelmed by the number of short sale requests in relationship to the personnel allocated to do this function inside the institution. Way too many requests, very few employees.
Secondly, it is the quality of the negotiators that really adds to the problem. I interact with these negotiators daily, I am absolutely amazed at their incompetence. Furthermore, their attitude towards the people involved and the need for urgency is pathetic. I see these folks displaying minute amounts of ability and exorbitant amounts of attitude, ego, and ignorance.
Most of these people prior to entering the short sale clerk positions, never even owned a home. The majority of them came from a bill collector background and I would be surprised if half of them have a high school education.
I always thought that people assigned to manage a portfolio of 10-20 million dollars’ worth of the company’s assets, would at least know the most fundamental principles of Real Estate in general. Boy was I mistaken. Unfortunately the majority of servicers hire people with very low qualifications so they do not have to pay them very much. Lenders have put in place some cookie cutter processes that they have tested as solutions to mitigate losses for them, hence “loss mitigation departments”. These processes are designed to take a fairly low skill clerk, put him in a “negotiator” position and turn them loose with some checklists and cheat sheets in hand and expect them to handle short sales.
I do not need to tell anyone that has been through a short sale in the last 20 years, the end result of such a system. I have been doing short sales as a Real Estate agent and this time around I decided to go in the inside to see what is going on in there that causes such grief for just about everyone involved in this process. My experience has been very interesting to say the least.
I pity all those owners, buyers, agents, title and escrow officers and so forth that labor on these transactions, many of these individuals doing a great job, only to have some incompetent buffoon make their life a living hell because they just simply look at this as a “process” without regard for what impact a 4-5 month delay in arriving at a decision may have on the people involved. And do not be fooled, these people are not diligently sitting at their desks toiling away under tremendous pressure to perform, I am often amazed at the amount of time they spend daily on camaraderie, event planning, shopping spree comparison and various other socializing activities while agents, sellers and buyers go on waiting for a return call.. little do they know that most of these folks are very familiar with the “delete” button on their voice mail.
So to Susan and all those poor souls whom misfortune has put in the path of a short sale negotiator, I feel for you. The whole process in my opinion is adding insult to injury and there is little anyone on the outside can do because nobody in the inside cares or is listening. That is the hard reality as evidenced by the results and experiences of people in the path of this Real Estate mess.

MC

August 7, 2008 3:24 AM

I'm a Realtor with a short sale listing. I've had three offers and have been ignored by the lender for over 7 months. The last offer just went away and the trustee sale is next week. I did my job three times over for zero compensation.

Helene Rothauser

August 11, 2008 9:45 AM

WE are at the beggining of a short sale transaction. It is appauling to me the lake of protection the buyer has,they also go through a horrible time of being in limbo,with little or no pretection. It seems to me that some laws are urgently needed like now. We are talking about time and money on both sides and most working people do not have much of either.

Thebe

August 12, 2008 4:29 PM

I successfully negotiated a short sale earlier this year and only now realize how incredibly lucky I was. I am the owner (with my husband) and negotiated the transaction myself with only a realtor friend advising me on some of the terminology. I worked with Homecomings Financial and they were fairly responsive and helpful. I started the process in January and sold the house in late March.

I still don't know why it went so well, but here's my best guess. In Sept. 2007, we left the house and were living in another state (we moved so my husband could take a better job). My brother agreed to live in the house rent-free until it sold. But obviously carrying both mortgage and rent payments (we took an apartment in California) caused a lot of hardship, and I told the loss mitigator that if we didn't sell the house soon, we'd have to go into foreclosure.

One important note: You do NOT have to be in default to do a short sale. We were never in default and that helped protect our credit.

Also, another thing that helped us, our loss mitigator guy said, was that our short sale was very small. We sold it for only $27,000 less than we owed. We only had one mortgage, too, no second lender to deal with.

I consider our case a perfect example of what the mortgage crisis could do to a couple who bought a house with a perfectly reasonable fixed mortgage that they could afford, only to be sent into a tailspin when they had to relocate for a job. Thank god we never took a home equity loan.

So while our story had a happy ending, I truly feel for the people who have been posting here.

Bill in Cali

August 16, 2008 2:56 PM

Look at Rose's comments on Nov 03 2007. This is what infuriates me about people. I love how Rose and people like her take no credit for their actions and their stupidity. It is never their fault that they bought a house they couldn't afford. Its the banks fault because the bank I guess called Rose and told her to go out and get a house she couldn't afford. Nowhere in Roses comments does she take any responsibility for her mistakes. She says that the people buying her house are well off and the rich get richer. I got news for you Rose the people that are buying your house got rich probably by working hard and living up to their debt obligations. They didn't get there by being deadbeats and whining and buying houses they couldn't afford. Those rich people pay the majority of the taxes in the US so people like you can buy houses you can't afford and than guess who picks up the tab for your failure. EVERYBODY EXCEPT YOU. With your attitude you will always be poor bitter and unhappy. Always blaming those horrible rich successful people for your poor decisions and failures.

Royal Edwards

August 19, 2008 9:39 PM

A short sale of your home may be a viable solution if you are facing forclosure and/or the value of
your property is less than what you owe on it. But, you should consult qualified professionals. This is very
important? Our legal team specializes in Loss Mitigation and Short Sales. Feel free to contact me with any questions:royalkedwards@yahoo.com

st.h

August 20, 2008 5:13 AM

I am a realtor in California, never have done a short sale. Have a friend that is going into foreclosure on his second home. What would happen to his first home that is an income ppty? and can he apply for a short sale? I don't think so because he has an income property. Thanks you for your help.

Mary

August 20, 2008 4:22 PM

HELLO
Wow this thread is awesome!! I just closed my first short sale deal (I am an investor) by assigning the sales contract I was awarded. THe seller originally owed $660K and HomEq approved the short sale for $306K. It was fantastic. My questions:
#1 - THe seller has another property (investment property) also in foreclosure and asked me to short sell it but is worried about the tax ramifications. I do not have an answer for her. I know about the tax relief act on primary residence properties, but I do not know about investment properties when there is a bankruptcy involved. Does anyone know? Can I have a link so that I can show her? She filed bankruptcy in April and it has already been discharged.
#2 - What is a fair assignment fee for a short sale deal such as this? THe home is still appraising for $500K even in this market, after closing the new buyer (who is assigned the contract to) paid $311K. Then she screwed me when I want $7K for the contract. Was I asking too much?? I thought it was too little but I have known her for 10 years. Please give me some feedback.
Thanks!!!!!!!!
Mary McCreless
Real Estate INvestor
-A Buyer. Not an Agent,-
bookkeepermm@hotmail.com

SGT S

August 21, 2008 9:59 AM

I am an active duty soldier who purchased a home prior to enlisting in the Army. I am married with two children. I have orders to move and have been trying to sell my home since April without success. I will not be able to afford my MTG payment soon due to living expenses incurred in my next assignment. I have to leave my family behind in the home and continue to try and sell it. I have never missed or have been late on a payment and due to my security clearance I can not afford to miss a payment, or have any other serious financial issues. Any advice?

Jojo

August 24, 2008 11:25 PM

Wow...
I am sure glad I liquidated everything 2 years ago and now live in a rental home. But all is not wonderful...Just found out that the owner of the home owes 570K on a house that might be worth 250K. He has it listed as a short sale. My lease ends in 2 months and obviously he can't renew the lease nor would I want to renew at this point. I am thinking about staying on a month to month. I also put in a lowball offer of 150K for the house (the lender will probably laugh when they see it. The asking price is 375K. I did not give a deposit but did give them a letter from the bank showing that I could complete the sale with cash. Right now I am deciding whether to stay in the house month to month or just get out and rent somewhere else. If I can get the house for 150K then I would just live there (not an investor but I remembered what my papy taught me..."what goes up must come down"
Anyway it really is bad out there and I feel badly for all the honest hardworking people who are in danger of losing their homes. As far as all the greedy people who bit off more then they could chew...what can I say...you made your bed, now...
Remember when salaries were 25K and you could get a good home for 50-75K, that's a 2-1 ratio...now people make lets say 50K and the homes are 400K, thats like 7-1...how can anybody afford that.
I am not a realtor, investor or a lawyer, just a regular guy who generally makes good business decisions and chooses to live BELOW my menas...

C. Lasobre

August 27, 2008 3:24 PM

If i do a short sale on my rental property, will i still need to pay the difference? Help me out and i don't know what to do anymore. Your comments will be greatly appreciated.

Pending Foreclosure

August 29, 2008 9:56 AM

C. Lasobre, it is looking like you will have to pay. I have been trying to sell my home via short sale and at the last minute they inform me that I will owe the difference. My realtor said they are forcing you at the closing to sign papers to agree to installment payments. If you don't sign, you don't sell the house.

Susan

August 31, 2008 12:54 PM

For anyone that is considering a short sale on their home or other property in Lee County Florida please contact us for the facts. There is a lot of BAD information out there and you should thoroughly investigate your options before making a decision.

Everyone's situation is unique to them.

Short Sales in Florida www.The-Extreme-Team.com or leave a msg at 888-764-6665.
Florida Future Realty, Inc.

Calvin

September 2, 2008 9:47 PM

I moved to Atlanta last year. I am trying to buy a home in pre-foreclosure (short-sale) that was scheduled to be auctioned in August 2008. The house is in perfect condition. It initially listed for $429,000 in April, then dropped to $329,000 in June, and listed for $299,000 by August. I offered $250,000 minus (they pay) closing cost on August 1st. My realtor says the bank is considering my offer. My question is how long should I wait before I expect an answer and will I be able to counter their offer? Are banks able to consider more than one offer at a time on short sales/foreclosures? I've heard conflicting comments about banks considering more than one offer at a time. Under what circumstance would a person make a back-up offer on a foreclosure or short sale? After reading most of the previous comments, I am worried about the process of short sales. My contract stated that the offer be finalized by September 15th. Will the bank notify my realtor if they decline my offer?

TJ

September 5, 2008 12:37 AM

This is a great collection of knowledge and experience. Since I'm soon to enter the short sale process, I want to add to this collection ... There were several questions about the taxation of the forgiven debt amounts (as they are most often seen as "profit" by the IRS ... the whole thought of that makes me puke ... the debt was forgiven for a reason). Here is a link provided to me by a real estate agent:
http://www.irs.gov/publications/p4681/ch01.html
It is the information direct from the IRS's mouth on what debt forgiveness is an is not taxable. I hope this is helpful to those who are still going through this recovery exercise. As I keep seeing over an over on blogs and posts like this one ... you have to put in the sweat and effort ... and get some reliable assistance.

don

September 15, 2008 1:37 PM

I'm in the process of trying to buy a short sale property listed for $130k. Supposedly, the owner currently owes $185k on the home.

I signed a contract for the asking price ($130k), gave the realtor a $1000 check (which has been cashed) and am now waiting on the sellers lender to approve the short sale.

I'm told that a negotiator will be assigned to the case tomorrow. How long does it take after that ...usually?

I'm also told that the lender will usually accept no less than 20% of the current mortgage owed. Is this a general rule of thumb? If this is true, why the heck would a realtor bother listing a home for $130k when the owner owes $185k?! They must know the bank won't accept the offer so they're wasting everyones time?!

What can I do as a buyer to help this process along?

thanks

HL

September 16, 2008 7:23 PM

Hello everyone,
I have come across this thread while searching for answers regarding short sales and it has helped a great deal. I have a similar problem as Danny who posted on July 15th. I would really appreciate some insight as I'm currently looking for someone to help me through the process. Basically I don't know who to trust.

I purchased a home in Los Angeles area about 5 years ago. Actually, the only person residing at the home is my father, but due to his past credit problems, he purchased the home with my credit. I rent an apartment with my wife and we have a 19 month old son.

My father was set to make a tidy sum on the property if he had sold the house at the peak of the market. Instead, he decided on a more ambitious route and was set on builidng condo units on the property.

He took out a home equity line of credit from a different lender and began the process of completing this project, which included hiring an architect, city approval, safety inspection, etc.

I started to see the housing market slide and it became relatively clear to me and my father that this was not going to happen.

The bottom line: The first mortgage owned by X is ~ $450K. The equity line of credit owned by Y is ~ $300K.

My father was late on August payment to the first lender but made the payment eventually. He is currently late on the September payment and contemplating whether to somehow get the money to pay or start the process of short sale. The first mortgage is about to adjust in November and the equity line of credit will increase in payment as well. The house has been on the market for some time without much movement. So far he has not been late on the equity line of credit payments. I don't know what the FMV of the home is, but I've been informed that it may be around 600K.

I'm considering short sale. I've talked to two firms that apparently does short sales frequently. I was referred to one by a friend and the other one I saw as a TV advertisement. Both seem confident but with conflicting claims. One says that they have investors lined up that are interested in property in Los Angeles but the process can be very lengthy. The other says that they don't have investors and even scoffed at the idea that investors are lined up. They find average buyers. But they also said that the process can be legthy or short depending on what I want; meaning long or short escrow. I can include the names of the two companies if it will help.

I just don't understand all the details. Who do I trust? How can I do due diligence on finding the right people without knowing who to turn to for solid advice?

My biggest concern is my wife. Although her credit may not be affected initially, it seems (from what I understand and researched), she may end up being liable if either or both lenders end up pursuing the rest of the amount after the sale. Does anyone know anything about that? In addition, can the IRS come after her wages and assets as well?

Who can I turn to for sound advice on these matters? Please help...

Hopeful...

September 22, 2008 11:35 AM

I am in the same boat as Calvin, and would like any and all insight and advice. I live in the Tampa, FL area. My husband and I have been frantically looking at homes for sale in the area. A vast majority are all short sales. We put in an offer on one, knowing we were pretty low compared to the comps for the neighborhood. The house was listed at $249,900, and we offered the lender $210,000. They came back about a month later stating they would not accept any less than $240,000. This lender was Wells Fargo. We walked away because we are not going any higher than $225,000. We just put in another offer on a short sale. The home was listed on 6/16/2008 at $329,777, the price then dropped to $299,777, and then on 9/12/2008 droppped to $279,777. There are about six other models of this exact same home in the same neighborhood that are listed anywhere from $260,000 to $315,000. One of these models just sold about a month ago for $220,000, short sale. We submitted an offer for $225,000 on one of these models. Going by the comps of the neighborhood, our offer is pretty consistent with the price per square footage. Any advice on what to expect? How long do you think this process will take to hear an answer? Going by the comps, is our offer justifiable? Please help!

ECal

September 22, 2008 7:31 PM

AM,

Can you tell me how your short sale affected your credit rating?

Wondering in Las Vegas

September 23, 2008 3:12 AM

I just had an idea.

Let's say I owe 193k on the first loan and about 160k on the
heloc(s). The house is worth today about 350k or so. Do you think the bank would forgive the heloc(s) if I was to deed them, say, 1/2 of the house? Is that so crazy? The same bank has both loans--their initials are WF.

Does this idea have any legs?

d_an

September 24, 2008 3:59 PM

Why do a short sell if - even after the sale, the bank continues to report that you are being delinquent on your payments? Wilshire did this to me, and ruined my credit. If I knew that was going to happen, I would have sought another way out instead of agreeing to the short sale.

Anthony

September 27, 2008 3:27 PM

Hopeful...,

Since you based your offer on comps, send those comps to the bank along with all of the required paperwork. Stay on top of them, but be prepared to wait. Once they schedule the BPO, join the BPO agent as he/she conducts the BPO. Show him everything that can affect the price along with the comps. I've seen some agents bothered having someone show them everything, but hey, you have to look out for yourself and that BPO needs to come in as low as possible.

D_An,

On the short sales I have dealt with, the sellers credit report shows the mortgage account closed. You're delinquent on an account that is closed? Did the lender require that you take back a smaller note to cover some of the losses of the short sale or did they put in writing that the debt was forgiven?

If anyone has any questions or concerns, please feel free to email me at info@csgrpllc.com. I'll be glad to help as much as I can.

I also provide Loss Mitigation services for homeowners who wish to keep their homes, short sale negotiations and I also buy properties.

Good Luck!
Anthony

Will Weaver

September 28, 2008 11:05 AM

Coming Up Short
Understanding the economy’s toll on the American Dream and how dedicated REALTORS® can make a difference

An insightful Q&A session with Julie Escobar and Will Weaver

These are challenging times, to be sure. Our economic conditions, market fluctuations and, of course, the extraordinary efforts our media puts forth to fuel the negative all play a part in what has become a “perfect storm” for consumer fear and information. Perhaps none as evident as the market in Detroit, Michigan.

It’s there that I caught up with national speaker and short sale Will Weaver from the Floyd Wickman Team to discuss how that perfect storm affects our ability as a nation to realize the American Dream. Here are a few excerpts from that conversation:

Q: Will, you have an interesting take on what you believe to be the American Dream. Can you share that with our readers?

A: The American Dream means something different for everyone, really. Some would say it’s freedom or the pursuit of happiness, or the ability to work hard and get paid accordingly. Others believe home ownership defines the phrase. I believe it’s all of those things and more. In fact, historian and writer James Truslow Adams coined the phrase “The American Dream” in his 1931 book The Epic of America and shared that it is "that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”

Unfortunately, today’s shifting economy has created shortcomings and loss for many consumers who are working hard to live richer, fuller lives yet find themselves losing jobs, family and homes. What’s more unfortunate is that so many feel like they are all alone, with nowhere and no one to turn to for help.

Q: It’s something that affects so many people these days, Will. I know that you and a team of Floyd Wickman trainers specialize in teaching real estate professionals how to really be there for their customers with the information and resources they need to keep their heads above water. What can you share with them here?

A: First of all, get educated so you can educate. So many customers are in the dark as to their legal rights and the options that are available to them. They’re starving for information and an ally they can trust. I urge all real estate professionals to be both for them. A partner and I recently ran a full-page ad in four local papers inviting consumers to a free workshop called What Every Homeowner Needs to Know About Foreclosures and Short Sales. The response was tremendous, and the opportunity to really help some folks in need was priceless.

Q: What should agents teach their customers about those two things?

A: What worked for us was starting with a relatively simple format. Our goal was to give them the basics they needed to make the right decisions for their families. It’s always amazing to me to see the “light bulbs” go on for people who realize that there really is hope.

We covered a handful of important topics, including:

• Definition of a short sale
• The Top 10 short sale situations
• Why a short sale is a win
• Short sales vs. foreclosure
• Steps to a short sale
• Three stages of a short sale

Q: Well, then, I guess that begs the next question: “What is the definition of a short sale?”

A: Good question! The “short” in short sale actually refers to the fact that the payoff amount agreed to in the transaction is “shorter” than the mortgage balance on the property. Simply put, there is more owed on the home than it will sell for.

Q: And how about sharing the “Top 10” list with us?

A: I’m happy to! The Top 10 hardship situations are:


1. health issues
2. rate increase (3-5 year ARM expiration)
3. predatory lending/borrowing
4. divorce/separation
5. overextension of credit/number of mortgages
6. job loss or transfer
7. two house payments
8. distressed sellers
9. declining market
10. pre-foreclosures

Q: Short sale is a scary term for those who don’t understand what they are and how they work. Can you tell us why they can be considered a “win” for many of today’s distressed homeowners?

A: Short sales can be a win because they can provide a way to avoid foreclosure and, in many cases, bankruptcy. It’s important to note the differences in terms of the long-term effects on consumer credit. Let’s take a look at short sales vs. foreclosures:

Short Sale
 negotiated settlement
 seller’s credit bruised
 no attorney fees
 peace of mind
 buy again in two years
 liens negotiated

Foreclosure
 court settlement
 seller’s credit ruined
 big attorney fees
 no peace of mind
 buy again in 10 years
 all liens exhausted

Q: That sure makes short sales look like a much better option for many. Do you have time to take us through the steps of a short sale?

A: To start, it’s important for consumers to find an advocate–agent they can really trust who will walk them through this often-emotional process. I would say that’s definitely the first step. Here they all are in a nutshell:

1. Talk to a REALTOR®
2. List the property
3. Gather the needed information
4. Complete a hardship package
5. Get an offer accepted

Q: You mentioned three stages earlier. What are you referring to there?

A: There are three stages of foreclosure: pre-foreclosure, foreclosure and post-foreclosure. It is in this initial phase that we can help so many people lessen their credit damage, get out from under a tough situation and move on to the next stage of their lives. That offers great relief.

Q: There’s no doubt a lot of fine print that real estate professionals need to comprehend to be the best resource possible for their clients. Can we visit those in a future article, and can you tell agents how they can reach you to learn how to become the “short sale specialist” in their area?

A: Absolutely. I’m happy to help. There is a lot of fine print. As the old saying goes, “The devil’s in the details!” In our next article, we’ll explore:

 the components of a hardship package
 the benefits to a lender
 why lenders prefer to work with REALTORS®
 the truth about loss mitigation companies
 when a short sale isn’t a good idea
 how commissions are paid

I welcome agent questions and comments via email at shortsales@floydwickman.com. I think it’s our job and our responsibility to help protect the American Dream whenever and however we can.

I am reminded of a great quote by President Lincoln: “I am a firm believer in people. If given the truth, they can be depended on to meet any national crisis. The great point is to bring them the real facts.”

That’s my passion: to bring people the facts.

Will Weaver has more than 12 years of real estate experience and is a three-time graduate of Floyd Wickman’s results-getting training systems. He also is a Floyd Wickman Certified Trainer and Speaker. Will brings an enormous amount of expertise to the field of short sales and truly teaches from experience rather than theory. His work with lenders and sellers in this arena brings him great pride, as he has been able to bring hope to many clients facing tough situations. Will can be reached at 800.910.5351 or shortsales@floydwickman.com. You also can discover the step-by-step methods to your own short sale success by visiting www.willshortsale.com

Will Weaver

September 29, 2008 3:33 PM

Coming Up Short
Understanding the economy’s toll on the American Dream and how dedicated REALTORS® can make a difference

An insightful Q&A session with Julie Escobar and Will Weaver

These are challenging times, to be sure. Our economic conditions, market fluctuations and, of course, the extraordinary efforts our media puts forth to fuel the negative all play a part in what has become a “perfect storm” for consumer fear and information. Perhaps none as evident as the market in Detroit, Michigan.

It’s there that I caught up with national speaker and short sale Will Weaver from the Floyd Wickman Team to discuss how that perfect storm affects our ability as a nation to realize the American Dream. Here are a few excerpts from that conversation:

Q: Will, you have an interesting take on what you believe to be the American Dream. Can you share that with our readers?

A: The American Dream means something different for everyone, really. Some would say it’s freedom or the pursuit of happiness, or the ability to work hard and get paid accordingly. Others believe home ownership defines the phrase. I believe it’s all of those things and more. In fact, historian and writer James Truslow Adams coined the phrase “The American Dream” in his 1931 book The Epic of America and shared that it is "that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”

Unfortunately, today’s shifting economy has created shortcomings and loss for many consumers who are working hard to live richer, fuller lives yet find themselves losing jobs, family and homes. What’s more unfortunate is that so many feel like they are all alone, with nowhere and no one to turn to for help.

Q: It’s something that affects so many people these days, Will. I know that you and a team of Floyd Wickman trainers specialize in teaching real estate professionals how to really be there for their customers with the information and resources they need to keep their heads above water. What can you share with them here?

A: First of all, get educated so you can educate. So many customers are in the dark as to their legal rights and the options that are available to them. They’re starving for information and an ally they can trust. I urge all real estate professionals to be both for them. A partner and I recently ran a full-page ad in four local papers inviting consumers to a free workshop called What Every Homeowner Needs to Know About Foreclosures and Short Sales. The response was tremendous, and the opportunity to really help some folks in need was priceless.

Q: What should agents teach their customers about those two things?

A: What worked for us was starting with a relatively simple format. Our goal was to give them the basics they needed to make the right decisions for their families. It’s always amazing to me to see the “light bulbs” go on for people who realize that there really is hope.

We covered a handful of important topics, including:

• Definition of a short sale
• The Top 10 short sale situations
• Why a short sale is a win
• Short sales vs. foreclosure
• Steps to a short sale
• Three stages of a short sale

Q: Well, then, I guess that begs the next question: “What is the definition of a short sale?”

A: Good question! The “short” in short sale actually refers to the fact that the payoff amount agreed to in the transaction is “shorter” than the mortgage balance on the property. Simply put, there is more owed on the home than it will sell for.

Q: And how about sharing the “Top 10” list with us?

A: I’m happy to! The Top 10 hardship situations are:


1. health issues
2. rate increase (3-5 year ARM expiration)
3. predatory lending/borrowing
4. divorce/separation
5. overextension of credit/number of mortgages
6. job loss or transfer
7. two house payments
8. distressed sellers
9. declining market
10. pre-foreclosures

Q: Short sale is a scary term for those who don’t understand what they are and how they work. Can you tell us why they can be considered a “win” for many of today’s distressed homeowners?

A: Short sales can be a win because they can provide a way to avoid foreclosure and, in many cases, bankruptcy. It’s important to note the differences in terms of the long-term effects on consumer credit. Let’s take a look at short sales vs. foreclosures:

Short Sale
negotiated settlement
seller’s credit bruised
no attorney fees
peace of mind
buy again in two years
liens negotiated

Foreclosure
court settlement
seller’s credit ruined
big attorney fees
no peace of mind
buy again in 10 years
all liens exhausted

Q: That sure makes short sales look like a much better option for many. Do you have time to take us through the steps of a short sale?

A: To start, it’s important for consumers to find an advocate–agent they can really trust who will walk them through this often-emotional process. I would say that’s definitely the first step. Here they all are in a nutshell:

1. Talk to a REALTOR®
2. List the property
3. Gather the needed information
4. Complete a hardship package
5. Get an offer accepted

Q: You mentioned three stages earlier. What are you referring to there?

A: There are three stages of foreclosure: pre-foreclosure, foreclosure and post-foreclosure. It is in this initial phase that we can help so many people lessen their credit damage, get out from under a tough situation and move on to the next stage of their lives. That offers great relief.

Q: There’s no doubt a lot of fine print that real estate professionals need to comprehend to be the best resource possible for their clients. Can we visit those in a future article, and can you tell agents how they can reach you to learn how to become the “short sale specialist” in their area?

A: Absolutely. I’m happy to help. There is a lot of fine print. As the old saying goes, “The devil’s in the details!” In our next article, we’ll explore:

the components of a hardship package
the benefits to a lender
why lenders prefer to work with REALTORS®
the truth about loss mitigation companies
when a short sale isn’t a good idea
how commissions are paid

I welcome agent questions and comments via email at shortsales@floydwickman.com. I think it’s our job and our responsibility to help protect the American Dream whenever and however we can. I am reminded of a great quote by President Lincoln: “I am a firm believer in people. If given the truth, they can be depended on to meet any national crisis. The great point is to bring them the real facts.” That’s my passion: to bring people the facts.

Will Weaver has more than 12 years of real estate experience and is a three-time graduate of Floyd Wickman’s results-getting training systems. He also is a Floyd Wickman Certified Trainer and Speaker. Will brings an enormous amount of expertise to the field of short sales and truly teaches from experience rather than theory. His work with lenders and sellers in this arena brings him great pride, as he has been able to bring hope to many clients facing tough situations. Will can be reached at 800.910.5351 or shortsales@floydwickman.com. You also can discover the step-by-step methods to your own short sale success by visiting www.willshortsale.com

Recovery Blues

October 1, 2008 12:02 PM

We have a solid offer in place for our home - just under the appraised value. It is a short sale situation, however, the bank will not allow any negotiation for the balance due and is requiring us to sign a letter stating that we will repay the balance and that the recovery department would contact us after close of escrow. We can't afford to pay that balance - should we sign the letter or would it be better to cancel the purchase contract and go into foreclosure? Or should we sign the letter, try to renegotiate with recovery dept and if an agreement can't be reached file bankruptcy at that time? What's a better scenario for us ... foreclosure or bankruptcy?

RonOrr.com

October 2, 2008 9:49 AM

Will Weaver has a lot of good info there for people and a good step by step article. It sounds like a certified speaker and trainer.

Hopeful thanks for the example

There really is a lot to learn about these short sales, I get questions in my state all the time about scenarios and common questions, I answered most through this article:
http://www.minnesotainvestors.com/blog/what-short-sale-information-minnesota-short-sale-process/

FAZ

October 5, 2008 12:26 PM

listen up People u r all in the same boat like the rest of us all you have to do is walk away from the property the LENDERS are NOT going to help you
they r all a bunck a lyers they are looking out for themsevles they don't want to lose but they want you to lose all you have so what i did is walk away the sooner the better .... REMEMBER this 700 BILLION bailout it's not gonna help no american citizen only the rich ones @ the TOP ,thats.... all i have to say

maria/no. ca.

October 5, 2008 5:41 PM

My primary residence has been on the market for 18 mos. I took it off the market 6 mos ago because I cant sell it at the price I need. Im upside down. I have a 1st and 2nd on the home. Ive been told by a RE agent that I cant do a short sale because i have other income properties. Im trying to sell one of the rental properties in AZ but no bites. I would like to move into my other property in CA because the pmts are 1/2 as much as im currently paying or should I say use to pay. Im 2 months past due. Basically my question is, if i foreclose and move into my rental can the lender of the 1st or 2nd force me to sell that house and/or the house in AZ?

shush

October 12, 2008 11:41 PM

I'm considering a short sale of my home in Arizona. I have tenant's in place. This was not an investment property. My job relocated me to So. Cal. so I rented the place out to keep bored neighborhood kid's from destroying it. I did purchase a home in So.Cal. as well and I'm not behind on any payments on either home. I'm considering a sale of the Az. home only to make my debt to income look better, but the amount of foreclosures in the area out way any good comps. So I think a short sale could be my only option. I already know that my home is worth less than what I owe. I have a first at 60k and a second at 45k. Not much at all if you read this entire thread which I did. My first is not my purchase loan and the second is an equity line and Az. could possibly do a judicial foreclosure, is a short sale in my best interest? My tenants pay 1100.00 mo. and the first 623.00 mo and the second 300.00, a bit of positive cash not alot. I really don't want to sell, but if I ever have the desire to get a loan on my home in So. Cal. even with my good credit I would not qualify. If any of you investers are interested to buy at what I owe I'll let it go for 90,000.00 with tenant's in place with a lease good until 2010 at 1100.00 p/mo. ironman139@msn.com p.s. 1357sq.ft. west side Phx., Az.

Lynn

October 14, 2008 12:45 PM

I just got my offer accepted on a short sale in NY. The house was listed for 299,000 and we FINALLY settled on 284,000. I think this is about the Market Value for the home, the contract go out today so I am hoping to avoid the whole 1-5 months that it normally takes. By the way it only took the bank 2 weeks to approve our offer. I think things are changing since the banks are becoming more equipped to handle these sales.

ShortSaleAdvocates.com Ken Wagner

October 20, 2008 8:03 PM

Hello everybody,
I wish we all met under better circumstances.
Foreclosure isn't just happening to people that took our risky loans, many people that bought homes in the last 5 years now owe more than what their home is worth, even when they put 20% down.
I've personally received over 30 short sale approvals so far this year. I also do loan modification for those that would qualify.
So, let's see if these words of advice will help the reader. Remember, in real estate, all things are local. So, I'm speaking from a California body of experience.
Every lender and in many cases each negotiator at the loan servicer will behave differently when presented with a short sale.
Here is a general guideline:
1] Don't do a short sale, unless foreclosure is the other option.
2] Don't get scammed by a phony loan modification.
3] Don't EVER work with somebody that doesn't have a license on the line. There are plenty of crooks looking for another angle.
4] Don't believe anybody that promises a certain outcome. Lien holders and negotiators are highly inconsistent in their practice and procedure.
5] I don't give bankruptcy advice, and bankruptcy attorneys should probably not give short sale advice. There is only one thing worse for your credit score than a foreclosure: a bankruptcy and foreclosure.

Do-
- Whatever you can to avoid foreclosure.
- Get advice early and make sure you are working with skilled and experienced LICENSED professionals.
- Be honest with the professionals you hire.
- Be Proactive. Do it now!
- Know that success is a choice that requires an active intention coupled to a persistent activity, guided by an planned outcome. Failure is what happens when you let the universe decide.

Lynn- Congratulations, sometimes an approval can be 3 days, sometimes the result is being ignored for 8 months.

Shush- You would have to demonstrate a valid hardship.

Will Weaver- hmmm advertising space...

D_an- Challenge the reporting. Creditors make errant reportings commonly.

Hopeful- I have my client buyers put in offers on all properties that are of interest. If able, you may want to try that approach. I then call the listing agents weekly for status.

Wondering- It's like in Vegas...all or nothing. The bank doesn't want half the house.

TJ- Good info on the Tax Forgiveness Act. When considering a short sale/loan modification agent, they should have a copy of all these publications and be able to discuss all these issues.

C. Lasobre &
Pending Foreclosure -
Different state laws regulate if a lender has a right to recovery for their loss. You can always say no, but the response may be a quick foreclosure. Remember, it is a negotiation.

SGT S
Thank you for your service and dedication.
Perhaps the Soldiers and Sailors Relief Act
http://www.defenselink.mil/specials/Relief_Act_Revision/

For current information, a voice of reason, or to find a way forward please call or drop me a line any time.

I can be reached directly at 714-277-9006, or through my e-mail or web site.
I sell property in Orange, Los Angeles, Riverside and San Bernardino Counties of California. Also, I can assist with the short sale negotiations throughout the United States.
www.ShortSaleAdvocates.com
ShortSaleAdvocates@yahoo.com
Take Care, Ken Wagner

Jon C.

October 20, 2008 8:06 PM

Short sales may be considered an exit strategy because of their popularity but they were and still should be regarded as a last resort.

Marina

October 21, 2008 12:23 AM

“Creative” Mortgage Products

There is a commercial on the radio that makes me cringe. It says, “It isn’t about the interest rate on the mortgage, it’s about the monthly payment.” This statement is severely misleading.

In the past, many lenders came up with “creative” mortgage products that got buyers to the closing table, in what looked, on the surface as a good deal, but when scrutinized by somebody who knew the market turned out to be a disaster waiting to happen. First, there were the short term Adjustable Rate Mortgages (ARMs). With this product, you could get a good interest rate, initially, but a rate that could increase dramatically over the couple of years. Many people banked on the value increases mentioned above to refinance the loan when the rate was about to adjust. Those unfortunate people who didn’t have good timing, however, couldn’t refinance when property values started to plummet, and a monthly payment which was a stretch but doable in the beginning became impossible when the interest rate increased. This is a situation ripe for foreclosure.Another “creative” product was the “No Doc.” or “Stated Income” mortgage. With these mortgages, potential buyers did not have to verify their income to get a loan. In many cases, people who really couldn’t afford to own real estate were able to get mortgages anyway. Needless to say, these people were in a lot of trouble once property values decreased. They couldn’t really afford the monthly payment in the first place, and now they were stuck with a property that was worth less than what they owed on it. Again, this is a formula for foreclosure.

Gregory Vinson

October 21, 2008 9:18 PM

The closer the short sale offer is to the market value, the more likely the bank will accept it. The bank's next best alternative is to proceed to foreclosure which will usually take months and will involve legal expenses. Afterwards, the bank will have to list the property with a broker and likely wait another few months in order to sell the property. If property values continue to decline, the amount the bank can expect to receive gets less and less as time goes on, and the bank will be responsible for property maintenance, taxes and insurance on the property in the meantime. Consequently, the bank should be willing to accept less than market value now through a short sale. If you really want the house, don't try for too big a discount, but you should try to get at least some discount. See http://nutsandboltsrealestate.com for more articles on this topic and best strategies for negotiating with the bank and second mortgage holders, etc.

kemo

October 23, 2008 10:21 AM

I just recently sold a home using the short sale method. Here is what I did. Once the bank said they where going to foreclose I offered a short sale they accecpted so My RE started marketing the house at a lower price, months went by with no offers, I contacted the morg. co again and offered a Deed in lieu the said they would review everything and get back to me. In the mean time my RE kept marketing the house and I gave permission for My RE to speak with the morg. co, they neg. a even lower sales price for another short sale within 4weeks we had an offer and then within another 4weeks the mortg. co accepted the offer with certain conditions, the conditions where they wanted $20,000 I said no I cannot so they said $10,000 I said no I cannot you will have to foreclose they said how much can you pay I said $5000.00 they agreed so the short of it is get a good RE, keep in constant contact with your mortg. co. Be nice be open to offers and negotiations, Mortg co. do not want your house they are not in the realestate business. We sold a $285.000 home for $200,000 plus the $5000.00 we paid at closing and with the new law the went into effect this year the loss will not be taxed as income to us. Again get a good realestate agent that knows what to do and let them be part of the neg. with the mortgage co.

jack

October 26, 2008 9:20 PM

We have a mortgage with Homecomings with a balance of 314000. The home is probably worth 150-160k now. Our payment is going up 500 a month in Dec. We tried to get help from them but said we had to be late to be considerd for a workout package, loan modification, etc. We are thinking about just not paying mortgage and saving the money to rent another place in a few months while doing a short sale. Is this possible to do a short sale and leave property to rent another?

rachel

November 6, 2008 2:54 PM

We are in the process of short selling our home. Both our 1st and our 2nd have approved it and now we are just waiting. We owe $452,000 and it is short selling for only $220,000. Will we have any financial obligation on the $200,000+ loss? Will we have to pay taxes on anything? Please any info would be greatly appreciated!

Thanks,
Rachel

Rich Sparks of Keller Williams Realty

November 17, 2008 3:03 PM

Hi Rachel,

The bank has three options in handling your debt forgiveness. Firstly, they could seek a default judgment and try to collect the judgment from you. Secondly, they can 1099c you for the difference. Thirdly, they could do a combination of the previous two. Normally, during the short sale negotiations you get the bank to agree to accept less then what is owed. Then they will 1099c you for the difference which looks like income to the IRS. You may or may not have to pay income tax on the forgiven debt (called shadow dollars).
There are two ways of avoiding the taxes. One, if you can prove insolvency you can get out of it. Secondly you may fall into the Mortgage Relief Act which is good through 2009.
To gain a better perspective of what your exposure is check out IRS publication 525 pg 18 & 19. To add a note, the form you submit with your taxes is "IRS Form 982".
Also, I would recommend talking to a tax attorney who is familiar with your state laws as well as national.

Good Luck
Rich Sparks.

Lisa

November 18, 2008 1:00 AM

I'm an seasoned R.E.agent learning the short sale process and I can attest to so much that his been stated here.
1.) Short sales are anything BUT short, they should be called "eternity sales." I know this is not true of every bank, but in my experience, sales from start to finish are taking anywhere from 2+ months to complete.So I ALWAYS inform the buyer/seller of this and tell them a short sale will more often then not, not be a quick close.
2) I echo the sentiment that lender's do not want incomplete pkgs (short sale packages vary from lender to lender, but there are standard financial docs. that every lender will ask for.) I have files that are 100 pages +.
3)Make sure that you are in constant contact with negotiator, they seem to be swimming in a sea of files and I've found that the only way to successfully close a short sale is to call negotiator at least 3 x's per week.
4.) I can honestly say that as an agent I am working 10 times as hard as ever before, the time and energy put into every single file is unbeleivable, but I LOVE what I do and aside from this being a businees and needing to be compensated for my work, I derive such satisfaction in knowing that I have helped someone avoid a foreclosure on their credit and a possible deficiancy judgement. I know we R.E.'s get a bad rap when it comes to this subject, but it isn't until you go from start to finish in ANY trasnaction in this day and age and trying to obtain a mortgqage in the process,that you can fully apprceciate what we have to do to close escrow.It takes a whole lot of patience, persistence and good old fashoined hard work to make it all come together.
5.) To buyer's; do your homework when it comes to working with an Real Estate Agent, as mentioned before, most R.E.'s are not well versed in the short sale process. Ask about experience in short sales,ESPECIALLY as about the % that they actually close on. Some agent's choose to use outside negotiator's which the agent will pay out of his/her commission. Just make sure that if your agent employs one of these companies that are reputable and in good standing.
6.) For homeowner's thinking about a short sale, discuss your situation with your CPA. I have found that a short sale is sometimes not a "one size fits all" and that every homeowner has a distinct set of circumstances and there is no one remedy that will help all in this situation. Consult with a CPA and/or a Real Estate lawyer to go over the specifics of your situation.
7.) I have empathy for homeowner's who are in this situation, especially because of a job loss or cut hours that has brought them to this point. I pray for us all, and I believe we'll see our way out of this economic mess. It's going to take time, patience and lots of work to get us back on our feet. I work in S. California, in the Palm Springs area if anyone is need of my services.
8.) Lastly, (sorry for such a marathon, lol!), if you are having a tough time making your house payments, don't just wait until it's late too late, find an alternative option instead of a foreclosure. I can't believe the number of calls I've received over the last 1.5 years from homeowner's who waited too long and just did nothing. Don't wait, at least arm yourself with information. Remember, knowledge = power, arm yourself!

I wish everyone the best of luck and I hoped I was able to help someone out, even if the information is a bit redundant.Thank you!!!!

buddy

December 1, 2008 7:10 PM

I used www.loanmodassistant.com with coupon code tomsdiscount it only cost me $150 and 30 days later I got my shortsale approved through countrywide for about 33% off of the payoff.

Joe

December 7, 2008 1:32 AM

After being full time investor for 3 years and being involved in different real estate investments forms I start concentrate on short sales. I'm now in Jacksonville Florida area and I'm looking for negotiator to work out my deals. If anyone out there had any good experience with negotiator (s) or negotiating service company I will appreciate any help.
Even If is there any mantor willing to share a profit on the deal for personal mentoring I'm open to discuss.
I'm not new in it, but still any help appreciate.Please respond if interested.
I do have recently deal ready to start negotiate with alenders.

Vicki Owens

December 10, 2008 4:32 PM

Lots of good info here. I am and agent have been doing successful shorts for about 3 years now (long before it was a buzz word). Every bank seems to be different, some have it down, some don't. It would be great if they will give us an idea on what they will accept, they used to, but not often anymore.

Can anyone shed some light on why once the "gate keeper" reps on the phone with the larger lenders confirm the whole package is received that it still takes 2-3 weeks to get to a negotiator who can actually makes decisions? And why they say it will take 72 hours from anytime your send them anything to "upload or escalate" the information? It never used to be this way, this is all pretty new in the last 12 months or so (at least in my experience). I know they are "backed up" but if the package is done why so long to assign to the right person? If all agents are telling these people the buyers "are about to walk" after 4-6 weeks, how would that make anything faster? It makes no sense why they are not pushing the completed packages thru for decisions. How hard can it be to screen an electronic file for missing items and send it on to the decision maker or back to he originator - come on already. The people we used to be able to make a call to we no longer can. Has this all been outsourced or something?

From questions I have asked on the banks benefit in getting paid from PMI claims, I hear claims on the insured loans are paid to them after deductibles and only in bulk, it makes no true sense for them to factor that the PMI will have them ultimately getting more in the end. Sort of the first offer is your best philosophy. And since nothing is really moving at "fair market value" these days, how low is too low for offers? They surprise me in what they accept sometimes. Plus with shorts, they do not have the expense to repair or maintain these properties, they are for the most part in good shape. (and why they can be worth the wait for a buyer).

Also I have had to rescue people back from several "loan modification" companies recently who took their money and did nothing to facilitate the short sales. Deal with someone with a license who is local, get an attorney, talk to your lender and do not believe everything you read on line. Lots of fraud going on. Even people with perfectly good credit and paying on time not even considering loan workouts are now being solicited by these companies. If it sounds too good to be true, it probably is.

I just cannot believe that someone on the inside of all of the bank activity with loss mitigation has not gotten on line to blog and give some true insight on the logic of their systems. How can it be such a mystery after all of this time? There has to be a way to simplify into a win/win for everyone.

Ok, I have vented now, back to my research and work. Thanks.

Mark Strombeck

December 15, 2008 7:05 PM

Hi, I am a honest and ethical real estate agent that will help you understand and explain the pros and cons of a short sale. I have 100% success rate in getting my client's short sales approved. I saw this blog and there is some inaccurate information here or blogs by people trying to make money. If you are in a bind and you have no one to ask questions of, feel free to e-mail me at markstrombeck@yahoo.com. I will answer all questions FREE because every good thing I do, God will bless and it will come back to me in time. Take care.

Jaime

December 30, 2008 3:44 PM

Here's a different question. Hopefully this has not been addressed earlier.

I bought a house for $202K approximately 3 yrs ago. Houses in this area are currently selling for $120K - $140K. My interest at the time of buying this house, was that it was the best value based on what was available on the market.

So, here I am in a house that is now probably worth -$80K from the sale price. I put $27K down at the time of the purchase (basically thrown in the trash). After paying for all fees, etc., I basically owed $185K, which was split into 2 loans. Loan #1 was for $165K @ 5.75% and Loan #2 was for $20K @ 8%. Apparently, this allowed me to not pay this silly Mortgage Insurance.

I've been fortunate in that I can afford the house payment just fine, however, it bothers me a bit to be paying $1400/mo. on a house that is worth 1/2 of what that payment could really pay for. I bought this house very weary about the high prices, but trusting that the banks would know whether this house was worth what I was going to pay over my lifetime. Apparently, trusting these thieves is not a wise choice.

Assuming that new rules and regulations go into effect during the Obama regime, chances of houses coming back up to the prices of the crazy housing boom will probably never been seen again.

At the time of purchasing my home, I could not get a realtor to even return my phone calls for anything under $200K. They were too busy making big commissions. My guess is that the banks probably weren't too hot on financing little shit either. The professional evaluators were too busy giving houses evaluations within 5% of the listing price to ensure financing through the banks. All the while, these guys all made lots of money with no liability or penalties.

What happens if I just decide that I no longer want to pay on this overpriced house and simply let the bank take it back? What happens if the millions of people who are upside down on their loans decide to do this (even if they can currently afford the home?).

There is no penalty for "ARTIFICIALLY INFLATING" the housing market.

I suppose that over 10 yrs I could save enough cash to just pay cash for a home. I think many people fear the "bad credit" deal, is it really that bad? Would it be worth just giving up on this house. I have no real interest in selling the house, however, all the dishonesty really bothers me. The banks, the realtors, the evaluators ...

Maybe my thinking is screwed up at this time as it is frustrating to see that many people made lots of money that should not have been made. I have no problems paying reasonable prices for things.

Should I call up the bank and find out if they are willing to negotiate the loan? Would they even consider this knowing that I can afford the home?

E-mail replies to jrobledo@raytheon.com.

Becky Scott

January 2, 2009 11:08 AM

Does anyone know of a free broker price opinion auto-fill software program? I am a single mom trying to keep things together and am pushing to get 3 BPO'S done in one day. I hear other realtors tell of doing 30 in a single day? Is this humanly possible without some sort of automated help?

schomes

January 6, 2009 2:21 AM

Has anyone closed a short sale with a 1st and 2nd with Homecomings where the 1st will show as settled for less but the 2nd with Homecomings (investor) etrade said they would take $15K but still will continue to go after the balance? How to go around that one?

carolyn bates

January 8, 2009 12:39 AM

A relative has a rental unit condo in Hawaii.
She lives in SF.
The condo unit value has gone down at least 30%.
They have not been able to rent the until for the past two years. They bought this within the last five years, I believe.

She has a mortgage on her primary residence in SF, has a well paying full time job, and two children will be in college next year. Finances are very tight. She also has a mortgage on a second home in Tahoe, and land with a mortgage nearby.

What is her best option for the rental unit condo in Hawaii.
She is paying monthly fees as well as mortgage there.

Short sale?
Foreclosure?
Keep unit?
How to stretch the money?

Thank you very much.

CB

Nancy Aberg

January 8, 2009 2:07 AM

interested

alan

January 15, 2009 12:15 AM

Hello,
I'm trying to close on a short sale (as a buyer). We are about to close the escrow but the seller has not left the house. What are the consequeces if i close the escrow? I'm afraid that the seller will destroy the house before leaving. what are the consequences to the seller?

Your input will be greatly appreciated.


thank you

Heidi

January 15, 2009 1:05 PM

Hi. My husband and I are in an interesting position. We want to short sell our condo because the market is horrible, as everyone knows. We have had no luck in the past two months, with only one couple coming through and one phone call. Our real estate agent is an expert on short selling, but I am still worried that it could be worse than bankruptcy.

My husband lost his job recently. We have been making our payments and scraping by, but we have an opportunity to move out of the country and take a job elsewhere. The quicker we're out, the better. Short selling sounds like the easy way out, but I'm not sure I want to go that route if it's like bankruptcy.

Please let me know. Thank you.

Mike Linkenauger

January 25, 2009 5:53 PM

Its almost always a good idea to at least try a short sale. We are based out of Florida, and lenders take 50 cents on the dollar for condos on a regular basis in our state. Its pretty amazing. We also have a national network of short sale specialist realtors. http://www.short-sale-specialists.com

suzanne simpson

January 26, 2009 2:38 PM

I have been doing short sales for sometime now. We have done properties as high as 4.2 million down to 90,000 $ condo's. We are the best in loss mitigation services and negotiating with the lender. We are nation wide and have 85-95% success rate. We work for sellers and realtors. We have a website www.sohff.com or www.saveourhomefromforeclosure.com

Paul

January 27, 2009 1:29 AM

I did a sort sale at a property in the amount of $285K the amount owed was $287K Why did I recive a 1099 in the amount of $270K and what the porcentage will I have to pay? Please Help?

Kelly

February 3, 2009 8:25 AM

Just a FYI for all short sale people, it IS possible! Sellers submitted short sale application with paperwork on Mon Jan 5th, bank rep came out to see house on Sat Jan 17th. Then Monday Jan. 26th we got short sale approval letter from the lender (HOMEQ)! THREE WEEKS after application! Only problem is they want us to close in three weeks, it is tight and my bank is trying as fast as they can. This is pretty much the only stipulation. “Offer is considered null and void if funds are not received by XX.” Three weeks from the short sale letter.

sally

February 4, 2009 4:22 PM

I understand that a second home does not qualify for tax forgiveness under the Mortgage Forgiveness Debt Relief Act, but what if the home was purchased as a primary residence, and became a rental property because of a marriage?

GARFIELD

February 4, 2009 7:34 PM

I AM SHORT SELLING A HOUSE FOR 140,000
THAT IS OWED 250,000 ON WHAT WILL BE THE
TAXES ON 110,000.

Anthony

February 5, 2009 3:38 AM

FYI: For everyone that doesn't like short sales because they are time consuming, I've noticed that some lenders are moving faster through the short sale process. I submitted an offer to Litton Loan on a Friday afternoon. I had an email Monday morning that the BPO was ordered. Less than 2 weeks later,I had an approval letter with closing to take place within 30 days...not bad. HomeQ is also quick, as Kelly noted. Aurora also moved fairly qickly at the beginning, but they slowed down after receiving the BPO. In all, it took about 10 weeks from beginning to closing.

Kelly, if you are not ready to close within the 3 week period, ask the lender for an extension. More often than not, they will grant you the extension (I have seen as many as 5). Let them know what is going on and that you can close if they give you another week or two. They wil more than likely give you another week.

Garfield:
I'm not an expert in this, but I beleive $110K falls into the 25%-28% tax bracket. It's best to seek advice from a professional tax advisor.

Sally:
It's best to seek advice from a tax professional. Here is my understanding of what a primary residence is, but I may be wrong:

Section 121 of the IRS Code defines “principal residence” as:

". . . during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more."

What I get from that is that a home where you lived for 2 years out of the past 5 years (ending on date of sale)is considered a primary residence. It doesn't have to be 2 consecutive years. Also remember you can't have 2 primary residences, so you would have to decalare one or the other as your primary home. That's how I understand it. Hope that helps.

If anyone has any questions, please feel free to email me at anthony.robaina@hotmail.com. I'll be glad to assist you as best I can.

Good luck to all!
Anthony

Raul

February 22, 2009 12:27 AM

I have a unique question about a potential short sale situation I am considering on an investment property:
1. This is on a SFR "investment property"
2. I purchased this proiperty in 2007 for $355k with 10% down payment, and purchased it "subject to" the pre-existing mortgage. Which means I simply took over the last owner's mortgage, the loan did not change to my name, it is still under the previous owner's name.
3. This property was a serious fixer, I later spent $70k on the property
4. It is now only worth maybe $200k. The mortgage balance is about $310k. It is now vacant. I could not find good tenant even at $1200 per month.
5. I got laid off last year, almost living off my savings only, could not afford to make payments on this property & other investment property & my own home mortgage. I have decided to stop making payments & property taxes on the two investment properties.
6. I still have some savings & a shrinking 401k, any imapct to the short sale?

Is a short sale on this property possible? given the fact I own it but the mortgage is still under the previous owners name.

Please kindly advise ASAP. Thanks

joe

February 22, 2009 10:20 AM

my wife and i tried to purchase a short sale in florida.it took countrywide 6 months to reply.they were willing to take our offer.ah,but alas,the seller had another loan on the house.that bank refused to accept the money countrywide would give them from the sale.then we were we offered the difference.no reply.as this long and stressful process dragged on,(up to 8 months),we were extenting the offer agreement every couple of months.now we were informed the seller filed bankruptcy and her lawyer told not to sign the extention.the deal is dead.i believe short sales were designed to stall forclosing.at the expense of the buyers time and work.by the way,counrtywide is letting the home go into foreclosure

bala

February 23, 2009 2:53 PM

i am in job but the house value went down by 50%. Can i do a short sale.?
I want to leave the house.What is my options?

Challenges

February 27, 2009 3:44 AM

We bought our house in 2001 for $104,000. In 2005 we refinanced the house adn took out the equity and paid off bills and made improvements in the house. - 1st Mort. $160k 2nd Mort. $40k. Home appraised @ $240,000, so there was still 20% equity in the home and no PMI required. Here we are in 2009, I lost my job and was out of work for 11 months, and sacrificed my retirement account to pay living expenses during this time. Have finally found work, but have to move for the job. Have not been late on mortgate yet, but am now facing a relocation and rental home expenses, plus the continued mortgage until we can sell the home. Zillow places home in the $140k to $160k range. What advice can anyone offer to deal with the 1st & 2nd mortgage co's. on a short sale? Oh yes, I have taken about a 25% decrease in income due to the layoff/new job. Thanks,

Barbara Gray

February 27, 2009 11:13 PM

I need to find a seminar in Miami Dade on short sales. I have been adviced to do one but I just really need to be educated on this beforeI move forward.From the postings here I see that short sales are nothing new.
Thank you

Michael

March 2, 2009 7:53 AM

Hi. Married have a TH in Northern VA; 1st time home buyer, purchase price was 489K, house currently worth about 370K. Personal reasons require relocation out of state very soon.
We have a few student loans, no credit card debt, we both have 401k and good incomes. Never late on mortgages (piggy back mortgage scenario). Credit scores are > 750. Due to the student loans and current real estate valuation we have a net worht < 0.

I am confused on how to proceed for short sale. One option I hear often is based on stories that banks won't even touch a short sale unless the homeowner is late and in pre-foreclosure. So the 'advice' is to stop making the payments. However we are fearful of the damage to our credit, and don't want to blatantly walk away from responsibilities. It is a very unfortunate situation for all but we can't hang on to this (underwater or not) property for very long once we finalize the relocation. I guess my question is, might it be best to continue to stay current in mortgage payment while entering the short selling process?
It seems to me that one very real risk is that if we do decide to stop making payments early on this greases the skids for foreclosure proceedings should the short sale attempt(s) fail. Thanks for your time in these dark days.

GHunter

March 2, 2009 10:22 PM

Short Sales really are the answer for those folks underwater on their homes who want to get out from the burden of their homes and get on with their lives. I see some worry that a short sale is like bankruptcy -- its not. You can recover and be buying a home in as little as 2 years if you choose. See our website -- we specialize in short sales nationwide. We offer full service and a do it yourself program. We are offering a 7-Day Free Trial on the program - no risks. http://www.thenegotiatedsolution.com

Anthony

March 4, 2009 12:22 AM

Michael,

I would continue to pay the mortgage and attempt to get a short sale accepted. Your relocation could be good reason for the lender to accept a short sale. I have seen a few homes here in New Jersey where the homeowner was current and managed to get a short sale approved. At least your credit report won't show you as delinquent on your mortgage payments.


Challenges,

I would advise the same thing for you. Put the property up for sale and go for a short sale. Your relocation will cause a financial hardship and your best bet would be to get the lender to accept a short sale.

Any questions, you can email me at anthony.robaina@hotmail.com

Thanks,
Anthony

Cate

March 6, 2009 2:36 AM

No matter what happens, you can apply for an FHA loan after 2 years. No 30 days lates and a trade line like a secured credit card is all you need and a harpship letter. An FHA loan requires 3%-3.5% down and IS NOT CREDIT SCORE DRIVEN. My sister obtained a loan after a bankruptcy. It

Laura Ulmer

March 6, 2009 2:56 PM

There have been some major tax law revisions that encompass short sales.

In Dec 2007 Congress passed the Debt Forgiveness Act which protects people going through loan modification, short sale, or foreclosure on principal residence for tax ramifications for the amount of forgiven debt.

The catch is you it must be a principal residence, and you must have lived in it for 24 months. (Judged by the posting date of the loan)

Search the IRS website for Debt Forgiveness Act for legal details.

Or search for Foreclosure Discovered for a store house of information on short sales, foreclosures, credit impacts, the works.

Cameron Novak

March 18, 2009 4:03 AM

this is a good nutshell explanation, but lacks in quality information.

Cameron Novak
The Homefinding Center
http://activerain.com/cameronnovak

Stephen

March 18, 2009 9:54 PM

I agree that short sales are a great tool for struggling homeowners, it helps the homeowner who is burdened by a legitimate hardship, and the banks net more money than a lengthy foreclosure. I have been working short sales in California and have had great success. If any one would like help please feel free to contact me: Oliver@thelajollateam.com

Also Check out: http://www.ShortSale2020.com

Annie

March 19, 2009 7:52 AM

Having gone thru just about the entire gambit as discussed here. A few opinions I have formed are,if the banks do not have a way to better handle the inundation by realty agents and buyers wanting to know if thew can stop looking, then the banks and the realty agents should not purposely list them at way way under prices, If a private party listed their own house for say $50K and then refused legit offers for those over $100K I think we could be held to answer. Bait and Switch of sorts. The second thing I have heard and witnessed in court myself while being evicted from a wamu house by Chase. The banks do want you out. There were 17 cases in the 40 cases at 130pm in a so. cal court that were filed 30 days too soon on renters. Each and every person my self included had paid thousands to attorneys and thought they had a "deal or time extension" worked out. The bank then just stopped responding and the judge allowed no reason as admissible even when the defendants had the bank saying they will work with them in writing. We got 21 days from the bank. 73 hours prior we thought we had worked out a 45 day extension. the move out comes inbetween paychecks. sent lots and lots on attorney for nothing

sarina

March 23, 2009 6:52 AM

We live in the UK and are interested in several properties that are either advertised as short sales or that there are liens & costs that may not be sufficiently covered by the sale??? what does all this mean to us. Please help we are very keen to purchase a holiday home in florida, but all of this is very misleading. Thank you

Yuri Plotnikov

March 25, 2009 9:04 PM

check out www.WayToShortSale.com. They've written a great guide to the short sale process, written for the average homeowner (not in jargon for real estate pros and industry insiders). It's got lots of practical tips that go beyond what your realtor will tell you.

Tanner

March 31, 2009 10:01 AM

I would like to purchase my first home this year. I understand their is a $8,000 tax credit for this year for purchasing a home (first time Buyer only). Also, FHA would probably assit me on my down or ? I have 3% down on my 401k also. Here is my problem, I have about $13,000 worth of credit issues and an improved credit score. I have also just finished a $14,000 student loan and I am not sure it had reflected on my score since it was a wage garnishment...and boy did it hurt for 3 yrs!...And thats why my credit card was in a shambles........okay!
Does the bank let get a home loan and or can include credit card debts and pay them off still? Is this wise on my part to do it?

Jana

April 3, 2009 10:12 PM

I am entering into a position where I am going to be doing a short sale and wonder if the lender will try to take cash assets or look into the history of cash assets.

tmo

April 7, 2009 3:52 PM

Hi! Last week we made an offer of 240k with 30k down on a house for sale at 275k. Loved the house, would've made a higher offer but realtor explained it was a short sale and we should start out lower, see what happens. It's been a week now. We were told that the banks are a little slow responding to offers. Is "a little slow" a matter of days, weeks, or months? Our current home is sold and the deal will be closed in about six weeks. Sitting here waiting is more than a little frustrating.

Jose Pena

April 9, 2009 3:14 PM

If you are an owner and can not make your mortgage payments any more or realize you soon wont be able to keep up with the home. Then a short sale is the answer. Based on statistics the difference between a foreclosure, dead in lue, and short sale..is the amount of time the owner has to wait before they can get another mortgage loan from a bank. the credit score of the owner will be affected no doubt, statistics show around 160-220 point loss(i.e:if you have a 700 score, it will fall to around 500). so the cure isn't in the score, it's in the time you'll have to wait before you can get a decent loan. with foreclosures you'll have to wait about 4-7 years, dead in lue-4-6 years(about the same as foreclosure), short sales - 2-4 years. That's the key point, you help a homeowner sell their home in order to obtain a new one 2-4 years down the road...what happens with the amount lost you may ask?? in 2007 the "debt forgiveness relief act" was passed. If you successfully close a short sale transaction, the sellers lender will mail them a 1099 form, the amount lost or "forgiven" will be displayed on the form. When the sellers get ready to do there taxes for that year they will have to make sure they get a "982 form" and fill it out accordingly, this 982 form is used to successfully verify that the difference lost in the sale was in fact forgiven by the lender, and your clients should not be taxed on that amount.
(keep in mind, each bank works different with short sales some will ask for more information others not to much just the necessary. "patience is the key, and diligence is the turn to success with a short sale")

here's a good link everyone should read here. http://www.chicagotitlesd.com/january09/MFNewsShortSaleForeclosureEffectsonCredit.pdf

...hope all of this helps you in some way.

Jose Peña
Realtor
Mi Casa Real Estate
Northwest Arkansas

Mel

April 10, 2009 9:34 PM

I am listing my home with a realtor this weekend as a short sale. We are not late on our payments but feel this will be the first month we can't afford it. I have already submitted all my paper work to the lender and it has been assigned an negoitator due to financial hardship and we owe more than the home is worth.
When you are going through a short sale process, should we still try and pay the mortgage payments or will we get faster response by not paying. We do not have anymore savings left, so we would have to borrow the money. If short sales take months, do people usually stay in the home and not make payments? Do the lenders work with you without starting foreclosure proceedings?

Lisa Povlow

April 15, 2009 11:38 AM

I am a realtor in Clearwater, FL. I have successfully closed dozens of short sales in the past year. The key issue with short sales is to be patient and persistent. As a listing agent, I follow-up with the lenders 2-3 times per week. I provide updates to the buyer's agent frequently. This communication is key. There is nothing more frustrating than working for months to get an approval letter only to find out that the buyers have moved on to another property.

Please feel free to contact me at LDPovlow@msn.com or visit my website at www.LisaPovlowHomes.com.

Thank you,

Lisa Povlow
REALTOR
Charles Rutenberg Realty, Inc.
Clearwater, FL

JB

April 16, 2009 5:35 PM

To echo what a lot of people are saying here, patience and persistence are certainly the keys to a successful short sale. I work for an attorney who began assisting local real estate agents with short sales, when frustration got the better of them and they were ready to give up. Our best advice - never give up!! Feel free to contact us with any questions, we're always happy to help! jb@shortsalelegalservices.com or www.shortsalelegalservices.com

johnny m.

April 20, 2009 9:59 PM

true story-
job relocation in late 2008. once offer for my house was in writing, bank took less than 2 months to approve short sale. credit score before short sale was 800. after short sale was 750. i was never late on payments. my gut feeling is that this saved my credit score. the short sale was reported as a "settlement" on my credit score.

i was in continuous contact with the bank, even before the offer was made. i was quite lucky.

Charles Pruett

April 22, 2009 7:35 AM

Sure...short sales CAN be pursued by real estate agents, but most don't know what they're doing, and lack of persistence could allow the home to slip into foreclosure. It's best for the seller to have a skilled short sale negotiator...like, say the real estate litigation attorney's at sellhomeowner.com negotiate your short sale. Without such negotiation experts, you're looking at 4-6 months to "git 'er done." These people will do it in 60 days.

Lisa Povlow

April 30, 2009 1:27 PM

Charles is correct. An inexperienced Realtor can cause irreparable harm. There must be proper evaluation of all mortgages/liens/judgments on the property. If these are not evaluated and addressed early in the process your short sale will fail. I've read tons of stories where the short sale is approved by the lender, but the sale did not close because all of the liens on the property were not addressed.

You can get to the finish line, but you may not cross without an experienced Listing Agent negotiating on your behalf.

Thank you,

Lisa Povlow
REALTOR
Charles Rutenberg Realty, Inc
Clearwater, FL
LDPovlow@msn.com
www.LisaPovlowHomes.com

Don Sabatini

April 30, 2009 11:37 PM

IRS must take some serious steps now.

carolina gomez

May 3, 2009 10:13 PM

I have just read a few paragraphs concerning short sales. my parents are here, where i have to make the final decision of what to do with there home which their home value is under by 200k and they are 3 months behind. I have decided to hire a forensic loan audit attorney. In return he has charged me a reasonable flat fee, which includes a chance to modify the loans, if not, plan B would be to consider a short sale, which he will help us with that and included in fee. he will read all documents before we sign so that we can walk away not paying nothing-if a short sale is considered. he mentioned laws of changed and that homeowners are able to walk away without having to pay taxes on short sales. so my best advice is to get an attorney, no matter if you are behind on your loan. the person i got, has over 30 years experience in this field. My parents and I finally feel PEACE OF MIND!

Ann

May 6, 2009 5:16 AM

Ok...here is my story...our house has been on the market for over a year now...in march my husband got laid off...we decided to go through short sale and got a good agent to help us. They were willing to take lower commission. We finally got an offer on the house...but we have two mortgages... the second mortgage only gets very little money and they don't want to approve the sale until they get more money...if they don't get more money and we go through sale, would the second lender come behind us later for the money? Also we are filing bankruptcy Ch 7...court hearing is this week...my agent said wait and see if the sale of the house go through then go through the court date. any suggestions??

Ron

May 6, 2009 2:53 PM

Ron

May 6, 2009 11:43 PM

This question is for people who have sold their house using a short sale. How did affect your credit score. Our house is in my fiance's name and she hasn't an above average credit score. She is worried that this will ruin her credit. Any advice or comments would be appreciated.

fred

May 7, 2009 10:29 PM

I have a 50% investment interest in a home in s. florida. the home is devalued by 70k i want to short sale it. What if the other 50% owner files BK during this process? Will the short sale still work???

Ray

May 8, 2009 10:23 PM

I bought my house 4 years ago, and am underwater 45K at least. With my wife being pregnant again, we just bought another larger home, and I turned my original home into a rental. The problem is, the original tenants backed out of the deal, and now I am not able to get any renters into the home. My local RE agent is telling me I can get about 600/month less then what my mortgage is. This will put me in a large amount of debt each month. I am trying to decide if I should just try to short sell the home, rather than take a 7200 lost yearly on the property. Does anyone know if I would fall under the debt forgiveness act and not be 1099'd the amount as income, or because it's a rental does it not count? I lived in the house for 4 years until I bought the second home. Could the bank put a lien on my current home (different lenders)

Rochelle

May 12, 2009 10:51 AM

Any one can tell me how long a short sale can take in Bergen County, NJ?

The owners are upside down, say around
at least $125K based on CMAs and recent appraisal, ... I put in an offer based on the CMA and appraisal and it's $145K less than their purschase price which was drastically inflated, a purchased with of a 103% loan.

With that said, do I have a chance to get this property, ... also, they didn't have the BPO before accepting my offer.

What are my chances?

Karen

May 15, 2009 11:43 AM

Thanks for all of the info here. Hoping someone can offer advise on my situation. My husband and I bought our home in 2006 for $600,000 (5 year interest-only arm, 80/20 loan--$480,000 with american home mortgage, 120,000 citibank heloc). We weren't married at the time, and his credit wasn't great (though it is now), so the mortgage is in my name only (and only on my credit report).

We're in Virginia (right outside of DC) and the house is now worth $400,000, so to refi before our arm resets next year, we'd need to bring about $250,000 to the table. And it was never a house we planned on staying in long-term (like many of us, we bought it thinking we'd sell in 3 years and make some $).

Now that housing prices have crashed, we can buy our dream home for about $700,000 and we've been approved for a loan to do so. My question is, if we buy this new home (with both of our names on the loan), are our chances good that the bank will grant us a short-sale on our current home? And for tax purposes, will our current home be seen as an investment property so the 1099 forgiveness laws won't apply? Also, will the bank be able to come after our new home or any of our other assets to mitigate their loss?

Thanks in advance for any advice you can offer.

elenora

May 16, 2009 2:00 AM

Great or helpful article.I appreciate the concern which is been rose. The things need to be sorted
out because it is about the individual but it can be with everyone.

Elenora
paralegal jobs uk

steve

May 17, 2009 11:50 PM

no, the bank will not entertain a short sale with an active bankruptcy

aram

May 18, 2009 1:19 PM

It is about time we came to terms with the fact that not everyone will qualify for a loan modification. The alternative does not have to be a foreclosure. Short sales are definately a better option but unfortunately many realtors do not know how to execute them. This often results in the short sale falling apart and foreclosure. If you are going to short sale, use a company that specializes in them like www.housingassist.com or shortsalescenters.com

Cyndi McKenna

May 20, 2009 1:11 PM

Wow, it is hard to read most of these posts....for those of you that are in need of a short sale, the most important thing is to be honest with the realtor, attorney, or the people that you are working with. Let them know about all of the loans, any judgements or liens that you may have. Also, if you are thinking of trying for a loan modification or feel that it may be beneficial to stay in the property and not pay...please decide that upfront.

I have successfully negotiated several short sales that the homeowner then talked to an attorney that told them they would be able to get their home back and that they should stay and declare bankruptcy.

There are diffferent solutions for different people, but be be sure to get all of the facts first. If it sounds too good to be true, please remember that it probably will not turn out well...

Research on the internet is a GREAT place to start for basic information. All information that you need to make your decision should be attainable for no fee to you.

I work with banks and have knocked on numerous home owner doors that when asked, the person they were working with were paid a lot of money and they got no answer on the loan modification or short sale. Please be careful of scams that are present.

andy

May 21, 2009 2:02 PM

Does anyone have any experience dealing with a debt collector on a 2nd lien? Been trying to short sale a property for over a year, finally got approval from the 1st lien holder, the 2nd had originally approved a 3K short pay-off, but then sent the loan off to a collections agency who is demanding 40K in order for the short sale to go through.

These are purchase money, non-recourse loans in CA. The deal can't go through without the approval of the debt collector.

Anyone have experience with this?
Thanks

Daniel

May 22, 2009 7:30 PM

A bankruptcy will delay the short sale proceedings. That's all. When the bankruptcy case has been dismissed foreclosure is back on.
A foreclosure will stay on ones record for three (3) years now. That was changed recently from seven (7) years.
I do short sales in Idaho and Florida. I charge zero (0) dollars in fees.

Kyle

May 26, 2009 10:28 AM

We are in the short sale process and have an equity loan.
The bank was going to forgive the amount owed until it discovered we had a second with them (not sure how they missed it - we disclosed everything). Now they say we are liable for the balance after the sale. Is this amount negotiable? They've offered 0% interest on the payback but we'd like to get the amount down since we'll be paying on this for years to come.

Sarah Becker

May 28, 2009 5:13 PM

We work with a large number of homeowners facing foreclosures. Avoiding foreclosure can be daunting. Clients need to know that, as realtors, we are on their side. As professionals, we should offer our expertise freely to those in need. Distressed property owners should not have to worry about being taken advantage of in their time of need. That's why my team is reaching out to homeowners on the verge of foreclosure offering a free initial consultation and, if we can help them, our follow-on services are absolutely free. If you or someone you know needs a dependable, honest real estate agent in Northern California, please contact us at topspaces@yahoo.com

alex

June 6, 2009 6:35 AM

hi there I LIKE TO BUY MY NEIGBOR HOUSE IN A SHORT SALE AND HE WANTS TO BUY MY HOUSE IN A SHORT SALE THE HOUSES LOOK LIKE EACH OTHER THEY BOY ARE MULTY FAMILY 3 FAMILY HOUSES 3 APARMENTS EACH AND WE OWE TO THE BANK CLOSE TO THE SAME MONEY . IF THIS IS POSIBLE HE END UP ON A HOUSE SIMILAR THAN THE ONE HAS FOR LES MONEY AND I WILL END UP ON A HOUSE SIMILAR AS THE ONE I HAVE . BUT ON A PRICE IS EASY TO KEEP .AND IN THE AREA WE LIKE ...IF THIS IS POSIBLE PLEASE SEND A EMAIL TO GIVE YOU IDEA PLEASE TNKS ALL. amylagunas454@yahoo.com.mx

Sarah

June 26, 2009 9:57 PM

My husband has been commuting as a teacher 1.5 hours each way to a small town we would prefer to raise our family. We are preapproved and have a house in mind but our house in this market (and urban neighborhood) is unsellable. We had refinanced and are "upside down". We really want to move but are stuck it seems. Some advised us to try a short sale, realizing we would have to rent a house for the next 2-3 years due to credit. We make it paycheck to paycheck but never missed a pmt. There is no divorce or loss of a job. We want to simply escape this house that requires thousands in foundation repairs and move to a small rural community. Considering all: Should a short sale be considered???

Trace

June 27, 2009 5:41 AM

Hello there,

We're thinking of purchasing. We're pretty lucky to have cash to pay for a house.

And most of the listings that our realtor shows are short sales but he told us to avoid short sales. He said that it's a 'pain' to go through.

I have a few questions for those who can answer, I'd really appreciate it.

Will paying the house for cash make the deal easier to go through (or at least we'll hear sooner than most of the 'horror' story of not hearing anything for months)?

One of the realtors who contacted us (she is actually the seller agent of a house that's a short sale), she says that we can start lower bidding (like 20-30 grands below the price asked--after all the property was pretty trashed in the inside--not on the outside, though) since we will be paying by cash, and the lender should respond sooner since this is a cash transaction (Whether it's being rejected or accepted) is this true?

I heard that we have to put a 'deposit' when we present the offers to the lenders, is this correct?

If yes, what happened if the lenders reject the offer, will the deposit be returned?
Or what happened if we changed our minds after not hearing from them in like 3-6 months and have decided on another house, will we be receiving our deposit back?

Thank you so much for your response.

Shawn

June 27, 2009 10:14 AM

My wife and I are in a two bedroom townhome and are having a second child. We need a three bedroom house but the builder has dropped the prices which has caused short sales in the area. We want to look at that option. Is that along with my wife not working a good enough reason to get approved for a short sale? Will my credit score drop and prevent me from buying a new home right away if we sell on a short sale? This is my main concern. We need to have a place to live like everybody else and I dont want them coming after money if we do this...What do you think??

chris

July 2, 2009 2:28 AM

TO TRACE :

I lived in se in florida cape coral and was an agent. Short Sales are a good idea to buy you can get a better home. Most homes in Foreclosure have been sitting you run into mold issues and other issues with a home. 3 things to look for on short sale. In what stage is the short sale on that home (has a negotiator been assigned) 2nd Make an offer around 10-20 off that list price 3rd if it says in the MLS bank approved short sale go for it. All the work has been done and it's ready to close. I just short saled my house I waited till end put bank approved within 3 days I had the offer and everyone is happy. If you do put an offer in ask for in WRITING for a weekly update. You want dates and information on each step of the process by your realtor. Not all realtors work hard. You can verify the information by looking on tax roles and calling that company saying I put an offer in on a house you have I want to verify information. They will verify. Be persistant. Also work fast. Don't sit by. Also another advise is if paying cash negotiated the HUD down if you don't like it only pay 2% commission don't let them stick you for the 3 they try.

Anthony

July 5, 2009 1:21 AM

Trace,

In this market, short sales are the way to go. They can be time consuming and requires patience, but they are definately worth it. I know plenty of realtors who don't like it mostly because they don't have the time nor patience to deal with banks directly. Others simply don't fully understand the process. If your agent does not want to deal with it, you can always hire a third party to process the paperwork with the lender.

Paying cash can speed up the process, but not always. Lenders generally do prefer cash as it removes the need of obtaining a mortgage and can usually close quickly. Who ever is processing the short sale paperwork needs to stay on top of the lender.

As for finding out what stage the lender is in...remember that the lender will not start the process without a purchase contract.

Don't ever be afraid of making a "lowball" offer. You never know what the lender is going to ask for. Just because it has a list price does not mean that is a fair price. Last year, I had a client that offered $320K on a home listed at $360K. I advised him to go lower, but he insisted on $320K. The BPO came back at $290K.

If an MLS listing says "Short Sale Approved", that does mean that the lender had already agreed to a short sale, but I wouldn't go for it anyway. You need to find out exactly what price and when was the short sale previously approved. They might have approved a price that is still too high in todays market or a couple of months might have passed since that approval and depending on local market and home conditions, the fair market price might be lower today that it was back then.

Also, your realtors commission will be included on the HUD and comes from the sellers funds (bank). You should not pay a commission unless you want to or there is a deal where you will cover the commission to your realtor.

I've seen lenders that don't care if you put a deposit or not. You should send them a proof of funds letter. They just want a buyer who can close. If you make a deposit and your offer is not accepted, then the deposit will be returned to you. You can always include dates in the purchase contract that allows you to back out if your offer is not accepted by a certain date.

Hope this has help. Any questions, feel free to email me at anthony.robaina@hotmail.com.

Thank you,
Anthony

Kefelegn Workie

July 22, 2009 8:30 AM

I am two payments behind on my investment property, I have requested a loan modification, the banks response is too slow. If I foreclose, would the bamnk come after my savings account or any other assets for its loss? I am lossing about $1000.00/month on this property, what can I do?

Kefelegn Workie

July 22, 2009 8:30 AM

I am two payments behind on my investment property, I have requested a loan modification, the banks response is too slow. If I foreclose, would the bamnk come after my savings account or any other assets for its loss? I am lossing about $1000.00/month on this property, what can I do?

Jennifer

July 22, 2009 2:21 PM

I purchased a condo in So Calif with the plan of moving in. I ended up getting engaged/married and moving in with my now husband. I never ended up moving into the property. The condo is now worth 100K less than what I paid for it. I've had tenants in the property since I purchased it, but I'm still paying $800 more per month than the actual mortgage. I had a baby and had to cut back my hours at work. Now my tenant is moving out and I'm in over my head. My questions are:
1. Am I eligible for a short sale on my own? I don't want to screw up my husband's credit.
2. My husband owned a home before we were married. Could the lender come after my husband? I'm not on the title or loan of the home.
3. Am I eligible for any type of loan forgiveness? I purchased the home thinking it was going to be a primary residence?
4. In a short sale, how does the 1099 work? I've heard that it may be forgiven also, but not sure.
Please help.
Jennifer

Eileen

July 23, 2009 11:34 AM

Jennifer,
You're "eligible" for a short sale if the mortgage company agrees to one. You'd have to consult an attorney regarding your husband's liability, but if the home is only in your name and was purchased prior to the marriage, the condo is probably considered "separate property."

You can negotiate with the mortgage lender to modify the terms of your loan,if they're willing to change the terms. Many are not. You may qualify for some assistance (not the same thing as "forgiveness") if the mortgage is guaranteed by Fannie Mae or Freddie Mac. You'll need to check with your loan officer on the guarantee status of your mortgage.

The IRS normally charges income tax on the amount of debt that was forgiven in a short sale. If you purchased a property for $500K and sold it for $400K, with $480K owing on the mortgage, you would normally be taxed on the $80K difference between what you sold the property for and what was owed on the mortgage.

Right now, the IRS is not charging income tax on mortgage debt forgiveness, but only if the property is your PRIMARY RESIDENCE and the debt forgiven is on the PRIMARY MORTGAGE. Since the condo is not your primary residence, you would be taxed on the forgiven debt in a short sale.

Contact http://www.sellhomeowner.com for more information about negotiating a short sale.

Short Sale Strategy

July 23, 2009 9:51 PM

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Ben Johnson

July 26, 2009 12:22 AM

Has this post really been going for over 2 years? Wow!

D

July 26, 2009 5:03 PM

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Mike B

July 29, 2009 5:07 PM

I am in a unique situation as I am in the military and I am being transferred by the Army from PA to SC. I own a home in PA that is only 4 years old, but I am having difficulty finding a renter or buyer as I have been trying to sell/rent my house on my own due to the drop in home value and the high realtor fees. I have looked in programs offered by the Army, but do not qualify. I have also looked into a personal loan, but no one will give me the amount I am asking for and there is a high APR associated with a personal loan. I am moving next month and have come to the realization that I may have to go with a short sale. My only reservation is that I don't want it to affect my credit rating which is in the high 700's and unfortunetly my wife did a bankruptcy claim before we were married. I do not want to marr my credit as I will retire from the Army in 3 years and want to build a house. Does anyone have any suggestions on a way ahead.

Cory Boatright

July 29, 2009 10:25 PM

Short sales are becoming a very popular way to liquidate property quickly. It helps the bank, homeowners and new buyers. Investors can also make money because they can buy a property from a bank via short sale with enough equity built into it to sell to an end buyer. Check out http://www.ShortSaleFundamentals.com for other short sale strategies

D

August 9, 2009 10:44 AM

Fannie Mae guidelines effective June 25th, https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0816.pdf.
Per these guidelines you cannot obtain a mortgage for 2 years after the short sale. No exceptions. I think policy writers have gone mad. This makes absolutely no sense. Not everyone short sales because they are delinquent. Wake up Washington. You bought them!

Natalie Ferdinand

August 9, 2009 2:29 PM

On July 13Th we signed a contract for
a short sale property in Ranson WV that was quote unquote fully approved to sell. we are waiting to close on
this property and the bank seems like they don;t want to sign to necessary paperwork. They want more
money out of the deal as we have heard and the negotiator on this case has been told that the investors don;t care that your buyers will be put out of there home and that they have a 2 year old to worry about, they just don;t care.it is Aug 7Th and we were suppose to go to closing on this property on
July 31st. Financing and everything else is ready to go on this. We have been told by everyone we are at
the mercy of the bank. (WELLS Fargo)The person who is trying to sell this property or to get it out of his name is a services man who is going to be shipped over seas to serve our country and I feel bad for him also. We have put time and money into this home and we really don;t want to back out of the
contract we really want this house for our family, also, because we were told if we were to do so we will lose that
money and I don't think any of this is fair. Banks are given money by the government to get these kind of debt off
there hands and all they do is sit on them. we are at our wits end and are not sure what to do. We don't
want the bank to back out of the deal if you contact them but on the other hand we are stuck in limbo waiting for them to send over the paperwork. My husband has no more time off
of work so if we do close we now have to higher movers. we had contractors to come and paint and to clean the carpets.and fix any electrical work that needed to be done in this house on the 31st we have lost money because
they bought materials for us and now we can't use them until we go to closing. I could go on and on and on but I am
so upset at the way banks are handling these sales. Please contact me Natalie Ferdinand @ 240-888-0897 or this
email address

thanks for your assitance
Natalie Ferdinand-Twigger

Tanya

August 9, 2009 5:01 PM

How long after a short sale will I be able to purchase a new home? does this truly stay on our credit report?
Please help!

Kurt

August 10, 2009 12:48 AM

My girlfriend and I bought a hosue. Last month she just left becaue, according to her, she "couldn't live with the evil ghosts" that also live here. She has left me high and dry. I have other asssets, including a house I rented out, when she and I bought the house together. The payment will slowly drain my bank account or at least make life very poor quality. Would the bank even consider a short sale when I do work and my only wish is to get out from a life, maybe even working 60 hrs a week to cover everything, that would be barely making it ? I have had a "for sale by owenr" sign out. Lookig to sell it for the mortgage amount of $ 230k. just to out from under the house. Recent real estate agents said they would list it for $ 165K. Any comments or suggestions would be greatly appreciated.

G.G.

August 17, 2009 1:06 PM

Hi. I am so frustrated. Just listed my house in California on short sale. I paid 563k in April '05 put 123k down then pulled a second to remodel so I owe 500 on it. I am 49 and my whole life saving is in this deal.
I have been going through the nightmare of the home modification request since April 20th and got denied.
I pay 6.25% on the first and 3.4% on the second. My only request was to drop the first to 3.4% and stretch the loan on 40 years.
I have a tenant ready to pay us $2,000./month with an option to buy. The property would pay by itself and everybody would make money in a few years... I was denied by the investors and now it is listed at 399k.
How stupid is that? What about that bill that passed on Feb. 20th? Who is that suppose to help again?
I would love to hear from someone that went through the same process with success.
I have a friend that did'nt make his mortgage payment now for over 2 years and still in his house 'cause he paid $3,500. to an attorney. I heard that as long as you are in negotiations progress, they can't evict you and proceed with foreclosure.
Thanks guys. Good luck in this jungle

Jack bob

August 21, 2009 4:32 PM

natalie you are and idiot! if you new you were at the mercy of the bank, why in th world would you spend money on the house? either you have made some poor desicions or you realtor has over promised.
never spend money on something that is not yours!!

Bob Jack

August 29, 2009 4:52 PM

My home value has dropped over $200k and my wife and I can still pay the mortgage. However, we don't want to pay for a home where there is no value. Will the bank consider a short sale? Can I short sale a home to someone I know and buy it back later (yr later)?

jane

August 30, 2009 5:44 PM

Is it worth looking at a short sale?

Simone

September 8, 2009 11:21 PM

We Buy Houses in foreclosure in Florida. We Handle the short sale and do all the negotiations. We would love to help anyone in Florida. Please go to
www.411WeBuyHomes.com and we will reply personally back to you within 24 hours to inform you of your options.
We Can help you! Have a great day.

Michael Kornitzer

September 16, 2009 6:26 AM

Anyone with a Short Sale or Foreclosure question please call me for a free consultation. 813-541-0114 Watch out for investor predators who bought a $599 CD on the internet and claim they will buy your house. Theres no more money in Short Sales for investors. Hasn't everyone lost enough? You as the owner of a property can definately Short Sale and should Short Sale. We are closing more short sales than anyone in the country and can help you. We don't charge you money or try and rip your lender off or get you to sign your deed over. Google me Michael Kornitzer www.bknegotiate.com 813-541-0114

Susan Elgar

September 16, 2009 1:46 PM

I want to consider a "short sale" on a condo we have in Gulf Shores AL. We paid $550K and it is now vauled at less than $300K. We are paying interest only and it is costing $5K a month for nothing. We have perfect credit and i do not want to loose that. BUT how do I get this albatross from around my neck. Is a Short Sale the answer as I have been approached by a realtor????? Thanks for any info
Susan

Randall Airst, Esq.

September 17, 2009 4:08 PM

The feedback from brokers we deal with is that lenders are reluctant to forego any deficiency. In many cases, they will insist on some contribution from the borrower. So, under this scenerio, the homeowner is burdened by obligations on a home they no longer own. An audit can provide brokers with an additional tool to use for the benefit of the homeowner. Specifically, the borrower can provide a cooperative lender with a waiver of rights identified during the course of the audit.

Not legal advice, but based on observations from the brokers we perform audits for.

Best wishes

Danny Flucke

September 26, 2009 6:40 PM

A Federally Certified Lender Subsidy Spreadsheet (FCLSS) quickly and easily determines if a homeowner qualifies for either a mortgage modification OR a short sale.

A common mistake is assuming homeowners have a choice.

A homeowner will ONLY qualify for short sale subsidies IF they fail to qualify per US Treasury modification guidelines.

When the FCLSS returns a "fail" - It automatically calculates the lender's federal short sale subsidy - And recommends the pre-approved short sale listing price based on the current area market and lender subsidy.

This is not rocket science - But it is difficult to find certified companies willing to perpare these modification or short sale case files.

If you cannot find one locally - We provide this service nationwide - At an investment of $1,297 - With a 100% money back guarantee.

And for the record - Our opinion is that "forensic loan audits" aren't worth the stamp to receive them. (That's why "audit firms" do not offer a 100% money back guarantees...)

Thank you for your time, Danny

Danny C. Flucke Jr - Senior Partner
Nationwide Mortgage Experts / http://NaMoEx.com

DCFJ@NaMoEx.com / (714) 624-9479

Oliver

September 26, 2009 10:42 PM

Will we see the uniform short sale process that the administration has been talking about for months?!?!?

Follow me on Twitter, lets connect:
http://twitter.com/OliverGraf360

caitlin

October 2, 2009 1:00 AM

Please advise. We're thinking of doing short sale on our condo in FL. We also have another property in NY, which is paid for, can the lender go after/put lien on the NY property?

liz

October 5, 2009 3:39 PM

Help, I'm in such a crisis.
I co-signed for my brother on a property but the bank only has me listed as the owner. My brother lost his job and is now 4 months behind on his mortgage. I want to get him out of the the house and try to do a short sale in order to salvage what's left of my credit. If the bank approves a short sale - will the bank give me debt forgiveness on the amount that's owed? My brother was not on the title, but he does live on the property, is he the responsible party?

Hannibal

October 15, 2009 2:58 PM

Hi
I am wondering about going into short sale investment. This is the person between the bank and the property owner. I am not sure if you need a real estate license. Do you need one? If you buy the note from the bank, would you need to get the buyer for the short sale home? How does it work, not sure?
I appreciate it, this is for a second income. Thanks

RJ

October 19, 2009 3:45 PM

I saw someone ask but no answer. What happens with renters during this process?

Diane Frey

November 12, 2009 1:33 AM

www.kjhomefinder.com

Short Sale Specialist

November 16, 2009 3:30 PM

ITS OFFICIAL!! NATIONAL SHORT SALE CENTER IS OUT OF BUSINESS!!

We heard about it today when somebody called us who recieved something in the mail from them, and then confirmed it when we called them. The Short Sale Specialist Network is an excellent resource to find a short sale expert, there is NEVER any cost involved to the home owner.

www.short-sale-specialists.com

You would think the National Short Sale Center would be able to make a business, considering it is short sale galore out there right now!

Short Sale Specialist

November 16, 2009 3:34 PM

ITS OFFICIAL!! NATIONAL SHORT SALE CENTER IS OUT OF BUSINESS!!

We heard about it today when somebody called us who recieved something in the mail from them, and then confirmed it when we called them. The Short Sale Specialist Network is an excellent resource to find a short sale expert, there is NEVER any cost involved to the home owner.

www.short-sale-specialists.com

You would think the National Short Sale Center would be able to make a business, considering it is short sale galore out there right now!

Siena Development

November 19, 2009 5:16 PM

Hannibal,

Buy my property on short sale I will do a lease option for 36 months. With very attractive bonus.
I am in land development and with the down turn we tried to get modified with a lower interest rate for 36 months. Wells will not budge without a punitive "special forebearance" and no commitment there after so my lawyer said no. So, I am thinking outside the box here. I built the home, spent a ton and if your interested call me for details.
714.315.2643

Siena Development

November 19, 2009 5:16 PM

Hannibal,

Buy my property on short sale I will do a lease option for 36 months. With very attractive bonus.
I am in land development and with the down turn we tried to get modified with a lower interest rate for 36 months. Wells will not budge without a punitive "special forebearance" and no commitment there after so my lawyer said no. So, I am thinking outside the box here. I built the home, spent a ton and if your interested call me for details.
714.315.2643

Christine

December 1, 2009 6:47 PM

I hope one of the experts participating in this conversations can help me . . . I'm doing a short sale through a real state agent who is charging me $2,500 for the work. Well, the thing is a bit more complicated because when we started the process he said that was the lawyer's fee, and then, when I found out that the lawyer's fee is supposed to be paid by the lender, my agent told me that I had misunderstood and that it was actually his "transaction fee". Aside from the supposed misunderstanding, I would like to know if it's legal that he's charging me that amount. If so, what should I do now? We already sent an offer to the bank about one month ago; we submitted a backup offer a few days later. In case it makes any difference, I live in Florida. Thanks a lot for your guidance!

Short Sale Specialist

December 2, 2009 7:08 PM

Christine, it may be illegal now for an agent to charge for a short sale. The ones who know how to get the job done don't have to charge anything!! They get paid a fair commission at closing!! Find a good, ethical short sale expert who will look out for your best interests in the transaction -
www.short-sale-specialists.com

Anthony

December 3, 2009 12:12 AM

Hi Christine,

It sounds as though your agent might be ripping you off. Who did you make the payment out to? The agent? An agent should not be collecting any fees, except in the name of the employer(broker) and with consent of the employer. You shouldn't be paying for a short sale anyway.

Your agent is receiving his commission at closing from the lender. Same goes for your attorney. As the comment above says, find a good and ethical short sale expert who will look out for you best interests.

You can always contact the Florida Real Estate Commission and get and answer as to whether or not it is legal for the agent to be collecting a fee from you.

Let me know if you need further help.

Thanks,
Anthony
anthony.robaina@hotmail.com

Anthony

December 3, 2009 1:33 AM

I saw someone ask about what happens to renters during this process.

As far as New Jersey goes (where I'm from), tenants cannot be evicted or told to move because the property is in foreclosure or has been foreclosed. Keep in mind that the NJ Anti-Eviction Act does not apply to tenants that live in owner-occupied homes with no more than two rental units, a home where units are set aside for developmentally disabled members of the owner’s immediate family, or Hotels, motels, or guest houses.

When a lender forecloses on a home, they are foreclosing with the tenants in them and when they resell, the new owner is purchasing the home with tenants. Tenants must continue to pay rent.

As long as tenant pays their rent and follows the rules, they cannot be evicted. The NJ Anti-Eviction Act of 1974 protects residential tenants from losing their homes through no fault of their own. It applies whether or not the tenant has a written lease. In 1994, the NJ Supreme Court ruled that the Act also protects tenants that live in homes that are in foreclosure or have been foreclosed.

Thanks,
Anthony
anthony.robaina@hotmail.com

Anthony

December 3, 2009 3:00 AM

New guidelines for Short Sales designed to make them go more smoothly.

The U.S. Treasury Department announced new guidelines that will help out some homeowners short sale their home.

To qualify:
*The property must be the homeowners principal residence
*The home owner must be delinquent on the mortgage or close to defaulting
*The loan must have been made before January 1, 2009, and be for less than $729,750
*The borrowers’ total monthly mortgage payment must exceed 31 percent of their gross income
*Must be an arms length transaction (no relationship between buyer and seller) and the buyer must not sell the property within 90 calender days of closing

Borrowers will receive a $1500 to assist with moving expenses from the government for completing the short sale, which will be deducted from the gross sale proceeds at closing. Mortgage-servicing companies will receive $1000 for each completed short sale and must release the borrower from all liability for the debt. Subordinate lien holders can receive up to $3000 for releasing the lien and the borrower from all liability for the debt. The investor will also receive $1000 for allowing the subordinate lien holders to receive their $3000. A mortgage insurer must also agree not to collect any additional money from the borrower.

Also, servicers have 10 business days after receiving all required documents to approve or disapprove a short sale and they must not require that the closing takes place in less than 45 days without consent of the borrower.

The guidelines also makes it easier for homeowners to transfer ownership of their property back to the lender through a "deed-in-lieu".

As always, email me with any questions you may have and I'll try my best to help.

Thanks,
Anthony
anthony.robaina@hotmail.com

Stephanie

December 15, 2009 6:19 AM

I'm a consumer lender and have lost one third of my income but still have a job. Reading about short sales, deds-in lieu and forclosure and the public's view is interesting. Some say the short sale is the best option but how so? I have a home values at $250,000 today and owe $327,000. If I go through the short sale process and the bank still holds me responsible for the difference and I still must put a roof over my family's head how can I that AND repay the bank?
I don't beleive one minute they would be willing to write off that difference if I'm still working and making ANY income. But then again can they sue everyone in this situation?
I tried to file BKY but my attorney said I make too much money and even if I file individually they still take into account my spouses income! I make that payment and qualified for this mortgage on my income, not his.

Anthony

December 17, 2009 11:02 PM

Hi Stephanie,

To qualify for a short sale, you must prove to the lender that you have a financial hardship and are no longer able to afford your mortgage and that a short sale is a better option than foreclosure.

When a lender approves a short sale, you are being released from all liability on the loan. Your first mortgage will not sue you for the difference. They can ask for a promissory note for part of the losses, but everything is negotiable. When tax time comes, they will issue you a 1099 and you must report the difference as income. If this is your principal residence, you may qualify for tax relief under the Mortgage Forgiveness Debt Relief Act of 2007. You will fill out IRS Form 982 when you do your taxes. You will not have to pay taxes on that difference.

Hope this helps!

Thanks,
Anthony
anthony.robaina@hotmail.com

MR SAM ZAPPALA

December 31, 2009 4:39 AM

I am a certified loan lender that offers loan to people who are in
need of loans. We give out loans for project, business, taxes, bills,
and so many others reasons.So contact us now and get the loan that you
need with a low interest rate of 3%. I assure you that you will be
glad you transacted business with us at the tail end of this
transaction because the terms and conditions are very simple.There is
more to gain by getting a loan from this company,so if interested
* Personal Loans (Secure and Unsecured)
* Business Loans (Secure and Unsecured)
* Consolidation Loan and many more.
COMPANY EMAIL: sam.zappala@gmail.com

LOAN APPLICATION FORM FILL AND RETURN IT BACK
1) Full Name:.........................
2) Gender:...............................
3) Loan Amount Needed:...................
4) Loan Duration:................................
5) Country:...................................
6) Home Address:...............................
7) Mobile Number:...............................
8) fax Number:............................
9) Occupation:..............................
10) Work Address:..............................
11) Purpose of Loan............................
12) Bank address................................
13) Marital Status:...............................
14) Date Of Birth...............................
Thanks and God Bless,
Best Regards,
MR SAM ZAPPALA

MR SAM

December 31, 2009 4:42 AM

I am a certified loan lender that offers loan to people who are in
need of loans. We give out loans for project, business, taxes, bills,
and so many others reasons.So contact us now and get the loan that you
need with a low interest rate of 3%. I assure you that you will be
glad you transacted business with us at the tail end of this
transaction because the terms and conditions are very simple.There is
more to gain by getting a loan from this company,so if interested
* Personal Loans (Secure and Unsecured)
* Business Loans (Secure and Unsecured)
* Consolidation Loan and many more.
COMPANY EMAIL: sam.zappala@gmail.com

LOAN APPLICATION FORM FILL AND RETURN IT BACK
1) Full Name:.........................
2) Gender:...............................
3) Loan Amount Needed:...................
4) Loan Duration:................................
5) Country:...................................
6) Home Address:...............................
7) Mobile Number:...............................
8) fax Number:............................
9) Occupation:..............................
10) Work Address:..............................
11) Purpose of Loan............................
12) Bank address................................
13) Marital Status:...............................
14) Date Of Birth...............................
Thanks and God Bless,
Best Regards,
MR SAM ZAPPALA

lorraine

January 1, 2010 2:44 PM

This last comment from Mr. Sam Zappala on December 31, 2009, sounds like a scam and please be careful of this offering. Read all the bad grammar and spelling and you will see it is not ligit. This is the last straw for any of us to be scammed, adding insult to injury. My heart goes out to all Americans who are suffering the loss of their homes. This is a very sad time for many of us. My prayers are with you all that you will have a much better 2010.

lorraine

January 1, 2010 2:44 PM

This last comment from Mr. Sam Zappala on December 31, 2009, sounds like a scam and please be careful of this offering. Read all the bad grammar and spelling and you will see it is not ligit. This is the last straw for any of us to be scammed, adding insult to injury. My heart goes out to all Americans who are suffering the loss of their homes. This is a very sad time for many of us. My prayers are with you all that you will have a much better 2010.

Ron

January 2, 2010 2:59 AM

I just received a letter from GMAC that my account has been transferred to their attorney. This is after agreeing to the workout plan. They returned my third trial payment stating that it is inadequate although it was based on the workout program. The government program is just not working and the lenders are screwing with everyone's head because I'm one of the many who are experiencing the same situation with various lenders. The trial payments are just to give false hope of saving your home. So I would definitely take the short sale before losing hours of sending/re-sending the same documents over and over and just eventually getting foreclosured on anyway at the end. Obama wake the f - up!!! Your program is not working and more tax dollars are being wasted and economony will continue to suffer.

Ron

January 2, 2010 2:59 AM

I just received a letter from GMAC that my account has been transferred to their attorney. This is after agreeing to the workout plan. They returned my third trial payment stating that it is inadequate although it was based on the workout program. The government program is just not working and the lenders are screwing with everyone's head because I'm one of the many who are experiencing the same situation with various lenders. The trial payments are just to give false hope of saving your home. So I would definitely take the short sale before losing hours of sending/re-sending the same documents over and over and just eventually getting foreclosured on anyway at the end. Obama wake the f - up!!! Your program is not working and more tax dollars are being wasted and economony will continue to suffer.

Ron

January 2, 2010 2:59 AM

I just received a letter from GMAC that my account has been transferred to their attorney. This is after agreeing to the workout plan. They returned my third trial payment stating that it is inadequate although it was based on the workout program. The government program is just not working and the lenders are screwing with everyone's head because I'm one of the many who are experiencing the same situation with various lenders. The trial payments are just to give false hope of saving your home. So I would definitely take the short sale before losing hours of sending/re-sending the same documents over and over and just eventually getting foreclosured on anyway at the end. Obama wake the f - up!!! Your program is not working and more tax dollars are being wasted and economony will continue to suffer.

Chad Ackerson

January 2, 2010 7:58 PM

Sam Zapalla posting is a SCAM! And, as far as I know, California real estate agents should not be charging any upfront fees for negotiations. We've helped hundreds of California homeowners avoid foreclosure via a short sale with minimal cost ($30 for notary fees). Mattucci Real Estate www.luxuryshortsalelistings.com

Mrs Dora Donalson

January 6, 2010 8:56 PM

I am Mrs Dora Donalson by name, the loan lender Renowned I give credit to those who need financial assistance. Finding money to pay the bills?
I want you to know that we can help by providing loans, if they give us the opportunity to help,
We are pleased to offer a credit for an amount of choice that offers more than $ 250,000.00 for men and women at the top, our loan interest is 2%.
If you are interested get back to us with the completed application form.


NAME
ADDRESS.
Country.
PHONE
PROFESSION
STATE.
Necessary amount of the loan.
The purpose of the loan.
The duration of the loan.
Monthly income.
Have you ever applied for a loan?
Thanks for your time
Mrs Dora Donalson (C.E.O)
silverplanwellfinance@gmail.com

Lorraine

January 10, 2010 9:41 PM

Another African Scam from Mrs Dora Donalson. Don't fall for it.

Anonymous

January 15, 2010 4:09 PM

We have a short sale in the pipeline. My lender - now Bank of America, still has not sent me notice that my home is scheduled to be in foreclosure on the 2nd of Feb. My realtor informed me.

Banks want remorseful sellers - but won't be held accountable for their actions in this mess. Brokers are another group that got off scott free. Truthfully the short sale is going to be the way sellers will be able to show the lenders that something has to change. Finally.

Most home buyers are not knowledgeable - that's just fact and yes I take responsibility for my purchase but now at 5k a month for a 198k home - it is just criminal in any situation. We counted on a flunker of a broker to advocate for us but instead they were lining their pockets on our dimes - well our lost dimes.

Anonymous

January 15, 2010 4:10 PM

We have a short sale in the pipeline. My lender - now Bank of America, still has not sent me notice that my home is scheduled to be in foreclosure on the 2nd of Feb. My realtor informed me.

Banks want remorseful sellers - but won't be held accountable for their actions in this mess. Brokers are another group that got off scott free. Truthfully the short sale is going to be the way sellers will be able to show the lenders that something has to change. Finally.

Most home buyers are not knowledgeable - that's just fact and yes I take responsibility for my purchase but now at 5k a month for a 198k home - it is just criminal in any situation. We counted on a flunker of a broker to advocate for us but instead they were lining their pockets on our dimes - well our lost dimes.

Anonymous

January 15, 2010 4:10 PM

We have a short sale in the pipeline. My lender - now Bank of America, still has not sent me notice that my home is scheduled to be in foreclosure on the 2nd of Feb. My realtor informed me.

Banks want remorseful sellers - but won't be held accountable for their actions in this mess. Brokers are another group that got off scott free. Truthfully the short sale is going to be the way sellers will be able to show the lenders that something has to change. Finally.

Most home buyers are not knowledgeable - that's just fact and yes I take responsibility for my purchase but now at 5k a month for a 198k home - it is just criminal in any situation. We counted on a flunker of a broker to advocate for us but instead they were lining their pockets on our dimes - well our lost dimes.

Anonymous

January 15, 2010 4:12 PM

We have a short sale in the pipeline. My lender - now Bank of America, still has not sent me notice that my home is scheduled to be in foreclosure on the 2nd of Feb. My realtor informed me.

Banks want remorseful sellers - but won't be held accountable for their actions in this mess. Brokers are another group that got off scott free. Truthfully the short sale is going to be the way sellers will be able to show the lenders that something has to change. Finally.

Most home buyers are not knowledgeable - that's just fact and yes I take responsibility for my purchase but now at 5k a month for a 198k home - it is just criminal in any situation. We counted on a flunker of a broker to advocate for us but instead they were lining their pockets on our dimes - well our lost dimes.

Alexander

January 20, 2010 5:02 PM

I am working on a short sale and the investor is unwilling to negotiate a lower offer. CMA reports and comps are coming in much lower. Not to mention the properties condition. Is there any other way to get the negotiator to accept a lower settlement?

Alexander

January 20, 2010 5:02 PM

I am working on a short sale and the investor is unwilling to negotiate a lower offer. CMA reports and comps are coming in much lower. Not to mention the properties condition. Is there any other way to get the negotiator to accept a lower settlement?

Anthony

January 21, 2010 2:39 PM

Alexander,

What reason has the lender given you as to why they won't budge? There could be a number of reasons why the lender would do this, such as, who the investor is, what type of loan, etc...
Also, who is doing the negotiations for you (you, a third party)?

Thanks,
Anthony
anthony.robaina@hotmail.com

Shelley

January 31, 2010 11:41 PM

I heard of a woman in Phoenix who was in trouble and unable to make her payments but instead of letting the bank foreclose she sold raffle tickets for her house and paid off her mortgage that way. Talk about creative financing!

Shelley

January 31, 2010 11:51 PM

A woman who could no longer make her payments decided to raffle off her house and paid her mortgage off that way. Creative financing!

Doug

February 8, 2010 10:19 AM


My situation is the following:

About four years ago, my wife and I. aged 67)purchased a three flat in Chicago. The property is very nice,
and at the time the co-owner, aged
36, a CPA and Attorney, and I paid a
combined 10% down on the property.

It was to be a partnership.
At the closing we were represented by the same attorney.

Somehow, without my realising i,
my wife and I were the only ones
to sign the mortgage document, an
egregious error to say the least.
My wife and I are also the only signators on the promissory notes.
(That's another story), but I won't
get into that now.

My wife and I are the only names on the Title as well, and our property is held in the form of an LLC.

Recently, the co-owner said, that since he and his mother had put money into the building, that he wanted the title to also reflect his and his mother's name as well.

The property is very nice and cost
a hefty amount. The co-partner has been managing the property. We pay 50% on the expenses, and being a CPA, and now a tax attorney, the "co-partner" provides end of the year expenses, depreciation etc., to my tax consultant.

So, it all boils down to the fact that my wife, since we are the only signators on the Mortgage,are totally responsible for the property which has naturally, due to housing market conditions, declined in value- thus resulting in our owing more on the mortgage than the property is worth.

Naturally, I am concerned about interest rates going up, double dip recession, and further decline in the properties value, and of course, maintaining our rents which do not presently cover the monthly mortgage payments.

I am certain that our bank would not accept a short sale, and even if it did, I would not qualify because I do have a modest retirement account that I do not want to place at risk anymore than i have to.

I was thinking of doing the following:
Paying 10-20% down on the mortgage. If I did that over the next year or two,
my thinking, barring any unforseen circumstances, is that a future buyer may purchase the property at a price, much lower than the original- thus allowing me to pay off the original notes.

Naturally, I am frighted that the market could be worse a couple of years down the pike, and interest rates will probably go up. Am I totally nuts, or am I making a bit of sense to anybody?

Any comments or suggestions would be greatly appreciated.

Doug

February 8, 2010 10:19 AM


My situation is the following:

About four years ago, my wife and I. aged 67)purchased a three flat in Chicago. The property is very nice,
and at the time the co-owner, aged
36, a CPA and Attorney, and I paid a
combined 10% down on the property.

It was to be a partnership.
At the closing we were represented by the same attorney.

Somehow, without my realising i,
my wife and I were the only ones
to sign the mortgage document, an
egregious error to say the least.
My wife and I are also the only signators on the promissory notes.
(That's another story), but I won't
get into that now.

My wife and I are the only names on the Title as well, and our property is held in the form of an LLC.

Recently, the co-owner said, that since he and his mother had put money into the building, that he wanted the title to also reflect his and his mother's name as well.

The property is very nice and cost
a hefty amount. The co-partner has been managing the property. We pay 50% on the expenses, and being a CPA, and now a tax attorney, the "co-partner" provides end of the year expenses, depreciation etc., to my tax consultant.

So, it all boils down to the fact that my wife, since we are the only signators on the Mortgage,are totally responsible for the property which has naturally, due to housing market conditions, declined in value- thus resulting in our owing more on the mortgage than the property is worth.

Naturally, I am concerned about interest rates going up, double dip recession, and further decline in the properties value, and of course, maintaining our rents which do not presently cover the monthly mortgage payments.

I am certain that our bank would not accept a short sale, and even if it did, I would not qualify because I do have a modest retirement account that I do not want to place at risk anymore than i have to.

I was thinking of doing the following:
Paying 10-20% down on the mortgage. If I did that over the next year or two,
my thinking, barring any unforseen circumstances, is that a future buyer may purchase the property at a price, much lower than the original- thus allowing me to pay off the original notes.

Naturally, I am frighted that the market could be worse a couple of years down the pike, and interest rates will probably go up. Am I totally nuts, or am I making a bit of sense to anybody?

Any comments or suggestions would be greatly appreciated.

Doug

February 8, 2010 10:20 AM


My situation is the following:

About four years ago, my wife and I. aged 67)purchased a three flat in Chicago. The property is very nice,
and at the time the co-owner, aged
36, a CPA and Attorney, and I paid a
combined 10% down on the property.

It was to be a partnership.
At the closing we were represented by the same attorney.

Somehow, without my realising i,
my wife and I were the only ones
to sign the mortgage document, an
egregious error to say the least.
My wife and I are also the only signators on the promissory notes.
(That's another story), but I won't
get into that now.

My wife and I are the only names on the Title as well, and our property is held in the form of an LLC.

Recently, the co-owner said, that since he and his mother had put money into the building, that he wanted the title to also reflect his and his mother's name as well.

The property is very nice and cost
a hefty amount. The co-partner has been managing the property. We pay 50% on the expenses, and being a CPA, and now a tax attorney, the "co-partner" provides end of the year expenses, depreciation etc., to my tax consultant.

So, it all boils down to the fact that my wife, since we are the only signators on the Mortgage,are totally responsible for the property which has naturally, due to housing market conditions, declined in value- thus resulting in our owing more on the mortgage than the property is worth.

Naturally, I am concerned about interest rates going up, double dip recession, and further decline in the properties value, and of course, maintaining our rents which do not presently cover the monthly mortgage payments.

I am certain that our bank would not accept a short sale, and even if it did, I would not qualify because I do have a modest retirement account that I do not want to place at risk anymore than i have to.

I was thinking of doing the following:
Paying 10-20% down on the mortgage. If I did that over the next year or two,
my thinking, barring any unforseen circumstances, is that a future buyer may purchase the property at a price, much lower than the original- thus allowing me to pay off the original notes.

Naturally, I am frighted that the market could be worse a couple of years down the pike, and interest rates will probably go up. Am I totally nuts, or am I making a bit of sense to anybody?

Any comments or suggestions would be greatly appreciated.

Paul

February 10, 2010 6:37 PM

I have recently started a blog to address the misconceptions and falsehoods surrounding Short Sales. It can be found at http://activerain.com/blogs/pshively.


Please visit www.charman-associates.com for more information regarding Short Sale Processing.

Paul

February 10, 2010 6:40 PM

I recently started a blog to address the misconceptions and falsehoods surrounding Short Sales. It can be found at http://activerain.com/blogs/pshively.

Also, please visit www.charman-associates.com for more information regarding Short Sale Processing.

Renee

February 18, 2010 3:18 PM

I lost a home 10 years ago to foreclosure and the bank made a whopping $30,000.00 on that. I am facing foreclosure again on another house. I was required to pay Mortgage Insurance on this house, in the event that I defaulted. Since I have been paying this, I feel like despite my credit being ruined, the bank should not seek a deficiency or be granted one in court. I have not heard one word through all my research on this, where anyone else speaks of having Mortgage Insurance in the unfortunate event of a default. Anyone have any thoughts, information, etc. concerning this type situation? I am not sure how to deal with this. I need relief from the stress of this entire situation.

Anthony

February 18, 2010 11:35 PM

Renee,

Deficiency judgment laws vary from state to state, but PMI does not protect you from one. It is meant to protect the lender from losses in the event that the borrower defaults. In some cases, PMI only covers a certain percentage of the lender’s losses and not the entire amount.

While I haven’t personally seen it, I have heard of PMI companies coming after the borrower and seeking to get reimbursed after they have paid the lender for their losses. There are many factors that come into play in determining whether or not the lender will seek a deficiency judgment. Every case varies from one another.

Chances are that you owe more than what the home is worth, so it might be best to sell your home for less than what is owed (short sale). In a short sale, the difference can be negotiated to the point where the lender might cancel the remaining debt and issue a 1099C. It won’t hurt your credit as bad as a foreclosure would.

If you’d like, send me an email and we can chat some more and see if there is any other way I can help.

Thank you,
Anthony
anthony.robaina@hotmail.com

david d

February 21, 2010 5:57 PM

im in a break up i want out of this house were not behind in payments i dont want to rent it out i want to do a short sale but i need to move now should i get behind and wait on short sale or just walk away

david d

February 21, 2010 5:57 PM

im in a break up i want out of this house were not behind in payments i dont want to rent it out i want to do a short sale but i need to move now should i get behind and wait on short sale or just walk away

david d

February 21, 2010 5:57 PM

im in a break up i want out of this house were not behind in payments i dont want to rent it out i want to do a short sale but i need to move now should i get behind and wait on short sale or just walk away

Ben

February 23, 2010 11:42 PM

I moved for work and have had my house for sale for about 1 1/2 years. i have dropped the price $30K. i have it listed about $5k below my break even point. I am at the point where i can not "stay above water" on my bills now. juggling back and forth. I think i can continue to make the payment as long as nothing major comes up as i have depleted my savings. My Realtor wants to drop the asking price even further and do a short sale. i have about an 800 credit score and mixed feelings about not paying a debt. Any advice?

Jay

March 2, 2010 5:11 AM

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moria1975

March 5, 2010 12:04 PM

THIS ARTICLE IS BULLSHIT!!!!! Lenders are ABSOLUTELY INCOMPETANT on finding their "values" of properties!! They use market data, computers, and unreasonable monetary figures to estimate value without even sending in an actual appraiser to see the inside of a home!!! My short sale was denied back in April 2009, today March 5 2010..the appraiser finally needed access to the property to determine a value for the bank to sue me in court for the defiency judgement. The appraiser also told me the bank made a horrible mistake by not taking the short sale, as now it sits encumbered by black mold and unihabitable!!! I jumped through hoops and fire to try and do the "right thing" and head off the problem, now I pay dearly for their incompetance!!! Ive been treated horribly by the lender and they DO WANT YOUR PROPERTY!!!! I was told by one representive that they will sit on it and wait for the market to pick up and get more for the property!!! HE SHOULD BE FIRED!!!! Lesson is: DONT WRITE ARTICLES ON ISSUES YOU HAVE ABSOLUTELY NO EXPERIENCE IN!!!!!!!!!!!!!!!

moria1975

March 5, 2010 12:23 PM

THANK YOU STEVE WAGNER!!! I AGREE WITH YOU 100%!!! Mind boggling how they deny a short sale and never even appraised the inside of the home!!! LENDERS ARE ABSOLUTELY INCOMPETANT ON ACTUAL MARKET VALUES THESE DAYS!!!

Jeffrey1975

March 5, 2010 1:43 PM

What people do not realize is that the IRS can no longer come after you for the remainder of a short sale as income. Due to the new Debt Forgiveness law inacted in 2007. Most short sales are now inclusive with the bank forgiving the remainder of the debt so they can not sue you and put it on your credit. This is why short sales are taking off like storm now since 2009 and in 2010. If you do a short sale, have them put it in the clause that you will not be responsible for the remainder amount, or take out a loan for the difference and this will actually boost your scores. Short sales will not be put on your credit unless they banks are not forgiving and you cant qualify for a loan to make up the difference. Its better then forcloasing.

Anand Emmanuel

March 20, 2010 10:29 PM

I am a Realtor in the State Of CA. If you need any help with short sale please feel free to send me an email.

New bill AB1779 to extend the tax forgiveness in State of CA till Jan 01, New bill AB1779 to extend the tax forgiveness in State of CA till Jan 01, 2013 by CA Assembly Member Niello, will be in assembly on March 12. All home owners who lost their property must contact their local assembly member and request them to support this bill. The objective of the bill is to extend the tax forgiveness in State of CA till Jan 01, 2013. If the bill fails thousands of home owners who lost their property in 2009 will end up paying tax to CA FTB for their cancellation of debt 1099C sent by their mortgage companies.

To get the latest updates please visit this website http://www.raindeals.com

Lucy Edelstein-Perez

March 28, 2010 12:53 PM

Sam Zapalla posting is a SCAM! California real estate agents should not be charging any upfront fees for negotiations. We've helped hundreds of California homeowners avoid foreclosure via a short sale with minimal cost ($30 for notary fees). Shore to Shore Team www.LuxuryShortSaleListings.com

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April 3, 2010 4:15 PM

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Dolores

April 10, 2010 5:05 AM

Interesting comments!! We help persons in foreclosure by either seeking a loan modification(you do NOT need to be in foreclosure to apply) or a short sale. We take the short sale process one step further because we buy your property at the agreed short sale price. Also if you want info, please visit our educational website: www.iafpp.com. We do not charge for our services ever! Let us help you gain your life back!

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Rob Alley

April 15, 2010 12:35 PM

Nice Article, I also specialize in helping people with short sales. Our website is www.charlottesvilleshortsale.com

Ed Malone

April 20, 2010 3:14 PM

Lord-You are correct you will receive a 1099 for the difference but if it is your priamry house all you have to do is file it. You will not have to pay the taxes on it. If it is a secondary home you will also get a 1099. Check with your CPA or get one and they will let you know if you are insovlent. If you are you will also have to just file the 1099 but you will not have to pay anyting.

Another thing that could happen is you could receive a judgement. If you get foreclosed on this is coming anyways. If you short sale you will get an approval letter from your lender stating weather or not they will place a judgement. Negotitate with the lender at this time to have them not place a judgement it may cost a few bucks but it is worth it.

Bk is your last resort. If the house is the only thing you are putting in the BK why file? You can get out of it with very little damage and be back on your feet in a yr or 2. A Bk is on your record for 7-10 yrs if I am not mistaken.

If you need help with a short sale in Florida contact me at ed@uccrealty.com!

T

Ed Malone

April 20, 2010 3:14 PM

Lord-You are correct you will receive a 1099 for the difference but if it is your priamry house all you have to do is file it. You will not have to pay the taxes on it. If it is a secondary home you will also get a 1099. Check with your CPA or get one and they will let you know if you are insovlent. If you are you will also have to just file the 1099 but you will not have to pay anyting.

Another thing that could happen is you could receive a judgement. If you get foreclosed on this is coming anyways. If you short sale you will get an approval letter from your lender stating weather or not they will place a judgement. Negotitate with the lender at this time to have them not place a judgement it may cost a few bucks but it is worth it.

Bk is your last resort. If the house is the only thing you are putting in the BK why file? You can get out of it with very little damage and be back on your feet in a yr or 2. A Bk is on your record for 7-10 yrs if I am not mistaken.

If you need help with a short sale in Florida contact me at ed@uccrealty.com!

T

James Roberts

April 23, 2010 8:19 AM

I'm in the process of a short sale that has been going on since 9/09. The 1st morgage approved the sale, but the 2nd morgage has been dragging on asking for the same paper work over and over. I'm close to losing the purchaser and the 1st morgager backing out. My negotiator calls everday for an update on an approval and is told by the case person that it's in reveiw by the investors. Is there anything that can be done to get them to move.

DEBBIE

April 25, 2010 3:05 PM

I am in the process of a short sale, and let me tell you I would not wish this on anyone. we submitted all documents as requested then they needed more information so we submitted that. well finally after 2 months they have granted us the short sale, we have buyers. My realtor comes to the house for use to sign the pre-foreclosure form and on there it states that we get a Borrowers Incentive Hud pays us for relocating,well now the bank wants us to waive that. I want to know is that legal and why should we have to waiver this because the bank is getting there amount per short sale why can they waiver there amount. I dont understand
They want to hold the required amount that FHA asks for on repairs to the home. There are no repairs we have kept this home in top shape since we moved in the apprasal shows no repairs needed. I plan on suing the bank after all this is over.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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