You probably know by now that completing a short sale is much, much better then giving up and quitting and letting the bank take the home via foreclosure.  You probably also know that although, much better than a foreclosure, the short sale will affect your credit.

What you probably don’t know is that in most cases a deed-in-lieu of foreclosure and a loan modification will as well.

Your loan modification (depending on the type) is essentially a settlement or restructuring of debt.  Ever see those debt consolidator commercials that say, “no bankruptcy needed?”  Just like a loan modification (which you can do yourself) you could do this with your creditors as well, as in you could negotiate a lower payoff or better terms with your creditors.

The catch is that there’s usually some damage to your credit involved.   This information comes straight from Wells Fargo, who told a client the other day that this modification would be recorded and adversely affect their credit.

The same can be said of a deed-in-lieu where you are basically settling or agreeing NOT to pay the debt.

To understand why this happens you have to refer over to the pie chart and see how it “hits” your credit.

See the largest part of the pie?  35% to payments?  Keep in mind that 99.9% of the time you will not qualify for any of these things without missing a payment, so that’s damage number 1.

The second part of this is settling which is like missing one big payment or all of the remainder payments.  It’s kind of like dropping an atom bomb on your credit. Depending on how this is recorded it could very well stay on your credit for 5 years or more.

Finally, there’s the issue of forgiveness of the debt in the case of the deed-in-lieu that could result in a collections account being opened.

We understand that everything is going crazy right now, but if you keep your wits about you, you can often avoid some damaging things and come out better in the end.

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

Short Sales Affect Your Credit

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We recently recorded a video (got to learn how to use a mic) about a Wells Fargo Short Sale. Here we go into why we like Wells Fargo Short Sales.

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

Wells Fargo Short Sale Video

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It’s important to understand the bank’s viewpoint.

BPO (Bank’s Appraisal is High)

They think the home is worth more so their REO comparisons have a “happy ending.” Meaning, they think they can resell the home for more then your offer.

You Want More Closing Costs so You Increase The Price (the Net to Seller Remains the Same).

They believe that any increase in PRICE is a good one and that ALL INCREASES should increase their net. The idea of increasing the sales price to include closing costs is a bit foreign to them, in that they believe that you do that to get in the home.

It’s a Short Sale, I should get a good Deal

Finally, they feel that the home should be sold at RETAIL as short sale.

Although these things may not be logical or rational, this is their “belief system.” There are other things that I could add, but I’m hoping I’ve given you enough to help you understand their viewpoint.

Optional otherviews:

All Short Sellers are “bad.”
Agents are vultures
Investors are of the devil
% are good
Confusion helps subsidies

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

The Bank’s View

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This happens quite a bit.  I get a call from someone about their short sale and they are frantically wanting to get the home on the market.  In some cases, they want to get their home on the market but they can’t make time to meet with our team or make the home available for photos, etc.

Selling your home as a short sale is more than just putting it on the market.  ANYONE CAN LIST A HOME (as long as they have a real estate license).  Not everyone can navigate through a short sale and have it completed successfully.

When you are interviewing agents, ask them how many short sale SELLERs have they represented.  There’s nothing more disheartening to find out that a seller got anxious and decided to list with whoever would show up first without any due diligence on either parts.

If you haven’t seen this video on selecting a Short Sale Agent, head over to the About us page.

Here’s a few questions to eliminate the wheat from the chaffe:

• How do you handle a Mortgage Insurance company’s involvement in the short sale?
• How much to 2nd Lien holders typically get?
• How many sellers have you successfully represented in a short sale?
• Who does the negotiation with the bank?  Are they local?
• Will I receive a 1099 for the difference?  (I’m going to post the answer in another post, but the short version is ALWAYS yes, the difference is that if the home is your primary residence – that is you bought the home to live in – then you will not be liable)

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

I need my home listed ASAP!

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Here’s your scenario:

PMI (Private Mortgage Insurance, also known as Mortgage Insurance) company has a policy on the shorted loan that says they will pay the investor 20% of the loan amount.  So if you have a 400K loan, that’s $80K total payout.  In order to pay this, the insurance policy has certain things in place to make sure, just like any insurance policy, it’s designed NOT to be paid out.  Some of those actually related to short sales.

In a short sale, the investor would like to get the insurance to cover their loss on this. In most cases,  20% of the total loan PLUS whatever the investor gets through REO Sale = MORE THAN YOUR SHORT SALE.

That’s a big fail.

This is why you see Bank of America short sales getting so many complaints.  The investor is saying, “I want to help you, but based on my due diligence and my insurance policy, you need to bring another 20K to the table.” Dead deal.

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

What does “PMI” have to do with a Short Sale?

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According to business week, this is a common practice, one that makes it scary to even think about a deed in lieu or a foreclosure.

Deficiency judgments were rare in the 15 years since the last real estate slump, said Ben Hillard, a former investment banker who now is a real estate and corporate attorney at Hillard & Rogers in Largo, Florida.

“The banks have been too underwater with foreclosures to spend much time on deficiency judgments, but that’s beginning to change,” Hillard said in an interview. “This is going to be the next big crisis.”

The key (which is alluded to in the article) is to know your options and have a specialist help.

• Make sure the wording is correct and forgives you of the debt.
• Be happy if you get the 1099, that means the bank has “written off” your debt – in exchange of proper wording.
• Know your state laws – Georgia gives 30 days for banks to pursue a deficiency judgment.
• Know what type of loan you have on the home.  Home Equity “LINES” are different than “LOANS” and are treated differently
• Know your situation – are you really in a great situation but carrying the mortgage note on this home is a drag?  You could be a target as this next quote suggest.

The likeliest candidates for deficiency judgments are so- called rational defaults, said Larry Tolchinsky, a real estate attorney in Hallandale Beach, Florida. In those cases, people who are current on their mortgages decide to walk away from a property because its value has sunk so far below their loan balance they have no hope of recouping the loss.

About 21 percent of American homeowners owe more on their mortgages than their properties are worth, according to Zillow.com, a Seattle-based real estate data firm.

“Walking away from a property comes with a cost, especially for people who otherwise have good credit,” Tolchinsky said in an interview. “The bank is going to pull your credit report, and if you’re current on your other bills they are going to come after you and potentially ruin you.”

If you want to explore your options, feel free to contact us.  A short sale at least keeps you in charge as much as possible.  A foreclosure is the bank “TAKING” the home and a deed-in-lieu is basically giving up, if there’s no negotiation for forgiveness.

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

Lenders Pursue Mortgage Payoffs Long After Home Owners Default

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After a late night of browsing I stumbled onto a site that said it had Certified Program 3648 Advisors.  I thought for sure this would be something that I would be immediately certified in, simply due to the sheer volume of short sales I’ve been able to complete in the last few years.

NOT SO!  Apparently in order to be “CERTIFIED” you must be able to pay a fee.  In fact, that’s the only requirement!  There’s no requirement for the agent that is certified to actually complete a short sale transaction!

I did more research on this and it turns out it is a bit of a marketing trick. Program 3648 is not affiliated with the gov’t or any other gov’t sponsored entity. It is a private firm using the Mortgage Debt Forgiveness Act (HR 3648) as a marketing tool to get clients.  – Sidney Jimenez

So where did Program 3648 come from?  It’s named after the debt forgiveness act of 2007.  Which simply waived the taxes on your primary residence when you do a short sale.

What about other so called “certifications?” 

Most have some great material and education but none require their members to ever have completed a short sale transaction.  One of the best is CDPE (Certified Distressed Property Expert), but even it’s members don’t have to have any real experience.  In fact, despite this course’s excellent material, the National Association of Realtor does not recognize it as an official designation.

When you are interviewing potential agents to sell your home, you need to ask a few questions:

1. How many SELLERS have you successfully represented in a short sale?
2. What is the structure of your team?

The first question is self explanatory, but the second one might confuse a few people.  The bottom line is that short sales are highly administrative and one agent cannot effectively manage their business and short sales without help.

(shameless self promotion warning) – At the Jarvis Team we have a full time negotiator on staff LOCALLY that will handle all of your paperwork who will make 3 contacts (not just phone calls) with the bank every week.  If you need to stop your foreclosure or just want to discuss a short sale, call us at 770-374-4667 .

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

Program 3648 – Other Certifications

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To say that Bank of America short sales are the worst is to say that World War II sucked.  It doesn’t even come close to describing what it is like to deal with Bank of America on a short sale. That being said, they are predictable at least, once you know few things.

Here’s a few oddities that you probably didn’t know

• Before a file can be a short sale, homeowner(s) must call BOA’s Home Retention 1-888-325-6428 to let them know that they want to do a short sale.  Then, Home Retention mails them a Short Sale Pkg & refers file to “Short Sale” once the financials are entered.
• Toward the end of the approval process it’s likely the negotiator will call you and congratulate you on a successful short sale.  This means that Bank of America has completed THEIR job.  They then will send it to the insurance company or investor for approval which could add another 60 days to the process.

We learned these two new things along with the edition of Equator, Bank of America’s new online short sale system, in the last 30 days!

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

Bank of America Short Sales

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I read this on a forum post the other day and thought, this is the perfect example of an agent who does not understand the short sale process.  Before you read on, please be aware that a short sale involves getting all the parties to agree, so it’s more than a simple negotiation with the bank, there is the seller, the buyer, the agents, the buyer’s lender, the seller’s lender sometimes you have their attorneys, you have taxes, hoa’s and more.  So it’s definitely not easy, but it’s not this either:

“Banks say they’ve hired staff, set up processes for handling a flood of troubled borrowers, but consumers are not filling out the paperwork. JPMorgan Chase and Bank of America, two of Florida’s largest lenders, say they make dozens of phone calls, send letters and even knock on borrowers’ doors to get documents. But both banks say few borrowers respond. [this is true! I actually do assignments for banks in some cases to try to contact these homeowners.  Most homeowners do not know that the banks would like to help them stay until it's too late!]”

BULL! WHY won’t these banks just be honest and tell us that it is more financially beneficial to them to foreclose? [For small banks, this is actually true, but for larger banks, it can cost them upwards of $50,000 per foreclosure, PLUS the losses they take on the home.] THEN, we get Congress to IMMEDIATELY draft and put into place an ‘ACT’ FORCING the banks to do the short sales or loan modifications, or face even more tax and losses. I just don’t see any end in sight for the continued decline in home values ( mainly in AZ, FL, NV and CA) [Note that GA is in this mix of states too! Also note, This agent is not licensed but in one of these states]. We are DROWNING in these states. Our states are BROKE, and will need Federal rescue. The banks and their greedy, selfish behavior is what is causing this mess to continue. We need an ‘Act of Congress’ to force banks to stop the bleeding. ‘We The People’ MUST do something!

The sentiments are understood, even if misplaced.  The truth or facts here is that the Government is doing a lot to “prod” banks into complying.  Do a search on HAMP or HAFA and you’ll see that there are guidelines to follow for short sales and loan modifications for all government backed loans.

In fact, we’d love to help you if you have an FHA loan, thanks to the government, it’s a streamlined process…. SORT OF.

If this agent had been working on any number of short sales, then she’d know that there are a ton of things in place to help consumers. Unfortunately, 60% of foreclosures have former homeowners that never called the bank.

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

Here’s An Example Of An Agent Who Does Not Do Short Sales

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If you have an FHA mortgage then you might qualify for your lender to “pre-approve” your short sale with what is called a “Pre-Foreclosure Sale.”  I can’t tell you specifically how the two are really different at the end of the day.   However, I can tell you that we are closing short sales in record time thanks to the FHA process and guidelines.

What are the benefits outside of the quick closing?  The Seller can sometimes get up to $1,000 at the closing for moving expenses!

One side note is that if your Servicer/Lender is unresponsive, like Bank of America, you have to actually APPLY by calling and specifically requesting to Apply for the FHA Pre Foreclosure Sale plan.  They’ve got 60 days to review your application.

Post from: Atlanta Short Sale Listings, Search All Georgia Real Estate, Short Sales Atlanta

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