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Tag Archives: short sales

Short sales v. foreclosures

March 15, 2010

Despite the best intentions of just about everyone, except maybe the banks, loan modification programs are only helping a very small number of people in trouble.

That means many homeowners are coming back to the dreaded short sale in an attempt to get out from under.

In theory the short sale should be a really good idea, but the bank departments handling them are plagued by high turnover, high stress and chronic overwork. What theoretically could take a few days or weeks can drag on for many, many months. Buyers give up. Agents spin their wheels re-submitting the same materials over and over. The bank can say yay or nay to any and all terms of the contract. And there’s no guarantee the property won’t go to auction anyway.

But maybe, just maybe, things will improve. The new Home Affordable Foreclosure Alternative program will run until Dec. 31, 2012. Among its provisions:

  • The lender must offer a short sale in writing to the borrower within 30 days after the borrower either is ruled ineligible for mortgage modification under the HAMP program or has been ruled unable to sustain payments under a trial plan.
  • A borrower may receive up to $1,500 to assist with relocation expenses.
  • Incentives of $1,000 will be offered to lenders for each completed short sale. For each deed in lieu of foreclosure, in which the borrower voluntarily transfers the property to the lender, $1,000 will be paid to the lender.
  • A lender with a second lien on the property will get up to $3,000 of the short sale proceeds, or can pursue a short sale outside the program if it doesn’t agree to share.
  • The lender will not be permitted to reduce the real estate agent’s commission after an offer on a property has been received.

Short sale transactions are not for the faint of heart or anyone who has to be in a new home within a certain time frame. In many ways I think it is a whole lot better to skip these properties and go straight to properties that have already been through the foreclosure process and are now bank-owned.

If you’d like to discuss this in more detail, I’ll be happy to talk to you.

[Source: http://rismedia.com/2010-03-11/government-urges-short-sales-experts-arent-sure-theyll-help/]

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Short sales and avoiding foreclosure on your mortgage

August 8, 2009

I just finished working on a short sale, and I’m sorry to report that it did not have a happy ending. I’ve spent the last few days talking to other brokers, and their experiences have been similar. At least for now it appears that the opportunity to help homeowners in this fashion is pretty much dead.

I’m not going to whine about how hard I worked and how many hours I spent trying to make this sale come together (okay, I will), and how my seller, the buyer, the buyer’s agent and I all worked in good faith. In the end, none of that mattered. In the end it became clear that the decision makers with this particular lender never opened the file. It did not matter that we replied promptly to all the requests of the minions at the lower end of the totem pole, and that the seller jumped through hoops to produce all the financial history they requested. NO ONE EVER LOOKED AT THE FILE. Despite having a bonafide offer, the property went to auction, the buyer lost out on a home they very much wanted, and all the repercussions of a foreclosure will come raining down on the seller.

What does this mean to you? First and foremost, if you find you cannot handle your mortgage payments, contact your lender. There have been several news stories recently about how little of the stimulus money lenders have actually been spending on loan modifications, but that is the place to start.

The second thing is to come to terms with your new reality. Unless you are able to work something out with your lender to change the terms of your mortgage, you will have to move. This may be the hardest thing of all. Not the moving, but the coming to terms with it. Talk it over with your family and be there for each other. You will get through this, and it really and truly is not the end of the world.

The third thing is to bring a Realtor into the process immediately. You need to sell your house NOW. Once the foreclosure process has begun, it will probably be too late. You need someone who will give you competent advice on market conditions, and you will need to price your house aggressively. Be frank with your Realtor about your loans and their terms and exactly where you are in the foreclosure process. This is all vitally important.

Then cross your fingers, say your prayers, and hope for the best.

P.S. If you have bought or refinanced your property within the past few years and would like to greatly reduce your chances of losing your home to foreclosure, I have a way to turn the banking system to your advantage. It won’t help if you can’t make your payments now, but it could provide you with a cushion if such a predicament strikes you in the future. And nowadays, who knows? If we’ve learned nothing over the past several decades, you can never take your employment for granted. Please visit — www.Debt2Zip.com

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