Posts Tagged ‘Realtor’

Take a dose of the Short Sale pill from your local Realtor to relieve your Mortgage payment Headaches

Wednesday, February 10th, 2010




short sale pill

The cure for a foreclosure




You have been hit so badly by the economic downturn. Your finances are not in a good shape. You’re having a hard time paying the mortgage on the house, and you are sure that in time the lender will start foreclosure proceedings against you. You want avoid that, but don’t know how. A short sale can help you avoid foreclosure. Do you have an idea what a short sale is? Do you know of any one who went through the short sale process?

I will define the term short sale, so you can make an informed decision on whether to go through with a short sale or not, but before that, let me take a step back and discuss your current situation. This is the common process everyone else went through before they decided that a short sale was in their best interest.

How you got to where you are now

You had to take a loan from a lending institution and your house was used to secure the loan. The loan is most likely for the house you are living in right now; or maybe for something else. You are going through financial hardships, and you have been unable to pay the monthly payment for the loan. You are also more than 60 days behind in payments. You are aware that the value of your property is less than the amount you owe the lender. The lender has been sending collection notices and could initiate foreclosure proceedings against you. You want to avoid a foreclosure. And honestly, your lender wants to avoid foreclosure too. But if they allow time to pass, your loan interest and penalties will increase, and the lenders loss due to your non-payment will also increase. You and the lender are in situation where both of you are losing.

A short sale benefits you and the lender

A short sale allows you and the lender to lessen your losses, keep this in mind because it is the most important reason for deciding to move forward with a short sale. Plus, you are the one who initiates the process to begin with. In a foreclosure, it is the lender who takes action. In most cases, the lender will find ways to avoid initiating a foreclosure. Why? Because a foreclosure process is lengthy and costly for the lender, and the lender does not receive any payments from you, only the deed to your house. One important detail you should be aware of is this -in a foreclosure, you will not be able to get a loan to buy a new home within 5 years, even if your financial situation has improved. In a short sale, you can buy a new house 2 years after. The cost to the lender is lesser, plus, you are able to pay part of the loan amount that you borrowed from the lender. You can negotiate the remaining balance of the loan with the lender. You are also able to avoid foreclosure, a word many financially challenged homeowners were not able to avoid.



How to start the short sale process

This course of action begins when you, the borrower decides that a short sale is the best option. You start the process by contacting a local Real Estate Agent to assist you by listing the property for sale on the Multiple Listing Service (MLS). Immediately the agent will contact your lender on your behalf to make them aware of your situation and the need for a short sale. This is done so that the agent can get the list of all the necessary documents your lender will require and also to find out what steps that your lender requires you follow in order to begin the short sale process. Having a professional real estate agent assisting you with this process will allow you to maximize your time with other pressing concerns. The real estate agent will represent you in negotiating the short sale with the lender and getting it approved; from listing the property and up to the point where your house is sold.

Now, please bear in mind that in a short sale, you will not receive any payment from the buyer of your house because all of the proceeds will be paid to the bank to pay for your loan. And that amount is usually less – or short of – the total amount you owe the lender. The short sale process is initiated to lessen everyone’s – you and the lenders’ – loss.


 

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Do you know a homeowner in financial distress? Do you think a short sale will be right for them?

Give this much thought. If you have questions, feel free to ask me and don’t forget to leave your comments and suggestions on my blog.


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Short Sale VS Foreclosure VS Deed-In-Lieu of Foreclosure; which of these represents the best choice for a homeowner in distress

Wednesday, October 21st, 2009

The entire foreclosure process can be very stressful for homeowners; some get so depressed, that they do nothing about it. While others who are proactive sometimes end up being given the wrong advice or make decisions that are not well informed. If you are a homeowner dealing with this situation, you will have to make a decision on whether to get your property sold as a Short Sale usually at the discount approved by your lender, or give the property back to them as a Deed-In-Lieu of Foreclosure or just let them complete the Foreclosure. You need to decide which of these three options is the best for you both in the short and long term? Deciding which option to take might be tough especially if you do not know how each will affect your credit and ability to buy a home in the future.

Short Sale VS Foreclosure VS Deed-In-Lieu of Foreclosure

A short sale transaction occurs when a lender agrees to a discounted payoff on the loan balance, due to the financial hardship experienced by the homeowner and/or a decrease in the resale value of the property. A short sale is the best option if you are facing foreclosure because it is a lesser financial loss. You get to avoid foreclosure, reduce the adverse effects on your credit and increase your chances of getting a loan to buy a home within a shorter period of time.

Foreclosure occurs when a lender sells or gets back a parcel of real property, after the owner failed to conform to their mortgage or deed of trust agreements. The estate becomes the absolute property of the lender. The foreclosure process generally starts with a formal demand for payment in the form of a letter called Notice of Default (NOD) issued from the lender. It varies from state to state but in most cases the lender usually issues this notice when the homeowner has been 3 months irregular on their mortgage payments. The notice is typically a warning that they will sell your property if you do not make your payments current.

Deed in Lieu of Foreclosure is the alternative to a foreclosure. This is a settlement, which is voluntarily made, and in good faith in which the borrower surrenders their house to the lender and moves on with nothing owed. The main advantage for the borrower is that it immediately releases them from the debt associated with the defaulted loan. The borrower also avoids a painful and time consuming foreclosure. The main advantage for the lender is a reduction in the time and cost of repossessing the property. In most cases a lender will only accept a deed in lieu if there are no other liens attached to the property or these liens can be significantly reduced. The reason is because they do not want to be responsible for the other liens that are attached to the property; this is why most lenders will push for a foreclosure instead because it removes all junior liens.

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Documents required by lenders in order to begin the Short Sale process

Saturday, September 19th, 2009

A Short Sale is a type of real estate transaction wherein a homeowner sells their property for less than what they owe the lender. For most lenders to consider a short sale, the homeowner must be experiencing a financial hardship and is unable to make their mortgage payments. Also, the mortgage itself has to be upside down; meaning that the value of the property has dropped and hence there is no equity. The lender takes a loss, and any unsettled balance is usually forgiven. In order to begin the process of negotiating and then approving the short sale, you will need to submit a set of documents required by most lenders. The primary documents are:


• Authorization to Release information. This authorization is an important document because it instructs the lender to discuss your loan with a third party, which in this case is your real estate agent who is helping you navigate the short sale process. The authorization should contain the following data.

a. Name of all the borrowers

b. Social security number of all the borrowers

c. Address of Property

d. Names of lenders/creditors

e. Loan number

f. Signatures of all the borrowers

g. Date

h. Name and contact information of your real estate agent (or whomever you want the lender to release your loan information to)


• Borrowers Financial Statement. This document highlights in detail your assets and liabilities. It is a worksheet that accounts for all your income and expenses. It also should include your co-borrower’s financial information.


• Listing Contract. This is the contract between you and the listing agent. It is needed so the lender can see that your agent has made the effort to expose the property to as many potential buyers as possible in order to received offers by placing it on the Multiple Listing Service (MLS). It also highlights the commission charged by the real estate agent. Agents are often needed in order to speed up the process.


• Purchase and Sale Agreement. This is an agreement that contains the accepted buyer offer. The contract should be legitimate and must be signed by all the owners of the property. A short sale package is considered incomplete without this document. Only packages with a contract that has been signed by both the buyer and the seller should be submitted to lender.

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What is a Short Sale and why you should have one done for you by a Licensed Real Estate Agent

Tuesday, September 15th, 2009

What is a Short Sale?


A Short Sale is a real estate transaction in which the revenues from the sale fall short of the balance owed on a loan secured by the property sold. Short sales have become the order of the day due to the financial hardships experienced by homeowners whose mortgages are upside down and can no longer make their mortgage payment for one reason or the other. Instead of letting the bank foreclose and ruin their credit, homeowners are now opting to do a short sale.


Who Benefits from a Short Sale?


After a short sale, the home is sold to the buyer and the seller walks away without any cash from the sale; all proceeds go to the lenders and other creditors on title. The main advantage of a short sale to the seller is that he/she can avoid owing the balance of the loan and also get to avoid the long term negative consequences of a foreclosure on their credit.


The buyer’s advantage is clearly the prospects of getting their new home at a significant discount compared to what they might have paid for it a few years back. Buyers should be aware that the short sale process often takes time and are required in most cases to purchase the property as is. In the end, the reward for being patient is a new home at reasonable price.


Mortgage lenders benefit as well, they avoid the cost of a lengthy foreclosure process. Most lenders will agree to a short sale if the seller can prove that they are financially insolvent and also if the lender is made to see that it’s in their best interest to take the discount now instead of taking the property back after a foreclosure and then trying to sell it for less than what they can net right at the moment if they approved the short sale.

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