Stop Foreclosure – Avoid Foreclosure – Refinance – Short Sale – Lease Option

Let’s say that your mortgage is for $300,000, but thanks to the housing slump, your property is only worth about $280,000 in today’s market. You’re now what is referred to as being “upside down” on your mortgage—owing more than your home is worth. This is a problem in itself, but if you’re also having trouble making your monthly payments, you could soon find yourself in the same position of thousands of Americans who are facing foreclosure.

A daunting prospect indeed, but there are alternatives. Refinancing your home loan for instance, is one way to get a bit of breathing room. Some lenders may also consider temporarily halting or reducing your mortgage payments, which would give you a bit of time to recover from whatever hardship you’re facing. And there’s also the option of trying for a short sale.

A short sale is when you sell your home for less than you owe the bank. Using the same numbers as above, say you owe the bank $300,000, but you know that the house will only reasonably fetch about $280,000 from a buyer. If you sell your home for that amount, you’ll be short $20,000 on your debt to the bank.

While the bank naturally wants its entire $300,000 back, they know they can’t squeeze water from a stone. If you can’t afford to make your monthly payments, the bank will have to face two options: accept a short sale or go ahead with a foreclosure.

A foreclosure means that the bank will repossess the home and try to sell it themselves. This is a risky option for the bank because foreclosures are time consuming, and often result in the bank taking a big financial loss.

In a short sale, while the lending company will not recoup all monies owed, they may be able to recover more of their money than if they went the foreclosure route.

Why would a seller want to do a short sale as opposed to a foreclosure? A short sale typically does less harm to a person’s credit score than a foreclosure, which is second only to bankruptcies in terms of credit damage. Depending on the terms of your agreement with the bank, you could also walk away with the remaining debt forgiven, which essentially gives you a fresh start at life.

Your lending company holds all the power when it comes to a short sale. They decide whether they’re willing to accept one in the first place, and what the terms of the sale must be. They determine the viability of a short sale based several things. First, they need to be convinced that you’re not simply shirking your responsibilities, but are actually facing a hardship.

According to most banks, legitimate hardships include the death of your spouse, unemployment, illness, and divorce.

If you’re interested in trying for a short sale, you need to consult a real estate agent or attorney who has experience with short sales. They can advise you on the documents and procedures involved. You’ll usually need to supply the lender with two years’ worth of income records, as well as pay stubs and bank statements. It’s also a good idea to gather a list of all your income and expenses to demonstrate the severity of your financial distress.

Aside from the hard numbers, you will also need to write a hardship letter detailing your situation, and how desperately you need the bank to forgive your debt. Experts recommend that this letter be brutally honest and heartfelt. If you’re having trouble feeding your children, tell them. Even if you feel ashamed of your financial situation, you need to communicate with the bank. While a short sale is primarily a business decision for the bank, they will take your needs into consideration, and look more kindly upon a short sale if they see that you’re truly struggling to make it.

A short sale is a lengthy process, taking between one and four months on average for the bank to approve a short sale offer. If the offer the buyer makes is lower than the bank is willing to accept, they will deny your request for a short sale, and proceed with a foreclosure.

If you have professionals to guide you, you may escape the dark cloud of foreclosure, and enter the slightly brighter skies of a short sale. Just be patient, honest, and have all your paperwork prepared well in advance.

Water Filters – Reverse Osmosis – Whole House Water Filters

First of all, “yes” some short sales take long to sell and “yes” some short sale listings can be frustrating.  But let me tell you this; not all are created equal! With a little patience and a little creativity you can overcome some of the shortcomings of listing pre-foreclosure/short sale properties and make a lot of money by helping homeowners get out from underneath the huge burden of debt and stress they are under.

Let’s deconstruct three of the biggest short sale myths:

Reduced commissions

They take too long

Too hard to close

1.  Reduced Commissions

Yes, it’s true when it comes to a short sale; the lender is in the driver’s seat.  And since they hate to lose money they tend to reduce the amount of commissions by an average of 1%, meaning that if your area pays out 6%, they will only approve 5%, which will be split by both the agents involved in the transaction.

You know what I say to that?  Who cares! Be creative! Did you know that there are 7 additional profit centers that can offset your 1% cut in commission?  Let’s take a look at what they are:

A “Loss Mitigation Fee” via the Lender

A “Loss Mitigation Fee” via the Buyer

A “Loss Mitigation Fee” via the Attorney or Title Company.

A “Loss Mitigation Fee” via the Seller

Referral fee from a listing agent (for doing the loss mitigation work on their short sale).

Buy it as an investment (buy and hold or buy and flip).

Any combination of all of the above!!

The “Loss Mitigation Fee” is a fee that we collect only when we successfully negotiate a short sale and have the foreclosing lender pay for all of the closing costs (the Realtor commissions, attorney/title company fees, conveyance taxes, etc.).

2. It Takes Too Long

The average loss mitigator receives an average of 30 NEW files a day.  Not a week, not a month but a DAY!  That is part of the reason that short sales can take a while, but it isn’t the main reason.  The primary reason is because the majority of real estate agents submit short sale packages that are less than adequate and professional!  Meaning;

They are incomplete in terms of paperwork (entire documents are missing)

They are arranged poorly (Yes, that makes a difference!)

They are sent to the wrong person or department (happens very often)

They are incomplete in terms of information (i.e. the financial worksheet isn’t completely filled in)

Those and many more reasons cause short sales to get hung up.  Once again, take what the defense gives you.  If loss mitigators are overwhelmed, then the key is to put together a professional and presentable short sale package guaranteed to get your short sale offer reviewed and approved.

3.  They Are Too Hard to Close

With the right system they are not hard!  Let’s take a look at how to overcome the two biggest reasons why short sales blow up right before the closing.

Not managing expectations

This is a negotiating process.  Make sure you clearly communicate the process every step of the way to the buyer and the seller. We use an online short sale management tool called to automatically keep everyone connected to the short sale process, which is updated in real time.

Many deals blow up because real estate agents fail to communicate to both the homeowner and the buyer the current status of the short sale and what to expect when they negotiate with the foreclosing lender(s).

Lack of qualified buyers

The key is not to have only one buyer but to have a pool of qualified buyers that are pre-approved.  The best buyers to keep an eye out for are those that are already pre-approved and that have funds in place to make an actual purchase.

The two easiest ways to do that are:

Start networking with every real estate agent that specializes in buyer’s representation. They are easy to find because it is in all of their advertisements.

Start working closely with every single mortgage broker or direct lender that you know, or that one of your fellow agents knows.

In conclusion, listing pre-foreclosure/short sale properties can take some time to close. However; in this market everyone needs to stick together and help one another out. By building the right network of real estate professionals, we can all ensure that our listings (short sales or not) do not sit out there without a buyer!

A short sale, by definition, is the sale of a property to a lender for less than the amount of the mortgage owed.  This sale is often only permitted under extreme circumstances.  The bank or mortgage lender takes into account current economic outlooks, the personal financial situation of the debtor or home-owner, the local real estate market, and the reasonable possibility that the bank will recover some, if not the entirety, of the mortgage loan.  The advantages of short selling a property to the debtor are obvious.  A short sale is often pursued instead of foreclosure proceedings.  Thus, by short selling a property, a debtor can keep a foreclosure off of their personal credit history.  Also, the difference between the original mortgage and the short sale offer, also known as the deficiency balance, is partially under the control of the debtor.  This means that the debtor is free to pay back the deficiency under their own terms.  Sometimes, though rare, this debt is forgiven completely.

The advantages of a short sale are less obvious for the bank or mortgage lender.  These institutions are primarily concerned with recouping their financial losses on bad or risky loans.  Thus, they may choose to allow a short sale if they believe that this course of action will result in a smaller financial loss than foreclosure proceeding.  Whereas a foreclosure can cost the bank or mortgage institution a certain amount of money through legal fees and court proceedings, a short sale is simply an agreement between the debtor and the lending institution and entails much less hidden costs to the lending institution.  Oftentimes, a short sale is the best method for the bank to guarantee at least a partial return on a bad or defaulted loan.

A short sale is a fairly common business transaction.  However, lenders do not like to view these transactions as financial favors to the debtors.  Rather, these institutions view these short sales as sound financial extensions of credit.  When retaining an asset makes little business sense or is economically unfeasible, a business will default on their loans.  If enough of these loans are defaulted on, a bank or mortgage lender can be put in dire financial straits.  Thus, a short sale is utilized to reacquire these economically unfeasible assets and recoup a portion of the extended and defaulted loans.  In this manner the financial institution looses only a fraction of the accumulated debt.  In these types of business short sales the deficiency balance is almost always forgiven.

There are a number of steps that debtor must take in order to secure a short sale from a bank or other financial institution.  Most banks require that a Notice of Default be completed.  This alerts the local government of the impending default and stipulates the location, relative value, and financial history of the defaulted property.  While conditions vary from bank to bank, several levels of approval are usually required.  This is often a long and complicated process for the debtor.  Some banks have set limits on short sales, and these restrictions can vary in amount or type.  For example, many banks won’t approve a short sale if there are tax liens held against the property.  However, if approved, a short sale can be a great way to relieve debt obligation without permanently affecting your credit score.

How To Shoot Handguns Accurately

Current events have created hardships and financial devistation for many homeowners. These homeowners were unable to make their mortgage payments and were in default. Foreclosure is a problem that many people have been experiencing right now. If you are one of them, you would be now thinking of a solution for you to stop the foreclosure process immediately. One of the most practical solutions to your foreclosure problem is to sell before foreclosure. There are many reasons why you should sell before foreclosure and here are some of those reasons:

1) If you sell before foreclosure the sales contract will immediately stop the foreclosure process, since what the lender wants is the money that they have loaned you during your mortgage loan agreement. If you sell before foreclosure and your house is already being auctioned, the sales contract will immediately hold the bidding and it will not be sold to anyone at the auction.

2) Another reason to sell before foreclosure is that you could sell your house or your real property for the current market value. This means that when you get to sell before foreclosure you would be able to pay the bank and still have some money for you to save or use for the down payment for your new prospective home. This is hitting two birds with one stone, being able to pay your lender or the bank solves your foreclosure problem, since this is your main reason to sell before foreclosure and having the extra money from the sales of your house or real property is a big bonus.

3) Protecting your credit is another reason why you should sell before foreclosure. If you house or your property has been foreclosed surely this will have a big effect on your credit record. Large points will cause your credit to change dramatically from good to worse. If you have a bad credit then you want to purchase a home or perhaps a car you would be required to make a large down payment and will have higher interest rates than the usual interest rate. Another effect of a foreclosure in your credit is that you will have a difficult time in getting a decent credit card with decent interest rates. Though there are special credit cards for those with bad credit record, however this credit card is more like a prepaid credit card, then the credit limit will not be the same as a normal credit card. So, if you sell before foreclosure you would be able to avoid all these hassles and more importantly you will not get a bad record on your credit since the creditor could not tell if you are currently under the foreclosure process then you would be able to get another mortgage easily if you sell before foreclosure since you will not have a bad record in your credit.

4)When you sell before foreclosure you will not be asked to vacate your previous house immediately, you will be given an ample amount of time to move out. Usually most sales contract will give the previous homeowners 30 or 60 days to move out. This way, the previous homeowners will have time to pack up, how they will transfer their things and furniture, previous homeowners will have time to sort out their next move, make proper arrangements in terms of their new home, and gather their monetary resources.

By all means if you can sell your house before foreclosure do so. Your lender may even accept a short sale of some amount to facilitate the sale. The faster you can solve this default the sooner the damage to your credit will stop. Missed payments will cause points to be lowered but a foreclosure will hurt more for a longer period of time.