Short Sale – Karen's Perspective

New Rules Concerning Short Sales

Have you been, or will you be, involved with a short sale?

Beginning January 2012, new rules:

Starting January 2012, everyone involved in a short sale will be liable for “negligent or intentional misrepresentations in the transaction” and will have to sign affidavits stating that they are handling the transaction to federal standards.

The addition of the affidavits to the short sale process is designed to help everyone involved in the short sale “identify potential mortgage fraud and have a clearer understanding of the intent of all parties involved in the real estate transaction,” the GSE (government-sponsored enterprise) announced in a public statement.

The move is specifically designed to prevent “flopping” short sales, which occurs when short sale properties are purchased from the bank at a discount, then sold immediately for a higher price. The government agency considers this practice unscrupulous because it involves at least one party having knowledge of another party willing to pay more for the property than the amount for which the bank is settling.

11 / 29 / 2011
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6 Options When You can’t make Your Mortgage Payment

If no longer being able to make your mortgage payment is a reality for you, here are 6 of the most commonly practiced and accepted options for any homeowner in this position.

Loan or Mortgage Modification. This is a good place to start when you feel the mortgage payment growing to a place you can no longer handle it. Whatever you do at this point, DON’T WAIT!! As soon as you know your mortgage is too much for you, contact your lender. Rest assured, the lender does not want your house. They are in the lending business, not the real estate business. They will work with you even when you are still current on your payments.With a loan mod, they may refinance the debt, extend the term of your loan or even reduce your monthly payments to an affordable level.Your loan could be permanently changed by adding what you’re not paying currently to the back end of the existing loan balance, lowering the interest rate, making an adjustable rate fixed, or extending the number of years you have to repay your loan.
Why would the lender want to do this? It keeps them from losing the loan payments and gaining a house and, ultimately, they will make more from you over time because it will take you longer to pay off the loan.

Why would you want to do this? This allows you to keep the house and keep your credit in tact. It gives you time to wait until the market turns around, house values begin to climb and you can sell for a profit.
Forbearance - Read more…

05 / 17 / 2011
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Why Would a Lender Accept a Short Sale?

Guest Post

Thank you to Penny Evans for this post.

A Short Sale can be the solution when the proceeds from the sale of your home would not be enough to cover the mortgage payoff, commissions, and all other closing costs. This is a common situation in today’s market. Many people think that the only choices are foreclosure, bankruptcy, or just being stuck with the house because they don’t know about the Short Sale option. Despite popular belief, a seller does not have to be behind on their mortgage to request a short sale, they simply have to demonstrate that the house can’t be sold for what is owed.

With a Short Sale, your bank agrees to accept less than full repayment of the mortgage in an effort to avoid a potential foreclosure which would amount to larger losses for the lender. If you are approved into the lender’s Short Sale program, the lender agrees to “write-off” as much of the mortgage as is necessary for the home to be sold at market value with typical closing costs.

What is a deficiency judgment?

05 / 12 / 2011
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Short Sale – Offer 100 Percent Deposit!

A short sale is a sale that occurs when the lender agrees to sell the property for less than the balance owed on the loan. This occurs when the homeowner can no longer afford the property but the lender acknowledges that selling the property at a slight loss is better than going through the foreclosure process.

A short sale does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, the deficiency. Being released from the deficiency is a part of the short sale negotiation. Many lenders will forgive the debt to the borrower but be sure you get this agreement in writing from the lender or they are within their rights to come after you even years after the short sale.

05 / 02 / 2011
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How is Your Ecomony Holding Up?

Highlights from an interview by Meredith Whitney currently on CNBC:

* A double dip in housing is a certainty
* State economies are plunging and are $200 billion underwater, will lead to 2 million in state-level layoffs leading to a low-end impact; raising taxes at state level will impact the top-end
* Retail sales have been stronger only due to consumers not paying mortgages, retail sales have already topped as is
* Second quarter bank results will finally catch up with accelerated mortgage foreclosures; charge-offs and delinquencies in credit cards are better due to mortgage non-payment cash flow going to other obligations. This will soon top as well.
* Structural employment issues in the US won’t get better any time soon

The experts are saying that the economy is going to get worse. How’s your personal economy? What are you doing to prepare and care for your family?

Again, if you’ve paid attention to global economics, I hope you’ve taken care of your personal finances. I focus on my own micro economy because I’ve done what I can to set myself up to ride this economic wave.

What have you done to prepare?

06 / 23 / 2010
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Short Sale vs. Foreclosure – how does it impact you?

Lenders

Did you know:

Time lenders typically require to repurchase a home:
Short sale: 3 years
Foreclosure: 5-7 years

Points drop in credit score
Short sale: 50-130
Foreclosure: 200-400

Buying again after a short sale

If your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. The wait for an FHA loan is 3 years.

If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence.

Buying Again After a Foreclosure