Real Estate Information Archive


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Short Sale with a Guarantor

by TeamForYOUrDreams

Even beautiful homes are sold short.  In particular, the one in this information involved negotiating with a guarantor, which saved the day.   At first, I tried to sell the house for enough to cover the loan and commissions.   In spite of my best efforts, there were few showings.  So we had to reduce the price. 

Federal legislation in 2007 allows a homeowner to pay less than what is owed on their mortgage and not pay income tax on the “short” amount due the bank, under certain situations. 

To get a short sale approved, you have to find every way to negotiate, and do not give up with the first “no.”  Look at the seller’s monthly mortgage statement to see if there is a mortgage insurance premium.  If so, there is a guarantor that will take some of the loss on this loan.  Even if there no mortgage insurance premium on the monthly statement, the lender may have bought mortgage insurance and the premium is being paid by the lender, typically covered by a higher interest rate charged to the borrower in return for a “no pmi” loan.

The loan I was negotiating had a guarantor, i.e. the bank was not going to take the loss, the mortgage insurance company was, and the guarantor would be the company that was “short” so I contacted the guarantor and negotiated with the loss mitigation expert there.  When the guarantor said they would approve the sale, the bank had to go along with it.  If at first you do not succeed, try and try again.  If the bank turns you down, see if there is a guarantor, or at least a supervisor to review the decision.

For a more detailed discussion on this topic, please go to

Homeowners Insurance for First Time Homebuyers

by TeamForYOUrDreams

As a first time homebuyer, you might not know that your lender will require you to obtain homeowners insurance when you buy your first home.  You will be required to insure your home continuously until the mortgage is paid off. 

When you purchase homeowners insurance, you buy a package that combines several types of insurance into a single policy.  You can purchase additional coverages and riders also.  There are a lot of choices, so you should have an insurance agent explain the policy in detail to ensure it offers adequate protection for all of your needs.

First time homebuyers need to be advised that they should purchase a policy which includes replacement cost coverage.  Replacement cost is the amount it would take to replace or repair your home with materials of similar kind and quality, without deducting for depreciation. 

A first time homebuyer should shop around when purchasing homeowners insurance.  It is possible to get different rates from different agencies.

For a more detailed discussion on this topic, please go to

Do a Compelling Hardship Letter

by TeamForYOUrDreams

A short sale is all about helping people who have had hardship’; not the wealthy who want to reallocate their loss.  Short sales can be done on investor owned property as well as owner occupied property.  But, there has to be a financial reason why the owner cannot pay the rest of what is owed to the bank. 

The way you express that is in the hardship letter.    Some seminars give you a list of hardships, but do not limit your thinking to a simple list.  Anything that causes a change in the financial condition from when the loan was taken out which results in the inability to pay the monthly payments and the impossibility of bringing the rest of the money owed to the closing of the sale is a financial hardship.   

The owner should write it personally, with enough detail that the loss mitigation negotiator can feel the pain.  The letter needs to describe what has happened to create the financial setback.  You need explain why, in vivid detail, so that a hardened loss mitigation negotiator who reads these letters all day long can feel sympathetic to your client. 

Do not stop with the description of the problem.  Explain what you have done to try to eliminate the problem, deal with it, or make it better.   You do not want the negotiator to just see that your client has fallen down, you want to describe the efforts to get back up again.

At the end of the letter, tell the negotiator that the owner wants to sell the house so that they can pay back as much of the debt as possible.  The hardship letter has to be signed by the seller, and preferably by both sellers.

This should be on top of the short sale package, setting the stage for why this owner deserves to be allowed to pay less than what is owed to the bank.   It is probably the most important document in the entire package, so give it the attention it deserves.

For a more detailed discussion on this topic, please go to

Displaying blog entries 1-3 of 3

Contact Information

Photo of Team For Your Dreams, Inc. Real Estate
Team For Your Dreams, Inc.
REMAX United
7721 Six Forks Road, Suite 110, Raleigh, NC 27615
Raleigh NC 27615
Fax: 310-347-4041