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Displaying blog entries 1-10 of 21

More Short Sales in the Triangle Means Less Foreclosures

by TeamForYOUrDreams

The more Short Sales in Raleigh, Cary, Wake Forest and the rest of the Triangle area of North Carolina the fewer foreclosures. Every Short Sales is one less foreclosure.   I hope we can do the same in every neighborhood in the United States.  My method to spread the message is to send a video to my friends, neighbors and clients asking for them to help save their neighborhood from foreclosures.  I hope they tell anyone they know who is in trouble about short sales.  I used this video http://www.youtube.com/watch?v=LBRaB6U_PTE on YouTube.  There are a lot of people in trouble do not know how much Short Sales can help them out of trouble.  Without this knowledge, they let their home head toward foreclosure.  For certain people, the video gets a better reaction as it presents the information more personally than my Short Sale website www.ShortSalesR.us .  The Short Sale website works for the people that prefer to study Short Sales in detail.  On the other hand, the video provides a face to face presentation.  The new short sale procedures are easier and faster, so they work better.  If you tell anyone you know who is in trouble, the real estate market will improve more quickly and America will recover faster.  Thank you for helping.

Short Sales Should Speed Up with Lawsuit Settlement

by TeamForYOUrDreams

Triangle Short Sales Will Become Shorter

One of the difficulties with short sales in Raleigh, Cary and the rest of the Triangle area is that the buyer of a Raleigh, Cary or other Triangle home has to make an offer then wait and wait for the lender to agree to accept a short payment.  In other words, the thing that is short about a short sale is the payment to the bank not the time for the sale to be reviewed. There is a lawsuit brought by the Attorneys General of most of America's states that is being settled with all the major banks.  The lawsuit was brought because of claimed violations of foreclosure procedures by these banks.  One fortunate sidelight of the settlement of this lawsuit that was mainly brought to correct the sale of bank owned properties (REOs) is a requirement that will make short sales faster for sellers in Wake Forest, Holly Springs and the rest of the Triangle area.  The faster the approval, the more buyers will see the process though to completion and there will be an increase in the number of short sales that close.

The following is a quote of the article in Realtor Magazine that picked up a feed from Real Estate Daily News

 " As part of a settlement with state attorneys general, the five largest mortgage servicers are adopting new requirements for short sales, which is expected to speed-up what has been known as a lengthy process.

Here are some of the new requirements for servicers under the settlement: 

  • Servicers must provide borrowers with a decision within 30 days after receiving a short sale package request. 
  • Servicers will be required to notify a borrower, also within 30 days, if any necessary documents are missing to process the short sale request. 
  • Servicers must notify a borrower immediately if a deficiency payment is needed to approve the short sale. They also must provide an estimated amount for the deficiency payment needed for the short sale. 
  • Servicers are also required to form an internal group to review all short sale requests. 
  • Banks will be considered in violation of the settlement requirements if they take longer than 30 days on more than 10 percent of the short sale requests. Violations can carry fines of up to $1 million and $5 million for repeat offenses." 

This report is good news. The biggest problem with short sale's loss mitigation departments is that the departments are understaffed, so the overworked employees have a hard time handling their big case load.  With penalties of $1 million to $5 million, these banks should greatly increase their staffing to spend the money on negotiators who will get more accomplished for their firm instead of paying penalties. Since a lender makes between 20% and 30% more from a short sale than a sale of the same property after foreclosure, this increase in the loss mitigation department will be a huge benefit the lenders because there will be more short sales and less foreclosures.  Meanwhile, it will benefit sellers in Chapel Hill, Durham and the rest of the Triangle area who will get faster approvals, buyers who will get new homes more quickly and Realtors who will have a shorter processing time and an increase in closings. 

This sounds great to me.  What do you think?

Negotiate Short Sales Better: Find the Investor

by TeamForYOUrDreams

Negotiating a short sale requires an understanding of the process. When you submit the short sale package, you are dealing with a servicer, who collects the payments and administers the loan so you need to be able to involve the investor to get the right result. 

How do you find the investor? You can ask the servicer. The Internet also provides an abundance of information. Many servicers will not tell you who the investor is, possibly because they do not want the investor to know how poorly they are processing your short sale request.  However, many servicers have rules that require them to furnish the investor’s information if the borrower/seller requests that information in writing.  Some commentators say that another way you can find the investor is to look them up in MERS, the Mortgage Electronic Registration System. 

Why do you want this information? When the servicer knows that their client, the investor, will be looking into how the short sale is being processed, the servicer wants to make it look better.

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 http://shortsalesr.us/featured/short-sale-with-a-guarantor/

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 http://shortsalesr.us/short-sale-dos-and-donts/do-a-compelling-hardship-letter/

Don't Take Away the Owner's Lifeline

by TeamForYOUrDreams

There are times when you should not do a short sale, or you need to do it carefully. If the seller has a home equity line of credit, it may be the only lifeline available to the family. If the seller can still withdraw any substantial amount of money from that line of credit, it may be the only thing keeping the family afloat while they look for another source of income. If you are not careful, you could ruin their chances for recovery.

Some Realtors submit the financial information to the lender early in the process, to see if the seller qualifies for a short sale. The seller’s financial information can be fed into a computerized review system to see if the seller qualifies for a short sale.  In some situations, the loss mitigation department will review the financial situation before you have an offer and determine that the seller qualifies for a short sale. This can shorten the review process once an offer is presented.

The last thing you want to do is to give the home equity lender a financial statement showing that the borrower no longer is able to qualify for the home equity line of credit.  So, if you are going to do the short sale, you have to time it right.

For a more detailed discussion on this topic, please go to http://shortsalesr.us/short-sale-dos-and-donts/dont-take-away-the-owners-lifeline/.

Short Sale Information for Sellers

by TeamForYOUrDreams

A short sale may be your best alternative if you have financial trouble and a house that will not sell for enough money to pay off all the debts associated with the home, but it is not for everyone. It is not for people who do not have a financial crisis, because they will not qualify with their lender.

You need to evaluate the alternatives. You can let the bank foreclose. You might consider giving the bank a deed in lieu of foreclosure.  You can try a loan modification.

A short sale is not an easy process. You have to get the buyers to be patient, as the lenders may take a while to review the offer.  One oddity of this process is the real negotiation is done with the bank and lien holders. Normal negotiations in real estate sales are between the buyer and the seller.

For a more detailed discussion on this topic, please go to http://shortsalesr.us/for-sellers/.

Don’t Practice Law, Unless You’re a Lawyer

by TeamForYOUrDreams

The relationship between Realtors and Lawyers is interesting.  Lawyers do not want Realtors intruding on their turf.  When a foreclosure proceeding is filed, it may be considered a lawsuit depending on the foreclosure procedures in your state.  Many foreclosures are done by a power of sale in the deed of trust, so it is just a series of notices and other requirements leading to a non-judicial foreclosure.  In other words, it is not a court proceeding.   However, in many states a foreclosure is a filing with the court, so it can be considered a legal proceeding or lawsuit.

In North Carolina, the Short Sale Addendum to the Listing Agreement says “If a foreclosure or other judicial proceeding is filed with respect to the Property, although Firm may continue to solicit and negotiate offers to purchase and contact, communicate with, obtain information from and supply information to Lienholders,  Firm may no longer negotiate the terms and conditions of a Short Sale with Lienholders, as such negotation would constitute the practice of law.”  Other states have similar interpretations of the line between what a Realtor can do and the practice of law. 

If you are not licensed as a lawyer in the state where the property is located and where the client lives, you need to know about the rulings that may restrict what you do in negotiations when a foreclosure has been filed.  One other pitfall to avoid is the regulations on debt counseling. If you charge the seller a fee that is not contingent on the closing of the sale, it can be argued that you are doing debt counseling.

How do you stay out of trouble?  Follow the wording in your forms.  How do you find the line?  Talk to your broker in charge.  You may also want to talk to an attorney, particularly if your firm has one on retainer. 

For a more detailed discussion on this topic, pelase go to http://shortsalesr.us/short-sale-dos-and-donts/dont-practice-law-unless-youre-a-lawyer/.

Select The Right Closing Attorney or Escrow

by TeamForYOUrDreams

Closing a short sale takes more talent than closing a regular sale, so it is critically important that you use a closing attorney or escrow officer who has experience with the requirements of a short sale.

 

Angie Turner is a paralegal with Clifton and Singer, one of Raleigh’s premier firms in the field of real estate law.  Here is what she has to say about the differences in closing a short sale and a regular sale:

 

“Short sale transactions are very different from standard closings. They require real estate professionals that understand the process, that can negotiate with the bank, and that can coordinate with multiple parties to complete the transaction.  One of the important parts of the short sale package that is submitted for the lender’s review is a draft HUD statement, in other areas called a closing statement.  The lender will determine whether to accept the short sale based upon the amount of the payment to the lender shown on the draft HUD statement.

 

The closing attorney’s responsibility is to provide fair and upfront pricing for the seller’s side of the draft HUD statement.  While the pricing for the seller’s side of the draft HUD statement is estimated, the estimates must be as accurate as possible.  Estimating the seller’s fees is often difficult due to the lack of a closing date and other variables.  If the seller or closing attorney is in doubt about the estimated fee, the closing attorney’s office should err on the high side because the bank will be unwilling to accept a higher fee later.  In other words, if the bank settles for a certain amount as a full payoff of their loan, you do not want to go back to them with less money being paid to the bank than what was shown on the draft HUD statement.

 

The closing attorney’s office is also responsible for making changes to the draft HUD statement and submitting it to the bank and Realtor.  Often the HUD statement will be changed 15-20 times before the bank agrees to the short sale.

 

Once the negations are completed, the closing documents are signed, and the keys have changed hands, the closing attorney’s job is far from over.  In order for the seller to give good title to the buyer, the deed of trust securing the loan must be canceled of record.  The

loan(s) paid off in a short sale transaction have numerous stipulations and precise instructions that must be followed exactly before the bank is willing to cancel its deed of trust.  Since the bank is taking less that a full payoff, they are even more difficult on the requirements for eliminating the lien on the property that was sold.  Therefore, after closing, the closing attorney is still working with the bank and meeting its requirements to ensure that the deed of trust is successfully cancelled.

 

Due to the additional requirements in completing a short sale, you will need to choose a closing attorney that is knowledgeable in short sale transactions.  You need a firm that is willing and able to work with you and the bank before you have even scheduled a closing.  For example, even before you have a sale approved, you will need to have a draft HUD statement to estimate the proceeds to the bank.  Also, you need a firm that will follow through with the numerous detailed tasks that occur after closing.”

 

For a more detailed discussion on this topic, please go to http://shortsalesr.us/short-sale-dos-and-donts/select-the-right-closing-attorney-or-escrow/.

Short Sales With Multiple Loans and Liens

by TeamForYOUrDreams

Some short sale sellers will make your life extremely “interesting” with their talent for putting on multiple mortgages and collecting liens.  You get to negotiate them all,  because if any one will not sign off, the short sale does not close.  This is why some Realtors will not take short sales with too many mortgages and liens. 

The first issue is how do you negotiate with all the liens.  Some of the people providing Realtor training say to negotiate with the last one first.  In other words, if you have a first loan and a second loan, find out what the second loan will settle for first, then negotiate with the first loan. 

You can also negotiate all of the debts at once.  The reason is that there is not a linear relationship between them.  How do you break a standoff? You have to know what is allowed under your local rules, the disclosure rules for lenders and the National Association of Realtors code of ethics.

When you get good at short sales, you can handle many liens at once and get them to a closing at the same time, and be able to avoid foreclosure at the same time.

For a more detailed discussion on this topic please go to http://shortsalesr.us/short-sale-how-to/short-sales-with-multiple-loans-and-liens/.

Displaying blog entries 1-10 of 21

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
919-846-3272
919-812-5111
Fax: 310-347-4041