Navigating the short sale process can be a daunting process to say the least, luckily these days there are many real estate professionals that can help. A CDPE is a certified distressed property expert, one who has been through an education process and gained real life experience with regards to buying and selling distressed properties. A short sale is a great way to sell your home while avoiding foreclosure. However, this process is neither easy nor quick.

Patience is a virtue and reminding yourself of this on a daily basis is key if you are going to make it through a short sale transaction. While you may get your paperwork to the lender in a timely manner, the length of time that it takes a lender to follow through can be long and slow. Of course this will be followed by more paperwork too!

One important piece of the short sale puzzle is the hardship letter. There is no prototype here, no legal definition of what the letter should contain. Clearly to be accepted for a short sale you need to show why you are in this position and why your hardship deserves consideration. Some situations that fall under the hardship category include: job loss, divorce, death of an immediate family member, too much debt, high medical bills, and so on.

A short sale transaction is an experience, one which is made easier with professional help. Stay the course and a successful short sale can help you avoid foreclosure and ease your burden in the long run.

Click here for more information on the short sale process from House Logic.

The National Association of REALTORS® (NAR) just released their existing-home sales numbers, but what does this mean for homeowners and buyers in The Phoenix Metro area?

According to NAR, 379,000 homes were sold nationwide in September, and they expect that a total of 4.53 million homes will be sold in 2010. This is down 19% from 2009 numbers when buyers were looking to take advantage of the tax credit that initially ended in November.

Short sales have become an increasing portion of these (and national) home sales. Helping local homeowners avoid foreclosure, I’ve experienced a high degree of success in short sales.

                               Here is the local statistics of activity in the Phoenix Metro MLS

With millions of homeowners across the country seeking this better option to foreclosure, if you or anyone you know is having trouble paying the mortgage and doesn’t know what to do, contact me for more information.

I can help

You may have heard that Bank of America, Ally Financial (formerly GMAC), and JPMorgan Chase have all temporarily suspended foreclosure proceedings to investigate possible problems with mortgage documentation. Bank of America froze foreclosures in all 50 states, but recently announced they will move forward in the 23 states that resolve foreclosures through their judicial systems. Ally and Chase have continued to halt proceedings in these states. 

For homeowners having problems making mortgage payments, this may seem like tremendous opportunity to stay in their homes. The unfortunate reality is that the foreclosure process will start again, and for those facing foreclosure, the real opportunity lies in the extra time to find better alternatives. The first step to take during this opportunity is to contact an educated real estate agent as soon as possible to learn about options. 

For homeowners who owe more on their homes than what they’re worth and don’t what to do, I can help provide options and hope during this time of uncertainty. Together, we can take a proactive approach to a situation millions of Americans are facing everyday. We can use this extra time for developing a strategy to get past this time of distress, and move toward a brighter, more stable future.

Hi, Whether this is for you or your friends or family… please pass this letter on… it’s important. I was told today by someone I know well that her brother lost his house in foreclosure last week. When I asked why she hadn’t asked me for help … she said she thought it was too late. Now her family has a very short period of time to find a rental and it could have looked very different. Unless a home has already been foreclosed… it is almost NEVER too late… We have stopped foreclosures 5 days before the actual trustee sale – giving my clients an additional 4 months to live in their home rent free AND sell their home instead of having a foreclosure which now allows them to restore their credit and even purchase another home sooner. Bank of America, Chase, Citibank, Wells Fargo, GMAC, Wachovia, Washington Mutual and so many more… I have successfully negotiated with all of these companies! Don’t let the ideas scare you from finding out about your options… In fact… even though in some cases it has taken months of hard work…I have never had a short sale not ultimately be approved.  … the sale was made and the lenders relented and accepted the deal. I have been asked by so many friends and family about the process of foreclosure, short sales and loan mod’s that I have decided to write a letter to all of my email clients and friends to let them know I have had great results and can offer loads of information and knowledge to assist people in these very challenging and difficult circumstances. Whether $40,000 or $4,000,000. the banks have been told BY THE GOVERMENT to do everything possible to assist the homeowners in the best decision for them. Condo’s, investment property, single family homes… even mobile homes… lenders don’t want your property. So if your loan mod is going nowhere… or you are behind in payments and have decided to either “just let it go” back to the bank or begin the process of trying to short sell your home… No matter where you live… Email me and I will either help, educate or find a qualified person to assist you. I really care about helping our economy get back to a level playing field. Having homes currently in default transfer to new homeowners able to make payments help us all balance the system. But MORE important, I care about you. So call or email me and I promise I will do my best to help you with making the best decisions for whats right for you! AND I PROMISE… it won’t cost you a penny from your pocket…

Please call today or send this to a struggling friend.

Check out our video at   http://www.propertyindistressaz.com/

Sincerely

Rarely will a consumer find so much contradicting, confusing and downright incorrect information on a legal topic as they currently do when it comes to short sales and related issues.  Rarely heard of just 2-3 years ago, short sales now make up a significant majority of current MLS listings in the metro Phoenix market and the trend doesn’t seem to be changing any time soon.  Agents, consumers and other professionals are scrambling to get up to speed on the process, strategies and legal issues surrounding short sales.  From a legal perspective, there are three (3) main issues I discuss with clients who may be considering a short sale (or other loan workout for that matter):  (1) deficiency issues, (2) credit issues, and (3) cancellation of debt income issues.   

With respect to issue #1 – deficiencies, short sales present interesting issues and possible outcomes.  Arizona has two anti-deficiency statutes that act to prevent a lender from collecting on a deficiency following a judicial or non-judicial foreclosure on certain residential property situated on 2.5 acres or less.  Because these statutes deal with foreclosures, many real estate professionals, including attorneys, take the position that Arizona’s anti-deficiencies have no application to short sales.  This is categorically false.  Either these real estate professionals do not understand the law, or they are trying to create confusion to help attract clients for their services.  While a short sale can result in a deficiency situation where a foreclosure on the same property would not (for instance, without a lender’s agreement to not seek a deficiency, a short sale involving a non-purchase money loan on qualifying property will not extinguish a borrower’s liability for a deficiency, while a foreclosure by the same lender at a non-judicial trustee’s sale will result in the lender being barred from seeking a deficiency), for many loans (specifically, purchase money loans on qualifying property), a short sale should never result in a deficiency for a borrower. 

Notwithstanding Arizona’s relatively broad anti-deficiency protections afforded to purchase money loans on qualifying property, lenders continue to misrepresent their rights and borrowers’ liabilities in short sale transactions.  Lenders continue to demand cash contributions from borrowers to approve short sales even though they would have no right to seek a deficiency if they foreclosed on the property.  Borrowers and their real estate agents should never engage in short sale negotiations without knowing exactly what rights and obligations a lender and borrower have under the loan and any particular workout scenario.

 For a more detailed analysis of Arizona’s anti-deficiency laws and their applicability to short sale transactions, see my letter to the Editor of Maricopa Lawyer attached. 

letter-to-the-editor-of-maricopa-lawyer

Marc McCain, Attorney at Law,  McCain & Bursh, PLC  602-604-2138

www.mccainbursh.com    mmccain@mblawaz.com

ARIZONA RESIDENTIAL SHORT SALE TIPS

1.  Understand your loan terms, your liability to the lender, tax implications and the market for your home.  A borrower must understand whether its loan falls under Arizona’s anti-deficiency laws, the tax consequences of a potential short sale, and the home’s current value.

2.  Know your leverage, if any, and what your lender wants to accomplish in the short sale.  Some lenders are better suited than others to conduct and approve short sales, while some lenders may prefer a foreclosure given insurance or guarantees on the loan.  If your loan falls under Arizona’s anti-deficiency protections, you’ll have more leverage when dealing with your lender.

3.  Hire a real estate agent or other real estate professional with experience handling short sale paperwork, submittals, negotiations and review of short sale terms and conditions.  Most borrowers simply don’t have the time, experience or patience to handle a short sale transaction from A to Z.

4.  Understand the typical requirements for a short sale and be sure to get your specific lender’s complete list of requirements before starting the short sale process.  Most lenders require a borrower to demonstrate a hardship and to disclose its current financial condition, along with supporting documentation.  If you could be liable to a lender after a short sale, you may want to re-consider whether submitting personal financial information to your lender is a good idea.

5.  Know what you want in a short sale approval letter or short sale agreement and be sure the key terms are in writing.  If you are seeking a written release of liability following the short sale (highly recommended, but often times not given), be sure your documents don’t reserve the lender’s rights to a deficiency or state that you are responsible for a deficiency.

6.  Be patient and don’t give up.  Lenders can and often times do change their initial position – an initial denial or demand for a large borrower monetary contribution may not be the lender’s last offer.  Short sales are negotiations, so don’t be afraid to negotiate.

7.  Stay current with Federal and other short sale programs or lender incentives.  Commencing on April, 5 2010, the Federal Government’s Home Affordable Foreclosure Alternatives program will implement changes to short sale and deed in lieu workouts for participating lenders and loans.  Among the many requirements of the program, a lender will not be able to seek a deficiency following a qualifying short sale or deed in lieu.

Marc McCain,

McCain & Bursh, Attorneys At Law, PC,

www.marcmccain.com     www.mccainbursh.com

(602) 604-2138  mmccain@mblawaz.com

Rarely will a consumer find so much contradicting, confusing and downright incorrect information on a legal topic as they currently do when it comes to short sales and related issues. Rarely heard of just 2-3 years ago, short sales now make up a significant majority of current MLS listings in the metro Phoenix market and the trend doesn’t seem to be changing any time soon. Agents, consumers and other professionals are scrambling to get up to speed on the process, strategies and legal issues surrounding short sales. From a legal perspective, there are three (3) main issues I discuss with clients who may be considering a short sale (or other loan workout for that matter): (1) deficiency issues, (2) credit issues, and (3) cancellation of debt income issues. With respect to issue #1 – deficiencies, short sales present interesting issues and possible outcomes. Arizona has two anti-deficiency statutes that act to prevent a lender from collecting on a deficiency following a judicial or non-judicial foreclosure on certain residential property situated on 2.5 acres or less. Because these statutes deal with foreclosures, many real estate professionals, including attorneys, take the position that Arizona’s anti-deficiencies have no application to short sales. This is categorically false. Either these real estate professionals do not understand the law, or they are trying to create confusion to help attract clients for their services. While a short sale can result in a deficiency situation where a foreclosure on the same property would not (for instance, without a lender’s agreement to not seek a deficiency, a short sale involving a non-purchase money loan on qualifying property will not extinguish a borrower’s liability for a deficiency, while a foreclosure by the same lender at a non-judicial trustee’s sale will result in the lender being barred from seeking a deficiency), for many loans (specifically, purchase money loans on qualifying property), a short sale should never result in a deficiency for a borrower. Notwithstanding Arizona’s relatively broad anti-deficiency protections afforded to purchase money loans on qualifying property, lenders continue to misrepresent their rights and borrowers’ liabilities in short sale transactions. Lenders continue to demand cash contributions from borrowers to approve short sales even though they would have no right to seek a deficiency if they foreclosed on the property. Borrowers and their real estate agents should never engage in short sale negotiations without knowing exactly what rights and obligations a lender and borrower have under the loan and any particular workout scenario. For a more detailed analysis of Arizona’s anti-deficiency laws and their applicability to short sale transactions, see my letter to the Editor of Maricopa Lawyer attached. letter-to-the-editor-of-maricopa-lawyer

Marc McCain, Attorney at Law McCain & Bursh, PLC

www.mccainbursh.com mmccain@mblawaz.com

A program is in the works to promote incentives for short sales

Incentives are in the works for promoting short sales in order to avoid more foreclosures than are seen as necessary.  The plan is meant to prod lenders into allowing more short sales.  Currently short sales are frequently avoided by lenders because the offers that come in are seen as too far below the last appraised value of the property, even though the foreclosed upon sales price in the end may be even lower.

The incentives that are being mulled over are expected to pass soon.  The plan is to give the lender $1,000 for allowing a short sale to occur and the buyer a $1,500 credit at closing.  The plan is expected to be passed by the treasury as a way to keep properties selling.

Short sales are seen as a way to help the home owner avoid a harsher hit to his credit as well as to get the house off of a lenders books before it even gets there officially.  The new incentives are seen as a way to avoid the foreclosure rate increasing more than expected.

For more information about the short sale incentive click here to read an article from Realty Times.

The current U.S. housing market and national financial crisis has caused untold stress and heartache for many American families. Foreclosure is one of the most devastating financial challenges that a family can face and one that many times can be avoided. The options available to Phoenix-area residents for foreclosure are many. Following is a brief explanation of these solutions, including their benefits and drawbacks:

Reinstatement
A reinstatement is the simplest solution for a foreclosure, however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender’s approval and will ‘reinstate’ a mortgage up to the day before the final foreclosure sale.

• Benefit: Does not require the mortgage company or lender’s approval.
• Drawback: Requires that a homeowner be able to pay all back payments, fines and fees.

Forbearance or Repayment Plan
A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

• Benefit: Allows the homeowner to make back payments over time.
• Drawback: Requires that a homeowner be in a financial position to pay not only their current mortgage, but also a portion of the back payments owed. Some mortgage companies will require a homeowner to ‘qualify’ for forbearance.

Mortgage Modification
A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage.

• Benefit: Reduces the payment a homeowner is required to make on a monthly basis and may reduce the principal balance of the loan
• Drawback: Requires that a homeowner ‘qualify’ for the new payment and will often require full documentation. Lender has to be actively pursuing modifications.

Rent the Property
A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, is able to convert their property to a rental and use the rental income to pay the mortgage.

• Benefit: Allows homeowner to keep property indefinitely.
• Drawback: The issues that can arise with a rental property are many, and rent often does not cover the full cost of property ownership and maintenance.

Deed in Lieu of Foreclosure
Also known as a ‘friendly foreclosure’, a deed in lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property.

• Benefit: Many times in a successful deed in lieu, the lender will forego their right to a deficiency judgment.
• Drawback: Requires that a homeowner vacate the property, and a deed in lieu may be reported to credit bureaus as a foreclosure.

Bankruptcy
Many have considered and marketed bankruptcy as a ‘foreclosure solution,’ but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.

• Benefit: Does not require lender approval.
• Drawback: If a homeowner cannot afford their mortgage payment, a bankruptcy will only stall—not stop—the foreclosure process. Bankruptcy can be costly, is damaging to credit scores, and can only be declared once every seven years.

Refinance
If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.

• Benefit: In some cases, this will lower payments.
• Drawback: In today’s market, a refinance will almost always raise mortgage payments, and is an expensive process.

Servicemembers Civil Relief Act (military personnel only)
If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Servicemembers Civil Relief Act. The American Bar Association has a network of attorneys that will work with servicemembers in relation to qualifying for this relief.

• Benefit: If qualified, this will lower payments on all consumer debt in addition to mortgage payments.
• Drawback: Must be active military to qualify.

Sell the Property
Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.

• Benefit: Allows homeowner to avoid foreclosure and harvest some of their equity.
• Drawback: In many cases today, homeowners do not have sufficient equity to sell their property without negotiating a short sale (see next solution).

Short Sale
If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.

• Benefit: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. This also keeps foreclosure off the individual’s public record, and in many cases will allow the homeowner to avoid a deficiency judgment. Borrower may qualify for another mortgage in as little as 24 months (as opposed to five years for a foreclosure).
• Drawback: Short sales can be a trying process in which a homeowner is best served by contracting with a qualified real estate agent to guide the way.

This represents only a summary of some of the solutions available to homeowners facing foreclosure. Please call me today for a free confidential evaluation of your individual situation, property value, and possible options.

A short sale can be time consuming and complex

A short sale is the selling of property to avoid foreclosure, the catch being that the property is being sold for less than the amount owed on it.  What makes a short sale tricky is that the sale price is not up to the seller, the lender has to agree to the purchase price.  The home owner isn’t walking away with any money at closing in the case of a short sale so he doesn’t care if the home sells for a dollar, the bank’s involvement is to reduce their loss as much as possible and the buyer just wants a bargain.

The basic process of a short sale is:

• Borrower must be in arrears on loan payments
• Borrower or broker contacts lender to discuss the possibility of a short sale
• Potential buyer makes offer, knowing what is owed by borrower/owner of property
• Lender reviews loan and offer
• Borrower has to show/prove financial hardship
• Lender and broker discuss value and condition of property and examine any offers
• Lender makes final call

The short sale process looks easy on paper, follow the steps and the deal is done, short sale completed.  However, in reality the communication between the borrower, lender, Realtor and potential buyer is complex and time consuming.  Simply wanting a short sale won’t make it happen.  Using a CDPE (Certified Distressed Property Expert) eases the pain and insures you better success when trying to complete a short sale.  Being in financial stress is not easy on anyone and using an expert will help you get the job accomplished in a more timely manner and help create a successful real estate transaction.