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New SBA Guidelines Expand Ability for Borrowers to Buy/Refinance Commercial

Posted by NextGEN Real Estate Corp. on April 15, 2011 at 12:00pm

By Elizabeth Braman
Commercial borrowers are now able to refinance existing loans to 90% using the Small
Business Administration's 504 loan program, thanks to a new law enacted on September
27, 2010. This law brought about significant changes to the SBA's lending guidelines.
Most significantly, SBA loans now create opportunities for overleveraged property
owners to refinance into lower rate, stable, long‐term commercial mortgages.
The 504 program recognizes that dropping property values have made refinancing
difficult for many property owners. Accordingly, owner occupied properties can now be
refinanced up to 90% of the appraised value OR 100% of the outstanding mortgage,
whichever is less.
To help properties that are overleveraged, the SBA now permits borrowers to use
additional collateral, such as a home, equipment or another commercial property, to use
as part of their 10% required equity.
SBA 504 loans were primarily used to purchase commercial real estate by small business
owners who occupied at least 51% of their property. The funds can now be used to also
refinance properties, including debt acquired in support of a commercial real estate
project such as machinery, equipment and leasehold improvements, plus eligible
refinancing costs and prepayment penalties.
In addition to the refinance component, the SBA is seeking to reach more middle market
companies by increasing several of the borrowing thresholds for the 504 program. Now
qualified companies with a tangible net worth of $15,000,000 (up from $7,000,000) or
less will qualify for an SBA loan as long as their last two-year average after-tax net
revenue is under $5,000,000 (up from $2,500,000). The SBA’s share of the 504 loan has
increased to $5,000,000, except for manufacturers who can finance up to $5,500,000.
The SBA’s 504 program’s current lending terms:
90% leverage with two loans; a first loan at 55-65% leverage offered by a conventional
lender on conventional loan terms (variable, 3, 5, 7 and 10 year fixed loans with 20-25
year amortization periods) and a second loan, which is a fixed 10 or 20 year debenture
(4.894% for 10 year and 5.93% for 20 year in March 2011). The borrower is required to
bring the remaining 10-15% equity to the project.
In a controversial and widely criticized move, the SBA 504 refinance program initially
could only be used to refinance loans that were due on or before December 2012 with a
balloon payment. This requirement left out many property owners with loans due beyond
December 2012, including many of the 5+5 year loans written in 2006 and 2007 that are
due for a rate adjustment this year but don’t have immediate balloon payments. Now,
with a change that will be published in The Federal Register by April 6, 2011, all loans
will be available for refinance as long as they otherwise meet the additional eligibility
requirements.
There are a number of requirements for borrowers to qualify to refinance under the 504
program:
The property must have been financed more than 24 months prior to a refinance.
The loan has a balloon payment.
The borrowing business has continued operations over the previous 24 months.
The refinance cannot be used to take out an existing government loan, such as
other SBA 504 or 7A loans or USDA loans.
The loan to be refinanced must be current for the last 12 months.
The loan to be refinanced must have been used to purchase real estate, or if
improvements, only those eligible under 504 guidelines.
The SBA does not lend any funds directly. Rather, the SBA works with a Certified
Development Company (CDC), which is a private, nonprofit corporation. The CDC
secures the second lien debenture, which is 100% guaranteed by the SBA.
At present, applications to use SBA 504 refinance funds must be approved by the SBA
before the end of September 2012. The SBA estimates 20,000 businesses could be
eligible to receive assistance with $15 billion in financing, increasing to $30 million with
leverage offered by the banks.

Elizabeth Braman, JD, MBA, CCIM is president of Los Angeles-based Watermark
Financial, Inc., a commercial real estate financing firm. Contact her at
ebraman@watermarkfinancialgroup.com.

American Homeowner Preservation Recognizes Outstanding Employee Denisse Bays

Posted by Jorge Newbery on April 15, 2011 at 4:01am

American Homeowner Preservation recognized the superior performance of Denisse Bays, recently promoted to Transaction Coordinator. Michelle Weadbrock, previously commended for fantastic service, handed off the AHP "Outstanding Employee" Cup to Mrs. Bays in a brief ceremony. AHP offers a novel foreclosure prevention program designed to keep families at risk of foreclosure in their homes. AHP negotiates with existing lenders to approve short sales to investors, who provide affordable leases and favorable repurchase options to selling families. Families then receive counseling to prepare them to qualify for financing to repurchase within the 5-year option period.

"I really admire what is done here for f amilies in need, and I'm definitely glad to be part of this team," said Bays. "I am pleased to be recognized for my contribution to AHP." Originally from Venezuela, Bays has lived in the Cincinnati area for three years. She resides in Kentucky and doesn't mind braving the traffic every morning and afternoon to come to work, where she knows she is making a difference. After a long day at work she goes home to her husband and kids and likes to relax watching American Idol or occasionally going out to dance.

"Denisse rapidly builds rapport with AHP clients and has shown a great talent for helping solve families' housing predicaments. She is detailed, focused and determined. Being bilingual has been particularly helpful, as AHP has a great deal of Spanish-speaking clients," said AHP Director Jorge Newbery. "We are thrilled to have Denisse on AHP's team."

Close to 140 families across the U.S. have found permanent solutions to their housing dilemmas through American Homeowner Preservation. Monthly housing payments are reduced by an average of 40% through AHP's program. In addition, families can repurchase their homes at an average of less than half of their prior mortgage balances. Interested families are encouraged to visit www.ahphelp.com or call 800-555-1055 to learn more.

BBB: American Homeowner Preservation Gets an 'A'

Posted by Jorge Newbery on April 15, 2011 at 4:00am

CINCINNATI, OH - April 12, 2011 –

The Better Business Bureau recently gave foreclosure prevention company American Homeowner Preservation (AHP) an "A" rating. AHP provides a short sale leaseback program to families who owe more than their homes are worth. When existing lenders approve, families are able to short sell and stay in their homes with lease payments averaging 40% less than prior mortgage payments. In addition, participants receive an option to repurchase their homes at amounts averaging 54% less than what was owed on their underwater mortgages

"Every family has a unique set of circumstances, dictating a customized resolution. Government, banks and servicers have tried to apply one-size-fits-all solutions to these millions of families, and the results have been miserable for all involved," said American Homeowner Preservation Director Jorge Newbery. “The solutions offered to families are tailored as solutions for the banks and then are imposed on the families. The reverse is what works: find a solution for each individual family, and then try to make it work for the bank," Newbery continued. "We are encouraged by the 'A' rating from the BBB."

23% of all residential properties with a mortgage are underwater with an aggregate $750 Billion Dollars of negative equity, according to a March 2011 CoreLogic report. "The 11.1 Million homes at risk of foreclosure could result in the largest displacement of American families in history," said AHP's Michelle Weadbrock. "Our goal is to keep these families in their homes with affordable leases and favorable options."

AHP does not charge fees to homeowners. Families seeking assistance are encouraged to contact AHP at (800) 555-1055 or www.ahphelp.com.

Contact:
Jorge Newbery
American Homeowner Preservation
800-555-1055
Email

American Homeowner Preservation Saves Another!!

Posted by Jorge Newbery on April 15, 2011 at 4:00am

"We were introduced to your program by Gil Bivens of Aztec Financial in Phoenix, Arizona. The entire process was surprisingly very simple. When Gil gave us an initial presentation about the program and how much money we were going to save, it was hard to believe that the bank would allow us to sell our house to an investor and allow us to buy it back at its market value, which was estimated at about $30,000.00, compared to what we owed $152,000. We can now buy our house back for about $36,000 for a huge savings of about $116,000. Our monthly payment went from $1,064 to $639.00. Overall, we love AHP for helping us save our home. Bottom line, we are blessed for what AHP has done and would recommend anyone, going through tough times to take a chance and let AHP help them."

ING Direct Blacklists American Homeowner Preservation

Posted by Jorge Newbery on April 15, 2011 at 3:59am

ING Direct, the Dutch-bank and internet-based mortgage lender, has objected to American Homeowner Preservation’s program to keep families in their homes, and ING will no longer consider AHP short sales. “ING DIRECT will also be adding your company to our exclusionary list as your company strictly finds investors to keep sellers in their home, while the bank takes a significant loss. This is against ING DIRECT’s short sale policies and guidelines, and as such you will no longer be able to work on this short sale file or any future ING DIRECT accounts,” Adam Agostinelli of ING Direct Retail Asset Management advised in an email to AHP.

NAR: U.S. bill would speed short sales

Posted by Bryant Tutas on April 14, 2011 at 7:48am

I found this in our FAR newsletter today:

NAR: U.S. bill would speed short sales WASHINGTON – April 14, 2011 – A new bill introduced into the U.S. House Tuesday would, if it becomes law, improve the process for approving short sales, bringing relief to distressed homeowners who can’t keep their homes and hope to avoid foreclosure.

The bill, supported by the National Association of Realtors® (NAR), would impose a 45-day deadline on lenders to respond to short sale requests. The legislation – “The Prompt Decision for Qualification for Short Sale Act of 2011” – was offered in Congress by U.S. Reps. Tom Rooney (R-Fla.) and Robert Andrews (D-N.J.).

“Realtors and consumers continue to raise issues about delays in the short sale process, because lenders are unable to decide whether to approve a short sale,” says NAR President Ron Phipps. “After many months of delays, and with no response from lenders, potential buyers lose patience and cancel their contracts, often resulting in the property entering foreclosure. A short sale minimizes the negative impact on sellers and generally costs the lender less than a foreclosure.”

READ THE FULL STORY HERE

Military Short Sale

Posted by MaryAnn Dempsey on April 14, 2011 at 5:00am

I had to deal with a bank for a borrower who is in the military, and we all appreciate and respect these military people, as they are our protectors. How can a bank, state, "unless we have a copy of the borrowers orders, stating that he must live a certain distance from home to base, we will not even consider a short sale". as we all know, military files are "Classified/confidential" and cannot and will not be handed to a bank for any reason whatsoever. Common sense, at least I think so. So the bank would rather just foreclose. This is so nice to hear that our banks would rather just put our military out on the street rather than help them. Well, I had to and did scream loud enough and made myself heard and now I am happy that my client and his family, a military person, will not be thrown out in the street. Sometimes you have to wonder, what kind of people are working at these banks and do they really know what they are doing or just pretending.

Dealing with Credit Unions for a Short Sale

Posted by MaryAnn Dempsey on April 14, 2011 at 4:54am

As a Short sale Specialist, I have never dealt with such a bunch of unmotivated employees at Tremont Credit Union, who not only are so disorganized, but would rather foreclose on a borrower, instead of trying to, #1, possibly and likely obtain more money from a short sale; #2, take a chance that if the home becomes foreclosed on and then becomes vacant, there will be a possibility that the home could be vandalized, etc., when winter comes upon us, again, there could be possible pipe bursting, etc, causing even more damage and less value to the home. Why in the world would Tremont Credit Union reject a Short Sale and not counter offer. Isn't something more, better than something less? At least in my world it is. Even if you try and ask the Chair person and believe it or not a Board member to help, guess what, they are all for it, but then choose to ignore you after the fact. We know that banks are not happy about attorneys negotiating the short sale files, as it will cost more money out of their pocket, but, Tremont Credit Union has left me no choice, so I guess they have the extra money to spend. My only concern is, that is not what I read in the business news a few weeks ago, so again, I am quite baffled.

A house is worth what a house is worth

Posted by MaryAnn Dempsey on April 14, 2011 at 4:15am

Every short sale transaction is not the same, and a lender should approach them all differently. HAFA requires the lender to identify the borrowers minimum net proceeds ahead of time, and the guideline requires 120 day period to change that value. So what does this mean, that if a property falls outside of the minimum net proceeds, it isn’t eligible under HAFA. Sounds ridiculous to me. This is such a shame; as a house is worth what a house is worth and no more, and even in the span of 120 days the criteria used can and most likely will change. It removes flexibility from the process, which is critical when handling these types of transactions.

LBPS Higher Managment Contacts? Talk about burearcracy at its best, this should be on TV

Posted by Melanie Ross on April 12, 2011 at 2:45pm

We had short sale approval through 4-11 frm LBPS. This is burearcracy at its best.

Loan docs signed, loan funded last week. Title sent the final hud 5 days ahead of time. NOONE responded. Wed I call to LBPS to find out why. LBPS would not approve the hud which was more than the approval letter and ready to close prior to the end date for the approval. WHY couldn't someone have told us. WHY do we have to call in to find this out. WHY if we follow the approval letter instructions nobody would respond until WE called in.

The reason.......as of 3-30 the current BPO would be over 90 days. Even tho we had an approval letter. They would not make an exception. They ordered a BPO on 3-23, sed the agent could not get ahold of us for entry and did a drive by. NEVER told us this, noone contacted us for BPO and there would have been plenty of time if we knew this, so they had to order another one last wed. The BPO was done last Friday and I talked with the agent so I know we are ok there.

We tried to get an exception for this ridiculous request since we were so close to closing.

The wierd part is they did approve the hud last friday but said would not accept if it closed. And title was not going to take a chance on just recording. They even sent this to internal error oversight committee. Now if they have a committee for this, there must be some errors. But it still came back, oh we need a bpo.

This is a fannie mae loan. And now we need a new approval with new numbers cuz they totally screwed up and admit it but are not working to get it done. Trustee date set for 4-26. Second's letter is only good through 4-15.

We are tearing our hair out calling and emailing. This really should be broadcast for such short sightedness.

come on a damn BPO??? cuz it would be 11 days too old if we closed when we were supposed to WITH AN APPROVAL LETTER?

Please any help you can give. and our mls does not have the fannie mae assistance line either.

Why would a Lender consider a Strategic Short Sale?

Posted by Bryant Tutas on April 11, 2011 at 11:47pm

Hi folks. Why would a Lender consider a Strategic Short Sale? This article may help answer that question.

A Strategic Short Sale is a choice. It's a choice made by a seller (borrower) to sell their property to get out from under a mortgage that no longer makes sense and put their money elsewhere. These borrowers do not have a "normal" hardship.

Here's an real life case of a Strategic Short Sale situation:

I have as young family right now who bought their house in 2005. They paid $250,000 and put 20% down. They purchased using an ARM because the mortgage broker convinced then that in 3 years they could refinance into a fixed rate. This 3 year period was the amount of time the husband needed to complete his internship with his job and go into a higher salary.

Before they could refinance the bottom dropped out of the market. Their mortgage went up from $1,500 a month to almost $2,500 a month. Their home is now worth $55,000.

Anyone that reads this and thinks these folks should just stay and honor their obligation is just flat out wrong. And folks that "think" they would stay, if in the same situation, are just kidding themselves. There's not a Lender on the planet that would modify this loan so that it works.

So this family can stay trapped in their home for the next 25 years or they can sell now and move on with their lives. It's a no brainier. By the way, we are closing on this Strategic Short Sale in 2 weeks.

**************

But why would a Lender accept this Strategic Short Sale? Because they know that it is inevitable that this loan will go into default or have to be settled at some time in the near future. On average folks in the US have to move and sell every 5-7 years. This loan will still be way underwater at that time. So why not just take the loss now?

A Strategic Short Sale almost always requires the borrower to participate in the Lender's loss. What this means is the borrower will be required to make a cash contribution at closing and/or sign a new promissory note paying back some of the money owed over time.

A Strategic Short Sale is a settlement. It's the Lender agreeing to a lump sum of money now instead of continuing to accept payments over the existing life of the loan.

Never forget the time value of money.

Simpler explanation: You owe me $100. You have agreed to pay me $1 a month for the next 100 months. You come to me an offer me $45 today to wipe out your debt. I agree. Is that $45 today worth more to me than the $1 a month for the next 100 months? Probably. I can't predict the future so cash in the hand is a safer bet. Plus I can now re-lend the money and get it working for me again. Plus I received some money from the mortgage insurance company and the government for taking the "loss". It only looks like a bad deal on the surface.

Things aren't always what they seem. Make cents?

Are you facing foreclosure in Florida?

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

Want to find out more? www.CentralFloridaShortSales.com

***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

Short Sale Not Closing, Is it possible to list it as REO ?

Posted by Jason Yacoub on April 11, 2011 at 6:54am

Short Sale Not Closing, Is it possible to list it as REO ? and if so what are the set necessary?

2nd Liens and Mortgage Insurance

Posted by Gail Mitkoff on April 11, 2011 at 2:20am

Fannie Mae's Short Sale Assistance Desk ("Assistance Desk") will handle post-offer issues related to the existence of a second lien or issues involving mortgage insurance. Most cases are resolved in two weeks. The Assistance Desk is offered by MLSs across the nation, including My FL Regional MLS, N. NV Regional MLS, ARMLS, Tucson, MRED, Intermountain, Pinellas, West Pasco, SE Minnesota, Miami, and coming soon to the New England, Northwest and Southeast markets.

The California Association of Realtors (CAR) is offering the Assistance Desk as a free to service to participating MLSs in California. Here's a link to their press release:http://www.car.org/newsstand/newsreleases/fanniedesk/

For more information on Fannie Mae's Short Sale Assistance Desk, visit https://www.efanniemae.com/is/reprofessionals/pdf/ssadfaqs.pdf

I hope this is helpful.

Gail

This conversation was a classic!!

Posted by Bobbie Files on April 10, 2011 at 10:30am

A couple of months ago I closed on a short sale with BofA as the 1st and Citizens as the 2nd. Typical process and timelines. Citizens got all the client's documentation, had a complete package and submitted the file to a negotiator. GREAT!!!

About a week after, I was told they would be assigning a negotiator. I received a call on my way to the office. The negotiator called me to introduce himself and let me know that he was overlooking the file and he needed some updated documents. Well, like I said I was on my way to the office....driving. I am not a great multi-tasker when it comes to driving, talking, writing and , uhm, well ...smoking. Yes, I am a smoker....no comments about the smoking necessary I know it is bad!

In order to lessen the chances of killing myself or others, I pulled over so I could write down what he needed (afterwards I realized I could have just recorded the call on my phone, but I can be a little slow at times). Here I am thinking I am being a good, responsible adult, I pulled off into the break down lane. I now understand that is a no-no.

Moments after pulling over, whaddya know, blue lights are flashing behind me!!! I don't know if you call it being pulled over since I was already pulled over, but for a lack of a better name for it, I was pulled over.

I was on the phone with Chris (the negotiator) and looked in my rearview and exclaimed loudly and in a panic "Shoot (and that was not the word), bluelights!!!!!!" By Chris' response I am guessing that "Bluelights" is a local thing, because he said "Bluelights?? What do you mean?"

"I am being pulled over!!!!!!! And I was already pulled over!! What the (explative)!?!?!?!?!"

As politely as could be, Chris started to laugh!! "How about you call me later?" he says.

"Are you nuts!!!! You're a witness!!!!!!' You are staying on this phone!!! Here comes the cop, I am going to put the phone on speaker phone and put you down."

Well, in typical me fashion, I do things without thinking. The cop approaches my car and asks me if everything is okay, and I responded with "Yes, I pulled over because I needed to write something down." The cop looks at me rather puzzled and says "What was so urgent that you had to stop?"

"Oh, I was on the phone (and I grab the phone for effect) and I was told that the person I was speaking with needed something so I pulled over to write it down."

The cop looks and says "Well this isn't the correct area to be pulling over, it is dangerous and you shouldn't do it, and also buckle up."

Well.....this is me being me, instead of putting down the phone to free a hand, I decide to free the other hand by flicking my cigarette out the window and at the cop!!!!!!!

Not my smartest move!!! The look I got could have froze water. "And you should really quit smoking to." Then the cop turns to walk back to his car. Before he could even reach his car I was outta there!! I grabbed the phone and Chris was in tears he was laughing so hard. I could not believe that happened!! That short sale got approved and closed a couple of weeks later.

Now here we are in April and I have Citizens mortgage on another short sale. Driving to my office on Wednesday and my cell rings.....Chris again!!!! The first question he asked me "Do you remember me?" Like I could forget him. Second question "Are you driving?" LOL!!!

Bobbie Files, C.D.P.E.
Certified Distressed Property Expert
Your Bristol and Plymouth County Realtor
508-238-5000 x.296 Office
508-521-9480 Direct / SMS
888-570-9907 Toll Free Direct Fax

bobbiefiles@kw.com Email

Visit my website at www.BerkleyMass.com

Visit my YouTube Channel at https://www.youtube.com/user/bobbiefiles

Join My Facebook Communityhttp://www.facebook.com/bobbiefiles.realtor

Search for Berkley Ma Homes at: http://BerkleyHomes.BerkleyMass.com

Search for Taunton Ma Homes at:http://TauntonHomes.BerkleyMass.com

For those struggling to pay your mortgage payments please visit:http://shortsales.berkleymass.com

Don't be a vixtim of mortgage relief scams

Posted by Linda Papallo 860 221-8600 on April 8, 2011 at 6:46am

I specialize in educating Connecticut homeowners of the cautions they must take when seeking mortgage relief assistance. If you owe more for your home than it may be worth and are unable to pay your mortgage payments,

please be aware of recent government changes to protect you fron unscrupulous individuals and companies who want to take advantage of your disressed situation.Please be aware of following red flags: 1. The claim of government affiliation. 2. Being asked to pay up front fees- it's illeagal to charge them.3. Being asked to sign a lot of paerwork without the benefit of reviewing it. 4. the request for you to sign your deed over to another 5. Anyone telling you, you don't require an attorney. You should also be aware the Government requires specific written federal discloure to be provided to all homeowners with any offer of mortgage relief or short sale assistance. The disclosure below must appear on all offers of mortgage relief assistance. IMPORTANT GOVERNMENT DISCLOSURE: You may stop doing business with us at any time

you may accept or reject the offer of mortgage assitance we obtain from your lender or mortgage servicer.If you reject the offer you do not have to pay us for our services. The above brokerage is not associated with the government and our service is not approved by the government or you lender even if you accept this offer and use our services your lender may not agree to change your loan.

For more information regarding short sales please visit my website: www.connecticutshortsalehelp.com

Linda Papallo Realtor, CDPE 860 221-8600

Century 21 Access America

449 Silas Deane Highway

Wethersfield, CT 06109

A Common Short Sale Mistake Being Made On Glendale Short Sales

Posted by Jennifer Escobar on April 8, 2011 at 5:31am

Glendale, CA Real Estate – I see a lot of agents making mistakes on short sales property valuation. Lenders hire a supposedly impartial third party to value the property.

Many of these people are evaluating 10 properties a day. There is very little quality control and usually no one checks their work.

Because of that, I always try to meet them at the home when they are doing their inspection. I explain the history of the property and why it is selling for that price.

The lender will take as gospel whatever value that person tells the bank the property is worth. If that value is more than the property is selling for, then the lender won’t accept the short sale.

Here are some common mistakes that you need to make sure that your short sale agent avoids.

One common mistake is to use comps outside the neighborhood when the bank is ordering an appraisal instead of an agent. Agents understand that buyers don’t buy only in a specific neighborhood.

Buyers look for the best deal they can find within a specific are. Because of this, an agent is more willing to use comps outside of the neighborhood.

But, when the bank is using an appraiser you must use the closest geographical comps, not the lowest priced comps

The second mistake is not controlling the access to the property. The person evaluating the property should not be able to get access to the house without the agent knowing about it.

Your agent must have all showings go thru their office. A third mistake I see is not treating the people valuing the property with respect.

Short sale agents will be meeting the same people over and over. So, they must be punctual when they meet them.

They shouldn’t be forceful on the value. I recommend that they be convincing but not overbearing. Don’t argue over the value.

Most of the time, the agent or appraiser is going to determine the value on their own. They will look at the comps, and if it all makes sense, then they will use your agent’s comps.

However, if they think that those comps are inaccurate, then they will get their own. I always show up 15 minutes early to familiarize myself with any potential repairs.

I look around and notice nicked drywall, peeled up flooring, cracked tiles, and other issues. When I go thru the house with the agent I note those items and write them on my clipboard.

Once I’ve prepped your Comparable Market Analysis, then I go ahead and send a copy to the short sale negotiator. I tell them that I put my own property valuation together for them to review.

Following these tips can mean the difference between failure and success on your short sale. Thinking about a short sale?

I can help you short sale your property and never pay the bank another penny. Send me an e-mail at cme4homes@jenniferescobar.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 818-649-4950

Thinking about a loan modification? Our FREE Los Angeles Loan Modification Services will help you get a loan modification approved with your lender. Click here to for more information regarding my FREE LOAN MODIFICATION SERVICES!

Thanks for reading this, Jennifer Escobar.

Jennifer is a Real Estate Agent at Qwest Real Estate.

My BLOG: www.Glendale-ShortSales.com

Important Notice

Jennifer Escobar, Qwest Real Estate, and the Stop Foreclosure Institute are not affiliated in any way, shape, or form with the government. Our services have not been reviewed or endorse by the government or your lender. Most lenders willingly work with agents on short sales. Why?

Because most short sales are beneficial to a lender. If you accept our offer to help you on a short sale, your lender may not agree to a short sale or to modify your loan. We do offer FREE California Loan Modification Assistance.

However, the likelihood of negotiating a modification is like everything else in life. It takes work and persistence to convince your lender to modify your loan. No matter what you or we do, your lender may not approve a loan modification.

We do not recommend that you stop paying your mortgage, because this will cause damage to your credit and could cause you to lose your home. Because we know avoiding foreclosure is so important to any homeowner, we recommend that you speak with the appropriate legal or tax advisor before making any decision.

This is not intended as legal, technical, or tax advice. Please speak with a licensed professional before making any decision. Information is deemed reliable but not guaranteed as of the date of writing.

You have the option to reject a short sale or loan modification from your lender if it does not meet your approval. If you decide not to go thru with the short sale, then you do not have to pay us our fee. We normally make a real estate sales commission for helping you on a short sale.

The views expressed here are Escobar’s personal views and do not reflect the views of Qwest Real Estate.

This information on Glendale, CA Real Estate | Los Angeles Short Sales | Los Angeles Short Sale Specialist | Short Sale Specialist | Short Sales | CA Free Loan Modification: A Common Short Sale Mistake Being Made On Glendale Short Sales is provided as a courtesy to our viewers to help them make informed decisions.

How Does A Short Sale Affect Your Credit Score?

Posted by Andrew Coppo on April 8, 2011 at 2:30am

Foreclosure vs. Short Sale: Which Option is Best For My Credit Score?

As someone who deals with homeowners facing foreclosure on a daily basis, I am often asked whether a short sale or foreclosure results in more damage to your credit. Unfortunately, there is no straight- forward answer. The reason why this is such a difficult question to answer is simply because it depends upon a variety of factors. In general, a short sale or foreclosure will affect your credit score 85-160 points. Many mistakenly believe, or are mis-informed, that a derogatory credit event such as a foreclosure is somehow worse than asking your lender to accept a short sale. In the world of credit scores, however, lenders interpret both of these events the same way: the customer did not pay as agreed. The degree to which your credit score will be affected depends largely upon how delinquent you are on your payments at the time of the short sale or foreclosure. Neither event is “better” because they both seriously damage your credit and reflect your inability to repay a debt. With regard to the actual affect to your credit score, you can take proactive measures to mitigate the negative effect to your credit score. In order to understand why this is true, it is important to first examine how your credit score is calculated.

What Is A Credit Score?

Each of the three major credit bureaus (Equifax, Experian, and TransUnion) collect information about your practices of borrowing and paying back credit. This information is compiled into a credit report, from which a credit score is calculated. While there are multiple formulas for calculating credit scores, the formulas introduced by the Fair Isaac Corporation (FICO) are the most widely used. This term is commonly referred to as your FICO score. All of these scores can be a bit confusing, so it might be useful just to think of “credit score” as a numeric grade of your credit history. Fair Isaac recently released a report stating that credit scores are affected nearly the same whether you go through a foreclosure or short sale. The report stated that the average points lost on a FICO score are as follows:

30 Days Late = 40 to 110 Points
90 Days Late = 70 to 135 Points
Foreclosure = 85-160 Points
Short Sale = 85-160 Points
Deed-in-lieu = 85-160 Points
Bankruptcy =130 to 230 Points

As stated above, the FICO score treats a foreclosure, short sale or deed in lieu of foreclosure exactly the same. They are all treated as “serious delinquencies.” Serious delinquencies are characterized by being in default a minimum of 60 days. Making matters worse, credit reports are limited in how they represent foreclosures, so it is generally impossible to tell from the face of the credit report if a reported derogatory event is a foreclosure, short sale, deed in lieu of foreclosure, settled account or some other variation.

How Are Short Sales Reported To The Credit Bureaus?

As stated in the previous section, FICO does not differentiate between a foreclosure or a short sale. Further complicating matters, lenders don’t have a uniform standard as to how they report a short sale to the credit bureaus. Some lenders report short sales as “settled as agreed” while others may report it as “account legally paid in full for less than the full balance.” In some cases, if the account is more than 120 days past due, the short sale will automatically show up as a “foreclosure” on the credit report. As a result, except in limited circumstances, the credit agencies typically treat foreclosures and short sales exactly the same.

According to the FICO guidelines, the most determinative credit score factor is being able to stay current on your account, or only slightly delinquent, in the months leading up to the derogatory credit event. By doing so, you thereby minimize the damage to your credit score by avoiding any serious delinquencies. This is not to be confused with your ability to purchase a home following a short sale or foreclosure, the mere existence of either event on your credit report will generally preclude you from buying a home for two to five years, respectively. Your credit score, however, will only be affected to the degree that you are delinquent on your payments.

Facts About Short Sales and Credit Scores

As previously mentioned, foreclosures and short sales have very similar effects on your credit because both events are reported to the credit bureaus as “serious delinquencies.” The degree to which your credit is affected depends upon how delinquent you were on your payments before the derogatory credit event occurred. Thus, a homeowner who stops making payments at the beginning of the short sale process will have a very similar credit score effect as those who go through foreclosure because, on average, a short sale takes three to six months to complete and your credit continues to tank with each successive late payment. Each missed payment negatively impacts your credit score regardless of whether the house is sold as a short sale or foreclosure. As a result, your credit will be seriously damaged by either event if you allow yourself to become seriously delinquent.

Your credit score can only start improving when the late payments stop and you divest yourself of the home. Until recently, most lenders required homeowners to be delinquent on your payments in order to qualify for a short sale. This is no longer the case. Consequently, a homeowner could theoretically short sell their property without being considered seriously delinquent, and therefore suffer minimal credit damage. In contrast, a homeowner who goes through a foreclosure will be at least 90 days delinquent. Whether you will be able to purchase a home anytime soon is another story, and perhaps my next blog post, but from a credit score perspective, it is possible to mitigate the damage to your credit score by avoiding a “serious delinquency.” In all other cases, however, a short sale will affect your credit exactly the same as a foreclosure.

Myth: Short Sales Are Better For Your Credit Than A Foreclosure

It matters not to a lender why you failed to make your mortgage payments, only that you did. Lenders go to great lengths to alert each other, by way of reporting to credit bureaus, that the defaulting homeowner is someone who could not make their payment obligations. Thus, unless you can avoid being “seriously delinquent”, there is no credit score advantage to a short sale over foreclosure. A consumer’s FICO score will take a huge hit either way until responsible credit behavior supplants the foreclosure or short sale over a period of time. If you are able to minimize the immediate damage to your credit score, this will allow you to obtain credit, such as auto loans or credit cards, thereby putting you on the road to credit recovery faster than those who suffered a serious delinquency. With regard to buying your next home, the nation’s two largest mortgage investors, Fannie Mae and Freddie Mac, with certain exceptions, won’t lend to you again for five years (foreclosure) and two years (short sale).

*This information is for educational purposes only and contains general rules only. It should not be construed as legal or tax advice. If you have any specific questions based on specific circumstances, please consult your legal and/or tax advisor.

About the Author: Greater Boston Short Sales, LLC (GBSS) is Massachusetts’ leading short sale negotiator. GBSS assists homeowners, Realtors and attorneys with getting their short sales closed. Contact us today if you are a homeowner facing foreclosure or a Realtor seeking assistance with a short sale transaction. GBSS is a MARS provider. Please read our disclaimer HERE.

BofA new Coop shortsale program

Posted by Trina Gonzales on April 7, 2011 at 9:21am

I have to applaud Bank of America for really trying. One of my shortsale files was transferred to their third party vendor for their BofA coop program. It's a very close model to HAFA but it's a BofA product. The negotiator told me that it would be a 10 day turnaround and I really didn't believe her. I actually got a counter in 6 days! They only countered minor things like the buyer's home warranty. Now we just need to get investor approval. Wow!!! Has anyone else worked with this program yet? What are your thoughts?

Short Sale Approval Received in 26 Days from Well Fargo Home Mortgage!

Posted by Tni LeBlanc (805) 878-9879 on April 7, 2011 at 1:21am

Short Sale Approval Received in 26 Days from Well Fargo Home Mortgage!

I just received short sale approval from Wells Fargo in 26 days! It was a total of twenty six days from when the short sale application was submitted to the lender until I received the short sale approval letter in my email box. So much is written about the bad short sales - the ones that drag on for months at a time - that I thought I should remind potential short sale sellers that not every short sale takes forever to be approved. Many are approved in 30 - 45 days, and some lenders are even encouraging their distressed borrowers to apply for a short sale.

It should be noted that there are many factors that can affect how long your short sale will take to process, and, of course, short sale approval is not guaranteed. That said, submitting a complete or near complete application at the outset will speed processing time. For example, Wells Fargo Home Mortgage has forms that are specific to Wells Fargo that must be used in their short sale application package. Including these forms at the beginning can improve processing time. Also, promptly responding to requests for additional documentation and following up with calls to the lender can also play an important role. An experienced short sale agent can help you put together a complete (and persuasive) short sale package.

If you are considering a short sale of your Santa Maria, Orcutt, Nipomo, or Arroyo Grande home, you should seek out an experienced and diligent short sale agent to guide you through this process. There are many pitfalls that can be avoided with the right upfront advice. If you would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.

Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

*Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

Can the Seller of a Short Sale Receive a Commission Rebate?

Posted by Bryant Tutas on April 6, 2011 at 1:57am

Here's what I think......

In Florida it is perfectly legal to give commission rebates. The rebate just has to be disclosed to the parties of the contract (buyer and seller). By the way, 40 States allow commission rebates.

The sharing of brokerage compensation by a licensee with a party to the real estate transaction with full disclosure to all interested parties is not considered a violation of Chapter 475, Part I, Florida Statutes.

Can a lender stop this from happening?

And what about the "Arms Length Transaction Affidavit (ALT)? The wording on these can be ambiguous to say the least.

The ALT from Suntrust states:"

"Affiant further says that beyond any contractual sales commission owed to the Seller's Agent and/or Buyer's Agent, no party to this short sale transaction will receive any proceeds from the sale of the above mentioned property

The ALT from Wells Fargo reads:

None of the parties shall receive any proceeds from this transaction except the sales commission.

Neither of these Affidavits, in my opinion***, would prohibit the seller from receiving a commission rebate. And when we team these with the Florida rebate law stating we only have to disclose the rebate to the parties of the contract.....the issue cloubs even further.

Is a rebate coming from the Broker "proceeds of the sale"?

And what about RESPA? RESPA requires that all monies related to the transaction be on the HUD. However, RESPA doesn't apply to all transactions including cash purchases and mortgages that are not Federally related

By the way. the Department of Justice is all FOR commission rebates as a commission rebate saves the consumer money in a real estate transaction. Rebates also help Brokers compete.

These are difficult questions and I think the courts will have to decide. What say you?

***I am NOT an Attorney. Nor do I play one on TV. This article is just my opinion. Do not rely on it as legal advice. Don't give your seller a rebate and tell your Broker ofrthe Judge that "Broker Bryant said it was OK". I didn't. What I'm really saying is SEEK LEGAL ADVICE.

Are you facing foreclosure in Florida?

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

Want to find out more? www.CentralFloridaShortSales.com

***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

Foreclosure vs. Short Sale: Which Option is Best For My Credit Score?

What Is A Credit Score?

How Are Short Sales Reported To The Credit Bureaus?

Facts About Short Sales and Credit Scores

Myth: Short Sales Are Better For Your Credit Than A Foreclosure

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