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"Property has been successfully imported into the application. Please check your Workflow for any tasks assigned to you for this property. Thank you."

This is the third time I have entered this property in Equator.

The first time, the buyer could not perform. Although they have created a system to simplistically add a new buyer this was "hard decline", needless to say I was required to start over.

Third time's a charm, let's see how we do!

Your Credit Score
When you foreclose on a home your credit will be altered for about 5+ years, to say the least. However, when you do a short sale your credit is also affected, but for a much shorter time period and less damage is done. The truth is there is no concrete answer as to how many points it will affect your score. Every person has his or her own FICO and each individual’s score will vary. What I can tell you is the late payments are typically what have the major affect on a borrower’s credit. Most people are usually able to qualify for a new loan and buy a new home within 2 years after a short sale vs. the 5+ years if you were to go into foreclosure. Since everyone is different it’s best to consult with a credit repair-person or your real estate professional in more detail.

FAQ’s
Why don’t I file Bankruptcy?
Short Sale vs. Bankruptcy – When faced with foreclosure many people tend to turn to bankruptcy as an option of solving their problem. Now there is a large difference many of the “professionals” fail to tell you. Filing for bankruptcy will consolidate your debt and can wipe out your liabilities, but it will not save you from having a FORECLOSURE put onto your credit report. Instead, now you will have both a bankruptcy and a foreclosure on your credit. If you plan on eventually turning back your property you WILL STILL HAVE A FORECLOSURE ON YOUR CREDIT REPORT. Trying to conduct a short sale while in bankruptcy can hold up the process, but it is not impossible. It will just take some more paperwork. My best advice is to consult with a great bankruptcy attorney prior to making any decision should you have additional debt you are unable to control besides your property. One key point to keep in mind is if your home is the only debt that is creating an uncontrollable situation for you then a short sale option is most likely your best bet vs. a bankruptcy. If you have other uncontrollable debt then a bankruptcy might also be needed in addition to a short sale. You should consult with a bankruptcy attorney should this be the case.

What do I do after a short sale?
After your short sale, the stress of your housing payment is extinguished and it’s time to get back on track to restoring your credit. Many people will rent for a while until their credit is fixed and then it’s time to get back into another house. With the right team of people working for you, you will be in a new house before you know it.

Mona Salem 310.925.4782 | Michelle Rosca 562.552.9600 | Long Beach Short Sales

Having problems with short selling property or a reverse mortgage in a probate?  Please contact us.

Homeowners with second mortgages have a higher risk of a delayed short sale or foreclosure. Why? The 2^nd lienholders have trouble (rightly so) allowing tens of thousands of dollars to be forgiven and often times, their denial of the short sale offer results in more loss on their interest(s) than if they cooperated. Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, says, “Subordinate liens have become the biggest hurdle to resolving the foreclosure crisis more quickly.” How do our agents resolve the 2^nd mortgage issue? By Persistence and Communication.

First, what are some local governments doing to eradicate the subordinate lienholders issue? A recent bill proposed by Rep. Jerry McNerney (Cali’s 11^th congressional District) called the “Fast Help For Homeowners Act” aims to expedite short sales by requiring second mortgage lenders to review and make a decision on a short sale agreement within 45 days. If the lender does not respond within the time frame, the short sale is deemed “approved” by the second mortgage lender on the 46^th day. McNerney ultimately wants this bill to provide relief to homeowners throughout the country.

I commend rep Mcnerney for putting effort in publicizing the issue and proposing ways to get 2^nd lienholders to comply. Do I believe more laws and regulations will improve the situation? Not necessarily. Will it actually produce positive results for the short sellers? From a historical perspective, one can easily be skeptical but we all can hope for the best.

To set the scene (reiteration of my last post) of a typical short sale with primary and subordinate lienholders, picture a room of five famished people waiting for food and suddenly throwing one pie right in the middle. Most likely, a fight will break out for the pie and it will probably end up getting ruined resulting in a loss for everyone (AKA foreclosure). This is what typically happens in a short sale transaction and 2^nd lienholders are usually the biggest contributors to this demise.

What uncooperative 2^nd lienholders do not understand is IF they allow the property to fall into foreclosure, they will get nothing from the transaction. Yes, they are able to pursue the borrower for the remaining balance post auction but they would have to pursue via lawsuit which will add on more costs, time, and a headache. The homeowner will probably end up filing for bankruptcy anyway.

Now, one indispensable element to a successful short sale transaction is COMMUNICATION. Our previous post The Secrets Of A Pro Negotiator, emphasizes the importance of communicating with all parties of the transactions well, one of which is the 2^nd lienholder. The job of a professional short sale agent or 3^rd party negotiator is to communicate the simple notion, “Here is the whole pie. You can either have a piece of the pie or nothing at all. We think you should take the piece we offer you.” Although many no’s will be spoken from the 2^nd lienholder, through months of persistence and explaining the present circumstances, they will eventually understand that accepting the offer will be the better financial choice than the alternative.

What do you think is the solution for subordinate lienholders?

Peter

Too often, many homeowners doing a short sale read up on the internet and speak to friends, coworkers, relatives and anyone else whose done a short sale, about how they received $3000 relocation assistance by doing a HAFA short sale.

Sadly...this is NOT always the case. Simply going into the HAFA short sale program here in CA does NOT guarantee you will walk away with money.

Case in point.....First your realtor needs to determine if your servicer(the one you normally make or made your mortgage payments to for your 1st lien)participates in the HAFA program. Many servicers DO NOT!.

Also, even if your servicer(1st mortgage lienholder) participates in HAFA, the INVESTOR who is above your servicer and has final say so...may NOT be a HAFA participant.

Many 1st mortgage liens are SOLD to a private investor or group of investors that DO NOT belong to HAFA, nor do they have to abide by HAFA's guidelines and rules. 

OK, so let's say your 1st lien holder and their investor DO participate in HAFA and allow you to do a HAFA short sale.

If you have a 2nd lien, you need to also find out if THEY participate in HAFA...for if they DON'T...then guess what may happen when you go to close? Your 2nd lien holder could see the $3000 monies awarded to the seller(YOU) by the 1st lienholder and decide to GRAB or TAKE any monies on the table. Thereby preventing YOU, the homeowner from getting ANY MONIES awarded to you. Don't say NO...because I've seen it done.

Also...here's the kicker....and even better than the above. Let's say..Mr and Mrs Seller had a 1st and a 2nd on their home, and the 1st even agrees to a HAFA short sale, and so does their investor.And let's say your 2nd lien servicer WAS a participant in HAFA and agreed to participate. *  If your 2nd in this process gets SOLD OFF or CHARGED OFF during this process to a collection co. for x amount of months of NON PAYMENT on your part, then that COLLECTION co is NOT HELD to HAFA's rules and can collect the relocation monies at funding. The collection companies ARE NOT SERVICERS...and therefore they DO NOT belong or partipate in HAFA's rules or programs...so  since they are a collection company..they can TAKE the monies left on the table. Remember people...they are a COLLECTION company...they don't call them a collection company for nothing!!!!

Remember the 2nd lien holder, whether it be a servicer or now a collection co...has begrudgingly accepted what the 1st will give them, and they are NOT happy.

Please make sure when doing a short sale that you interview an agent who has done them extensively and has much experience in negotiating short sales. Please don't assume EVER that because an agent has these CDPE or SFR designations...that they KNOW or are VERSED in NEGOTIATING short sales. These companies handing out designations are PRIVATE COMPANIES charging realtors a $500 or more fee to take a 1 day or sometimes just a several hour course in short sales. THIS DOES NOT mean your realtor knows in the slightest how to navigate and negotiate the slippery slope of short sales. Many of these realtors who have gotten their licenses not that long ago or get these designations because they know that 50% of the market is upside down and if they want ANY business, they better get with the program and start handling short sales.

I am not knocking these designations....there are agents who have them and legally have experience and know how to handle short sales... the main thing is to check for experience in how many short sales they have done...and if they have DONE it themselves. Farming it out to 3rd party negotiators or attorneys, does NOT guarantee success.

Please ask many questions about the short sale process and scenarios. There is no magic wand that anyone can wave to make sure your short sale goes smoothly, for many things occur as roadblocks to navigate along the way. But with a strong negotiating agent who is familiar with all the ins and outs and possible scenarios that the banks, lenders, servicers, investors,and collection agencies throw our way....hopefully having this extensive knowledge and experience can help you obtain a successful outcome.

When doing a short sale, you will need to obtain many documents to be submitted to the lender.  The paperwork that you will need includes:

• Most recent mortgage statements
• Two months of checking account statements
• Two months of savings account statements
• Two months of other bank accounts statements
• Last two pay statements
• Last two years tax return statements
• Hardship letter
• Financial statement

Your short sale specialist should guide you through this process of completing and obtaining this paperwork.