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My seller ended up getting $30,000 from Chase and $3000 in moving incentive from HAFA program. Wonders never cease.

Wow!  I am loving Wendy and Brian and the information!  We have done a ton of short sales but this is good stuff!

Hi Everyone,

What are the current lender credits available to Sellers?

Hi Everyone,

We have had some success with a simple underwater mortgage hardship.  I am still hesitant to let that be the only hardship with folks.  Any advice?

Thanks in advance,

It's the beginning of the year so time for the round-up of last year's distressed property sales in Cupertino. So here's what happened:

Single family and condo townhomes :

Total sales:  453

Short Sales: 21

REO:            11

Distressed sales as a percentage of total sales: 6.8%

Compare to 2010

Total sales:   844

Short Sales:   31

REO:            33

Distressed sales as a percentage of total sales:  7.6%

My conclusion:

The percentage of distressed properties in Cupertino is virtually the same  between 2011 and 2010. Also a 6-7% distressed property sale percentage is not large enough to affect values. What is interesting is the number of total sales in Cupertino is significantly lower in 2012 than 2011.

If you have any questions about short sales or bank owned homes please feel free to contact me.

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

D.R.E.  01191194

This Week's Popular Discussions

Short Sale Approvals with Seller isn't Delinquent Howdy Folks - Just curious if anyone is seeing short sale approvals when the seller isn't delinquent. We just did one, but the seller wa… Started by Christopher Pendleton	16	1 minute ago Reply by Bryant Tutas
Short sale lender wants agents to pay for an appraisal. This short sale lender requiring an appraisal rather than a BPO, the kicker...they will not pay for it and will not approve the short sale… Started by Bev Dudley	9	2 minutes ago Reply by Bryant Tutas
Chase cut my commission, but will give seller $30,000! I'm the broker/owner of a small firm. My wife and I are attempting to purchase a $300k Chase short sale for our primary residence. We got… Started by Billy	73	4 minutes ago Reply by Bryant Tutas
Interesting news from the California Association or Realtors regarding licensing and short sale processing http://www.car.org/legal/foreclosure-short-sale-folder/short-sale-negotiators/Below is the part of the article, use link above to read fu… Started by Jeff Payne	3	5 minutes ago Reply by Bryant Tutas
3rd party SS Processors I recently changed to a new Broker. Company claims, that if you use a certain Escrow Co., that they negotiate your SS for free. Bank get ch… Started by Rochelle Castro	23	6 minutes ago Reply by Bryant Tutas
Using Bankruptcy to avoid foreclosure I have had to sellers that I have been going back and forth about short sales finally decide to go into bankruptcy. There is a couple of p… Started by Kevin Vitali	60	6 hours ago Reply by Ryan Simpson
I Need HELP with a BPO from ING I have a home listed in Scottsdale AZ for 305k. A month or so after listing it we received an offer for 295K. This home is in an ok area, b… Started by Scott Douville	6	7 hours ago Reply by Ryan Simpson
Have you had BOA close files in Equator with no explanation? Hi all, I'm new to the site. I'm a California attorney and real estate broker specializing in short sales. For a bit over 4 years we ha… Started by Spencer Lugash	8	7 hours ago Reply by Eric Mieles
Co-Op Short Sale Assignments Has anyone gotten an e-mail from this company DTS or Dignified Transfer Solutions who is teamed up with Bank of America to assign contacts… Started by Thomas Zdanowicz	27	8 hours ago Reply by DESIREE A BURGOS
I knew when I took the listing that I was going to be sorry. We wrapped up a short sale last week, closed on Tuesday, funded on Weds, in which the first mortgage holder was paid in full, a second and… Started by Jill Ford	2	11 hours ago Reply by Becky Martin

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In a briefing by Credit Suisse this week, the financial giant’s opinion was that reducing principal balances of underwater mortgages is a risky idea that has not been shown to keep underwater borrowers from later defaults.  In my practice as a Florida real estate lawyer, that opinion flies in the face of borrower sentiment.  The guiding force in the Credit Suisse statement seems to be the “moral hazard” argument, coupled with statistics about the failure of principal reductions helping homeowners.

As reported by Bloomberg News, Dale Westhoff on behalf of Credit Suisse said that of the 11 million “underwater” homeowners, about 6.5 million have never missed a payment and 2 million more are making on-time payments after delinquency.  He said that widespread principal reductions may drive defaults much, much higher as borrowers seek the aid.  But he also said that such wholesale principal reductions have never been done before and the associated risk is unknown.  Furthering that argument, he said that if principal reductions are offered, it may create the concept that the lenders are guaranteeing the value of homes.

Others don’t share the same view.  I for one find that 50% of those that seek my assistance have decided that without a meaningful principal reduction, they are merely overpaying rent and having a debt obligation as well.  This sentiment was predicted as far back as 2001. [See my article A HOME WITHOUT EQUITY IS JUST A RENTAL WITH DEBT]. 

While Fannie Mae and Freddie Mac maintain a no principal reduction policy, New York Federal Reserve Bank President William Dudley said this month that without a significant turnaround in home prices and employment, a substantial portion of deeply underwater home loans (as in Florida) will ultimately default absent a realignment of principal to market value.  This concurs with the findings I make in my office everyday by speaking with troubled borrowers.

Will the argument that principal reductions will bring out a flood of applications for similar aid hold true – I think the estimates of that flood are probably understated! - At least here in Florida.

The problem has been quantified by specialists as needing to avoid 8 to 10 million more distressed property sales through the application of principal reductions.  Although some programs for “short refinancing” are in effect, with 125% caps that is not enough in the hardest hit states – where the market value drops are far greater and the bulk of the problem loans exist.

From the macro viewpoint, short sale guru (as in billion dollar bets that the mortgage bonds would fail) Greg Lippmann wonders what the big deal is – since investors write down their portfolios anyway and have been doing business like this for years.

 It seems to me that writing down the loan at the borrower level will have the added benefit of lowering losses on the loan underlying the mortgage bonds, therefore stabilizing that market.  Without the help to the first tier borrower – the homeowner – the homeowners’ later default simply makes the foundation upon which the bonds are created subject to disintegration.  If we don’t see principal reductions then this is going to be a very slow recovery.  If we do see principal reductions we are liable to experience “non-qualified” borrower revolt and a new era of lending and doing business a very different way.

-----------------------------------------------------------

Copyright 2012 Richard P. Zaretsky, Esq.

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader. Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com Website www.Florida-Counsel.com.

See our easy to understand articles at:

TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES

Since we (the buyers) started this endeavor in July (2011), we've pushed the foreclosure date 4 times, had countless negotiations with the bank and just this month we FINALLY came to an agreement with them. A verbal agreement that is. It's been 3 weeks and we still haven't received anything in writing so we pushed the foreclosure a 5th time. Is the bank just pushing it so they can keep sitting on this contract and eventually just say no? How long does it typically take from a verbal contract to a written contract? There are major HOA fees that are owed that we are willing to pay but each month this contract gets pushed, the HOA tacks on another $1,000. I need hope that this will actually happen. We are going on month 7. Thanks!

This Church Street home in Santa Rosa Beach Florida was originally purchased as a short sale in 2009.  For the second time, it is being sold as a short sale, just approved by J.P. Morgan Chase. The mortgage was backed by Ginnie Mae, and was a USDA loan, which offers  mortgages to rural areas throughout the U.S.  

Lender: Chase
Mortgage Type: Ginnie Mae USDA
Balance: appr $220,000
Junior Liens: none
Sale Price appr $200,000
Seller Cash Contribution: -0-
Seller Promissory Note: -0-
Deficiency: none

Although Chase's short sale approval letter did not specifically address a waiver of deficiency, the Chase negotiator quoted me USDA loss mitigation guidelines, which state there is no pursuit for the balance of the unpaid note.  I researched online and found the following information about USDA loans sold as short sales, which the USDA calls "pre foreclosure sales" or "PFS":

"A borrower who successfully sells the property securing the loan using the PFS option is relieved of the mortgage obligation. The borrower shall not be pursued for deficiency judgments by either the Servicer or the Agency."

Other things to note about USDA short sales - you must have a hardship, and be at least 31 days late on your mortgage payment or facing "imminent default". For more information about Ginnie Mae or USDA short sale help in Santa Rosa Beach, Florida, email me at itswendy@rulnickrealty.com

It's Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-487-9639 or local 850-650-7883 ext 204
Email Wendy: itswendy@rulnickrealty.com

Santa Rosa Beach FL short sale help

Short Sale Road Rules: Pricing Strategy

From what I’ve seen, not having a pricing strategy or mispricing short sale listings is a major contributor to short sale delay and failure. Something as simple as getting the price right may be the difference between a successful short sale and a foreclosure. This failure could very well become the basis for a complaint or lawsuit against the listing agent on the basis of negligence or incompetence. My rule of thumb is simple: If you have a short sale listing on the MLS for more than 30 days without an offer, you’ve priced it wrong. In the last few years, I have noticed something about buyer’s behavior. It used to be if the buyer was willing to pay $95,000, and you were listed at $110,000, they would make an offer. Now, when there may be dozens of listings comparable to yours, and many REO and short sale bargains out there, that same buyer will pass your listing right up and move on to the next one.

Pricing Psychology and the Seller
Many times, when I point out the fact that a listing has been priced out of the market, the excuse I get from the listing agent is that the seller did not want to price according to today’s market value. This is not acceptable. As a listing agent, you must be in control of your seller and your listing at all times. This is especially true in a short sale. We must be very clear in communicating how and why we are pricing a listing the way that we are, and understanding the seller’s psychology is key. There are three main steps in determining and presenting a short sale listing price strategy. They are:

1. Know The Market
The secret to a successful short sale is being able to justify your offer/list price to the lender using current and relevant market data. In effect, do your own BPO/CMA, and gather true, recent comparables that reflect closely on your price. As we know, there can be a wide range of values for comps. I suggest picking the low end of the scale and pricing your listing accordingly. In a short sale, amenities and improvements don’t count. No one cares that your property have granite counters and a Jacuzzi. If a buyer looks at three comparable properties, and they are priced at $100,000, and yours is clean and tidy with nice amenities and priced at $135,000, you will lose the sale every time because the buyer will go with the lower price and think that they will improve the property themselves for cheaper. In short, Price your listing very aggressively, at the bottom end of the market scale.

2. Communicate with Seller
This is where most agents fail. Somewhere along the line, we stopped being salespeople and became order takers. This worked through the boom years, but it is a recipe for failure today. Sales are about control, and you must be able to be confident and control your seller. We must explain with confidence that, in your expert market experience, that in order to attract offers, that you have determined that this is the price. We do not and can not think of what the property used to be worth, and we can’t pine for what we wish it to be worth. The reality is, Mr. Seller, according to this market data, the listing price needs to be X in order for us to be successful. What you owe to the bank is irrelevant. The lenders only concern is how much is it worth today and what can you get for it. That’s it. We must also explain our strategy to attract quality, legitimate buyers. Unqualified buyers are a huge problem. Remember, we are not necessarily looking for the highest price; we are looking for the strongest buyer. This is critical. Our Fiduciary Duty to the seller is to put them in the best financial position and to get the property sold. If we price a listing correctly, we should attract multiple offers in a short period of time. If 2 of those offers are by FHA buyers for $100,000 and $101,000, and one cash offer for $90,000. So long as you can justify the offer with market data, the cash offer is strongest and therefore the one we recommend to the seller. We can only attract these types of offers by pricing correctly. When I look in the MLS and see short sales that have market times of 90+ days with no offers, that is clear indication of an agent who is endangering their seller with their inexperience.

3. Make The Seller Understand
A successful short sale listing agent can make a seller release their emotional attachment to a property and view the short sale as a business decision. First, I stop calling it a home. The word Property is used to distance the emotional aspect of the home and helps the seller view it as an inanimate object. We also need to talk about the sellers relief after the short sale, and how much not having the uncertainty of the transaction is going to relieve their stress. Help them find alternate housing, which goes a long way to helping sellers let go of their current property. Finally, just level with them. Many feel bad that they were not able to live up to their obligations. Remind them that you understand, and that you share their concern, but that ultimately, this is a simple business decision, and this short sale will help them “close the books” and allow them to move on to new opportunities. If a big corporation finds one of its brands foundering, they will take the loss, write it off, sell the underperforming asset, and move on. There is no reason the average seller can’t do the same.

Conclusion
In a short sale, the successful listing agent knows the market, gathers relevant market comparables, then prices the listing aggressively to attract multiple offers. If done right, offers should come in no more than 10 days listing time. If you are having little to no showing activity, your list price is way out of market. If you have showings but no offers, you are close, but not close enough. Remember, we want to find the “Sell Right Now” price. The market will respond when you find that price, and then you can determine the strongest buyer and accept that contract with confidence. So long as you can justify that price with market data, you shouldn’t have issues getting it approved as a short sale.

For more Short Sale Road Rules and information about the author, please visit our Facebook Fan Page at http://www.facebook.com/ShortSaleProcessor, and our website at www.josephalfe.com or www.ssprocessors.com

Short Sale Road Rules: Getting Buyer and Seller on Same Page

One of the most neglected, and yet, most important part of a successful short sale is getting both buyer and seller on the same page.  This may stem from the traditional way of thinking on a traditional “retail” sale:  It’s “Us against them.”  This does not apply to short sales, and if you can over come this mentality, your closing success will skyrocket.  Getting the short sale approval is only part of your responsibility; the other part is getting your buyer to the closing table. This is how I do it:

Locking the Buyer Down: The Stick

As I have gone over in my other articles, locking the buyer down into an airtight commitment is part of my “Rules of the short sale.” We do not allow a buyer to have any “outs.” To recap, here are the “Rules:”

1. 90 day contract close date-We need enough time to get approval
2. Ernest money up front
3. Inspection time normal 10 days (NO “upon lender acceptance” allowed)
4. Attorney review normal 5 days (NO “upon lender acceptance” allowed)
5. Proof of funds for cash buyer
6. Mortgage Pre Approval (NO Pre-Grades from loan officers-only banks)
7. Buyer agreement on use of professional negotiator

These rules are non negotiable.  If they are refused, we recommend to our seller that this is not a legitimate buyer and we get another offer.  Period.  Trust me, a buyer that refuses is a buyer that will find some excuse down the road to walk away or not close.  Don’t waste your or your seller’s time with these tire kickers.

Sounds like a tall order?  I hear it all the time…”Joe, out here in (pick an area) my buyers will NEVER go for these rules….”  WRONG!  They WILL go for it, because you are going to DEMAND IT! It’s just that you are going to do it in a way that brings the buyer over to your side and gets them involved and excited about the process. Remember, the time where agents could make money by being order takers is long gone! You need to put on your big boy (or girl) pants and go out and be a salesperson.   We accomplish this by giving them incentives to play by our rules.

The Carrot

We get our buyer on board by offering them incentives. The most obvious one is Price.  Remember, no matter what the objection, Price cures all ills.  Sounds simple, and it is, but like anything there is an art to it.  First, as a listing agent, it is your responsibility to do a detailed CMA on your listing.  We need to know what the true comparable properties are selling for, both distressed and non distressed. As discussed before, we have set our price aggressively at the very low end of the comp range.  This attracted buyers. Now once an offer has been tendered, we set about to find the most important key to our strategy, the buyer’s “All In” price.  This is where you have to get the buyer and their agent on your side. 

Coming Together

How I do this is simple.  I tell them that I have a duty to my seller to get this deal closed, and that if we work together, not only can I help my seller, but we can help your buyer as well. We know that it is in our best interest to make your buyer happy, and to get a great deal for them.  This is why they need to be committed and honest with us.  Remember, WE HELP OUR SELLERS WHEN WE HELP THE BUYERS BUY.  This puts the deal in perspective, and softens the edge a little so we get a more honest answer when we ask for the ALL IN price.  As explained before, no matter what offer was tendered, we need to know the buyer’s absolute, top dollar, price, fees, extra costs, everything price.  This is the ALL IN price.  Once that is established, I then like to ask the buyers to REDUCE their offer by 5%-7%.  You heard that right.  I said drop the offer.  This accomplishes two if things:

1. It gives us negotiating room with the seller’s lenders
2. It gives the buyer and incentive to stick in the deal.

The possibility of a discount is a powerful motivator for buyers, and once you show them that you are allowing them this opportunity, most buyer objections melt away quite rapidly.  In fact, they become your new best friends.

Now, I know many of you are telling to “Hold on, how is this benefiting our seller..” Well, again, we help our seller when we help our buyer buy.  What the seller owes is irrelevant.  Our objective in a short sale is not TO GET THE HIGHEST PRICE, BUT RATHER TO PUT THE SELLER IN THE BEST POSITION TO CLOSE. Of course, we have to be quite clear to the buyer that by lowering their offer, they must be willing to bump it back upwards should the lender counter.  This also means the buyer should be ready to bring a little extra cash to the table to buy out a seller deficiency on a second, pay ancillary fees, or cover any seller cost not paid for by the seller’s lender.  As long as our total amount stays below the ALL IN price, we should be good to go.  If you do this right, you will close at a number somewhere between the low offer and the ALL IN price, and everyone will think you are a hero. If, by chance, we end up beyond the all in price, most of the time it’s close enough that you can negotiate some sort of settlement. For those of you who can’t believe that the seller’s lender will go for this…they can and they do everyday.  What some of you don’t realize is that most investor guidelines allow for up to a 20% variance from appraised value if you know how to work the short sale right…hence the insistence of using a professional negotiator.

Remember, short sales are a strategy.  You should plan ahead because if you don’t, you will be doomed to react to lender actions and that, my friends, is why most agents fail at short sales.  Get the buyer on board and the rest of the deal will follow.

For more Short Sale Road Rules and information about the author, please visit our Facebook Fan Page at http://www.facebook.com/ShortSaleProcessor, and our website at www.josephalfe.com or www.ssprocessors.com

Does anybody have any information out there on Aurora?  I need the name and/or number of a supervisor or escalation department. 

Thanks so much,

Gloria Handley

Homelight Realty and Management

Gilbert AZ

It's the beginning of the year so time for the round-up of last year's distressed property sales in Santa Clara. So here's what happened:

Single family and condo townhomes :

Total sales:  816

Short Sales: 184

REO:            116

Distressed sales as a percentage of total sales: 37%

Compare to 2010

Total sales:   818

Short Sales:   162

REO:            133

Distressed sales as a percentage of total sales:  36%

My conclusion:

The percentage of distressed properties in Santa Clara is virtually the same  between 2011 and 2010. Also a 36% distressed property sale percentage is large enough to affect values. What is interesting is the the number of short sales went up in 2011 and the number of REOs went down. Hopefully this will continue in 2012.

If you have any questions about short sales or bank owned homes please feel free to contact me.

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

D.R.E.  01191194

This Week's Popular Discussions

How to stop short sale lenders from automatically cutting our commission Nearly 9 out of 10 of my short sales, the lender cuts the commission from 6% to 5%. I am sick of this. They know they have us by the short… Started by Julie Wilkinson	17	13 seconds ago Reply by Bryant Tutas
How much time does it take to complete a short sale? Curious how much time you spend working a short sale once you get an accepted offer? How much time: To gather initial documents from seller… Started by Jeff Payne	7	46 seconds ago Reply by Bryant Tutas
Track it! TRACK TRACK! I can't remember what I ate for breakfast most days, but I can remember every conversation I've had on any file I'm negotiating. I also TR… Started by Smitty	3	1 minute ago Reply by Bryant Tutas
How does Credit Report Look after a Short Sale? I had a client ask me how his credit report would differ if the bank accepted a short sale as payment in full or if they went after a defic… Started by James Lockard	8	2 minutes ago Reply by Bryant Tutas
PMI suing the banks? I had a call today from a past short sale client who said a PMI company wants to meet with them and hear their story of the 3 times they tr… Started by Karyl Moore	4	3 minutes ago Reply by Bryant Tutas
What's the real benefit of short sale versus foreclosure? Like all of you, I'm a big proponent of short sale over foreclosure, not merely for my livelihood (but that counts) but also because I thin… Started by Tamara Dorris	16	4 minutes ago Reply by Bryant Tutas
A Step in the Wrong Direction So slightly off short sale topic but important to all of us. I had a confrontation yesterday with a mortgage broker who I have worked with… Started by Eric Mieles	6	15 hours ago Reply by Eric Mieles
1st & 2nd TD with Wells via Equator Now that Wells Fargo is using Equator, if I am doing a SS with both a 1st & 2nd at Wells, do I need to initiate SS in equator on 2nd TD… Started by Chad Dannecker	1	18 hours ago Reply by Bryant Tutas
Have you used CAR's Short Sale Assistance Desk w/Fannie Mae loans? I was just poking around on the California National Association of Realtors (CAR) website and I saw the Short Sale Assistance Desk (SSAD) i… Started by Shari P	2	21 hours ago Reply by Jeff Payne
Freddie Mac Addendum and "rentback"? Hello, I am a first-time home buyer in the process of some back & forth after putting an offer on a short sale. The latest thing to com… Started by Erin	6	21 hours ago Reply by Jeff Payne

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Hi folks. Do You Want To Close More Short Sales? Of course you do. Here are some tips that may help.

• Educate the Sellers at time of listing. Make sure they fully understand the process and what is expected of them. Be sure they understand cash contributions, promissory notes, tax ramifications and what happens to the deficiency.

• Price the property at market value or more. Negotiate the cleanest contract you can get with a price that you can defend to the lender.

• Know the type of short sale i.e. FHA, VA, HAFA Non GSE, HAFA Fannie, HAFA Freddie, USDA..... and why this is important.

• Be sure any major repair issues are addressed at time of listing. These could put limitations on the type of Buyer you are looking for. For example: If it needs a new HVAC system a Buyer will not be able to use FHA financing.

• Be in complete charge of the transaction. Know what you can and can’t do then make sure the lender understands that you know.

• Make sure the BPO agent has the information you need them to have PRIOR to them doing the BPO. And know what that information is.

• Make sure you are aware of ALL liens on the property prior to taking the listing.

• Understand that the Seller is not always the Borrower. That works both ways. Example: Child owns the property but the borrowers are the parents. Or...the Seller assumed a mortgage when they purchased the property but the loan is still in the original borrower’s name.

• Stay focused on the transaction. Don’t let “drama” cloud your vision.

• And most importantly, understand that “Short Sale Denied” means....this time. Find a new buyer and try again. And keep trying until you get the job done.

This is in no way a comprehensive list but it will give you some things to think about. Any questions?

DO YOU NEED SHORT SALE TRANING?

Hi Superstars!  I received a call today from the Bloomberg News asking about a comment I left on one of the lender sites and he is writing an article about lender contributions on short sales.  I was excited to hear that he found my comment/post on this site.  I know lenders google us and probably hit this site alot also.

Good work and thank you Wendy and Bryant for the site!

 
One of the biggest sources of confusion I find with Eglin Air Force Base HAP sales from the seller comes at closing.  First, if you don't know what HAP is - it's the Homeowner Assistance Program from the Department of Defense.  It's designed to help military members who have permanent change of station orders (PCS), and are "upside down" in their home values, i.e. owe more on their mortgages than their property's market value. HAP will pay the mortgage deficit under certain circumstances, which helps the service member avoid the credit impact of short sale or foreclosure due to their mandatory relocation.

One of the stipulations of HAP is that the Eglin airman is current on his mortgage payments, taxes and association dues, or that is the extent to which the benefits apply. For example, if you were six months behind in your mortgage, HAP would not pay the amounts in arrears to satisfy your bank. You must. So what's the issue? Even service members who are "current" on their mortgage payments will normally owe a pro-rated amount of mortgage interest, taxes and maybe association dues at closing. Remember, mortgage interest is paid in arrears. If you have a payment due on March 1, that would cover the interest for the month of February, not March. 

My last HAP seller asked me why he had a bill for almost $1500 at time of closing from the U.S. Government title agent.  I told him it was probably his mortgage proration. He said, "But I made my mortgage payment!" I said, "Yes, but that covered the previous month."  If your closing is mid-month, you would owe about two weeks worth of interest to your mortgage company, which will be collected by the title agent to pay your lender at closing.  That goes for taxes and association fees, too. 

Florida's state taxes are paid one year in arrears (not all states handle their property taxes the same way).  That means that the tax bill for your Navarre, Niceville, Crestview, Fort Walton Beach or Destin property covers the previous year (arrears). If you close on September 1, for example, the buyer will still receive the tax bill for the time YOU owned the property during the past year. That wouldn't be fair, would it? So at time of closing, you have to reimburse the buyer the eight months to apply to the tax bill they will be getting at the end of the year. Yes, your mortgage company normally (but not always) escrows this amount in your total mortgage payment. You will get a reimbursement check after closing for any remaining balance in your escrow account. But for the HAP closing, you will owe the year-to-date taxes that are due.  The same applies to homeowners association dues. The government won’t pay those on your behalf.

So what is a reasonable expectation for funds the Eglin service member might 
need for closing? Set aside enough to cover one mortgage payment, and potentially, almost a year tax obligation. You probably will not need all of it, but be prepared “just in case”.

It's Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.

Call toll-free 1-877-487-9639 or local 850-650-7883 ext 204
Email Wendy: itswendy@rulnickrealty.com 

Wendy Rulnick, Broker, is a short sale and pre-foreclosure specialist and has been featured in "Kiplinger Personal Finance Magazine" and "Florida Realtor Magazine". She has successfully helped hundreds of families avoid foreclosure through short sale along the Emerald Coast of Florida. Wendy Rulnick is knowledgeable in all aspects of short sale, including VA Compromise Sale, FHA HUD pre-foreclosure sale, HAP military PCS, HAFA, Bank of America Coop program and more.  She is also co-founder of www.ShortSaleSuperstars.com and short sale instructor to agents across the United States. Wendy Rulnick sells real estate in Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Panama City Beach, Eglin AFB, Hurlburt Field. 

One of the biggest sources of confusion I find with Eglin Air Force Base HAP sales from the seller comes at closing.  First, if you don't know what HAP is - it's the Homeowner Assistance Program from the Department of Defense.  It's designed to help military members who have permanent change of station orders (PCS), and are "upside down" in their home values, i.e. owe more on their mortgages than their property's market value. HAP will pay the mortgage deficit under certain circumstances, which helps the service member avoid the credit impact of short sale or foreclosure due to their mandatory relocation.

One of the stipulations of HAP is that the Eglin airman is current on his mortgage payments, taxes and association dues, or that is the extent to which the benefits apply. For example, if you were six months behind in your mortgage, HAP would not pay the amounts in arrears to satisfy your bank. You must. So what's the issue? Even service members who are "current" on their mortgage payments will normally owe a pro-rated amount of mortgage interest, taxes and maybe association dues at closing. Remember, mortgage interest is paid in arrears. If you have a payment due on March 1, that would cover the interest for the month of February, not March. 

My last HAP seller asked me why he had a bill for almost $1500 at time of closing from the U.S. Government title agent.  I told him it was probably his mortgage proration. He said, "But I made my mortgage payment!" I said, "Yes, but that covered the previous month."  If your closing is mid-month, you would owe about two weeks worth of interest to your mortgage company, which will be collected by the title agent to pay your lender at closing.  That goes for taxes and association fees, too. 

Florida's state taxes are paid one year in arrears (not all states handle their property taxes the same way).  That means that the tax bill for your Navarre, Niceville, Crestview, Fort Walton Beach or Destin property covers the previous year (arrears). If you close on September 1, for example, the buyer will still receive the tax bill for the time YOU owned the property during the past year. That wouldn't be fair, would it? So at time of closing, you have to reimburse the buyer the eight months to apply to the tax bill they will be getting at the end of the year. Yes, your mortgage company normally (but not always) escrows this amount in your total mortgage payment. You will get a reimbursement check after closing for any remaining balance in your escrow account. But for the HAP closing, you will owe the year-to-date taxes that are due.  The same applies to homeowners association dues. The government won’t pay those on your behalf.

So what is a reasonable expectation for funds the Eglin service member might 
need for closing? Set aside enough to cover one mortgage payment, and potentially, almost a year tax obligation. You probably will not need all of it, but be prepared “just in case”.

It's Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.

It's Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-487-9639 or local 850-650-7883 ext 204
Email Wendy: itswendy@rulnickrealty.com

Wendy Rulnick, Broker, is a short sale and pre-foreclosure specialist and has been featured in "Kiplinger Personal Finance Magazine" and "Florida Realtor Magazine". She has successfully helped hundreds of families avoid foreclosure through short sale along the Emerald Coast of Florida. Wendy Rulnick is knowledgeable in all aspects of short sale, including VA Compromise Sale, FHA HUD pre-foreclosure sale, HAP military PCS, HAFA, Bank of America Coop program and more.  She is also co-founder of www.ShortSaleSuperstars.com and short sale instructor to agents across the United States. Wendy Rulnick sells real estate in Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Panama City Beach, Eglin AFB, Hurlburt Field

The Mortgage Debt Relief Act of 2007 is set to expire!!

The window is closing rapidly on one of the most important tax-relief provisions enacted by Congress during the housing crisis to help financially strapped homeowners. Time is running out to Short Sale your house. Although the 2007 law that allows taxpayers to exclude from income the amount of debt that is forgiven or canceled by their lenders doesn’t expire until Dec. 31, it’s likely to take every bit of the coming months to persuade your bank to either foreclose or allow you to sell your house for less than it’s worth (Short Sale).

While owners who are struggling to hold onto their homes shouldn’t throw in the towel solely because of the pending tax bite, it is certainly something to consider.

Under the tax code, borrowed money need not be reported as income because you have an obligation to repay. But if the lender subsequently cancels what you owe, the IRS requires that you report that debt as income because the duty to repay it no longer exists. So, if you owe $250,000 and your lender forgives $50,000 of that debt in a $200,000 refinancing, that $50,000 is considered income. If your combined federal and state marginal tax rate is 36 percent, you would owe $18,000 in taxes.

Under the Mortgage Forgiveness Debt Relief Act of 2007, though, taxpayers are allowed to exclude from income the discharge of debt on their principal residence when they do a short sale— at least until 2013.

So when your lender agrees to a short sale, there is no tax on the difference between the selling price and the amount you owe. When your lender forecloses, there is no tax on the canceled debt. Even when you refinance at a lower loan balance, there is no tax on the difference between what you owed on the old loan and what you now owe on the new one.

But unless Congress extends the law — and there is no indication lawmakers are even thinking about that — all residential mortgage debt relief that takes place on or after Jan. 1, 2013, will once again be considered taxable income.

Why worry about this now, Because the timelines on debt forgiveness decisions by lenders are absolutely horrendous.

Of course, each state has a different timeline. But the shortest is 463 days in Minnesota, according to Lender Processing Services. So the tax absolution window may already be closed for foreclosures.

There are no hard-and-fast numbers when it comes to short sales or loan modifications. But they also can be long, drawn-out transactions.

According to a nearly year-old survey by Equi-Trax Asset Solutions, a Santa Barbara, Calif., analytics company, it can take anywhere from four to nine months for underwater borrowers to persuade their lenders to sign off on a deal in which the lender will net less than what the borrower owes (Short Sale).

Eighteen percent of the 600 agents polled said short sales can be closed in less than three months if the stars line up just right. But almost 10 percent said these transactions require more than 10 months to complete.

There are many factors besides a tax break to consider when deciding whether to give up your house. What will a foreclosure or short sale do to your credit score? How long will you be precluded from buying another house? Will the extra income push you into a higher tax bracket? How long will it take before the amount I owe is on par with what is owed? Is it worth being tied down to one property for many years or should I just short sale and be back in the market within 2 years and probably buy more house for way less.

Consequently, as always when it comes to such matters, you should consult a tax professional before making any decisions.

At Trinity Homes & Investments we discuss all available options with our clients before deciding which course of action to take.  Our mission is to find dignified solutions to foreclosure.

This week's featured discussions.

Just an observation from what actual short sale sellers and buyers are asking on Short Sale Superstars I LOVE that we get actual consumers coming to this site to ask questions. We get alot of buyers and sellers alike who are trying to navigat… Started by Jeff Payne	8	1 minute ago Reply by Bryant Tutas
How many short sales are you closing a month? I was just wondering for all the heavy hitters iut there. I am trying ti gauge myself on how many short sales i should be closing monthly.… Started by Darren Bell	3	1 minute ago Reply by Bryant Tutas
Help!!! 1st and 2nd won't let 3rd get any $ I have a 1st with GMAC, 2nd with BofA and 3rd with MCT Group a collection company for USE Credit union. The 1st and 2nd have agreed to the… Started by Mike Giancanelli	7	3 minutes ago Reply by Bryant Tutas
Why do we interview agents and/or the sellers negotiator before showing a property? We have a laundry list of questions that we ask a lisitng agent and/or the sellers short sale processor before we show a property. There a… Started by Jeff Payne	10	3 minutes ago Reply by Bryant Tutas
BOA/Equator Counter Offer too High short sale I received a counter offer from BOA/Equator system about 25% more than offer price. The home is not in good condition and needs a lot of fi… Started by tejas	26	5 minutes ago Reply by Bryant Tutas
Who Creates The HUD? I'm representing the buyer of a short sale in California; Seller's agent is in my brokerage, and has "hired" a 3d party negotiator. BofA ha… Started by Katherine Muhs	12	16 hours ago Reply by Kevin - Greenville, SC
Mortgage Debt Relief Act Hope everyone had a productive week so far. I didnt see anyone start a thread and ask so I was curious what everyones thoughts were on the… Started by Eric Mieles	3	16 hours ago Reply by Wendy Rulnick
HAFA INCENTIVE - Can Borrower/seller Elect Not To Receive The $3,000 Incentive? Does anyone know if the Borrower/Seller can elect not to receive the $3,000 incentive to contribute either to buyer closing costs or just t… Started by Brenda Rogers	19	yesterday Reply by Kevin - Greenville, SC
Anyone closed with HSBC on 1st Lien?? I am looking to review the Arm's Length Affadavit from HSBC. It is impossible to get through to them to obtain one -- anyone closed with t… Started by RoJane Maybee	10	yesterday Reply by Jessica Eisenhauer
Estate Short Sell Reverse Mortgage or Walk? I was contacted by the heir about listing a property. We quickly discovered that the deceased had a Reverse Mortgage and that the estate wo… Started by Kathleen Sheridan	5	yesterday Reply by Kevin - Greenville, SC

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