Question: I am thinking about conducting a short sale on a condo I have in Palos Verdes. I have a home in Orange County that has some amount of equity, and I’m doing alright in my 401k. Doing a short sale with my mortgage lender will not risk my other assets, will it? If I am unable to do a short sale with the condo and end up having to lose it in foreclosure, what will happen? And will the tax liability be the same for either outcome?

Answer: If you bought the Palos Verdes condominium with a mortgage loan, a foreclosure will terminate the bank’s rights to any of your other assets. If the mortgage lender agrees to let you do a short sale, you should also end up with no liability to the lender, unless part of the agreement was reimbursing the lender the discrepancy of your loan and the sale.

Basically, you shouldn’t have any liability for the short-sale-difference unless that was originally part of the agreement.  Then of course you’ll be responsible to those payments in  whatever form you agreed to make them.

As for the tax issues, keep in mind that the IRS doesn’t recognize any tax liability whatsoever for forgiving non-recourse debt.

An important thing to keep in mind when considering a short sale to avoid foreclosure- your lender is not technically obligated to sell your house in such a manner. For them, it is a pure cost-benefits calculation. When they allow a real estate short sale, they have to swallow the discrepancy between the amount you owe on your mortgage and the money your house brings in when it sells. They don’t like doing this unless the alternative is even less profitable.

You may even have a potential buyer who has put down all the paperwork to make an offer, and they still won’t cave. On the plus side, this can go two ways- the bank may say you have to go into forclosure, but they may also try to convince you to stay in your house and refinance your mortgage.

You may even be able to settle it with a loan modification.

If that doesn’t work, though, and your bank is willing, a short sale may be completed. In order to comfort potential buyers, you may want to think about moving out of your house while going through the shortsale process- this will make it seem less likely that you may decide to simply refinance. And be sure to get official approval from your bank. “Bank Approved Short Sale” is much more likely to get takers than one that doesn’t yet have expresss permission. a

The National Association of Realtors has introduced a new certification system designed to make sure real estate agents get more training in foreclosure sales and short sales.  Called “Short Sales & Foreclosure Resource”, the program is being offered because recent member surveys have shown that these types of properties make up more than one-third of all home sales nation-wide. A real estate agent can’t afford not to be comfortable with the process.

Many real estate agents have had to do with on-the-fly, on-the-job training through experience with these types of sales.  They all require more paperwork than a regular home sale and more patience, but they’re not impossible. Private companies often offer training programs and certification labels to show clients that an agent has ‘official’ skills in the ‘distressed’ property field.

Sellers forced into a foreclosure and/or a short sale are often panicky and more difficult to deal with, but they need to keep in mind that they can stary in their homes for quite some time. Receiving a notice from the bank does not necessarily mean you have to move out right away. The bank doesn’t own a home until it has been officially foreclosed, a long and difficult process.

In this window, a skilled real estate agent can intervene and get the ball rolling on a shortsale instead. The seller must prove financial hardship, but it is not impossible.

The key factor in selling a house, especially one in foreclosure or a shortsale house, is to choose good pricing. You need to put the house up for a price that is competitive with other for-sale homes in the area and in similar areas. Asking for too much will leave you sitting on a house with no bids, wondering what happened. Asking for too little will raise the ire of your lender/bank.
It’s difficult, but lenders want their real estate short sale houses to go for as close to their appraised value as possible- in this current recession, that means a lot of legwork. And if a buyer makes an offer thati s crealy far too ow, it may be better not to report it to the lender at all. Clearly, the bank will say no, wasting ime and effort that could be spent on trying to get the house sold for more.

If a realistic offer is made, your real estate agent submits a big packet of paperwork to the lender/lenders for them to approve the deal. This is a crucial step that requires high precision- even one piece of paper out of place in that packet can result in a no-deal and big waste of time. Lenders have limited time to work through these packets with you- if there’s something wrong, they’re likely to just put your back at the bottom of the pile, so to speak.

According to official reports, home prices have continued to decline during the third quarter of this year. But many real estate agents in the Southern California area maintain that they have seen many signs of stabilization.

On Tuesday, the National Association of Realtors reported that home prices in major metropolitan areas declined almost fourteen percent when compared to the same time last year. However, prices were up in the first part of the year, which suggests that the oscillations may even out.

An agent with J.T. Kirkland predicts that mortgage rates and the federal homebuyer’s tax credit will help to pull in new buyers into the market, keeping prices at least stable, if not rising, into the spring.
“It’s different town to town, city to city,” he says. “Areas with good schools are seeing increases, for example, and demand is rising again.”

He confirms that, on paper, prices at the high and low ends of range have indeed dropped, but that the middle prices have remained fairly stable, which means that most buyers and sellers will have more luck than they suspect. However, the markets flooded with foreclosed and shortsale properties, which create a downward pressure on prices. Real estate short sales have been very helpful in some areas, but when they become to common they tend to exacerbate the problems.

But the tax credit is doing its job- incentivizing first-time buyers to get into the market and snap up those foreclosures and short sale homes. And though overall prices are down, the actual number of sales is increasing thanks to the credit. Sales of single-family homes and condominiums actually rose more than eight percent this quarter, though they haven’t reached anywhere near the peaks of 2004-2005.

The main problem, say experts, is psychological. People feel frightened, insecure in the their jobs and wary of getting trapped into a payment deal they can’t handle. The key to overcoming these doubts is open communication with lending institutions, buying affordable homes that fit one’s income, and ignoring the melodramatic reporting on the housing market on TV. Television news exaggerates in order to get more viewers- obtaining news from free outlets can often be more reliable. The only thing to fear is fear itself.

Another thing for potential buyers to keep in mind is that they will never get an opportunity like this gain- home prices will soon begin rising again. It’s smart to get into the market while everything is cheap.

In the last quarter, the average sale price went down 11.2% from last year, and according to reports almost a third of all homes sales are either foreclosures or short sales. In more than seventy-five percent of metropolitan areas, home prices fell.
Foreclosures and short sales –classified as distressed sales- put downward pressure on prices, despite the Obama administration tax credit. A week ago, the President decided to extend the eight thousand dollar tax credit for families trying to buy their first homes.
Leading economists have said that the decreasing inventories of houses could have been moderating price declines during the year, but that a new wave of foreclosures could upset that balance, pushing down prices again.
Already existing home sales, which include single-family homes ad well as condominiums, actually went up in the third quarter in some areas, but on the whole, major city areas are still sliding backwards.
What does this mean for those in trouble on their mortgages and looking to sell? It means, on the surface, that foreclosures and short sales are more common, making it more difficult to successfully complete them. However, if you look deeper, these types of sales increasing in volume means the infrastructure in companies and regulatory bodies for dealing with them will improve and become more efficient. So there are pluses and minuses.

The Treasury Department unveiled sweeping rules this week to help financially troubled homeowners who need to sell but can’t get a price high enough to pay off their mortgages. Homeowners will even get $1,500 to help cover their moving costs.

The plan is designed to help homeowners who don’t have the income or debt levels to qualify for a loan modification under the Obama administration’s $75 billion Making Home Affordable program. The plan establishes timelines, a standard process and documents, and cash incentives for participation.

Short sales, as these deals are known, reduce the damage to the borrowers’ credit record and save the lenders the cost of foreclosure. Short sales also help neighboring property values because the sales price is usually higher than what the house would fetch in a foreclosure auction.

About one in 10 home sales this year was a short sale, or an estimated 500,000 sales, according to the National Association of Realtors. In areas like Las Vegas, southern Florida and California, the ratio is far higher.

You also have to include a hardship letter, in this you really wanted detail the hardships that you have faith and are facing and why the bank should agree to a short sale versus taking a gamble on whether or not you’ll be able to make good on this note sometime down the line. Be sure to include all mitigating factors such as lost your job you got sick were in the hospital anything that may affect your abilities or may have affected your abilities to earn a living that would help pay off his mortgage.

Statement of income and assets, here you want to be truthful and straightforward detailing to the lender will of your accounts savings checking in any other assets you may have that they will look at before agreeing to a short sale. Proof of income or the lack thereof, again it’s best to be truthful and straightforward they will be able to obtain filings that your employers may have made and it’s best to have that information up front rather than to find out once you’re deep in the process that the process has been declined because they discovered something that you did not disclose.

Current market comparisons, it’s best to include a competitive market analysis markets decline properties decline all calls in home values drop this can be part of the reason why you can’t simply sell your home and pay off the lender you’ll need to substantiate this claim via a comparative market analysis he qualified real estate agent can compare your comparative market analysis which basically shows prices for similar homes in your area, this will include homes that are active on the market, pending sales, and homes that have been sold in the last six months.

Home forclosure shortsale

If everything checks out the lender theoretically should approve your short sale as part of the agreement you should ask your lender not to report this transaction negatively on your credit, while this is a standard request the lending institution is under no obligation to comply unless they explicitly agree to.

Access loss mitigation has performed numerous home short sales, we have in effect reversed the foreclosure process and pre-foreclosed on the lending institutions on behalf of the homeowners by utilizing the short sales process. We would be more than happy to provide a absolutely free no obligation consultation.

We talk a lot about loss mitigation here, but it seems we never give a full, descriptive definition. This is the gist of what the HUD (Department of Housing and Urban Development) says counts as loss mitigation:

Loss mitigation is a service provided by a third party with the goal of helping a mortgage-possessing homeowner lessen the amount of money they lose if they can no longer make their mortgage payments. Usually, it is a division within a lending bank, though it can also be a private financial firm. The process by which these experts try to help decrease the amount of money lost by the bank and the homeowner is to facilitate negotiation between the two parties. Usually they do their best to avoid outright foreclosure.

New terms are often reached through either loan modification, short refinance negotiation, real estate short sales, a deed-in-lieu of foreclosure, or some other form of loan work-out.

These types of services use to be relatively uncommon and reserved for special cases. Nut ever since the 2008 recession hit, more and more homeowners have been turning to loss mitigation tactics to try to deal with financial burden. Unfortunately, this places a big strain on banks, who are unused to having customers feel they are entitled to this service and are struggling to grow their departments.

That’s where outside firms step in and fill the gap- to try to benefit both the overwhelmed bank and the overworked homeowner.

The Federal Trade Commission chairman declared last Thursday that the government agency is now entering talks to consider banning all upfront payment requirements for  ‘borrower help’ companies that advertise their ability to help homeowners stay good on their home loans.

Officials in the federal and state government say that there is a relatively high percentage of scammers in the industry, and that this is a trending phenomenon among financial-related industries. Unscrupulous ‘businessmen’ take advantage of desperate borrowers who are in danger of having to default on their mortgages, and who are looking for help. Those who charge upfront fees in the thousands of dollars rarely perform services that pay off.  If it’s that expensive on the outset, it’s unlikely to be a legitimate company who will try to help you stave off foreclosure or short sale.

California loss mitigation companies will be the next state to undergo judicial rulings on the matter. Two companies, “Nations Housing Modification Center” and “Infinity Group Services” have had files charged against them by the Federal Trade Commission.

Limits may also be placed on how these types of companies may advertise, and additional ‘false advertising’ restrictions may be layered upon the pre-existing ones.  More than twenty-two companies have had files charged against them by the government in recent months, and the government wants to emphasize that upfront payments should be minimal for most homeowners, if the company is legitimate.

The government does offer free loss mitigation services, but the wait times are often quite detrimental to the effort. Sometimes you do have to pay a little to get the attention and expediency you need.