Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

The NATIONAL ASSOCIATION OF REALTORS® (NAR) today announced that the Obama Administration has added new incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP), part of the administration’s Making Home Affordable plan.

Loan servicers may consider short sales or deeds-in-lieu of foreclosure for borrowers who do not qualify to have their loans modified on a permanent basis under the Making Home Affordable Loan Modification Program.

· Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program, but don’t qualify for a modification or do not successfully complete the three-month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.

· Incentives include: $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; $1,500 for borrowers/homeowners to help with relocation expenses; and up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).

· The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.

· Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.

· In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.

· The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.

· Servicers may not charge fees to borrowers/homeowners for participating in the FAP.

· The program is in effect through 2012.

· Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).

You might think EVERYBODY knows about Short Sales and how they work, yet they are still a bit of a mystery to many. Here’s a good overview courtesy of California Association of Realtors:

“Be persistent during ordeal of short sale
Approximately one in five homeowners is “underwater” – meaning they owe more on their mortgage than their home is currently worth. For borrowers in default or at risk of defaulting, selling their house for less than is owed, often termed a short sale, may be the only option. However, short sale offers must be accepted by the bank that owns the mortgage, and can take as long as a few months before an offer is accepted.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Some home buyers are submitting unrealistically low offers on bank-owned properties, hoping to purchase a home at a bargain price. Low offers often use valuable time and resources that could be dedicated toward more favorable offers more likely to garner bank approval. It is vital that home buyers work closely with their REALTORS® to submit appropriate offers, especially when dealing with a short sale property.

· Theoretically, short sales should be a win-win for the bank and the homeowner. Although the bank does not receive the full payment on the mortgage, it also does not incur the costs of foreclosure and/or eviction, if necessary. Many homeowners also prefer short sales because it does less damage to their credit score than a foreclosure. However, many real estate experts say that the majority of banks are reluctant to approve short sales, and often let properties go into foreclosure, even when there are reasonable offers on the property. In addition to considering the price, most lenders also take into consideration whether the homeowner can demonstrate financial hardship. If the homeowner is capable of making payments, many lenders will try to work out a loan modification, rather than a short sale.

· Short sales often are more time intensive than traditional transactions and often require additional paperwork. Due to the large number of short sale offers, many take as long as a few months to receive approval. If information or required forms are missing or incomplete, the bank may set the offer aside, which could delay the process and cause the property to go into foreclosure. To expedite the process, it is important that sellers work closely with their REALTOR® to provide all of the necessary paperwork.”

Remember–give us a call at 800-895-5112 with your short sale questions.

with blessings,
Claudia

Lately I’ve been handling bank-owned properties (REOs) for Freddie Mac. Over one-third are the result of failed short sales!

Often the former listing agent tells me there were multiple offers on the property and they were just waiting for bank approval. When I tell an agent that the bank foreclosed, they are usually shocked.

“How can that be?” they ask me. “I’ve been working with the bank for months.”

Here are some relevant facts:

1. Bank/lender employees don’t have to tell you when they foreclose. If the property has been in default over 121 days, the bank can foreclose at their discretion.

2. Just because you or your agent are talking with the bank, it doesn’t mean that automatically the Trustee Sale date has been postponed. You have to petition the bank for an extension.

3. Not all bank/lender employees tell the whole truth. I’ve talked to many homeowners and agents who thought they were in negotiation with a Loss Mitigator. A short sale packet and reasonable offer had been submitted to the bank–and the bank foreclosed anyway.

If you, a friend or relative are considering selling your home as a short sale, be sure to hire an agent or broker who is an experienced, local professional with a proven track record. Your decision can make the difference between starting over in 2 years or less with minimal damage to your credit OR having your credit reports smacked with a FORECLOSURE that will make it challenging to get a mortgage for the next 5 years (at least).

Feel free to call us at 800-895-5112 with your short sale questions. We have a proven track record (with testimonials) and we actually LOVE helping homeowners avoid foreclosure.

with blessings,
Claudia

An article in the Sacramento Bee was made available by the CALIFORNIA ASSOCIATION OF REALTORS®:

“With more homes going into default, and more homeowners unable to qualify for loan modifications, short sales are becoming a viable alternative for many. However, these transactions can be complicated and often require more paperwork and time than a more traditional sale.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Short sales are designed to offer homeowners and banks an alternative to foreclosure. Generally this tactic is employed during real estate downturns, when it becomes more difficult for a homeowner to sell the property for an amount equal to or greater than the amount owed on the original loan. Short sales can be a win-win because they allow sellers to avoid foreclosure and can be less damaging to the seller’s credit score than a foreclosure. With a short sale, buyers have an opportunity to purchase a home at a more affordable price.

• Short sales often are more time intensive than a traditional transaction and often require additional paperwork. Because some banks are overwhelmed with short sale offers, it is important that the seller working closely with their REALTOR® to provide all of the necessary paperwork to ensure that the bank can accurately assess the situation and make a decision that benefits all parties. Sellers who opt for a short sale may best be served by a REALTOR® who has experience working with short sales and is familiar with the required paperwork.”

I totally agree! Short Sales are not for the faint of heart. If you are considering listing your house as a Short Sale in the hopes of avoiding foreclosure, make sure you are using an agent who knows what they are doing.

Give us a call at 800-895-5112. You’ll find out that we are local, we know what we are doing, and we can help. We’re happy to answer your questions and guide you through the process.

with blessings,
Claudia
Certified Short Sale Specialist

I recently got a call from a woman who found my website, www.ShortSalesTemecula.net . She was calling from Idaho about her Temecula rental property that is facing foreclosure.

She told me the house is listed and she has 3 offers. At this point in the conversation, I didn’t know why she was contacting me.

“I can’t get in touch with my agent,” she told me. “I call and call and never hear back from her. Yesterday I called the bank. They said they don’t have a short sale packet or any offers. And the sale date is already set. What can I do? I’m afraid my credit is going to be wiped out if the house goes into foreclosure.”

Honestly, there’s not much of anything I can do. I suggested that the homeowner continue to attempt to contact the agent, who is also a broker. If the agent worked for a broker, the homeowner could seek help from the broker. I also gave the woman the number for Department of Real Estate consumer hotline to ask for their assistance.

I asked how this particular agent was chosen. The homeowner said the young woman helped her lease the house. Leasing is her specialty. The agent told the homeowner she could also handle a short sale.

WORD OF WARNING– If you received a Notice of Default or you are getting behind on payments or will soon be unable to make your mortgage payments, speak to a specialist about your options.

Short Sales require specialized knowledge and expertise to complete with success. The agent must know how to properly market the market, how to compile the short sale packet, how to negotiate with the bank, how to handle multiple offers, and how to work with a seasoned escrow officer who knows what it takes to close escrow on a Short Sale.

All these steps require a high level of competence and excellent communication skills. Make sure your agent knows what they are doing! Once you sign a contract with an agent, it can be binding and you might owe them a commission even if you cancel the contract.

Feel free to contact me at 800-895-5112. I can help you discover your options and make the best choice for you and your family.

with blessings,
Claudia

As a self-employed real estate broker, I hadn’t thought of another significant reason to avoid foreclosure. A recent article pointed out that many employers are now running a credit check on potential employees. A foreclosure or bankruptcy can be viewed as a lapse of judgment or a Red Flag with regard to character.

This is another reason to consider a Short Sale if you are facing a foreclosure. A potential employer might have strong opinions about people who allow their home to be foreclosed. And these opinions might have nothing to do with your circumstances, such as illness, job loss, etc. Yet, you might not have an opportunity to explain the situation if you are eliminated early in the job interview process.

If you want more information about Short Sales and if this is a good option for you, give us a call at 800-895-5112, send us an email or check out our website www.ShortSalesTemecula.net.

with blessings,
Claudia

This morning I read a news item in the Press-Enterprise. Though the words “SHORT SALE” were never mentioned, it appears that Ed McMahon will save his Los Angeles hilltop home from foreclosure with a short sale.

He tried for many months to sell the home, to no avail. He received a Notice of Default (as I understand from news reports) and was at a loss as to what to do.

Comedian Phyllis Diller publicized his plight and asked the entertainment community to bail out the TV icon.

Then Donald Trump offered to buy the McMahon home and rent it back to Ed and his wife. Now I read today that a buyer came forward and the McMahon’s will move out of their home in the gated community at the close of escrow.

This is a Short Sale! There could be many reasons why The Donald’s offer didn’t go through. 1. The defaulting lender must approve any arrangement for the homeowner to remain in possession of the home. 2. If Ed McMahon is financially strapped, it is doubtful that he could pay rent that would come close to covering Trump’s PITI (mortgage, interest, taxes, and insurance payments). If Trump bailed McMahon out with all-cash, it would really be a bad investment for Trump and not one he could write-off.

So…SHORT SALES can happen to the best of us. If you are unsure how to proceed, give us a call or send us an email and we’ll help you make the best decision for you and your family.

with blessings,
Claudia

I love helping homeowners avoid foreclosure. It give me a lot of satisfaction when we close a short sale and they can move on with their lives with credit intact.

Yet, there is more to know about short sales than how to get the buyers to make offers and how to get the lender to approve one of the offers.

If you are contemplating selling your house with lender approval because you have no equity, do some homework first.

1. Talk to your tax expert or CPA. There is an IRS form that can be filed with your taxes which will address the consequences of selling at a loss. If the lender issues you a 1099, what impact will that have on your tax liability? If you handle your own taxes, feel free to contact me. My husband is a tax professional, who is happy to answer your questions. (No obligation, of course!)

2. Talk to an attorney to learn about your legal rights, the difference between short selling your home, declaring bankruptcy, and foreclosure. Every state is different. In some states, the lender has the right to “come after you” with a deficiency judgment.

3. Put a call into your lender. Find out if they approve short sales. If you have a 2nd mortgage that is not purchase money, but a line of credit, ask if it is a HELOC. If it is, the lender will not be willing to discharge your debt. It’s like a credit card debt that is not tied to the house. You might be asked to sign a note for the debt and make payments.

Get the facts before you have a realtor list your home as a short sale. It will make the whole process a lot easier in the end.

with blessings,
Claudia

OCWEN, a sub-prime servicer, is not currently accepting short sales. So if you are an agent or homeowner trying to Short Sale, or sell a home for less than is owed on the mortgage AND the loan(s) are serviced by OCWEN, you might need to find another solution.

Check back for an update, because the “word” is that OCWEN might change that policy. Maybe they were just under-staffed and unable to handle all the requests of short sales.

Feel free to contact me with your Short Sale questions.

with blessings,
Claudia

The lender has countered one of the 8 offers for Summersweet. The counter was accepted by the potential buyer and we are just waiting to get everything in writing to open escrow.

We will hold all other offers as back-up in case this transaction does not go through. Thank you, agents and potential buyers, for your offers. The seller and I greatly appreciate your interest.

with blessings,
Claudia