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The Legal Concerns with Short Sales


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Home Page > Finance > Real Estate > The Legal Concerns with Short Sales

The Legal Concerns with Short Sales

Posted: Jul 07, 2010 |Comments: 0
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The Legal Concerns with Short Sales

There are many areas that have their own report with large numbers to look at when it comes to short sales. Some areas are so saturated, that the neighborhood looms with despair as the neighbors talk to each other about losing their home. Their only solace is in the fact that they know they won’t have a foreclosure on their credit, but that they will be able to have the mortgage listed as “settled”, or as “paid as agreed”. While many agents and mortgage originators are jumping into the fray, how does this work exactly?

 

The truth is that there are more legal concerns for the salesperson than there are for you. Aside from you knowing about how this many affect your taxes, we as salespeople are responsible for being clear on how we represent the facts to you from start to finish. I am a professional, and I won’t conduct myself otherwise, but make no mistake, this can’t be taken lightly. It is true that in 2007, the government directed the IRS not to count forgiven debt as income, but this provision has limitations. Beware, that this will only be the case on a purchase loan, not a cash-out for refinance, nor does it apply to an investment property. There is also a limitation on the dollar figure attached to this. While it’s generous it doesn’t matter, the truth is the truth. Whether it’s one million dollars or ten thousand, it shouldn’t make a difference. If you are a salesperson and you are reading this, then you are responsible for the truth to be told to your client. You can’t run around telling people that there are no tax consequences, and be clear when you are explaining it that they understand that there are limitations.

 

One other common white lie that is being told, is that if the primary mortgage holder approves the short sale that the debt has been forgiven. The lien holder on a second deed of trust may not care at all, and therefore won’t forgive the debt. They may accept a partial payment, but there is no guarantee. What the second lien holder doesn’t get, they will more than likely sell it off to a collection agency thus leaving you with more frustration. The other downfall when this happens, is that the collection agency may come looking for the seller for the balance, even after a year of it having been sold.

 

If you are a seller, keep in mind that much of this information will never be told to you. Of all people, when selling a home you need to know up front that there could be much recourse on you unfortunately. It is not unheard of, for the lender to come looking for money in your bank account or even your retirement for the money, so it might be a good idea to get your attorney involved if this happens to you. They might contact the real estate agent before they ever contact you, but it still makes for an ugly situation. If you live in a state that is called nonrecourse, then the lenders have no rights to your money. Again, if you are a salesperson, take the time to know your industry, and have this information handy. Shame on you if you ever mislead someone down the primrose path of an untruth. It is your job to know your industry and practice it with due diligence.

 

For more information on short sales, and other information pertaining to them, you can visit www.inlandempireshortsaleresource.com.

 

 

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As a real estate executive and philanthropist, Mayer Dallal  provides valuable counsel to individuals and families dealing with economic uncertainty. The advice Mayer  Dallal gives his clients is to have options, to navigate this difficult economy with knowledge and confidence.

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I was denied a Hamp mod due to NPV caculations. My lender will not explain these terms to me. They said they cannot help me. I need to short sale and get out. Can u please help me
What are tax implications of short sale ?
What are the repercussions of a short sale ?

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short sale, foreclosure, foreclosure prevention, short sale information, behind on my house payments, going to loose my house, fha loan, i want to buy a home, real estate california, real estate, fha mortgage, california, new jersey, new york, riverside c

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Short Sale Funding – Roadblocks and Solutions for Investors


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Home Page > Business > Short Sale Funding – Roadblocks and Solutions for Investors

Short Sale Funding – Roadblocks and Solutions for Investors

Posted: Aug 08, 2009 |Comments: 0
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Many listings are for homes being sold on short sales, where the lender accepts less than what is owed on the mortgage to avoid the foreclosure process and having to resell the property.

The short sale is a way out for the distressed homeowner who is facing foreclosure or bankruptcy; two examples of situations that are very damaging to a credit score.

What a great deal for the real estate investor!  Or is it?  Unfortunately, the mortgage meltdown has caused the market to be saturated with foreclosures.  This has put a lot of pressure on builders, developers, realtors and loan officers.

Loan officers are under pressure to close mortgages; builders and developers want to sell their properties; realtors need to sell their listings for commissions.  The pressure has opened the door to real estate scams and mortgage fraud.  As a result, mortgage guidelines have tightened, making it difficult for real estate investors to fund their deals.

Are you an investor who has completed the lengthy process of negotiating a short sale just to find out that you are unable to obtain the funding to close the deal?  Do you have an end buyer; someone who has already went through the process of getting approved for a mortgage and all they need is you to do your part?

Honest real estate investors are running into roadblocks all over the place.  Laws and guidelines are constantly changing creating more frustration as investors continue hoop-jumping their way through every transaction.  Unless you have fat cash in the bank you will be faced with many difficulties in the real estate investing world.

What if there were a lender who could provide the funding for the first closing and then a title company who can do a simultaneous close to complete the process of buying the short sale, selling to the end buyer and paying off the debt all at the same closing table?  Is this possible?  Is it legal?  What about seasoning issues and FHA guidelines?  It sounds like one would have a better chance of hitting the lottery!

Jodi Funke has great news for the frustrated real estate investor.  Her company can provide one-day funding to complete the short sale purchase and resale the same day.  Imagine going to the closing table with no money, closing the deal and walking out with your profit.  You can do this, legally and ethically, no matter what state you are working in.  Visit http://www.cashforshortsales.com to learn how.

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Jodi Funke is a transactional lender who understands this dilemma. “Lack of funds is the number one reason most real estate investors cannot close a short sale deal,” said Jodi. “We provide one-day funding for the investor to buy the property and our nationwide team of closing professionals, attorneys and title companies are experienced in doing back-to-back transactions so the investor can fund the deal and resell the property the same day.

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I was denied a Hamp mod due to NPV caculations. My lender will not explain these terms to me. They said they cannot help me. I need to short sale and get out. Can u please help me
What are tax implications of short sale ?
What are the repercussions of a short sale ?

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Jodi Funke is a transactional lender who understands this dilemma. ?Lack of funds is the number one reason most real estate investors cannot close a short sale deal,? said Jodi. ?We provide one-day funding for the investor to buy the property and our nationwide team of closing professionals, attorneys and title companies are experienced in doing back-to-back transactions so the investor can fund the deal and resell the property the same day.

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Bank of America Short Sale - What Do They Need?


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Bank of America Short Sale - What Do They Need?

By: Andy Faria
Posted: Feb 02, 2011


Bank of America services more mortgage loans than any other lender in the US. This means they process more short sales than any other lender, and it can be easy to get lost in the mix. The best way to make sure your short sale gets pushed to the front of the line is to supply them with the correct documentation at once and ahead of time. A good real estate broker with a working knowledge of short sales can guide you through this process quite easily, but before you even get started it will be best to begin by preparing the following things:

Hardship Letter - What is the reason you can no longer afford the home? BOA looks closely at this and the fact that your home is no longer a good investment is not enough of a reason to ask them to take a major hit. BOA will deny a short sale offer if the hardship is not a valid reason for hardship, so be sure to pay specific attention and prepare a detailed and accurate hardship letter.

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Pay Stubs - This is for all borrowers that contribute to the mortgage payments in the household. BOA requires the most recent month of paystubs. If you get paid every week it’s best to provide the four (4) most recent paystubs, and if you get paid every other week it’s best to provide the two (2) most recent paystubs. As a short sale offer is reviewed you should set aside any paystubs you receive, just in case they ask for them to be updated later in the review process.

Profit & Loss - If you’re self employed and you don’t receive paystubs you will need to have a profit & loss statement prepared to outline your most previous 3-6 months of business. An experienced short sale broker should be able to help you prepare this simple document that shows the income generated from your business.

Bank Statements - The two (2) most recent bank statements will also need to be provided to BOA. Like the paystubs you will want to set these aside as you receive them during the review process, in case BOA requests them at some point

IRS Form 4506T Form -.This form allows BOA to look into the electronic filing of your previous tax returns and is standard with all short sale and loan modification reviews.

This paperwork is not typically required until an offer is received and presented to Bank of America for approval. It’s best not to wait though and start preparing everything you will need ahead of time, when you first list the property for sale. The faster you get out from under the home, the faster you can start rebuilding your future.

Andy Faria - About the Author:

The author is a licensed real estate broker in the state of MA. He continues to work with homeowners statewide to help get them out from under the financial obligation of an underwater home, without charging them a single dime. Have five minutes? Give us a call anytime Northeast Properties 866-794-1869 Toll Free

 

Massachusetts Short Sale Brokers BOA Short Sale Results

Source: http://www.articlesbase.com/real-estate-articles/bank-of-america-short-sale-what-do-they-need-4156682.html

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Short Sales vs. REOs


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Short Sales vs. REOs

By: Glenn Plantone
Posted: Nov 11, 2009


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As of September 2009, the nation’s supply of REO homes has begun to shrink, even in foreclosure capital Las Vegas, NV. As investors flood back into distressed markets, we are seeing multiple bid situations for most REO or bank-owned foreclosure properties coming back onto the market. With demand exceeding supply, it is becoming harder and harder for investors to purchase REO properties at discount prices. Also, with the Obama administration offering hefty incentives for banks to help homeowners avoid foreclosures, REOs are becoming more scarce. Instead, we are seeing short sales skyrocket in popularity as banks have suddenly become willing to negotiate this option.

Many of my investor clients have asked me to explain the differences between short sales and foreclosures/REOs. First, the definition of each: A short sale occurs when a buyer negotiates with the bank to purchase a home from the seller for less than what the seller owes on the mortgage. In many cases, where the equity in the property has dropped sharply, this means that the second lien holder (if any) receives next to nothing on their note (think $1000 for a $90,000 note as an example) and the first position lender very often must still except less than the amount of the first mortgage. REOs are bank owned properties that have already completed the foreclosures process. The owner of the property, upon failing to make their mortgage payments, has been notified of their delinquency, received a notice of default and then a notice of sale. Subsequently the property has been sent to auction at the trustee sale where, in absence of a successful winning bid, it has reverted back to the bank holding the mortgage. These properties are then re-listed by the banks on the open market as REOs or Real Estate Owned meaning bank owned real estate.

The major differences between the two transactions can be summed up in two categories: Differences to the Buyer and Differences to the Seller.

Differences to the Buyer

Difficulty of Transaction - Short sales are traditionally much more difficult to transact than purchasing an REO. Once a bank has taken possession of a foreclosed property and re-listed it as an REO, that REO property can then have offers placed upon it and the bank will respond to those offers just like any other seller. Short sales must go through a special evaluation and approval process at the bank. This process usually involves not only evaluating the fair market value of the property, but also evaluating the potential of the current owners to continue making their payments. Sometimes, a bank will offer to modify the existing loan if the sellers wish to stay in their property rather than negotiate the short sale. This can result in the property being pulled from the market altogether.

Time Frame for Closing - REOs can often close in a 30 day escrow just like a normal transaction. Short sales can take months to negotiate and then might not be approved at all.

Price - Because the buyer is usually not competing against other offers in a short sale situation, they can often obtain the property for less than what the same property might end up costing as an REO.

Differences to the Seller

Future Home Purchases - Homeowners who go through a foreclosure cannot apply for an FHA loan for 5 years after the date of foreclosure (7 years for investors), but homeowners who complete a short sale can apply for an FHA loan 2 years later. When homeowners apply for a loan through a mortgage company, they must state on the application if they have had a property foreclosed upon or given a deed in lieu of foreclosure within the last 7 years. There are currently no questions on standard mortgage applications asking whether or not a homeowner has ever completed a short sale.

Credit Score - A foreclosure will typically lower a homeowner’s credit score by somewhere between 250-300 points and this decrease will last approximately 3 years. Short sales can often affect an owner’s credit by only 50 points and that decrease may sometimes be remedied in as little as 12-18 months.

As the supply of REO properties continues to be tight across the country, short sales are presenting a good buying opportunity for would-be investors looking to re-enter the market. They can also provide a win-win situation for home owners looking to escape a negative equity position with less of a hit to their future purchasing potential and credit score.

Glenn Plantone - About the Author:

Glenn Plantone is a foreclosure and short sale expert, full time real estate investor and licensed real estate agent in Las Vegas, NV. He has appeared on several radio and television shows and in print discussing real estate trends and opportunities. 702-938-8888 or gsplantone@gmail.com
For detailed information on local and national real estate trends visit Glenn’s blog & website:
http://www.viewpointequity.com
http://www.vegasforeclosures.blogspot.com

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Time Line & Structure For a Successful Short Sale


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Time Line & Structure For a Successful Short Sale

Posted: May 24, 2010 |Comments: 0
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There is a time line and structure associated with the short sale process which should be carefully documented and kept track of. Here is an example of what we do from beginning to end: The Jones family has decided to sell their home as a short sale.

First thing we do is meet in the office to review and provide our documentation (or if out of area email / mail all the pertinent documentation). PS -I will send another blog with all documentation needed to successfully perform a short sale.
We get all the signed docs and information back from the seller.
We immediately provide the “Release Form” to your lender which allows us to talk and negotiate on your behalf. The release form traditionally will take 72 hours to get into their system in which we relentlessly follow up to ensure they have it. For without it, we cannot move forward.
We aggressively market your home and get it into contract with a qualified purchaser.
We then submit the FULL package to the lender and ensure the bank is not missing any items. This is extremely important. Most of the time items lost or missing when the package is sent to the lender (which it happens all the time - Keep in mind we are not the only file. They are receiving hundreds of short sale files daily).
We follow up every day (up to 3 times a day) until we know they have a full package in their system. If the package is not complete and we do not follow up, they put the file in the what we call “neglected pile” - Will do not let this happen. Please note: If you are currently represented by a real estate professional that may not know what they are doing, please tell them to read these blogs.
When we know they have the full package, we follow up a minimum of 2 times per week until the assign us a negotiator.
Depending on the bank, they will order a BPO (Broker’s Price Opinion - For valuations purposes) before or after a negotiator is assigned.
Depending on the bank, they may have additional in-house addenda / forms to be signed off on.
They may also ask for updated bank statements, pay stubs, etc depending on how long it has been since submission / on the market.
Once they have everything and we have a negotiator they either accept or counter offer.
Once agreed they provide an approval of a settlement amount short of what is owed. It then goes to the title company to close out and have buyer and seller sign off on all the closing documentation.

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Steve Daria -
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Steve Daria is a the broker / owner of Maxim Realtors, LLC, specializing in helping clients with short sales in Fort Myers, FL.

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Steve Daria is a the broker / owner of Maxim Realtors, LLC, specializing in helping clients with short sales in Fort Myers, FL.

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Home Page > Finance > Real Estate > Short Sale Home Buying Tips

Short Sale Home Buying Tips

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Are you a homeowner who is upturned in your credit? Destabilized financial crisis has been affecting many people.  You owe more than your home is cost, and you can no longer pay your mortgages.

A short sale may be an option you would want to think about. Short sale properties need bank approval before it is released for sale in the real estate market. Although, it may take time and involves a complicated process, the advantages are definitely worth the wait.

Sometimes home buyers would have to wait four months and longer to close on a short sale.

Lenders are completely aware of how awful the foreclosure crisis is and that they will end up losing their homes.

A homeowner would be able to avoid foreclosure. Also, short sale causes less damage to the lender’s credit report and appears good on paper.

The biggest advantage to buyer is the prospect of moving to a home at a great discount. Mortgage lenders can also profit from short sales.

If you are a buyer who would like to consider entering into short sales, this does not mean that you are acquiring the home under market and these homes are not bargains.

Have a real estate professional who can help you with the process and protect your interests. Home buyers may get a great property at a low price; however, they will need to go through a lot of paperwork.

You also need to seek legal advice from a competent real estate lawyer.

 

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How Marketing is useful in selling short sale home

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“In the last few months, selling short sale home has become less the exception to the rule and more of the norm. But this doesn’t mean it’s easier—in fact, with more competition, sellers are under greater pressure to find willing buyers and sell on time. So how do you plan and carry out your short sale to get the results you want? Here are five things every seller should keep in mind when selling short sale home today.

Hardship Is Essential

Occasionally, banks do short sales with perfectly stable and financially secure borrowers. But these are rare, and to get your lender to take a loss on your part, you should be able to prove extreme hardship. The bank wants to know that selling short sale home is your only option. Write a convincing hardship letter and be ready to provide supporting documents, such as medical bills or certificates, to prove your point.

Do The Numbers

Another reason banks agree to short sales is that their losses are smaller compared to the costs of a foreclosure. But selling short sale home doesn’t come cheap either. Do some research and find out your home’s current value, and compare it against the balance left on your mortgage. Factor in the costs of the sale such as agent’s commissions and closing fees. This way, the bank can see exactly how much they stand to lose and decide faster.

Set A Good Price

Pricing is probably the most important element in selling short sale home. Short sales have to be priced below market value; otherwise a buyer won’t have any incentive to wait six months or more for short sale approval. Knowing how much your home is worth and how much you owe will help you determine how much the home should sell for. This will allow you to negotiate better with buyers without being on the losing end.

Market Your Home

Marketing is vital to selling short sale home, especially in today’s market. Also, lenders have tightened their rules and are less willing to extend deadlines when a borrower doesn’t close the sale within the agreed date. Your agent can help you get word around about your short sale home so you can find a buyer in less time. You can also do your part by telling friends and family and posting flyers around your neighborhood.

Start Early

Technically, you can initiate a short sale the day before a foreclosure auction. But the earlier you start, the better your chances of selling short sale home in a reasonable time. A home that’s close to foreclosure is less attractive to buyers than one that has a bit of time to spare. It’s also allow you to price the home higher and reduce the deficiency, limiting the damage to your credit score.”

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the author Jacob Bon comes from a background in short sale sales. Marketing and sales have always been in the forefront of Bon’s business activities. He strives to make every encounter a positive experience and seeks to do the best for his clients. The skills possessed by him have helped the number of people to avoid foreclosure. For further information regarding about Tips of doing short sale home, Important element in selling short sale home read more about visit:- http:// www.bankshortsale.us

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the author Jacob Bon comes from a background in short sale sales. Marketing and sales have always been in the forefront of Bon’s business activities. He strives to make every encounter a positive experience and seeks to do the best for his clients. The skills possessed by him have helped the number of people to avoid foreclosure. For further information regarding about Tips of doing short sale home, Important element in selling short sale home read more about visit:- http:// www.bankshortsale.us

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Quick Guide for Real Estate Short Sales


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Home Page > Finance > Real Estate > Quick Guide for Real Estate Short Sales

Quick Guide for Real Estate Short Sales

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Posted: Feb 08, 2011 |Comments: 0
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A short sale is a transaction that occurs when the loans against a property are greater than what the property can be sold for. It is a way for homeowners to avoid foreclosure on their homes and still be able to pay off their loan by settling with lender.

Advantages

The seller:-

• In control of the sale, bank just needs to approve it.

• Knows who is buying his home.

• Will be away from the social stigma; foreclosure.

• The home sale will be handled like any other home sale.

• Exits the mortgage liability without facing bankruptcy.

On the other hand the buyer gets the home at a reduced price. And the lender accepts to a loss it considers minimal without going through a foreclosure.

Disadvantages

Short sale often lowers your credit score by as much as 200 points which can be overcome more quickly than a foreclosure, especially if you manage to retain one or two credit cards and keep them current.

The process can be complicated and can take longer than the parties would like. It is so important for a homeowner to contact a short sale expert when they are aware that they are in trouble to get the process started.

A Realtor can help homeowners by working with their lenders to negotiate a lower payoff amount in order to price their homes below competition and get it sold. Also he can market your home to attract buyers and oversee the entire sales process.

How to Find a Short Sale Specialist?

1- Search for agents with the CDPE designation on the site http://www.cdpe.com/

2- Call the local agents you find who specialize in short sales. Ask them about their strategy on setting the right price.

3- Request a list of past clients of the agent you are interviewing. Call these clients and ask them about the service they received.

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Dan Rube -
About the Author:

Dan Rube; An Experienced San Diego short sale Realtor. Check www.sdlistinghomes.com for more info.

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