Short Sale Blog

Here is the latest short sale news at Seattle Short Sales. We assist hundreds of Seattle area homeowners with short selling their home and avoiding foreclosure.

Not Prepared to Give up Your Home Through Foreclosure or a Short Sale? Then Consider a Loan Modification.

Seattle Short Sales - Thursday, January 31, 2013

We have noticed, over the years, that many loan modifications that struggling homeowners have attempted end up failing. Many borrowers who have come to us to negotiate their short sale actually started out by trying to work with their lenders to negotiate a loan-mod. After months of negotiation (or, in some cases, years!) they either were denied the loan-mod, or they were granted a loan-mod with terms that did not help them in the end.

However, this doesn't mean that the idea of getting a loan modification is necessarily bad. In many cases, it means that the negotiation process was not carried out effectively. For many homeowners, a short sale is the fastest and surest way to permanently rid themselves of mortgage debt that they can no longer afford. However, for others, keeping the family home if at all possible is their top priority. They are not prepared to give up their home, whether through a short sale or through foreclosure, without a fight. For them, negotiating more favorable mortgage terms through a loan modification may be the key to keeping that home.

Unfortunately, we have heard countless tales from our short sale clients of how they spent months, or even years, trying to negotiate a modification with their lender - with no success. Problems that led to their modification failing to get approved range from lenders repeatedly losing paperwork, to lenders continually changing terms or eligibility requirements or submission documents.

We’ve also heard from many homeowners who did manage to negotiate modifications - only to find out the hard way that they cannot meet the obligations of the new loan terms. Often, the new payments still end up being more than the homeowners can afford on the long term, and they end up re-defaulting a year or so later. And, believe it or not, in some cases, the new payments actually end up being higher than the original loan payments!

We've decided to apply our years of experience in facilitating negotiations between struggling homeowners and their lenders to the field of loan modifications too. We want to help struggling homeowners negotiate loan-mods that will actually help them. Everyone’s situation is unique, and there is no single solution to financial troubles that works for all. Our experienced case managers review each homeowner’s situation individually. We look at the pros of all possible solutions - loan modification, short sale, bankruptcy - and our professionals work with our clients all the way, from making the important decisions and making a plan, to carrying out that plan.

We now have an attorney on staff who is dedicated to loan modifications. We look forward to this expansion in our services - so we can review each homeowner's unique situation carefully and offer all options to them.

Our plan is to focus on residents of Washington State who have recently received a Notice of Default (NOD). We will then file immediately for mediation, under Washington’s Foreclosure Fairness Act. Filing for mediation typically stops the foreclosure in its tracks. It allows us time to review the homeowner’s situation, and come up with an appropriate solution. If a loan modification is the best solution, this allows for a very manageable loan modification process, where we work directly with the beneficiary of the borrower’s note.

Seattle Short Sales has a team of experienced and successful real estate specialists dedicated to working with distressed homeowners. We close, on average, 12% of all short sales per month in King County. In the last 24 months, we have negotiated over 756 short sale approvals, and discounted over $81 million of mortgage debt for distressed homeowners.

In addition to our short sales negotiators, our team includes dedicated professionals advising and advocating for homeowners in the fields of: loan modifications, bankruptcy, debt settlement and collection defense. As part of our service, we offer unlimited attorney and CPA consultations.

If you are a homeowner who is struggling to make ends meet, and would like to learn more about the options available to you, please go to: http://seattleshortsales.com/homeowners/

Real Estate Sales and Prices up in King, Snohomish Counties - Seattle

Seattle Short Sales - Tuesday, August 28, 2012

A report published in the Bellingham Herald this weekend indicated that the real estate market is improving in the greater Seattle region - but that home sales in the rest of Washington state are just “sputtering along.”

Snohomish County leads the way in both number of sales and in prices, with second-quarter sales of existing homes up 23% from the same period a year ago, and the median sales price up by 8.2%.

King County also showed marked improvements from a year ago, with home sales up by 17.2% and the median sales price up by 6.5%.

Although the number of home sales increased statewide by 10.4% over the previous year, the Bellingham Herald quotes Runstad Center for Real Estate Studies (University of Washington) associate director Glenn Crellin as expressing caution at this apparent positive trend.

Crellin notes that, even though home sales increased over the 12 months, the seasonally adjusted rate actually dropped from the first quarter of 2012 to the second quarter - which means the pace of that upward trend is decreasing.

Crellin believes that the market has actually been suffering from a shortage of properties. With property prices increasing, at least in the greater Seattle area, this may be a sign that the bottom of the market has been reached.

However, there are currently around 80,000 mortgages in Washington state that are either more than 90 days delinquent, or already in foreclosure proceedings - and that number does not include the number of properties that have already been foreclosed upon. All of these properties will come on the market at some point, and the real estate market in Washington will not be able to truly recover until that REO inventory has been substantially decreased.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

How to Use the WA State Foreclosure Fairness Act to Get an Unfair Advantage Over the Banks

Ross Kilburn - Tuesday, July 10, 2012
We had a short sale file a few months ago that was bogged down. Going nowhere. Repeated calls, emails, and escalations didn't help.

So, we filed for mediation, under the guidelines of the WA State Foreclosure Fairness Act.

In less than a week, we had the approval letter in hand!

Coincidence? Perhaps, you never know.

To find out though, we then tried it on two other short sale files that needed a boost. We got almost instant attention from the lender, with great results.

Finally, we tested it on a file where PMI was wanting an unreasonable cash contribution. PMI isn't the beneficiary, so the FFA doesn't directly apply to them. But, as you can guess at this point, PMI dropped their cash demand entirely!

We've developed specific FFA techniques that are generating phenomenal results. We've closed 80 short sales in the last 90 days.

We would like to teach you exactly how our process works, and how you can make it work for you.

As part of our Advanced Short Sale Training series, we have a new talk we would like to invite you to, titled:

"How to Use the WA State Foreclosure Fairness Act to Get an Unfair Advantage Over the Banks"

Here is what you will learn:
  • When to reply to the Notice of Pre-Foreclosure Options letter to maximize your time advantage
  • Who should be on the initial phone call, and what should be said, and NOT said
  • How to use a mediation filing to help a short sale get unstuck, without paying the mediation fee!
  • Why you might want to file for a mediation on every short sale, and what could happen if you don't
  • Real life examples of successful mediations, from start to finish
  • The secret way to get a mediation completed for your client, with no charge to them whatsoever
We would love to see you, but you need to register soon. We've had previous talks on deficiencies, debt forgiveness, and bankruptcy and they've all sold out. We have space for only 30 people in our conference room.

To learn more go here: http://seattleshortsales.com/agents/training.htm

To your success,

Ross Kilburn

General Manager
Seattle Short Sales, Inc.
1400 112th Ave SE, Suite 220
Bellevue, WA 98004
O. 800-603-3525
F. 888-860-1314

Mortgage Delinquencies Drop Nationally - But Still Rising Here in WA

Seattle Short Sales - Thursday, May 10, 2012

Good news on the national front regarding mortgage payment delinquencies - but, as usual, the Seattle area and Washington state seem to be lagging behind the national trends.

According to a new report by TransUnion, as published in the Silicon Valley Mercury News, the percentage of homeowners who are 60 or more days delinquent on their mortgage payments dropped in the first quarter of 2012. The nation-wide delinquency rate is now at its lowest level since 2009.

But that drop is small. The national delinquency rate was 5.78% for the first three months of this year - down from 6.19% a year ago. Before the housing crash, the delinquency rate was about 2%, and it peaked at nearly 7% in late 2009.

Throughout this housing crisis, though, Washington state seems to lag behind national trends. As the national delinquency rate declines, there are only eight states where the delinquency rate is still increasing: we in Washington are one of those eight.

The regions that were hit hardest and earliest by the financial crisis and high foreclosure rates are showing very strong signs of recovery. A report published this week by HousingWire, using figures published by Move Inc., lists the regions that show the “top turnarounds.” These are the towns showing the highest level of housing market recovery, as reflected by declining inventory and increasing house prices. Those top turnaround towns include Phoenix-Mesa in Arizona; Orlando, Florida; and Oakland and San Jose in California - all of which have already been hit hard by foreclosures.

We are confident that Washington state and the Seattle real estate market will also follow those same trends and see recovery in the housing market. We just seem to continue to be a year or two behind the national trend.

As delinquency rates are still on the rise here, homeowners who are struggling to make their mortgage payments will continue to look for solutions such as short sales, in order to avoid foreclosure and the negative affects that mortgage payment delinquency will have on their credit rating.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

State of Washington Senate Bill 6337: A Bill that will Make No Difference, Provided that your Original Short Sale Approval is Negotiated Well

Seattle Short Sales - Wednesday, March 07, 2012

A revision of Senate Bill 6337 (companion to House Bill 2718) was passed last month. The aim of the bill is to protect homeowners who short-sale their homes from being pursued by their lender for the deficiency.

The deficiency is the shortfall owed to the lender after a home is sold short. For example, if a homeowner owes $200,000 on their mortgage but, following the short sale, can pay the lender back $120,000 on the loan, the difference - $80,000 - is the deficiency.

This bill sounds great in theory. But, for the majority of homeowners who process their short sale here through Seattle Short Sales, Inc., this bill will make no difference at all.

Why? Because the majority of our approvals - in fact 93% of all short sale approvals we negotiated last month - already come with a clear wording that waives the homeowner of ever having to pay back the deficiency. Our homeowners already have the protection that this bill would offer.

The new bill applies only to short sales for which the lender has issued a Form 1099 to the borrower: the homeowner to whom the debt was forgiven. Lenders are required to issue a 1099 any time that they forgive a debt of over $600. This means that the borrower must declare the forgiven debt, and they may have to pay tax on it as if it were income. It also means that the lender may write off the bad debt as a loss, which means that they may get a tax break on that loss.

So, really, what Bill 6337 does is prevent a lender from both writing off the bad debt as a loss, and also pursuing the borrower to pay back that debt. They must choose one option or the other. (Which - really - should be the case for whenever a 1099 is issued, not only in the case of short sale deficiencies).

And that seems only fair.

But, as we pointed out, 90% or more of our recent approval letters already specify that the lender will not pursue the deficiency. Here are some sample stats showing how our track record of obtaining deficiency waivers with short sale approvals has increased over the past two years:

 

(A quick point here, in case you were wondering why we’ve only shown stats for a few months over the past two years: We could not afford the time to go through all of the hundreds of short sale approvals we have negotiated over that time period. So we used the March 2010 and March 2011 stats, which we had already gone through for our blog post on deficiency waivers. And then, starting last July, we changed our file-naming system so that whether the deficiency was waived (“Debt Settled”) or not waived (“Lien Release” only) is in the file title, so we selected the two months at the beginning of that period as well as the last two months. You can review our complete short sale approval letter database here).

So two years ago, back when the majority of short sale approvals did not explicitly waive the deficiency, this bill might have made a difference. But now that lenders have realized that short sales are in their best interests, too, and are willing to write into their approval letters that they will waive the homeowner of ever having to repay the deficiency… well, Bill 6337 won’t do anything. They have already said they will not pursue the deficiency.

For the minority of our short sale approval letters where the lender does not explicitly waive the deficiency… well, even then, Bill 6337 will not change much. According to the wording of the bill, the lender is only prevented from pursuing the deficiency if they have issued a 1099. But if they don’t issue that 1099, again, the bill won’t prevent them from chasing borrowers up for that deficiency down the road - or to selling that loan on to debt collectors.

The take-away here is that the protection for homeowners who are considering a short sale is that Bill 6337 will not likely protect you. Your security lies in the wording of your original approval letter. Make sure that the negotiators who are working on your behalf work towards clear and unambiguous wording about waiving the deficiency balance - and then you will know that your future is safe, Bill 6337 or not.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

Washington “Foreclosure Fairness Act” Passed This Week Will Provide More Options to Homeowners

Seattle Short Sales - Friday, April 08, 2011

This week, the Washington State legislature passed the new House Bill 1362, also known as the Foreclosure Fairness Act. The bill, sponsored by Democratic state Rep. Tina Orwall (Des Moines) is aimed at reducing the high rate of foreclosures in Washington State. The bill was passed by the Senate at the end of March, but with amendments, so it had to return to the House, where it was passed on Wednesday.

Recent data released by RealtyTrac indicate that Washington State had the 11th highest number of foreclosures in the country for February 2011. One third of these were in King County, with Snohomish and Pierce Counties together accounting for another third.

According to HB 1362, section 1a, "The rate of home foreclosures continues to rise to unprecedented levels, both for prime and subprime loans, and a new wave of foreclosures has occurred due to rising unemployment, job loss, and higher adjustable loan payments.”

This represents a significant rise in the foreclosure rate for the state; two years ago, Washington ranked only 25th nation-wide. Over 77,000 families state-wide have lost their homes in that time period, and 43,000 more families are expected to lose their homes in 2011.

The Foreclosure Fairness Act has been drafted with the intention of slowing the foreclosure rate in Washington State by providing homeowners with information and alternatives. There has been a growing recognition that the current American foreclosure system is “broken,” with many struggling homeowners stymied about their options due to problems communicating with their loan servicers: long telephone waits, lost paperwork, not getting to speak to right people. The new bill will bring homeowners and servicers face to face, in the company of a third party to facilitate negotiations.

Rep. Orwall told the Seattle Medium that “one of the keys to restore Washington’s economy is to stabilize the housing market through a proactive and effective strategy that helps families keep their homes. Mediation is an important new tool to ensure that all options have been explored before moving to foreclosure.”

The new bill will require that lenders provide homeowners with a notice of how much of a payment (including any fees) is required to reinstate a deed of trust before recording notice of foreclosure sale, and also that they explain that mediation is an option. It will allow for the provision of a professional housing counsellor (i.e. a disinterested third party) early in the process, to help with communication, in order to try to avoid issuance of a foreclosure notice in the first place.

If the homeowner and servicer cannot come to an agreement, the bill then provides for foreclosure mediation: help from the third party in looking at alternatives, such as short sales. Foreclosure mediation has already dropped the foreclosure rate in other states.

The bill also provides for a mechanism for funding the new housing counsellors. Financial institutions which issue more than 250 notices of default in the preceding year will be required to pay a $250 fee on each notice of default. The fee will also help to fund outreach campaigns as well as the costs of enforcement of the new regulations.

“Foreclosure may sound like someone else’s problem, but when it’s happening en masse, like it’s happening right now, it’s all of our problems,” commented Sen. Adam Kline to The State Column, noting that a high rate of foreclosure “tears the connecting threads out of our neighborhoods.”

Foreclosure mediation, aimed at finding alternatives to foreclosure, will not only help individual homeowners. Reducing the foreclosure rate statewide will also help the housing market as a whole, speeding the recovery of home prices and eliminating the problem of negative home equity that currently plagues one third of Seattle area homeowners.


If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

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