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.

New Revised Guidelines for Washington’s Foreclosure Fairness Program

Seattle Short Sales - Tuesday, March 11, 2014

The Foreclosure Fairness Program (FFP) was created in 2011 by the Foreclosure Fairness Act (FFA). The program is developed and administered by the WA Department of Commerce. The aim of the FFP is to reduce foreclosures in Washington state by encouraging mediation between homeowners who are at risk of being foreclosed upon, and their lenders. Its aim is to avoid foreclosure by exploring alternatives, such as loan modifications or short sales.

Through the FFP, a mediator is assigned who will work with the borrower and the lender to find an alternative to foreclosure that is appropriate to their situation. Specifically, the program guidelines aim to coming up with some sort of loan modification. However, if both parties want to work towards a different solution, such as a short sale, the mediator will work with them at their direction

Much of the value of the FFP is that it slows down the pace of foreclosure, providing defined steps and timelines, so that homeowners may have some breathing space and seek guidance about what alternatives are available to them. The FFP mediation process typically occurs over a 70-day timeline (and that period can be extended if both parties agree to the extension). The FFA states specifically that if a borrower has been referred to mediation after a NOTS has been recorded, that Trustee Sale may not take place until the trustee receives a certificate stating that the mediation has been completed. In other words, lenders may not rush a Trustee Sale without taking the time to fully investigate other options with the borrower through the mediator.

FFP guidelines are updated from time to time, and they were most recently updated by the Department of Commerce this month. Click this link for a complete listing of Foreclosure Fairness Program guidelines updated as of June 6, 2013. Following are some of the highlights of the newly revised guidelines:

  • The FFP is for borrowers with a mortgage for “residential real property,” which means a single-family residence, a residential condominium unit, or a residential cooperative unit.  The home must be the principal residence of the borrower at the time that contact under the FFA was made - however, borrowers remain eligible for mediation even if they move after that initial contact.
  • Second mortgages and home equity lines of credit (HELOCs) may be eligible for mediation under the FFP provided that all other eligibility criteria are met.
  • Borrowers must be referred to the program for foreclosure mediation by a housing counselor or by an attorney. Borrowers who received a Notice of Default after July 22, 2011, are eligible to be referred to the program for up to twenty days after the Notice of Trustee Sale (NOTS) was recorded. The referring housing counselor or attorney must screen the homeowner for eligibility.
  • Mediation fees are set at $400 for a session of one to three hours (including mediator’s preparation time) with an additional fourth hour charged at $130 if necessary. Payment of this fee is split equally between both parties.
  • Some lenders are exempt from mediation through the FFP. These are mainly smaller lenders such as many of the smaller credit unions. The Department of Commerce posts a list of exempt lenders for each year on its website; click here to see the list of exempt lenders for 2013.

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/

You can also contact Lambros Politis on Google+ or submit a contact request at Ark Law Group.

Debt Settlement Part 1: The Difference Between Debt Settlement and Debt Consolidation

Seattle Short Sales - Thursday, May 16, 2013

This article is Part 1 of a two-part series on debt settlement. In this article, we look at the differences between debt consolidation and debt settlement. In the second article, we will look at two recent real examples - of clients of ours, whose debts we have settled by convincing their lenders to accept thousands of dollars less than the balances owing.

Many people are confused about the differences between the two strategies known as “debt consolidation” and “debt settlement.”

Debts can add up. Unfortunately, today’s difficult economic climate has many people facing reduced income due to hours cuts or layoffs, and home prices remain low. In these tough times, many Americans find themselves forced to pay basic bills with their credit cards. Their debts are adding up to levels that they may not be able to continue paying.

One way of managing a high debt load is “debt consolidation.” Most people have several different debts, each with a different interest rate. Debt consolidation means managing those debts in order to minimize the interest paid.

For example, if you have $5,000 of credit card debt that you are paying 22% interest on, you are paying over $1000 per year in interest on that debt. If you can move that debt (and any other high-interest debts) into a lower-interest loan, e.g. by paying the credit card off through a line of credit secured against your home, you can bring that interest rate down to perhaps 6%. Those savings, of 16% interest on a $5,000 would save you $800 per year - money that can go directly towards paying off the debt itself, not just servicing the interest.

However, debt consolidation does not relieve you of your obligation to actually pay off that credit card debt. You still owe that $5,000 - and you are still accruing interest on it, even though now it is at a lower rate.

And this is where “debt settlement” comes in. Debt settlement is a completely different strategy. It means making an offer to your creditor, to permanently get rid of your debt. For example, in the case above, you could offer your credit card holder $2,500 to call the debt quits! You would be relieved of having to pay the remaining $2,500, and you would be relieved of that $1,000+ you were paying each year in interest!

Why would your credit card company, or any other creditor, agree to this?

Because it's better than getting nothing.

Debt settlement works with unsecured debts - in other words, debts that do not have collateral associated with them, such as a mortgage on a house or a car loan (where the lender has the right to foreclose on the home, or repossess the car, if you stop repaying them).

Debt settlement also works with undersecured debts, for example a second or third lien against a home. If sale of the home generates only enough funds to pay out the first lien (which, in most cases, is the mortgage loan), then the second or third liens are considered to be undersecured. Since so many homes have dropped in value over the past five years, many second and third liens are now undersecured.

In either case, whether the money owed is unsecured (e.g. credit card debt) or undersecured (e.g. a judgment lien), your creditor has nothing to repossess from you if you do not pay it back. They may be worried that you will declare bankrutpcy - in which case they will receive little or nothing on the money you owe. And that is exactly why they may accept significantly less than the actual amount you owe, in order to “settle your debt.” Because if they don’t, they may get nothing at all.

We have helped numerous clients settle their debts, permanently, often for only 10 to 20% of the total funds owed. In Part 2 of this series, we will look at two real examples - where our clients have been relieved of having to repay thousands of dollars of debt.

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/

You can also contact Lambros Politis on Google+ or to find more up to date information on this subject, go to theArk Law Group Blog. 

How Does a Short Sale or a Foreclosure Affect My Credit Score?

Seattle Short Sales - Thursday, March 28, 2013

Just because you are having trouble paying your mortgage right now, doesn’t mean that you may not want to enter the housing market again a few years down the road. Smart homeowners who are looking to get rid of their current mortgage debt know that the decisions that they make now will affect their future. One of the things that they consider when assessing solutions (negotiating a short sale, filing bankruptcy, or simply awaiting foreclosure) is how their choices will affect their credit score, and their ability to get new financing.

The credit-reporting agencies (Experian, Transunion, and Equifax) are notoriously tight-lipped about how they calculate credit scores. How a short sale or a foreclosure will affect your credit score depends upon a number of things, including what your credit score was before the short sale or foreclosure (higher scores tend to fall further), and, especially, whether you were delinquent on mortgage payments before the short sale.

Since the credit-reporting agencies do not release their formulas, most of the information available is more “anecdotal” - from blogs and discussion forums. Much of the older information (as in two or more years old) indicated that the hit to a credit score from a short sale was about the same as the hit from a foreclosure on record. However, things have changed lately!

Much of the actual credit score hit was due to the mortgage payment delinquency. Mortgage delinquency is what leads to a lender initiating a foreclosure, so the two go together. It used to be that a borrower had to be delinquent on mortgage payments before most lenders would even look at a short sale request. However, these days, most lenders will consider a short sale request by a borrower who has not yet missed any mortgage payments. In particular, if that borrower can demonstrate to the lender that they are “at imminent risk of default” - i.e. that changed circumstances (e.g. unemployment, increased medical expenses) mean that the borrower will default soon if nothing is done.

This means that, these days, it is possible to do a short sale without ever becoming delinquent, or, in the case of some short sale programs, being only one month delinquent.

For a borrower who has remained current on mortgage payments, the “hit” of a short sale on their record can be as little as 60 points, or even less, and it may remain on record for as little as 12 to 18 months. For borrowers who were behind on mortgage payments when they did the short sale, the hit may be more like 100 points or more. In contrast, a foreclosure may cost the borrower between 250 and 300 points. A foreclosure remains on the borrower’s record for seven years.

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/

You can also contact Lambros Politis on Google+ or to find more up to date information on this subject, go to the Ark Law Group Blog. 

Tenants’ Rights Following Foreclosure or Short Sale of their Rented Home: Part 2

Seattle Short Sales - Wednesday, March 13, 2013
This article is Part 2 of a two-part series about the rights tenants have when the home that they are renting is threatened with foreclosure. Part 1 explained tenants’ rights when foreclosure is pending. This instalment looks at how much notice must be given to tenants to vacate the home in the case of a short sale, or following foreclosure and a Trustee Sale.

The regulations governing how much notice renters must receive to vacate is different for a property that has been foreclosed upon than it is for a property that has been sold (including through a short sale). Here is some general information regarding the regulations in Washington State, and on the rights and obligations of tenants:

Eviction following foreclosure:

Within the context of a foreclosure, the 20 days-notice to vacate is not applicable. Following a foreclosure trustee sale and after the transfer of the property to a new owner, regardless of whether it’s a fixed-term or month-to-month lease, the new owner may give notice to the tenants to vacate.

Washington State law requires a new owner to given tenants a minimum of 60 days notice to vacate, but this is effectively superceded by federal law, which requires a minimum of 90 days notice. These timelines apply only to the case of a new owner following foreclosure and a Trustee Sale. As a tenant, you must choose whether to take the 60 days notice, or assert your federal right for the 90 days notice - because you receive different benefits depending upon which you choose.

If you intend to continue occupying the home for the full 90 days, you should let the new owner know that that is your intention. Since you are asserting your right to occupy under federal law, you must also obey  federal law, which requires you to continue paying rent. You are also required to meet any other obligations specified under the original lease contract.

However, if you only intend to occupy the property for the 60 days specified by state law, the state law mandates that you cannot be evicted for failing to pay rent. In effect, you may continue to occupy the property for free for up to 60 days following foreclosure. (You still could be evicted during this period for committing waste or nuisance, however). If you stay beyond the 60 day “free” period, the new owner may file suit against you and force the eviction through an unlawful detainer action. You don’t want that eviction to come up during a background check in the future when apartment hunting.

You can, of course, always decide to sign an updated lease with the new landlord if that is presented to you as an option following foreclosure. 

Eviction following a short sale:

When the property changes hands through a normal real estate transaction or though a short sale, the new owner enters into the same lease agreement with the tenants as the previous owner had. The previous owner transfers the security deposit that the tenants paid to the new owner. In other words, the prior lease agreement is binding on the buyers.

If the rental agreement is on a month-by-month basis, according to Washington State law, the landlord must give the tenants a minimum of 20 days notice to vacate. If the 20 days are within a rental period that the tenant has already paid rent for, the tenant may be due a pro-rated partial rent refund.

If the rental agreement is for a fixed time period, the new owners must honor that agreement. 

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/

You can also contact Lambros Politis on Google+ or to find more up to date information on this subject, go to the Ark Law Group Blog. 

Tenants’ Rights Following Foreclosure or Short Sale of their Rented Home: Part 1

Seattle Short Sales - Monday, March 11, 2013

This article is Part 1 of a two-part series about the rights tenants have when the home that they are renting is threatened with foreclosure. This instalment discusses tenants’ rights when foreclosure is pending. Part 2 of this series will look at how much notice must be given to tenants to vacate the home in the case of a short sale, or following foreclosure and a Trustee Sale.

Not all underwater homes are owner-occupied. In many cases, homes that are threatened with foreclosure are rentals. How does the prospect of foreclosure affect tenants who are living in an underwater rental home?

The impact on tenants ultimately depends upon how the property owner chooses to deal with the threat of foreclosure, and how much they choose to communicate with the tenants about the situation.

Pending foreclosure:

If a property is going into foreclosure, according to recently passed Washington State law, the Trustee is required to give tenants of a rental property facing foreclosure a minimum of 90 days notice before the foreclosure sale date.The Trustee was already required by law to post notices of the foreclosure on the property, but the new law requires them also to mail notices of the foreclosure sale to the tenants. This foreclosure notice is not an eviction notice; it is simply to make sure that the tenants are informed about the situation.

A landlord who is facing foreclosure may choose to try to do a short sale, in order to avoid being foreclosed upon. It is generally easier to sell a property with tenants who are on a monthly lease than on a fixed-term lease, because the tenants can be evicted with 20 days notice if they are on a monthly lease; this makes the property more attractive to any potential buyer who intends to occupy the home.

For this reason, if tenants are on a fixed-term lease, landlords might approach them about converting to a monthly lease in exchange for an incentive of reduced rent. Tenants are not required to change the terms of their lease if they do not want to, but the reduced rent offered may make it worth their while to do so.

Tenants requesting a short sale:

Receiving notice that the home you are renting is facing foreclosure may open the possibility for some tenants to purchase the property as a short sale. If you are a tenant and are in the position to obtain financing, this is an opportunity not only to avoid having to move, but to purchase a home at a discounted price.

Most lenders will consider allowing a tenant to purchase a home that they are foreclosing on as a short sale, because lenders usually will recover more from their bad mortgage through a short sale than they will through the long process of foreclosure - especially a short sale with an interested buyer already in place. The landlord will also usually be open to a short sale, as it will be a faster solution, as well as much easier on their credit rating, than foreclosure would be.

If you would like to purchase the home that you are renting as a short sale, you should contact your landlord, the owner, as soon as you are aware that the property is in trouble. The sooner you get the short sale process started, the more likelihood you will have of succeeding with the deal.

The second instalment of this series will explain how much notice to vacate a property the owner (or new owner) is required to give tenants: prior to foreclosure, following a short sale, and following foreclosure.

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/ 

Dual-Tracking: Can my Lender Continue Foreclosure Proceedings While I Negotiate a Short Sale?

Seattle Short Sales - Thursday, March 07, 2013

The National Mortgage Settlement of February 2012 provides for relief and compensation to borrowers who lost their homes to foreclosure, and for some borrowers who are threatened with foreclosure. However, it does not have provisions to help everyone. One common misunderstanding of what the terms of that mortgage settlement mean is with respect to dual-tracking: where lenders continue with foreclosure proceedings even while a loan modification or short sale is being negotiated.

The National Mortgage Settlement has a provision in it that forbids lenders from dual-tracking - but this provision applies only to loan modifications. Banks may not foreclose on a homeowner while they are under consideration for a loan modification. However, there is no proviso that prohibits banks from proceeding with foreclosure while the homeowner is working on negotiating a short sale.

The wording is confusing - the "no dual-tracking" provision may make it sound like this also applies to short sales - so some lenders have been working to clear up any confusion. In January, Bank of America sent a notice out to short sale agents specifying: “As of January 15, 2013, there will no longer be a temporary foreclosure hold during the Cooperative Short Sale property marketing phase. We may begin or continue the foreclosure process up until a submitted offer to purchase the property is approved by all relevant parties.”

The terms of the Settlement state only that the lender/servicer may not proceed with foreclosure if the short sale has been approved by all parties. Two cautionary notes here are:

  • this means that they may proceed with foreclosure even while a short sale is being negotiated
  • this provision only applies to the five servicers who are party to the National Mortgage Settlement: Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo.

Other lenders may still continue to dual-track foreclosure proceedings, even though a short sale is being negotiated and is close to approval - or even approved and about to close! For example, this short sale approval that we negotiated in February with Ocwen, a lender that is not party to the National Mortgage Settlement, states in its first paragraph “Ocwen will NOT postpone a scheduled foreclosure sale, even if there is a pending sales contract.”

The take-away is to be efficient with short sale negotiation: do all that you can to make the process move forward quickly. A lender’s foreclosure department may not even be in contact with their short sale department - so pay attention to any foreclosure notices, such as demand letters or Notice of Trustee Sale communications, even if you have a short sale in the works. If there is a Trustee Sale scheduled, make sure that your short sale will close before that sale date.

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/
 

Can I Do a Short Sale if I Have a Reverse Mortgage?

Seattle Short Sales - Thursday, February 28, 2013

With so many homes underwater on their mortgages these days, some people are asking us: Can I do a short sale if I have a reverse mortgage? Before looking at that question, though, it is important to figure out whether there is even any point in doing a short sale if you have a reverse mortgage. To get to that, it is important to understand what a reverse mortgage is, and how it works.

Reverse mortgages are designed to help seniors use the equity in their home to free up cash. It is a product that is only available to homeowners who are over 62 years old: it is basically a loan drawn against the equity that they have in the home. That loan can be paid to the homeowners as a lump sum, or it can work as a line of credit, or it can be some combination of the two.

The cash amount of the total loan is recorded as a lien for that amount against the property - even if the total amount of that loan has not been disbursed.

For example, a reverse mortgage for $150,000 may be disbursed as a $100,000 lump sum to the borrowers, with the remaining $50,000 available as a Line of Credit. If the homeowners ended up using $20,000 of the Line of Credit funds, the lien on the property would still be for $150,000 (the lending limit) but the payoff of the loan would only be the amount of funds used: the $120,000 (plus interest).

In a reverse mortgage, the borrower is under no obligation to make any payments: the loan balance grows with time. The aim of a reverse mortgage is to free cash up for seniors who intend to stay in their home for as long as they are able to care for themselves. The loan comes due only upon one of the following:
  • the borrower dies
  • the borrower fails to stay current on taxes or insurance
  • the borrower moves out of the house for more than 12 months.

When a reverse mortgage comes due, the borrower (or heirs to the estate) may either refinance the home and keep it, sell the home and cash out any equity, or turn the home over to the lender. (Note, however, that the first two options are not available if the home is underwater, because there is no equity).

So what happens when property prices fall, and a reverse mortgage ends up underwater?

If the borrower is living in the home and wants to continue living in the home: If the borrower is living in the home, there is good news. All reverse mortgages are non-recourse loans - so you cannot end up owing your lender any more than what you borrowed. The lender must honor the mortgage contract, and the borrower may continue living in the home for life, or until the loan comes due (for one of the three reasons listed above).

If the borrower is living in the home, but wants to sell it: If the home is underwater, the only way to sell it is by getting the lender’s permission for a short sale. However, an advantage to doing a short sale on a reverse mortgage, compared to on a conventional mortgage, is that the lender usually will not require it to be an arm’s length transaction. This requirement is dropped for reverse mortgages because it is common that someone within the family may want to purchase the family home from the borrowers.

If the borrower has passed away: If the home has passed on to heirs, but there is no equity in the home (i.e. it is underwater) then there is no value being passed on to the heirs. However, the good news is that the heirs are not responsible for the negative equity: that is entirely the bank’s problem. While the heirs could, theoretically, work with the lender to negotiate a short sale, there is no reason for them to do that: they are not going to get the property in the end, and they are not going to see any cash from it. The only realistic option for them is to turn the home over to the lender.

In summary:

The borrower of a reverse-mortgaged home that is underwater is in a good position with choices: Their lender is required to adhere to the terms of the reverse mortgage, even if the home value has dropped. They may continue to occupy the home for the rest of their life, or until they choose to move out. They also have the option of working with their lender to negotiate a short sale, whether to a family member or to a third party, if they choose to.

Heirs who have inherited a reverse-mortgaged home that is underwater have essentially inherited nothing. The bad news is that they won’t be able to keep the home. However, the good news is that they have not inherited the debt associated with the home, either: that negative equity is the lender’s problem. The best move for the heirs is to sign the home over to the lender.

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/

January Stats: Over 90% of our Short Sale Approval Letters Came with Full Deficiency Waiver for Sellers

Seattle Short Sales - Saturday, February 23, 2013

91% of our short sale approval letters for January 2013 came with a full deficiency waiver for our sellers! Of the 35 short sale approvals that we negotiated for struggling homeowners last month, 32 of them had the lenders waiving the deficiency. This means that the homeowners are able to walk away from their underwater mortgages clean: with to no requirement ever to pay their lenders the shortfall on the mortgage payment following the short sale, and able to make their move to financial freedom without bearing the burden of past bad debts

The deficiency balance is the difference between the balance owing to the lender on the mortgage, and the net proceeds available to pay off the lender following sale of an underwater home. For example, if Hal owes $250,000 on his mortgage, but his home is worth only $200,000 at today’s prices, he is underwater by $50,000. Commissions and closing costs, after selling the home, might total around $25,000.

So, if Hal is able to obtain his lender’s approval for a short sale, after selling his home and paying closing costs, there might only be $175,000 to pay his lender: $75,000 short of the full $250,000 owed. That $75,000 shortfall is the deficiency.

That $75,000 is just a fictitious example to illustrate how a deficiency is calculated. But here are some real numbers for January: In January, 2013, the deficiencies on the 35 approvals we negotiated ranged from $3,000 to $234,000. The average deficiency was $87,000

Back in 2010, when we started collecting stats on our short sale approvals, less than half of the lenders would waive the deficiency balance. Continuing with our example: if Hal’s lender does not waive that deficiency, it means that he is trying to pick up the pieces in his life, all the while knowing that debt collectors might come after him for $75,000. That situation does not give Hal a lot of motivation to start working at rebuilding his finances.

Fortunately, lenders have come around to realize that short sales are a far better way to cut their losses on a bad mortgage, than spending a year or more foreclosing on a homeowner who simply does not have the money to pay. Now they are actually encouraging homeowners to do short sales - both by waiving the deficiency balance in most cases, and even sometimes paying homeowners extra cash on top for completing the short sale.

These days, in the majority of cases, the lender will waive the deficiency balance. What that means in our example Hal's case is that the lender writes that $75,000 off. They promise Hal that they will never come around to collect it (and that promise is in writing, in the short sale approval letter). Hal can put his bad mortgage debt completely behind him, and look ahead to rebuilding his life.

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/

Fannie Mae Makes the Moves for Even Faster Short Sales

Seattle Short Sales - Sunday, February 17, 2013

The trend continues: Lenders do not want to foreclose on you. Foreclosure is not only undesirable for struggling homeowners trying to deal with underwater properties. Foreclosure is a costly way for lenders (including both loan servicers and investors) to deal with non-performing mortgages. Short sales are an alternative to forelosure, and this week, Fannie Mae announced a new tool to make the short sale process even faster and easier.

Some of the issues that can slow down a short sale approval include:

  • needing guidance for a recommended listing price for the property
  • disputing the BPO (Broker’s Price Opinion), or fair market value of the property
  • delays in hearing back from the loan servicer (bank)
  • stumbling blocks between parties during negotiation of an offer.

If a short sale case has come up against one of the issues listed above, the new Fannie Mae tool, called Home Path For Short Sales, allows selling agents to escalate the short sale case. When agents escalate the case, Fannie Mae will contact the servicer to address the issue that is stalling the short sale process. According the DSNews, agents who have used the Home Path For Short Sales tool to escalate cases saw results within one to two days.

Fannie Mae’s new Home Path For Short Sales tool continues the trend that we have been seeing in the last twelve months, as lenders and servicers turn increasingly towards short sales for loss mitigation. Late last year, new FHFA guidelines were announced that will streamline the short sale approval process . In addition, a few weeks ago, Freddie Mac released information about its “shorter short sale” approval process.

To find out whether a mortgage loan is owned by Fannie by visiting https://www.knowyouroptions.com/loanlookup. And find out more about Fannie’s new Home Path For Short Sales tool at http://www.homepathforshortsales.com/.

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/
 

Freddie Mac’s “Shorter Short Sale”

Seattle Short Sales - Saturday, February 02, 2013

Freddie Mac Executive Vice President Tracy Mooney published a blog post last week outlining how short sales are about to become even faster, easier, and more transparent. We wrote an article about Freddie’s new “Standard Short Sale” program last November, back when those new guidelines first came into effect. A highlight of that program is that loan servicers (the bank you hold your mortgage with) are now authorized, in many cases, to approve short sales - without having to pass the file by the investor (Freddie, Fannie, etc.) or the mortgage insurer.

Mooney’s article focuses on how the new “Standard Short Sale” guidelines will make the short sale approval process faster. In fact, Mooney estimates that these new guidelines will knock off 50 to 75% off of short sale approval timelines! Some of the guidelines that will improve short sale processing times are:

  • Timelines for decisions: Servicers are supposed to make a decision about a short sale within 30 days of receiving the completed application. They may take up to 30 additional days if time is required to negotiate with third parties.
  • Better communication: If servicers take the extra 30 days to make their decision, they must provide weekly status reports.
  • Better escalation process: Servicers must provide borrowers with a clear procedure in order to escalate their file, including a dedicated 1-800 number for that.

Fannie Mae is also following these Freddie guidelines. Most residential home loans in America are backed by either Freddie Mac or Fannie Mae. You can find out whether your mortgage loan is owned by Freddie here: https://ww3.freddiemac.com/corporate/. You can find out whether your mortgage loan is owned by Fannie here: https://www.knowyouroptions.com/loanlookup

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/


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