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.

Foreclosures Dropping Nationwide - But Washington State Has Become New “Foreclosure Hot-Spot”

- Friday, March 15, 2013

Foreclosure are dropping nationwide, reports RealtorMag this week - but the news is not so good for Washington State. RealtorMag calls Washington one of the “new foreclosue hot-spots,” as it moved up to being the state with the fifth-highest foreclosure rate.

Florida and Nevada still top the list (with Illinois and Ohio in third and fourth place) but Washington has now overtaken Arizona, which has the sixth-highest foreclosure rate, and is far ahead of California, which dropped off the top-ten list for the first time since 2006.

RealtyTrac has published a map that shows the foreclosure rate in each state for February 2013. In Washington, one in every 656 housing units received a foreclosure filing in February (for a total of 4,362 foreclosure properties). This compares to the high rate in Florida, of one in every 282 properties, and to the lower rates in other northwestern states (Oregon, one in every 1,752 properties; Idaho, one in every 1,101 properties; and Montana, a very low one in every 10,864 properties).

RealtorMag quotes RealtyTrac vice president Daren Blomquist as saying that many of these foreclosure starts “will likely end up as bank repossessions or short sales later this year.”

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

- 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

- 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?

- 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?

- 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

- 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/

Cash Incentives and Relocation Assistance for Short Sales: A Guide to Government and Lender Programs

- Wednesday, February 20, 2013

Only a few years ago, struggling homeowners who wanted to get out of their underwater mortgages had a tough time convincing their lenders to approve a short sale. However, things have turned around completely since then. Lenders now realize that, in most cases, approving a short sale costs them far less than pushing the homeowner into foreclosure. In fact, many lenders are now actually paying borrowers cash - as incentive payments or relocation payments - for completing a short sale!

There is a lot of information about the various government short sale incentive programs out there. But it's harder to find information about cash incentive progams run by the banks, and some people may be wondering if the stories they have heard, for example of cash payments of $20,000 or more to underwater homeowners, are true.

Well, they are! We have worked directly with most of these programs, and they really do exist! Here is a brief overview of the various government and lender programs that pay cash incentives, as well as samples of real approval letters that we have obtained, to show exactly how much cash was paid to each homeowner for completing their short sale:

Government Programs:

FHA Pre-foreclosure Sale Program: If the loan is FHA-insured and the short sale is approved, HUD will pay the borrower between $750 and $1000 towards relocation costs.

This Maple Valley homeowner received $1000 towards relocation on his FHA short sale: 6.23.12 - MetLife - 1st Lien - 79k Deficiency - Debt Settled - Short Sale Approval

VA Compromise Sale Program: If the loan is VA-insured, VA will pay up to $1500 in relocation assistance to borrowers who complete a short sale with a VA compromise claim. This temporary cash incentive program was brought into place in January 2011, and is currently set to expire on December 31, 2013.

This GMAC short sale approval letter for a VA loan allows a Spanaway homeowner $1000 in relocation assistance: 11.16.12 - GMAC - 1st Lien - 92k Deficiency - Debt Settled - Short Sale Approval

HAFA: Short sales that are processed through the federal government’s HAFA program pay a $3,000 cash relocation incentive to the seller. If the home is not owner-occupied, the payment goes to the occupant, not the owner. The incentive is not paid if the home is unoccupied.

This Sammamish homeowner received $3,000 in relocation assistance by processing her Wells Fargo short sale through the HAFA program: 3.14.12 - Wells Fargo - 1st Lien - 146k Deficiency - Debt Settled - Short Sale Approval

FHFA “Standard Short Sale” Program: This new program replaces the HAFA program if the investor is Freddie Mac or Fannie Mae. It also offers up $3,000 in relocation costs to the borrower - but it's important to understand that this amount is a maximum total relocation costs. For example, if the borrower receives other relocation contributions, e.g. from their employer, that amount is subtracted from the $3,000.

Lenders’ In-House Programs:

Bank of America Cooperative Short Sale Program: Available to select homeowners who apply for it before submitting a short sale offer through BofA’s Equator system. Cash incentives to borrowers range from $2,500 to $30,000, and are offered at BofA’s discretion.

This Seattle homeowner received $27,388 in relocation assistance through the B of A Coop program: 12.13.12 - Bank of America - 1st Lien - 110k Deficiency - Debt Settled - Short Sale Approval

This Arlington homeowner received $5,000 in relocation assistance from B of A (incentive itemized on HUD, but not listed in the approval letter): 11.19.12 - Bank of America - 1st Lien - 45k Deficiency - Debt Settled - Short Sale Approval

Wells Fargo: Cash incentives reportedly range from $3,000 to $20,000, and are offered at Wells Fargo’s discretion.

Chase: Cash incentives of up to $35,000 have been offered to select homeowners by invitation from Chase.

This Snohomish homeowner received a $20,000 relocation incentive for doing a short sale of his home: 9.12.12 - Chase - 1st Lien - 105k Deficiency - Debt Settled - Short Sale Approval

And this homeowner received a $25,000 “relocation incentive” for selling his Enumclaw home - even though the home that he sold was a rental! 12.13.12 - Chase - 1st and 2nd Lien - 161k Deficiency - Debt Settled - Short Sale Approval

In some cases, cash incentives may be “doubled up.” For example, a borrower offered a cash incentive from their lender may also be eligible for HAFA’s relocation incentive of $3,000.

This Kirkland homeowner received $2,000 from her lender, Bank of America, in addition to the HAFA $3,000 relocation assistance - for a total of $5,000 in cash for selling her home: 10.26.12 - Bank of America - 1st Lien - 122k Deficiency - Debt Settled - Short Sale Approval

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.

To find out what short sale cash incentive programs you may be eligible for, contact us for a no-obligation, no-fee consultation: http://seattleshortsales.com/homeowners/

Fannie Mae Makes the Moves for Even Faster 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/
 

Five Hidden Benefits of Bankruptcy

- Thursday, February 07, 2013

People who are considering filing bankruptcy are often concerned that there may be negative effects. Some people are concerned about their ability to find credit after bankruptcy. Others are concerns with keeping their finances private. And almost everyone worries about how a bankruptcy will impact their credit score.

What many people do not know is that there are actually a surprising number of positive effects of filing bankruptcy. Here are just 5 ways that bankruptcy can have a positive effect on your finances.

1. Get better financing rates

For consumers who have serious credit problems, the interest rates offered on credit cards, car loans and other forms of credit are very poor. If your credit problems are serious, you may not even qualify for this type of credit at all.

However, for debtors like this, filing bankruptcy will actually significantly improve the availability of credit and the interest rates offered. This happens because creditors know you will not be able to declare bankruptcy again for many years to come. As a result they will be more willing to lend to you, because you will be unable to discharge the debt in bankruptcy for a long time.

This option is most attractive for people who usually handle their finances well, but who have been pushed to bankruptcy as the result of some misfortune. This has become much more common in recent years after many people lost their homes to foreclosure as a result of the recession. If you have suffered a temporary setback that is keeping you from obtaining new credit, you may want to consider bankruptcy as a way to get better rates.

2. Keep employers from discriminating against you

These days, employers are careful about checking the credit history of people they hire or promote before making an offer of employment. The fear of missing out on a future job might scare some people away from exercising their right to declare bankruptcy.

However, what most people do not realize is that employers cannot use your bankruptcy filing to disqualify you from employment. In contrast, they are fully able to consider debt that has not been discharged in bankruptcy to deny you employment. What this means is that people with a poor credit history who have not declared bankruptcy are in a worse position than those who have. So, if you have poor credit history which is preventing you from getting a better job, filing bankruptcy can help eliminate this barrier.

Additionally, bankruptcy may be a good way to keep your current employer from learning about your debt problems. Many consumers hold off on filing bankruptcy until their creditors start using the court system to get money. Often, this means filing a garnishment against the consumer’s pay check. If you file for bankruptcy, these creditors will no longer be able to garnish your pay check and your employer will not need to know the intimate details of your finances.

3. Use bankruptcy to raise your credit score

Many people considering the option of bankruptcy are concerned about the impact a bankruptcy will have on their credit rating. While bankruptcy can negatively impact your credit score in the short term, this is not always true on the longer term.

In fact, some consumers with very high debt loads actually see an improvement in their credit scores. This happens because the information as it appears on your credit report regarding late payments or unpaid balances is removed, and marked as “Included in Chapter 7 Bankruptcy” or “Included in Chapter 13 Wage Earner Plan”. Additionally, your credit score is partly based on a comparison against people in similar situations. So, after filing bankruptcy, your credit score is compared against others who have declared bankruptcy, which can actually make your finances seem much better.

Even for those who do see a decrease in their credit score due to bankruptcy can rebuild their credit quicker than if they had not filed bankruptcy. After your bankruptcy, your outstanding debts are no longer considered delinquent, so they stop weighing your credit score down. Once this happens, you can again obtain credit with reasonable interest rates, and manage your debt load. If this is done carefully, you can rebuild your credit score into the 700s fairly quickly. 


4. Get your driver’s license back

If you have lost your Washington driver’s license as a result of too many tickets, you can file a Chapter 13 bankruptcy to get your driver’s license reinstated. You will still have to pay back the entire balance owed on these tickets, but you will not be subject to any interest or penalties, and you will not have to wait for the fines to be paid off before you get your license back.

As soon as you file bankruptcy, we can send your petition to Olympia and seek reinstatement of your driver’s license. Although you will still have to pay the balance of the tickets, you may do so over a repayment period.

5. Stay in your home

Many people believe that filing bankruptcy means they will lose their home. This is not true. In fact, if you are behind on your mortgage payments and are facing the threat of foreclosure you may be able to declare Chapter 13 bankruptcy to keep your home. You will have to start paying your mortgage again after you enter your petition, but you may be able to negotiate a better interest rate. Additionally, you will be required to pay your back-mortgage payments, but you may do so over the length of your Chapter 13 plan, which is usually three to five years. This is often a much better prospect for homeowners than foreclosure.

Bankruptcy can also be an effective means of lowering your mortgage payments.  Prior to the recession, many homeowners either bought new homes with two mortgages, or took out Home Equity Lines of Credit on their existing homes. After the housing bust, many of these homes became worth a lot less than the value of the mortgages. What this means for many homeowners is that they are now paying more on their multiple mortgages than the house is worth.

If you are in this situation, there is an option to eliminate your second mortgage or Home Equity Line of Credit in a Chapter 13 bankruptcy. This process is called “Lien Stripping”. The first mortgage on the house would remain the same, but you would pay a fraction of what you owe to the second lien, then have it discharged at the completion of your Chapter 13 bankruptcy.

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”

- 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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