Massachusetts Real Estate

head_left_image

Foreclosure Avoiding it Through a Short Sale or Loan Modification

Foreclosure is not a fun word yet it is reality that many across the US are facing in these tough economic times.

There are many ways that home owners find themselves in this predicament including job loss, reduction in income, mounting credit card debt, an increase in mortgage payments, a terrible illness, or divorce. There are probably others that I have missed as well.

A home foreclosing doesn't just effect the homeowner directly. It effects you and I and everyone else that lives near the home.

Foreclosures drive down property values! When you are faced with selling your home and you have to compete with the foreclosure down the street that's been marked down in price because the bank has no desire to hold it, you will quickly realize you are part of the epidemic.

There are many home owners that don't know there are other options besides letting their home end up in foreclosure. Some are even too embarrassed to investigate their options.

This is a shame and I would like to help explain some of the things you can do including a short sale or a loan modification.

The short sale and loan modification options would solve the same goal of avoiding a foreclosure but with each providing a different outcome.

The short sale is for those that absolutely need to move and get out from under their debt completely. A loan modification is for those that would really like to remain in their homes but can not do so without assistance.

It is important to remember that banks are not in the business of owning Real Estate in their portfolios and would much rather assist a homeowner than to take ownership of their home.

 

Here is a break down of how both assistance programs work.

Short sales                                                                                                                                    

 

A short sale is a legal lender approved solution designed to assist those home owners who are financially strapped to get out from under their mortgage debt.

A short sale is negotiated through the mortgage holder of an owners home where by the mortgage holder agrees to take less than what home owner owes on the property.

An example of a short sale would be if a home owner owes $500,000 on their current mortgage and their home is only worth $450,000. The lender in this example would agree to take a short fall of $50,000 at closing. In many cases the mortgage holder may completely wipe out the debt and the home owner does not have to repay the 50k.

The home owner benefits in this situation because they get out of a sticky financial mess without going to foreclosure which can seriously damage your credit.

You may be thinking why would a mortgage holder want to allow a short sale? There are a number of reasons, most notably the cost involved for the lender going through a foreclosure proceeding. The mortgage holder when all is said and done can easily spend $40,000-$50,000 going through a foreclosure. This avenue can save the lender money they would otherwise lose. The average loss by a bank is about double when a foreclosure is done instead of a short sale.

Most lenders will work with a short sale option to avoid a costly foreclosure.

As a Realtor representing a seller in a short sale scenario there some issues you need to be aware of. See Ethics in a short sale for an explanation.

When selling your home and you know you are going to be faced with a short sale make sure you choose to work with a good Realtor who has some working knowledge of short sale procedures! A good Real Estate lawyer in your corner who has worked with short sales would also be an important consideration. There are also short sale negotiating companies that work directly with the banks as well. There is a lot that goes into the process of completing a short sale. Having professionals to work with is vital when you are going through a short sale.

If you would like to investigate the short sale process and live in the Metrowest Massachusetts area, I would welcome the opportunity to speak with you. I am well versed in the procedures and have been successfully completing short sale closings.

Loan Modification

 

Over the last year working as a Metrowest Massachusetts Realtor, unfortunately I have heard a number of stories about people who have lost their homes that did not realize they had any other options.

What you need to understand is that just because you missed a few mortgage payments does not mean that a bank is not going to want to work with you! There are times in people lives where they can come under financial stress, as mentioned previously.

Banks understand that sometimes a persons problems are not permanent and can turn around quickly. You have all the incentive to try to avoid the foreclosure process at all costs.

With a foreclosure on your record you will not be able to buy a property with conventional loan financing for five years. So if you or someone you know is potentially facing a foreclosure because of falling behind in mortgage payments don't just sit back and let it happen. Reach out to your lender and explain your situation right away and ask for their help.

The 1st thing a lender or bank will want to know is exactly where you stand financially at the moment and what you can afford. Let the mortgage company or bank know your exact situation. Speak to them about your desire to remain in the home and how you can work out a payment plan that will be mutually beneficial.

The bank is going to want to know what has caused you to become financially strapped. You can plan on being asked to put this in writing. This is known as a "hardship letter". In the letter you will be asked to explain the circumstances behind your missed payments and an understanding of why you believe you will be able to continue to make payments under the modified terms.

You will be asked to provide documentation to prove your case. Documents that the bank will ask for most likely will include pay stubs, bank and brokerage accounts, W-2's, income tax returns, and a list of your current expenses including things like insurance, utilities, taxes, food and other typical expenses.

The bank has the option to try to keep you in the home in a number of ways including an extension of the length of the mortgage, the interest rate, or a reduction in principal. It potentially could be some combination of all three. Remember the goal is to keep you in the home and the bank is working with you!

One other option that can help those home owners who are under water where the value of their home is less than the mortgage balance is the new bill put into law in October known as the Home Owner Recovery Act of 2008.(read a complete explanation here) This new bill will allow a qualified home owner with the lenders approval, to refinance their home at 90% of the homes newly appraised value. There is one caveat, however, to this new program. The home owner will be required to share in the future appreciation of the property with the government.

If you live in Massachusetts and need help with a Short Sale please visit Massachusetts Short Sale Realtor

Above all else remember there is help available!

______________________________________________________________________________________________________

The above information on Foreclosure ~ Avoiding it Through a Short Sale or Loan Modification was providedremax executive realty hopkinton ma by Bill Gassett, the team leader for the #4 RE/MAX Team in Massachusetts in 2007. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 22+ Years. Bill's office is conveniently located in the center of Hopkinton MA at 77 Main Street.

I have a passion for Real Estate and love to share my marketing expertise! I would welcome the opportunity to earn your business.

For Metrowest Massachusetts Real Estate and homes see Metrowest Mass Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

Click here to view Bill Gassett's Metrowest Real Estate profile

 

 

Subscribe in a reader

 

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 22 years.

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

Comment balloon 85 commentsBill Gassett • December 10 2008 09:18AM

Comments

I have been working with a lot of people in this situation over the course of the last two years.  I am sure many will find this very helpful!

Posted by Lesley Lambert, Real Estate Agent - Realtor - Westfield, MA - 413- (Park Square Realty serving Western MA) over 10 years ago

Lesley - I have been involved with a number of short sales myself. So far they have been going smoothly other than the fact that they take significantly longer than your typical closing time.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill, I have read many posts about these subjects and have handled REO, Foreclosure and short sale deals but this is one of the best "explanations" for both agents and consumers that makes it easier to understand. I am going to send a link to this post to a couple of folks who called my office yesterday wanting to know more! Thanks again!

Posted by Russell Lewis, Broker,CLHMS,GRI (Realty Austin, Austin Texas Real Estate) over 10 years ago

Bill we have been telling our clients that short sales can be a great investment opportunity if you know what you are doing and how to find them.  If you are interested I can send you are report.  Would be great to get your perspective.  Just let me know.

Posted by Josef Katz, {Marketing Maestro} (Digital and Direct Response Marketing) over 10 years ago

Russell - Thanks. I have tried to make this subject as easy to understand as possible. There are many folks who just don't realize they have other options besides letting their home go to foreclosure.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Hello Bill, this is a detailed, but simple post for Homeowners to understand regarding Short Sales and Loan Modification.  Keep up the great work!

Posted by Vickie Arcuri, South Florida Luxury Real Estate (ONE Sotheby's International Realty) over 10 years ago

Josef - They certainly are. There are homes right now in my area that I would never have thought could be priced so attractively. Sure send the report along.

Vickie - Thanks. Short sales are difficult transactions usually from start to finish. They are excellent options though for those who face the potential of foreclosure. Having skilled professionals in your corner is important.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

HI Bill, you do have a way with words!  Great explanation for both realtors and home owners.  I'm still leary of the short sale process though.  I need to hear more success stories from folks that have gone through them.  The one's I've heard have not been so great...  thanks for your insight!

Your Raleigh Realtors

Posted by Lee & Pamela St. Peter, Making Connections to Success in Real Estate (Berkshire Hathaway HomeServices YSU Realty: (919) 645-2522) over 10 years ago

Bill - This is a wonderful explanation of the process. Just by making a phone call to see how some former buyers were doing last summer, we discovered they were behind in their payments and they had given up and were going to let the house foreclose.  Long story short, we got it sold for them, saving them and the bank a foreclosure. It is amazing to me that people don't know this but many are unaware of their options. Thanks! I'm bookmarking this one!

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) over 10 years ago

Pam - There is no question that short sales can be difficult and there are a lot of horror stories for sure. I think you need to have an abundance of persistence with them. Having the right people to work with is also important. I don't do it by myself. I have an attorney I work with that is well versed in the whole process. It makes a difference.

 

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Sharon - Thanks. That is a great story on how a Realtor who knows what they are doing can make a big difference in someones life. If you did not come along who knows what would have happened. Foreclosure is the most likely answer.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

It is easy for sellers to become overwhelmed when found in this type of situation.  Your blog clearly explains alternatives to foreclosure that consumers may not be aware of.

Posted by Patricia Beck, Colorado Springs Realty (RE/MAX Properties, Inc., GRI, CDPE) over 10 years ago

Patricia - Thanks for the compliments. You are right though when people come under financial stress thinking clearly becomes a lot more difficult.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Good, helpful consumer, article, Bill!  You are right, there are probably many people too embarassed, or they wait unti it's too late for help.

Posted by Wendy Rulnick, "It's Wendy... It's Sold!" (Rulnick Realty, Inc.) over 10 years ago

Hey Bill,

I hope more agents come around to your way of thinking. Its clear that you are focusing on what is best for the client...

I appreciate that. We need more agents to get into alignment with the way you are looking at this market...

Happy Holidays!

Tim Harris

Posted by www.TimandJulieHarris.com over 10 years ago

Loan Mods are the best way to go in this economic situation!  Although it's beneficial for both the home owner and the Lender (so they don't have to foreclose) it's really hard to get one done!

It's good to see such an avenue for agents when other options are out... ;)

 

Any advice you'ld give a fellow agent?

Posted by Caroline Harabedian over 10 years ago

We were told by a Countrywide officer that they have 50,000 requests for short sales and the asset managers do not have time to respond. He said that only 5% of the requests are going to settlement and advised us to avoid short sales as a waste of time.

Posted by Roy Kelley (Realty Group Referrals) over 10 years ago

The best way to go is to ensure people actually qualify for a loan and have enough income to pay off the loan at some point. Modifications cannot save everyone, especially the option arms because they were stated, sold on minimum payment with NO hope of ever making the fully amortized rate. Buy what you can afford is the best way to avoid foreclosure.

 

Also, many of these people will need a law firm to submit the modifications because they've participated in the fraud on the over embellished stated income and some prosecutors are going after borrowers while banks have six years or more from the point of discovery to go after a fraud claim and now you've just handed them the smoking gun; unless you have the attorney/client privilege over the submission.

Posted by James Burns, Esq. (Law Office of James Burns) over 10 years ago

Bill, great post.  I just closed a short sale a few weeks ago...took 6 weeks, but well worth the time.

Posted by Kay Van Kampen, Realtor®, Springfield Mo Real Estate (RE/MAX Broker, RE/MAX) over 10 years ago

Bill:

That is pretty good timing. Some of the short sales should be submitted under the attorney/client privilege for the same reasons of ammo for a bank to possibly use in the future.

I assume you're doing this and submitting the short sale with an offer and pre-approved lender notice for the prospective buyer...this seems to get them closed in 30-45 days...assuming the pricing is within reason.

Posted by James Burns, Esq. (Law Office of James Burns) over 10 years ago

Great post!  It is comforting knowing there are others out there trying to help homeowners in their area.  If anyone is looking for some excellent Short Sale Training, geared towards the real estate agent please check out our website:  www.ShortSaleSolutions.biz

We spoke at the National Association of REALTORS Convention this year, and are here to help answer any questions you might have about these tricky transactions!

 

Posted by Paige over 10 years ago

Hi Bill!
Your bolog is helpful not only to me but I'm sure your explanatins will be easily understood by prospects. thank you for sharing your thoughts

Kieran

Posted by Kieran and Cecelia Loughman (Exit Creative Reaty) over 10 years ago

Hi Bill!
Your bolog is helpful not only to me but I'm sure your explanatins will be easily understood by prospects. thank you for sharing your thoughts

Kieran

Posted by Kieran and Cecelia Loughman (Exit Creative Reaty) over 10 years ago

Bill...great post! As I mad reference to in my recent post about a friend in trouble, it's unfortunate you have to let your payments get behind BEFORE they will help you! But, it seems that is the only way to go! My friend is going to stop paying the second mortgage, and keep paying the first. I don't think they will be able to foreclose on him, since the second lender is in second place to the first lender. Once he get's his finances on track, he will either pay up what he is behind, or maybe then (he's tried 4 TIMES to get the lender to work with him) maybe something good will happen.

Short sale is not an option for him...its where he lives....so where would he go?

 

Posted by Thom Abbott, Midtown Atlanta GA Condos For Sale (MyMidtownMojo.com |770.713.1505 | Intown Atlanta GA Condo Living) over 10 years ago

My broker recently started a program to 1) modify loans, 2) short refi 3) short sale, since many companies only handle one or the other is a great program to help the homeowner avoid foreclosure, if any realtor wants to refer their clients to us, you can get their 25% referral fee if goes to short sale, make some money and look good to your clients.

SE HABLA ESPANOL

Metro Phoenix Area

Send me your referrals to: carmen@casasarizona.info

 

Posted by Carmen Gabriel over 10 years ago

Wendy -  There are far too many people that wait until it is too late.

Tim - I always put the client 1st. That type of thinking always leads to happy clients who refer business to you.

Caroline - I suspect that loan modification will get somewhat easier as we move forward. Any time a new program is introduced there usually is a break in period. I am sure getting the staffing and training is an issue just like short sales.

Roy - Why would they be a waste of time? It is either a short sale or a foreclosure. A foreclosure is certainly more costly for the lender in most cases! Sounds like a rep that has a great attitude.

James - You have to prove you can qualify for a loan modification. They are not going to do them for just anyone.

Kay - Thanks. Six weeks is a quick turn around for a short sale.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Paige - thanks for the link. It is good your firm is helping those in need.

Keiran - You are welcome. I am glad you found this to be valuable.

Thom and Ray - The 2nd mortgage holder always has the option to foreclose? I am not sure what you mean that a short sale is not an option because it is where he lives? Do you mean he does not want to sell?

 

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill, in reference to your reply to James, yes, the homeowner will need to show that they will be able to stand behind their new commitment for the modification.  They have to support their financial ability to follow through, otherwise, doing a modification would be a waste of time for the lender as well as the homeowner.

The good news though is that someone who is upside down may be able to get a modification when a refinance isn't possible.  There are a number of homes that can be saved from foreclosure through loan modifications, but people just aren't aware of how to do this.  Few homeowners are able to do this on their own though.  There are some good stories out there, but the majority need to work with a company experienced at dealing with the lenders and who know the rules of the game, much in the same way a Realtor needs to know the rules in order to get Short Sales done properly.

Posted by Gregory Lohr (Freedom Foreclosure Prevention Services) over 10 years ago

Bill, there can never be enough or too much information on foreclosures and short sales. There are so many stories we could all share. Now, the latest, is that people are breaking in and living in the homes owned by banks. ;-)

Pepper

Posted by Mesa, Arizona Real Estate Mesa Arizona Realtor, AzLadyInRed (Homes Arizona Real Estate LLC) over 10 years ago

Bill, I also find myself wondering about the comment from Thom and Ray, that  the Short Sale is not an option because it is where he lives.  If faced with foreclosure, a Short Sale is much better than being foreclosed on.  Just because he lives there doesn't mean the lender won't foreclose.  Are they thinking the lender won't foreclose because it is a 2nd instead of a first?  I'm not sure I understand this logic.

Posted by Gregory Lohr (Freedom Foreclosure Prevention Services) over 10 years ago

Greg - I am not sure what Thom and Ray were saying either. We both know that the 2nd mortgage holder will foreclose just as easily as the 1st if there are no payments being  made. I am not sure about the whole part about living there either. I agree with you completely about having professionals working with you who are well versed in the loan modification process.

Teri - I just read the other day about a guy who was actually going out and finding homes slated for foreclosure and putting homeless people he knew in them. Squatting is becoming much more of an issue.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill this is the best information! You've presented it in a very easy to understand to-the-point format. Thanks for taking the time to share your knowledge - it is most enlightening. as always the best to you.

Posted by Teresa Berry over 10 years ago

I am not sure how it works in your state, but in California, It is required to Have approval from the Department of real estate to accept advanced Fees for Loan modifications. There are only about 21 companies approved to do so.

The problem I see with loan modification is the leverage lies with the lender and the borrower has little pull. Here in California, we have the ability to pursue legal action against the lender if there is a violation in the homeowners loan documents.

I am also trying to help homeowners savr their home. If anyone is in California, they can go to my website www.Brettnoel.com and click on the link Save my Home.

 

Great article, we all need to do what we can to help homeowners.

 

Brett Noel

California's Success Coach

 

 

Posted by Brett Noel (Keller Williams) over 10 years ago

Bill, a great post.  Very informative, so I've forwarded on.  One caveat though.  Short sales look like foreclosures on a consumer's credit report i.e. they have the same score impact-- as long as they are reported by the lender, which typically they are. I verified this fact with sa score expert at Fair Isaac aka the FICO company. To elaborate on your post....

Because of the credit crunch, Fannie Mae has stated new requirements before you can be approved again for a home loan:

  • Foreclosure: 5 years from completion date; additionally between 5 and 7 years you can only purchase a personal residence, and must have a minimum of 10% down and 680 credit score. Also you can only do limited cash-out; no regular cash-outs are permitted. After 7 years you’re back at square one.
  • Deed in lieu: 4 years from completion date; also 10% down payment required between years 4 and 7.
  • Short sale: 2 years from completion date.
  • Chapter 13 bankruptcy: 2 years from discharge date or 4 years from dismissal date
  • All other bankruptcies: 4 years from either the discharge or dismissal date

More on this at http://www.videocreditscore.com/foreclosure-impact-my-credit-score

Posted by Anonymous over 10 years ago

Sorry here's the link 

How Much Will A Foreclosure Impact My FICO Credit Score? - Episode #49

Posted by Andy Jolls over 10 years ago

Bill - well done post. You clearly and simply explained the options available to some homeowners who find themselves in a financial hardship. The key, of course for a short sales is being able to demosntrate a hardship. Sadly, many may not realize they might have options. Hopefully we will see more successful loan modification for those who qualify.

Jeff

Posted by Jeff Dowler, CRS, The Southern California Relocation Dude (Solutions Real Estate ) over 10 years ago

Bill,

This is very important information for so many owners that are going through financial difficulties.  It's well-written, easy to understand and informative.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 10 years ago

I have found that one component of a successful loan mod and short sale is a very organized kit that has a very detailed hardship letter, financial analysis, documentation, a value approach, a short sale net sheet, a foreclsoure net sheet and to have detailed communication. A streamline submission makes for a successful modification and/or short sale. Peice mail is the lenders nightmare and gets passed around as its not a soon, certain, positive feel that it will ever get done.

Bill Black

 

Posted by Bill Black- America One Finance over 10 years ago

Bill,

 

There is some good, basic information here regarding short sales.  keep up the good work.  I would like to point out however, that you may want to change your numbers in your example.  If a seller owes 500K, and the property sells for 450K, the bank does not take a 50K loss.  More than likely, the bank will NET somewhere around 420K.  That's a 70K loss.  Why?  Don't forget that purchase price and lender net are two seperate things.  Most agents make the mistake of trying to negotiate the purchase price with the lender and not the net.  The net is purchase price minus all selling costs such as commissions, seller closing costs, taxes, title, liens, etc.  Not taking this into account is why many agents go to the table to close and find out that not only does the buyer have to bring cash, but there is little or no commission as well.  Why?  It was never figured into the deal.

short_sale_expert.activerain.com

Posted by Anonymous over 10 years ago

Bill, great solid info.

SW Florida was one of the areas in the country to go into the tank first. We have been dealing with short sales for 2 plus years now. I'm sorry to say our Board of Realtors was the first board in Florida to have an addendum for our contracts in regards to Short Sales. Kudos to our Board but this is not where any of us want to be.

Here is what I've seen. The banks and their mitigation departments are woeful. They are getting a little better but it is sometimes necessary to offer your first born to get in touch with the right person to get the right answers. Here is what I find mind blowing. In my experience a bank would rather NOT reconfigure the loan to help the homeowner with their primary residence loan (investors, sorry this is not for you). I also have the distinct feeling that the banks would rather go to foreclosure than get the short sale done. They manage to put silly road blocks in your way to accomplish the sale. Also it depends on the loan as to how much help you get. If you have an FHA loan they will set the price for the short sale. If you have VA they just say "bring us an offer". both are a little unnerving but that is the rule of the road.

We need to have mental health counseling for those dealing with Short Sales. It tests your patience, character and grit. Keep the info coming! and hats off to those who stay the course for their clients.

Posted by Lynn M. Bower, PA, ABR, GRI, RSPS, AHWD, PMN, CNE (John R Wood Realtors) over 10 years ago

Hi Bill,

Great Post!  I have always wondered about short sale and now you have explained it in detail.

Thankfully up here in the Toronto area of Ontario, Canada, we don't have many foreclosures.  Our mortgage remedy is Power of Sale. 

Our marketplace is starting to soften considerably, but hopefully we can avoid the deep recession you have been experiencing in the US.

I wish you all the best!

Mark

Posted by Mark Argentino over 10 years ago

Brett - It is great that you are tryingto help home owners as well. Keep up the good fight.

Andy - Thanks for all the information it is excellent.

Jeff & Christine - Thanks for your compliments. I tried to make this an easy read.

Bill - I would agree that all the information you mention is worthwhile to provide in order to expedite a short sale.

Short sale expert - You are correct. Thanks for pointing out my blunder. I do realize that the bank is only interested in the net. I would probably go back and edit that:)

Lynn - I would agree with you that the banks have less than stellar communication skills. The problem is that most of them are under staffed and over loaded. It could take for ever for them to dig out of this short sale mess.

Mark - It seems no one around the globe is immune to the financial problems. Lets hope the future brings better times.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill, another excellent way to inform your consumers.  People need to learn about their alternatives.  It is so rough here right now, I would reblog it if you and I believed in reblogging :)

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) over 10 years ago

Bill

I also think this was a great explanation. We have done numerous short sales and when the Realtor is educated it is wonderful. We get the HUD sheets done for the agents and are able to make quick changes to them when needed. As was noted by other agents, it can just take a while to get them done.  Thank you Bill

Posted by don juan over 10 years ago

That's is some great information Bill. With loan modification those late pays can be change to paid as agreed. In most cases the Reporting Agencies don't follow the proper procedures in filing late pays. I would love to tell you more. Give me a call or drop a line or two ad I will go over everything with you.

Posted by Greg Morris, Build Wealth With Greg (GGM Marketing) over 10 years ago

Bill, keep sending out the good information that there is help out there!  People get so wrapped up and depressed they do nothing which makes things worse.  Once they get thru this step, then they have to deal with the bank itself - that outcome is another story for another post.

Posted by Lyn Sims, Schaumburg IL Real Estate (RE/MAX Suburban) over 10 years ago

Bill so many homeowners find themselves in this situation.  As you explained foreclosure and short sales also affects the neighbors.   Your wellwritten post should help many to  seek help and avoid this situation.  Yes banks don't want to own real estate they would prefer to work with the home owners.

Posted by Jennifer Fivelsdal, Mid Hudson Valley real estate connection ( JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571) over 10 years ago

Renee - If you want to re-blog it. I will turn it one for you:)

Roni - Trying to do a short sale when you don't know much about them would be a big mistake. Selecting a good Realtor should always be a priority for a seller, short sale or not.

Greg - thanks for dropping by and commenting on short sales and loan mods.

Lyn - I hope I will be helping a few more sellers in the future with their short sale.

Jennifer - Thanks for the compliments on my article. There are quite a few who do nothing until it is too late. I hope can help a few home owners avoid this situation.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

A short-sale or loan modification is great. If you can get it! I've had more contracts that fell through not because the buyer could not get financing but because I could not get a short-sale payoff for the seller.

I find it amusing how CNN, MSNBC and everyone says "facing forclosure? Sell your house with a short-sale!".  Maybe its just down here in the Dallas-Ft.Worth area but I sometimes find trying to obtain a short-sale payoff like pulling teeth without Novacaine.

I can't tell you how many times I have had lender closing docs on my desk just waiting to close and not being able to because the lender refuses to issue a short-sale payoff.

And its not just homeowners behind on their mortgages due to being upside-down or buying more house than they could afford, taking DPA, or ARM mortgages, etc. Two of my closings were for couples getting divorced and neither one could afford the mortgage on just the one income.

But I have at the same time come across unscrupulous realtors who search the deed records to find homeowners in forbearance, contact them, get them to quit-claim the home to the realtor, the realtor finds a buyer and trys to sale the house at fire-sale prices. Obtaining a short-sale payoff from the lender by submitting a redicoulously low price for the home, then trying to "flip" the house to another buyer and not letting me know about the first transaction, there-by scamming the homeowner's lender and trying to pocket a large sum of $$ by way of seller proceeds for himself.

I had a lady in my office crying because her realtor tried to do this to her. She was getting divorced and had to move into a 1 bedroom apartment with her mother and 2 small children. I tried to obtain a revised payoff from her bank, telling them that her realtor was trying to "flip" the house. He had submitted a contract to her bank for a sale price of $50k. But the contract that I had was for $85k with another buyer. I only learned of the discrepency when I finally received the banks payoff and it was only for $42k. I contacted the bank to ask why it was so low. I sent them the correct contract and spoke to the homeowner who fired her realtor. The end result was that I nor the homeowner could get her lender to revise the short-sale payoff. We did not close and the lender forclosed on the home anyway. Damaging this lady's credit.

Post note: Her realtor was renting the homeowner's house during this process as she had already moved in with her mother. She found out about this when she received a utility bill for over $800. She was crying in my office as she showed it to me stating that when she and her husband lived there with her 2 children the most they ever paid for utilities was $380.

Posted by Kelly Caskey, Sr. Escrow Officer, Universal Land Title of North over 10 years ago

Kelly -  there is no doubt many types of horror stories with what is going on with short sales, foreclosures, ect. Like anything else in life finding people you can trust is important. I know there are plenty of examples of pulling teeth when it comes to navigating the waters of a short sale. I don't think anyone has ever recognized the banking industry as a group of geniuses. I know banks are understaffed and over worked with more than they can handle but it is examples like yours of being at the very end and not being able to get a payoff nerve racking. I feel your pain.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill. excellent article that certainly tells it like it is. Unfortunately, here in CA at least and I assume in other parts of the U.S., the banks are very slow acting on Short Sales which hinders the sale of the house. Many times, buyers don't want to wait out the 90 days to find out if their offer has been accepted. And many times we see that if the bank had only accepted that offer instead of going to foreclosure, they would have lost much less money. 

Modifications have been something of a misnomer here as well. It's a shame that the banks refuse to speak with homeowners unless and until they miss house payments. There are many homeowners who value their credit but are forced to miss payments before the lender will even speak about loan modifications.

Somewhat bleak...and needs improvement. Hopefully, with more restrictions from Congress on this bailout money, we might see a more valuable worthwhile help for the homeowners in trouble.

Posted by Gena Riede, Real Estate Broker - Sacramento CA Real Estate (916) 417-2699 (Riede Real Estate, Lic. 01310792) over 10 years ago

I have been doing reverse mortgages for 4 years and have been able to help many seniors that find themseleves in this situation. In many cases there is just enough to payoff the existing mortgage and in some cases I have been succesful in getting the bank to take less to avoid foreclouser.

For those of you that do not know what a reverse mortgage is, it is a program that allows seniors over the age of 62 to access a certian amount of the equity in the home withiut having to make a minthly payment as long as the remaine in the home as the primary residence.

I would be happy to speak with anyone who would like more information.

Here at Wells Fargo I have seen a great deal of interest in this product  during these troubled times.

 

Peter

Posted by Anonymous over 10 years ago

I'm having a senior moment I forgat to give my info

peter.j.napoli@wellsfargo.com

Posted by Peter J. Napoli over 10 years ago

Great Post, and glad to see this information getting out there to aid distressed homeowners. Many times, as noted in the many replies to this post, the lenders are not willing to work with the homeoweners because they are deluged with requests, or demonstrate no sense of urgency through the process.

Which is why we now offer attorney facilitated forensic loan document audit and loan modification program. Our affiliated attorney's, who specialize in real estate law, can leverage the lender, encouraging a much swifter and amenable negotiation and solution for the distressed homeowner.

dee.hoffman@national-credit-alliance.org

Posted by Dee E Hoffman over 10 years ago

54 comments without being featured... pretty good there, Bill!  'Shows the interest in this topic, and the nature of the comments makes it obvious that your explanations are much appreciated.

Posted by Margaret Woda, Maryland Real Estate & Military Relocation (Long & Foster Real Estate, Inc.) over 10 years ago

Bill,

Thanks for telling me to read the post. This was EXCELLENT.

The reality is that if a buyer buys a shortsale instead of a foreclosed property sometimes it is easier on the buyer.

YOU MAY ASK WHY?

Answer is simple ofter on the foreclosed properties the titles are a mess due to the foreclosure and often the bank selling has hired a MASS PRODUCTION LAW FIRM in Boston that have no desire towards customer satisfaction. This often is frustrating to the buyers since we can not get answers out of the sellers attorney's. In the cases of a short sale there is less title issues involved and more of a sense of urgency for timing by the seller and the bank holding the property. Just my thoughts.

Posted by Edward moloney, Loan Officer Providing 5 STAR SERVICE (Edward Moloney Loan Officer GMH Mortgage Services) over 10 years ago

Peter - Thanks for mentioning there are option with reverse mortages as well.

Dee - Thanks for providing a link to your services.

Margaret - I was kind of surprised this was not featured as well. It has already been viewed by over 1900 people in 24 hours!

Ed - I have not experienced this. In fact I have never seen a mortgage holder in a short sale and the term "sense of urgency" been mixed together. I wish this were the case. There would be so many less complaints.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

So great of you to put this information out there.  People going through confusing times might start out on the internet to find information or solutions during this difficult time vs talking with someone first.  With the lack of good information on the net or local experts in this field, too much time can go buy which can lead to the worst.  You're blog is so diverse and resourceful.

Amber

Posted by Jason & Amber Gardner, We're Committed to Your Success! (Hasson Company, Realtors) over 10 years ago

Amber thank you very much. I appreciate the compliments. Thanks for commenting.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill,

Great article. Very well written and full of facts.

I wanted to bring to your attention that when a short sale happens and the financial institution settles for less than the full amount owed that can be a real negative on the owner's credit report.

Here's why: Depending on the financial institution, it can be reported as "settled for less than the amount owed" and/or "past due amount still owed".

Either way, it will drop the credit score and be a blemish on the report until removed by the assistance of an attorney well versed in credit law, or going beyond the statute of limitations as stated in the Fair Credit Reporting Act.

You are definitely well versed in the Real Estate market. Best wishes for your continued success.

 

Robert Landreth

Posted by Robert Landreth (National Credit Management Association) over 10 years ago

Hi Robert - Thanks for your comments. I do realize that a short sale does have a negative impact on a persons credit and their ability to get financing for a new home. I guess there should be consequences for a relief of debt and that happens to be one of them.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill,

Great that you took the time to really write out a thorough and easy to follow explanation.  Foreclosure is serious and when it is coupled with the other problems that lead to foreclosure, high debt, job loss, divorce, it can be devastating.  Consumers need really Just the Facts in a straight forward manner to realize they have choices.

This will also be a great resource article for you for prospects in the future that you can point toward for information as well.  Great work here.

Posted by Rebecca Levinson, Real Estate Marketing and Online Advertising Consultant (Real Skillz-Clear Marketing for Your Real Estate Vision) over 10 years ago

Bill, as usual, a solid and informative post !!! So true that the foreclosures affect everyone.  Short sales and loan modifications are 2 great alternatives.  We have positioned ourselves to be short sale experts in our area.  In fact, we just had one of short sale listings get approved this past week !  So hopefully the buyers mortgage goes through and all is good !  Great post - will flag for a feature.

Posted by The Somers Team, Real People. Real Dreams. Real Estate. (The Somers Team at RE/MAX Access) over 10 years ago

Great information shared!  I think you will see that "Short Sales" will move more quickly if the package of information is complete and convincing that the homeowner deserves a short sale approval since Fannie Mae, Freddie Mac, HUD has increased their incentives to their mortgage servicers for approval up to $2200 per deal.  YEA! Plus don't forget to include in your package of information additional supporting documentation such as past due utility bills, copy of the divorce decree, copy of credit card bills showing them past due and charges for daily living expenses etc.   I have published a 110 page book "A Road Map In Saving Your Home" that has 90 loss mitigation contact numbers, description of all workout options, where to file a complaint, trusted resourses, forms, checklist etc.  If interested, shoot me an email CathyMcDaniel@AmericaREU.com. Good luck everyone in helping your community avoid foreclosure.

 

Posted by Cathy McDaniel over 10 years ago

Bill, I hope many, many consumers see this.  Some are so afraid and don't know there's any help--so they do nothing and lose their home.  There IS help and I hope they get it.  Great post.

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 10 years ago

Cathy - Thanks for your comments on avoiding foreclosure. I mention some of these things in the article. I did not here about the increased incentives for closing...thanks for the info.

Carole - Thanks. There are options for people not to lose their home.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

It is a great blog to read for people who facing forclosure, default in mortgage payment. I am also working with short sale clients who facing forclosure. Can I reblog yours in my web?

Posted by Kenneth Young over 10 years ago

Kenneth - You can certainly link to this post in your blog but do not copy and paste this please.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Thanks for the information. I am in the moving and junk removal business. Trying to get connected with REO's and Investors. This information helped me out tremendously. I need to understand the process.

Posted by Raleigh NC Movers Professionals Cary NC Local Movers (Furniture Cab) over 10 years ago

William good luck with your business and I am glad I was able to help you understand a little more about short sales.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill,

This is the best explanation I have heard on the process - great writing! Thank you for taking the time to spell out the steps in plain English! Great post. Merry Christmas to you and your family!

Posted by Dorie Dillard CRS GRI ABR, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.750.6899) over 10 years ago

Dorie - Thanks for the compliments on avoiding foreclosure. I am glad you have found it to be clear and concise.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Great Post! Thanks!

Glen

San Diego Short Sale Experts

Posted by San Diego Realtor, Glen Henderson, San Diego Realtor & Broker Associate (Premier Homes Team, a division of Big Block Realty, Inc) over 10 years ago

Thanks Glen. As a Short sale expert I am sure this all makes sense to you.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill - This is a thorough, easy to understand explanation of the options available to strapped homeowners.  Unfortunately we are still seeing short sales that are not going through due to the extreme slowness of the banks to respond. 

Posted by Pam Dent, REALTOR® - Charlottesville Virginia Homes / Horse (Gayle Harvey Real Estate, Inc.) over 10 years ago

Pam this is a common problem because many of the banks are just not properly staffed to handle all of them. It would be great to see some kind of goverment funding that would help the banks costs involved with hiring additional help.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

I saw your blog posting about foreclosed properties. We offer a great tool to help you in competitive REO listings. www.foreclosurefeedback.com . The Asset manager's can login and see all of the feedback on their REO properties, see what you are doing to market them and print reports to document the need for price reductions. Call in to sign up instead of online and tell them Rick said to give you the first 90 days for free to try it out at 858-270-1055 ext 113. If your competition doesn't offer this, you will definitely have a leg up on them. Good Selling!

Rick

Posted by Rick Bengson (Showing Suite, Inc.) over 10 years ago

Nice cover on short Sales and loan modifications.. We've been doing short sales and are increasingly coming across a number of people who need to sell that tried a loan modification first only to be denied (or the terms just were not favorable) after trying this route for several months... 

 

 

 

 

Posted by Paul Francis, Las Vegas Real Estate Agent - Summerlin Homes (Francis Group Real Estate) over 10 years ago

What a well written article.  It was new and fresh even though I knew all about the process.  I love how you explained things.  

Posted by Maya Thomas, Broker, Please see my client recommendations. over 10 years ago

Maya - Thanks for you comments on my article about avoiding foreclosure through a short sale or loan modification. There more people that can be helped the better. Many home owners don't know what to do a just let their home go to foreclosure.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

An informative blog Bill!  I like to note that the Department of Financial Institution advises homeowners to assure their loan modification provider is licensed as a loan originator prior to using any of their services.  Its recommended that homeowners verify a license at http://www.dfi.wa.gov/.  Through the process of loan modification or short sale, knowing all the options available is essential, along with finding a legitimate, licensed and well-vouched-for company. 

Ben M.

Posted by ratemodify.com modify (www.ratemodify.com) about 10 years ago

Bill, I read your article ad enjoyed it. I was recently offered by a short sale company a 30% commission for being a Realtor for them. It was a lead through Activerain. I thought this was a misprint so I sent an E-mail.

But it was not and here is the response:

 Hi Paul, That is correct. We offer 30% of the commissions. We are providing the lead, you have possibilities to double end, and you have possibilities to gain more prospects from the listing. Please let me know if you are interested. Thank you, Marizol Moreno Short Sale Processor / Negotiator The Williams Law Center Direct: (323)580-2437 Fax: (800)673-7319

 

Sorry but I work hard for my money so I was not about to give up 70% of my commision. Amazing! Needless to say I don't think I will be a Realtor for this company...

Posted by Paul Mee (Sun Homes Realty) about 10 years ago

Paul that is pretty crazy. I wonder what kind of company they are?

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) about 10 years ago

when buying a short sale approved home what is the average time frame for the entire process, seems the banks move at a snails pace, we are attemting to buy and are moving into month number 3. Len

Posted by len almost 10 years ago

Len - The banks do move at a snails pace. When you say short sale approved home do you mean someone one trying to get a short sale approved? It is much more rare to see a home already short sale approved when it goes on the market. I do not know an exact average. A lot depends on the lender. Some are much worse than others. Unfortunately you could be waiting a few months or as long as a year or more. I know this sounds shocking but it's true.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) almost 10 years ago

This blog does not allow anonymous comments