Greg Olson, REMAX Suburban

You  Have Options!!

Navigating Short Sales: What to Do When the Sale Price Leaves You Short

If you're thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won't cover your total mortgage obligation and closing costs, and you don't have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as:

•·        Refinancing your loan at a lower interest rate

•·        Providing a different payment plan to help you get caught up

•·        Providing a forbearance period if your situation is temporary

When a loan modification still isn't enough to relieve your financial problems, a short sale could be your best option if

•·        Your property is worth less than the total mortgage you owe on it.

•·        You have a financial hardship, such as a job loss or major medical bills.

•·        You have contacted your lender and it is willing to entertain a short sale.

2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional* and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won't try to take advantage of your situation or pressure you to do something that isn't in your best interest.

A qualified real estate professional can:

•·        Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).

•·        Help you set an appropriate listing price for your home, market the home, and get it sold.

•·        Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).

•·        Ease the process of working with your lender or lenders.

•·        Negotiate the contract with the buyers.

•·        Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can't sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale "package" that accompanies any offer typically must include

•·        A hardship letter detailing your financial situation and why you need the short sale

•·        A copy of the purchase contract and listing agreement

•·        Proof of your income and assets

•·        Copies of your federal income tax returns for the past two years

4. Prepare buyers for a lengthy waiting period. Even if you're well organized and have all the documents in place, be prepared for a long process. Waiting for your lender's review of the short-sale package can take several weeks to months. Some experts say:

•·        If you have only one mortgage, the review can take about two months.

•·        With a first and second mortgage with the same lender, the review can take about three months.

•·        With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender's loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

5. Don't expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

•·        You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can't pay back the balance, talk with your real estate attorney about your options.

•·        Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.

•·        Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA. 

Greg Olson/REMAX Suburban

Cell (847) 977-7024

Tips for Finding the Perfect Neighborhood

Your neighborhood has a big impact on your lifestyle. Follow these steps to find the perfect community to call home.

•·        Is it close to your favorite spots? Make a list of the activities - movies, health club, church, etc. - you engage in regularly and stores you visit frequently. See how far you would have to travel from each neighborhood you're considering to engage in your most common activities.

•·        Check out the school district. This is especially important if you have children, but it also can affect resale value. The Department of Education in your town can probably provide information on test scores, class size, percentage of students who attend college, and special enrichment programs. If you have school-age children, visit schools in the neighborhoods you're considering. Also, check out www.schoolmatters.com.

•·        Find out if the neighborhood is safe. Ask the police department for neighborhood crime statistics. Consider not only the number of crimes but also the type - such as burglaries or armed robberies - and the trend of increasing or decreasing crime. Also, is crime centered in only one part of the neighborhood, such as near a retail area?

•·        Determine if the neighborhood is economically stable. Check with your local city economic development office to see if income and property values in the neighborhood are stable or rising. What is the percentage of homes to apartments? Apartments don't necessarily diminish value, but do mean a more transient population. Do you see vacant businesses or homes that have been for sale for months?

•·        See if you'll make money. Ask a local REALTOR® or call the local REALTOR® association to get information about price appreciation in the neighborhood. Although past performance is no guarantee of future results, this information may give you a sense of how good of an investment your home will be. A REALTOR® or the government planning agency also may be able to tell you about planned developments or other changes in the neighborhood - like a new school or highway - that might affect value.

•·        Make personal observations. Once you've narrowed your focus to two or three neighborhoods, go there and walk around. Are homes tidy and well maintained? Are streets quiet? How does it feel? Pick a warm day if you can and chat with people working or playing outside.

Greg Olson, REMAX Suburban

5 Factors That Decide Your Credit Score

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe.  If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it's a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. The types of credit you use. Generally, it's desirable to have more than one type of credit - installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, visit www.myfico.com.

Greg Olson, REMAX Suburban

Navigating Short Sales: What to Do When the Sale Price Leaves You Short

If you're thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won't cover your total mortgage obligation and closing costs, and you don't have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

1. Consider loan modification first. If you are thinking of selling your home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as:

·          Refinancing your loan at a lower interest rate

·          Providing a different payment plan to help you get caught up

·          Providing a forbearance period if your situation is temporary

When a loan modification still isn't enough to relieve your financial problems, a short sale could be your best option if

·          Your property is worth less than the total mortgage you owe on it.

·          You have a financial hardship, such as a job loss or major medical bills.

·          You have contacted your lender and it is willing to entertain a short sale.

2. Hire a qualified team. The first step to a short sale is to hire a qualified real estate professional* and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales. You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won't try to take advantage of your situation or pressure you to do something that isn't in your best interest.

A qualified real estate professional can:

·          Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).

·          Help you set an appropriate listing price for your home, market the home, and get it sold.

·          Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).

·          Ease the process of working with your lender or lenders.

·          Negotiate the contract with the buyers.

·          Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can't sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.

3. Begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale "package" that accompanies any offer typically must include

·          A hardship letter detailing your financial situation and why you need the short sale

·          A copy of the purchase contract and listing agreement

·          Proof of your income and assets

·          Copies of your federal income tax returns for the past two years

4. Prepare buyers for a lengthy waiting period. Even if you're well organized and have all the documents in place, be prepared for a long process. Waiting for your lender's review of the short-sale package can take several weeks to months. Some experts say:

·          If you have only one mortgage, the review can take about two months.

·          With a first and second mortgage with the same lender, the review can take about three months.

·          With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender's loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

5. Don't expect a short sale to solve your financial problems. Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

·          You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can't pay back the balance, talk with your real estate attorney about your options.

·          Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2012. Be sure to consult your real estate attorney and your accountant to see whether you qualify.

·          Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA. 

The Better Business Bureau (BBB) consistently ranks contractor fraud as its number one complaint. Don't be a victim. If you (or someone you know) is thinking about hiring a contractor, please read or share these tips straight from the BBB before signing anything.
Obtain bids (from at least three licensed contractors) based on building specifications, quality of materials, labor and time to complete the project.

Ask for customer references, and be sure to contact them. If possible, check out previous work.

Contact the Better Business Bureau (BBB) for a report on the contractor and review site thoroughly for further advice.

Ask to see the contractor's pocket license and another form of ID.

Call the Contractors State License Board to see if the license is valid and if a bond is in place.

It's very important that your contractor have property damage and personal liability insurance coverage, and, if the contractor has any employees, workers' compensation. Insist that the insurance broker send you certificates of insurance.
Remember, a contractor may not ask for more than ten percent of the total contract price, or $1,000 (or two percent or $200 in the case of swimming pools), whichever is less, as a down payment. (Insist upon a lien release from all subcontractors and suppliers before you pay for any work).

Anything you sign may constitute a contract. Before you sign a final contract, be sure it includes the following:
the name, street address (not just a post office box), and local telephone number of the contractor;

if you must obtain a loan to pay for the project, that the agreement is valid only if you obtain financing at a given rate;

a written description of all work to be done, including a detailed description of the kind and quality of materials to be used;

a bid based on the job, not by the unit;

a price breakdown for both labor and materials;

starting and completion dates;

the schedule for releasing payments to the contractor;

a written statement reiterating any oral promises made by the contractor or sales representative, including any warranties on materials or labor;that the contractor will obtain the necessary building permits.
Don't sign a completion certificate until you're satisfied that the job has been completed according to the contract and inspection has been completed by local building authorities.

Lose Your Job, Keep Your Home

If you're faced with a layoff, there are ways to escape foreclosure and stay in your home.

Few words sting like the ones that inform you that you're being laid off - especially today, with jobs so hard to come by. If you're a homeowner, the blow of a job loss can be even worse.

In households with more than one wage earner, halving the monthly income can severely stretch a budget. And in households where there's one breadwinner, having zero income can be devastating. A rainy-day fund helps, but it's important to craft a plan early about how you're going to get through the rough patch.

More people are facing this nightmare today: While the volume of subprime mortgages headed to foreclosure is falling, the volume of prime, fixed-rate mortgages defaulting is on the rise, according to statistics from the Mortgage Bankers Association.

"If you don't have the prescribed three to six months income in the bank (now eight to 12 months due to how long it takes to replace that job), you're really in deep trouble with some troubling decisions to make," said Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling, in an e-mail. The NFCC is a national, nonprofit credit-counseling network.

"We always advise people to pay their living expenses in full (this includes the house payment), followed by any secured debt (usually the car payment), and then the creditors. This will keep a roof over your head, food on the table, utilities paid, medicine in the cabinet, the kids at day care, etc. Once the money runs out, no one beneath that line gets paid. However, this assumes that there's either some savings to fall back on or another income source," she said.

Between programs offered by the government and loan servicers, additional options are available for today's homeowners before they slip into foreclosure - if they speak up and ask for help. Or maybe the best answer is to start over again by cutting your losses and selling your home or pursuing a short sale if you owe more on your mortgage than your home is worth, those in the industry say.

Whichever road you choose, it's important to contact the lender or servicer as soon as you know you could have a problem on your hands - and before you get behind on your payments. The MBA has a listing of contact information for lenders and servicers, including links to Web sites that give consumers a glimpse of some of the help that is offered.

"A lot of customers call us very late in the process, and it becomes extremely difficult for us to explain everything in one shot and to resolve everything to their satisfaction," said Sanjiv Das, CEO of CitiMortgage.

Early communication is also stressed at Chase, said Christine Holevas, a bank spokeswoman. Remember also to be open and honest about your financial situation. You may think you're bettering your chances for help by fudging on income information, for example, but it will in fact slow the process down; when income is verified and is found to be false, you'll have to start over again, she said.

For help, there are counselors who will sit down with you and sort through options and paperwork. Chase, for example, has counselors at 27 homeownership centers throughout the country to assist its borrowers, Holevas said. The U.S. Department of Housing and Urban Development has a list of approved housing counselors, or homeowners can connect with a counselor through the NFCC site.

Government modifications
The solution that has gotten some of the most press this year has been the government's Home Affordable Modification Program, which lowers monthly payments for borrowers based on debt-to-income ratios. Borrowers have to successfully complete a three-month trial period before the modification is finalized.

Some homeowners are still confused about who is eligible, said Greg Hebner, president of MOS Group, a loss-mitigation service provider that works with lenders and servicers.

For one, the program "requires a hardship, but does not require you to be delinquent," Hebner said. "That is an important consumer misconception - if I'm still making my payments, there is no help for me."

But what the government does require is some amount of monthly income in the household, said Drew Kessler, director of sales for Rand Mortgage, in New City, N.Y. In a dual-income household, for example, if one person loses his or her job, a modification is a possibility. With one breadwinner, it probably isn't.

"There has to be some viable source of income," Kessler said. "If they lost wages, or found a new job, the banks will work with them."

Kessler's advice: It might be best to accept a job that pays less instead of holding out for one that is best-suited to your salary history, in order to qualify for the adjustment.

"A borrower also has to be in danger of imminent default to be eligible," Holevas said.

"They're going to take a look at what your liquid assets are," she said. "If a borrower has more than seven months worth of payments in savings, he or she is not yet in imminent danger of falling behind and likely won't be able to modify," she said.

If you do qualify, it's important to submit complete and accurate information in order for the application to move through the process without hiccups, Holevas added. If you don't, "the back and forth tends to really slow things down," she said.

"Remember, if you don't qualify for the government's program, many mortgage servicers have their own modification plans," Holevas said. "All options can be examined if you start early enough."

"Contact your lender when you think you're going to have a problem," she said, "even if you're a couple of months out from not being able to make your payment."

Other avenues
A variety of other options are available, depending on the company that services your loan and other characteristics of your mortgage.

A few examples:
- If your mortgage has been bought by Fannie Mae, there's a HomeSaver Forbearance program for those in default or if default is imminent. With HomeSaver, a borrower needs to have a willingness and ability to make reduced monthly payments of at least half of the regular payment - including taxes and insurance and any other escrow items. That period of forbearance lasts six months, during which time the servicer works with the borrower on a more permanent solution.
- If your mortgage is serviced by CitiMortgage, there is a program that allows borrowers to pay a flat $500 mortgage payment for three months after the loss of a job, said Das of CitiMortgage.
- Genworth, a private mortgage insurance firm, offers job-loss protection on some of the loans it insures, paying up to $2,000 directly to the servicer for up to six months in the event the homeowner loses his or her job. The benefit period stays in place for up to three years after the loan closes, if the PMI remains in place on the mortgage. PMI is typically required when a borrower's down payment is less than 20%. It can be canceled once there is at least 20% of equity in the home.

Cutting bait
"For some homeowners, it might make more sense to sell their home and start fresh.
Home sales are up recently in many markets, and if you're living in a home that would be attractive to a first-time buyer eligible for the government's first-time buyer tax credit, you might be able to take advantage and make a sale before the credit expires at the end of November," Kessler said.

"Maybe sell now and get yourself in a smaller property, a less costly property," he said.

For homeowners who owe more on their mortgage than their home is worth, short sales can be a viable option. In a short sale, the home is sold for less than the mortgage amount - with approval from the lender - and the difference is forgiven.

"Short sales usually take longer than a traditional sale, so borrowers might want to seek out a real-estate agent who is a certified default property expert in order to expedite the process," said Rich Rollins, president of National Quick Sale, a firm that works with the mortgage industry to get short-sale offers processed. His firm also helps match up investors with distressed properties, working out deals that allow the homeowners to give up ownership but rent their home, with the potential for them to "rent to re-own," he said.

He warns, however, to be careful of unsolicited offers of help from people claiming they can save your home, he said.

"Be very wary of people who approach you for a profit or fee upfront," Rollins said.

"You've got to be diligent because there are people out there trying to steal your money," he said. "You're already in a precarious position. Don't let people take advantage and take the money that you do have."

1. Review your current credit report for accuracy. Everyone is entitled to one free credit report per year from each of the three credit bureaus-Experian, Equifax, and TransUnion. Get a copy of your credit report and look at it for accuracy. First, make sure that the information in your file is about you and only you, not someone who has a similar name or a similar Social Security number. It is very common for your credit reports to have mistakes or incorrect information. At a minimum, make sure that the information you are being evaluated on is current and correct.

2. Repair credit report mistakes. If you find something on your credit report that is incorrect or missing, you should dispute the mistake by contacting the credit bureaus directly. All credit bureaus have their dispute procedures on their website. They are also required by law to investigate any disputed items and these investigations will usually be done within 30 days of your request.

3. Pay your bills on time. Sounds like a no-brainer, right? Payment history accounts for roughly 35% of your credit score. Paying bills on time is the most important thing to do. If you're struggling to catch up, contact your creditors to work out a payment schedule.

4. Increase the length of your credit history. This accounts for about 15% of your score. Don't cancel your old card or get a lot of new ones in a short time span because this can hurt your score.

5. Keep credit card balances low. It's a good idea to keep the balances below 25% of your available credit. Even if you pay off your credit cards every month, a high average balance will impact your score. This accounts for about 30% of your credit score.

6. Keep new credit requests to a minimum. This accounts for 10% of your score. Every time a lender runs your credit, an inquiry is recorded. If you are trying to get a loan, don't apply for new credit cards first.

7. Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.

8. Pay off debt rather than moving it around. The most effective way to improve your credit score in this area is by paying down your revolving credit. In fact, owing the same amount but having fewer open accounts may lower your score.

9. Beware credit-repair scams. By all means, don't pay someone to wipe away the negative items in your file. If they don't follow through, the damaging items will reappear in two or three months.

Clocks 'Fall Forward' for Homebuyers, as President Obama Signs Off on Extension of First-Time Homebuyers Tax Credit
November 06, 2009: 11:52 AM ET
PARSIPPANY, N.J., Nov. 6 /PRNewswire-FirstCall/ -- Following months of speculation and Congressional debate, President Obama today signed the "Worker, Homeownership and Business Assistance Act of 2009" into law, extending the popular First-Time Homebuyer tax credit originally scheduled to expire on December 1, 2009. This new legislation offers those in the process of buying a home more time to take advantage of this significant tax benefit, allowing them to claim the credit if they close on a first-time home purchase by midnight on June 30, 2010.
According to the IRS, the credit has provided a tax benefit to more than 1.4 million* taxpayers as of September 2009. The credit enables those buying a primary residence for the first time to claim 10 percent of the purchase price of their home, up to $8,000 for single taxpayers or married taxpayers filing jointly.
"This is very good news for consumers looking to purchase their first home, particularly those who are still weeks away from closing on their purchase and would likely have just missed the original deadline," said Mark Steber, chief tax officer, Jackson Hewitt. "Nearly a million and a half people have benefited from this credit, so with an additional seven months to the closing timeframe, so many more will now have the chance to benefit as well."
Earlier this month, Jackson Hewitt reminded taxpayers of the guidelines for eligibility. Details are available at http://jacksonhewitt.com/content.aspx?id=97299.
The new provisions include the following changes:
Taxpayers must purchase their home, or be locked into a contract to close, before midnight on April 30, 2010. The closing must occur before midnight on June 30, 2010.
The credit is allowed in full for those with incomes up to $125,000 ($225,000 if married filing joint). The credit is reduced for taxpayers with an income between $125,000 and $145,000 ($225,000 and $245,000 if married filing joint) and is not available for taxpayers with an income higher than $145,000 ($245,000 if married filing joint).
Taxpayers (and their spouses) who have lived in their home for five consecutive years out of the eight years preceding closing on a new house may qualify for a reduced credit ($6,500 or $3,250 for those who file separately).
More information about the extended First-Time Homebuyer credit, other home-related tax considerations and additional provisions cited in the recent act is available online at www.jacksonhewitt.com.

Visit my website at www.gregworks4u.com for continued updates!