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Bank of America Predicts more cuts to come
 Bank of America, after making their cuts elsewhere over the previous year, put thousands of employees in a single division only to help its already rocky mortgage problems. With these changes and the robo signing settlement with state attorney generals, could very well be a separating moment for the bank.
 When Bank of America took over Countrywide in 2008, mortgages have not slowed down for the bank. The only department growing at the bank is the Legacy Asset Servicing division which was established in 2011, in order to sort through delinquent mortgages and repurchase claims from investors. Bank of America relocated 13,000 employees to this particular division within the last year, which brought the estimated staff total to 48,500. During the fourth quarter alone, more than 3,700 employees were moved and 7,000 employees were cut and more predicted to come this year.
The bank estimated $4billion worth of delinquent mortgages on December 31, which was down $5.1 billion a year ago and half of the $7.6 billion in starving home loans at the close of 2008.CEO Brian Moynihan said the nearing of robo signing settlement to be made with multistate coalition of state attorneys general, the Justice Department and the Department of Housing and Urban Development just may be an uplifting moment for the bank. After one year of negotiations, HD Secretary Shaun Donovan said a settlement with the largest investors was very close.
Bank of America put aside $1.5 billion in litigation reserves which are tied directly to mortgage matters in the fourth quarter, showing a fair lending settlement made and the pending AG deal. "In hindsight we'll decide if it's watershed or not, but those programs are designed to help homeowners," Moynihan said. "These are good things. We and the rest of the industry have been trying to work this out. The question is how fast it comes. This has been a huge, huge drag for the company. This is a lot of work for a lot of people. It's difficult work because of what is involved, and we have to work through it right." Bank of America paid out $239 million in severance during the last few months of 2011, increasing from $186 million in the previous time. Thompson has stated that more cuts are to come with Bank of America staff over time.
Allie Zehring
Source:dsnews
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We have just announced several more superstar agent panelists, industry insiders, and bank asset managers to the upcoming Short Sale Symposium at Sea Conference. A couple include Vanessa Liddell, an original CDPE Trainer directly responsible for training over 7,000 agents, Marla Webb , whose was directly responsible for the disposition of over three billion in HUD assets annually, and many others. In addition, we've announced workshop topics and added many more activities to the conference.
~ March 17th-22nd porting in Ft. Lauderdale, FL ~
~ Ports of call include Belize City and Cozumel ~
I know finances may be tight right now, it is a challenging market and many agents are struggling to maintain their businesses. Make an investment in your business that could pay you back a hundred fold. I have 60-90 short sale listings myself at any given time, yet haven't talked to a buyer or seller or attended a closing in years. Let myself and others show you how to make 2012 your BEST year in real estate, and how to turn you business into a finely tuned MACHINE.
Mike Linkenauger
GROUP RATE ENDS FRIDAY FEBRUARY 17TH!
Confirmed Speakers and Panelists
(More being added)
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Harris Real Estate University |
ROSSI Speaks, Inc. |
Modern Realty Co |
REOPro Network & The Realty Association |
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Marla Webb
Cambrian Advisory Partners
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PitcherGroup |
ShortSaleSuperStars.com & Tutas Towne Realty |
Short Sale Specialist Network |
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ATG Title |
Keller Williams Realty |
Specializing in Short Sale Training & Negotiating |
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If you have questions about this event,
visit www.ShortSaleCruise.com or call us at (877)737-4903. Visit www.TheShortSaleGuide.com for more information about The Short Sale Specialist Network.
~ Follow Us ~
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| Copyright © 2012 Short Sale Specialist Network. All rights reserved. |
Smaller Services a possible result of foreclosure settlement?
 A resolution between five of the largest mortgage servicers and a multistate coalition of attorneys general could grow to consist of smaller firms; however it is not foreseen to happen before a deal be made in the weeks to come. In October 2010 all 50 state AG’s opened a mutual investigation into industry wide foreclosure practices, but evidence came to light that year of mishandled documentation and robo-signing of foreclosure affidavits with the proper review of the loan files.
 The five biggest mortgage lenders are Bank of America, Wells Fargo, JP Morgan Chase, Citigroup and Ally Financial. All of these firms combined presently service more than $6 trillion in mortgages. A reach out to the nationally chartered banks by the Department of Justice, has made an effort to bring in nine more servers to the settlement. The Office of Comptroller of the Currency and the Federal Reserve signed consent orders with those reported firms in April.
The commands became an agreement to correct the dilemmas and change processes such as installing a single point of contact for concerned borrowers and stopping foreclosure on those being deemed for a modification. HSBC, PNC Financial Services, U.S. Bancorp, SunTrust Banks and MetLife are the other nine firms being considered. "Following the conclusion of these discussions and the announcement of any such settlement with the five largest servicers, we expect that the next nine largest mortgage servicers, including HSBC Bank USA and HSBC Finance, will be approached regarding a settlement although the timing and proposed terms of such settlement discussions are not presently known," according to the filing.
Allie Zehring
Source:dsnews
How Does a Short Sale Effect Credit?
A lot of homeowners wonder whether putting up their property for a short sale is better than just allowing the financial institution to foreclose it. Some property owners even consider filing for bankruptcy in order to be relieved of their debts. Foreclosure and bankruptcy are just two of the options you have if you are experiencing a severe financial crisis. However, these two options have considerable effects on a lot of important factors in an individual’s life. On the other hand, a short sale, while still affecting these factors, has a significantly lesser impact. Deciding on whether to just allow your property to be foreclosed, to file for bankruptcy, or to perform a short sale depends ultimately on your choice as well as the value of your property. This is why it is important that you learn more about the benefits and the advantages of a short sale VS foreclosure or bankruptcy.
Factors that are affected by a Short Sale and Foreclosure
 In order to understand whether a short sale is better than foreclosure or bankruptcy, it is vital that you know the answers to the question: “How does a short sale impact credit?” It is equally important that you also learn the effects of foreclosure on credit. Going over the benefits and the advantages of a short sale over foreclosure will help you decide on the best option for you. While the main question that you should ask is: “How does a short sale impact credit?” you should also take some time to review the other factors affected by performing this type of sale on your property.
Here are the most important factors affected by a short sale:
• Your credit score
• Your credit history
• Future loan application
• Deficiency liability
• Deficiency judgment
• Deficiency amount
On the other hand, foreclosure affects the following factors:
• Your credit score
• Your credit history
• Your credit reports
• Future loan application with a mortgage company
• Future Fannie Mae loan application for a primary residence
• Future Fannie Mae loan application for a non primary residence
• Deficiency liability
• Deficiency judgment
• Deficiency amount
Short Sale Effect on Credit Score
Now that you have a basic understanding of the factors in your life affected by a short sale and foreclosure, it is time that you compare the advantages of the former over the latter. The first question that you should know the answer to is: “How does a short sale impact credit score?”
A short sale, while still affecting your credit score, has a significantly lesser impact compared to foreclosure. Without any records of late payments, your credit score may only be impacted with a fifty point deduction. Late payments have one of the most significant negative effects on credit scores. The average points that you may lose over late payments are the following:
• 40 up to 110 points for late payments of 30 days
• 70 up to 135 points for late payments of 90 days
Foreclosure, on the other hand, can lower your credit score for more than 300 points. If your home has been foreclosed by the financial institution, this is going to stay on your credit record for seven years
Short Sale and Foreclosure Effect on Credit Reporting
The next question that you should ask is: “How does a short sale impact credit history?” If you put up your property or your home for a short sale, this is not going to be listed as an item on your credit history. After a successful short sale transaction, the company handling your mortgage will list the sale as “Settled in Full,” or as “Paid as Negotiated,” or as “Paid.”
A foreclosed property or home will be detailed on your credit history and will remain there for 10 years. This is also going to be permanent in your county’s public records.
Short Sale and Foreclosure Effects on Employment
Now that you have answered your main question of “how does a  short sale impact credit?” it is time to take a look at its effects as well as the effects of foreclosure on your employment. A short sale, as discussed above, does not have a credit reporting item. This means that it usually does not have any bearing on your current or future employment. On the other hand, foreclosure, as it is detailed on your credit reports and stays on your history for a long time, has a great impact on your current and future employment. Most employers check the credit history of their employees and their applicants. This means that if you are currently employed, your employer has the right to either re-assign you or even terminate you.
Short Sale and Foreclosure Effects on Future Loan Application
You might be wondering “how does a short sale impact credit and does it affect future loan application? The answer is yes, but only to a minimal. A future loan application with a mortgage company does not require you to declare that you have performed a short sale on your home. On the other hand, foreclosure affects the interest that you will receive in qualifying for a loan with a mortgage company. If you are going to apply for a primary residence backed loan with Fannie Mae, you will be eligible to do so after two years. With a foreclosure, you would have to wait for more than five years to qualify. After a successful short sale transaction, you also would be eligible for a non primary residence backed loan with Fannie Mae after two years. With foreclosure, you would have to wait for seven or more years.
These are the answers to your question: “how does a short sale impact credit?”Now that you also know its benefits and advantages over foreclosure, you can now decide on whether putting up your home for a short sale or allowing it to foreclose is the best option for you. It is always advisable to contact a Short Sale Specialist Realtor in order to better understand the ins and outs of a short sale. Our agents are highly experienced and well determined enough to successfully complete your short sale and get you back into the life you've worked so hard for!
Benefits of a Short Sale VS Foreclosure
You might be facing a possible foreclosure on your home or even bankruptcy that has led you to the question of whether to just walk away and allow the lender to foreclose your property. However, allowing this to happen will greatly impact a lot of factors in your life, most especially your credit. This is why it is important that you should consider short selling your home.
 There are many advantages and benefits of a short sale VS foreclosure. The most important benefits of a short sale vs. foreclosure are related to your current credit, your future credit, your employment opportunities, and your deficiency liability. If you are still considering foreclosure rather than short selling your property, here are some of the benefits and the advantages of a short sale that might change your mind.
Benefit # 1: A Short Sale Has Lesser Impact on your Credit Score
A short sale, while still affecting your credit score, only has a minimal effect on it. A fifty point deduction from the credit score usually follows a short sale on a property. Late payments usually have the biggest negative impact on credit scores after a short sale has been performed. These can affect your credit score with a thirty point deduction, or even more.
On the other hand, if you allow foreclosure on your property, your credit score will suffer from a three point deduction or more. This will even stay and reflect on your history for ten or more years. This is one of the reasons as to why you should consider short selling your property rather than just awaiting foreclosure.
Benefit # 2: A Short Sale is usually reflected as “Paid” on your Credit History
One of the greatest advantages and benefits of a short sale VS foreclosure is that this does not have a credit report that shows up on your credit history. After your property has been sold, the company who handles your mortgage will report this on your credit history as “Paid as Negotiated,” “Settled in Full,” or simply as “Paid.”
However, with foreclosure, this will be detailed on your credit history and will stay on your credit record for ten years. Aside from these, it will also be permanently recorded in your county’s public records. This disadvantage of foreclosure should be another reason as to why you should stick with a short sale rather than foreclosure.
Benefit # 3: A Short Sale usually does not have a bearing on your Current Employment
Another of the greatest benefits of a short sale VS foreclosure is that this is not reported as an actual item on your records. This means that it usually does not have any bearing on your current employment.
With foreclosure, you are already considered as an individual in a sensitive situation. This can have a negative effect on your current employment. Your employer reserves the right to check your credit scores and will do so actively. Foreclosure is usually a ground for termination or re-assignment.
 Benefit # 4: A Short Sale usually does not affect your Future Employment
As discussed above, a short sale is not reported as an actual item on your credit record. Short sales usually do not affect the future employment of individuals who have performed a short sale on their properties. This means that you do not have to worry about not being qualified for future employment.
On the other hand, foreclosure is one of the most negative factors that can affect your future employment. As this is one of the factors that most employers look at, if your property recently faced a foreclosure, you might be disqualified from the job that you are applying for.
Benefit # 5: A Short Sale does not affect your Application for a Future Loan with a Mortgage Company
If you would like to apply for a loan with a mortgage company even after performing a short sale on your property, you can do so without worrying about your application. This is because you do not have to declare that you have recently put up your home for a short sale. This is one of the advantages and benefits of a short sale VS foreclosure.
On the other hand, your application for a loan will be affected by foreclosure. One of the questions that you would have to answer in applying for a loan with a mortgage company is “have you had property foreclosed upon, or given title, or deed in lieu thereof in the past seven year?” If your answer is “yes,” then you are required to offer an explanation before approval. With a yes, the interest rate that you will receive with the loan will be affected.
Benefit # 6: A Short Sale results in a Lower Amount of Deficiency
Another of the greatest advantages and benefits of a  short sale VS foreclosure is that you only have to suffer from a lower amount of deficiency. With a short sale, your property may be sold at its market value, or near its market value. In most cases, this value is greater than the amount that you will get with a foreclosure. The best thing about this is that, at most times, the deficiency is usually forgiven. Short sales also help cut the losses of your lenders, so if you want to do the ethical thing, you should choose to put up your property for short sale.
With foreclosure, your home will be subjected and presented to a public sale or auction. If your home will not be sold through these processes, it will go through the REO system of the bank. This does not only results in a longer processing and selling time of your property; it also has the potential of being sold at a significantly lower amount and a higher deficiency.
These are just some of the advantages and benefits of a short sale VS foreclosure. Taking a closer look at all these benefits of a short sale VS a foreclosure will help you determine the best path to take. If you care about your credit score, your records, and your employment, you should definitely consider short selling your property rather than just allowing it to go on foreclosure.
For more information on Short Sales VS Foreclosure or to find a short sale Realtor contact a Short Sale Specialist now 1-877-737-4903!
HAFA Short Sale Program
 Letting go of the loan that you can no longer afford rather than facing the devastating effect of a foreclosure seems a wise decision at this time of economic crisis.
Precisely the reason that the government-sponsored Home Affordable Foreclosure Alternatives exists to help homeowners be cleared of their debts and get incentives that they may use to move out.
One of the alternatives offered by HAFA is a short sale program where homeowners, assisted by a mortgage servicer, lists and sells his mortgaged property at proceeds less than the total amount due on the mortgage. Compared to a traditional short sale, the HAFA short sale provides incentives to those who will participate. Taking advantage of HAFA short sale allows a homeowner to be cleared of all remaining debt and obligations on his first lien mortgage, plus becoming eligible for a $3,000-incentive to help with moving expenses. This is the government’s way under President Obama’s administration to protect the Housing industry as a whole.
The other alternative is the Deed-in-Lieu of Foreclosure. This is where the homeowner voluntarily transfers the ownership of his property to the servicer. The focus of this concept is on the short sale program. As a real estate company, we help homeowners throughout the country with mortgage short sales. When homeowners need help, we connect them to local real estate agent that will assist them at no cost. The Short Sale Specialist Network is a real estate company with extensive experience when it comes to short sales.
The number of short sales keeps increasing either because many succumbed to financial difficulty or most likely many have started to see the advantage of a short sale versus foreclosure. Early this year, the US government passed a revised HAFA policy and set of guidelines which sought to make the process to close a short sale faster and more efficiently. The government wants to make things easier for homeowners who want to make use of the short sale compared to when they are taking advantage of a traditional short sale.
The HAFA short sale can be of assistance when  shifting to a more affordable housing. Granting you had the chance to modify your loan yet you feel you still could not afford the mortgage fee, HAFA short sale program can be the friend you can turn to.
HAFA Short Sale Program vs the Traditional Short Sale
The HAFA short sale program and the traditional Short Sale differ in many aspects.
- In traditional short sale, investors assess each homeowner on a case to case basis compared to HAFA short sale, which imposes specific qualifications such as the property must be the homeowner’s primary residence, he must have a loan balance under $729,950, the monthly mortgage payment must be greater than 31 percent of his monthly income and the loan he wants to satisfy is a first lien mortgage that originated prior to January 1, 2009.
- Traditional short sale starts right after the property is listed for sale and an offer is received while the HAFA short sale starts prior to the listing of the property for sale.
- In the traditional short sale, all pertinent documents such as the initial offer, all financial documents, loan pay-off, completed appraisal, and investor review must be completed first prior to the decision. In HAFA Short Sale, all documents and other preparations are also done prior to obtain short sale approval and be able to list your property for sale.
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Traditional short sale requires cash or promissory note from homeowners while the investor maintains the right to pursue a deficiency judgment that is completely opposite from the HAFA short sale because there was no requirement of promissory note, no seller cash, and no pursuing of a deficiency judgment.
- Based on observation, the HAFA program has a higher success rate of closing compared to traditional short sale. Unlike traditional short sale, HAFA short sale provides $3,000 incentives to homeowners to help them relocate.
HAFA Short Sale Program: How to Qualify
Before you consider yourself into the HAFA short sale program, you must know first is you are qualified for HAFA in general. You can qualify for HAFA if you do not qualify for the Home Affordable Modification Program (HAMP), if you did not complete the HAMP trial period, if you are delinquent even after the HAMP modification or if you request for the HAFA short sale or Deed-in-Lieu of Foreclosure. Servicers though have a marching order that before considering the homeowners for HAFA, he must be considered first for HAMP.
If you can qualify for HAFA, now let us see if you can qualify for a HAFA short sale. You may be eligible for HAFA short sale if you have the following requirements:
- The subject property is where you lived for the last 12 months.
- You have a documented financial hardship. A documented financial hardship is where the borrower has represented that he does not have sufficient liquid assets to make the monthly mortgage payments. The US government policy on HAFA further provides that citing a Permanent Change of Station order as the basis for their financial hardship when is accepted even if his income has not decreased as long as the borrower does not have adequate liquid assets to make the monthly mortgage payments.
- You have not purchased a new house within the last 12 months.
- The first mortgage obtained on or before January 1, 2009 is less than $729,750.
- Your name must be cleared of any conviction from felony larceny, theft, fraud or forgery, money laundering and tax evasion related to a mortgage or real estate transaction within the last 10 years.
HAFA Short Sale Program: Third party mortgage
 To complete a short sale, you must first release your other loans. You may ask the assistance of your servicer to negotiate with your other loans, however this is typically a requirement of your Realtor or negotiator. HAFA also provides some funds to pay off other loans and liens against the property.
HAFA Short Sale Program: Time line
HAFA sets a deadline to make the process more efficient. The evaluation of homeowners by mortgage servicers must be done within 30 days after determining that the former is eligible for the program. After determining the eligibility of the homeowner, the servicer shall send a Short Sale Agreement that will serve as the contract between the homeowner and the servicer.
The SSA contains the list of price approved by the servicer, the period that the property will be marketed for sale, a provision that the homeowner will be released from all future liabilities after the property is sold, the amount of the monthly mortgage to be paid by the homeowner shall pay during the term of the SSA and the instructions on how to get the relocation incentive.
It is important to know that the property cannot be sold to a relative of the homeowner or anyone else close to the homeowner like his business partner. Since in short sale the property is sold at a lower price than the mortgage balance, the amount of debt forgiven might be treated as income that will be taxed.
Bank of America Short Sale Information
 A short sale is one of the offerings that Bank of America provides as an option among its borrowers, and as of date, many people are taking advantage of this type of alternative. The current economic climate in the country, as well as in other parts of the world, has made it difficult for some homeowners to keep up with their mortgage payments.
Financial problems have increased dramatically from job layoffs and other problems in obtaining a sufficient amount of income to survive. Most people have been hit by the financial crisis and some of them are suffering right now as they face foreclosure of their homes. Bank of America is now offering short sales as a viable option for those who want to avoid foreclosure of one of the most important assets in people’s lives.
Short Sale vs. Foreclosure
A Bank of America short sale is a highly recommended option for those who want to avoid the hassle of a foreclosure, and even be eligible as well for cash incentives. When you opt for a Bank of  America short sale, you will have more control over the sales process as opposed to the financial institution taking over the whole process. You will have peace of mind because you will be able to know and determine who is going to purchase your property, and also plan your relocation after the sale as well.
Since foreclosure is not involved when you choose to short sale, you will be spared from any embarrassment that has always been attributed to a foreclosure. You will also have a great chance of buying another home in typically only two years after you have completed your short sale. As for foreclosures, not only will you suffer emotional trauma and social stigma, you will also have bad credit history, restrictions in purchasing another home, and a purchase and mortgage ban for at least five years.
Requirements for Bank of America Short Sales
If you want to avoid foreclosure, it would be a wise decision to opt to go for Bank of America short sales. It is a very simple process that does not require much from the seller. All that you need to  submit are Bank of America short sale package form, statement of account from banks, tax returns, W2 form, pay slips, authorization from third party, hardship letter, and other pertinent documents that Bank of America may ask from you if they deem necessary.
There are a few things that you have to remember when you apply for the Bank of America short sales. Your existing loan should not be an FHA or VA loan. The seller also cannot get a Bank of America short sale if the seller is not under the HAFA short sale program. These are just a few of the disqualifications that you need to know. However, try to talk to a bank representative in Bank of America just to make sure that you are 100% qualified and can take advantage of the short sale. It is better that you ask these things before you proceed with your application so as not to waste time or effort in this endeavor.
Process for Bank of America Short Sales
 Representatives from Bank of America will take all the information about the property from the seller as well as from the real estate agent. The representative will also provide a negotiator for the short sale. The negotiator will then contact an agent who will perform the appraisal and provide a Broker Price Opinion. The negotiator will also look at the documents as well as follow up for other information that may be needed for the short sale.
Internal payoff numbers will be ordered then a counter offer will be provided. A file will then be provided to all parties in the short sale negotiation and it is just a matter of time until all parties can accept, counter, or reject the short sale. The agent will then be notified about the result of the short sale from Bank of America.
How Long with the Bank of America Short Sale Take
A lot of people who are in line for short sales are all thinking about the amount of time that they are going to wait until they receive a decision from Bank of America.
Of course, with the current economic climate, there are so many people who opted to go for a short sale on their property. Everyone must realize that short sales vary from one client to another, and that Bank of America is just trying to assess each short sale request thoroughly to provide the best possible decision for the request.
On average, the short sale may be closed within three months. However, this can be lengthened or shortened depending on the who the investor is on the mortgage, if there is mortgage insurance, or if there are multiple loans or liens on the property. It is important to understand that there are some files that are very easy to process while there are some properties that need more time for assessment and evaluation for short sale.
Sometimes, the appraisal may be higher than the offer of the homeowner and it can pose problems for the lender. It is best if you open communication lines in order to find out when you can get a decision on your Bank of America short sale.
If you have additional short sale questions contact the Short Sale Specialist Network now! 1-877-737-4903
Can I Short Sale To a Family Member?
 The question of “Can I short sale to my family member?” gains immense relevance when considering the fact that a number of homeowners face foreclosure. There is no doubt that opting for a short sale is a far better avenue to take, rather than having to forfeit their homes to foreclosure and permanently damage their credit history.
A short sale is actually the perfect solution for people who cannot find adequate buyers for their properties which have significantly depreciated. Homeowners however should realize that there is an immediate need to contact an experienced Realtor to broker the short sale especially if the question “Can I short sale to a family member?” is taken into consideration.
The need for a local and experienced Realtor in the context of “Can I short sale to a family member?” is based on the potentials for fraud that can be perpetrated either intentionally or unintentionally by the seller. In the same manner that homeowners should understand that any type of fraud does not only affect the actual homeowner, but also others who are experiencing upside-down mortgages.
This means that unless the issue of “Can I short sale to a family member?” is properly addressed, fewer homeowners can take advantage of the benefits of a short sale.
Short Sale Qualifications
In order to properly answer this question, it is initially vital that the qualifications for a short sale be adequately understood by the homeowner. This will ensure that there are reasonable expectations about the short sale when talking to a Realtor. The common qualifications include:
• The market value of the property has dropped severely to a point that it is already lower than what is owed to the bank
• The mortgage is already nearing or in default
• Seller should have no viable assets
• Seller has become financially challenged because of:
• Unemployment
• Medical or health reasons
• Divorce
• Bankruptcy
• Death
• All assets are gone or have been sold
Short Sale and Arm’s Length Transactions
One of the most important concepts to consider when evaluating the question “Can I short sale to a family member?” is that of arm’s length transactions. Basically, this is the exact concept which covers this primary concern about short sale.
Essentially, an arm’s length transaction means that the buyer and the seller of the product, property, or anything of value, have no relationship to each other and can act independently. This is to ensure that the self-interest of each is looked after rather than the others who have a stake in the transaction. Usually, this concept becomes extremely applicable in the real estate market where transactions like short sale come into focus.
Consistent with the intents of a short sale, the fair market value of the property should be appraised by the potential buyer with the seller operating under the concept of arm’s length transaction. Letting go of this concept not only compromises the fair market value of the property but can also be construed as fraud by a potential lender.
Take this example in terms of “Can I short sale to a family member?” When two strangers transact a real estate deal, the final price normally is approximate to the fair market value. The reason is that the seller would want to get the best possible price for the property while the buyer wants to make sure that he gets the lowest price possible.
When two people, such as family members, engage in a real estate transaction like a short sale, there is a possibility that the value of the property is depreciated further to give preferential discount to the family member buyer. This in turn severely affects the interest of the bank holding the mortgage.Rules on Short Sale
To further clarify issues on “Can I short sale to a family member?” it is extremely important to put it into context that there is a reason why banks need to pre-approve short sale transactions.
Banks actually have a set of rules and regulations governing short sale transactions. This is also the reason why owners of a mortgaged property need to qualify for a short sale transaction. Essentially, mortgage owners who opt for a short sale transaction should never benefit from it. This also means that opting to engage in a short sale transaction with a family member can be construed as mortgage fraud.
The basis for mortgage fraud is because the seller can potentially gain from the sale of the property being a family member. Moreover there is nothing to prevent a family member buying the property to sign over the title back to the original owner of the house.
In this instance, mortgage fraud has occurred because the seller got back the property they have mortgage on for significantly less the cost. If the intention of the bank holding the mortgage was to give benefits to the owner rather than collect on the mortgage, loan modification should have been undertaken instead of short sale.
There is no doubt that there are many factors and consequences that can affect short sale transactions. It is also important to take note that the bank holding the mortgage is not obligated to accept any short sale offer. Because of the immense benefits of the short sale transaction relies heavily on these types of complexities, the need for an experienced short sale Realtor must be emphasized.
Therefore, the answer to the question of “Can I short sale to a family member?” is definitely no in most cases. There are of course some exceptions. In the event that everything is disclosed to your lender in advance and they agree to the terms of the transaction, of course, one could short sale to a family member. One can also argue, "What exactly constitutes a family member?". Can I short sale to my cousin or a family member with a different name? This is where arms length affidavits come in handy. In many cases, lenders ask borrowers to sign an arms length affidavit stating that all parties are acting in their own best interests, and there are no side deals or anything of that nature. The best bet, is to always seek legal advise from the appropriate party, and consult an experienced local short sale Realtor for alternatives open to you.
How to Prepare A Short Sale Package
In order for you to get short sale approval from your lender you must first submit a short sale package containing various documents that demonstrate that you meet the qualifications required for a real estate short sale. The short sale package you submit will show to the lender that a) your property’s fair market value is below the value of your mortgage b) the borrower has suffered significant and legitimate hardship making it impossible for them to fulfill their debt obligations.
 Short Sale Package Checklist
While your short sale realtor will assist you in preparing your short sale package, you will need to gather certain financial documents and assist in the preparation of a short sale hardship letter in order to complete the short sale package and seek short sale approval.
The specifics of each short sale package may vary depending on the lender. Your lender will provide a specific list of documents that must be included with your short sale package, but in general your short sale package will include the following documents:
- Letter of authorization
- Short sale hardship letter
- Preliminary net sheet
- Tax returns
- W-2s
- Payroll stubs
- Copies of bank statements
- Comparative market analysis
Letter of Authorization
Legally speaking, your lender is only authorized to disclose your personal and financial information to you. In order for your short sale specialist to help you through the short sale approval process, you will need to include a letter of authorization with your short sale package in order to give the lender permission to disclose to and deal with your short sale realtor. Your letter of authorization should include:
- Your name
- Your realtor’s name and contact information
- The date
- Your loan reference number
Short Sale Hardship Letter
A letter of hardship for a short sale explains and illustrates the homeowner’s distress and why the homeowner is in a position where they are unable to meet their debt obligations. This letter is an extremely important part of the short sale package. As the term suggests, the short sale hardship letter should include mention of the hardship that has rendered the borrower incapable of covering the deficiency upon sale, and unable to make present or future mortgage payments. Examples of legitimate hardship generally accepted by lenders include:
- Divorce
- Death
- Medical emergencies or major illness
- Unemployment or significantly reduced income
- Bankruptcy
Lenders will be less sympathetic to homeowners who were involved in real estate speculation. Additionally, here are some examples of stressors that would not be accepted by lenders as hardship.
- Poor purchase decisions – If the homeowner claiming hardship spends their income on unnecessary consumer goods
- Purchasing another home – The fact that your home no longer suits your family, even due to the birth of additional children, does not constitute a hardship in the eyes of lenders.
- Unhappy with your home – No matter the circumstances of your house or neighborhood, the fact that the physical condition of your house or the state of your neighborhood significantly reduces your quality of life does not constitute a hardship.
Your short sale realtor can assist you with the preparation of your letter of hardship for short sale.
Preliminary Net Sheet / HUD1
This is an estimated balance sheet showing the expected net result of:
- The expected sale price of your home
- Cost of sale
- Unpaid loan balances
- Outstanding payments & late fees
- Real estate commissions & other sale fees
The preliminary net sheet will usually be prepared by your short sale specialist. The bottom line of the preliminary net sheet should not show cash to the seller, else there would be little reason for the short sale in the first place.
 Tax Returns, W-2s, and Payroll Stubs
Your lender will want proof to substantiate your inability to meet your debt obligations. As part of this assessment, they will require your recent tax returns, W-2 forms, as well as payroll stubs. If these indicate that you have assets or sufficient income to meet your debt obligations, the lender may not grant the short sell. Additionally, while the seller may grant the short sale, this assessment of the homeowner’s assets and income may play a role in determining whether the homeowner will be personally liable for the deficiency, should a short sale be granted.
Recent Bank Statements
As part of the lender’s assessment of your financial situation, they will want to see copies of all your recent bank statements. Some lenders will want you to document and account for each and every deposit and significant withdrawal. If there is any unusual activity such as large cash withdrawals or deposits, you will also want to explain these items in your short sale package.
Comparative Market Analysis
One of the requirements of a short sale is that the value of the home is less than the value of the mortgage. A comparative market analysis, also known as a CMA, is included in the short sale package in order to substantiate the fact that the fair market value of similar homes – and thus the seller’s home – is less than the value of the homeowner’s debt obligation. The comparative market analysis will be prepared by your short sale specialist.
Short Sale Approval Process
Along with your short sale package, your short sale specialist will also submit to your lender the listing agreement, executed purchase offer, as well as the buyer’s financing preapproval letter and earnest money deposit check. This will get the ball rolling on the short sale approval process. However, starting the short sale approval process is only the beginning of the process. The short sale approval process may still take several weeks, or even several months depending on your lender.
Choosing the Right Short Sale Specialist
Preparing your shot sale package is only part of your short sale specialist’s role in the short sale approval process. Your short sale realtor may also act in short sale negotiations with the loss mitigation assigned to your file. Your short sale realtor will be instrumental in getting your short sale approval as well as negotiating a forgiveness of your outstanding debt.
For a short sale to be successful, it is vital to seek the guidance of an experienced short sale realtor to prepare your short sale package and participate in short sale negotiations. Choosing a real estate agent who specializes in short sales and has a long track record of successful short sales ensures you are doing everything possible to maximize your chances of achieving a positive outcome.
To Contact one of these experienced Realtors Contact the Short Sale Specialist Network today! 1-877-737-4903
What Are The Qualifications For A Short Sale?
As a distressed homeowner, you’ve likely heard of short sales as an alternative to a foreclosure. You’ve perhaps heard that a short sale can help you salvage what remains of your credit, allow you to become a homeowner again much sooner, and that it can help you avoid the public embarrassment and psychological burden of a foreclosure auction and eviction. But what are the actual requirements a homeowner must meet in order to qualify for a short sale?
Short Sale Qualifications
While every lender will have their own specific internal requirements for giving short sale approval, there are 4 general short sale requirements you should meet before even considering a short sale. If you don’t meet every one of these requirements, you don’t meet the qualifications for a short sale.
1. Fair Market Value of the Home Has Dropped Below Value Of Debt
 By definition, one cannot really have a short sale without a situation where the home is worth less than the debt obligation of the homeowner to the lender. If sale of the home covered the value of the debt obligation, it wouldn’t be a short sale. Nonetheless, before giving short sale approval, a bank will need to see substantive proof that the fair market value of the home is actually less than the value of the homeowner’s debt obligation.
In the short sale package that will be prepared by you and your short sale Realtor, your realtor will include a comparative market analysis that will demonstrate to the lender that the market value of homes similar to yours are below that of your debt obligation. The analysis will demonstrate that selling your home would not be enough to pay the lender. The comparative market analysis will show the price of similar homes that are active on the market, pending sale, or that were sold in the past 6 months.
2. Mortgage is in default or will be in the forseeable future
A short sale is still possible if your mortgage payments are up to date, provided you are going to be unable to keep up with payments in the future. In the past, short sale approvals were only granted when a mortgage was in default. However lenders now realize that it makes more sense to give distressed homeowners the benefit of a short sale even if they are keeping up monthly mortgage payments, rather than waiting until the homeowner stops making payments before approving a short sale.
3. Homeowner Is Facing Hardship
In order for the lender to give short sale approval, the homeowner must demonstrate that he/she is facing or has faced significant hardship that has affected his/her ability to make monthly mortgage payments as well as cover the difference between the proceeds of sale and the mortgage. The homeowner will submit a letter of hardship with their short sale package indicating the hardships he/she faced.
It’s important to note that not all difficulties faced by homeowners will be considered legitimate hardships in the eyes of lending institutions. Displeasure with the home or the neighborhood, reckless spending, requiring a bigger home for a growing family – these are all difficulties facing a homeowner where he/she may desire a short sale, but they are not the type of hardships lending institutions will consider. Some situations or events that the lender will generally consider as legitimate hardships include:
- Death of a breadwinner
- Unemployment or significantly reduced income
- Divorce
- Major illness or medical emergencies
- Bankruptcy
- Relocation
4. Homeowner Has No Assets (Insolvent)
The most important short sale requirement is that the seller does not have any assets that would cover the deficiency. This could include savings accounts, stocks or bonds, negotiable instruments, money market accounts, hidden cash, real estate properties, or absolutely anything else the homeowner owns that has tangible monetary value.
The basic fact of the matter is that banks and mortgage lenders are not charities – they are in business to maximize profit. The reason lenders approve short sales rather than pursue foreclosure is because in certain situations, it can be in their best interest. There are added legal and administrative costs associated with going through with foreclosures, thus a short sale under the right circumstances can save both the homeowner and the lender time and money.
If the lender knows that the homeowner has no assets and no ability to pay the difference between the proceeds of sale and the value of the mortgage, then rather than attempting to squeeze blood out of a stone, the lender can allow a short sale so they can at least salvage the additional costs that could have been spent on the foreclosure process. However, for this to be the case, the homeowner must not have assets that are sufficient to cover the deficiency. The homeowner can face all the hardship in the world and the value of their house may plunge through the basement, but if the homeowner has an expensive beach house or a large savings account that would cover their debt obligation, they will not be granted a short sale – at least not a short sale where the deficiency will be forgiven.
 Of course, most homeowners facing foreclosure do not have valuable assets that could be liquidated to cover the deficiency. But in some cases, though the homeowner may have some assets, it may be insufficient to cover the deficiency, or perhaps not enough to cover the deficiency and also provide a reasonable standard of living for the homeowner’s family. In such cases, the lender might grant a short sale but will not forgive the deficiency, meaning the homeowner will still be liable for their outstanding debt following the sale of the home. They might also forgive a portion of the debt, but not all of it.
Depending on the homeowner’s assets, income, and financial situation, he may have his debt forgiven, or he may be forced to repay all or some of the deficiency. It is important that the homeowner has a good short sale negotiator who can advocate for the homeowner during the short sale negotiation process. An experienced short sale negotiator who knows the ins and outs of the short sale process and is familiar with the internal policies of the various lending institutions may be able to arrange for debt forgiveness where a less experienced negotiator would fail.
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Jacksonville FL Short Sale Realtor Mike Linkenauger
Jacksonville,
FL
More about me…
First Coast Realty Associates
Office Phone: (904) 733-4911
Email Me
I am a lifetime Northeast Florida Resident, and have unsurpassed knowledge of all Jacksonville Communities. I am an internet marketing expert and have aggressive seller marketing. I am your short sales and community specialist. (904)733-4911 visit my main website at www.FirstCoastRE.com
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