Free Fresno short sale training event this Wednesday
FREE Short Sale Training!
The short sale market is BOOMING! Learn new marketing strategies to get more short sale listings AND more importantly, get insider tips on how to get them closed!
Text “srgliz” to 90210 to RSVP or reply by email!
Lee Honish presents a 3 hours course Fresno short sale sale marketing course that is sure to boost your business in 2012. This is a FREE short sale training event hosted by Summit Realty Group Fresno but seating is limited! Text “srgliz” to 90210 or email us to RSVP to secure your seat to this FREE short sale training event.
Bring your stuck short sale files for FREE one-on-one short sale coaching from industry leaders on how to get them closed!
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Day: May 9th, 2012
Time: 1-4pm
Location: 4741 W Spruce Ave, Suite 104, Fresno CA 93722
Plus…get Monster Marketing from Lee Honish for over 60% off the retail price on the day of the event!
Text “mobilerealtors” to 90210 to Enter to win a Free Sprint Tablet from Summit Realty Group!
Short Sale Transactions: A Primer for Realtors and Sellers
The real estate market runs in cycles. Presently, we are in an economic period in which mortgage delinquencies are on the rise. The primary cause of this is the combination of higher interest rates on mortgages and a slowdown in residential real estate sales. Some homeowners with adjustable interest rates are particularly stressed as their payment amounts increase, stretching their budgets to the limit. In this climate, we can anticipate seeing more foreclosures, “distress sales”, and short sales. The information in this primer will help you understand the short sale and how you can prepare for this transaction even before you begin the escrow process.
What is a Short Sale?
This term refers to a transaction in which the sales price will not generate enough money to cover the payoff of the Seller’s existing loan and closing costs. Working with a willing Lender, a Seller may be able to negotiate a payoff amount which is less than the actual amount that would ordinarily be required to payoff the loan. The lender agrees to accept the equity available in the property, and the Seller receives no proceeds from the sale of the property.
Why would a Lender or Seller find a Short Sale appealing?
Homeowners benefit by avoiding the long-term negative consequences to their credit which are associated with a foreclosure. Lenders benefit because they can avoid the substantial expense of a foreclosure proceeding. Most lenders do not want to own the properties used as collateral for their loans, because the maintenance costs and taxes add to their cost and decrease profitability.
What are the First Steps?
- The short sale real estate agent and Seller should start by having an extensive, truthful discussion about the Seller’s financial status. People who are in financial trouble may be hesitant to discuss the details of their unfavorable situation, but honesty and full disclosure are essential to the successful closing of a short sale listings transaction.
- The Seller should contact the Lender to find out whether the Lender is willing to consider a short payoff arrangement. The process of convincing a Lender to reduce its loan balance to close the transaction is often challenging, requiring the negotiating skills of a seasoned agent. Be mindful of the additional work that short sales require of both the short sale real estate agent and the Seller.
- Ask your Escrow Officer to prepare a “net sheet” as soon as possible and update it regularly as information becomes available. This is a detailed estimated statement of the payoffs and closing costs that will be charged to the Seller at close of escrow.
Working with the Lender
Determine the Lender’s guidelines. You can anticipate a very specific list of required documentation that begins with a copy of the Listing Agreement or some other form of written authorization from the Seller. Additional requirements include:
- Strong evidence of financial hardship to the Lender
- Pay stubs or other proof of current income flow
- 2 years of Tax Returns and W-2′s
- Latest personal checking account statement
- Copies of all past due secured and unsecured debt notices
- Copies of the latest mortgage statement
- Copy of the current tax bill
- Copy of a current appraisal, including comparable sales in the area
- Copy of the Purchase Agreement
Entering Escrow
The short payoff is a condition of closing that must be set out in both the Purchase Agreement and Escrow Instructions. When the Lender’s payoff demand is received in escrow, it is likely to include restrictions on closing costs and the payoff amounts to other lenders and creditors. Throughout the escrow process, the Seller and real estate agent should be proactive about the numbers that the lender will see. Take care to include every possible expense in the Seller’s “net sheet”, and be aware of the “bottom line” as the process unfolds. Your Escrow Officer can advise you immediately of any significant changes or discrepancies. Remember that the Lender will establish a minimum payoff figure which it is prepared to accept, and its willingness to adjust that final figure may vary.
Your Escrow Officer will fulfill the important role of reporting the numbers and complying with the short payoff Lender’s requirements. If you have been working with your Escrow Officer to generate preliminary “net sheets” for the Lender, then the Escrow Officer will be anticipating the requirements of these unique transactions and will be able to monitor the transaction to a successful conclusion.
Summit realty Group has a dedicated short sale real estate listings team in place to get your short sale listings sold fast and with the least amount of hassle as possible. Contact Summit Realty Group today to start your short sale process today.
New CA Law Increases Importance of HAFA in Short Sale Market
New CA SB458 law may increase the importance of the HAFA Short Sale Market in California.
HAFA (Home Affordable Foreclosure Alternative) is a national short sale program adopted by major lenders and servicers that requires subordinate liens to fully forgive borrowers of their debt along with other requirements. Full debt forgiveness is now also required under SB458 for lenders of one-to-four residential unit properties doing short sales in California (unless an exception applies).
“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment subsidize the difference,” said C.A.R. President Beth L. Peerce.
Just as in the HAFA guidelines, SB 458 brings closure and certainty to the Short Sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property. HAFA is also the only short sale that helps the homeowner with moving assistance funds and insures agent commissions.
Information provided by C.A.R
LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED
In a major victory for REALTORS®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder. Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale. This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units. Any purported waiver of this rule shall be void and against public policy.
Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.
Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.
This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov.
Information provided from C.A.R
Realtors Applaud Bill to Speed Lender Response to Short Sales
A new bill to improve the process for approving short sales may soon bring relief to distressed home owners who are unable to keep their homes and hope to avoid foreclosure. The bill, introduced in the U.S. House yesterday and strongly supported by the National Association of Realtors®, would impose a deadline of 45 days on lenders to respond to short sale requests.
The legislation, the “Prompt Decision for Qualification for Short Sale Act of 2011,” was offered in Congress by U.S. Reps. Tom Rooney (R-Fla.) and Robert Andrews (D-N.J.).
“The current short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a home owner from foreclosure,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I.
“Realtors® and consumers continue to raise issues about delays in the short sale process, because lenders are unable to decide whether to approve a short sale. After many months of delays, and with no response from lenders, potential buyers are losing patience and cancelling their contracts, often resulting in the property entering foreclosure. A short sale minimizes the negative impact on sellers and generally costs the lender less than a foreclosure,” said Phipps.
NAR has been actively pushing the lending industry to improve the process for approving short sales, which represent about 13 percent of recent home sales according to NAR data. Phipps praised Reps. Rooney and Andrews for their efforts on the bill and urged Congress to pass the bill quickly.
“As the leading advocate for home ownership and housing issues, Realtors® want to help more home owners avoid foreclosure by facilitating a short sale when a family is absolutely unable to keep their home; however, that can only happen if lenders and servicers approve short sale offers in a reasonable amount of time,” said Phipps. “Streamlining short sales transactions will reduce the amount of time it takes to sell the property, improve the likelihood that the transaction will close and reduce the overall number of foreclosures. This benefits sellers, lenders, buyers and the entire community.”
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Washington, April 13, 2011
Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section.
Sellers in Distress: Know Your Options
San Diego homeowners facing financial difficulties have numerous options besides short selling your home. Options could include loan modification or a revised repayment plan; refinancing with your current lender or another lender; bankruptcy; or voluntary deed-in-lieu of foreclosure. These options may have adverse consequences and you must decide what is best for your individual situation.
To find out more, explore your options with your lender and other appropriate professionals, such as attorneys, accountants, and qualified San Diego housing and credit counselors. A list of HUD-approved housing counselors is available by Clicking Here. Even more local, state and national resources are compiled on the State of California Foreclosure Help website at http://www.hud.gov/local/ca/homeownership/foreclosure.cfm
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