I received yet another call today from a past client.  He was delighted with the service we provided.  Only 6 months after completing his short sale, his credit scores are back over 700.  Why?  Well I am not the credit bureau, but my guess is that is has a lot to do with the debt ratios.  After unloading all that bad debt, guess what? They now have an excellent credit profile.  Just goes to show you that home owners are more valuable to our economy without being saddled with hundreds of thousands of dollars in bad debt.  Its really just common sense.  I have heard this testimonial now from so many past clients.   If I were you, I would definitely correct my bad situation pronto.

The  Mortgage Forgiveness debt relief act and debt cancellation tax break is due to expire at the end of 2012.  You need to have completed your short sale to qualify.  That means starting now!  Don’t wait till its too late.

Whats HOT!

Super low interest rates = 4.5% on 30 year fixed

Low prices on Homes and Investment property

First time home buyer programs offering 2% down payment grant plus interest rate near 3/4% below market

Short sale time is running out!  If you do not complete your short sale prior to the end of 2012 you may be taxes on the debt forgiveness.  IT is substantial so call now to inquire about your specific situation!

Because you care… Refer your friend in the months of August through October and they will receive $1,000 cash towards closing costs.

Dear Clients and Friends,

That time of the year has come again when its time to take another look at what is going on.

Currently, we have an unbelievable buying opportunity.

Interest rates are back down to their all time lows. This makes home affordability almost the same as rent.   Its also going to lead to another refi boom. (take advantage because once inflation kicks in we are expecting rates to go much higher)

And more importantly, it means you can buy an investment property or move up to the home you always wanted and save big time!

This is like the perfect storm of buying opportunities.  Low prices and Low interest rates!  Its just a matter of finding those cherries as they become available.  And they are available.  When consumer confidence comes back and the market recovers, look out.

Regarding short sales – The time to act is now!

The mortgage home debt forgives act is due to expire at the end of 2012.  It can take a full year to approve a short sale.  Therefore, if you are upside down on your home, this year is the year to correct that.  After this year you run the risk of paying big taxes bills on the dollar amount that you have lost.

Don’t do it!  We have strategies that can help you stay in your home but eliminate the negative equity situation.   We have already completed over 130 successful short sales and can help you and your friends get out of overwhelming debt.

Wishing you all the best the rest of this year.  Please call with any questions that you have concerning these topics.       949-481-7358

Time is running out. It can take a year or more to short sale a home. After 2012, the mortgage debt tax forgiveness act will expire and you will pay the tax on any debt forgiveness. In many cases that can mean $20,000 or more in extra taxes.

Fact: Some people sell their homes to investors and rent back. Thereby lowering their total debt and monthly payment without even moving. For all of you who don’t want to move and want to get out of bankrupting your retirement, this might be a spectacular option for you!

Fact: Economists expect that homes may continue to lose value through 2016 and then only gain at normal appreciation rates of 3% to 5% thereafter. At that rate it may take you 10 to 15 years just to get to zero negative equity on your home. Can you really afford that?

Fact: Daniel Realty & Investments has completed over 130 successful short sales locally.  You couldn’t pick a better agent to work with when selling your home.

Until  a few years ago, short sales were rarely used.  The market was strong and properties were rising in value.  With the collapse in the economy, home values have plummeted and home owners have found that they owe more on their home than what it is worth.

So quite simply, a short sale occurs when a homeowner wants to sell their home and owes more money than it can fetch in the market.  In most cases, the homeowner will petition the bank for permission to sell to a willing buyer thereby releasing their lien on the property and allowing the transfer to occur.  In most cases this involves debt forgiveness from the bank holding the mortgage and it can also include debt settlement or a lien release fee.

Short sales are extremely useful for homeowners that are severely underwater.  In general if a homeowner is greater than $50k underwater on the value of their home they should consider the possibility of hiring a short sale professional.  By moving forward with a short sale, a homeowner can wipe clean the bad investment and start clean in as little as 2 years.  This is a great option rather than waiting 10 or more years to break even on the debt.

There are many options that can be negotiated in a short sale but the main benefits are, debt forgiveness and the ability to undo bad market timing.  A good short sale professional can get you amazing results to put you back on a sound financial track.

I see a lot of people who choose  not to participate in short sales but really should consider it.  There are many reason why, but ultimately it comes down to fear, complacency, and ego.

Fear… since nothing can be guaranteed in a short sale, people are sometimes afraid to move forward.  I can tell you that 99% of all of our short sales are successful and that you always retain the option to bring your mortgage current and keep the house.  I can also tell you that most of my clients have recovered their credit score in as little as 9 months once their debt has cleared up.  But ultimately it takes courage to make a change.

Complacency… This is a killer.  A lot of people just avoid change at all costs.  They are comfortable to die a slow death.  Unfortunately its difficult to overcome this.  Its a long slow death as the long term damage will only become apparent in 10 or more years.  These individuals are often deluded by the belief that the market will just magically come back and fix everything. The housing market will recover, but what a great opportunity  be lost.

Ego… another tough one.  I can tell you that most homeowners are not upside down due to mismanagement.  They are upside down because the institutions that were supposed to regulate the market failed and actually caused this financial melt down.  You shouldn’t take it personal because you market timing was bad.  It wasn’t your fault. It was the greed and bad policy making of our banks.  They were supposed to be the gate keepers.  Tax payers have bailed them out, but its really time to help you out too.

Time is running out.  The mortgage forgiveness debt  relief tax act is soon to expire.  After expiration the tax man will make you pay for complacency.  I recommend action now!  Good luck to you and please call if we can be of service.

With the proliferation of first and second combination loans during the last real estate boon,  new legal questions developed.   Clients often ask “Am I subject to deficiency on my second if the junior lien was taken out simultaneously with the first for the purpose of purchasing the home?”  That’s a great questions!

Typically money lent to purchase a home is not subject to deficiency following a foreclosure or short sale.  But it was not typical to receive a junior lien at he time of purchase.  As a general rule, junior liens were taken after close and were subject to deficiency law.

This new lending practice left a gray area in the laws interpretation.  And ultimately, to get the best answer to this questions, the advice of a California real estate attorney should be consulted.

As of November 2010 the California Association of Realtors (CAR) have revised form SSIA (short sale information and advisory).  In it they clarify continued liability on debt.  Section 4E is quoted below:

E. Junior Liens: The anti-deficiency protections for Junior Liens are also somewhat unclear. Junior liens used to purchase the residence (such as 90/10 first and second) would have “purchase money” protection generally. However, junior liens that are refinanced or junior liens that are used to take out equity do not have “purchase money” protection. Such “non purchase money” junior lien holders may be able to pursue a deficiency judgment against the borrower directly after a Trustee sale by a senior lien holder or after a judicial foreclosure by the junior lien holder.

Although the law is not entirely clear, home equity loans (HELOCs) may fall into this category.

Once again, always check with your real estate attorney when seeking legal advice regarding your specific loan situation.  However, in general, it looks to me like CAR is standing behind the position that if you received a junior lien as part of a home purchase, aka “purchase money”, that deficiency judgments may be prohibited in California.

This is definitely one of the top three questions I am asked when interviewing sellers regarding short sales.  Obviously there are a lot of factors that go into credit analysis and no 2 people have exactly the same profile.  So I want to start with this disclaimer.  If one person gets certain results, there is no guarantee that another will get the same results.

About nine months ago I did a short sale for a client whose name will be kept anonymous.  They started with a credit score of about 750.  Before I had begun to work with them, they actually were late on their mortgage several months and had begun to get credit dings.  They had successfully finished a Hamp loan modification with Bank of America.  But at the end of it, they realized that the loan modification just wasn’t going to fix their future and at best provided only temporary relief.  So of course they contacted me to find a more permanent solution.

To make a long story short, it took a year and a quarter to complete the Bank of America short sale.  Turns out it was the last of their manually processed short sales prior to switching to their new equator system (which works much quicker).  So after a year and a quarter of late payments and the charge off from the short sale, their FICO score ended landed at 618.  According to the client, it was still good enough to go out and get a new auto loan with top tier loan rates only two weeks after finishing the shorts sale.

One would say, “not bad”  considering all of the credit blemishes and the fact that they just lived for 1.25 years in the home without make payments. (Of course that wasn’t their wish, just a side befit of the bank’s incompetence.)

But wait, it gets much better.  This client is one of the few that actually tracked his credit.  And in as little as 9 months,  I called him for follow up.  I can happily say he was delighted to report a FICO score of 735.   Wow that’s right, his credit was almost fully restored in as little as 9 months. That’s incredible.

And of course these results seem to mirror what Howard Clark has been saying about how a short sale affects your credit score.  According to him, it is supposed to drop 120 points.  But what I couldn’t believe was just how fast it came back up.  My best guess is that because of the short sale, my clients were able to unload all of their debt and clear up their debt ratios.  Being free and clear of this heavy burden was obviously beneficial in more ways than one.

So at the end of the day, it just goes to show you that there is no sense in suffering.  Doing the right thing for your future, and your balance sheet will help both you and the economy.  The fact that the credit bureaus will see you as less of a risk only validates this thesis.

Cheers to good financial health.

$5,ooo Buyers Allowance for Wish List Items!

Don’t miss the opportunity of a life time to own this spectacular pool home.  Seller has completed so many upgrades.

New Landscaping

New Stainless Steel Appliances

New Paint

New travertine tile flooring

New Carpeting

New Blinds (on order)

So So much more

Super clean, and move in ready equity sale.  Seller has recently raised the commission to 3% for the selling agent.

I will give an extra $1500 for a full price offer  before June 10,2010!

Property Stats:

• 4 Bedroom, 3 bath

• Very high cathedral ceilings

• 3 Car Garage

• Good size corner lot

• 2300 sq ft. feels more like 2500 to 2600

Offered for $729,000

Home owners associations have become very aggressive in trying to collect past due HOA dues. The high delinquency rate has pushed HOA’s to the brink of bankruptcy.   Many short sale clients are finding that after a period of time the hoa is filling in small claims court and passing the account on to collection attorneys.

In the recent past hoa collection laxity gave us time to negotiate with the bank and buyer to pay past due HOA dues.  However today, aggressive collections tactics are complicating and over encumbering the short sale process.   In order to insure that you are not pursued for past due balances, late fees, and attorney fees, you should make your HOA payments.

I have seen people who have been foreclosed that are still being pursued for legal and HOA fees.  If you can not afford to make your HOA payment, we will do our best to try and negotiate with the bank and or buyer to pay these fees.  However, results vary and the more aggressive your HOA becomes, the more problems that could entangle this process and cause it to fail.  Our advice is to consider paying your HOA dues as a cheep insurance policy against future problems.  If you have any questions, please call me.  While we have a very good success rate at negotiating for you the seller, the length and complexity of this process make the outcome regarding HOA actions uncertain.

This notice is not to be considered legal advice with regard to your rights..   This article is notice of possible consequences brought by non payment of your legal obligations.

What a great question!  If you have been thinking this, you are not alone.

A good thing about short sale is that it represents the opportunity to lift the heavy burden of carrying an overpriced home off of your shoulders and a chance to start fresh.  But the one thing short sale sellers want to know is: “Coming out of this short sale, what will my credit look like?”

So here is the scoop.   I want to tell you that no two short sales are the same.  What I mean by this is that there are variables that change the effect each and every short sale has on your credit.

1. Are you going to be making your payments?

Late payments make your score go down.  You can actually make your payment and still request a short sale.  But lets face it, it puts more pressure on the bank if you are delinquent.

2. How long is the bank going to take to make a decision? 

Your guess is as good as mine.  The longer they take, the more mortgage “lates” that show up on your credit.  Generally the bank will take about six months.  But every bank moves at different speeds and according to different> policies.  To make matters even more unpredictable, short sale negotiators usually have a 30 t0 60 day window just to pick up the file and start to process it.  So even within the same bank, the time frames on the exact some type of loan can vary depending on the negotiators work load.  What type of loan is it?  If it is owned by the bank they can make a quicker decision, but if it owned by entities all over the globe and securitized things can get more complicated and take longer.

3. What is formula will be used to score my credit? 

There are 3 different bureaus and nobody really knows what their secret formulas are. It is common to have different scores at each of them.

After considering these three things, Howard Clark has gone out on a limb and given this general rule.    This weekend he posted some guidelines on his television show and website.

According to Howard,  you can expect a short sale to yield the following effects to your credit score.

• A short sale may lower  your credit score by 120-130 points.
• A foreclosure may lower  your credit score by 140-150 points.
• Bankruptcy may cause the largest hit affecting your credit score by 365 points.

Clearly it is in your best interest to do a short sale as opposed to other solutions.  And there are other benefits as well.

The next most common concern short sale sellers have is: “How long can I stay in my home?”  Since it takes on average 7 to 8 months to close a short sale escrow, that is how long you have.  Nearly 3 to 4 months longer than foreclosure.  And sometimes it can be much longer.  So if you want to stay, short sale is a great option to buy some time.

Again, I want to caution you that these are general guidelines.   There are a lots of variables that can effect credit scores and individual results can vary.

]]> http://www.jdanielrealty.com/321/how-will-a-short-sale-affect-my-credit/feed/ 0 http://www.jdanielrealty.com/301/the-short-sale-authority-faqs/ http://www.jdanielrealty.com/301/the-short-sale-authority-faqs/#comments Tue, 15 Sep 2009 08:03:19 +0000 John Daniel http://www.jdanielrealty.com/orange-county-real-estate-news/?p=301 Read More]]>

In the last 3 years, short sales have become the predominant type of sale in Orange County, CA.  It is estimated that over 60% of all home sales are short sales.  As an independent agent, they make up the majority of our work.  We specialize in short sales and handle each and every shorts sale in house with diligent care.  This is unlike “short sale mills”.  Your case is handled and orchestrated by a highly skilled agent with tremendous experience in short sale transactions.  We will attempt to answer some of your most common questions.  After reading this document, please see our additional materials under the short sale category of our blog and call for an immediate personal consultation.

FAQ’s

1. How long will it take?

The typical range of short sales is from 4 months (rare), to 6 to 8 months (typical), up to over 1 year (sometimes).

2. Why does it take so long?

Mainly because the bank typically does not start to take the file seriously until it is almost in foreclosure.  Don’t be surprised when you get a notice of a trustees sale even though you have requested a short sale.  Typically we just need to call and make sure an extension has been granted.  It can be granted by most banks up to 4 times.

3. How much does it cost?

Most of our sellers do not pay anything out of pocket to short sale their homes.   All of the fees typically come out of the gross proceeds of the sale.  What is left pays off the remainder of the note.  Therefore our commission is paid from the gross sales price of the home.  Rarely, a bank may request seller contribution towards a settlement.  However, we do our best to negotiate any requested fees down or ask the buyer to contribute towards settlement.

4. Can I stay in my house even though I am not making the payments?

Yes, absolutely.  It is better that you occupy it rather than abandon it.  The bank would rather have you taking care of the premises and not let it be subject to vandalism and deterioration.

5. What will happen to my credit?

It depends.  Most of the material that I have read indicated that it is the mortgage lates that effect you most.  Therefore, you have the option to make the payments to try to minimize the impact to your credit.  However, if you can not, you may rehabilitate your credit after the short sale is complete.

6. How long until I can buy a home again?

That depends.  Fannie may states that you may qualify after a 2 year waiting period.  This is of course dependent on you re-establishing good credit.  Other options help you repurchase faster are contracted sales, seller carries, AITD’s, lease options, and other creative forms of home purchasing.  Theoretically, there is nothing to stop you from making a deal to purchase a home right away!

7. What are the steps to a short sale?

A. To begin with, start with a personalized interview free or charge by our skilled representatives.  There are many aspects to a short sale that you will want to consider.  1. Are there tax ramifications?  You may want to check with your CPA.  2. Do you have a prepay rider or any other special consideration?  Do you need to consult a real estate attorney?  3. How many banks are involved?  Did they take government bail out money or not.  Private lenders tend to be tougher then large public institutions.

B. Meet with your Orange county short sale realtor and list your home for sale.

C. Fill in all forms, paperwork and complete short sale package.  We will assist you in making sure that you do this correctly.

D. Find a prospective buyer – This usually take 2 to 4 weeks.

E. We will submit the short sale package.

F.  Then wait.  Typically your short sale listing will go quiet while the bank assigns a negotiator.  This can take 30 to 60 days.  Then they will order an appraisal or BPO (brokers price opinion)  this may take an additional 30 to 60 days.

G. Once they have the package complete and all of their work done, they may send it to a supervisor or investor for approval.  This can take another 30 to 60 days.

H.  Upon approval, you are typically granted 30 days to complete escrow.  However, if the buyer backs out for any reason then a new buyer and extension will have to be obtained.  This could reset the clock another 30+ days.

j.  Also be aware that if there is more than one bank involved, the second can hold up the sale.  Sometimes by the time the approval is granted on the second, the first will expire and we will need to re-approve.  These banks move slow and it is sometimes hard to coordinate their joint activities.

K.  Finally, upon closing of escrow, your debt will be settled and your short sale will be completed with a pay off.

8.  What happens if they do not approve my short sale?

Great question.  First let me say that nearly all of our short sales get approved.  The reason for this is that we pre-screen our clients to make sure they are good candidates.  However, in the event that you run in to an unforeseen road block, you still have the option of bringing your note current, or allowing the home to foreclose.

You may have many additional questions, and please feel free to email or call.  I would be happy to help any way that I can.  I want to applaud you for having the courage to face your and apply the correct solution toward resolving your financial problems.  It has been my experience that our clients enjoy  immense freedom and relieve knowing that they can move forward and rebuild on more solid ground.

I am looking forward to working with you.  Please visit our additional short sale resources at: http://www.jdanielrealty.com/orange-county-real-estate-news/category/short-sales/

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