Category Archives: homeowner

What do homeowners have to do in a Short Sale?

Watch this short video to learn about the requirements for doing a short sale:
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Effect of Short Sale on Credit

Watch this short video to see how a short sale would affect your credit vs. a foreclosure or a bankruptcy:
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Recourse & non-recourse loans

Watch this short video to understand why it is CRUCIAL for you to know whether your loan is recourse or non-recourse: http://ping.fm/JKsWu

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ARE YOUR MORTGAGE PAYMENTS CHOKING YOU? HAVE YOU CONSIDERED A SHORT REFI?

Did you know that you may be able to keep your house with a smaller principal and a smaller payment? Welcome to a short refi. This is the best of all worlds for a homeowner with payments that are choking them.

The bottom line is that in a short refinance, or short refi, the 1st lender agrees to forgive a portion of the loan balance. Then, you apply for and must qualify for an entirely different loan with a new lender. At that point, the transaction flows like any other refinance. You pay for an appraisal and all the typical title and escrow fees associated with a refinance. The new lender pays off the old lender the agreed-upon amount. Your payments are made to the new lender, with a new, lower interest rate and a new lower principal amount.

There are some very important points to keep in mind. First of all, you MUST be current. If you have had any late payments within the last year, you do not qualify for a short refi. Next, you MUST be under water or over-leveraged. That means that you owe more to the banks than the house is worth. You must also have reasonably good credit. Since you will be applying for a new loan with a new lender, you will need to meet all the new lender’s qualifications with respect to current credit score, income, savings, other debt, etc. And the most important point is that your current lender MUST agree to this proposal. Remember–they are forgiving part of the balance. Not very many of them do, and very few mortgage brokers that I know have experience closing these successfully.

 

Here are some other notes from the newly implemented FHA guaranteed short refi program: Your lender must agree to forgive at least 10% of the principal balance. So if your 1st mortgage is $400,000, the 1st lender must agree to forgive at least $40,000 (10% of $400,000). This FHA guaranteed program only applies to owner-occupied properties and only applies to 1st loans. The amount cannot exceed the current FHA guidelines in the area in which you live. Click here to find FHA loan limits in your area.

 

Also, if your current 1st loan is an FHA-backed loan, you cannot do a short refinance with this program. There may be income tax consequences as well.

 

And, finally, the total balance of loans against the property cannot be more than 115% of the appraised value of the property. For instance, if the value is $300,000, the total balances of both loans cannot be more than $345,000 (115% of $300,000). So the total of both the 1st and the 2nd mortgages, after the short refinance, cannot be more than $345,000. In some cases, this will require the 1st mortgage to forgive more than 10% or will require the 2nd mortgage to participate as well.

 

Remember, this program is voluntary for the banks. The banks MUST agree to participate. Not very many banks will agree to this. Not very many mortgage brokers have experience closing these short refinance transactions.

 

Please go to my YouTube channel http://www.youtube.com/colleencoleman to look at presentations that I’ve done about short refi, as well as other real estate topics. I look forward to being of service to you and would welcome any questions that you have. Please feel free to call me at 909-972-1616 or email me at docrealtor45@gmail.com.

 

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What is a Short Sale?

Watch this short video to learn how a short sale can help you if you cannot afford your mortgage payments:

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What is Short Refi?

Can’t afford your mortgage payments but want to keep your home? Short Refi, with lower payments, may be the answer to your troubles. Watch this short video to learn more:

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Do You Want to Short Sale Your Property but Are Worried that You Can’t Afford to Pay Real Estate Commissions? No Worries!

Did you know that it does NOT cost anything to homeowners if they short sale their property?

In other word, you can avoid foreclosure, do a short sale, and save your credit report, all for FREE. Period. No costs to seller, whatsoever. No strings attached. It’s hard to believe, but it’s 100% true.

It is a sad and unfortunate fact that most of the distressed homeowners do not take any action to save themselves from foreclosure for many reasons. A lot of homeowners are worried about paying real estate commissions to agents who sell their homes. “I think that a short sale is my best option, but I can’t afford to pay the real estate agents’ commissions.”

The reality is that agents are paid by the short sale mortgage lenders, and NOT homeowners. Homeowners do not pay real estate commissions to do a short sale. Real Estate agents do all the work to get a short sale approved and are, in turn, paid commissions by the short sale mortgage lender.

Now, you might be thinking that why would the mortgage lender accept a discounted payoff and pay commission to agent for doing a short sale when they can recover the money by doing a foreclosure sale? The truth is, lenders actually lose more money in foreclosure sales than in short sales. In the case of a foreclosure sale, mortgage lenders have to go through process of foreclosing and then putting the property on market. Also, since the properties are no longer occupied, they are more prone to damage and vandalism. Banks are in the business to lend money, not to own properties. If the property becomes an REO (real estate owned; bank owned), the bank now has the responsibility to pay property taxes, insurance, utilities, etc. They have to keep the property up by paying somebody to mow the lawn, clean the inside, inspect it to make sure that there are no squatters, break-ins, vandalism, etc. If the property is in terrible shape, the bank may also need to do repairs on the property as well.

Mortgage lenders do not like excess inventory and bad loans on their books. So, they pay commissions to real estate agents for helping them in getting these problem loans off their books. Real Estate agents work with homeowners and help them compile and put together all the necessary paperwork to apply for a short sale. They negotiate with the mortgage lender to approve the short sale, and once the short sale is approved and the property is sold, mortgage lender pays commissions to the agents for their services.

Is a short sale right for you? Certainly, losing one’s home is a painful and devastating experience, but it is important to stay composed in these distressed times and focus on ways to ensure that you do not close doors to future possibilities.

Did you know a foreclosure stays on your credit record for SEVEN YEARS? It is time to act wisely and make the right decision so that minimal damage is done.

Still not sure about your options? Give me a call at 909-972-0041, and we will discuss your situation and the options you have. Don’t worry, I will not charge you anything for this. It will be a 100% FREE, no obligation consultation session.

Act today, and save your future.

Colleen Coleman

Broker 01470735

P.S. I’ve closed over 90% of my short sale listings. The national average is 15 to 20%.

 

 

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Got HAFA ? It May Get You Up to $1500 !!

HAFA (Home Affordable Foreclosure Alternative) is a government program that allows financially distressed home owners avoid foreclosure by completing a short sale or a deed-in-lieu of foreclosure (DIL), if they were unsuccessful keeping their home under HAMP (Home Affordable Modification Program).

Who is eligible?
The borrower must meet the following criteria to qualify for HAFA:
  • Borrower was not approved for a HAMP modification request, or a HAMP modification was offered but was not accepted by the homeowner, or the homeowner falls out of a HAMP modification, or the homeowner missed at least two consecutive payments during a HAMP modification, or the borrower asked for a Short Sale or DIL.
  • Property in question must be principal residence.
  • First lien originated before 2009.
  • Mortgage is delinquent or default is reasonably foreseeable.
  • Unpaid principal balance is not more than $729,750 (higher limits for 2 to 4 unit dwellings).
  • Borrower’s total monthly mortgage payment exceeds 31% of gross (before taxes and deductions) income.

Benefits of HAFA for Homeowners
  • Foreclosure Alternative: Provides homeowners an opportunity to sell their homes via short sale and avoid foreclosure.
  • Financial Incentive: Homeowners receive up to $1500 for relocation assistance.
  • No Extra Paperwork: Allows lenders to use the same paperwork they previously collected from homeowners for HAMP.
  • No Further Debt Liability: Requires lenders to fully release homeowners from any future liability of the debt.
  • Pre-approved Short Sale Terms: Allows home owners to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
  • Quick decision: Lenders have only 10 days to approve or disapprove a short sale or DIL.

Some more information for homeowners
  • If the property is sold as a short sale, it cannot be sold to a relative; it must be an “Arm’s Length” Transaction.
  • The amount of debt forgiven might be treated as income for tax purposes.
  • Buyer may not receive funds from the transaction and cannot sell the property for at least 90 days after closing.
  • Not all banks participate in HAFA. Call your bank to find out if they do.

On a personal note, I know that it is not just the home that one loses in a foreclosure. All the hopes and chances for a better future are at stake with the damage done to the credit scores by the foreclosure. The wisest way is to stay hopeful in these distressed times and look for better alternatives.

If you have any questions or want to learn more about HAFA, call me today at 909-972-0041 or email me at docrealtor45@gmail.com.

Resources: https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.html

 

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Lower your property taxes!

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