Short Sale Information
Definitions:
Pre-Foreclosure- This is the time period between the Notice of Trustee Sale and the actual Trustee Sale date. This is normally 90 days. Banks will allow a redemption (catching up the payments) or other programs available to cure the default.
Foreclosure- This is after the Trustee Sale has occurred. The Borrower cannot remedy the default in the State of
Forbearance- Anytime before the Trustee Sale date, the Borrower can enter into an agreement with the lender to "catch up" the payments. The Borrower will need to submit financial information to the lender to be considered for the program. Payments will either be added to the back of the loan, or there will be a balloon payment after a period of time. (Approximately 6 months or more)
Loan Modification- Anytime before the Trustee Sale date, the Borrower can enter into a Loan Modification Agreement with the Lender. This will be based on the Borrower's financial situation. In this case the Lender may lower the interest rate, extend the financing period and other methods to make the loan manageable for the Borrower.
Short Sale- Anytime before the Trustee Sale date, the Borrower may sell their home. If the sale of the home is LESS than the amount owed to the Lender(s) and the Lender(s) agree to the sale, the shortage of the amount due is considered a "Short Sale". The Borrower will need to submit financial information and the reason for their hardship to the Lender(s).
BPO- A "Broker Price Opinion" is where the bank pays another Real Estate agent a small fee to give a value of the property and its cost of repairs to the Lender. This is ordered when the Lender is considering an agreement with the Borrower, or getting ready to place the property on the market.
Trustee- This is the company hired by the Lender to start the Foreclosure process against the property. They facilitate the sale and calculate payoffs.
Deficiency- This is the amount that the Bank lost in either acquiring the property thru the Trustee Sale, or by a Short Sale Agreement.
REO- When a Bank takes over a property after a Trustee Sale and puts it up for sale, it is considered an REO or a "bank owned" property.
FAQ's
Q: Which is worse, a bankruptcy or foreclosure?
A: A foreclosure stays on your credit for 10 years whereas a bankruptcy will stay on for 7 years. Although both may damage your credit rating, a foreclosure will give a signal to future banks that you have failed to make payments on a home and did nothing to prevent the foreclosure when there are many options available. This is far worse than having lenders see that you were unable to make payments to creditors and filed bankruptcy.
Q: Can I avoid bankruptcy?
A: Yes. In practically all cases, workout terms can be negotiated that prevent foreclosure and the need to file for bankruptcy.
Q: Is it too late to do anything about the Trustee Sale?
A: No. If you take steps now to protect your interests, many alternatives remain available to you.
Q: Can I refinance my current mortgage?
A: Yes. With sufficient equity or a 6 month payment history you can refinance your mortgage with a new lender. Even if you don't have much equity, very often your existing mortgage can be restructured with your current lender. (Forbearance or Loan Modification programs)
Q: Can I sell my property?
A: Yes. Your property remains yours to sell until the title has actually been transferred out of your name. Even if you owe more than your property is worth, we are highly successful at negotiating full satisfaction of you mortgage as the property is sold as or less than market value. (Short Sale)
Q: Should I use a Realtor to sell my property?
A: YES! We recommend using a Realtor!! Selling a property and negotiating with the bank can be very time consuming and confusing. Finding a Realtor that has had numerous “successful” pre-foreclosure sales will give you an edge in the market in selling your property.
Q: Can I continue to live in my home?
A: Yes. In many cases your mortgage can be restructured according to your household income and should you decide to sell, you can remain in your home during the sale of your property. In fact, staying in your home may allow you 30-60 days to save up for your next residence.
Q: Will stopping foreclosure save me money?
A: Yes. As a resolution to the claim is negotiated, which stops foreclosure, you avoid forfeiting equity you may have in the property and also avoid a deficiency judgment against you. These savings typically total thousands of dollars.
Q: What is a “Hardship” loan modification?
A: This is where the lender agrees to restore your mortgage payments to the normal amount due to a hardship you have had that prevented you from keeping up with these payments. Many times the missed and late payments are added to the back of your loan.
Q: What is a “Short Sale”?
A: This is where you sell your property for less than you owe the lender(s). Although you want to get the most out of the sale of your home, many times the property is over-encumbered with 2nd or 3rd lien holders or equity lines of credit. Banks are willing to negotiate a “short sale” provided they receive a certain percentage of the amount owed. The balance is paid by your MIP (Mortgage Insurance Premium).
Q: What is the difference between a Chapter 7 and Chapter 13 bankruptcy?
A: Chapter 7 is a forgiveness of your debts. Chapter 13 is a repayment plan (3 to 5 years) to your listed creditors.
Q: How many days can you put off a Foreclosure Sale?
A: It depends on how close you are to the Trustee Sale date and your financial situation. If the Bank received an offer on the home or is working on a Loan Modification/Forbearance Program, they will more than likely postpone the sale date to allow consideration.
Q: What is a “TS number”?
A: This is the file number that the Trustee or Sheriff or Attorney uses for your case.
Q: What programs do you negotiate with the bank?
A: There are many programs designed to help homeowners avoid foreclosure. Some of the programs available are:
Forbearance
Loan Modification
Work Out
Pre-foreclosure
Short Sale
Abatements
Deed in Lieu of Foreclosure (NOT Recommended)
Q: What makes you different than other companies that want to assist me?
A: Our Company has experienced agents that have worked with distressed properties for over a decade! Not only are they leaders in today’s market, but provide training to other agents and are veterans at negotiating with banks to help homeowners save their homes and their credit! We can provide alternative to:
· Bankruptcy (which costs approximately $1500-$2500 or more for a good attorney)
· Foreclosure (which is our first priority)
· Stop future negative credit reporting
So what do I do NOW??
Please Do Calm Down
Take a deep breath and do ONE THING AT A TIME until it is finished. DON’T PANIC. And certainly, don’t file a bankruptcy hastily.
Please DO BE DETERMINED AND DO USE COMMON SENSE
And don’t believe everything the collectors tell you. When you asked your lender to help, they probably said, “No, there is no help available on this loan. You just need to pay in full.” That actually means “No, it’s easier for us if you just pay in full, and if you want REAL help, you need to find a way to apply for that help yourself.”
THERE IS HELP AVAILABLE
Doesn’t it seem strange to you that a person can make mortgage payments for YEARS and when they have one hardship the lender would want to just throw them aside and take a loss by selling the property?
Doesn’t it seem like there should be some emergency protection available in the case of HARDSHIP? Of course. There ARE hardship programs available on 99% of the home loans, and if you qualify they CAN HELP YOU!
WHY wouldn’t the lender want to use them? The lender doesn’t have the staff to bother with this, but they need to act like they do. YOU don’t have time to play this game. You need to “present your own case”.
WE ARE TAKEN SERIOUSLY
Once you have PROOF ON THE RECORD, would a lender want to lose investors and insurance companies that FUND ITS BUSINESS because it is proven to be careless about the foreclosures it had FULL OPPORTUNITY to prevent? Or would a lender want to spend unnecessary legal fees in bankruptcy court when it could simply approve a hardship application?
This is NO TIME FOR TRIAL & ERROR
It is impossible for a homeowner to become an expert on all their options in time to save their own home.
There are TENS of thousands of foreclosures recorded every MONTH in the
Please DO NOT INCRIMINATE YOURSELF
So you’ve been begging the lender to talk to you and they ask you a bunch of questions about your finances, so you want to convince them how great you look, and then they’ll approve you, RIGHT?? WRONG!!! If you make too much money or have too much money saved or too many assets, you can be DISQUALIFIED FOR HELP. The best programs available are HARDSHIP PROGRAMS. Don’t fall into this tempting trap!
Please DO NOT PROCRASTINATE
We know it is tempting to hide out and avoid all this stress…but the longer you wait, the fewer options you will have. INACTION IS THE WORST POSSIBLE DECISION. Your back payments will continue to mount up and hoping that this problem will “go away” or that something will “happen” to make things better, simply allows your lender to move closer to having the right to sell or repossess your home.
Please DO NOT SPEND ALL YOUR MONEY ON “OTHER THINGS”
YOUR HOME IS YOUR MOST IMPORTANT ASSET. CREDIT CARDS want you to “panic and pay!”…do you know why? Credit cards are unsecured and you’re in financial trouble… they think you may be headed toward bankruptcy and they will get NOTHING. But this is NOT YOUR PROBLEM. Fight “fear with fear”, get yourself a lawyer and see how fast those calls “cease and desist”. You have your own problems, and right now the most important one is saving the home where your family lives!
Please DO NOT DIG YOUR HOLE DEEPER
What friends and family DON’T realize is that the same hardship that got you in trouble on your mortgage has created pressure in MANY areas, and exactly what you DON’T need is another debt! If ANYONE is going to loan you money, let it be the mortgage company that already benefited from all those payments you made during the good times. If you had a hardship which caused this foreclosure, you may qualify to PAY BACK THE MONEY AT THE END OF THE LOAN. Once the money is spent, the mortgage company will NOT give it back! Avoid creating more debt if at all possible.
Please DO NOT BECOME A VICTIM
Yes you had a hardship. No you didn’t plan it. But, if you feel like a victim and act like a victim you may BECOME a victim. Predators, like collectors and con artists, love to prey on the desperation of people in trouble.
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7898 E. Acoma Dr. Suite 101 • Scottsdale, AZ 85260
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