San Jose Short Sale Agent: Silicon Valley Foreclosure Prevention Specialists

It was a pleasant, beautiful sunny day today as the San Jose Short Sale Agent drove around previewing some homes while listening to some oldies on the radio.   It turned into a much nicer day when my client who was closing on his short sale today, invited me to lunch after he picked up his check for the $3000 relocation assistance check from his HAFA short sale.  He was so excited that the nightmare was ending, that he wanted to celebrate with me.

It a little over two months ago when he contacted me, feeling he was at the end of his ropes.  Chase had just informed him they were denying his request for a loan modification after dragging it out for months and the prospect of staying in his home was now up in the air.  But he had made up his mind.  He realized, despite his emotional attachment, he could no longer afford to keep the home.  He had to give it up and move on with his life and make a new life for him and his family.

In a little over two months, that same lender – Chase – was willing to allow him to sell his home for a loss, forgive him the deficiency, but on top of that gave him a check for $3,000 to help with the relocation to his new rental.   As we were discussing over  dim sum lunch, he was so happy and grateful that he is able to move forward without the burden of his mortgage, he seemed like a different man.  He was saying he could not sleep even last night, because he was concerned that something could go wrong and we would not be able record the deed and close escrow today.  He was going to sleep well tonight!   My client is now a friend and an evangelist on my behalf.

We were discussing why more people who are in similar situation as himself would not choose his route if they were unable to get loan modifications or otherwise afford to keep their homes.  We came to the conclusion it is probably due to lack of information.  If distressed homeowners knew that their income tax exemptions and the benefits of financial incentives from HAFA were ending soon, they would probably take decisive action as to prevent missing out on those valuable benefits.  He would tell his friends whom he knows are having difficulty paying their mortgages to take action.

Dear reader, if you or someone you know, are in a similar situation where you have come to the conclusion that you cannot afford to keep your home, but you cannot sell your home either because of the debt you owe to the banks, please take action soon and before this year is up.  Naturally, if you reside in the greaterSilicon Valley, I would love to help you so you can move forward with a new chapter in your life.

However, I am not saying you have to come to me necessarily; I respectfully and sincerely urge you to talk to someone who is an expert in the field of Short Sale  and get help soon before the two programs expire.   I think I would not be doing my job and my personal quest to help as many people fight foreclosures if I were not educating people about programs that are available; yet many people are not taking advantage due to lack of information.

Please talk to someone.  Indecision means you are making a decision to allow foreclosure to happen to you.

With the start of the New Year, inevitably people start thinking about paying taxes and the IRS.

Here is something to ponder if you are one of the millions of American Homeowners who is behind in their mortgage payments.  Starting in 2013, whether a homeowner gets foreclosed on or completes a short sale, they will be required to pay both Federal and State Income Taxes.  Yes, even after they lose their home, they will be left with a tax bill for the value of the debt which was forgiven or charged off.   And as calculated in the article below, this could mean possibly tens of thousands of dollars for the homeowner.

According to the Mortgage Debt Relief Act of 2007, up until December 31, 2012, the IRS and Franchise Tax Board (for California Homeowners) will “generally allow taxpayers to exclude income from the discharge of debt on their principal residence.”  The Franchise Tax Board has agreed to mirror the IRS on this matter.   And given the status of the Federal Debt Ceiling and current political climate, I would bet against the law being extended.

http://www.sacbee.com/2012/01/09/4172841/you-may-owe-federal-income-taxes.html
You May Owe Federal Income Taxes in 2013 if You Have a Short Sale, Foreclosure
 

Besides the expiration of the Income Tax exemption, there is another financial incentive which will expire at the end of calendar year 2012.    The HAFA (Home Affordable Foreclosure Alternative) Program, which may assist qualified Homeowners receive moving expenses and additional funds to pay off a second mortgage will expire on the same date.

Given that the foreclosure and short sale procedures are prone to extended time to completion, homeowners in distress contemplating short sales must do some serious thinking this year.

The San Jose Short Sale Agent  shouted with glee today to celebrate the victorious outcome of a family which was able to successfully fight its battle against foreclosure today, as I was feeling proud and victorious.  The family which had endured the humiliation of being turned down for a loan modification by their bank, feeling they were without recourse, had come to me only two months ago to try a short sale as their last hope.   They felt they were at their wit’s end.   They came beaten and  humiliated.  It was bad enough they had to live through the indignity of unemployment which triggered their horror story, but their bank had refused to modify their loan or otherwise assist them.

But today they were victorious because the same bank which refused their loan modification request, had approved their Home Affordable Foreclosure Alternatives Program (HAFA) short sale and were willing to pay them $3,000 to help with their relocation costs and also had going to pay nearly $4,000 to pay off their HOA delinquencies and additional funds to pay off their delinquent property taxes.   Unlike two months ago, now the family felt they were getting vindicated.

That joyous feeling lasted a few hours as I read this  article today describing a different outcome for a person with a similar hardship which is headed towards a different outcome.   I obviously do not know the full details of Darlene’s situation besides what was described in the article below.   However, what I do know is that she was unemployed, suffers from cancer and fell behind in her payments which led to her foreclosure.

Typically three things have to be present to qualify for a short sale approval:  1) hardship (typically economic hardships) ,  2) monthly income short fall (meaning more goes out than coming in)  and 3) insolvency (meaning no assets).   In Darlene’s case, she certainly would have met the hardship (cancer plus unemployment);  the article mentions she is living on pension, social security and unemployment so I would assume she had a monthly short fall and probably did not have much assets set aside.   She certainly sounds like she would have been a good candidate for a short sale.

Additionally, if  this were her only home (primary residence), and as she was obviously delinquent on her mortgage payments and her unemployment and other income sources would probably have resulted in her paying more than 31% of her monthly income, there is a good chance she would have qualified for a HAFA short sale as well as Wells Fargo participates in that program.   If she qualified for a HAFA short sale, then she would have received $3,000 relocation assistance and up to $6,000 to pay off her second loan, if she had one.   Rather than being evicted with nothing to  her name or perhaps a small stipend – otherwise known as cash for keys – to get her out, Darlene could have saved herself the humiliation of being evicted from her home of 41 years and walked away knowing that she would have settled her debts with Wells Fargo and other lien holders.   She could have walked away selling her home with the bank’s blessing plus money in her pocket, rather than having the bank evict her and her neighbors of 41 years watching this happen.

The unfortunate aspect of this tragic story is that Darlene probably did not know that the HAFA option was available to her.   People in Darlene’s demographics do not often have the benefit of being able to research alternative options to foreclosures on the internet and take advantage of those solutions and the accompanying benefits like my clients did when they reached out to me two months ago.  Both of these people had similar hardships – unemployment (but Darlene’s case was worse because she also has cancer which was probably rapidly draining her bank account) – yet the outcomes will be dramatically different and each of these families will be celebrating the Holiday Season this year  in different states of minds.   It did not have to end this way for Darlene except that she was unaware and regretfully no one around her had given her the requisite  information.

If you are reading this blog entry, please share what you have read, so that people like Darlene do not have to suffer through foreclosures due to lack of knowledge regarding alternative options.   Please tell your grandparents, parents, neighbors or others who may be unable to surf the net for answers that there are alternative options to foreclosures; they don’t have to endure the humiliation of an eviction.  Please share with them that there is a Federal Government designed program to help out people facing foreclosures by offering them different alternatives.

 
San Jose Foreclosure Case is Both Tragic and Complicated

Starting today, December 1, 2011, Bank of America (BofA) makes the HAFA short sale process run easier and smoother by permitting them to be processed through the Equator system. The use of the Equator system made the entire short sale process at BofA go much smoother. It was only a couple of years ago, that BofA was often deemed to be the worst lender to deal with in the short sale arena. As the San Jose Short Sale Agent who has handled countless number of short sales with BoA prior to their transition to Equator, the changes in their service after converting to Equator were almost immediate. BofA went from the worst to best in a matter of months by a BBB (Better Business Bureau) survey. Unfortunately, the benefits and the efficiency of Equator were unavailable for those who were seeking HAFA short sales with BofA.

Until this announcement was made, all HAFA short sales had to be taken out of Equator and handled through their third party vendor call centers and fax machines. This meant things took longer and the inefficiencies of faxing documents to various fax numbers and non-employees came back into play. (But to be fair, even Wells Fargo which also uses Equator, takes the same approach with HAFA short sales and removes them from Equator). But with the announcement today that HAFA short sales can be processed through Equator, all is right with the universe. Now only if Wells Fargo will follow suit.

Bofa Announcement

If you have been following my blog, you know that I am personally offended by these scam artists out there who are preying on homeowners going through difficult times right now.  I try to warn people about scams and point them in the right direction.

If you are one of the 10 Million Homeowners who is behind in mortgage payments and have come to the difficult conclusion that you can no longer afford to keep your home but also cannot sell it either and are looking for a way out, there are dignified solutions available to you.  Foreclosure is not the only course.  You may not be aware, but there are alternative solutions which may not only allow you to sell your current unsellable home, but may also provide you with  thousands of dollars to make it happen, if you qualify.

The HAFA (Home Affordable Foreclosure Alternatives) program is a Federal Government sponsored program to help homeowners in distress.  IT COSTS NOTHING TO THE HOMEOWNERS.   Real Estate agents can help you with the process, but the homeowners do not pay the Realtors; their commissions are paid from the proceeds of the HAFA sale.

Unfortunately, many homeowners are not aware and are being duped by swindlers who claim to be able to help.    Below are 10 signs of Mortgage Modification Scams.
Mortgage Payments Weighing You Down Report

I am mad as hell as I write this entry.  Once again, dual track foreclosure has proven to be alive and well and being practiced by one of the large banks in Silicon Valley.

What is dual track foreclosure?  Simply put, it is when the lender agrees to work with homeowners on a loan modification request, but also continues its foreclosure effort  simultaneously.  If the homeowners are being given the chance to work on a loan modification, why not stop the foreclosure effort until the resolution of the modification request?   The problem is that by permitting the homeowners to work on a loan modification, it gives them the false impression that the foreclosure action has halted during the loan modification process.   Those homeowners whose loan modifications are rejected are discovering that their homes are being foreclosed soon thereafter, often not giving them enough time to prepare to deal with the loan modification, let alone the foreclosure.     In even worse scenarios, the homeowners are being foreclosed on while they are anxiously awaiting answers to the loan modifications.  Homeowners are given false hopes of saving their homes through a loan modification, but while they are working through the process, their homes get unceremoniously snatched away without warning.    

Legislative efforts were made earlier in the year in California to try to stop this deceptive practice by the lenders, but it never passed.   The lobbying efforts of the lending institution were sufficient to get the bill killed in the California Senate.  The despicable practice is still not illegal and being widely practiced.

Being the San Jose Short Sale Agent, I received a call from a prospect today who was referred to me by a recent client for whom I completed a successful short sale.  He wanted me to help him because he spoke with someone at Wells Fargo who kindly informed him that they denied his loan modification and by the way, they are going to foreclose and sell his home (court house auction) next week.   Here is an example of a dual track foreclosure at work.

This homeowner had trouble making his mortgage payments because his wife had lost her job.  They went from a two income family for which they qualified their loan to a single income family.  They had been working with Wells Fargo since April of this year to get qualified for a loan modification.   After months of providing documentation, they were told a few days ago that their loan modification was being rejected.  And also, by the way, the foreclosure auction (Notice of Trustee Sale) had been scheduled for next week.  When the homeowner asked if he could get a 30 days extension to hire a Realtor to do a short sale, they rejected that request as well.

I would love to help this homeowner, but the problem is, with less than a week to go before the auction date, I cannot stop this trustee sale from taking place.  Even if I had a viable offer in hand, most lenders and Wells Fargo, specifically, will not stop the sale if the sale is scheduled to take place in less than 7 days.    Had the homeowner called me a week or two ago, I could have worked some magic, but now with less than a week to go before the sale date, he is out of options.   Had he not relied solely on the bank to and taken other steps, we could have prepared him for a HAFA short sale and probably gotten him $6,000 to pay off the second lien and another $3,000 in relocation expenses.  Instead, he will get nothing for months and months of waiting.

Some of you skeptical readers out there may be wondering if I may be exaggerating how often dual track foreclosures may be occurring in the real world?  More often than  you would like to believe and sometimes with confusing results.

Family Fights to Keep Home After Accidental Sale – Local News – Sacra Men To, CA – Msnbc
For homeowners out there who are  working on loan modifications, do not put all of your hopes into that one basket.  The chances of homeowners getting successful permanent loan modifications are small to begin with, most receive a temporary modification or are summarily rejected like the person who called me today.   So protect yourself and  consider multiple options, do not make the mistake of believing that the lender will have your best interest at heart.

You are at the end of your ropes and came to the conclusion that you can no longer afford to keep your home.  If there were a way to help sell your home and protect your financial future, would you seek help?

If the government had a program which would help pay for a portion of your loan obligation and also help pay for your moving expenses, would you seek help?

If the government had a program which would insure that the lenders would not come after you for deficiency that results from what you borrowed versus what you ultimately re-pay them, would you seek help?

If the government said until 2012, the IRS will not collect taxes on the gains that result from the lenders forgiving you for portions of your loan, would you seek help?

Many homeowners are continuing to suffer because unemployment rate is still 10% in Silicon Valley and loan modifications are still very difficult to obtain  or may be secretly a victim of dual track  foreclosure.  If you saw no other way out except to sell your unaffordable home through a short sale using the HAFA program to obtain all of the above-mentioned benefits, would you seek help?

If the answer to the above questions were yes, then you may be a candidate for the HAFA short sale program.  Most major lenders are participants of this program which was designed to help distressed homeowners avoid foreclosure.  It is one of the few government programs designed to help struggling homeowners that actually works.

However, time is running out and you may not be able to take advantage of all of these wonderful benefits after the end of calendar year 2012.  So please contact us to find out more and see if you can qualify for all of these free benefits, including money to help settle your other liens and help you move.  Help is available to you, not taking advantage of this program is wasteful and can be disastrous to your financial future.  You have an obligation to help yourself by finding out more.

You may be fortunate and not be in a situation to take advantage of these benefits offered by this program.  However, if you know someone who may be able to benefit, then please forward this link and help them take advantage of these benefits and free money.   You will be helping someone out a very difficult situation.  It may be the right thing to do.

Another short sale approval came in today.    Another young family can now move forward and use the $3,000 check to help them relocate.  This was a HAFA short sale and another $6,000 from the proceeds were given to the second lien holder to help settle their claim.  After submitting the offer, it took less than 45 days to get the final approval.   This approval again, contradicts the rumors floating around out there that HAFA automatically causes delays in short sales.   HAFA deals with deadlines and was designed to speed up the process.

It was good for the bank, the seller and the buyer.   The house may not have sold for the amount borrowed, but we received a fair market value offer that was sufficient to pay monies to all parties involved to get them all to settle.   A happy day for all.  A good day for all.
Wells Fargo Approval

I got a chance to watch a couple of agents go at it with each other in a real estate forum trying to answer a question about doing short sales.   It was interesting, to say the least.  Besides the two main agents who proclaimed themselves the “experts” and hijacked the conversation, there were a few others who chimed in and made some comments.  But the question was never specifically answered.

The question posed was whether a lender will approve a short sale if the borrower had assets. He didn’t provide a lot of detail but wanted to either do a short sale or let his home go into foreclosure and he specifically asked not to get into a debate about the ethics in not paying his mortgage.

The argument or “discussion” in the forum quickly evolved into a big debate about the ethics of what people considered to be strategic default.  One expert proclaimed it was morally and ethically wrong to engage in strategic default and the lenders would not go for it. The other expert proclaimed morality and ethics had nothing to do with his decision and it was more about money.

As a San Jose Short Sale Agent, I tend to agree with the latter expert.  When you are dealing with short sales with lenders, the department you deal with is called Loss Mitigation.  Let me say it again:  Loss Mitigation.  Their job description is patently obvious: it is to mitigate or lessen the loss for the lenders.

Yes, there obviously are moral and ethical implications of not paying your mortgage when you have the financial ability to do so.   I firmly believe you should pay when you can and live up to your contractual obligations.  However, the question posed specifically asked not to judge the ethical implications but sought opinion as to whether a lender would agree to a short sale when the borrower stopped paying and was headed towards foreclosure.

There is no definite yes or no answer in these matters as the answer lies in the details.  It has a lot to do with how much assets the borrower has or does not have.  However, if the lender is faced between foreclosure and short sale, from my experience, the loss mitigation department chooses short sales over foreclosures.   At the end of the day, the primary decision will be about which method loses less money for the lenders, then, other factors like ethics and mortality can be entertained.

Why do you think big lenders like Chase and Wells Fargo are offering people up to $35,000 to do a short sale without even verifying their financial information?   HAFA recently amended its rules to state that servicers are no longer required to verify any financial information, but only to collect signed hardship letters.  Do these actions by large lenders and servicers sound like they are overly concerned about the ethical or moral issues surrounding foreclosures?

I can’t speak for other States, but in California, the recent changes in the law means if the lenders agree to permit a short sale, then the issues about deficiencies become null and void.  Once a short sale has been approved, the seller can walk away clean without looking over their shoulders.  Yet, another procedure that make completing a short sale more effective and efficient and preferable to foreclosure.  It’s all about money; if the institutions can make more money foreclosing, they will certainly choose that method, but everything recently is geared towards choosing short sales.  Yes, the lenders hate strategic defaulters, but they hate losing money even more.

So back to the question about would a lender approve a short sale if the borrower has assets?  It would depend on how much assets the borrower had and whether foreclosure would yield more money for the lender or a short sale.

It is this San Jose Short Sale Agent’s opinion that  HAFA and the new California anti deficiency law make the time ideal now for homeowners who cannot make their mortgage payments solve their problem without having to worry about extended obligations to the lenders after the sale.  If a homeowner has made the difficult decision that letting go of the home is the best solution available for their current situation, here are the top 3 reasons or benefits* available to them.

1.  HAFA allows the proceeds of the sale to be used to pay off all of the parties including commissions to the realtors and a $3000 relocation fee to the homeowners and possibly $6000 to pay off a second mortgage.  So there is potentially no out of pocket costs to the homeowner to market and sell the home.   A big burden off the minds of those who are not familiar with the process.

2.  One of the tactics the second lien holders tried to use to extract extra money from the homeowners was approving the short sale but refusing to release the homeowner of the deficiency obligation.   Unless you had an astute Realtor who was aware of this trick and refused to go forth without first obtaining a waiver of the deficiency, homeowners were often stuck owing money to the lenders after they sold off the house.   NO MORE.  The new law says once you permit a short sale approval, the lenders cannot try to retain their deficiency claims.

3.  Finally, until the end of 2012, Mortgage Debt Relief Act,  relieves the homeowners of the capital gains tax obligations of their mortgage debt being forgiven.  Homeowners were often blind-sided by the notion of the forgiven debt being considered capital gains and having to pay taxes on it.   Well, until the end of 2012, this potentially huge tax obligation is waived.   This could be tens of thousands of dollars.  This is huge.

For those who have made up their mind that they need to get out from under their mortgage obligations, the situation is now ideal.  All of the potential hurdles that lay in front of them have now been pushed down.  The only thing that may be problematic is if the homeowner is in a state of shock or denial and unable to take action, and forcing the lenders to take action for them.
These are general overviews, for specific details, please contact us.

Please always deal with people who have actual experience and have data to prove they have successfully completed and closed multiple short sales.  Do your own research, be a smart consumer.  There is much at risk if a short sale goes awry.

*These are my opinions.  I am not an attorney or a tax professional, so please confirm with them first before making your decision.