Villa Cortina Homeowners, we have buyers who are looking to purchase 2 bedroom 2 baths units in this complex.

We would like to hear from you if you can do a regular sale.

Even if you are underwater and would like help getting out from under the  property so you can move forwards, we can help you, so please contact us.

Steve Mun Group
www.stevemungroup.com
650-605-3188

These are both financially and emotionally difficult times for these homeowners and also ideal climate for swindlers to come swooping in. However, there is a solution available for these homeowners without falling victim to fraud. I invite you to do your due diligence and find an agent who can help you out of this dilemma who has the experience, the skill set and references to protect your financial future.

Change the Course Report

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.

You hear the term all the time.  Notice of Default, (NOD).  If you google the term, you get pages and pages of definitions and suggestions on what to do.  But after reading all of the material, could you identify it if you saw it?

As the San Jose Short Sale Agent, I try to explain the significance of this document and try to describe what the documents looks like to my clients, but most cannot visualize it.   However, I don’t blame them, because even for me, in order for me to learn or absorb something: I need to see it, feel it or experience it before it will register in my brain.  I supposed we are all the same in this regard.

Instead of always trying to describe this document, I decided I would show everyone a sample.  This way, they will know when the official foreclosure process has begun and certain timelines have been established.   This is when things get very serious.

Sample NOD
As you can see from a real NOD from one of my clients (relevant information removed), the document simply identifies three things:  a) how much do you owe, 2) to whom do you owe said money and 3) when the sale date (a.k.a. auction date)  can take place if said money is not paid.   If the default amount is not paid by the end of 90 days, then the agent of the beneficiary can file a Notice of Trustee Sale (NOT or NOTS), which will describe when and where the property will be sold.

If you see one of these documents in the mail, then it is time you seek help from someone who can stop the foreclosure process.

We get all kinds of requests and questions about who can qualify for a short sale.

Many people, due to unforeseen hardships, are unable to make their mortgage payments are able to qualify and get the needed approvals.  However, because the short sales are becoming such a large part of  real estate transactions and all participants are trying to standardized the process through the  HAFA  program and because  HUD, a government agency,  oversees and encourages the utilization of short sales, not everyone will qualify.

Simply put, if you have been convicted of certain financial misconduct, most lenders who participate in the HAFA program cannot permit a short sale to be approved.

Below is the Dodd Frank Certification which is a part of the JP Morgan Chase’s  Short Sale package.    If you answer yes to any of these offenses, you are ineligible to receive any benefits that result from a short sale approval.

Dodd Frank certification

Typically, the FHA borrower may not have sufficient funds set aside to deal with repairs, hence this program is available for those specific needs.

Here is an excellent post by a fellow blogger and Mortgage Broker, Bill Ladewig,  discussing the multiple uses of the  FHA 203K loan.  A great product

SM

Rebuild this home with a FHA 203(k)

One loan finances the purchase and improvements. The FHA 203k includes the cost of rebuild, rehabilitation or home improvement in a purchase or refinance loan.  .

The 203(k) is a great marketing tool for real estate agents that provides added value.

While it is a great tool to rehabilitate trashed REOs it also can be used to upgrade homes.

The primary criteria are: the improvement is a permanent part of the real estate and the improved home’s value must be comparable to similar homes in the neighborhood.

There are many uses for the 203(k)

• Rebuild
• Rehabilitate
• Remodel kitchens and bathrooms or…
• Add Rooms
• Move homes to new lots. •
  • 203k cannot be funded until home is permanently secured to new foundation.
• Start with an existing bare foundation and build a new home.

Underwriting guidelines for borrower are the same a regular FHA

• Must be owner occupied
• There are no borrower income limits.
• No purchase price restrictions
• Subject to local FHA loan limits.
• Borrower’s minimum investment is 3.5%

FHA 203k are not overly complicated.

The final loan amount will be 96.50% of the purchase price and cost of repairs plus a contingency pad

The purchase contract is written based upon the purchase price.  I suggest, to avoid seller confusion, the purchase offer loan amount to be 96.50% of the purchase price with a notation the loan amount will be increased based upon repair costs.

Once the offer is accepted repair bids are prepared by licensed and bonded contractors.  If the bids are over $35,000 a FHA 203k inspector must review the property and bids; below $35,000 no FHA inspector is required.

• Purchase price plus construction costs CANNOT exceed the value of comparable homes in the area.
• The contractor must understand the bid must be accurate because there will not be any additional money available.

After the construction bid is accepted, it along with the purchase contract is sent to the FHA appraiser.

The time to complete a FHA 203k is dependent on the time required to prepare the construction bid.  Once the construction bid is accepted the time to close is the same as a regular FHA loan.

Education is Consumer’s Only Real Protection.

• What You Should Know About APR
• How To Shop for Mortgage Rates.
• Beware of Misleading Lender Advertising
• Education is the best consumer protection
• Rates and Point Relationship Explained

Bill Ladewig

800.664.7283 (SAVE)

Bill@YourFhaGuru.com

Website

Common sense would dictate that if the bank is working on a loan modification with you, then it should at least hold off on the foreclosure proceedings until the matter has been fully resolved. Borrowers often get lulled into a false sense of security, thinking foreclosure efforts are put on hold, when they are not.   Once the loan modification has been denied, then there is no time for other available alternatives, such has short sales.    If someone is about to lose their home, then they should be given every opportunity to remedy the situation.

Hopefully this courageous effort will go through.

http://mobile.latimes.com/p.p?m=b&a=rp&id=208114&postId=208114&postUserId=7&sessionToken=

California Bill Ending ‘Dual Track’ Foreclosures Faces Key Vote

Start off your New Year differently by crafting a plan to avoid foreclosure.

There are steps to avoid foreclosure and even get paid up to $3,000. See if you can qualify.

Here is her well written post about the passage of SB 931.

If a seller in Sacramento, — or anywhere in California for that matter — ever needed a good reason to do a short sale over a foreclosure, the fact that SB 931 was signed into law by Governor Schwarzenegger on Sept. 30th should be reason enough. First lenders can no longer go after a short sale seller of one to four units. Of course, the protection against a deficiency judgment is only for a first trust deed, but it no longer matters whether that first loan was purchase money (non-recourse) or hard money(recourse). It does not apply to subsequent or junior encumbrances.

The provisions of SB 931, which is now added as Section 580e to California Civil Code, prohibits a first lender from pursuing a seller after a short sale. It does not protect those who go through foreclosure. Although purchase money loans are non-recourse, some lawyers have argued that doing a short sale gives a bank certain rights to pursue a seller after a short sale, regardless.

I have received short sale approval letters that address this right and letters that do not. Sellers are not automatically exempt from a deficiency simply because the short sale letter does not address the issue.  SB 931 clears up that confusion.

However, here is the kicker. It applies only to short sales that close on or after January 1, 2011. This could possibly mean that many sellers with only one loan may elect to postpone closing their short sale until January. Of course, sellers  facing an auction really don’t have that luxury. They may have to close or go to foreclosure.

The new anti-deficiency law applies only to one to four units, and the sellers must not have committed fraud or be a corporation or political subdivision of the state.

See previous post about SB 931.