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There are many reasons a person would need to or want to do a short sale.  This is good information from Markve and Zweifel, the law firm I use to assist me with my short sale listings to make sure the files are kept up and worked on every day.  This information is helpful to sellers, buyers, and realtors alike. Please contact me if you are considering a short sale. Amy Kerber 952-844-6062, 952-210-4414 or Amy@amykerber.com.

Standard procedure  for your entire short sale process is:

1. List the property for sale.  If you are not entirely sure if you want to do a short sale you could meet with the attorneys first or discuss your situation with a law firm staff member.

2. Appointment Set- Client/Seller schedules an appointment with our law office for legal counsel regarding short sale, creditor and debtor rights, possible tax consequences,etc.

3. A Purchase Agreement is accepted by the seller.

4. Legal Assistant – The legal Assistant will review and package the short sale for the lender.

5. Attorneys- The attorneys supervise the work of each legal assistant through their process, answer questions, develop negotiation strategy, etc.

6. Legal Assistant sends file to the lender

7. Set-Up (3-5 days)-The file is received at the lender, imaged into their systems under the proper loan number,then scheduled to be assigned.

8. Processor Assigned- They will have the file for 2-4 weeks.
9. Negotiator is Assigned- The negotiator also has the file from anywhere between 2-4 weeks. The negotiator review sellers financials, hardship or lack thereof, and determines terms under which this seller would be acceptable for short sale. Once the negotiator determines seller eligibility, he/she will then review the buyer’s offer in comparison with the valuations to determine if the buyer’s offer meets the investor requirements. If the offer is acceptable and meets the investors and Mortgage Insurance Company’s guidelines, the negotiator will submit the file to the Mortgage Insurer( If applicable) and/or investor for final review and decision. If the negotiator finds the buyer’s offer does not meet the investor’s guidelines,the negotiator will counter the offer and send the counter offer to our office. At that time the legal assistant will refer the counter offer back to the listing agent for negotiations with the buyer.If the buyer accepts the lender’s counter offer,the negotiator then submits the file to the MI company and/ or investor for final approval.

10. Mortgage Insurer- An acceptable offer is the first submitted to the MI Co if the loan has Mortgage Insurance. There are many different MI Companies and they all have different guidelines and different time frames which is why no short sale is ever the same. Time frames typically vary from 10-30 days with MI depending on which company it is. Once the MI approves the short sale, the file is sent back to the negotiator & submitted to the Investor for final review and decision. Please note that both MI Co & Investor may request/require a cash contribution or promissory note at closing in order to approve the short sale.  If so,negotiations then continue with the seller and/or buyer regarding those settlements. If those settlements are required and/ or agreed to by all parties, the MI company approves and the file is transferred to the investor.

11. Investor - The file is submitted to the Investor for final review and decision.  Their process takes typically one to two weeks.  Once the investor approves the short sale, the file is sent back to the negotiator for the approval letter to be drafted.  When the file is with the investor, it is out of our hands and there is nothing either we or servicers negotiator can do to escalate or speed up their process.  The investor reviews the files in the order in which they are received.

12. MZ Law- Once we receive the lender’s offer for approval, it is reviewed by the attorney and the seller.

13. Closing- Most short sale approval letters require closing with in 30 -45 days.

For short sales to be successful, it is imperative that all parties to the transaction,( sellers, buyers, loan officers, and Realtors) are knowledgeable in the process so expectations are reasonable and premature cancellations are avoided.

Please call me to discuss specific situations further or to set up a free consultation.

Thanks.

Amy E. Kerber, Realtor, Graduate Realtor Institute, Certified Relocation Specialist

Coldwell Banker Burnet

7550 France Ave. S. Suite 100

Edina, MN 55435

952-844-6062 office

Amy@amykerber.com Email

www.CBBurnet.com/AmyKerber website

Minneapolis St. Paul & Twin Cities Business Magazines 2009 Super real estate agent

What’s going on this weekend you say?  The 3rd Annual Art Crawl at 50th And France in Edina from 3-5 pm. Vote on local artists and students window displays. Meet the artist and view in store exhibits from the artist.  They will be on display until March 18th and the winners will be announced then.  Two friends have been hard at work so be sure to visit the exhibits by Lois Ring at Edina Grill and Naomi Griffith at Ala Mode Boutique & Nail Spa.  

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Short Sale Definition:

 Selling a house for less than is owed on the mortgage or combined mortgages with the Bank’s Approval.

On the fence about doing a Short Sale? Read this Article from the Wall Street Journal

Underwater On Your Mortgage Or Just Can’t Pay? Know Your Options!

1. Understand loan modifications: If you are barely underwater on your home, this route may work, if you are 20% or more upside down, go directly to a short sale. Chances are it will take DECADES to break even on your home. Banks are NOT willing to do “principal reductions” (principal is the amount you owe). However, they may be willing to reduce your interest rate in order to get a lower payment. BE CAREFUL: think smart about your financial future when modifying a loan on a home that is worth considerably less than you owe. UPDATE: Only 69,000 homeowners in the entire United States have received a permanent loan modification by the end of January 2010! IN ADDITION: 70% of modifications end up with a HIGHER monthly payment than before. Go to step two. 2. Short Sale: When a loan modification will not work, or you just need to get out of the house all together, do a short sale. The short sale process takes about three to six months. You will need me, who has the specialized knowledge and processes needed to complete short sales. (My team includes very experienced and dedicated staff and a local MN short sale attorney’s office that negotiates with the bank on your behalf). 3. Deed in Lieu of Foreclosure: If you just can’t sell the house or condo, offer to deed the house back to the bank. This is your last, best bet before a Foreclosure. In order to deed the house back to the bank there can be no second mortgages or other liens on the property. The bank may not want it and instead will want you to continue trying to Short Sale. Typically the bank will want you to have listed the property with a MN short sale real estate agent for at least 90 days on the Minneapolis Multiple Listing Service (MLS). I have had several customers who have attempted to deed back to the bank and the bank just responded with “Lower the price another $10,000 and call us back in 60 days”. We did, and the bank gave us the same response again 60 days later. The bank does not want your property and would rather you participate in a MN short sale. A deed in lieu of foreclosure will hit your credit harder than a Short Sale. 4. Foreclosure: At some point of not making payments long enough and not getting a purchase agreement on the home, the bank will probably decide to move forward with their right to take the home back through a foreclosure. If you are “served” papers, you still have time to sell the home…you may complete a affidavit that will post pone the foreclosure sale for five months. If you list your property and find a buyer, most lenders will automatically postpone the foreclosure sale. However, you should not walk away or wait any longer to get the home on the market. The quicker we can get involved and get the home under contract with a new buyer, the faster we can stall a foreclosure by completing a fast MN short sale.

Qualify for a Short Sale

Banks are not willing to take a loss on their investment unless you qualify for a MN short sale. 1. The market value of the property has dropped: The home is worth less than the unpaid balance of the mortgage. The only way to know this is to look at the recent closed transactions of properties around your home. Recent is within the last 6 months. A true value is determined by what someone else is willing to pay for the home, however a MN short sale real estate agent or appraiser can give you a good determination of value. 2. In default or near default: Lenders are all over the board on this one. Some require you to be late on payments, some do not care, and some will tell you something different every day that you call. The bottom line, if you can’t pay, you can’t pay. If you can pay and it’s very tight, it’s your own personal decision to keep paying or to stop paying the mortgage. Ask our MN Short Sale attorney his legal opinion on this issue. 3. Seller has no significant assets: Rarely will a bank allow a short sale and take a loss on the investment if you have a load of cash sitting in the bank. Clarification: If you have a million in retirement funds, do not to worry, but if you have $50k+ sitting in the bank? They could ask for some of that cash to cover the difference. What if you have $10k in the bank? $10k is living expenses, just in case money, emergency money – banks will be much more likely to hear your hardship situation and not ask for any of that money. 4. Seller hardship: The Seller must have a current or imminent hardship. The banks want this in a letter and you need to be legitimate and truthful.

Examples of a Hardship: The following is a non-exclusive list of hardships that a Lender or Lien holder may take into account when deciding whether to accept a short sale: • Unemployment or loss of income • Reduction of income • Increase in household expenses (long term) • Divorce or separation • Medical emergency / sudden illness • Bankruptcy • Death of spouse or death of co-borrower • Short or long term disability • Adjustable rate mortgage reset • Failed business • Job relocation • Military duty • Medical bills

A few examples that DO NOT constitute a hardship: • Don’t like your home • Don’t like your neighbors • Buying another home (with the same or greater mortgage payment) • House is haunted • Moving just because

The bank will ask for these documents with your short sale application: • Hardship letter (here is a good example) • 3 months most recent bank statements • 3 months most recent pay stubs • Last two years tax returns (or extension requests) • Listing agreement with a real estate office • HUD-1 Net sheet (this is used at closing to show how the sale proceeds are distributed) • 6 month profit and loss statement (if you are self employed)

The bank needs the above items to verify that you qualify for a short sale. The bank will continue to request updated short sale documents throughout the short sale process. As it turns out, it is harder to get out of a mortgage than it was to get into one back in the days of easy mortgages! Do not get frustrated, just remember there is a good amount of paperwork push involved and the attorney’s office can help you with this.

Steps to Short Sale your Minneapolis, MN Home

1. Contact me You may set up an inital consultation over the phone or in person. I will review ALL of the options that are available to you (including loan modification, short sale, deed-in-lieu, and foreclosure, etc.). Conference calls are generally a great way to do this.2. Meet with me:  Let’s get started.  I will a give you the  short sale application(s) specific to your lender(s) so you can start getting together the paperwork. We will sign a listing agreement at this time and get the property on the market. I do not charge any upfront fees to list the property. If a point of sale inspection, well or sewer system inspections are required by law, you will need to pay for these inspections. Your lender will allow my commission and your closing costs to be paid out of sale proceeds. 3. Meet with the attorney: The attorney will contact you to set up an appointment to review your situation.  There are no fees charged to sellers who are selling a primary residence. Sellers of investment properties pay a $250 up front fee. The attorney’s office will negotiate the terms of the short sale for your maximum benefit. Your lender will pay the attorney fees out of sale proceeds. 4. Marketing the Property: We start marketing the property for sale. This period will take time even with a low price. Keep the home looking good and the yard in good shape for curb appeal. We are competing to sell the home against all the other short sales and bank owned homes so it is important to understand that we still must attract a buyer. 5. Under Contract: We get an offer that is realistic that we believe the bank will consider. I will review all offers with you and suggest that we accept, reject or counter any offer. We sign the purchase agreement with an addendum stating that the offer is contingent to the lender’s approval. 6. TIME: It takes about two to four months for the offer to be approved. Bank of America (Countrywide) has been the slowest however; they now have a new system called EQUATOR that has significantly sped up the process. Most banks are hitting 60 days or more to give us an approval and clear to close letter. Do not try to reason as to why yours should/will close faster…..it will not. Banks are flooded with short sale applications and are struggling to handle the volume. 7. Closing: We finally got the approval; we will typically close within 30 to 60 days after short sale approval is received from your lenders. You should not have to pay for anything at closing. In some cases your lender will allow you to have $1,000 to $3,000 of the sale proceeds. All realtor fees, attorney fees, closing fees, etc are paid from the proceeds of the sale. The remaining sale proceeds go to your lenders to settle your mortgage debt.

Deficiency Judgment:

What is a deficiency judgment? This is the legal ability of a bank to get a judgment against you for the difference of what is owed and what the home is sold for. That is why it is important that your lender agree to consider the remaining debt settled in exchange for the proceeds of the short sale. What are the chances of getting a deficiency judgment? Small banks and credit unions will typically pursue the remaining debt via the legal system if you do not reach a settlement with them. Typically a settlement can be reached by agreeing to bring some cash to closing or signing a promissory note for a portion of the remaining debt. Choosing A MN Short Sale Real Estate Agent

How do you choose the right real estate agent for your short sale? Don’t choose your best buddy, don’t choose your mom’s friend, don’t choose anyone unless they have a TEAM of highly experienced professionals that can complete the process and the sale. BEWARE! Most Realtors do not want to do short sales (and they can really screw up your short sale and finances). Most haven’t done a short sale and have no idea how to go about it other than what they have “heard” (this includes taking a class). From my experience, it takes time, persistence, and a large amount of specialized knowledge to make it all work.  I have since put together a short sale team including a local attorney’s office who works on your behalf to negotiate with the bank. We keep up with the ever-changing world of short sales and keep perfecting our processes to better complete each sale. This costs you nothing and should give you ultimate peace of mind knowing you have a competent and professional team working on your behalf. Buying Another Home

Can you buy another home after a Short Sale? Yes, just not right now. Regardless of your situation, the bank has to approve your short sale. If they let you out of your loan, it will probably be hard to obtain a mortgage for awhile. Look to purchase again in 12 to 18 months. I’ve heard of much sooner and I’ve heard 24 months, but most lenders will consider you eligible again in about 12 + months. Keep paying your bills on time, save some cash in the time being, and you will greatly increase your odds of being able to obtain a mortgage. I will also recommend that you consult with a credit repair specialist who will help you repair negative credit items and improve your overall credit score.

Where To Live After A MN Short Sale

There are more houses than ever available for rent in Minneapolis and the surrounding areas. Many are vacant and never lived in. Many people end up in nicer houses than the ones they sold….for less money. It is easy to start the search, and you may consider looking on Craigslist.com. Keep your budget in check and do not be scared to negotiate the right rental terms. Save some cash, keep paying your bills on time, pay down any other debts, and get ready to buy a home at today’s market value!

What Happens to Your Credit Score?

Will your credit be affected by a short sale? Yes, absolutely. Stop paying the mortgage = negative credit hit. Short Sale = negative credit hit. No way around it, but if you are reading this, you probably could care less at this point. The good news, your credit will bounce back if you keep paying all your other bills and debts on time.

Your Cost For Doing a MN Short Sale

You, the seller, have only a few out of pocket fees; any point of sale inspection fees, well and/or sewer system inspection fees will need to be paid by you. The Realtor fees, closing fees, attorney fees, etc are paid out of the proceeds from the sale. If you have more than one loan….all lenders will agree to take a portion of the sale proceeds for lien release. You typically cannot receive anything from the sale regardless of how much money you poured into the house. If you have an FHA mortgage or qualify for HAFA then you may receive $1,000 to $3,000 of the sale proceeds. Will Your Neighbors Know You Are Doing a MN Short Sale?

Yes. It is almost impossible to keep it hidden as anyone with a brain can figure it out. Realistically, many of your neighbors are most likely considering doing the same if they are upside down in the value of their homes. In addition, it is in the MLS (Multiple Listing Service) that the sale is a Short Sale so every Realtor and potential buyer will know…..which ultimately will attract more buyers as they know they can buy the home for a slight discount.

Short Sale TIP: Do not wait! If you think you are in the position of needing to short sale your home, call me immediately and I can set up a free consultation at the attorney’s office.

Amy Kerber, Realtor, GRI
Coldwell Banker Burnet
7550 France Ave. S., Suite 100
Edina, MN 55435
952-844-6062  Direct
952-844-6099  Fax
952-844-6000  Office
Web:   www.CBBURNET.com/AmyKerber
Your referrals mean the world to me and I will make sure they are treated well!
Ask me about our “Lock and Shop” program it takes the worrying out of rising interest rates.
Content taken from another realtors blog!

This is information from the staff and attorneys at Markve and Zweifel I work with on any short sale listings:

More and more mortgage investors and mortgage servicers are coming up with programs providing  relocation assistance funds of up

to $30,000 in some cases.  Closings out of this office have sellers receiving $3k, $5k, $9k, $14k, $19k, $24k, and yes even $30,000!   And that is just a few of the dozens we are working on with sellers receiving these relocation assistance incentives.  Sellers are using these funds to work out full settlements with 2nd mortgages if necessary, pay off judgments or other debts, or simply helping themselves get a restart on life and credit restoration. Mortgage lenders DO NOT WANT THESE HOUSES BACK!  So, they have come up with these programs to curb REO inventory losses and offer these homeowners a “graceful exit.”By knowing and understanding the details of these programs, and being able to provide potential clients with the details, a listing agent can increase their short sale listing inventory exponentially!  Some of these programs have specific procedures that must be followed precisely in order for the homeowner to receive the funds.  The MZ Law staff is well versed in those procedures so, together, we can help these clients to the best possible outcome.

 The attorneys at MZ Law also discuss the possibilities of cash back short sale availability with the clients during their consultations.

 

 

Here is an announcement just out from FNMA regarding their continued preference for short sales vs foreclosure and REO.  Highlights that will make a difference for our sellers and agents are listed below and how the change can ultimately benefit your short sale sellers.

1.  FNMA will now approve short sales with waiver of deficiency.

It has been our experience for the last year or so that FNMA has required some seller cash contribution (as little as $250) for waiver of deficiency in many cases.  Some servicers had refused to add waiver of deficiency language to their approval letters and it was too risky for seller to close. This change in policy will allow more sellers to choose to close as we can inform servicers their letter must include waiver of deficiency if investor is FNMA.

  1. Servicers will have the authority to approve.

Previously, servicers had to negotiate the transaction to meet FNMA guidelines and then still forward to the file to FNMA for final approval.  By the servicers now having the authority to approve the short sale, it will decrease short sales approval process by anywhere from one to three weeks if the investor is FNMA.

  1. Sellers with qualifying hardships will now be able to get FNMA short sale approved without having to default on their payments.  See attachment for list of qualifying hardships that eliminate default requirements in FNMA short sales.

This new policy will help our sellers become buyers again sooner.

  1. Standard payouts to junior lien holders of $6,000 from sale proceeds regardless of unpaid balance

Previously, FNMA would allow 6% of the unpaid balance or $6,000, whichever was lower to junior mortgages.  In many cases, the 6% was too low of an amount for the 2nd to approve.  This standardized payout from sale proceeds of $6,000 to secondary mortgages will help us get approvals from more 2nd mortgages.

  1. Less documentation required from some sellers.

The announcement states that if a seller is 90+ days in default and have a credit score lower than 620, the short sale will be considered without seller providing financial documentation.  This can really help more short sales close with sellers that are non-compliant, divorced couples with participation by only one spouse, missing borrower, etc.

THANK YOU FNMA……….MOVEMENT IN THE RIGHT DIRECTION TO HELP MORE HOMEOWNERS AVOID FORECLOSURE!

Sincerely,

Wendy Haisley

Program Coordinator / Legal Assistant

Markve & Zweifel, Attorneys at Law, PLLC

This information is from the great attorneys and staff at Markve and Zweifel who handle my short sale listings.  They give you legal advice and allow me to get your home sold!

Short sale vs. foreclosure

We wrote about how to prevent foreclosure this week.  If you are considering a short sale vs. letting your home go back to the bank, this is information that is important to know:

Most people think that by letting it go through foreclosure, they are not responsible for payment on 2nd or third mortgages and a high percentage of people have at least two mortgages.

Via short sale, we can commonly negotiate full settlements on the 2nds.  If property goes through foreclosure via advertisement,  they have no obligation to the first but owe the full amount on the 2nd.

It means that if she lets it go to foreclosure, she will still be responsible for the full balance on the second.

This means you would then have to negotiate some kind of settlement with them if lender is willing or they can sue you,Garnish wages, take $$ from bank accounts, attach the judgment to other property you own, etc.

If you do the short sale, we may be able to get you off all or at least part of the balance on the second.  Howmuch we can get you off of depends on who the lender is and what your hardship is.

Also, if you may want to buy a home in the near future with conventional financing, you will need at least 20% down to buy in 2 years, 10 % down in 4 years, or you will need to wait 7 years to purchase if you have minimal down which is one more reason to consider a short sale.

People, please, if you are wanting to help your self in the future, please contact us to find out about short sales.

Wendy Haisley- Markve and Zweifel law office.

Amy Kerber, Coldwell Banker Burnet, Edina Regional Office

Amy@amykerber.com

952-844-6062 office

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