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1)      California Senate Bill 931 (SB 931) – This important new law went into effect on January 1st.   It requires that first mortgage lenders forgive the deficiency when they accept a short sale on a dwelling with up to 4 units. (The deficiency is the difference between what was owed on the mortgage, the expenses of sale, and the amount it was sold for during the short sale). Without the protections of SB 931, an individual short sale seller had to make sure that the bank forgave the deficiency in the short sale approval. Often, as a matter of policy, national banks would refuse to remove this possibility – leaving short sale sellers in limbo. That uncertainty has been removed when dealing with a first mortgage lender in California by this new SB 931 legislation. 
2)      Tax forgiveness on principal residences. Under the federal Mortgage Forgiveness Debt Relief Act of 2007, sellers have a limited window of opportunity until the end of 2012 for potential tax forgiveness on the short sale of their principal residence. Also, California state tax relief is limited as well until January 1, 2013.  It is possible that these favorable tax laws could be extended, but they also could not be extended, making 2011 an opportune time to short sell your home.
3)      Recent HAFA Updates – The government HAFA program has been revised (effective February 1, 2011) to  make processing a short sale smoother under the HAFA. Participant servicers are no longer required to verify financial information (although they still may if they wish), caps have been removed from amounts that second mortgage lenders can receive (giving more room to negotiate a deal everyone will agree to), the subject property can be rented for up to 12 months prior to the Short Sale Agreement if it was previously the seller’s principal residence, and the time period for lender response to offers has been tightened.
4)      You’ve had enough. – This may be the most important reason. Often, I meet with clients who are considering a short sale and when we begin to discuss things, I discover they have been in financial distress for 2 or more years. If your home is massively underwater, the sooner you put it behind you the sooner you can begin your new life. If you short sell your property, you may be able to get a new loan in 2 – 3 years under current FHA and Fannie Mae guidelines. The sooner you complete the short sale the sooner that clock begins

I am a Certified Short Sale Specialist in Placer & Sacramento County areas & I can provide an in depth Short Sale Consultation when you are ready. I can be reached at (916) 417-6162.
5 Reasons Why A Loan Modification May NOT Be the Answer for You

When considering whether you should pursue a short sale or a loan modification, homeowners should consider and discuss the following issues with their legal counsel and tax advisor.  

•1)      Not every loan modification solves an equity problem.  If your house is worth half of what you paid for it, a loan modification may not solve your problem, unless it includes principal reduction as a part of it.  Bank of America rolled out a principal reduction program in June of 2010, and recently, Wells Fargo Bank announced that principal reduction will be a part of its "pick a payment" settlement with the California Attorney General's office.   (This list, of course, is not exhaustive)  Also encouragingly, the HAMP program has rolled out the Principal Reduction Alternative.  However, if your bank will not offer principal reduction as a part of its loan modification options, or you do not qualify for principal reduction, (and you have an equity problem), a loan modification may not solve your real problem. 

•2)      You haven't made a payment in a REALLY long time.  Ever wonder how your bank will handle the fact that you haven't made a payment in such a long time?  Unless they offer the aforementioned principal reduction or payment forgiveness, they will more than likely take the amount of your back payments (along with the penalties for late payments) and stack it right on top of your loan balance, creating an equity problem, or making an existing equity problem worse.  If you haven't made a payment in a year or more, this amount can easily amount to tens of thousands of dollars.  You and/or your legal advisor should inquire with your bank about how they will deal with the fact that you are not making payments.

•3)      Your market is still declining.   Here is where consultation with a real estate professional or appraiser can help.  Is your market still declining?  Even if your bank offers you a principal reduction with your loan modification based on what the home is worth today, if the market is still rapidly declining you could still end up in a negative equity position again soon.  So then even if your payments are now affordable, you may still face the inability to sell in a few years if your equity position is in the negative. 

•4)      You've already been served with a Notice of Default.  The foreclosure process should be halted during consideration of a HAMP loan modification.  And, if a HAMP loan modification is denied, the servicer should then consider the homeowner for any of their other loan modification options available and/or a short sale (if the homeowner requests it).  However, homeowners should be aware that the filing of a Notice of Default in California is definitely a reservation of the lender's right to foreclose.  You should be mindful of any deadline in place regardless of your loan modification application.  If all your other options have run their course and you are relying on 30 day extensions of an auction date, you could easily run into problems.  Will you be able to switch the file into the short sale department if the loan modification is denied 7 days before auction?  That could be tremendously difficult, as some banks (as a practical matter) take weeks to even acknowledge receipt of correspondence.  Further, if you must submit a complete short sale package (including an offer) in order to be considered, you could then be in the position of obtaining an offer (that your bank will accept) in a very short time period.   I have seen a number of homes fall in to foreclosure for this reason.

•5)      You really want a clean slate.  If what you truly desire is a clean slate, a loan modification may not solve your problem.  A successful short sale can help you to avoid foreclosure or even in some cases bankruptcy.    If you short sell your property, you may be able to get a new loan in 2 - 3 years under current FHA and Fannie Mae guidelines.  Also, under the Federal Mortgage Forgiveness Debt Relief Act of 2007, sellers have a limited window of opportunity (until the end of 2012) for potential tax forgiveness on the short sale of their principal residence.  Also, California state tax relief is limited as well until January 1, 2013.   These favorable tax laws could be extended, but they also could not be extended.  If what you truly desire is a clean slate, a loan modification may not be the answer for you; you could need a short sale to truly wipe the slate clean and move forward with your life.

       Unfortunately, loan modifications have not turned out to be a long term answer for some people.  It does not take a rocket scientist to figure out what is needed to keep most people in their homes; however, time and time again, the banks refuse and it does not happen.  Homeowners and their legal and tax advisors should make an honest assessment at the outset and also during the application process as to whether a loan modification will truly be the answer for the homeowner's financial difficulty.  I can provide you with a short sale consultation that will include an analysis of current market conditions. Call me today! 

4 Biggest Mistakes Short Sale Sellers Make

1)      Letting the house fall apart.  Even though you are short selling your home you should not let your house fall into disrepair.  A house full of deferred maintenance is not appealing to buyers.  You can lower the price to compensate and attract a buyer, but ultimately the lender does have to approve the lowered price.   The short sale lender may not want to take a hit on the price just because you decided not to repair that leak in the roof.  Also, the buyer may be using FHA or VA financing and making those repairs could be required for the sale to go through anyway.

2)      Taking too long to present the short sale application to the bank.  Buyers are waiting for the short sale to be approved.  They have many concerns on their end as well, including when they are going to move, interest rate fluctuations, and the cheaper short sale next door that just hit the market.  Don’t delay submitting your short sale package.  Ideally, you should have all material for the short sale application ready to go when you put the home on the market.

3)      Making the home difficult to be shown.  Let’s face it many short sale home sellers are not happy about selling their home.  Some are angry because many efforts at a loan modification with the lender have failed.  They feel that the bank is pushing them toward losing their home.  However, making the home difficult to be shown will not help the situation.  If the bank determines that you are deliberately delaying the short sale, they will simply continue the path toward foreclosure.  A simple market twist and you may be unable to quickly get an offer that the short sale lender will accept.

4)      Waiting until the last minute to put the home on the market.  Many times sellers believe that they will work out terms with the bank and their loan modification will be approved, etc.  If you want a short sale you need to leave enough time for an agent to get an offer and present it to the bank.  I have seen more than one short sale listing fail where the sellers gave the agent two weeks or less to obtain an offer and have the short sale package presented to the lender in order to stop a foreclosure sale.  If you want a short sale you need to give your agent enough time to present it.  There are routine delays with short sales; banks lose documents and packages have to be re-faxed.  Don’t wait until it is down to the wire.

If you are looking for an experienced short sale agent that can help guide you through the process, set up a consultation with me by calling (916) 417-6162 or Email me: TLCprofessionalservices@yahoo.com


       Facing foreclosure and tempted to stay in your home until the bank pulls it out from under you? Bad idea. Don’t do it. A much more graceful exit is a short sale, an agreement between you and your lender to sell your home for less than you owe. Although there’s no guarantee that your lender will let you avoid foreclosure with a short sale, new government regulations are aimed at encouraging lenders to do so.

Short sales get government incentives

      Although short sales are not hassle-free, at least you’ve got the government backing you. The Home Affordable Foreclosure Alternatives (HAFA) program provides financial incentives for lenders and borrowers to avoid foreclosure through short sales or deeds in lieu of foreclosures

       Participation in the HAFA program requires adherence to guidelines—including a standard process and minimum timeframes—that speed the process, says Dallas-based REALTOR® Tom Branch, co-author of Avoiding Foreclosure: The Field Guide to Short Sales. The HAFA program is for homeowners who can’t keep their homes with the help of a loan modification.

Advantages of a short sale

  •        You can be a homeowner again more quickly with a short sale in your past than with a foreclosure. New Fannie Mae guidelines help you qualify for a new mortgage in as little as two years after a short sale, as opposed to up to seven years after a foreclosure.
  •        You will have more time to make relocation plans and save money than with a deed in lieu. A short sale may take four to 12 months. A deed in lieu of foreclosure arrangement typically requires you vacate your home

           You can receive up to $3,000 from your lender for moving expenses at the time of closing of a HAFA short sale or a HAFA deed in lieu of foreclosure. Relocation funds are part of the incentives of HAFA, but not necessarily for other short sale or deed in lieu programs of the lenders.

           You can help your community’s home values. Because the lender often receives a higher amount of the remaining loan balance than it would from the sale of a home after a foreclosure, short sales help support home values in the surrounding community.

    Disadvantages of a short sale

    Read more: http://www.houselogic.com/articles/foreclosure-alternative-short-sale/#ixzz1PLozS0HSwithin 30 to 60 days of signing, according to real estate attorney Lance Churchill.

           Your credit score will take a severe hit. But that would happen anyway with a foreclosure. Fair Isaac, creator of the FICO score, says foreclosure and short sales have virtually identical impacts on your credit score. VantageScore—a company that has created a credit score model for consumers—says a short sale will lead to only a marginally lighter hit when compared with foreclosure. 

What Happens if the Short Sale Does Not Appraise?

       It depends.  This is definitely a difficult situation for both the buyer and the seller, usually because appraisals are not ordered and completed until after the short sale approval has been received.  Typically, the parties wait for weeks, if not months for the short sale approval, and once received the buyer begins their inspections and their lender orders the appraisal.  If the home does not appraise, the buyer has the option of coming in with additional funds (just as in a traditional sale), or the seller can go back to the short sale lender and present the appraisal as evidence that the short sale lender should accept less for the property.  Unfortunately, the process of getting a new price approved can take as long as the original approval, and in some cases the bank will flat out reject the price reduction.  For some banks though, the process of consideration is relatively quick.  The important thing for the buyer and seller to understand is that even though the bank has approved a short sale they are under no obligation to sell the home at the appraised value; the short sale approval is based on the offer amount. However,  a skilled short sale agent will negotiate effectively with the bank in order to make the bank accept the appraised price.

       If you or someone you know is thinking of a short sale on their Northern California property. 
Contact Tami Saner an experienced short sale agent for a free consultation at (916) 417-6162. 

 What information does a bank typically require for a short sale package? 

  • Last two years tax returns
  • Last two paycheck stubs for each borrower
  • Last two months checking statements
  • Last two months savings statements
  • Profit and loss statement year to date (if self employed)
  • Last two months business account statements (if self-employed)
  • Hardship letter (explaining the reason for the short sale request)
  • Financial statement (lists income and expenses for your household)
  • Signed form 4506 –T (allows short sale lender to pull tax return copies directly from the IRS)

       I am a local real estate agent, Certified Short Sale Specialist and Successfully SOLD HAFA ShortSales and I specialize in helping Buyers.  Contact me today at (916) 417-6162 for a free short sale consultation, or visit my website www.HomesByTamiSaner.com for short sale basics.

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