All homeowners need to do is work with their agent to initiate a short sale in Bank of America's Equator system.  Once the seller's information is uploaded BofA says it will evaluate the home owner's quickly to see if they qualify for the enhance relocation assistance.  (Specific investor participation and eligibility criteria do apply). 

Here is the fine print.... The relocation assistance payment is calculated based on the appraised value of the property.  The total amount will be no less than $2,500 and no more than $30,000.  The payment will be delivered at the time of closing if the homeowner complies with all terms and conditions of the short sale agreement which include but are not limited to a full walk through appraisal, satisfaction of all junior liens (relocation funds can be used to clear liens), and ability to provide clear title.   The short sale must close by September 26, 2013.    The amount of any deficiency and relocation assistance will be reported to the IRS on appropriate 1099 forms.  Homeowners are encouraged to contact the IRS or their tax preparer to determine tax liability.   

Contact me  today if you would like to find out if you could qualify for this program.

Here is a link to a National Association of REALTORS paper on The Debt Forgiveness Act.   Many don't know that there are tax implications when doing a short sale, loan modification or even a foreclosure.  Many sellers are simply focused on getting a deficiency wavier (the banks agreement not to come after you for the short fall) that they don't realize that when the short sale is completed the bank will issue a 1099 for the amount of debt forgiven. 

It is crucial when doing a short sale to consult your tax preparer.  Every sellers situation and tax implictions will be different so meeting with your tax preparer is essential.

Not a day goes by when I hear something about short sales from a client, on the news, on the radio, from my fellow REALTORS, and out in the general public that frustrates me.   I have heard people say “my attorney says I should just walk away” and read billboards that say “just dump it.”   It is statements like these that have fueled the foreclosure crisis in Nevada. 

Short sales remain one of the best options for homeowners who need to sell their home but no longer have equity.   So do you need to engage the services of an attorney to negotiate your short sale for you?  Do you need to pay $3000+ upfront fees and monthly retainers to do a short sale?  The answer is no.  There are many qualified REALTORS out there who specialize in short sales and are negotiating them on behalf of our seller clients every day with no upfront fees or monthly retainers.  In fact, in most short sales the seller PAYS NOTHING out of pocket.   Where is the attorney’s incentive to get your short sale done as quickly as possible if they are collecting a monthly retainer?  A REALTOR’S incentive is to get the short sale approved as quickly as possible and get the sale closed because that’s when we get paid. 

The attorney may tell you that they are more successful negotiating deficiency waiver (keeping the bank from coming after you) than REALTORS are.  This is simply not true.  Over the past several years I have been able to negotiate deficiency waiver for 100% of my clients who completed a short sale.  The lien holders in most cases understand that if deficiency waiver cannot be obtained many sellers would choose foreclosure as the best option.  The lien holders know that they stand to lose substantially more money in a foreclosure if they cannot come to agreement on a short sale.    Let’s not forget that with Nevada AB284, the new law that went into effect in October 2011, many lien holders don’t have the correct documentation or personal knowledge of assignments which is currently preventing many from filing a Notice of Default in Nevada and subsequently foreclosing.

So I want to set the record straight.  Homeowners if you are facing difficulties with your mortgage and you have determined a short sale is the best option for you call a REALTOR.  Don’t compound your financial woes by paying upfront fees and monthly retainers to an attorney.  Let’s let the REALTORS do what they do best which is selling real estate and let the attorneys focus on the law

One of the keys to getting the help you need if you are having difficulty paying your mortgage is to seek out help early in the process.  Real estate professionals who specialize in distressed properties are working on the front lines assisting homeowners every day.  Call us today. 

#1  - Deficiency Waiver

Getting the bank to release you from your obligation and waiving their right to pursue you in the future for the deficiency or short fall between what you owe and the proceeds they will receive from the short sale.  Getting the bank to agree to this waiver is the primary goal in a short sale.  Over the past couple years I have been able to negotiate this for my sellers 100% of the time.  Often times this waiver is conditioned upon a the seller making a cash contribution at closing. 

#2 Tax Liability

When a mortgage holder "forgives" debt they send a 1099 to the borrower.  When you do a short sale you will receive a 1099 from your bank in the amount of the debt that was forgiven.  This is taxable as ordinary income.  It is vital that you consult your tax preparer or a CPA to determine what this means for your individual tax situation.  There is a Mortgage Debt Forgiveness Act in place through December 31, 2012 that allows for some homeowners to be exempt.

#3 Credit Implications

The third largest concern for sellers contemplating a short sale is the effect it will have on their credit.  Here is a chart from FICO that shows the impact of various short sale related events on several different credit scores.  As you can see foreclosure and bankruptcy are far more impactful to credit scores than a short sale.

If you are under the 3 year mark and would like to repurchase when time allows, you may want to consider visiting with a credit counselor to gauge where your credit is at this time and what you might need to work on.  I recommend Consumer Credit Affiliates .  They can assess your situation and help you formulate a plan to get back on the path to home ownership.   

If you are planning to purchase you will need to save a minimum of 3.5% for an FHA down payment and money for closing costs.  In some cases you can get assistance from the seller with your closing costs which typically are about 3% of the purchase price.  If you need a recommendation to a good local lender contact me.

Amy Shocket, Broker-Salesperson ABR, CRS, GRI, PMN

The broker-salesperson basically says that I have met the same licensing requirements as a broker but I have chosen to be a sales person rather than a broker owner/manager.

ABR stands for Accredited Buyer's Representative.  This is a designation awarded by the National Association of REALTORS through is Real Estate Buyer's Agent Council.  It requires an agent to take several courses on buyer representation.  Visit rebac.net for more information.

CRS is short for Certified Residential Specialist.  This is also a designation, awarded by the Council of Residential Specialist, but the requirements to earn it are more intensive.  Not only do you have to take courses, but you have to reach a minimum dollar sales volume in order to earn the designation.  Vist crs.com for more information.

GRI are the initials for Graduate of the REALTOR Institute.  This was the first designation that I earned and it is awarded by the National Association of REALTORS.   This designation also involved education courses to provide knowlege on working with both buyers and sellers.  Visit the following link for more info http://www.realtor.org/education/gri/value

Lastly, the PMN stands for Performance Management Network.  This designation is awarded by the National Women's Council of REALTORS.  One of the largest women's organizations in the United States this designation is earned by taking a series of courses.  I am pleased to be a member of this organization as both Northern Nevada Chapter President 2008 & 2011 and Nevada State President Elect for 2011.  Visit wcr.org for more information.

I also hold a couple other designations but don't post those after my name.  They are the Certified Distressed Property Expert or CDPE (Visit cdpe.com) and the Short Sale Foreclosure Resource Certification (Visit realtorsfr.org).  These are both extensive education programs that have expanded my knowledge base in the area of short sales and REO properties.

What does this mean?  I am committed to getting the highest quality education available in my field in order to offer top notch service to my clients. 

Many of the banks have continued to work on their short sale process and make improvements to speed the process.  Many are also starting to roll out new programs where sellers can get "pre-approved" short sales prior to listing the property so that once the property is listed the timeline is significantly reduced which greatly benefits the buyers.   (These are programs in additon to the Government HAFA program.)

We still see obstacles when there are multiple liens, mortgage insurance and bond program loans.   It is important to know what type of loan you have and if your lender took out mortgage insurance on your loan.  Homeowners also need to know that banks are still looking for you to be in default or in danger of default in the immediate future.  There has to be a hardship or reason that you can no longer afford your payments. 

There appears to be a trend toward more deficiency waivers from servicers, but in some cases it doesn't come without a cash contribution or promissory note on the part of the homeowner.  Many servicers are looking at the seller's overall financial picture - credit score, other debts, monthly income, other assets etc. to determine if the seller might be required to contribute.

The key is still to seek the assistance of an experienced short sale listing agent as early in the process as possible.   It's best not to wait until a Notice of Default is filed to consider short sale as an option.

From the bank's perspective, the homeowners who are delinquent have the most immediate need to receive their assistance.   In addition, if you are able to continue making your payments they may request a cash contribution or promissory note from you at the closing of the short sale in order to approve the short sale.   Your lender will consider your entire financial situation when making this determination. 

There is an exception.  If you have an FHA loan on your home and you want to do a short sale you will be required to be 31 or more days delinquent at the closingof the short sale.  You do not have to be delinquent at the time you apply to the FHA Pre-Foreclosure Sale Program. 

Working with an knowlegable short sale listing agent is key.

The benefits is that once a buyer has made an offer they no longer will wait 60-90 days to get an answer as the underlying approval process was completed prior to listing the property for sale.   This will greatly increase the stigma that has been placed on short sales and make these listing more attractive to buyers. 

There are several other programs that follow a similar model.  The HAFA program designed by the US Treasury is available to borrowers who qualify and provides for an upfront approval.  Also, if your mortgage is FHA insured the FHA Pre-Foreclosure Sale Program requires homeowners to get approved into the program and sets the list price prior to the marketing/listing of the property. 

The key for homeowners in the Reno-Sparks market is to contact an experience agent who can make you aware of all your options when facing a possible foreclosure.  When a short sale is the best solution for a homeowner, hiring an agent who is knowledgable about all the programs available to them is crucial. 

For more information on the Bank of America Cooperative Short Sale please contact me.

Sellers should be receiving a copy of the form when they list their property so that the form can then be provided to the buyer.  The form can be waived if agreed upon by both the buyer and the seller.

Here are the key changes:

1. Monthly Gross Income Requirements- Servicers are no longer required to verify any financial information to determine if the borrower's total monthly mortgage payment exceeds 31% of the borrower's monthly gross income.  This being said, the servicer is still required to verify the borrower's hardship and may request financial documents to evaluate the hardship.
2. Vacant Property Requirements - Properties can now be vacant or rented up to 12 months prior to the Short Sale Agreement as long as the borrower can prove that the residence was their primary residence and they have not bought another home in that time.  Relocation no longer is limited to work related relocation and the relocation distance requirement has been removed.
3. Release of Subordinate Liens (Paying Off Second/Junior Liens) -  the 6% cap to pay off junior liens has been eliminated.  The servicer determines the percentage going to each junior, but the $6,000 cap is still in place.
4. Timing For Issuance of Short Sale Agreement - now for both HAFA short sales initiated by the servicer  and those requested by the borrower, the time line for the servicer to respond to the borrower is 30 calendar days. (Please note that many servicers are not adhering to this guideline simply because of the volume of HAFA requests.  There does not appear to be any penalty to the servicer for not meeting this timeline.)
5. Timing For Response To Alternative Request For Approval of Short Sale - if the borrower submits an executed sales contract, Alternative RASS and signed Hardship Affidavit or RMA, the servicer must communicate approval or disapproval, or a counter within 30 calendar days. 
6. Real Estate Commissions - the 6% cap remains, but servicers must now include a statement in the Short Sale Agreement that they will not deduct 3rd party vendor fees from any agent commission.
7. Alternative Deed-In-Lieu (Deed for Lease) Programs - these programs did not previously qualify for the borrower to receive relocation incentives.  They now are included but only when the DIL is final.
8. Borrower Notices - Servicers can now consider a borrower for HAFA while the borrower is considering HAMP.

Servicers are not required to, but may re-evaluate borrowers who were previously ineligble before the guideline were changed. 

For more information contact me for the full Supplemental Directive 10-18.

1. Can you explain the short sale process?
2. Do you have prior short sale experience and more importantly, success?
3. Can you tell me if my property qualifies for a short sale?
4. Do you know what information I'll need to provide my lender?
5. Can you tell me what hardships qualify for a short sale?
6. Do you have an effective short sale strategy?
7. Do you know how to effectively market my home in a timely manner?
8. Do you know how to strategically price my home?
9. Do you have an effective pricing and marketing campaign for 15, 30, and 45 days?
10. Will you be negotiating my short sale or do you use a 3rd party company?
11. Why are you the right agent to sell my home?

If the agent you are considering can't answer these basic questions and thoroughly explain the process of a short sale you may want to consider moving on.  Short sales require an agent who is actively engaged and experienced in getting short sales approved and closed.

Please contact me if you have questions about short sales and whether or not you might qualify to do a short sale.  A short sale is just one of the options to avoid foreclosure, and one of the best options if you are unable to retain your home.

Being a REALTOR has taken on a whole new meaning for me.    I have gone from a salesperson who specialized the marketing of property for sale and helping buyers find their new home, to so much more than that.   Helping homeowners avoid foreclosure by successfully finding alternatives such as short sale has made me so much more than a salesperson.  I am a problem solver, listener, helper, and facilitator.    I am genuinely helping people and making a real difference in their lives.  For buyers I am assisting them in navigating the more complicated web of purchasing short sales and REOs.  Helping them avoid the obstacles that arise in these types of purchases.  It has become harder than ever to be a buyer with tighter lending standards, distressed properties and long wait times. 

We look around in this industry and are often hard pressed to find positives and things to be thankful for.   But, there is plenty that I am thankful for.  The challenges of this market have made me a better REALTOR.  I have been given the opportunity to not only help my neighbors buy and sell homes, but help them improve thier lives.  By necessity I have been motivated to learn more, so I can help more. 

This REALTOR is thankful... 

Happy Thanksgiving to Everyone!

Bank owned or REO sales accounted for 32% of the sales in October.  The median was signifcantly lower at $1390,950.  These properties saw the fewest days on the market with an average of 96 days.  These listing received on average 99% of asking price.  The median sales price wasn't helped much which only 3 homes sold over the $500,000 mark and almost 80% of the sales at the $200,000 or below price point.

Short sales accounted for 27.9% of the sales in October.  They brought in a higher median sales price than the REO properties at $161,000.  They unfortunately average the longest market times of 199 days.  Short sale listings received an average of 99.1% of their asking price.  The short sale median sales price was definitely bolstered by a $1,200,000 sale.  There were 4 sales over the $500,000 mark.  70% of the short sales were under the $200,000 price point.

What does all this mean???  Sellers with equity can successfully sell their homes in a distressed market given that they have realistic expectations of the price.     Bank owned/REO sales net the banks less than short sales, a continued argument that banks seem to be getting finally.  And lastly, short sales aren't just for homes in the lower price points.  You can do a short sale on a $1 million home.  You just have to prove to the bank that you have a hardship and that it's in their best interest to not take the property back onto their books.  It can be done.

Does this mean that homeowners are completely off the hook and won’t have any costs?  No, in some cases depending on your financial situation the lender may ask the homeowner to contribute to the loss with a cash contribution or promissory note.  An experienced short sale real estate agent can assist you in minimizing these and working on a win-win solution for both the homeowner and the lender.  In some cases the cash contribution or promissory note can be the key to having the lender release the homeowner from any future liability.

How can you afford not to do a short sale?  When the alternative is foreclosure which can be devastaing to your credit, your future ability to purchase a home again, and result in larger tax consequences – how could you afford not to consider a short sale?

If you are a homeowner facing difficulties making your mortgage payment, consult an experienced short sale agent as soon as possible.

FHA Preforeclosure Sales  if listed correctly will be "pre-approved".  FHA requires homeowners to get approval into their system prior to listing thier property.  FHA sets the price and the net proceeds.  Once an offer is received the seller's lien holder is supposed to respond to the offer within 5 business days.  If the offer meets the FHA requirements as set forth in the "Approval to Participate" that the seller is given when approved into the system then this is truly a "pre-approved" short sale.

HAFA Short Sales - This is a newer short sale program that is set up in a similar fashion to FHA short sales.  Sellers can be approved for a HAFA short sale prior to listing the property, given a sales price and net amount.  In this case the short sale is truly "pre-approved".    The seller is provided with a Short Sale Agreement (SSA) which outlines the terms required for the short sale. 

Previously approved short sales are just that - previously approved under another buyer's name.  Most lien holders provide short sale approval letters with the specifics of the buyer who made the offer.  If the property is being advertised as "pre-approved" but the approval letter has another buyer's name on it, it won't do you much good.  At that point if you make an offer, your offer and all the pertinent documents will need to be re-submitted to the lien holder in order to issue a new approval letter in your name.  This process may be shorter than the timeline the previous buyer waited, but there are no guarantees. 

Key is to work with a buyer's agent that knows the short sale process and can inquire about the specifics of the property you are interested in.

These freezes do not mean that homeowners are going to get off the hook.  It simply means that you may have a bit more time to pursue alternative options, such as a short sale.   Don’t be fooled into thinking that you can hold off until after the holidays to look into your options.  If you are facing difficulty paying your mortgage please seek help of a qualified real estate professional as soon as possible.  The one thing you don’t have is TIME. 

Over the past several years we have seen the lenders institute foreclosure freezes in the 4th quarter simply because it is not good press to foreclose on homeowners during the holiday season.  Although the issues seems to be more focused on “robo-signing” for the current freezes, historically this isn’t uncommon. 

Again, call me today as acting quickly is the key…

Sound too good to be true?  Well there is a catch.  The homeowner must get their lender (servicer) and the investor who owns the mortgage to take a short payoff of the loan.  Many lenders and investors are reluctent to do this.  So although the program looks great to homeowners it may be easier said than done.

Who qualifies?

1. Homeowner must be in a negative equity position (underwater).
2. Must be current on the existing mortgage.
3. Homeowner must occupy the property.
4. Homeowner must qualify for new FHA loan and have a minimum FICO score of 500.
5. The existing loan cannot be an FHA loan. 
6. The existing lien holder (lender) must agree to write down at least 10% of the unpaid balance.
7. The new re-financed FHA first mortgage cannot have a loan-to-value greater than 97.75%.
8. If there is a second lien it can be re-subordinated to the new loan, but the 2 loans combined cannot be great than 115% loan to value.

Interested homeowners should contact their servicer for more information.  When I looked on Bank of America's website, my servicer, I found mention of the program but that they had not worked out the details and to keep checking back.  With the program scheduled to roll out in early September, you may find this to be the case with many lenders.

If you would like a copy of the FHA Mortgagee Letter that details the program, please feel free to contact me.