In terms of the back property taxes owed on a home that is sold through a short sale,  the bank will typically cover this expense and seller’s should be free and clear of this liability  going forward. In most states governmental property taxes convert into a lien on a property as soon as they are due — even before they fall behind, in most areas. That just means that your escrow provider and/or title insurer have to clear those tax liens, making sure they are paid up to the date of closing, before they are able to transfer clear title to the buyer.

In the average short sale situation, what happens is that the seller’s bank(s) has to direct some of the proceeds  from the sale of the home  to cover; any back taxes on the property, agent commissions, transfer taxes and such before they can apply the rest of the sale price to cover the outstanding mortgage balance(s). When escrow closes, and I mean starting the day of or the day after, the buyer is responsible for property taxes incurred from that day forward.

In some transactions, though, there are back expenses that are not extinguished by a short sale.

The most common are homeowners association dues that are not paid off or waived in the short sale. Some HOAs will continue collection efforts on back dues — not as a lien against the property under its new ownership, but as a personal debt of the former homeowner.

The other are second or even third mortgages in which the lender expressly agreed to let the short sale go forward on the condition that the seller or former homeowner pay some or all of the outstanding balance over time and did not agree to a full release.

Such terms would be expressed and  would be pursuant to  the short sale approval agreement, so you would be made aware of  such obligation if the lender does not agree to a full release.

Now to the question of paperwork. At or just after closing, depending on where you live, you should receive a document on legal-sized paper called a HUD-1 closing statement. As with any real estate transaction, hang on to that just in case you don’t get any additional paperwork from your lenders.

To the extent that some portion of your mortgage balances were forgiven by the banks, that gap — that deficiency — is normally subject to income taxes. It’s called cancellation of debt income, or CODI.

This sort of “income” (essentially a loan that was forgiven) is usually documented by the bank sending you a Form 1099-C, in January — just as if you’d earned that income. So, you might see two of these statements in the mail early next year.

I say “might” only because some of the mortgage lenders that are no longer operating as banks or lenders aren’t sending these statements out anymore. In that event, your HUD-1 might end up being the only documentation you receive.

That said, if you close your short sale before January 1st, 2012  chances are you’ll be exempt from income taxes on your CODI “income” under the Mortgage Forgiveness Debt Relief Act of 2007. The act applies to qualified principal residence indebtedness forgiven in calendar years 2007 through 2012 (it is believed that  this relief will  be extended  however,  at the time this  blog posted was written  an extension has  not  yet been signed into law).

You’ll still need to let the IRS and your state tax agency know of your short-sale specifics, but you’ll be able to invoke the terms of the act (most states now have parallel provisions) to avoid being charged with income taxes on the forgiven debt, assuming the home was actually your primary residence, your mortgage debt was $2 million or less, and certain other guidelines are met.

Visit this dedicated page on the IRS website for more details, and best of luck on your personal financial recovery endeavors.

Loan servicers / Lenders will have 30 days to send a borrower a short-sale agreement that includes the list price or acceptable sales proceeds under recent changes made to the Home Affordable Foreclosure Alternatives Program (HAFA), aimed at distressed borrowers who don’t qualify for other government loan modification and foreclosure alternative programs.

Once a sales contract has been initiated, loan servicers then have 30 days to approve or reject the short sale transaction.

The stricter timelines are believed to help speed up the short sale process, which has faced numerous complaints for how long it takes lenders to review and approve short sales often causing buyers to walk away in frustration.

The stricter timelines were a part of several revisions the Treasury Department recently announced to it’s HAFA program–the second major revision to the program since its launch in 2009.

Another big change: Loan servicers / lenders will no longer be restricted on paying second-lien holders, allowing them more freedom particularly when dealing with second-lien holders when borrowers owe less than $100,000. Loan servicers used to be restricted to paying second-lien holders no more than 6% of outstanding loan balance (with an overall limit of $6,000) in exchange for releasing subordinate liens. Second-lien holders have been another big obstacle to completing short sale transactions especially when most second are recourse liens and these lien holders in most instances have the option of selling these debts to collections companies for 8-10% even after the home has gone through foreclosure.

HAFA’s new directives also now forbid loan servicers from deducting vendor expenses from commissions paid to real estate brokers.

The rules are effective Feb. 1. It does not apply to mortgages owned or guaranteed by Fannie Mae or Freddie Mac, or insured or guaranteed by a federal agency such as the Federal Housing Administration (FHA). See FHA Short Sales.

If you™re facing foreclosure you™re facing some very  important decisions. We want you know you™re  not alone and we are here to help with any questions you may have to assist you in making the best decisions for your situation. There is no charge for this service and we are happy to help! We offer confidential and  professional real estate advice.

Contact us

As local  real estate short sale specialists  we can help you make sense out of your options. If you are a homeowner who is having trouble making your mortgage payment and are interested in exploring your options including the  listing of your home as a short sale, please give us a call today at 614.332.6984. We™re here to help you!

The Opland Group  Specializes in  Real Estate Sales, Luxury Home Sales, Short Sales  in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights    Granville    Grove City    Groveport    Hilliard   Lewis Center    New Albany    Pickerington    Polaris    Powell      Upper Arlington    Westerville    Worthington

Columbus OH Short Sales,  Columbus OH Realtor,  Short Sale Specialists,  Short Sale Process,  Ohio Foreclosure Process and your Options,  Avoid Foreclosure,  Short Sale vs Foreclosure,  What to do when you owe more on your home than it™s worth,  Loan Modification,  New Albany OH Realtor,  Powell OH  Realtor,  Dublin OH  Realtor,  Luxury Home Specialist,  Luxury Real Estate,  Buying a Short Sale or Foreclosure,  How will a short sale affect your credit,  Understanding Short Sales,  Bank of America / Countrywide  Short Sales,  JP Morgan Chase  Short Sales,  Wells Fargo  Short Sales,  IndyMAC  Short Sales,  Citi Mortgage  Short Sales,  PNC Short Sales,  National City Short Sales,  Home Affordable Alternative Program (HAFA),  What™s My Home Worth?

Should I stop making my mortgage payments?  This is a question we are frequently asked  by clients who  are thinking about doing a short sale,  and regrettably this is not  a question we can directly answer  as we can not  advise you to breach your contractual agreement with your lender to pay back the money you borrowed to purchase your home.That said, what  we can do is give you some scenarios that can happen if you stop making payments during a short sale and try to help you better understand your options so you can select the course  that’s best for you.

Lender Qualifications

Homeowners should understand that the overwhelming majority of lenders will require a borrower be at least 60 days late before they will seriously  consider their short sale request. FHA Requires borrowers be at least 31 days behind on their mortgage payments before they will consider a borrower for a short sale, HAFA requires borrowers be at least 60 days late.Furthermore, lenders will not typically  authorize a short sale until the seller finds a buyer (if your’s is a FHA Loan or if your lender is partcipating in the Home Affordable Foreclosure Alternative Program (HAFA)  authorization can be granted prior to  the identification of  a buyer). But homeowners should realize that  there is no guarantee that a lender will accept a short sale, and  your lender is not required to let you sell  via short sale.If you begin the short sale process and stop making your payments, should the short sale be denied and you cannot make up the back payments, you may find yourself involuntarily losing your home through foreclosure. Many short sellers enter the process with the thought that if the lender won’t approve their short sale, they are prepared to let the property go. That said, homeowners should realize that they can allow their payments to go 60 days late and then resume their payments, or begin making every other payment if they so desire.

Reasons To Stop Making Payments During A Short Sale

You may not have a choice in the matter.  If you don™t have the money to make payments then you can™t make payments. Plain and simple. Other™s decide to not make payments by choice, and here are their explanations:

To save money for a move.  It™s no secret that many homeowners are underwater and feel they need to get out from under their current situation. They will stop making payments during the short sale process to save up money to move when the short sale goes through.

Lenders  rarely force you to make up the payments.  In most situations  during a short sale, all missed payments are forgiven, but not all the time. If your situation  is so  dire that it prevents you  from making payments, or if you have other financial obligations to which you must allocated these funds  you may consider not making payments. (Deficiency Judgments)

The short sale could be moved to a more critical  time frame  for approval.  If you aren™t making payments, it’s obviously  in the bank’s best interest to close on your short sale as soon as possible to  further reduce  their total  losses. You don™t always  have to be in default in order to be approved for a short sale, however, your  request for a short sale is going to be taken much more seriously and receive higher priority if you  are at least 60 days late on your payments.

If You Miss Payments You May Face Default

Short sales do not always  get approved, some never find a buyer, while the overwhelming majority  are  mishandled by inexperienced real estate agents   falsely claiming to be short sale specialist.  If you make the mistake of hiring an  inexperenced agent there  is a very good chance that you may end up facing foreclosure if you stop making payments. Here are some of the drawbacks if you go into foreclosure:Although both short sales and foreclosure affect your credit, a foreclosure is much worse. After short selling a home, even if you miss payments, you can  purchase  a home again within as little as  2 years.If your home is lost to  foreclosure you won™t be able to purchase home for 7-10+ years. Seven years if you don™t have any other credit issues, pay off all your  delinquencies, and stay up to date on all future payments. Ten years or more if you face  delinquencies  or other credit issues related to your foreclosure.

Why You Might Keep Making Payments During Your Short Sale

If at all possible, making your payments, or resuming your payments  during the short sale could be  advantageous  for a few reasons:

If your short sale doesn™t work out, you can cancel without any penalties.  If the bank doesn™t accept an offer you submit, you don™t get an offer, or the bank denies your short sale for any other reason. You will be in a much better situation then if you had stopped making payments.

Making payments will protect your credit.  Although your credit may not be the most important thing for you to worry about during financial hardship, your score will not reflect late payments. However, the bank  will report your short sale as a settled account  and this could have an affect on your credit. It™s called a Credit Factor Score #22, and it could drop your FICO. (How a Short Sale Affects Your Credit)

It is possible to purchase a new home directly following a short sale if you stay current.  Both FHA and Fannie Mae have guidelines allowing a short sale seller who is current on payments to purchase a home  directly  following a short sale, if the borrower was never delinquent, complies with its “excessive prior mortgage delinquency policy,” and is not obligated to repay the short sale lender, including a deficiency judgment. Why would anyone do this?

If your home is worth dramatically less than what you paid for it, selling it short may be your only option.  You may have to move for any number of reasons such as divorce, employment, or  any number of  other reasons. If your payments are up to date, you could purchase a new home when you move if you stay current.If you™re facing financial hardships, please do not avoid the situation. It will not go away, and a short sale may be the best option. If you can™t make your payments, you can still sell your home in a short sale and avoid foreclosure. Be sure to talk to a lawyer, an accountant, and seek out an experienced short sale agent to give you advice on your personal situation.

If you™re facing foreclosure you™re facing some very  important decisions. We want you know you™re  not alone and we are here to help with any questions you may have to assist you in making the best decisions for your situation. There is no charge for this service and we are happy to help! We offer confidential and  professional real estate advice.

The Opland Group  Specializes in  Real Estate Sales, Luxury Home Sales, Short Sales  in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights    Granville    Grove City    Groveport    Hilliard   Lewis Center    New Albany    Pickerington    Polaris    Powell      Upper Arlington    Westerville    WorthingtonColumbus OH Short Sales, Columbus OH Realtor, Short Sale Specialists, Short Sale Process, Ohio Foreclosure Process and your Options, Avoid Foreclosure, Short Sale vs Foreclosure, What to do when you owe more on your home than it™s worth, Loan Modification, New Albany OH Realtor, Powell OH  Realtor, Dublin OH  Realtor, Luxury Home Specialist, Luxury Real Estate, Buying a Short Sale or Foreclosure, How will a short sale affect your credit, Understanding Short Sales,  Bank of America  Short Sales, JP Morgan Chase  Short Sales, Wells Fargo  Short Sales, IndyMAC  Short Sales, Citi Mortgage  Short Sales,  PNC Short Sales, National City Short Sales, Home Affordable Alternative Program (HAFA), What™s My Home Worth?

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is often a more popular choice for homeowners trying to delay a foreclosure rather than permanently block it. Chapter 7 is called a liquidation bankruptcy because the court might have to sell some of your property (by property, we are referring to more than just your home, basically your real tangible assets) to satisfy your creditors, but in return you walk away debt free. Certain property are off limits to being sold according to Ohio™s bankruptcy exemption laws, items deemed as necessities of life such as furniture,  clothing, personal effects, tools of the trade, cars, books, TV™s, and computers for example.      

Chapter 7 Bankruptcy to Delay a Foreclosure

Filing for bankruptcy puts an immediate stop to a foreclosure since the court will issue a stay (an order that delays) that prevents all of your creditors from collecting on any debt that you owe, including mortgage payments. If a homeowner has decided that it is acceptable to give up his home and is looking for temporary relief from being foreclosed on, this is a good delay tactic to employ since it will postpone foreclosure proceedings for two to four months. Once you have come out of bankruptcy, you will also have most if not all of your debts permanently cancelled.

Chapter 7 Bankruptcy to Save Your Home

In order to use a Chapter 7 bankruptcy to save your home from foreclosure you must be current on your mortgage payments and you must make certain that the amount of equity in your home falls within the exemption limits according to  Ohio law. If the amount of equity exceeds those limits your home may be sold to satisfy your creditors. Once you file, be aware that you will probably not be able to back out since the interests of your creditors must be protected.

Details to Consider

A Chapter 7 bankruptcy takes about three to four months in court. Foreclosure proceedings will restart after the case is finished unless you can get rid of your debt and arrange to keep your house through the use of the bankruptcy. You can further postpone a foreclosure if you are married and each of you file separately, the second spouse filing after the first one has finished. You can then top it off by filing for a Chapter 13 bankruptcy which would add another six months of relief.

In Ohio, before a foreclosure sale can happen the lender must issue a notice of default 90 days prior. A bankruptcy filing does not disrupt the 90 day window but actually only delays the sale itself. To maximize the delay of a foreclosure sale, a homeowner should file for bankruptcy after a foreclosure sale has been scheduled.

Overview of the Timeline

Before you are allowed to file for a Chapter 7 bankruptcy, you will be required to attend credit counseling. About a month after you file, a creditor™s meeting will be held. Approximately 45 days after the creditor™s meeting, you will be required to attend budget counseling. 60 days after the creditor™s meeting, the court approves the discharge of your debts.

Chapter 13 Bankruptcy

A homeowner filing a Chapter 13 bankruptcy immediately puts a halt on a foreclosure because the court issues a stay, a legal order that restrains creditors, including your mortgage lender, from attempting to collect on any debt you owe. A homeowner™s reprieve from foreclosure will last until the end of the repayment period if the homeowner abides by the required payment plan approved by the court.

Chapter 13 Bankruptcy to Save Your Home

A Chapter 13 bankruptcy will allow a homeowner to keep their home only if they have enough income to make their current mortgage payment plus pay a portion of their arrears monthly. The bankruptcy court will only approve repayment plans that demonstrate an ability to not only make due on the plan payments but that also shows that other necessary monthly expenses can be covered as well, such as transportation, utilities, etc. In addition, some types of debt, like recent back taxes, must be paid off completely through the repayment plan. In order for the court to approve a repayment plan, the bankruptcy filer must have enough monthly income to cover all of these payments.

A typical repayment plan lasts from three to five years.  If you are able to commit all of your disposable income to the repayment plan, the court will discharge the remainder of any unsecured debt at the end of that period.  Some debts do survive though, such as student loans and child support.

Chapter 13 Bankruptcy to Delay a Foreclosure

Initially, after filing for a Chapter 13 bankruptcy, your foreclosure will be delayed for at least three months while the court reviews your repayment plan proposal.  If the court approves your proposed plan then a foreclosure is postponed and possibly avoided if the filer meets the obligations of the repayment plan.  In the case that the court does not ultimately approve your Chapter 13 repayment plan, you may be able to convert the bankruptcy to a Chapter 7.  This should provide another two to three months of relief from a foreclosure sale.

Benefits of a Chapter 13 Bankruptcy

1. Repay missed mortgage payments over three to five years, the typical lifespan of a Chapter 13 bankruptcy repayment plan
2. Pay none, or a small portion, of the unsecured debts during the repayment plan period with the expectation of having them completely dismissed at the end of the period
3. The ability to contest costs and fees added to any missed payments
4. The potential to challenge the legality of any pending or proposed foreclosure in court
5. Dismiss any second or third liens on your home that would not have a chance of being paid if your home was sold, due to insufficient property value

The Opland Group  Specializes in  Real Estate Sales, Luxury Home Sales, Short Sales  in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights    Granville    Grove City    Groveport    Hilliard   Lewis Center    New Albany    Pickerington    Polaris    Powell      Upper Arlington    Westerville    Worthington

Columbus OH Short Sales, Columbus OH Realtor, Short Sale Specialists, Short Sale Process, Ohio Foreclosure Process and your Options, Avoid Foreclosure, Short Sale vs Foreclosure, What to do when you owe more on your home than it™s worth, Loan Modification, New Albany OH Realtor, Powell OH  Realtor, Dublin OH  Realtor, Luxury Home Specialist, Luxury Real Estate, Buying a Short Sale or Foreclosure, How will a short sale affect your credit, Understanding Short Sales,  Bank of America / Countrywide  Short Sales, JP Morgan Chase  Short Sales, Wells Fargo  Short Sales, IndyMAC  Short Sales, Citi Mortgage  Short Sales, PNC Short Sales, National City Short Sales  

PNC Mortgage  /  National City  Short Sales – Getting Started

The first step to initiating a short sale with  PNC Mortgage /  National City  is to list the home with a Realtor who specializes in short sales and has significant experience with this lender.  Your agent will be critical to the success of your transaction and while many agents have begun  marketing themselves  as short sale specialist, few of these individuals possess the  knowledge  and experience required to warrant this title and it is imperative that you select a true short sale specialist to represent you in the sale of your home.

The listing of a short sale is initially quite similar to the listing of a traditional sale, however, the your lender will require the following additional documentation; the previous two years™ tax returns will be needed  (these should also include   W-2s as well as tax schedules), paystubs for  the previous 2 months,  your previous 2 months™ bank statements for all accounts,  borrower financial  form (a detailed list of all of your income,  expenses, loans and bills),  a hardship letter (why you are no longer able to afford the mortgage), and  a  third party authorization (gives your lender permission to speak with your agent about your account).

Why are these documents needed?

Just as the you were required to apply and submit documents to obtain the loan, the bank is now going to require that you apply and submit proof that you can no longer longer afford the loan. The bank requires these documents  and uses them to help better understand the borrowers financial situation and to  determine if  the borrower should be granted a short sale based on their  circumstances. They are also going to want an explanation of the circumstances including what happened to put you, the homeowner in the hardship that you are in, ultimately causing you not to be able to afford your payments.

Who’s Eligible?

To qualify for a short sale  PNC  will want to see a clearly demonstrated œfinancial hardship. Acceptable financial hardships include; relocation, loss of a job, payment increase or mortgage adjustment, business failure, reduced income, to much debt, illness or death, divorce, damage to property, incarceration, etc. In  any of the fore mentioned  cases,  PNC  will typically agree to a short sale and will accept this as  payment in full on the loan (ie. the bank will  not demand cash or a promissory note).

* Note if your payments are current, there is very little reason for the lender to consider a short sale. If your payments are behind, then a lender may be more agreeable to negotiate with you.

Thus the documents listed above will enable you in your efforts  to successfully present a clear case to  Wells Fargo that you are eligible and deserving of a short sale.

How  does a short sale  affect your credit?

The damage to a Seller™s  credit  is far more severe  if they go through foreclosure or give the lender a deed-in-lieu of foreclosure. The points lost on your FICO score may be as follows:

• Foreclosure or Deed-in-Lieu of Foreclosure
  Both of these solutions affect credit the same. A sellers can take a hit of 250 to 280 points. This means if a seller™s FICO score before foreclosure is 680, it could dip as low as 400.
   
• Short Sale
  The damage to a credit report from a short sale  is much less drastic and in the range of 80 to 100 points. The hit will be indicated as a œsettled account or as œpre-foreclosure in a redemption status, or if your real estate agent knows what they are doing and is successful they may even be able  to convince the  bank to agree report  the account  as œpaid in full.      

The  PNC Mortgage  /  National City  short sale application consists of the following:

PNC  advises that  homeowners submit the  short sale application  as soon as  their property is listed.  PNChas multiple fulfillment centers  but your realtor can assist you in submitting this package on your behalf.

Once an offer is received we will submit this to  PNCand they will then order a BPO, or Broker Price Opinion on the property. The BPO is an appraisal or assessment of the home™s current market  value and is a key step in the short sale process.

Once the BPO valuation is returned the  negotiator will submit the entire package for review and short sale approval. While Citi suggests their standard processing time is 30 days, they are  currently averaging 45-90 days  with this  vary depending on  the type of loan, whether or not the loan is insured with a PMI policy, if there are any additional junior lien holders, the bank™s current work loads and the number of files the negotiator is currently working.  Files that are set to close before the end of any given month receive priority treatment.  

You can read about  PNC Mortgage  /  National City  Short Sales  directly from their website:    PNC Short Sale

Have a  PNC / National City  Mortgage and need to do a  Short Sale?

If you  have a loan with  PNC Mortgage /  National City  and  are considering a short sale in  Columbus, Ohio or the Central Ohio vicinity   make sure you are working with a real estate agent who is a short sale specialist, while many agents claim to be proficient in these types of sales, few  possess the knowledge and experience to accurately  call themselves short sale specialist.   We have a working relationship with  PNC, and contacts within the bank’s executive offices whom we can call upon to ensure our client’s short sales are not only being processed in an expeditious manner,  and ultimately that they are approved under the conditions and terms we require.

PNC  is participating in the Home Affordable Foreclosure Alternatives Program, or HAFA and eligible homeowners may be entitled to $3,000 in financial assistance to  help with your relocation expenses.  

Please call us at 614.332.6984 to address any questions you may have and to  discuss how we might assist you!

The Opland Group  Specializes in  Real Estate Sales, Luxury Home Sales, Short Sales  in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights    Granville    Grove City    Groveport    Hilliard   Lewis Center    New Albany    Pickerington    Polaris    Powell      Upper Arlington    Westerville    Worthington

Columbus OH Short Sales, Columbus OH Realtor, Short Sale Specialists, Short Sale Process, Ohio Foreclosure Process and your Options, Avoid Foreclosure, Short Sale vs Foreclosure, What to do when you owe more on your home than it™s worth, Loan Modification, New Albany OH Realtor, Powell OH  Realtor, Dublin OH  Realtor, Luxury Home Specialist, Luxury Real Estate, Buying a Short Sale or Foreclosure, How will a short sale affect your credit, Understanding Short Sales,  Bank of America / Countrywide  Short Sales, JP Morgan Chase  Short Sales, Wells Fargo  Short Sales, IndyMAC  Short Sales, Citi Mortgage  Short Sales, PNC Short Sales, National City Short Sales, Home Affordable Alternative Program (HAFA), What’s My Home Worth?

Citi Mortgage / Financial  / Wachovia Short Sales – Getting Started

The first step to initiating a short sale with Citi Mortgage / Citi Financial  is to list the home with a Realtor who specializes in short sales and has significant experience with this lender.  Your agent will be critical to the success of your transaction and while many agents have begun  marketing themselves  as short sale specialist, few of these individuals possess the  knowledge  and experience required to warrant this title and it is imperative that you select a true short sale specialist to represent you in the sale of your home.

The listing of a short sale is initially quite similiar to the listing of a traditional sale, however, the your lender will require the following additional documentation; the previous two years™ tax returns will be needed  (these should also include   W-2s as well as tax schedules), paystubs for  the previous 2 months,  your previous 2 months™ bank statements for all accounts,  borrower financial  form (a detailed list of all of your income,  expenses, loans and bills),  a hardship letter (why you are no longer able to afford the mortgage), and  a  third party authorization (gives your lender permission to speak with your agent about your account).

Why are these documents needed?

Just as the you were required to apply and submit documents to obtain the loan, the bank is now going to require that you apply and submit proof that you can no longer longer afford the loan. The bank requires these documents  and uses them to help better understand the borrowers financial situation and to  determine if  the borrower should be granted a short sale based on their  circumstances. They are also going to want an explanation of the circumstances including what happened to put you, the homeowner in the hardship that you are in, ultimately causing you not to be able to afford your payments.

Who’s Eligible?

To qualify for a short sale  Citi  will want to see a clearly demonstrated œfinancial hardship. Acceptable financial hardships include; relocation, loss of a job, payment increase or mortgage adjustment, business failure, reduced income, to much debt, illness or death, divorce, damage to property, incarceration, etc. In  any of the fore mentioned  cases,  Citi  will typically agree to a short sale and will accept this as  payment in full on the loan (ie. the bank will  not demand cash or a promissory note).

* Note if your payments are current, there is very little reason for the lender to consider a short sale. If your payments are behind, then a lender may be more agreeable to negotiate with you.

Thus the documents listed above will enable you in your efforts  to successfully present a clear case to  Wells Fargo that you are eligible and deserving of a short sale.

How  does a short sale  affect your credit?

The damage to a Seller™s  credit  is far more severe  if they go through foreclosure or give the lender a deed-in-lieu of foreclosure. The points lost on your FICO score may be as follows:

• Foreclosure or Deed-in-Lieu of Foreclosure
  Both of these solutions affect credit the same. A sellers can take a hit of 250 to 280 points. This means if a seller™s FICO score before foreclosure is 680, it could dip as low as 400.
   
• Short Sale
  The damage to a credit report from a short sale  is much less drastic and in the range of 80 to 100 points. The hit will be indicated as a œsettled account or as œpre-foreclosure in a redemption status, or if your real estate agent knows what they are doing and is successful they may even be able  to convince the  bank to agree report  the account  as œpaid in full.      

The Citi Mortgage  / Financial  short sale application consists of the following:

Citi  advises that  homeowners submit the  short sale application  as soon as  their property is listed.  Citi has multiple fulfillment centers  but your realtor can assist you in submitting this package on your behalf.

Once an offer is received we will submit this to Citi and they will then order a BPO, or Broker Price Opinion on the property. The BPO is an appraisal or assessment of the home™s current market  value and is a key step in the short sale process.

Once the BPO valuation is returned the  negotiator will submit the entire package for review and short sale approval. While Citi suggests their standard processing time is 30 days, they are  currently averaging 45-90 days  with this  vary depending on  the type of loan, whether or not the loan is insured with a PMI policy, if there are any additional junior lien holders, the bank™s current work loads and the number of files the negotiator is currently working.  Files that are set to close before the end of any given month receive priority treatment.  

You can read about  Citi Mortgage / Financial / Wachovia  Short Sales  directly from their website:    Citi Short Sale

Have a  Citi  Mortgage and need to do a  Short Sale?

If you  have a loan with  Citi Mortgage / Financial  and  are considering a short sale in  Columbus, Ohio or the Central Ohio vicinity   make sure you are working with a real estate agent who is a short sale specialist, while many agents claim to be proficient in these types of sales, few  possess the knowledge and experience to accurately  call themselves short sale specialist.   We have a working relationship with  Citi, and contacts within the bank’s executive offices whom we can call upon to ensure our client’s short sales are not only being processed in an expeditious manner,  and ultimately that they are approved under the conditions and terms we require.

Citi  is participating in the Home Affordable Foreclosure Alternatives Program, or HAFA and eligible homeowners may be entitled to $3,000 in financial assistance to  help with your relocation expenses.  

Please call us at 614.332.6984 to address any questions you may have and to  discuss how we might assist you!

The Opland Group  Specializes in  Real Estate Sales, Luxury Home Sales, Short Sales  in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights    Granville    Grove City    Groveport    Hilliard   Lewis Center    New Albany    Pickerington    Polaris    Powell      Upper Arlington    Westerville    Worthington

Columbus OH Short Sales, Columbus OH Realtor, Short Sale Specialists, Short Sale Process, Ohio Foreclosure Process and your Options, Avoid Foreclosure, Short Sale vs Foreclosure, What to do when you owe more on your home than it™s worth, Loan Modification, New Albany OH Realtor, Powell OH  Realtor, Dublin OH  Realtor, Luxury Home Specialist, Luxury Real Estate, Buying a Short Sale or Foreclosure, How will a short sale affect your credit, Understanding Short Sales,  Bank of America / Countrywide  Short Sales, JP Morgan Chase  Short Sales, Wells Fargo  Short Sales, IndyMAC  Short Sales, Citi Mortgage  Short Sales, PNC Short Sales, National City Short Sales, Home Affordable Alternative Program (HAFA), What’s My Home Worth?

Wells  Fargo Short Sales  

Out of all of the major banks, Wells Fargo is one of the most efficient when it comes to short sales and the processing and handling of these sales. Wells  Fargo is also  one of the only  banks that actually  provides a short sale time line and on average they are able to  issue a short sale approval within 25-45 days.  

The Wells Fargo Short Sale Process – Getting Started

The first step to initiating a Wells Fargo Short Sale is to list the home with a Realtor who specializes in short sales and has significant experience with this lender.  Your agent will be critical to the success of your transaction and while many agents have begun  marketing themselves  as short sale specialist, few of these individuals possess the  knowledge  and experience required to warrant this title and it is imperative that you select a true short sale specialist to represent you in the sale of your home.

The listing of a short sale is initially quite similar to the listing of a traditional sale, however, the your lender will require the following additional documentation; the previous two years™ tax returns will be needed  (these should also include   W-2s as well as tax schedules), paystubs for  the previous 2 months,  your previous 2 months™ bank statements for all accounts,  borrower financial  form (a detailed list of all of your income,  expenses, loans and bills),  a hardship letter (why you are no longer able to afford the mortgage), and  a  third party authorization (gives your lender permission to speak with your agent about your account).

Why are these documents needed?

Just as the you were required to apply and submit documents to obtain the loan, the bank is now going to require that you apply and submit proof that you can no longer longer afford the loan. The bank requires these documents  and uses them to help better understand the borrowers financial situation and to  determine if  the borrower should be granted a short sale based on their  circumstances. They are also going to want an explanation of the circumstances including what happened to put you, the homeowner in the hardship that you are in, ultimately causing you not to be able to afford your payments.

Who’s Eligible?

To qualify for a short sale  Wells Fargo  will want to see a clearly demonstrated œfinancial hardship. Acceptable financial hardships include; relocation, loss of a job, payment increase or mortgage adjustment, business failure, reduced income, to much debt, illness or death, divorce, damage to property, incarceration, etc. In  any of the fore mentioned  cases,  Wells Fargo  will typically agree to a short sale and will accept this as  payment in full on the loan (ie. the bank will  not demand cash or a promissory note).

* Note if your payments are current, there is very little reason for the lender to consider a short sale. If your payments are behind, then a lender may be more agreeable to negotiate with you.

Thus the documents listed above will enable you in your efforts  to successfully present a clear case to  Wells Fargo that you are eligible and deserving of a short sale.

How  does a short sale  affect your credit?

The damage to a Seller’s  credit  is far more severe  if they go through foreclosure or give the lender a deed-in-lieu of foreclosure. The points lost on your FICO score may be as follows:

• Foreclosure or Deed-in-Lieu of Foreclosure
  Both of these solutions affect credit the same. A sellers can take a hit of 250 to 280 points. This means if a seller™s FICO score before foreclosure is 680, it could dip as low as 400.
   
• Short Sale
  The damage to a credit report from a short sale  is much less drastic and in the range of 80 to 100 points. The hit will be indicated as a œsettled account or as “pre-foreclosure in a redemption status”, or if your real estate agent knows what they are doing and is successful they may even be able  to convince the  bank to agree report  the account  as œpaid in full.      

The  Wells Fargo  short sale application consists of the following:

In order to reduce the processing and response time Wells Fargo  advises that  homeowners and their Realtors notify Wells Fargo Home Mortgage of their intention to sell the property as soon as the listing agreement is signed.  This allows the bank to complete their borrow financial evaluation prior to  receiving an offer. We handle this on our clients behalf and will also  submit the  short sale application  to the bank at this time.  

Once an offer is received your agent  will submit this to  Wells Fargo  along with an estimated net to seller sheet. Wells Fargo will  then order a BPO, or Broker Price Opinion on the property. The BPO is an appraisal or assessment of the home™s current market  value and is a key step in the short sale process.

Once the BPO valuation is returned the  negotiator will submit the entire package for review and short sale approval. While  Wells Fargo suggests their standard processing time is  25 days, they are  currently averaging 37-45 days  with this  vary depending on  the type of loan, whether or not the loan is insured with a PMI policy, if there are any additional junior lien holders, the bank™s current work loads and the number of files the negotiator is currently working. Files that are set to close before the end of any given month receive priority treatment.  

You can read about  Wells Fargo  Short Sales  directly from their website:    Wells Fargo Short Sale

Have a  Wells Fargo  Mortgage and need to do a  Short Sale?

If you  have a loan with  Wells Fargo  and  are considering a short sale in  Columbus, Ohio or the Central Ohio vicinity   make sure you are working with a real estate agent who is a short sale specialist, while many agents claim to be proficient in these types of sales, few  possess the knowledge and experience to accurately  call themselves short sale specialist.   We have a working relationship with  Wells Fargo, and contacts within the bank™s executive offices whom we can call upon to ensure our client™s short sales are not only being processed in an expeditious manner,  and ultimately that they are approved under the conditions and terms we require.

Wells Fargo  is participating in the Home Affordable Foreclosure Alternatives Program, or HAFA and eligible homeowners may be entitled to $3,000 in financial assistance to  help with your relocation expenses.  

Please call us at 614.332.6984 to address any questions you may have and to  discuss how we might assist you!

The Opland Group  Specializes in  Real Estate Sales, Luxury Home Sales, Short Sales  in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights    Granville    Grove City    Groveport    Hilliard   Lewis Center    New Albany    Pickerington    Polaris    Powell      Upper Arlington    Westerville    Worthington

Columbus OH Short Sales, Columbus OH Realtor, Short Sale Specialists, Short Sale Process, Ohio Foreclosure Process and your Options, Avoid Foreclosure, Short Sale vs Foreclosure, What to do when you owe more on your home than it™s worth, Loan Modification, New Albany OH Realtor, Powell OH  Realtor, Dublin OH  Realtor, Luxury Home Specialist, Luxury Real Estate, Buying a Short Sale or Foreclosure, How will a short sale affect your credit, Understanding Short Sales,  Bank of America / Countrywide  Short Sales, JP Morgan Chase  Short Sales, Wells Fargo  Short Sales, IndyMAC  Short Sales, Citi Mortgage  Short Sales, PNC Short Sales, National City Short Sales, Home Affordable Alternative Program (HAFA), What’s My Home Worth?

What is a Deficiency Judgment

A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full. The availability of a deficiency judgment depends on whether the lender has a recourse or nonrecourse loan, which is largely a matter of state law. In some jurisdictions, first mortgages are non-recourse loans, but second and subsequent ones are recourse loans.

Deficiency judgments are court orders that make you personally liable for unpaid debt. They are often associated with foreclosures, when a home™s selling price is not enough to cover the loan balance. Let™s take a closer look at what deficiency judgments are and if you should expect one.

Deficiency Judgment Overview

When you default on a loan and the lender repossesses your property, the value of the property may not pay off the loan. For example, you might owe $100,000 on your home, but it only sells for $80,000. You™re $20,000 short.

The lender  has the right and may take further legal action against you. Legal action to collect the remaining amount is called a deficiency judgment.

How much is the  Deficiency Judgment?

It will be no surprise that the unpaid debt ($20,000 in the example above) is part of the deficiency judgment, however, lenders can also sue for the costs associated with the foreclosure (including the unpaid interest, unpaid property taxes and homeowner™s association dues, attorney fees, etc.)  and pursuit of the deficiency judgment.

Is a  Deficiency Judgment Likely?  

If your lender is allowed to pursue a deficiency judgment, there is no way to know whether or not they will. The likeliest candidates for deficiency judgments are so- called rational or strategic defaults. In those cases, people who are current on their mortgages decide to walk away from a property because its value has sunk so far below their loan balance they have no hope of recouping the loss. In most cases, your lender will not go to the trouble. Legal action is expensive and time consuming, and people who just suffered a foreclosure often don™t have the assets or income needed to satisfy a deficiency judgment. If you had the resources, you wouldn™t have missed your payments in the first place.

For some loans, deficiency judgments aren™t even an option. State laws dictate whether or not lenders can pursue deficiency judgments after foreclosure. If a loan is a non-recourse loan, a deficiency judgment is out of the question. Click here for more information on recourse loans and individual state laws.

If the  Deficiency Judgment is Successful?

If your lender successfully wins a deficiency judgment against you, you are personally liable for the amount of the judgment. You are legally required to satisfy the deficiency judgment, and the lender can go after you if you don™t. They may be able to garnish your wages or take personal items (not necessarily your home, car, or other essential items).    

Retirement accounts are generally not at risk in a deficiency judgment, but you should check with a local attorney if you are at risk.

Does PMI Help you Cover the Deficiency?

No. Private Mortgage Insurance (PMI) cannot protect you from deficiency judgments. It is meant to protect a lender against the losses from a mortgage default. A PMI is required if you make a down payment of less than 20% on your loan.

Is There a Way to Avoid Deficiency Judgments?

Yes. If you can stop foreclosure, you can avoid the judgment. In case you™re having difficulty in making mortgage payments and a foreclosure is imminent, you can look for various loss mitigation options like loan modification or short sale, etc. A loan modification can reduce your mortgage payments and help you save the home. A short sale allows you to sell your home for less than  your current mortgage obligation.  

A  short sale  does not help you retain the home. But when successfully negotiated by an experienced short sale agent  it waives off the lender™s right to collect the deficiency. This helps you avoid a judgment. However, you should not believe in verbal agreements. If the deficiency is forgiven, ask your lender to  state this in writing before you proceed with the short sale.

That said, even though the banks are allowed to sue homeowners for the deficiency, they rarely choose  to pursue a deficiency judgment. Why would the banks decline this right? It boils down to cost and the effects of negative publicity. As mentioned  legal process takes a long time and there are hefty costs involved  with such action.  Furthermore,  there is no guarantee the lenders can successfully claim back their money through income garnishment or asset liens  as the majority of these  borrowers ended up in foreclosure because of a hardships and were  unemployed, have emptied bank savings and have no other valuable assets. For such situations, the banks and lenders have more to lose by pursuing deficiency judgments and the banks simply aren’t interested in throwing good money after bad. Quite simply, if there is little chance of collecting back the money owed, a deficiency judgment after foreclosure will only create more losses for both the homeowners and the mortgage lender.

If the banks have reason to believe that these homeowners are in true financial hardship and this is the reason  for their  missed mortgage payments, then the banks will probably write off these debts due to the fact  the resources required to pursue after foreclosure deficiency judgment are better directed  towards high return investments, or making additional  loans.

Homeowners that are facing true financial hardship usually need not worry about being brought to court by their banks even if the bank refuses to release their right to pursue the homeowner if  there is a deficit after the short sale or foreclosure sale. Even if the bank retains  their  legal right to  pursue homeowners  for the balance owed after the the short sale or foreclosure auction, we’ve yet to see a lender resort to doing so.

The situation is however different if the bank is aware that the homeowners are wealthy and possess other highly liquid assets.  If the lender believes a homeowner has assets, they are less inclined to pursue the homeowner for a deficiency judgment, and rather  they will insist  that  the homeowner make a contribution to, or that they agree to sign a promissory note to cover a portion of this deficiency from the short sale. These contribution amounts vary based on the size of the loan, the value of the offer on the property, and what the bank believes the homeowner might actually be able to reasonably contribute.

It should be noted that deficiency judgments are entirely dischargeable as unsecured debts in a Chapter 7 bankruptcy filing. So even if homeowners do get sued after foreclosure, they may be able to get rid of the debt by filing Chapter 7. And with a huge debt of tens of thousands of dollars, it becomes easier to qualify for discharge, as the debt can easily outnumber the value of the borrowers’ assets.

What about Income Taxes?

Another problem with mortgage foreclosure is possible income tax consequences. The general rule is that when a lender forgives or cancels a debt the borrower can incur income tax on the amount of debt forgiveness. When you arrange a discount in your mortgage in order to sell your house (a so-called œshort sale) the mortgage lender will cancel part of your mortgage debt and you will receive a tax form 1099 telling the IRS that you have imputed income for the amount of debt reduction. You will also incur income tax liability for a deed in lieu of foreclosure. The taxable income will be the difference between the property value and the balance of the mortgage loan on the date you surrender the property to the bank.

A foreclosure may result in cancellation of debt income depending on whether the bank pursues a deficiency judgment. If the mortgage lender gets a deficiency judgment for the difference between the property value on foreclosure sale date and the mortgage balance the lender is not forgiving any part of the loan. If the bank chooses not to pursue a deficiency judgment, or pursues the judgment unsuccessfully, the borrower may incur income tax liability for debt forgiveness.

In December, 2007, Congress acted to protect many debtors from income tax liability associated with foreclosure avoidance. The Mortgage Forgiveness Debt Relief Act of 2007 states that homeowners will not be subject to income tax from release from mortgage liability if and to the extent the mortgage proceeds were used to buy or improve their primary residence. There is no income tax shelter from forgiveness of mortgage debts for  investment property, vacation homes, or mortgages used for businesses or to pay off credit card balances. The protection expires in December, 2012. You should speak with an attorney or CPA familiar with the new law to see if you qualify for income tax protection.

For those borrowers who do not qualify for protection of the new Act there is an insolvency exception to imputed income from the cancellation of mortgage debt. If a borrower is financially insolvent when he surrenders the mortgaged property to the lender voluntarily or through foreclosure there will be no imputed income. A borrower who files bankruptcy is presumed to be insolvent, so that a bankruptcy debtor cannot suffer imputed income tax liability because the bankruptcy discharges personal liability under a mortgage note. More information is available from IRS Publication 908 and IRS tax form 982. Both forms can be found at irs.gov.

The tax law permits many real estate investors to offset imputed debt forgiveness income with corresponding tax losses. For example, if a lender forecloses on a parcel of income producing rental property the taxpayer may be able to report an operating loss to offset all imputed income from debt forgiveness in the same year that the mortgage lender issues the Form 1099. When a foreclosed property was not income producing, but was held solely for future appreciation (example: vacant land), the deduction from ordinary income of capital losses in excess of capital gain may be limited to $3,000 per year so that the total loss will have to be deducted over future tax years. You should consult your CPA to determine the tax impact of a mortgage foreclosure on your tax situation. The tax impact of foreclosure is not a legal issue.

Please call us at 614.332.6984 to address any questions you may have and to  discuss how we might assist you!

The Opland Group  Specializes in  Real Estate Sales, Luxury Home Sales, Short Sales  in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights    Granville    Grove City    Groveport    Hilliard   Lewis Center    New Albany    Pickerington    Polaris    Powell      Upper Arlington    Westerville    Worthington

Columbus OH Short Sales, Columbus OH Realtor, Short Sale Specialists, Short Sale Process, Ohio Foreclosure Process and your Options, Avoid Foreclosure, Short Sale vs Foreclosure, What to do when you owe more on your home than it™s worth, Loan Modification, New Albany OH Realtor, Powell OH  Realtor, Dublin OH  Realtor, Luxury Home Specialist, Luxury Real Estate, Buying a Short Sale or Foreclosure, How will a short sale affect your credit, Understanding Short Sales,  Bank of America / Countrywide  Short Sales, JP Morgan Chase  Short Sales, Wells Fargo  Short Sales, IndyMAC  Short Sales, Citi Mortgage  Short Sales, PNC Short Sales, National City Short Sales  

Chase / EMC / WAMU  Short Sales

If one company™s short sale process has changed more than any other it would be Chase. Chase™s short sale process hasn™t changed so much in terms of administrative process, but more  from a corporate stand point.  You see, after Chase acquired Washington Mutual their primary task seemed to  be figuring out how to transfer hundreds of thousands of WAMU short sale accounts into the Chase data base.

If your mortgage originated with WAMU and you were attempting a short sale during this transition  you would have experienced long delays and  great frustration as the WAMU-CHASE database transfer was anything but smooth.  Chase representatives happily report  the transfer is now complete and files  are now processing smoothly.

The Chase / EMC / WAMU Short Sale Process – Getting Started

The first step to initiating a  Chase Short Sale is to list the home with a Realtor who specializes in short sales and has significant experience with this lender.  Your agent will be critical to the success of your transaction and while many agents have begun  marketing themselves  as short sale specialist, few of these individuals possess the  knowledge  and experience required to warrant this title and it is imperative that you select a true short sale specialist to represent you in the sale of your home.

The listing of a short sale is initially quite similiar to the listing of a traditional sale, however, the your lender will require the following additional documentation; the previous two years™ tax returns will be needed  (these should also include   W-2s as well as tax schedules), paystubs for  the previous 2 months,  your previous 2 months™ bank statements for all accounts,  borrower financial  form (a detailed list of all of your income,  expenses, loans and bills),  a hardship letter (why you are no longer able to afford the mortgage), and  a  third party authorization (gives your lender permission to speak with your agent about your account).

Why are these documents needed?

Just as the you were required to apply and submit documents to obtain the loan, the bank is now going to require that you apply and submit proof that you can no longer longer afford the loan. The bank requires these documents  and uses them to help better understand the borrowers financial situation and to  determine if  the borrower should be granted a short sale based on their  circumstances. They are also going to want an explanation of the circumstances including what happened to put you, the homeowner in the hardship that you are in, ultimately causing you not to be able to afford your payments.

Who™s Eligible?

To qualify for a short sale  Chase  will want to see a clearly demonstrated œfinancial hardship. Acceptable financial hardships include; relocation, loss of a job, payment increase or mortgage adjustment, business failure, reduced income, to much debt, illness or death, divorce, damage to property, incarceration, etc. In  any of the fore mentioned  cases,  Chase  will typically agree to a short sale and will accept this as  payment in full on the loan (ie. the bank will  not demand cash or a promissory note).

* Note if your payments are current, there is very little reason for the lender to consider a short sale. If your payments are behind, then a lender may be more agreeable to negotiate with you.

Thus the documents listed above will enable you in your efforts  to successfully present a clear case to  Wells Fargo that you are eligible and deserving of a short sale.

How  does a short sale  affect your credit?

The damage to a Seller™s  credit  is far more severe  if they go through foreclosure or give the lender a deed-in-lieu of foreclosure. The points lost on your FICO score may be as follows:

• Foreclosure or Deed-in-Lieu of Foreclosure
  Both of these solutions affect credit the same. A sellers can take a hit of 250 to 280 points. This means if a seller™s FICO score before foreclosure is 680, it could dip as low as 400.
   
• Short Sale
  The damage to a credit report from a short sale  is much less drastic and in the range of 80 to 100 points. The hit will be indicated as a œsettled account or as œpre-foreclosure in a redemption status, or if your real estate agent knows what they are doing and is successful they may even be able  to convince the  bank to agree report  the account  as œpaid in full.      

The Chase / EMC / WAMU  short sale application consists of the following:

While Chase / WAMU /  EMC  has a new division entitled List Assist that advises  homeowners submit the  short sale application  as soon as  the property is listed, this only applies to borrowers who are eligible for the government sponsored  HAFA Program.  Never the less, we’ve found this approach to be counter productive  and have an alternative listing strategy we employ with our client’s listings.  We share this strategy with our clients during the initial listing presentation.

That said, the short sale application needs to be faxed to 866.220.4130 or mailed to Chase Fulfillment Center P.O. Box 469030   Glendale, CO 80246. We suggest that homeowners allow us to fax the application in our their behalf as Chase often fails to log these files requiring that they be resent multiple times. However Chase has hired additional support staff and they are getting much better and have significantly decreased their short sale processing time as a result of these new hires.

Once an offer is received we will submit this to Chase and they will then order a BPO, or Broker Price Opinion on the property. The BPO is an appraisal or assessment of the home™s current market  value and is a key step in the short sale process.

Once the BPO valuation is returned the  negotiator will submit the entire package for review and short sale approval. While Chase suggests their standard processing time is 30 days, they are  currently averaging 45-90 days  with this  vary depending on  the type of loan, whether or not the loan is insured with a PMI policy, if there are any additional junior lien holders, the bank™s current work loads and the number of files the negotiator is currently working.  Files that are set to close before the end of any given month receive priority treatment.  

You can read about  Chase / EMC  Short Sales directly from their website:    Chase Short Sale

Have a  Chase, Washington Mutual,  or EMC  Mortgage and need to do a  Short Sale?

If you  have a loan with  Chase, WAMU,  or EMC  and  are considering a short sale in  Columbus, Ohio or the Central Ohio vicinity   make sure you are working with a real estate agent who is a short sale specialist, while many agents claim to be proficient in these types of sales, few  possess the knowledge and experience to accurately  call themselves short sale specialist.   We have a working relationship with  Chase, and contacts within the bank’s executive offices whom we can call upon to ensure our client’s short sales are not only being processed in an expeditious manner,  and ultimately that they are approved under the conditions and terms we require.

Chase  is participating in the Home Affordable Foreclosure Alternatives Program, or HAFA and eligible homeowners may be entitled to $3,000 in financial assistance to  help with your relocation expenses.  

Please call us at 614.332.6984 to address any questions you may have and to  discuss how we might assist you!

The Opland Group  Specializes in  Real Estate Sales, Luxury Home Sales, Short Sales  in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights    Granville    Grove City    Groveport    Hilliard   Lewis Center    New Albany    Pickerington    Polaris    Powell      Upper Arlington    Westerville    Worthington

Columbus OH Short Sales, Columbus OH Realtor, Short Sale Specialists, Short Sale Process, Ohio Foreclosure Process and your Options, Avoid Foreclosure, Short Sale vs Foreclosure, What to do when you owe more on your home than it™s worth, Loan Modification, New Albany OH Realtor, Powell OH  Realtor, Dublin OH  Realtor, Luxury Home Specialist, Luxury Real Estate, Buying a Short Sale or Foreclosure, How will a short sale affect your credit, Understanding Short Sales,  Bank of America / Countrywide  Short Sales, JP Morgan Chase  Short Sales, Wells Fargo  Short Sales, IndyMAC  Short Sales, Citi Mortgage  Short Sales, PNC Short Sales, National City Short Sales, Home Affordable Alternative Program (HAFA), What’s My Home Worth?

Bank of America Short Sales

Bank of America has introduced a new automated system called Equator that it is currently using  to process  all of it’s short sales of  conventional loans (that is all of it’s non-FHA and VA  loans) as well as former Countrywide loans which it acquired when it purchased the company. Equator has expedited Bank of America’s short sale process  by having the borrower, and their real estate agent upload the short sale package, that is the  application documentation, directly to the Equator System.  

Bank of America Short Sale Process – Getting Started

The first step to initiating a  Bank of America / Countrywide  Short Sale is to list the home with a Realtor who specializes in short sales and has significant experience with this lender.  Your agent will be critical to the success of your transaction and while many agents have begun  marketing themselves  as short sale specialist, few of these individuals possess the  knowledge  and experience required to warrant this title and it is imperative that you select a true short sale specialist to represent you in the sale of your home.

The listing of a short sale is initially quite similiar to the listing of a traditional sale, however, the your lender will require the following additional documentation; the previous two years™ tax returns will be needed  (these should also include   W-2s as well as tax schedules), paystubs for  the previous 2 months,  your previous 2 months™ bank statements for all accounts,  borrower financial  form (a detailed list of all of your income,  expenses, loans and bills),  a hardship letter (why you are no longer able to afford the mortgage), and  a  third party authorization (gives your lender permission to speak with your agent about your account).

Why are these documents needed?

Just as the you were required to apply and submit documents to obtain the loan, the bank is now going to require that you apply and submit proof that you can no longer longer afford the loan. The bank requires these documents  and uses them to help better understand the borrowers financial situation and to  determine if  the borrower should be granted a short sale based on their  circumstances. They are also going to want an explanation of the circumstances including what happened to put you, the homeowner in the hardship that you are in, ultimately causing you not to be able to afford your payments.

Who’s Eligible?

To qualify for a short sale  Bank of America  will want to see a clearly demonstrated œfinancial hardship. Acceptable financial hardships include; relocation, loss of a job, payment increase or mortgage adjustment, business failure, reduced income, to much debt, illness or death, divorce, damage to property, incarceration, etc. In  any of the fore mentioned  cases,  BofA  will typically agree to a short sale and will accept this as  payment in full on the loan (ie. the bank will  not demand cash or a promissory note).

* Note if your payments are current, there is very little reason for the lender to consider a short sale. If your payments are behind, then a lender may be more agreeable to negotiate with you.

Thus the documents listed above will enable you in your efforts  to successfully present a clear case to  Bank of America  that you are eligible and deserving of a short sale.

How  does a short sale  affect your credit?

The damage to a Seller’s  credit  is far more severe  if they go through foreclosure or give the lender a deed-in-lieu of foreclosure. The points lost on your FICO score may be as follows:

• Foreclosure or Deed-in-Lieu of Foreclosure
  Both of these solutions affect credit the same. A sellers can take a hit of 250 to 280 points. This means if a seller™s FICO score before foreclosure is 680, it could dip as low as 400.
   
• Short Sale
  The damage to a credit report from a short sale  is much less drastic and in the range of 80 to 100 points. The hit will be indicated as a œsettled account or as “pre-foreclosure in a redemption status”, or if your real estate agent knows what they are doing and is successful they may even be able  to convince the  bank to agree report  the account  as œpaid in full.      

The Bank of America short sale application consists of the following:

Bank of America’s system is a little different than other lenders and homeowners need not  submit the short sale application  until an offer is received on their home.   Once and offer is received the homeowner must first call Bank of America’s Loss Mitigation Department at 866.880.1232 to setup a login.   Agents may also initiate the  short sale for the homeowner by logging onto Equator but homeowners must still call to setup their personal login. Once a login has been setup, homeowners will then need to logon to the borrower end of Bank of America’s website at http://www.bankofamerica.com/shortsale.  

As your agent we can assist you in walking you through the process of initiating the short sale, preparing the short sale package  and uploading the proper documentation, this in addition to marketing the home and securing a buyer, and negotiating the short sale on your behalf.

Once the required documentation has been uploaded, the bank will then assign a negotiator. One of the negotiator’s first task will be to order a BPO, or Broker Price Opinion of the property.   The BPO is an appraisal or assessment of the home’s current market  value and is a key step in the short sale process.

Once the BPO valuation is returned the  negotiator will submit the entire package for review and short sale approval. This entire process is currently averaging 30-55 days but varies depending on  the type of loan, whether or not the loan is insured with a PMI policy, if there are any additional junior lien holders, the bank™s current work loads and the number of files the negotiator is currently working.  Files that are set to close before the end of any given month receive priority treatment.  

You can read about BofA Short Sales directly from their website:   Bank of America Short Sale

Bank of America Ends the Suspense

Deficiency judgments and the possibility of the bank attempting to pursue the homeowner after a short sale are a concern for many borrowers considering a short sale.   What these homeowners  fail to realize is  that the handling of the deficiency is part of the short sale negotiations and a real estate agent who is  experienced in  short sale negotiations, that is a  short sale specialist, will require that the terms of the short sale approval include the lender’s agreement to accept the reduced payoff as payment in full, and not to pursue the homeowner for a deficiency.    

That said, Bank of America has decided to attempt to relieve distressed borrowers of this concern and in a recent statement made by their Senior Vice President of Credit Loss and Loss Mitigation, Mr.  Jack Schakett, stated that if a borrower proves he can no longer pay the mortgage and has a few or no assets, Bank of America will waive it’s right to a deficiency judgment during the processing of the short sale deal.  But, if a borrower can afford to pay or has assets, the bank will try to negotiate a set fee for the borrower to pay at closing.   “We want to help customers who legitimately can’t afford to make payments, but we don’t want the one’s who have a bunch of money to just be able to walk away.   These individuals  will have to share some of our loss.” Mr. Schakett acknowledged that short sales in which the bank agrees to accept less  for the home than the balance of the loan are less expensive  to process than foreclosures, and thus they want to encourage more homeowners to pursue this course by making it clear they do not intend to pursue homeowners for deficiency judgments.   While new federal programs such as HAFA actually require first mortgage holders to waive deficiency judgments for eligible homeowners and provide incentives to lenders such as Bank of America for participating in these programs, this  statement by Bank  of America clearly demonstrates their desire to work with homeowners  to secure an option which best serves both parties.      

Have a Bank of America or Countrywide  Mortgage and need to do a  Short Sale?

If you  have a loan with Bank of America and  are considering a short sale in  Columbus, Ohio or the Central Ohio vicinity   make sure you are working with a real estate agent who is a short sale specialist, while many agents claim to be proficient in these types of sales, few  possess the knowledge and experience to accurately  call themselves short sale specialist.   We have a working relationship with Bank of America and contacts within the bank’s executive offices whom we can call upon when we required to ensure our client’s short sales are not only being processed in an expeditious manner, but ultimately that they are approved under the conditions and terms we require.

Bank of America is participating in the Home Affordable Foreclosure Alternatives Program, or HAFA and eligible homeowners may be entitled to $3,000 in financial assistance to  help with your relocation expenses.  

Please call us at 614.332.6984 to address any questions you may have and to  discuss how we might assist you!

The Opland Group  Specializes in  Real Estate Sales, Luxury Home Sales, Short Sales  in;    Bexley    Columbus    Delaware    Downtown    Dublin    Gahanna    Grandview Heights    Granville    Grove City    Groveport    Hilliard   Lewis Center    New Albany    Pickerington    Polaris    Powell      Upper Arlington    Westerville    Worthington

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