New FTC Rule Could Adversely Affect Short Sale Realtors

A new Federal Trade Commission rule has prompted the National Association of Realtors to caution all real estate agents. The said rule aims to protect homeowners from fraudulent offers of mortgage relief by banning ALL upfront fees. It also requires the agent to make disclosures particularly when the agent is acting in their behalf during lender negotiations or when the agents are advertising their short sale expertise and services.

The rest of the rule does not make things better for the short sale Realtor. The disclosure language to be used is also defined and the actual disclosure should be legible and clear. The agent is required to include the said disclosure in all his messages, which advertise the short sale service offered.

Also, two more disclosures are required if the Realtor is offering mortgage assistance services BEFORE they transact on behalf of the client and when they present the approval letter from the lender to their client.

Although the new rule looks out for the welfare of the distressed homeowners, it makes it difficult for short sale Realtors to discuss the feasibility of a short sale prior to the execution of the listings agreement. It would also make it harder for the Realtor to arrange a negotiation with the lender on behalf of their customer.

Time will tell how much impact the new FTC rule will make on the short sale industry. It may do all the parties involved more harm than good. Hopefully it will not, as the housing market is already burdened with the lengthy short sale process.

Why Choosing Foreclosure Over Short Sale Is A Big Mistake

Let’s face it. Most distressed homeowners today are more inclined to walk away from their homes or choose a foreclosure over a short sale. If you ask them, they will tell you it is the easier way out of a rather difficult problem.

Of course, they did not think about the long term effects of this decision. Having a foreclosure entry on your credit report means you are not financially credible. You will, for the first time in your life, have difficulties applying for loans even credit cards. Banks today have become more conservative when it comes to their lending guidelines and you may not want to experience this kind of problem.

You also have to live with knowing there was another way out.

Short sales have always been considered to be the safest answer to a foreclosure threat. It allows you to leave your home without any mortgage debt hounding you. Yes, the process involved can be a bit frustrating, especially with the way most banks are handling short sale proposals nowadays. But at the end of the day, you have done the right thing. Although it took almost all of your patience, you persevered to stop foreclosure from entering your family’s life.

If you think about it, choosing a short sale over foreclosure is actually simple after hearing these arguments. But it will take a lot of will power not to give up in the middle of the fight as the road to a short sale approval is riddled with delays and other problems.

The best way to go about a short sale is to hire someone who makes a living helping distressed borrowers like you. Look for a short sale Realtor who is not only knowledgeable but also experienced. Find someone who has a system in place and who will stick by your side until this fight is over. Ask your friends or co-workers for a referral.

With your firm resolve to see your short sale through and with a competent individual beside you, you will be surprised at how easy things will be.

More Reason to Consider a Short Sale

Florida lawmakers have recently decided to no longer extend the one-time stipend given to the courts. The stipend was supposed to be used to reduce the backlog of foreclosure cases by employing additional manpower for the processing of the filings.

Ramifications of such decision have already been felt in Palm Beach County where a Circuit Judge cancelled a foreclosure hearing scheduled for July citing financial constraints. The budget of the court for an entire fiscal year runs from July 1 to June 30. In 2010, Palm Beach County got a share of about $640,000 from the stipend and used it to hire assistants, case managers and even senior judges to complete foreclosure work.

As a result, 16,972 foreclosure cases in the said county were processed, reducing the backlog to 29,466 from 46,438. Meanwhile, the entire state has been able to process 139,615 cases out of the 462,339 cases recorded in June last year.

With still 322,700 cases clogging the system and more distressed homeowners on the verge of foreclosure, the lack of funding will really put tremendous pressure on the court judges. Most are worried about keeping up with the increase in their workload once the new fiscal year begins. Many people are also asking why the banks are not instructed to shoulder the foreclosure cost.

Meanwhile many distressed borrowers are hoping the lack of funding will make banks consider a loan modification or short sale over a foreclosure. If you are one of these homeowners and serious about avoiding a foreclosure, it is high time you look for a short sale Realtor and start preparing your short sale proposal. Keep in mind — the better prepared your proposal is, the more likely it will get approved. Hire a professional, someone who has the experience and knowledge to pull it off.

Why Buyers Also Need Short Sale Realtors

Time and again, the process involved in a short sale transaction has been established to be lengthy and complicated. But despite this, smart buyers understand why investing in short sale homes is a smart decision especially if you consider the considerable discount you can enjoy with these properties.

Usually, it is the seller who requires the services of a short sale Realtor. But considering the many things which could go wrong, you might as well work with one — from finding the perfect property to negotiating with the lender. Just make sure you deal with a Realtor who is experienced, knowledgeable and skilled when it comes to short sale transactions.

Here are some of the benefits of working with a short sale Realtor:

Enjoy Efficiency – having a short sale realtor will mean much time saved since he will basically represent you and whatever your preferences are to the seller and the lender. You can be kept informed about what is going on without you having to call anyone else. Your questions about the transaction as well as the property involved can be answered as soon as possible. Of course, it would put your mind at ease knowing you have someone on your side with your best interest at heart.

Rely on Skillful Negotiations – when it comes to negotiations, whether with the seller or lender, it would be smart to have someone who knows what you want and upholds your rights as a buyer as well. With a good short sale Realtor, the entire transaction can be hassle-free and delay-free.

Save on Money – if you are lucky enough to find a short sale Realtor who knows the ins and outs of such transaction, there is even no need for you to hire an attorney yourself. Your realtor can probably prepare a very detailed and legally-correct contract himself or work with a trusted attorney. You will surely get to save money in the long run.

The Realities of a Short Sale Transaction

Whether you are a seller or a buyer, you need to learn about the real truth behind a short sale. such facts will allow you to make the right decision and prevent you from mistakes, which could waste not only your time but also your money.

Sellers Point of View

Selling your home via a short sale is probably the best decision you will ever make considering it is less damaging to your credit score and less traumatic to you and your family than a foreclosure. Of course, making the decision to sell is actually the easiest part. One of the difficulties lies in finding a buyer who is willing to pay your asking price and will be around long enough to see the entire deal through.

It will take a very good short sale Realtor to help you display your home and attract the right crowd and keep the buyer updated and interested. For many of these realtors, communication is the key to achieving such level of commitment from the buyer.

Buyers Point of View

Many would think sellers are the most affected about the long wait for lender approval. But this is actually not the case since the buyers are the ones who want to move into the home as soon as possible. If you are wondering why many buyers are looking for short sale properties despite the complicated process involved, it is the 15 to 10 percent discount from the present market value of the home which convinces them to be patient.

If you are a buyer, you need to enter into a short sale transaction with your eyes open. You should accept the fact it could take awhile and control yourself from getting too excited about the purchase. There are many things which could go wrong. Some of these could be controlled while there are those which are completely out of your hands. The best way to handle everything is to talk with your short sale Realtor and ask about realistic expectations. If you want, you can come up with a timeline but better make sure you are willing to hold on as long as you can.

Short Sale Rules: How to Settle Deficiency

If you have been thinking about selling your home via a short sale transaction, one reason for you to be apprehensive is the deficiency judgment your lenders might not waive. Avoiding this judgment is actually what is in the mind of most short sale Realtors and sellers and surprisingly, it can be managed most of the time as long as you know just what is needed to be done.

Deficiency Judgment Defined

A short sale usually means selling the home at an amount less than what is owed on the mortgage debt. The difference between the sell price and the mortgage balance is actually referred to as the deficiency. Some lenders tend to agree to waive their right to this judgment and essentially forgive the debt (or issue a 1099) as part of the short sale agreement while some still go after the said difference.

As a seller, you can increase the chance of having the debt forgiven by working with a professional short sale Realtor who knows how to prepare a proper short sale proposal which will clear the seller of any liability, in terms of the deficiency. This should be spelled out clearly on the approval letter as well so there is no confusion regarding this matter.

Life After the 1099

Many sellers make the mistake of breathing a sigh of relief after they found out their lenders issued a 1099. What they do not know is it opens up a new concern, which is tax liability. The IRS would consider the forgiven debt as income which needs to be taxed. Best way to manage this concern is to speak to a CPA or attorney for you to understand and see the entire picture.

Settling the Deficiency

Since there is no guarantee your lender or the mortgage insurance company will waive their right to deficiency judgment, you need to be prepared. You also have options on how to go about this.

For starters, you can choose cash settlement and it not unheard of for the buyer to shoulder this amount as long as it has been discussed on the onset. You can also agree to a promissory note, which has been prepared by your attorney or experienced short sale Realtor since it is a legal contract. Usually, the payment can be spread over a period of 60 to 120 months at zero interest. You can demand on the contract for your credit history to be remained unblemished as long as you remain diligent on your payment.

Chase Offers More Reason to Choose a Short Sale

One of the financial giants, JP Morgan Chase has an offer to distressed homeowners they cannot resist. If you are one of these unfortunate homeowners, all you need to do is to agree to a short sale and in exchange, you will be given as much as $20,000. Not only this; but the difference between the sale and the mortgage owed to them will be forgiven. The promised cash will be released after the sale.

Chase has decided to offer such incentive after realizing that foreclosing a property will cost them more in the long run. In Florida, the entire foreclosure process can take as long as two years and Chase would have to spend money on court and attorney costs as well as maintenance of the repo home such as property taxes. By offering this incentive, they will also manage to remove these bad loans from their books.

Obviously, the homeowners and their short sale Realtor will benefit most from this incentive. There is still the matter of the taxes on the amount forgiven since it will be considered as income. Still, compared to a foreclosure, this deal is generally better.

Another reason for homeowners and their short sale Realtors to grab this offer is the fact Chase is willing to provide a reply to the proposal within 40 days. Typically, short sales could take as long as nine months before it sees daylight.

Since 2009, the financial giant has closed over 100,000 short sale transactions and is working hard to approve more as well as cut down the processing period. Florida is currently overwhelmed with the 300,000 foreclosures in its inventory of homes for sale and many more homes are on the verge of default. Clearly, this incentive is a heaven-sent and should be taken advantage of if you are serious about avoiding foreclosure.

Smooth Short Sale is Possible with These 3 Tips

Since it has been established a short sale is one of the best foreclosure alternatives for homeowners with underwater mortgages, many short sale Realtors and agents have their hands full. If you are one of these professionals and need to lessen the hassles of the otherwise complicated short sale process, then you need to be prepared.

Keep in mind no short sale deals are the same and you have to think ahead in order to avoid problems. In case you still encounter these issues, it would be best to know how to handle them. In any case, here are some tips you should consider:

Tip#: Dealing with the Seller – Make sure you sit down with the seller and find out if they are serious about selling. Some sellers enter into such decisions half-heartedly, resulting in delays and miscommunication. If the seller is motivated, you will not have any problems with the documents and communication.

Tip#2: Dealing with Low Offers – The market is indeed tough for sellers, with home values declining. Low offers have become the trend and it is one of the reasons why plenty of short sale deals collapse. Keep in mind lenders are trying to recover as much of their money as possible and it will make sense if the low offer is supported by the proper documents, market analysis, etc. Defend the offer and the bank will listen, you hope.

Tip #3: Dealing with Buyers – Many short sale buyers end up walking away because of the length of the process. This is why it is crucial you are honest with the buyer regarding the waiting period. Always, give a realistic timeline and never promise lender approval until you have it. Of course, it is important the buyer is pre-qualified in order to avoid financing-related problems when the time comes.

As a short sale Realtor, you need to understand your clients are depending on you to make sure the deal is successfully completed. You should check all details and be proactive.