Is a Short Sale actually a Short Sale?
February 19, 2009
we have never had so many requests from buyers who only are interested in short sales, foreclosures, or (REO) bank owned properties.
However, when it comes to buying these types of properties, there are many differences.
One of the most common and sought after is the “Short Sale“.
However, not all Short Sale are alike.
In fact, not all Short Sale are even a Short Sale at all.
This morning, a real estate investor called and told me that he had put an offer in on a “short sale” home recently. He shared with me that it has been more than 10 days ago and had not heard anything from the bank and that the realtor said to be patient.
He wanted my advice. Here’s what I shared.
Unfortunately, many, if not most “short sale” listed in the MLS are not approved “short sale”
The real estate agents, just take a listing, and market and advertise the home at a price that would net the seller less than the amount owed. Then, when an offer is received the listing broker submits that offer to the bank. I was told by a well respected teacher at the AZ School of Real Estate , Bill Dowdy, that this is averaging about 78 days! yes, almost 3 months.
The more professional way to handle a proposed “short sale”, (I say proposed, because, not all banks will approve a “short sale”) is a step by step process that if approved, the bank will in effect, issue a “short sale”approval.
I can walk you through a detailed and step by step process if you request. However, in a nutshell, you need a hardship letter, and substantiation of financial information that you really cannot afford to pay any further.
Now, when a seller receives this Certificate of “approval” , the property can effectively be marketed and sold as a “short sale”.
These ’short-sales’ are the only kind of properties I recommend to my clients on which to make offers. W
e get a speedy response and if offer is not accepted we can move on to the next“short sale”and not wait 75 days to know whether or not our offer is accepted or declined.
Be careful, speak with your real estate professional, there are many issues such as rights to earnest monies, breach of contract, etc… that buyers face when making offers on “short sale” properties; especially, those that have not yet been approved by the seller’s lending institution.
Short sales are much different than Foreclosures and REO real estate.
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Copyright © 2009 By James Wexler, All Rights Reserved. *Is a Short Sale actually a Short Sale ?*
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs.
Phoenix AZ Sellers Facing Foreclosure ??
December 18, 2008
Today, it is estimated that between 2 and 3 million Americans may face foreclosure.
If you are one of the many, you should…
Know your Options if you are facing foreclosure :
In Phoenix | Scottsdale and all of Arizona, we use Deeds of trust, not mortgages, which change some of your options you may have in other states.
First and most importantly, …
1) Contact your lender to work out possibilities such as short-sales, loan re-structure or deed-in-lieu of foreclosure. Many lenders will work with you to try to minimize losses for everyone involved.
2) A short sale should be handled by Realtors with experience in foreclosure or short-sales.
3) Speak with attorney and a CPA regarding legal and tax (financial) implications that a short sale, deed-in-lieu of foreclosure or traditional foreclosure may have.
Finally,
4) make sure you act sooner than later. Most problems can be handled if there is enough time.
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Copyright © 2008 By James Wexler, All Rights Reserved. *Help Options for Homeowners facing foreclosure*
Contact James Wexler (480) 221-8080 for all your Phoenix Scottsdale area Real Estate needs.
Loan Modification Package - Hardship Letter example
November 28, 2008
Phoenix AZ real estate and Scottsdale real estate has been declining in value. As a result, lenders have been less willing to loan money to refinance homes. Thus, foreclosures numbers are rising and banks are taking possession of real estate called lender owned real estate (REO).
In order to combat growing inventory of bank owned homes, banks have established (with some pressure from our Federal government) loss mitigation programs to keep borrowers in their homes and stop foreclosure.
Currently, loan modification is an option for borrowers to stop foreclosure, stay in their home by offering a permanent change in one or more of the terms of a mortgagors loan which allows the loan to be reinstated and results in payment the mortgagor can afford.
In order for most banks, if not all, to accept a loan modification, you must be going through a personal hardship such as reduced work hours or unemployment… or are facing medical issues or even divorce. Also, bank will work with homeowners who have seen and interest rate adjustment or were victims of predatory lending.
A declaration of hardship is one of the most critical parts of a loan modification package and I wanted to include a copy of a loan modification hardship letter that was sent to me from an associate who has recently modified their loan with a major bank successfully.
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To whom it may concern:
I, John T. Borrower, would like a chance to explain my current situation. When I purchased this Home I planned to raise my kids here and stay close to my roots (my parents live less than 2 miles away) and live in this house for the rest of my life. When I singed the loan papers on the 2 year arm I was assured up and down that the value of my home would increase. I did not.
Matter of fact it’s gone down in value like a used car I am currently upside down. Now as you know my Interest rate has adjusted to______% and I will not be able to pay this high payment and buy food, clothes, Gas for my Trucks and utilities for my home. I have been pulling my hair out worried not sleeping trying to find a way to fix this problem.
Since 2001 I have ran my own business along with my Brother, Mom, and Dad a true Family operation. We do construction jobs in
Because of the down turn in the construction business in Arizona my work load has been cut more than 65% I no longer with several of my customers. Less then twice a month I will get work with others, but it is rare. I have been doing jobs like tire hauling a couple weeks out of the month too, but it doesn’t even come close to amount of work I used to have.
As a result of the poor economic conditions, I am asking for a modification on this loan from what I hear on the news, and research I have done the bail out money will be given to banks so that loan modification could be done.
Please help me keep my home I want to stay here. I know everybody has a story, but I think we can both win in this transaction.
Thank you for your time,
John. T Borrower
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I am not a loan modification specialist, please consult with an attorney or CPA.
If you are considering a loan modification please ask for a referral of a loan modification company that has been successful for borrowers.
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Copyright © James Wexler *Loan Modification Package - Hardship Letter example*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
Stop Foreclosure! Save Your Phoenix AZ home for the holidays!
November 21, 2008
With Phoenix AZ real estate prices dropping, unemployment fears rising many Phoenix AZ homeowners are facing a tough decision. Borrowers are asking themselves, if they should continue to deplete long-term savings and pay their mortgage. A very scary question to ponder.
A new option as emerged at the forefront of those facing foreclosure. It is called a loan modification.
A loan modification is a permanent change in one or more of the terms of a mortgagors loan which allows the loan to be reinstated and results in payment the mortgagor can afford.
Loan modifications typically involve a reduction in the interest rate on the loan, a fixed rate mortgage vs. adjustable rate mortgage (ARM), the term of the loan, principal, interest and fees (the arrears ) added to the loan balance to bring you current. A loan modification can consist of any and or all of the above
Yesterday, Fannie Mae and Freddie Mac announced a plan to Suspend Foreclosures Until January 2009 While Streamlined Modification Program is Implemented.
Fannie Mae, Freddie Mac, Bank America and Chase Bank have all suspended foreclosures in most of the country for several months until they can establish loan modification departments to handle the massive amounts of borrowers requesting to modify their loans, avoid foreclosure and stay in their homes.
Fannie Mae and Freddie Mac , alone, expect to modify loans of more than 400,000 borrowers.
I am not in the loan modification business. However, I have advised struggling Phoenix AZ real estate owners to speak with an attorney and their bank to decide if a loan modification is right for them.
I wanted to share a story. A borrower, who is now almost 6 months behind on their payments for about $10,000 solicited the help of a Phoenix AZ loan modification company, who for a small fee has worked to negotiate a loan modification for the borrower.
The original terms where a 6 month forbearance. In the context of a mortgage process, forbearance is a special agreement between the lender and the borrower in order to delay a foreclosure. In this situation, the bank would request 20% of the monies past due “Arrears” paid immediately and then a fixed payment of 80% of the current loan amount for six months.
The client came back to the bank with an offer of $1,000 now and a 6 month payment of $1,300/month. The bank accepted.
In 6 months, if the client is paying on-time, the bank will review the current financial health of the borrower and offer a permanent loan modification.
Everyone is happy. Banks keep a client paying interest, prevent foreclosure and most importantly, the borrower avoid foreclosure and is home for the holiday.
If you are considering a loan modification please ask for a referral of a loan modification company that has been successful for borrowers.
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Copyright © James Wexler *Stop Foreclosure! Save Your Phoenix AZ home for the holidays!*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
Dare I say. “Short Sales are not all Bad!”
November 20, 2008
Most people who read my daily Phoenix AZ real estate blog and musings on Scottsdale AZ real estate know that I have not been a fan of short sales.
To clarify, I am referring to the vast majority of short sales listed on the AZ MLS (multiple listing service) that are, in fact, not approved short sales. These are listings posted by Phoenix AZ real estate agents who are picking arbitrary prices, hoping to solicit offers. The offers are subsequently, submitted to the banks for their approval.
The problem I have is that the sales prices and offers to purchase have little bearing on whether or not banks will accept the short sale. When deciding on whether or not to accept a short sale, the banks weigh heavily the financial hardship and current financial condition of the borrower before deciding on a price.
As are a result, the prices on the MLS are random, arbitrary at best. The prices, then skew the actual market for houses. Buyers do not know true market pricing. In fact, short sales adversely affect those who are trying to sell their homes. And buyers are mislead on what is really for sale at what price.
However, there is an upside to short sales that are approved by the banks.
First of all, It would be almost impossible to be approved for each Short Sale. The bank would have to do a Broker Price Opinion on all properties all the time.
Short sales are a pretty good model, but they could be streamlined to speed up the acceptance. The most frustrating thing to a buyer is waiting all that time and the find out it’s rejected.
The other issue is a (potentially) false market as prices are random. We need a system in place to keep short sale listings priced at/near market so other home prices are not dragged down by the neighbor who is selling the home short.
Short sales are not all bad. In fact, approved Short Sales can save the bank money, help the seller avoid foreclosure on their credit, help the buyer get a great deal on a house, and help the community by not having a vacant house.
If you are a buyer, make sure you contact a real estate broker who is knowledgeable with Phoenix AZ REO s and Scottsdale AZ lender owned real estate.
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Copyright © James Wexler *Short Sales are not all Bad*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
Why Loan Modifications for phoenix az real estate?
November 12, 2008
There is a lot of news about loan modifications. In fact, due to the decline in home prices of Phoenix AZ real estate, we are a national leader in loan modifications.
On Monday, Citigroup says it is imposing a moratorium on most foreclosures as part of a series of initiatives aimed at helping at-risk borrowers.
Previously, Bank of America halted foreclosures in California and more then 2,000 homes in greater Phoenix. JPMorgan Chase & Co. won’t put any more homes into foreclosure for the next 90 days while it implements a plan to help borrowers stay in their homes.
Yesterday, and most significantly, government sponsored entities and lending giants, Fannie Mae and Freddie Mac held a major news conference to announce that they too would be modifying loans for hundreds of thousands of borrowers.
The loan modification is here to stay. It may even pass sub-prime and credit crisis as the financial word of the year for 2008.
The question is : What is a Loan Modification ??
A loan modification is a permanent change in one or more of the terms of a mortgagors loan which allows the loan to be reinstated and results in payment the mortgagor can afford.
Loan modifications typically involve a reduction in the interest rate on the loan, a fixed rate mortgage vs. adjsutable rate mortgage (ARM), the term of the loan, principal, interest and fees (the arrears ) added to the loan balance to bring you current. A loan modification can consist of any and or all of the above.
The next question: Why would a bank or lender or the government want you to modify your loan?
The government, through such programs as the Hope for Homeowners Act is pressing banks and lending institutions to work with borrowers in what is called “Loss mitigation” to modify loans for qualified borrowers.
Believe it or not, legal fees and related foreclosure costs for a home that is lost in foreclosure is often more costly to a bank then a loan modification (assuming the borrower can and still wishes to pay).
Short sales have been the most common form of loss mitigation. In a short sale, a bank agrees to take less money then the borrower owes when the home is sold. Bank have been (somewhat) adverse to short sales as they do not recover any interest, fees, principal in arrears, take a drastic loss int he home and lose a potentially paying customer.
Loan modifications have now emerged as the best alternative for banks as a way to keep a borrowers in the home , borrowers continually paying interest (which is how banks make money), and maybe most importantly keeping less bank owned real estate hitting the market for sale which further drives down prices.
Keep in mind that the government has established loan modification to help prevent more Americans from losing thier home. It is not something to be afraid of at all. In fact, for many, it is the best thing they have done since the day they bought their home.
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Copyright © James Wexler *Why Loan Modifications for Phoenix AZ Real Estate?*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
4 types of loan modification experts
November 9, 2008
Phoenix AZ real estate is down. That is no secret. As a result, increasing numbers of homeowners are finding that their home is now ‘under water’; meaning the loan amount of the borrower is larger then the value of the home.
Add to the problem, the now infamous ’sub-prime’ mortgage meltdown and pervasive adjustable rate mortgage (ARM) that are now resetting to higher and often unmanageable interest rates, many Phoenix AZ real estate owners are making the conscious decision to walk-away from the payment, the home, and ultimately the house is foreclosed upon by the bank.
The government through such programs as the Hope for Homeowners Act is pressing banks and lending institutions to work with borrowers in what is called “Loss Mitigation“.
Short Sales are the most common form of loss mitigation where the bank agrees to take less money then the borrower owes and the home is sold. However, short sales reduce the amount of money they receive as they do not recover any interest , fees, principal in arrears and take a (usually) drastic loss in the home.
Loan modifications - where the lender agrees to a loan re-structure provides for lower interest rates and terms and often penalties, fees, interest and principal in arrears tacked onto the back of the loan, has emerged as a alternative for banks as a way to keep borrowers in the home paying interest and keeping less bank owned real estate hitting the market for sale which further drives down prices.
There are 4 types of loan modification methods you can use to work with your bank/lender to negotiate new terms that will (hopefully) keep you from losing your home.
- Do it yourself loan modification - Despite, the rampant advertising promising results, you do not need a loan modification company or an attorney. You will need to spend a lot of time to get to the loss mitigation department of your bank and get the required financial information to them on your own.
- Loan Modification Companies - These can cost $1,000 or more. However, they now the process, required information from you and even have relationships with lenders. Most of these companies do a great job for you. Be careful of scam artists. Make sure you ask for referrals.
- Attorney Loan modification company -These are law firms specializing in loan modification. Thy cost as much as $3,000 or more. However, they do perform a forensic audit on your mortgage looking for possible cases of predatory lending. Rumor has it, and I can not confirm it, but many believe that banks deal with attorney loan modifications first. Then , and if there are none of those, then the lenders get to non-attorney loan modifications.
- FHA “Hope for Homeowners” - Sponsored by the FHA and HUD , the FHA will refinance loans of borrowers having payment problems if the existing investor (lender) will write down the loan balance to 90% of market value.
If you want to stay in your home and have the means to pay a fixed amount, contact your lender right away. If the foreclosure process has started, then time is of the essence.
I recommend you try working with your bank yourself first. If you find that it is too time consuming, confusing or emotionally troubling contact a loan modification specialist.
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Copyright © James Wexler *4 types of loan modification experts*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
Is there really such thing as a short sale?
November 7, 2008
I have been writing an on-going series of stories about Phoenix AZ short sales and Scottsdale AZ short sales and the challenges and short sale nightmares buyers and sellers are facing with getting a short sale transaction closed.
The question I ask “Is there such thing as a short sale?” 
The problems with short sales are that most short sale are not short sales at all. Many real estate agents, just take a listing, and market and advertise the home at a price that would net the seller less than the amount owed. Then, when an offer is received the listing broker submits that offer to the bank.
There is very little incentive for banks to accept a short sale.
- The bank often collects insurance if the home actually is foreclosed upon.
- The loss of principal, penalties, fees and interest are also deductible to the bank.
- A loan modification package is a better option for the bank and the exact same financial information.
- loan modifications allows the bank to continue to collect interest and prevent taking the home into inventory.
- Bank are waiting to see if the FED will bailout the bad loans.
- A seller sees little benefit to a short sale. 99% of the time the credit is already affected negatively.
- A buyer has options at better prices to make offers such as the large amount of lender owned properties (REO)
- A buyer can stay in the home mortgage free until the home is foreclosed upon versus a short sale where (in most cases) they need to keep the home current.
I have heard statistics suggesting that 90%+ of all short sales never successfully close escrow. If that is even remotely accurate, I would argue that, for all intent and purpose, there is no such thing as a short sale.
If you are considering a short sale, make sure you work with a Phoenix Realtor or Scottsdale Real Estate agent who is experienced with short sales and bank owned transactions.
If you are a buyer, make sure you contact a real estate broker who is knowledgeable with Phoenix AZ reo’s and Gilbert AZ lender owned real estate.
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Copyright © James Wexler *Is there such thing as a short sale?*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
10 Ways to Stop Foreclosure in Phoenix AZ
November 6, 2008
Phoenix AZ real estate is struggling to find a bottom. As a result, our local economy is in a recession causing a litany of problems including declining Phoenix AZ real estate values, unemployment and rising foreclosures.
Unfortunately, foreclosures are a sign of the times and something that we need to address and face head on.
If you have faced a recent hardship and fear that foreclosure may be on the horizon, here are
10 Ways to Stop Foreclosure in Phoenix AZ
- Sell your home - selling your home is the only way to stop foreclosure 100% of the time.
- Loan Modification is a procedure whereby a loans payment plan is altered due to the hardship of the borrower. This can include the rate, term and monthly payment amounts
- Forbearance - contact your lender and agree to stop foreclosure in exchange for paying a lump sum, or a schedule of payments to bring your loan current
- Re-Finance your loan - this is a great option. Remember to do this, before, you know you are actually facing foreclosure . Otherwise, your credit will prevent you from qualifying for a loan
- Short Re-Fi‘ (short -refinance) - Here’s how it works. A lien-holder (typically, a bank) will allow a borrower to re-finance the short amount with another bank.
- 2nd Loan or HELOC - you may be able to take out a Home equity line of credit to pay for your monthly loan payments until the hardship has passed
- Short Sale - Simply put, a real estate Short Sale means the lender is accepting a lesser amount as a payoff than the total amount of the loan due.Why??? ….Well, a seller has an opportunity to sell the house, possibly salvage credit (seller still cannot have late payments) , and potentially avoid bankruptcy,
- Deed-in-lieu of Foreclosure -A Deed in lieu of foreclosure is where the borrower exchanges the deed of the home to satisfy a loan that is in default and avoid foreclosure proceedings.
- FHA “Partial Claim” Loan - A Partial Claim can allow you to instantly bring your loan current and stop any Foreclosure action. This strategy is only available on FHA loans.
- Bankruptcy - Foremost, I suggest you speak with a bankruptcy attorney for any advice before this option. It is also important to note, that not all state provide bankruptcy as a means of stopping foreclosure.
**I am not an attorney! Please consult with an attorney and/or CPA regarding legal and tax implications for any of the above 10 Ways to Stop Foreclosure in Phoenix AZ listed.
The important thing to know is that you have options prior to facing foreclosure. Foremost, contact your lender as soon as you know that you may have some trouble making ongoing loan payments.
Contact your bank and/or your real estate professional to help you through a difficult , but manageable process.
Make sure you work with a Phoenix Realtor or Scottsdale Real Estate agent who is experienced with short sales and bank owned transactions.
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Copyright © James Wexler *10 Ways to Stop Foreclosure in Phoenix AZ*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
7 tips to follow when deciding on a Phoenix AZ loan modification company
October 30, 2008
Phoenix AZ real estate has led the country in price decline in the last 12 months; Down nearly 31%, according to the S&P|Case Shiller index.
One of the unfortunate byproducts of troubling times are the proverbial sharks who smell blood in the water. Each day, in Phoenix AZ, I hear of new foreclosure scams in which unscrupulous parties take advantage of the unknowing, trusting and desperate who are facing being kicked out of their homes.
The most common scam promises things like “stop foreclosure now!” or “fix your mortgage now!”. However, after an upfront fee (usually equally to one months mortgage), no work is done on your behalf.
The companies call themselves Loan Modification companies.
A Loan Modification is a procedure whereby a loans payment plan is altered due to the hardship of the borrower. This can include the rate, term and monthly payment amounts.
The problems is that Phoenix AZ loan modification companies are currently not required to be licensed and are completely unregulated. Since there is no loan originated, there are no mortgage and banking laws to regulate the loan modification industry. Which means that anyone, and I do mean anyone, can start your own loan modification company today. In fact, after one quick google search, I found more than one entrepreneur offering his “quick 10-step guide’” to starting your own loan modification company.
Please don’t get me wrong. There are a lot of honest loan modification companies doing good work and successfully keeping people in their homes. Just be aware that there are no requirements to be in the loan modification business, so there are dishonest people praying on frightened homeowners promising hope with no substance.
Here are a 7 tips to follow when deciding on a Phoenix AZ loan modification company.
- You can do this for free and do it yourself
- HUD offers foreclosure counseling for free
- Attorney Loan modification companies have a higher degree of accountability to the State Bar Association.
- Loan Modifications should not exceed $2,500
- Demand a forensic audit of your loan
- Ask for references of prior clients who have had success
- Be wary of guarantees as there is no assurance that the loan modification will be accepted at all or at what terms
Keep in mind that the government has established loan modification as a loss-mitigation program to help prevent foreclosure. Loan modification is a great tool to help those facing foreclosure stay in their home.
Loan modification is not something to be afraid of at all. In fact, for many, it is the best thing they have done financially since they bought their home. I had a client who just lowered their payment to a fixed rate of 3.75% and lowered the payment from $3,100 t o$2,000.
I just want you to be aware that there are some shady people out there who do not have your interests in mind before their own.
Contact your bank and/or your real estate professional to help you through a difficult , but manageable process.
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Copyright © James Wexler *Loan Modifications for Phoenix AZ real estate*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Make sure you work with a Phoenix Realtor or Scottsdale Real Estate agent who is experienced with short sales and bank owned transactions.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
MLS search -- Phoenix Area Homes for sale
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