Negotiation With Short Sale Lenders – Wilmington NC Short Sale

In working in the Wilmington NC Short Sale arena for the last 2 ½  plus years, I have seen lenders do just about everything when it comes to negotiating short sales with home owners. There really is no “standard” in short sales. The way one short sale file at one particular lender is handled can be totally different on the next.

One of the biggest reasons for this is that every lender has different investors that actually own the loans. There could be more than twenty five different investors that have interests in loans at one lending institution. So for example just because Bank of America may have done something for a home owner in one circumstance does not mean they would do the same thing for another home owner in the exact same circumstance.

More often than not this is because one investor may not have the same needs or requirements as another investor.

There are basically three scenarios for a seller when completing a short sale. They are a:

  • Cash contribution to the lender at closing.
  • Signing a promissory note to pay back some portion of the short sale debt.
  • A combination of these two things.
  • A complete debt removal.

The biggest consideration for most home owners completing a short sale is debt removal. My goal of course in any short sale is to get the most favorable terms and conditions for the seller which is a complete debt removal. Many lenders today want sellers to have some kind of “skin in the game” if they are going to grant a short sale.

In my experience the terms that most home owners get from short sale lenders is very favorable. Home owners are typically asked to bring a cash contribution or sign a note that basically amounts to pennies on the dollar compared to what they owe.

A typical scenario could be a home owner being substantially under water…..for argument sake let’s say $100,000. It would not be unusual for a lender to ask the seller to bring $5000 to the closing and letting the short sale take place. Another possibility if the seller does not have $5000 is to work out a promissory note. Maybe the lender asks for a$15,000 note to be paid back over the next five years at an attractive interest rate. As mentioned previously it could be a combination of these two options. These are just quick examples to give you an understanding of what happens in the short sale world on a daily basis.

There can be circumstances although not real often, where the lender will only accept a cash contribution in order to close. The short sale lender may have this requirement for one of the following reasons:

  • The seller has money in liquid accounts.
  • The seller has not been late with any      mortgage payments.
  • The cash contribution is a requirement of      waiving the deficiency (debt removal).
  • The seller has a good credit score and      are current with other debt.
  • The residence is an investment property.

One of the most difficult parts of going through a short sale as a seller is the long wait involved from the time you get an offer from a buyer until the time you actually begin negotiations with the lender. Sometimes there can be months in between the two. As a seller it is easy to feel in the dark and helpless. There can be times where you will be in this waiting game wondering what the lender is going to require of you and then their request finally comes. They ask you for a cash contribution that you just don’t have.

I have an outstanding short sale attorney that works on behalf of the seller with all of my short sale transactions. In a circumstance where the lender asks for a cash contribution that the seller just can’t come up with the first course of action will be to try to work out an amicable compromise with the lender/investor. This would typically be one of the following:

  • Negotiate to get the cash contribution      lowered to something the seller was able to bring to closing.
  • See if the seller can get the funds from      a family member or borrow from them.
  • Try to get the lender to accept a      promissory note instead.
  • Ask the buyer to pay the cash      contribution if lender allowed this to occur.

In the vast majority of the short sales I have been involved in we have been able to work it out so a compromise was reached and everyone got what they wanted. Should sale negotiations can be difficult at times but if you know what your doing common ground can often be reached.

What would you need to do in the rare instance where a large cash contribution was required that the owner just did not have and the lender would not budge? If all else fails what you would need to do in the scenario above is to put the home back on the market and build in a cash contribution to the lender right into the transaction.

So for example you would add a cash contribution for the lender on behalf of the seller on line 104 of the buyer’s side of the HUD settlement statement. You would also place the same contribution on line 404 of the seller’s side of the HUD as a “Cash Contribution To The Lender”. The payoff amount would then go to the lender.

This is how short sale negotiations work with lenders. If you know what you are doing you can usually find common ground. Of course there are numerous things to look for in a short sale contract which I have covered in a number of articles I have written.

If you are need to short sale your home or condominium in Wilmington NC, Leland NC, Hampstead NC, Wrightsville Beach NC, and Carolina Beach NC. I am successfully completing short sales throughout  these areas. So far, knock on wood, I have a 98% success rate for short sale approval! Short sales are specialized transactions that are critical to have the right Realtor representing you. Do not make the mistake of picking an agent that does not understand how to get to the closing table on a short sale. Nationally less than 30% of all short sales close!

 

Nilesh Jethwa

WILMINGTON NC SHORT SALE EXPERT

http://www.shortsalewilmingtonnc.com/



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Credit Scoring After Short Sale and Foreclosure Wilmington NC Short Sale

 

The other question that I get from folks considering a short sale is how it will impact their credit. There is a lot of misleading information that come from Realtors, as well as online forums about the impact on credit scores. On many occasions you will hear that a short sale is far better for your credit than getting foreclosed on. This is incorrect! A credit score in a short sale or a foreclosure have the potential to be about the same. Maybe marginally better in a short sale.

According to Fair Issac (My FICO) a company that provides analytic, decision making, and credit scoring services for financial service companies a credit score will go down by 40 to 110 points after being 30 days late. Further, the scoring drop will increase to 70 to 135 points after 90 days late on a mortgage payment.

The average scoring drop in a short sale, foreclosure or deed in lieu is 85 to 160 points. You need to keep in mind that in both short sales and foreclosure it is possible that the credit score drop could be closer to 200-300 points.

Credit scoring factors vary from individual to individual. The scoring change is heavily dependent on where the credit score was before the negative event took place. Both a short sale and foreclosure are considered a loan that was not paid as agreed.

What happens to your credit score in each of these events could be different than someone else who goes through the same financial event. Unfortunately, most of the time the higher the credit score the greater the decrease from where you started.

When trying to decide whether a short sale is right for you don’t be fooled into making the decision under false hopes that your credit will not be impacted all that much. The biggest advantage in a short sale is the shortened time frame in which you will be able to purchase a home in the future.   

One of the most important steps after going through either a short sale or foreclosure is to be conscious about trying to improve your credit standing. Here are some excellent tips on how to increase a credit score (contact me I will be glad to send you a pdf print out.)

*** The above information for waiting periods before buying a home after completing a short sale and foreclosure was sourced by the Fannie Mae and Freddie Mac selling guides along with the FHA handbook.

If you are need to short sale your home or condo in Wilmington, Hampstead, Leland, Rocky Point, Wrightsville Beach, or Carolina Beach get in touch! I would love to interview for the chance to represent your best interests. www.shortsalewilmingtonnc.com

I am successfully completing short sales throughout the Wilmington NC and Surronding areas. So far, knock on wood, I have a 98% success rate for short sale approval! Short sales are specialized transactions that are critical to have the right Realtor representing you. Do not make the mistake of picking an agent that does not understand how to get to the closing table on a short sale.

If you are outside the Wilmington NC  area and need to do a Short Sale please feel free to contact me and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to other Realtors all around the country.

Nilesh Jethwa (CDPE)

910-622-0319

WILMINGTON NC SHORT SALE EXPERT

www.shortsalewilmingtonnc.com



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BUYING A HOME AFTER SHORT SALE IN WILMINGTON NC

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As a Realtor who has been heavily involved closing WILMINGTON NC SHORT SALES over the last two years, one of the questions that I get asked quite often from home sellers is how long will it take before I will be able to buy a home again.

The answer to this question does not have any clear cut and dry answer. There are quite a few variables involved when trying to figure out when someone will be able to purchase a home after a foreclosure or short sale

Going through either a short sale or a foreclosure has the potential to seriously impact ones credit. Government entities Fannie Mae, Freddie Mac and FHA do not directly loan money to individuals but are the governing body that work with lenders to guarantee loans and free up money to provide mortgages.

Banks typically have the authority to lend to whoever they want but will generally follow the guidelines set forth by these entities. There are some lenders of course that will take greater risks with some borrowers than others.

Below are the general guidelines that FHA, Fannie Mae and Freddie Mac follow when considering a loan after a short sale or foreclosure:

Short sale with FHA Loan

  • Can purchase right away with no mortgage default
  • 3 year wait if in default at the closing
  • Reduced wait if the borrower has re-established good      credit and can show extenuating circumstances

Short Sale With Fannie Mae Loan

  • 2 year wait if the borrower puts 20 % down
  • 4 year wait if the borrower puts between 10% to 20% down
  • 7 year wait if the borrower puts less than 10% down
  • 2 year wait if the borrower can show extenuating      circumstances and puts more than 10% down

Short Sale with Freddie Mac Loan

  • 4 year wait before being able to get a loan
  • 2 year wait if the borrower can show extenuating      circumstances

Foreclosure with an FHA Loan

  • 3 year wait before being able to get a loan
  • Reduced wait if the borrower can show extenuating      circumstances and re-establishes good credit

Foreclosure with a Fannie Mae Loan

  • 7 year wait from the completed foreclosure sale date
  • 3 year wait if the borrower can show extenuating      circumstances. Additional underwriting requirements apply for 4 years      after a 3 year waiting period.
  • 7 year wait for a 2nd home, cash out re-financing, or      an investment property

Foreclosure with a Freddie Mac Loan

  • 5 year wait from the completed foreclosure sale date
  • 3 year wait if the borrower can show extenuating      circumstances

** As a side note a deed in lieu of foreclosure follows the same guidelines as FHA’s foreclosure policy, the same as Fannie Mae and Freddie Macs short sale policy.

When analyzing the difference between completing a short sale or going through a foreclosure in regards to purchasing another property in the future it boils down to the waiting time which is more favorable in a short sale.

*** The above information for waiting periods before buying a home after completing a short sale and foreclosure was sourced by the Fannie Mae and Freddie Mac selling guides along with the FHA handbook.

If you are need to short sale your home or condo in Wilmington, Hampstead, Leland, Rocky Point, Wrightsville Beach, or Carolina Beach get in touch! I would love to interview for the chance to represent your best interests.

I am successfully completing short sales throughout the Wilmington NC and Surronding areas. So far, knock on wood, I have a 98% success rate for short sale approval! Short sales are specialized transactions that are critical to have the right Realtor representing you. Do not make the mistake of picking an agent that does not understand how to get to the closing table on a short sale. www.shortsalewilmingtonnc.com

If you are outside the Wilmington NC  area and need to do a Short Sale please feel free to contact me and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to other Realtors all around the country.

Nilesh Jethwa (CDPE)

910-622-0319

WILMINGTON NC SHORT SALE EXPERT

www.shortsalewilmingtonnc.com



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11 Things To Know About Buying A Short Sale Home In Wilmington, NC

11 Things To Know About Buying a Short Sale Home in Wilmington, NC

Now-a-days you can see that most of the listings are short sales. Those who are looking to buy, can get a good houses and sometimes below market price.

Here are 11 things about buying a short sale home in Wilmington NC, which might help you to buy short sale listings in this market:

1. Educate Yourself About Short Sale:

You need to know more about short sale and difference between short sale and other sales (regular sale & reo sale). Whether it’s the right buy for you or not. If you want to buy as soon as possible and cannot wait couple of months then short sale is not the right choice to write an offer. But if you can wait couple of month then look for short sale homes also in your search criteria and ask your agent to show short sale listings also.

2. Get Pre-Approval:

This is important whether you are writing offer to short sale or other type of listings. Pre-approval will make your offer stronger and gets higher priority than others who are submitting without pre-approval. So, make sure you are pre approved with a good lender before your home search.

3. Time Frame:

It takes time to know the final approval from the seller’s lender after you submit your offer, may be 1 month, 3 months or more. You need to have patience to wait that long for your dream home.

4. Offer Acceptance:

Even though, seller accepts your offer, doesn’t mean that your offer has accepted and you can move forward with that offer. Once you submit the offer, the seller’s agent forwards to the seller’s lender for final approval. The lender may accept it, reject or counter back to you with their price based on their own appraisal price.

5. Other Liens:

If other liens like HOA, tax liens and others where the seller owes to those lien holders , could also be a hindrance to the final approval of the sale. Most of the time, bank approves to pay all the liens but sometime they don’t, in that case either the seller or buyer or both needs to contribute to get that good deal.

6. Writing Offer:

Write a good offer based on the market value, don’t think that it’s a short sale, you can write a ridiculously low offer and bank will accept it. No, once you submit the offer, bank will also do their part by ordering appraisal to check the market value. They compare the appraisal value with your offer price. If you really like the house then write your best offer so that you can have higher chance of getting that house. Now, write only for those houses which you really like and not all short sale listings.

7. Check Listing Agent:

Check whether the agent representing the seller has experience in short sale or trained /certified agent in short sale, this shows that the agent can handle the short sale correctly from the beginning itself from submitting the package to getting approval from the lender. If the buyer side agent is also experienced is short sale then that would be a plus point to the buyer.

8. Follow up:

You need patience, once you submit your offer, don’t call your agent every other day for the status. The lender takes time depends on their work load to order appraisal or BPO (Broker Price Opinion) to determine the market value. This process itself sometime takes 30 days and another 30 or more days for final approval. But make sure, you ask your agent to follow up with the listing agent every other week or so for the latest update if any.

9. Backup Offers:

If you really like the house and somebody already wrote an offer, then ask your agent to submit a backup offer, if they are accepting the backup offers because sometimes the first buyer may walk away from the deal due to long waiting period or due to some other personal reasons.

10. Terms & Condition:

All the short sale listings are “As-is” sale, but that doesn’t mean you have to buy a house without any inspections. You have the right to do all the inspections but the seller will not fix anything if there’s any repair. It depends on you whether you are satisfied with the inspection reports and repairs(if any).

11. After Approval:

After getting the approval letter from the lender then work on to remove your contingencies(inspections, loan approval) and submit your initial deposit to the title within the specified time so that you can close the escrow on time and move to your home.

Buyers, you can get a deal with a short sale, but it comes at a price. If you have the time and the patience you could be rewarded handsomely.

Posted By Nilesh Jethwa CDPE Wilmington NC



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Wilmington NC Short Sale//Who Pays My HOA In Short Sale?

Who Pays My HOA In Short Sale?

Nilesh Jethwa  Wilmington NC Short Sale Expert

Most of the homeowner who has Home Owner Association (HOA) has this question when they cannot afford their monthly mortgage payment that “who pays my HOA in short sale?”

When the homeowner is in financial difficulties, sometimes they cannot afford to pay the home owner association fees along with other payments. Even though, it’s much lower payment than the mortgage payment but believe me they have the right to foreclose if you miss the HOA dues for couple of months or more, depends on the association rules and regulations. 

But in this tough market, most of the association doesn’t want to foreclose but most probably they will send it to collection department to collect it from the home owners for the due amounts.  They add their additional fees also with that balance due amount when it goes to collection.  Now, if you are not paying the association fees, they will put a lien on your property, which will make it hard to sell the property without clearing their dues.   

If you are doing short sale then sometime the lender pays all of your HOA dues but not all the banks pays for it.  You need a trained and experienced short sale agent on your side to negotiate with the lender to pay the HOA dues or make some kind of arrangement with HOA so that you can complete the short sale process. 

Trust me, HOA people is hard to deal with, they don’t want to give up any of their due amounts and most of them, don’t even care whether the homeowner is facing foreclosure or not.  If the lender doesn’t pay the HOA balance dues and no one else pays then you cannot complete the short sale even if the lender approves the short sale.  So, it is really important that you always work with an experienced short sale agent in your area, who knows how to handle the short sale process.

If you have any questions or need my assistance in selling your house then please contact me at 910-622-0319 or email me.  I sell not only in Wilmington NC but also the Pender and Brunswick County area. So call your local area short sale specialist for your short sale.

www.shortsalewilmingtonnc.com



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Wilmington, NC Short Sales: What you need to know…

 

The following information describes the short sale process:

 

• Homeowners are “short” when they owe an amount on their property that is higher than the current market value.

 

• A short sale occurs when a negotiation is entered into with the homeowner’s

 

For the Foreclosure vs. Short Sale chart Click Here!!

 

If your home is at risk of foreclosure, you don’t have to panic. There are many ways to ease the difficult situation, and one may be right for you. The country has seen a recent spike in foreclosures and defaults. As a result, in addition to new legislature, lenders have been more willing to work with distressed borrowers to help keep them in their homes. If you or someone you know is in this unfortunate situation or may be soon, now is the time to act. I’m sending you this helpful Item of Value that will explain the ins and outs of foreclosure, how you can avoid it and what your various options are. You don’t have to be the next victim of foreclosure. There is help available—if you know where to look.

 

Nilesh Jethwa and Associates have been serving the Leland and Wilmington NC. I’m Nilesh Jethwa. I’m a Certified Distressed Property Expert (CDPE) in Wilmington NC and Leland NC Area. I make it my duty to provide honest and accurate information about the foreclosure process and short sales. A Certified Distressed Property Expert® is a real estate professional with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales in Wilmington NC and Leland NC.The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. I believe that the best course of action for a homeowner in distress is to speak with a well-informed, licensed real estate professional in the Wilmington and Leland area. We have the tools needed to help you find the best solution for their situation. Often, when other options have been exhausted, CDPEs can help homeowners avoid foreclosure through the efficient execution of a short saleWe would gladly sit down with you and come up with the best solution to help you. To contact us please click here!