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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No Equity: Wilmington NC Short Sale

No Equity

Are You Upside Down on Your House Value
or Fallen Behind in Payments?

A “Short Sale” is a special transaction that allows you to sell your home even when your mortgage debt is higher than the value of your home.  Your lender takes the loss for the difference between sales price and your indebtedness, but takes an even greater loss if forced to foreclose. 

Very few Real Estate Agents have the contacts and expertise to quickly and efficiently process a Short Sale. I’ve been professionally trained on how to help with your current lenders so you can quickly sell the property and get out from under this burden. 

A Short Sale will help you:
Avoid Foreclosure
Avoid Bankruptcy
Protect Your Credit From Intensely Negative Impacts
Be Free of Financial and Emotional Burdens

There is NO charge to you for any of our short sale service. You will never be asked to pay us any money, regardless if the deal closes or not.

If you would like to set up a no obligation consultation to discuss your options to avoid foreclosure or to see if you qualify for short sale then you can reach me directly at (910) 622-0319 or submit the below form: We are here to help you!

 Nilesh Jethwa: Wilmington NC Short Sales

www.shortsalewilmingtonnc.com



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WILMINGTON NC HAFA SHORT SALES

The HAFA program is the government’s new short sale program. The government created the program in an effort to assist homeowners who can no longer afford their home and who want to avoid the damage a foreclosure does to a borrower’s credit. The following is my understanding of the program guidelines as presented in the MAKING AFFORDABLE Supplemental directive 09-09.The federal government has asked lenders to voluntarily implement a new program called Housing Affordable Foreclosure Alternative (HAFA.) The start date is April 1, 2010 although it is expected that some lenders will implement the program sooner and as I stated earlier, lender participation is voluntary. The guidelines further state that a lender who participated in the HAMP (Homeowner Affordable Modification Program) will be required to participate in HAFA. Loans in which Fannie or Freddie has an interest in do not qualify. They are working on their own short sale program. In order to qualify for HAFA, a homeowner must meet the basic eligibility requirements for HAMP. They are: • The property is the borrower’s primary residence. • The mortgage loan is the first lien originated before 01/01/09. • The mortgage is delinquent or default is reasonably foreseeable. • The current mortgage balance is $729,750.00 or less. • The borrower’s monthly mortgage payment exceeds 31% of the borrower’s gross income. • If the borrower has mortgage insurance, the insurer must waive any right to collection from theborrower. If a borrower meets the following criteria, the participating servicer must give the borrower the option to enter into the HAFA program: • The borrower did not qualify for the HAMP trial period. • The borrower did not successfully complete the HAMP trial period. • The borrower is delinquent on their HAMP modification. • The borrower requests a short sale or deed-in-lieu. The good news for sellers who participate in HAFA: • The lender is required to forgive any deficiency (no more waiting and wondering if they going pursue the deficiency.) • The sellers will get $1500.00 at close of escrow. • Servicers are expected to provide an approval letter 10 days from the date the offer is received (no more waiting for months with no guarantee that the short sale will be approved.) • The short sale will be pre-approved and the server will provide the listing agent with a pre-approved listing price. • The server will pay up to 3%, but no more than $3000.00, to junior lien holders. • If a borrower meets the HAMP qualification requirements listed above, they can participate in HAFA without going through the HAMP program first; as long as their servicer is participating in the program. However, if the borrower hasn’t gone through HAMP first, it will be very difficult for a servicer to get an approval letter to the borrower ten days from the offer submission date, and it will more than likely create delays. During the HAMP program process the borrower’s hardship is evaluated. The servicer becomes very familiar with the homeowner’s situation and all the obstacles that cause short sales to take forever are dealt with. Short sale pre-approval is pretty much determined through the HAMP process, so going through the HAMP program first will help the short sale to move quickly through HAFA. The good news for buyers: • The endless waiting for short sale approval will be eliminated. Short sale approval in 10 days or less. • Lenders must allow at least 45 days for close of escrow. This program will take all those frustrating unknowns out of the short sale process. The HAFA summary states that it is the borrower’s responsibility (with the assistance of their Realtor) to “deliver clear marketable title to the purchaser or investor.” It further says that the servicer can assist the borrower and the listing agent in the negotiations with lien holders, but they are not required to do so. An experienced Short sale agent knows how to negotiate with junior lien holders; however juniors could create problems based on HAFA guidelines. The program provides $3000.00 for junior lien holders. It also requires that junior lien give up the right to pursue any deficiency. If a junior wants more than $3000.00 and/or is not willing to forgive the deficiency, the borrower will not be able to obtain clear title as required. Multiple junior liens could create a problem. If there is more than 1 junior lien holder, $3000.00 may not be enough to satisfy them all. Another potential issue is that senior liens are not mentioned in the program guidelines. Property taxes are considered a senior lien and currently lenders will pay past due property taxes in order to attain clear title. Since the HAFA program stipulates that providing clear title is the borrower’s responsibility, one could assume that the borrower will have to pay any past due property taxes, before close of escrow, so clear title can be provided. definitely One other important requirement: • The transaction must be completely arms length. No one involved in the transaction can be related. This includes the Realtors, the buyers and the sellers. Currently in a short sale transaction the lender does not automatically give up the right to pursue. Large numbers of short sales fail because borrowers are concerned that the lender may pursue the deficiency. The fact that the HAFA program requires that the lender forgives any deficiency is a huge relief for borrowers struggling with their mortgage. Other than the problems that may arise with other lien holders, this program is a major step in the right direction for borrowers who are “under water.” It gives them a real chance at a fresh start. There are so many borrowers out there that are responsible people who find themselves in a night mare they never imagined, this program is an opportunity to move beyond the night mare and begin again. It is also a win for everyone who lives in the neighborhood of the borrower who participates in HAMP. Short sales generally do not bring down the value of the neighborhood as much as an REO does. Overall we see this as a positive solution for a homeowner in a very difficult situation. This is one of most important step in short sale, hire an experienced agent, if that agent is Certified and trained in short sale then that would be a plus. An experienced short sale agent knows how to negotiate with lender, how to prepare the short sale package and how to market your property to get buyer for your house. Before hiring, check that agent’s web presence, ask for reference and check whether they have successfully closed any short sale transactions. If you are in Wilmington , NC or near by area and need my service for short sale, don’t hesitate to contact me at 910-622-0319, your expert short sale agent in Wilmington area. www.shortsalewilmingtonnc.com.

Posted by Nilesh Jethwa



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Wilmington NC Short Sale: Recourse And Non-Recourse Loan

Do You Know The Difference Between Recourse And Non-Recourse Loan?

This is one of the most important things to know when you are considering short sale, what type of loan you have and what is the difference between recourse and non recourse loan.

When you purchase your home, most loans are considered as nonrecourse loan or it’s also called purchase money loan, which is secured only by the home and you are not personally liable for the balance if you do a short sale.

But when you refinance your previous loan then it is considered as recourse loan. Most second loans and home equity loans (known as HELOC) are also considered as recourse loans, which mean you are personally liable for the balance when you sell your house or foreclose and if the sale doesn’t cover all your loans.

Now, whether its recourse or nonrecourse, it also depends on the lenders, some lenders follow homeowners to collect for the remaining balance based on their business decision even on nonrecourse. It also depends on whether your state is a deficiency or non-deficiency state. It’s a whole different topic (deficiency and non-deficiency) which I will explain in my next blog.

If you are not sure whether you loan is recourse or non-recouse loan, then you can either check your loan note or check with your loan agent. So, it’s always good to know the difference between recourse and non-recourse loan.

If you are considering short sale then consult with CPA or tax attorney for any tax ramification before you list your house with any realtor.

You can reach me directly at (910) 622-0319 with any questions, I would be glad to assist you. Please Visit my website shortsalewilmingtonnc.com .

 

Nilesh Jethwa

Wilmington NC Short Sale Expert

Wilmington NC HAFA Short Sale 7 Benefits

Discover 7 Benefits of HAFA Short Sale for Homeowners

Exciting News for Homeowners! This new law is going to be effective as of April 5, 2010, it is called HAFA – Home Affordable Foreclosure Alternative, which will help homeowners who are having difficulty in paying the mortgage and cannot afford the loan modification program under the Home Affordable Modification Program (HAMP).  This new guidance is supplemental of HAMP, which gives guidance to servicers to work on short sale or deed-in-lieu to avoid foreclosure on an eligible loan under this program.

This new program is beneficial for everyone – borrower, servicer and investors by providing foreclosure alternatives and incentives for participating in this program. Currently, this program is available for loans which are not owned or guaranteed by Fannie Mae or Freddie Mac.

Borrowers that meet the eligibility criteria for HAMP but cannot afford the modified payments, or do not successfully complete a Trial Period Plan, or default on a HAMP modification (missed at least two consecutive payments) or request a short sale will be eligible for HAFA program.  The short sale must be arm’s length transaction

Let me tell you some of the benefits for homeowners of doing short sale under this program:

  1. The servicer may not require a cash contribution or promissory note from the borrower
  2. The servicer will approve the list price even before listing the house if you are qualified for HAMP but cannot afford it
  3. Servicer must forfeit the ability to pursue a deficiency judgment against the borrower.  This is one of the biggest benefits for homeowners who are doing short sale under this program, so after the sale, they don’t have to worry about any deficiency judgment after selling the house
  4. The servicer will pay the allowable closing costs for the seller to close the transaction
  5. The servicer may pay the subordinate liens not more than 6% of the unpaid principle balance of their loan to release the lien and full release of borrower liability (No more fear of deficiency judgment from the second lien holder!)
  6. Borrowers will get $3,000 as relocation expense at close of escrow.
  7. The servicer will pay the realtor’s commission, so no out of pocket expenses from the seller

Short sale is a complex transactions involving coordination and cooperation amount all parties involved in this transaction, so work with an experienced short sale real estate agent who have experienced in closing short sales, not all agents are experienced in short sale.

There are certain guidelines and time period, which you have to follow in order to complete the short sale successfully, so check the agent’s experience in short sale before selecting as your agent for assisting in your short sale.

If you have any questions on HAFA short sale or would like to see whether you qualify for the HAFA program, please call me at (910) 622-0319, I would be happy to assist you. If you are in bay area and would like to meet with me personally for a free confidential consultation then also give me a call. www.shortsalewilmintonnc.com

 

Posted by NIlesh Jethwa Wilmington NC Short Sale Expert

 

 

 

 

Wilmington NC Short Sale Top 5 things to do before you Short Sale Your House

Top 5 things to do before you short sale your house in Wilmington NC

Short Sale in Wilmington NC is a long process and it takes times to complete the process and I know it is a difficult choice for you to sell your house which you bought with a good intension to live there or raise your family. But due to certain circumstances, now you cannot afford to keep the house and cannot qualify for loan modification or refinancing. At this point, one of the best options is to do short sale.

Before you decide on short sale, these are the 5 things you need to know which I think is important in your decision.

1. Educate Yourself with All Options

First thing, you have to do is check on internet and educate yourself about different options to avoid foreclosure as soon as you think you will be in trouble. I guess you are already doing that by reading my blog. You can also Google or search on Yahoo on loan modification, deed-in-lieu, bankruptcy, foreclosure, short sale and other available options to avoid foreclosure. Ask professionals (realtor, CPA, attorney) for various options who are familiar with options to avoid foreclosure. It’s better to be pro-active to solve any issues rather than waiting or ignore the problems.

2. Contact Your Lender or HUD Counselors

Once you know that it would be hard to keep paying the payment or when you missed your first payment, contact your lender directly for help in modifying your loan or refinance. Ask your lender what all documents needed for modification or refinance based on your qualified program. Submit all required documents and keep following up with the lender (I know, its time consuming but you are trying to save your house so, it’s ok for that hard work). You can also contact your local HUD counselors for help to negotiate with the lender so that you can keep your house. You don’t have to pay any fees, it’s a free service. Avoid all the scammers who ask for up-front fees or wants to sign your deed to them.

3. Consult Your CPA or Attorney

If your lender denied your loan modification or do not qualify for loan modification due to some reason and cannot afford to own your house, check with your CPA or tax attorney for any tax ramification or any other legal questiosn for doing short sale. The new Mortgage Forgiveness Relief Act 2007 allows you to relief from the tax if it’s your primary residence. Check your scenario with these professionals if you have to pay any taxes or not.

4. Documents required – if going forward for short sale

If you decide to go for short sale then you are required to present these documents to submit to the lender for short sale approval. It’s always to better to have these documents before you start the short sale process. These documents are as follows:
– Copy of your recent mortgage statements
– Last 2 years tax return
– Last 2 paystubs
– Last 2 months of bank statements
– Hardship letter which explains your hardship
– Financial statements which includes your incomes and expenses
– Any other documents to prove your hardship

5. Work with an experienced short sale agent

This is one of most important step in short sale, hire an experienced agent, if that agent is Certified and trained in short sale then that would be a plus. An experienced short sale agent knows how to negotiate with lender, how to prepare the short sale package and how to market your property to get buyer for your house. Before hiring, check that agent’s web presence, ask for reference and check whether they have successfully closed any short sale transactions.

If you are in Wilmington , NC or near by area and need my service for short sale, don’t hesitate to contact me at 910-622-0319, your expert short sale real estate agent in Wilmington area. www.shortsalewilmingtonnc.com.

posted by nilesh jethwa

Buying a Short Sale in Wilmington, NC

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

Nilesh Jethwa ( Wilmington NC Short Sale Specialist)

Now-a-days you can see that more and more 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.

If you are in Wilmington or Leland NC  or near by areas looking to buy a house, then let me know, I would be glad to assist you. You can reach me at 910-622-0319. You can also contact me at nileshjethwa.com .

Notice of Default, What Should I do Wilmington, NC

You are thinking that you have received notice of default and what should I do? Am I too late? Is there anyway to avoid foreclosure?

According to RealtyTrac’s, 15% increase in foreclosure notices in the first six months of 2009 as compared to the first six months of last year 2008. The report also shows that 1 in 84 homes received at least one foreclosure notice for the first six months of this year, so if you look at the number, it is in millions (1,528,364 US homeowners received the foreclosure notices), out of this North Carolina itself received 12,642 homeowners received at least one foreclosure notice. If you would like to view for other states, click here “Foreclosure Report” for other states.

You have bought your house with a good intension to keep the house and pay the monthly payment on time but with a sudden change in your financial problems, you cannot afford the payment at this time. Most of the homeowners are not doing anything or just walking away from the house when they face this problem. If you just ignore or walk away from the house, it will not resolve your problems.

Even if you just ignored in the beginning and didn’t contact the lender or anyone for help and you have received the notice of default, now you are thinking what to do, well, you still have options to avoid from foreclosure, YES! That’s right! You have options to save from foreclosure.

One of the option is to contact lender for loan modification. You can still contact the lender for loan modification if you have job and think your income can support the payment and also show that you have financial hardship. It’s free you don’t have to give any fees to anyone for this service.

The other option is to do short sale to avoid foreclosure from your credit history. You can check this article to know more foreclosure vs short sale. For short sale, contact the trained and experienced realtor who knows how to handle short sale. You need to check the agents whether they had closed any short sale, not just listed. Also check whether they have any certification and training in short sale and which all banks they have negotiated with for short sales. Don’t just work with your friends, just because he is your friend, at this time, you need an experienced agent who can protect you from foreclosure if possible.

So, if you have received notice of default then don’t just sit there by doing nothing, be proactive and contact your lender for loan modification or experienced agent for short sale. Always consult your CPA or attorney for any tax ramifications questions. Don’t think that you cannot do anything at this time!! You Can! If you take action NOW! Please Contact me if you need any additional information. I am Certified Distressed Property Expert (CDPE) in the Wilmington and Leland NC area. To contact me or my team please click here!

 

Posted By: Nilesh Jethwa

Wilmington NC SHORT SALES

www.shortsalewilmingtonnc.com

Short Sale Wilmington, NC Part 1

What makes a successful short sale? It’s simple, everybody has to believe that they are a winner.

  • · The seller needs to know that they’ve gotten out of a bad situation with less credit damage and a new start.
  • · The buyer wants to make a purchase of a property below the true market value, at least in the near future.
  • · The lender must believe that the short sale will net them more money than a foreclosure action.

If we’re the buyer, then our interests are best served by a purchase at the lowest possible price that will be approved by the lender. The seller gets no cash, so we are just showing them a way out of a foreclosure action.

Here’s what you’re looking for as the buyer in a short sale transaction:

  • · A homeowner upside-down in their loan. Their home is worth less than they owe on it in various mortgages.
  • · Clear title and no prohibitive liens or claims against the property.
  • · Enough time to complete the process before foreclosure action.
  • · A willing seller with a desire to help in order to avoid foreclosure.
  • · A current valuation that will allow you to buy the home at a bargain price, creating instant equity.
  • · True hardship on the part of the seller to convince the lender of the necessity of a short sale.
  • · If VA or FHA, the situation meets their criteria for short sale.

In short, you are looking for a homeowner owing more on their home than they can get in a sale, and a situation where the lender will approve a purchase price that meets your investment goals.