What is a Short Sale?

A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.

Be aware that the seller need not be in default -- to have stopped making mortgage payments -- before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it. Short sales occur when property values drop or inflated appraisals were obtained, making the property worth less than the amount of its mortgage. This means when a seller enters into a purchase contract to sell for an amount that is less than the home's present mortgage balance, if the seller isn't bringing in money to close, the lender must approve the short sale. That's because the lender is taking a loss.

It's one strike against you if the listing agent has never handled a short sale, but it's even worse if your own agent has no experience in that arena. You need an experienced short sale agent. I have gone through the process with clients many, many times. I have vast experience negotiating with banks and lenders.

For sellers, if you owe more than the home present market value and you can not afford to continue to stay in the home than short selling the property could be a very good possible option. After consulting with a financial or legal advisor, I can assist you in making choices that are in your best interest.
An agent with experience in short sales will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner or communicated with the lender thoroughly.

Home Affordable Foreclosure Alternatives Program

The Home Affordable Foreclosure Alternatives (HAFA) program will go into effect on April 5, 2010. Part of the government's Home Affordability Modification Program (HAMP), HAFA was designed to help stabilize the residential real estate market by allowing the short sale process to move forward more easily.

Under HAFA, borrowers will be allowed to receive pre-approved short sale terms before listing the property, as well as $1,500 in relocation assistance, and they will be fully released from any future liability for the first mortgage debt. In addition, HAFA prohibits servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement, up to 6 percent.

In order to be eligible, the property must be used as a principal residence, the first lien must have been originated before 2009, the unpaid balance must not exceed $729,750, and the borrower's total monthly payment must be more than 31 percent of their gross income.

This new, streamlined process makes short sales a better option for mortgage servicers, who are expected to now choose short sales over foreclosures in many cases. The decrease in foreclosures should help to stabilize the housing market. In addition, real estate sales professionals will be able to close more short sales and keep more of their commissions.

For more information about HAFA, click here.

Call me today for more detailed information at 973-534-3065. Put my experience and commitment to customer service to work for you!

Foreclosure Overview

What is Foreclosure?

With mortgage interest rates at historic lows and a record number of homes falling into foreclosure, many real estate investors and home buyers are pouring their money into the foreclosure market. But before you set sail on your foreclosure adventure, you need to know how to navigate the foreclosure market. Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments and the lender files a public default notice or a lis pendens (Latin for "lawsuit pending") - depending on the state. The default notice is a public record, and for buyers it's the first step in locating a property in foreclosure.

If you are a seller, navigating your way through the foreclosure process can be daunting. Often times, selling while there is still equity is the best move. In a declining market, doing nothing can be disastrous. Call me and I can help you make the choices that are in your best interest. My home marketing plan is world class and has helped many people start a new life.

If you are a buyer, good foreclosure buys are available, but buyers need to do their homework, be patient, learn the foreclosure process and most importantly - be persistent. If you are a novice, it is highly recommended that you educate yourself about the foreclosure process and arm yourself with the necessary research and preparation. I provide my clients with detailed information and proper guidance when I work with them. I have extensive experience negotiating with banks and lenders and also third party representatives. Let my skills in negotiating go to work for you!

Foreclosure buyers, however, need to be careful. There can be other liens on the property, which can drive up the purchase price. Liens are typically placed on a home for outstanding property taxes. But there can also be mechanic liens for unpaid repairs or remodeling done by a contractor. Buyers should also research the local state foreclosure laws.

Ultimately, however, the foreclosure process can end one of four ways:

The borrower/owner pays off the default amount to reinstate the loan during a grace period known as pre-foreclosure.
The borrower/owner sells the property to a third party during pre-foreclosure, allowing the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.
A third party buys the property at a public auction at the end of the pre-foreclosure period.
The lender takes ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction.

Always consult a tax attorney or financial advisor prior to making decisions regarding foreclosures.

For more information please call Heather Milling at 973-534-3065