Central Florida Short Sales

Hi folks. Do you ever wonder what happens after the Short Sale? If the lien holder states they will be contacting you after closing to make arrangements for you to pay the rest of the money you owe....do you believe them? Well you should.

I had a closing a few months ago where Bank of America was the 2nd lien holder. The lien was a HELOC (home equity line of credit) for $65,000. For those of us that work Short Sales we know that these HELOCs can be very unforgiving. The reason is that these loans are normally taken out after the property was purchased. In many cases the funds from the HELOC were used to purchase "toys", e.g., furnishings, cars, vacations and other goodies that having nothing to with real estate. The holder of the HELOC, in this case Bank of America, are not too anxious to take a loss while the borrower is driving around in a free and clear Hummer.

When it came time to negotiate the HELOC on the property the best we could do was get them the $6,500  allowed from the 1st  lien holder, GMAC. Bank of America accepted this amount.

However, Bank of America's Short Sale approval letter specifically stated that the deficiency of $59,500 was to be charged off as a COLLECTIBLE balance and that they would be in contact with the borrower to make arrangements to pay this balance. Bank of America would not forgive the "Short".

The seller was however being forgiven almost $300,000 from GMAC on the 1st lien In fact, GMAC was stating that the 1st would be satisfied in full. Being that this was the case the seller decided to accept the terms from Bank of America, close the transaction and deal with the shortage later.

The transaction closed and all was well.

About 90 days after closing Bank of America contacted the seller to make arrangements for the money he still owed. The Seller negotiated with them for a couple of weeks and was able to get Bank of America to accept $2,500 as payment in full!

So in the end it all turned out very well. For a total payment of $2,500 the seller was able to be unencumbered  from a combined debt of more than $350,000!! And he avoided having a foreclosure on his credit. I would say he did very well. What say you?

Are you facing foreclosure in Florida?

We all know Short Sales can be very frustrating. Short Sale Lenders can make decisions that make absolutely no sense to us as agents. There are many times where we are tempted to be overly creative to get a deal through. Folks....being creative is OK. Committing fraud is a crime.

Not all Short Sales are successful. There are Sellers that will be foreclosed on. This is a fact. All we can do is our best. The only 100% way to NOT be foreclosed on is to make the mortgage payments. If you don't make your mortgage payments then the Lender has the right to foreclose on you and take your property away.

A Short Sale is one of the remedies the Lender has to avoid the cost of foreclosure.  But make no mistake about it they do NOT have to choose this option. We can do everything possible to get the Lender to accept a Short Sale but they may sill foreclose.

Earlier today I deleted the comment below from www.ShortSaleSuperStars.com and wrote the writer an email letting him know that we do not in anyway condone this practice. Wendy Rulnick and I started www.ShortSaleSuperStars.com to help folks in our industry successfully close Short Sales by doing them the right way. Please stay above board. Sellers are facing very difficult times and the last thing they need is an agent suggesting they do things that may come back to haunt them. OK here it is:

"This is what you do. You negotiate the offer with the buyer and the seller and get all parties to sign. Then... with permission of the parties, you rewrite a new front page of the contract with a lower purchase price and send that amount in to the lender with the offer and hardship package. I would make the purchase price about $20,000 lower because they always seem to come back and want at least $15,000 more than the offer that is submitted. This must be their MO. In any case, it worked like a charm. Then... you tell the BPO agent that the offer price is what you sent into Carrington. I hated to resort to these tactics, but Carrington messed with my sellers for over one year. The only bummer is they gave us an approval letter for 20 days because we were getting close to the foreclosure date. I asked for an extension because the buyer was not able to meet the deadline. We needed TWO more days to complete the closing. They came back and reduced our commissions to 3% for both side TOTAL! To top things off, Kirk the SR VP told the closing atty's mitagator that he hates realtors. Go figure."

What do you think? Fraud or no fraud?

.......Lender Business Processing Service.  Not quite sure how long they have been offering their servies to lenders but I have just had my first experience with them this week. In fact, I am on hold with them as I write this article. I've been on hold for over 2 hours!!!

I wrote a post a few weeks back about receiving Short Sale approval from Chase in 5 days. My approval was good until August 23rd. I had a really great Chase negotiator by the name of Gregory Williams. Mr. Williams is awesome at what he does and always responded to me very quickly. I emailed him last Friday asking for an extension of a couple days so we could get the transaction closed. He called me immediately to let me know the file had been sent over to LBPS and Chase had nothing else to do with it. YIKES!!! This is NOT what you want to hear 2 days prior to closing!!

Anyway, like the good little Broker I am, I did not let it derail me and instead just picked up the phone and called LBPS. That's when the fun and games began. I have now spent a total of 6 hours on hold this week and still have not sorted anything out. In fact, that 6 hours has been spent doing nothing more than holding to confirm that my LBPS 3rd Party Authorization has been received and approved!

I fear this is going to be a very painful experience. While I was writing this article (still on hold) I received an email from one of my other Sellers to let me know his loan was also just sold to LBPS. Oh well....no one ever said our jobs were supposed to be easy. I guess I best figure out the LBPS system!

Here's some info put out by IBM LBPS.

Folks, if you have a loan being serviced by IBM Lender Buisness Processing Service (LBPS) and are facing foreclosure, PLEASE contact me so I can help.

Are you facing foreclosure in Florida?

Hi folks. Short Sales DO get approved. It just takes patience, organization and negotiating skills. In the last 7 days the following lenders have issued approvals for our Florida Short Sales.

Orlando Florida Short Sale with Bank of America

• Property sold for $127,000. The amount owed Bank of America is $200,000 on the first and $38,000 on the 2nd. The 1st agreed to $109,894 (55%) the 2nd $3,000 (8%). The property was listed in March 2010. Bank of America denied a contract of $130,000 in April. This week they accepted $127,000!! I guess their decision back in April cost them us another few thousand.

Davenport Florida Short Sale with US Bank (FHA) and PNC Bank

Property sold for $60,000. Since FHA will only allow $2,500 to be paid towards the 2nd the Buyer agreed to pay PNC Bank an additional $4,000. US Bank was owed $93,500 and accepted $51,000 (53%) and the 2nd with PNC Bank was owed $61,500 they accepted $6,150 (10%). We had a buyer that fell out last week because they would not come up with the additional $4,000 for the 2nd. We placed it back on the market and found another buyer in one day. 

Kissimmee Florida Short Sale with Bank of America

Property sold for $60,000. This one has taken over a year. Bank of America was owed $190,000 and accepted $54,000 (28%) the 2nd also with Bank of America was owed $38,000 and accepted $2,350 (6%). We have gone through 5 buyers on this one. The Buyer that is closing has been under contract for a year. Patience galore!!

Tutas Towne Realty has already successfully negotiated Short Sales with the following Lenders.

• Chase
• Sun Trust
• GMAC
• Wells Fargo
• Bank of America
• US Bank
• PNC Bank
• Citi
• HomeEq
• Fifth Third Bank
• ING Direct
• GreenTree
• Capital One
• ASC
• First Horizon
• E-Trade
• Transland Financial
• USA Bank
• IBM LBPS

Can we add you to our list of successful Short Sales? 

Are you facing foreclosure in Florida?

Hi folks. Let's talk about this Strategic Short Sale thing a little. I know there are many people that just can't understand why anybody would do a Short Sale if they can afford their mortgage payment and they do not have a hardship. In fact, there are those that would call this immoral. Well OK then.

My job is not to judge. My job is to inform people so they can make a decision based on facts, their needs and what's best for them. And as much as it sucks a Strategic Short Sale MAY be the best option. Just because someone can afford their mortgage payment does not mean continuing to make it is the best way to go. 

This post will give you some hard cold financial data. Do with it what you may.

First, you have to remember that in my area property values are down 75% and in some communities as much as 85%!!!! Folks that purchased from 2003-2007 with 20% down are still way up side down. Just to put our decline into perspective.....the average house in Poinciana, in the year 2000, sold for $81,000 and $56 per sq ft. Today, 2010, they are selling for $72,500 and $41 per sq ft. Unfortunately our MLS data only goes back 10 years so I can't see how far back values have gone. But we do know houses are worth less today than they were 10 years ago!!

If you purchased a house in Poinciana Florida in 2006 at $220,500 (average 2006 selling price) and put 20% down ($44,100) today, that house is worth $72,750! Your PITI (principle, interest, taxes, insurance) payment, if you have an interest rate of 6.75%, would be roughly $1,450 per month. You would still owe $168,000. This is 232% of what the house is now worth (LTV). So just to be EVEN on your mortgage, values would have to increase by 132%!! Of course this doesn't include the $44,100 you put down.

So.....should you continue paying? Only you know the answer to that question. Just remember that until values increase by 132% you will STILL be upside down on your mortgage.

If you did decide to do a Strategic Short Sale today and rent a similar house you would save approximately $700 per month. If you invested $400 of that savings at 5% you would have almost $28,000 at the end of 5 years. If you kept your mortgage instead you would still owe $150,500. What would your house be worth in 5 years? I have no clue. But I can only guess that it would not have appreciated 100%. That means if you needed to sale in 5 years you would SILL have to do a Short Sale. Do you take the hit now or take it later?

The numbers are staggering. What say you?

Are you facing foreclosure in Florida?

Well that's a good question. What do you think? Most folks would probably answer this question with a resounding YES! But...what if I told you the answer is "No....you don't necessarily need a hardship to qualify for a Short Sale. You may be able to do a Strategic Short Sale". Heck, big business and lenders do them all the time.

One reason lenders/investors may approve the Strategic Short Sale is that the hardship in no way changes the financial outcome of the Short Sale for the lender. The numbers are still the same. In fact, the numbers may even be better for the lender on a Strategic Short Sale because the Seller is in a financial position to contribute. So why wouldn't they approve it?

Now while you may not have to have a hardship to do a Short Sale you may very well be required to be delinquent on your payments. This is mostly due to government intrusion into the process. For example HAFA (Home Affordable Foreclosure Alternative) requires the mortgage to be: "delinquent or default is reasonably forseeable." 

Also, if you have an FHA loan: "At the time the PFS (pre-foreclosure sale) closes the loan must be in default (i.e. delinquent more than 30 days)." FHA DOES require a hardship. 

If you are way upside down on your mortgage  and see no light at the end of the tunnel then you have to ask yourself some hard questions. The reality is that most of us will have to move for some reason over the next 5-7 years. So ask yourself:

• If I'm upside down on my mortgage today will I still be upside down in 5 years if I have to move then?

• Would my family be better off if I took the financial hit today instead of waiting?
  

• If I did a Strategic Short Sale today would I be able to rent a property for my family and save a substantial amount of money each month?
  

• How will going through a Strategic Short Sale affect my credit and will my interest rates on my credit cards go up drastically?
  

• How will a Strategic Short Sale affect my job (security clearance)?

Ask yourself hard questions. Seek legal advice from an experienced Attorney. Talk to your CPA. Have a family meeting.

Then if you decide that a Strategic Short Sale is the option for you, remember, there are no guarantees it will work. You may be asked to contribute to the "Short". What I tell potential Sellers when they ask the question is... "If you have no hardship and you have assets or sufficient income the bank may very well want some of it. You may have to bring a cash contribution to closing and they may also want you to sign a promissory note. But you may very well have your Strategic Short Sale approved."

These are difficult times and that require making difficult decisions. Let me know if I can help.

Are you facing foreclosure in Florida?

Title Companies handling Short Sale "negotiations" is the new trend in my area. I quote "negotiations" because they don't really handle negotiations at all. Instead they do what Title Companies do....shuffle paperwork. Here's an excerpt from one National company's solicitation to agents.

Now folks there may be Title Companies that are doing a good job with Short Sales but I have yet to experience one. I guess the issue is that handing your Short Sale over to a Title Company is handing it off to a 9-5 Monday through Friday hourly employee. They are NOT going to spend the time required to push your particular Short Sale through to closing. They are NOT negotiators. They are office workers. And there's nothing wrong with this unless.......you are counting on them to help you avoid foreclosure and salvage your credit.

Just yesterday I had a Title Company contact me on one of my Buyer side transactions. They were asking me for the Buyer's personal information including his first 5 digits of his social security number. Agents that handle Short sales everyday know this  information is being requested because it is a Bank of America Short Sale and the Title Company is getting ready to initiate the Short Sale through the Equator system.  Entering the Buyer's details is one of the very first tasks.  Nothing wrong with this  either except for with this particular transaction we have had the property under contract for 2 months!!!

This means that for 2 months this file has just been sitting. Two months of wasted time. Two months closer to foreclosure for these unsuspecting Sellers. Heck....my experience with Equator tells me that this file could have already been approved in this amount of time.

Agents that handle their own Short Sales from beginning to end do NOT sit on a file for 2 months. We are proactive. We follow up on our Short Sales at least twice a week if not more. We push the transaction along we don't just wait for things to happen. And most importantly we DO negotiate "the terms of approval and acceptance on the Seller's behalf." That's our job. That why we get paid.

So folks, if you are facing foreclosure, PLEASE hire a negotiator NOT a paperwork shuffler. You'll be glad you did.

Are you facing foreclosure in Florida?

Well this one was not easy. Sun Trust took 11 months to approve this Short Sale! Nine of those were waiting on the file to be assigned to a negotiator. During this time we lost 2 buyers and finally found one to stick.....I thought. About 3 weeks ago I received the approval to close. Even though I had communicated with the Buyer's agent every week for the last 9 months I found out a week before closing that the Buyer had changed his mind!!!

So....I had to place the property back on the market as an "approved short sale". We needed a cash buyer that could close in 7 days at the full asking price. Luckily we found one. Lolita' Clay from Exit Realty brought a full price cash Buyer and they closed today. 3 days before the Short Sale approvals expired. Way to go Lolita!!!

Property:

4 bedroom 2 bath condo in Legacy Dunes. Legacy Dunes is a Short term rental community about 5 minutes from the main gate of Disney World in Orlando Florida. The condo was purchased in July 2006 for a whooping $335,400!! We sold it yesterday, 4 years later, for..........$60,000!!! That's a decrease in value of 82%.

Hardship:

Loss of income

Liens:

1st with Sun Trust for $269,150. Settled for $62,183 or $.23 cents on the dollar.

2nd with Sun Trust for $30,350. Settled for $10,973 or $.64 cents on the dolllar

HOA lien for $6,000. Received full payment from the Seller.

Details:

The Seller had to contribute $17,500 to Sun Trust plus had to pay the $6,000 to the HOA. No promissory note and Sun Trust issued a Waiver of Deficiency for both liens.

Another successful Central Florida Short Sale by Tutas Towne Realty!!

Are you facing foreclosure on your Sun Trust Mortgage? If so........

Short Sales never cease to amaze me. Just when I'm really getting fed up with how slow Chase is they give me an approval in 5 business days!!! The other Chase Short Sales I have done all took 6 months or more so this one was truly a surprise. Hopefully this is a sign of things to come.

One of the reasons this one got approved so quickly is that the Seller had been working with Chase for over a year trying get a loan mod and then trying to do a Short Sale by herself. By the time she finally listed  the property with me she already had a negotiator contact.

I listed the property and sold it the very next day. I called the negotiator and all he wanted was the contract and the HUD statement. These were sent over on July 1st and we received the written approval on July 8th!!

Property:

3 bedroom 2 bath pool home in Winter Haven Florida. Tenant occupied.

Hardship:

Loss of income

Liens:

1st with Chase for $196,500

2nd with Chase for $64,500

Details:

The property was placed on the market on June 23rd. Went pending June 25th. Short Sale was submitted on July 1 and was approved on July 8th. No seller concessions or contributions.

Chase agreed to a purchase price of $105,000 with a NET to them of $96,270 or.... 37 cents on the dolllar.

Are you facing foreclosure on your Chase mortgage? If so........

This wasn't the easiest Short Sale but after 14 months and 5 buyers we finally got it closed. Another Florida Short Sale success story.

The property:

3 bedroom 2 bath single family home located in Saint Cloud Florida. It was bought new in 2006 for $253,500. The owner was transferred almost immediately and was never able to move in. It has never been lived in.

Liens:

• Mortgage with Bank of America for $235,000

• HOA lien for $3,800

• County lien of $300 for mowing

Hardship:

Loss of income

Issues:

This property was placed on the market in March of 2009. It was actually a referral from an ActiveRain member. The biggest issue was that the community this property is located in has a CDD (Community Development District). The annual "fee" for this CDD is $2,700 a year. This is on top of the taxes and the HOA fee. So basically the cost to live in this house is well over $600 a month BEFORE you add in the mortgage and the insurance. This is OK on an expensive property but when the property is less than $100,000 the cost is way out of line. This exorbitant cost is the reason we had 4 buyers that could not or would not close. Here's a good article on CDDs in Florida.

Anyway, we were able to find a buyer that was willing to pay the costs of living in this community. Bank of America would only pay $1,000 towards the HOA lien so I had to negotiate this down as low I could get it. I got it from $3,800 to $3,100 and the seller was able to borrow money to pay the $2,100 that Bank of America would not pay. I personally paid the county mowing lien to help get the transaction closed.

The property sold for $91,000 and Bank of America accepted $81,829 on the $235,000 that was owed. Or 35 cents on the dollar. Do you need help with your Florida Short Sale?