Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®. LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED In a major victory for REALTORS®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder. ... [Read More]
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®.
LAW AGAINST SHORT SALE DEFICIENCIES EXPANDED
In a major victory for REALTORS®, Governor Brown signed into law today a C.A.R.-sponsored bill, Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or junior lienholder. Effective immediately for transactions closing escrow from this day forward, both senior and junior lienholders cannot require a borrower to owe or pay for a deficiency in a short sale. This law also prohibits any deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units. Any purported waiver of this rule shall be void and against public policy.
Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale. A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.
Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.
This law is fully set forth as Senate Bill 458 (Corbett) at www.leginfo.ca.gov.
Image via Wikipedia The short sale is quickly becoming the norm for real estate transactions. Unfortunately, that doesn’t mean that there are standardized forms and procedures. Every lender has its own set of standards, forms, and guidelines. However, one can expect the seller of a short sale and the sellers’ listing agent to provide: tax form ... [Read More]
Image via Wikipedia
The short sale is quickly becoming the norm for real estate transactions. Unfortunately, that doesn’t mean that there are standardized forms and procedures. Every lender has its own set of standards, forms, and guidelines. However, one can expect the seller of a short sale and the sellers’ listing agent to provide: tax form T4506, hardship letter, listing agreement, sales agreement, 2 years tax returns, 2 months most recent pay checks, a copy of a utility bill, two months most recent bank accounts, an account of assets and liabilities, a monthly budget, arms length transaction statement and a Dodd-Frank form. This will get you started.
The selling agent must also be prepared to provide more detailed information about their buyers than usual. For example: social security numbers, pre-qual letter, and proof of funds, current address, and an arms length transaction statement that is specific to the seller’s lender.
Once all this data is collected and submitted to the first mortgage holder and the second mortgage holder then negotiation begins.
The first usually offers to pay the second a nominal amount. The second either accepts, or rejects and perhaps counters. Sounds simple but it may take weeks to come to an agreement….or not.
Only 3 of 5 short sales actually are successful at this time. (Is the glass half empty or half full?) Its best to prepare for the worst case. Your seller should be packing for a move one way or the other.
If a short sale lender is using a 3rd party transaction site like Equator.com then the process might be a little easier. Agents have many complaints about the system, but its probably the best that is available. Bank of America, Chase and Nationstar all use Equator with more lenders expected to join in the future.
You can expect to take about 60-90 days on average for the short sale process. That’s about twice as long as a regular non short sale.
Sellers shouldn’t accept offers that are too far below the current market as the lenders that hold the mortgages do order evaluations and will reject short sales that are significantly below the market. Many investors are making multiple offers with the expectation of being rejected and are very happy when an offer they didn’t expect to be successful is accepted. Most of the time the offer is not accepted and the seller has lost valuable time on an unrealistic offer.
Buyers and sellers should realize that today’s real estate professionals are working twice as hard for half as much under much less than ideal situations.
Patience is the key. If your a seller, always consult with an attorney and a professional tax consultant. The Realtor does not have the expertise to answer legal or tax questions.
(Rick Dillion serves Solano, Napa and Contra Costa counties.)
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Oh, for the good old days when you met with a prospective seller and listed the home, brought the offer and everyone was happy! Now, I’m meeting with sellers who are far from happy. They are stressed and under duress. Being upside down (owing more than the home is worth) is so common that perhaps ... [Read More]
Oh, for the good old days when you met with a prospective seller and listed the home, brought the offer and everyone was happy! Now, I’m meeting with sellers who are far from happy. They are stressed and under duress. Being upside down (owing more than the home is worth) is so common that perhaps a definition of the meaning is no longer necessary.
“My credit is ruined. I am months behind on my mortgage payments, credit cards, and I can’t even pay my water bill. ” said a upside down homeowner. “I lost my job, my car was repossesed. Then the mortgage payment increased. Why should I worry about a short sale?”
Well, many homeownersdon’t worry about it. They don’t answer the telephone or return calls. They are in denial of the situation and just maybe it will just go away. But there is light at the end of the tunnel and it doesn’t have to be the REO Train. Under HAFA rules the homeowner will get up to $3000 for moving expenses if the homowner qualifies. Losing a job certainly does. Also, bouncing back financially and becoming credit worthy will take only about two years with a short sale but over seven years with a foreclosure. A HAFA short sale also extends the time period for the homeowner to stay in the home as the auction date is extended.
HAFA rules that had been established are changing. The latest rule change is that you now can qualify for HAFA even if you have already vacated the home.
Why do the banks like HAFA short sales over foreclosures? The banks are trying to avoid the higher cost of the foreclosure process and the legal entanglements that go along with it. The banks are now realizing the value of the short sale process. This wasn’t the case a few months ago.
Take action as time is of the essence. Call your local HAFA certified or Short Sale & Foreclosure (SFR) certified Realtor today to see if you qualify for a HAFA short sale.
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In an effort to speed up the short sale process, some lenders are choosing to automate the way approvals are given. Bank of America is using a new system to automate the approvals of short sales, called Equator. It uses an Automatic Valuation Model (AVM) like Zillow.com to determine the value of the home, and ... [Read More]
In an effort to speed up the short sale process, some lenders are choosing to automate the way approvals are given. Bank of America is using a new system to automate the approvals of short sales, called Equator. It uses an Automatic Valuation Model (AVM) like Zillow.com to determine the value of the home, and [...]
