Stopping Foreclosures With Short Sales
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 >> Short Sale Listings
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What Is A Short Sale?
A Short Sale is the sale of a home when sales proceeds do not fully pay off the existing loan(s) and lender(s) accepts a discounted payoff to fully satisfy the loan.
The best part, the existing lender pays virtually all sales costs, including commissions, escrow and title fees and repair costs. You get your home sold, the loan(s) paid off and you avoid foreclosure.
Is a Short Sale right for me?
Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you are faced with a hardship that makes it likely you will be unable to meet your obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through foreclosure.
If you need help deciding what the next course of action to take for your situation is, contact us for a free 15-minute consultation.
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Articles Of Interest
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March 7, 2010
Seeking Alpha: A Deluge of Homeowners Underwater. First American Core logic just released its report on the number of homeowners who are underwater on their mortgages. The storm waters continue to rise. View article
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March 4, 2010
State Of California: Brown Warns Homeowners to Avoid Forensic Loan Audits. Attorney General Edmund G. Brown Jr. today joined the California Department of Real Estate (DRE) and the State Bar of California in warning Californians to avoid forensic loan audits, the loan-modification industry's latest "phony foreclosure-relief service". View article
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March 1, 2010
Prevent Loan Scams: Tips on How to Avoid a Loan Scam. Scams are not always easy to spot - but it helps if you know the warning signs. Check out out the comprehensive list for red flags for homeowners that indicate you may be dealing with a loan modification scammer. View article
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March 1, 2010
National Mortgage Professional: HUD- Major Step in the Fight Against Loan Modification Scammers. The U.S. Department of Housing and Urban Development (HUD) issued a press release announcing its partnership with the Loan Modification Scam Prevention Network in launching the www.PreventLoanScams.org website and national scam complaint form. View article
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February 22, 2010
Home Affordable Modification Program (Fannie Mae): Home Affordable Foreclosure Alternatives Program Guidelines. Guidance to servicers for adoption and implementation of the Home Affordable Foreclosure Alternatives Program (HAFA), which is part of HAMP and provides financial incentives to servicers and borrowers who utilize a short sale or deed-in-lieu to avoid foreclosure on an eligible loan under HAMP. Download full PDF
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February 21, 2010
Home Affordable Modification Program (Fannie Mae): HAFA Tutorial A 25-minute self-guided tutorial that provides an overview of the Home Affordable Foreclosure Alternatives Program (HAFA) - Short Sale and Deed-in-Lieu - for servicers of non-GSE loans. View videos here...
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Featured Article: Should You Re-Fi, De-Fi or Modify?
The country is going through a massive de-leveraging process. With the uncertainty of the job market and the direction of the economy, people in mass are looking for ways to cut monthly expenses and reduce liabilities. If you're a homeowner, then most likely the biggest liability you have is your mortgage.
So what are some of the options available to a homeowner to reduce their monthly payments? That would depend on their current financial situation. There are three primary categories that a homeowner would fall into.
- Financially strong
- Marginal or Hanging-On
- Need of massive restructuring
Should You Refinance You Loan?
If you are still financially strong, have good credit and have not missed a mortgage payment, then even if you have negative equity, you may qualify for a new program Fannie Mae or Freddie Mac has introduced to refinance your loan.
They can now allow you to refinance up to 125% of your home value. The rate would be their best prevailing conforming rates, currently in the low 5's. And if you currently don't have mortgage insurance, your new loan will also not have PMI. You cannot get cash out and other restrictions apply, but for those looking to just lower their mortgage payments, it is certainly worth looking into.
Should You Modify Your Loan?
If you don't qualify for the 125% refinance and you're struggling to make your mortgage payments, then applying for a loan modification may be the option for you. As long as you're still earning sufficient income to make the newly modified payment that the lender is willing to offer, then you're a candidate for a loan mod.
The challenge here is that your income can't be too high and it can't be too low. If you make too much money, then you don't need the help. If you make too little, then you can't afford it. The Obama administration has mandated that if the lender is going to offer a modified payment, it must be a long term, affordable and sustainable payment.
A key distinction here is that a lender's top priority is not to help the homeowner. Their primary objective is to do whatever is in their own best interest. When considering whether to approve a loan modification, a lender is going to compare that option against a foreclosure. If they determine that a loan modification will result in less of a loss to them than a foreclosure, then they will likely approve a loan mod. If, on the other hand, the lender has to reduce the payment by such a large amount to make it "affordable" for the homeowner, and that such reduction would result in more of a loss than a foreclosure, then the lender will probably not approve the modification.
Unfortunately, many lenders are still trying to figure out what is "affordable" and "sustainable" and that's one reason why the modification process is taking so long.
Should You Sell Your House?
The last group would be those that don't qualify for either of these options and can no longer make their mortgage payments. The homeowner has already missed their mortgage payment or is about to. This is what I call the de-finance process. It means the homeowner is in the process of eliminating the debt, regardless of consequences. This would include a short sale, bankruptcy or just letting it foreclose.
In most cases, a short sale will be a better option for the homeowner because it will have less negative impact on their credit. However, it's important to consider legal and tax consequences when making this decision.
Additionally, some lenders are imposing unrealistically harsh conditions on the homeowner when approving a short sale. An example would be including language that would retain the lender's right to pursue a deficiency against the homeowner even if the loan is a non-recourse loan. Another condition is requiring the homeowner to sign a personal note for the deficiency even when the homeowner can barely afford to buy groceries for their family.
Be sure to consult with an attorney, tax professional and/or an experienced real estate broker when deciding your best course of action.
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Useful Links For Homeowners
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Deficiency Judgments and California Law
California has enacted anti-deficiency legislation which is found in Code of Civil Procedure sections 580b and 580d. Section 580b prohibits deficiency judgments based on the character of the loan at the time it is made. Additionally, Section 580b prohibits a seller who has carried back a loan as part of the sales price of the property from obtaining a deficiency judgment against a defaulting borrower.
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California Foreclosure Prevention Act
The California Foreclosure Prevention Act modifies the foreclosure process to provide additional time for borrowers to work out loan modifications while providing an exemption for mortgage loan servicers that have implemented a comprehensive loan modification program.
- The Mortgage Forgiveness Debt Relief Act and Debt Cancellation
The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence.
- California DRE Advance Fee Agreement Listing
The full list of individual and corporate real estate brokers (updated daily) that are allowed to collect advance fees for Loan Modification and/or similar services.
- California DRE: Desist & Refrain Orders and/or Accusations for Loan Modification Activities
Before considering engaging the services of any of the persons or entities listed, it would be prudent to inquire about the disposition of the action that has been filed against the respondent.
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Fannie Mae: Beware of Foreclosure Rescue Scams
Scam artists prey on struggling homeowners and often target defendants named in foreclosure proceedings. Don't let them take advantage of you, your situation, your house or your money.
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Area Of Coverage
Serving The Ten Largest Counties In Northern California
- San Francisco County
- San Mateo County
- Santa Clara County
- Alameda County
- Contra Costa County
- Sacramento County
- Marin County
- Napa County
- Sonoma County
- Solano County
San Mateo County Cities & Zip Codes Served
Belmont, Brisbane, Burlingame, Daly City, El Granada, Half Moon Bay, La Honda, Loma Mar, Menlo Park, Atherton, Portola Valley, Millbrae, Montara, Moss Beach, Pacifica, Pescadero, Redwood City, San Bruno, San Carlos, San Gregorio, South San Francisco, San Francisco, San Mateo
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San Francisco County Cities & Zip Codes Served
San Francisco
94101
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Santa Clara County Cities & Zip Codes Served
Los Altos, Mountain View, Sunnyvale, Palo Alto, Stanford, Alviso, Campbell, Coyote, Cupertino, Gilroy, Holy City, Los Gatos, Milpitas, Morgan Hill, New Almaden, Redwood Estates, San Martin, Santa Clara, Saratoga, San Jose, Mount Hamilton
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If you need help deciding what the next course of action to take for your situation is, the Distressed Home Solutions team can help. Contact us now for a free 15 minute consultation.
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Corporate Address
Distressed Home Solutions
1819 Trousdale Drive
Burlingame, CA 94010
Telephone
(650) 227-1018 Ext 336
Fax
(650) 204-6214
E-Mail
info at distressedhomesolutions dot org
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