Short Sales Specialist in Maryland
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Transcript of Short Sales Specialist in Maryland
"Short Sale Essentials"
Fernando Herboso
Broker for Herboso & Associates
www.Short-Sales-Expert.com
Know the Facts
Get The Help You Need!
Table of Contents
Introduction 3
• Know Your Options
Chapter 1 4
• Short Sale Option
Chapter 2 8
• Tax Consequences
Chapter 3 10
• Your 'Must Have' Qualifications
Chapter 4 13
• Summary & Recommendations
Chapter 5 13
• Special programs This publication is designed to be informative. It is provided with the understanding the author is simply offering
information and that such information may change from time to time and is outside the control of the author. The author
is not engaged in rendering legal, accounting, or other professional services. The reader is advised content discussed in
this e-book serves only as informative.
2
Introduction
Short Sale Option
Know Your Options My name is Fernando Herboso broker for Herboso & Associates.
The reason why you are reading this guide is because we have spoken via
telephone or you were an attendee to one of my “Distressed Homeowner
Workshops”
I created this short guide to point out you briefly the steps necessary to start a short
sale on your property if you decide to go forward.
The short sale option provides you the opportunity to sell your home and reduce,
or eliminate, your mortgage debt.
• In this e-book we will outline in greater detail the short sale option.
• Please note there may be tax consequences when selling your home through
the short sale process. For more information on this please read Chapter 2.
3
Chapter 1
4
Chapter 1
Your Short Sale Option
Why Consider A Short Sale? A short sale offers the opportunity to sell your home and to eliminate, or reduce,
your existing mortgage obligation.
What Is A Short Sale? It is the sale of a home for less than the amount outstanding, currently remaining,
on your mortgage. A short sale is also called a pre-foreclosure sale. Your mortgage
company must agree to a short sale. If it does you can sell your home and pay off
all, or a portion, of your outstanding balance with the proceeds from the sale.
Is A Short Sale An Option for You?
Yes it very well may be if
1.
2.
3.
4.
5.
You are unable to refinance or qualify for a loan modification.
You are behind on your mortgage payments. You are facing a
financial hardship.
You owe more than your home is worth.
You cannot sell your home at a price greater than your mortgage debt.
What Are The Benefits of A Short Sale?
You will enjoy the following
1.
2.
3.
4.
You can eliminate, or reduce, outstanding mortgage debt.
You will repair your credit sooner as compared to a foreclosure.
You may qualify for relocation assistance.
You may be able to qualify for another mortgage sooner, around 2 years, as
compared to 7 if you went through the foreclosure process.
5
How Does The Short Sale Process Flow? The sale is similar to a traditional home sale. You will hire a real estate agent. The
agent will provide an up-to-date opinion of value. Based upon this value you will
put your home up for sale.
Please Note You will require approval from your lender before you can sell your home as a
short sale. For this reason your lender will work with your agent to:
• Determine current market value. • Set the asking price based upon current market value.
• Collect additional mortgage information with other lien holders on your home.
• Review all offers and make a determination of offer acceptance.
• If offer is accepted, to work with all lien holders to finalize sale.
How Do You Apply For Short Sale?
You will... 1. Submit an application with your existing mortgage company.
2. They will review your situation and recommend the best mortgage option for
your current financial needs.
6
Take Action Today! A short sale is not a quick sale. It takes time to receive the approval required from
your lender to begin the sales process. You can expect a short sale to take as little
as 30 days to as much as 1 year before your home is official sold and closed.
Simply follow these steps to begin a short sale.
1. Before Contacting Your Mortgage Company
• Gather your mortgage statements. • If you have a 2nd mortgage include this as well.
• Include all monthly debt obligations such as car loans, credit cards, etc.
• Provide proof of current income.
2. Now Contact Your Mortgage Company
• Call to book an appointment with a loan officer. • Explain you are interested in a short sale.
• Ask what information they want you to bring.
• Bring any additional information they have requested.
3. Include Financial Hardship Statement
• Draft a to-the-point letter outlining the reasons for your financial issues. • Explain why you are unable to honor your debt.
• Explain you prefer to short sale your home to avoid foreclosure.
• Ask for their understanding and assistance.
4. Contact A Licensed Real Estate Professional
• Inform the agent you are interested in selling your home as a short sale. • Fully disclose all pertinent financial information on your home.
• Disclose all mortgage holders and lien holders.
• Request a CMA of your home.
• Price your home at current market value.
• Make the sale process as easy as you can by following your agent's advice at
all times.
7
Chapter 2
Tax Consequences
8
Chapter 2
Possible Tax Consequences
Please Consult An Expert Your real estate agent is NOT an expert when it comes to the tax consequences of a
short sale. For this reason you must consult an accountant or seek legal advice to
fully understand all tax considerations.
The Mortgage Forgiveness Debt Relief Act of 2007 The US government has updated tax laws with respect to foreclosures. Here is a
brief summary of the December 11, 2007 update.
• The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers
to exclude income from the discharge of debt on their principal residence. Debt
reduced through mortgage restructuring, as well as mortgage debt forgiven in
connection with a foreclosure, qualify for this relief.
• This provision applies to debt forgiven in calendar years 2007 through 2012.
Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if
married filing separately). The exclusion doesn't apply if the discharge is due to
services performed for the lender or any other reason not directly related to a
decline in the home's value or the taxpayer's financial condition.
Recommendation We urge you to consult with a legal advisor and/or accountant with respect to the
tax implications of a short sale and foreclosure.
9
Chapter 3
Your 'Must Have' Qualifications
10
Chapter 3
Your 'Must Have' Qualifications
Do You Qualify For A Short Sale? Most lenders require 3 factors to be existing before they will qualify you for a
short sale of your home.
Factor 1:
• Financial Hardship
Definition
• An event, or events, having taken place after you have secured a mortgage
which render you unable to pay.
Examples
Financial hardship are issues such as:
• You are too heavily in debt. • Personal business failure.
• Job loss.
• Death of major income earner.
• Mortgage payments too high.
Factor 2:
• Inability To Pay Your lender will require you to prove financial hardship. There must be evidence
to back up your request to short sale your home. For this reason you will need to
include a financial worksheet, most real estate agents will provide this to short
sale clients, in your application to your lender. This worksheet is basically a
monthly profit and loss statement.
11
Factor 3:
• Insolvency You must prove to the lender of your inability to pay down, and/or to pay off,
your mortgage. You must prove you owe more money than you have in cash.
Note Your lender is not requesting you to be totally broke and on the verge of living on
the street. They simply want to determine your inability to meet your mortgage
obligation. You are permitted to have money available for living expenses and this
does not disqualify you from a short sale.
12
Chapter 4
Summary & Recommendations
13
Chapter 4
Summary & Recommendations
Seek Additional Help
1. About Your Finances
• Have you given thought to credit counseling? • Have you sought advice from your bank?
• Have you a contacted your accountant?
2. About Your Legal Options
• Have you contacted an attorney? • If so, did you discuss other legal ways to maintain your home?
3. About Your Home
• Have you contacted a real estate professional? • If so, have they provided you with an opinion of value for your home?
Consider Contacting An Agent
If you live in MD DC or VA, I would be honor to assist
you during this difficult process.
At the very least you can request a CMA
to discover the value of your home in today's market and
see how far are you really underwater?
Our service is free and without obligation.
14
Chapter 5
Special Programs
Chapter 5
Special Programs
Did you know that: Bank of America is testing foreclosure waters with
an incentive program for defaulting homeowners to “short sell” their
homes instead of enduring a foreclosure, which can take years?
Almost unheard of five years ago, a short sale must be approved by the
lender because the sale amount winds up being less than the mortgage
owed on the house. Foreclosures have come to cost lenders so much in
terms of sunken prices, deteriorated properties and legal fees that Bank of
America announced last week that it would give $5,000 to $20,000 to
qualified borrowers who submit a short-sale request to the lender by Nov.
30. A seller would be paid if the house is sold by Aug. 31, 2012.
If you are late, don’t despair. .there is talk that this will be extended
for all least a couple more months. . . call me for the latest details.
This is an incentive for people who are delaying foreclosures or who are
in a foreclosure process. Bank of America added that this program will be
preferred over foreclosing the property and bringing an opportunity to
homeowners to get cash out and be relieved of the deficiency.
Guidelines for Bank of America’s new Enhanced Short Sale
Relocation Assistance program states that a borrower may use the
incentive to pay off existing liens or for relocation expenses. FHA, Ginnie
Mae, VA and USDA loans are not eligible. Details are available in a case
by case basis and if your loan is with Bank Of America, all we need is an
authorization form your part and your loan number. We can find out if
you qualify for this program.
Short-sale incentives are an outgrowth of earlier, “cash for keys”
programs offered by lenders and real-estate companies. Also, the U.S.
Treasury Department has tried to boost the number of short sales with its
Home Affordable Foreclosure Alternatives program (HAFA), which
provides $3,000 for borrower-relocation assistance, $1,500 for
servicers to cover administrative and processing costs, and as much as
$2,000 for investors who meet certain requirements. .ad no deficiency
judgment!
Other programs currently available:
•Wells Fargo offers incentives of $10,000 to $20,000 to certain
homeowners who opt for a short sale. The program is aimed at
properties in Florida and other states known for protracted, judicial
foreclosures. The money is available only on first-lien loans that the
company owns, which is about 20 percent of its portfolio.
•JPMorgan Chase has not reported how much it offers for short-sale
incentives, though some real-estate agents have reported sellers
getting $20,000. The lender also has declined to specify how it
determines the amount of its incentives. We found that most lenders want
to keep this under wraps. . I can only guess is because they do not want a
wave of “Strategic Defaults”
•Citibank has reported it offers an average of $12,000 for borrowers
when it owns the mortgage. The amount is determined upfront and
varies depending on a borrower’s financial circumstances and mortgage-
payment history. The money is disbursed when the short sale closes.
Finally, there are many other programs that could qualify homeowner in
relocation assistance making it the perfect timing to do a short sale.
Considering that this was not available just a few months back!
Avoiding a Foreclosure is not even the tip of the iceberg
We can help you. . .
Avoid the hassle that comes with selling your house
Avoid paying any closing costs even Realtor commissions
Avoid repairs, updating, or even preparing the property before selling
Avoid Bankruptcy and ruining your credit
Avoid making the #1 mistake that will assure failure in your short sale
Avoid a Foreclosure and losing your home
Stressing about how long you will last if this keep going on.
Learn why Lenders actually prefer short sales over foreclosure
Help you stay in your home and postpone the auction?
Learn exactly what the credit differences versus a foreclosure are
Learn how to get paid for moving expenses by your lender****
Most importantly, we can help you
in most cases and give you the peace of mind to finally
get rid of a very big bad debt.
My direct number is
How Can I Help You Now?
Fernando Herboso