The words “short sale” is  heard a lot, but not really understood by many.  A short sale may happen when a homeowner that NEEDS to sell their home can’t because the value has dropped below what they owe.  The “needs-to-sell” determines who qualifies for a short sale.  The “need”, in the eyes of the lender, is a circumstance or series of events that has made it impossible for the homeowner to continue to pay the monthly mortgage payments.  These circumstances could be a reduction in income as a result of a pay cut or loss of commissionable income, a job loss, a divorce, a job transfer or new hire out of the area forcing a move; a death of either a family member who is a wage earner, or one who is not, prolonged illness, any serious medical condition causing a forced move, increase in medical bills, sustained medical leave of absence from the work force, or disability.  In many situations there is a combination of factors that when compounded, the homeowner finds his savings depleted and the possibility of losing his/her home a more probable occurrence. 

A short sale may be the best solution after you have tried the other options available to ease your financial crunch.  Seeking advice, from your lender, for a possible refinance, loan modification or forbearance are possible ways to stay in your home while reducing your monthly financial obligation.   Visit www.makinghomeaffordable.gov to research the viability of these programs for your situation.  If those avenues don’t achieve successful results the short sale becomes the alternative to avoid foreclosure. 

How you make your case to the lender?  A critical part is the homeowner’s hardship letter which outlines what happened and what he/she has done to try to prevent foreclosure.  Presenting one’s story in a 100% transparent fashion is the best approach.  The letter accompanies the documentation one assembles when trying to qualify for a loan, however, in this situation, you are looking to de-qualify yourself from your present loan. 

Each case is specifically unique and there is not a hard and fast rule as to who will qualify, with what lender conditions that may or may not be imposed, and who will not qualify. In most situations, the lender does not render his decision to accept the short sale until you receive, execute and submit a purchase contract contingent upon the lender and seller work-out agreement.  Most lenders only want to review completely executed contracts and will not review any partially executed contracts.  Remember this is a sale between a seller, the owner of record, and a qualified buyer with a contingency on seller lender approval, much the way a buyer makes his offer contingent upon a buyer’s loan approval from his lender.  This is not a bank owned property where the bank collects multiple offers and makes a decision of which to select.

Does that mean you could go through all the documentation, showings, negotiations and contract acceptance and either be turned down by the lender or more probably be presented conditions by the lender that you cannot accept?  The answer is “yes”.  However, in today’s climate, lenders are actively interested in working with the homeowners to prevent foreclosures.  Remember,  the lender is in the business of lending money not acquiring property. 

Not all homeowners will either get their loans modified or get an approved short sale and some will still face foreclosure.  However, at the end of the day, it is important that you know you, along with your skilled REALTOR by your side, did everything possible to avoid foreclosure. 

Your REALTOR plays a very critical role in this process and requires special training and acquisition of special skill-sets to understand how to best present your case.  The CDPE designation, (Certified Distressed Property Expert), indicates a commitment to understanding the complexities of the short sale and the knowledge and skill-sets to maneuver through this tedious process.   A highly respected national organization with more than 8,000 members, the CDPE training never stops as the short sale processes within every lender is continuously evolving.  The initial training spans two days and more than 15 hours and is followed with opportunities for three hours of ongoing training monthly through scheduled member conference calls and twice monthly Advanced Webinar training.  Your team to guide you through this complex maize should include your short sale specialist REALTOR, both a tax and real estate attorney, and a short sale trained Escrow officer to act in concert with you to assist you in accomplishing your goal of avoiding foreclosure, as there is a big difference in life without foreclosure as opposed to life after foreclosure.  Look for the CDPE logo before you make your  REALTOR decision.

If you have any questions or would like a referral to a CDPE in your area, contact Gayle Henderson PC CDPE, RE/MAX Excalibur Realty, Scottsdale Arizona. gayle@azavoidforeclosurenow.com .

The navigation through the short sale approval process with lenders continues to improve.  Our most recent success was a lender approval within four days from the short sale package, contract and collateral material submission.  That being said, not all lenders are able to respond that quickly and out of sheer volume of submitted packages, many lenders have had to create a multi-phase process.  It is so important that we as short sale experts, Certified Distressed Property Experts (CDPE), continue to probe and learn how each individual lender works.  With an average of 250-350 submitted contracts on a loss mitigators desk, it is much easier for us to adapt to their process than for them to be adapting to us.  If there are special forms they need completed, we are quick to respond.  If we can learn more about their processes before we submit our packages, we are better equipped to manage expectations of everyone involved in the transaction. 

Q:  I  am facing financial crisis and yet I haven’t missed any payments.  My house isn’t worth  as much as I owe on it  and I want to buy something else, smaller, lower mortgage and move into it before I try a short sale.  Is that a wise thing to do?

A:  This is an excellent question and one I am faced with regularly these days.  Sellers who accomplish what you just suggested, perhaps unknowingly, may bring themselves more troubles further down the road.  Here is the typical scenario, the homeowner sees that sometime in the near future, maybe a matter of a few months,  their funds are going to run out and they will no longer be able to continue to support the costs involved in their current home.  They may or may not try to sell the home during this period, but are unable to do so because they owe more than the value of the current home.  In what they may feel is prudent financial planning, they find and purchase a second home in which they close escrow, move into the new home and then the following month, they cease paying the mortgage on their prior residence and try to enter into a short sale on that prior residence. With the tightening of lender qualifications and the need to disclose all assets and support the purchase of the second property which they plan to make their personal residence, the first question that begs answering is that if there were enough actual assets to qualify for the purchase of the second home and carry both, then how can a hardship be documented for the first lender in the first home to accept a short sale.  Short sales are not meant to be a creative alternative to financial planning to rid one of higher debt in order to buy a smaller lesser property at a much lower interest rate and leave the first lender to absorb the loss of the loan and the cost of the sale.  This is the same logic or lack thereof that led to “don’t  show , don’t tell”  in stated income or no income, no job verification loans that contributed to the financial crisis that we currently experience.  This is the reflection of it’s always “someone else’s responsibility, not mine” logic.  Be wary of this thinking or anyone suggesting that this is a legitimate way out of your financial crisis.  The consequences could be ominous.  The lender on the first property could deny your request for a short sale. The lender on the second property could allege mortgage fraud and third, the homeowner, his mortgage broker and the real estate brokers could be subject to the scrutiny of ongoing HUD investigations.  Make sure your financial plans, assets, purchases and sales are 100% transparent and full disclosure with no exceptions is the rule.  This is not an additional financial and legal challenge that any homeowner would welcome.

Opinion by Gayle Henderson PC CDPE, RE/MAX Excalibur Realty. 602-850-4335. www.azavoidforeclosurenow.com

Scottsdale REALTOR, Gayle Henderson, (CDPE)Certified Distressed Property Expert  has been invited to share  Distressed Property Institute education with local Real Estate professionals.  Creating an industry network of REALTORS, Mortgage Brokers, Title and Escrow Officers, Attorneys , and Financial Planners trained in the ways and processes to avoid foreclosures in today’s market is a critical part of offering a solution to the current housing crises.

The Distressed Property Institute endorsement by RE/MAX International, Keller Williams and Star Power founder and national real estate trainer, Howard Brinton, continues to position the Certified Distressed Property Expert designation as the leading force in national short sale training.  The Institute recently invited a select group of their CDPE designees to Florida for an intensive two day training as part of their short sale trainer certification program.  “Combining both the knowledge of the short sale process and the current experiences of these leading real estate practitioners will give future short sale students a regional perspective of the housing market crisis.  “These seasoned speakers and active REALTORS will be a critical part of keeping up with the national demand for the CDPE training.”,  said Tony Martinez, Director of Training at the Institute.

According to Alex Charfen, Distressed Property Institute Founder, “The housing crisis recovery will take the cooperative efforts of all parts of the real estate industry.  We all need to believe we are on the same page to give hope and help to homeowners.   This is not going to happen overnight.  The sooner that lenders and real estate professionals from all specializations understand that together, we are working towards a common goal to stabilize our housing and financial markets, the sooner we can see our markets begin to recover.”

“Getting my designation as a Distressed Property Expert, CDPE, was only the beginning of my efforts to lend a helping hand to homeowners in financial distress, said Henderson, upon completion of the Trainers Course.  “There is huge power in numbers with a shared vision.  My commitment to give back to my community as a CDPE speaker sharing this information with others in my industry will hasten the housing market recovery.”

Thousands of homeowners have already been helped by the nearly 1500 current Institute members.  With a goal of 7500 members by the end of 2009, this organization will surely positively impact untold numbers of financially troubled homeowners.

To learn more about Gayle Henderson PC at RE/MAX Excalibur Realty, go to www.azavoidforeclosurenow.com .

Urban Land Arizona's Annual Conference took place yesterday confirming the current state of the housing market and giving small windows as to what could be the near future for Arizona economic recovery.  Reducing foreclosures andexcess inventory are two of the bigget keys to help stabilize our market.  Reports indicate that since loan modifications became an alternative to foreclosure, nearly 58% of those whose loans that were modified are back into the foreclosure process some six-nine months later.  This is a sobering fact that many predicted but most hoped wouldn't happen.  Experts that watch the economic trends believe that there is another tsunami of foreclosures on the horizon.  How do they know that you might ask ?  It is a simple matter of looking statistically slightly below the foreclosure surface.  No matter what the percentage of homeowners in foreclosure in all loan categories (Sub-prime, Prime, FHA and VA), three -five times more than that are currently in default and headed to foreclosure.  There is some bright news in this fact, and that is the hope through replacing foreclosures with short sales which will give the homeowner a dignified solution to their financial crisis, complete a sale at the current market value for less than what the homeowner owes with the approval of the sale by the lender.  The criteria for short sales continues to be dominated by a documented hardship which increasingly with job layoffs affects a wider segment of the population.  Seeking professional advice from a REALTOR with the skill sets to manuver the process is critical.  Seeking a CDPE (Certified Distressed Property Expert) is the first step.

 Scottsdale, Arizona January 12, 2009 Certified Distressed Property Expert, (CDPE) Gayle Henderson, of RE/MAX Excalibur in Scottsdale insists that foreclosure is not the answer to the current home ownership crisis looming throughout Maricopa County.

 

December 23, 2008, Henderson was notified by ARMLS (Arizona Regional Multiple List System) announcing a pilot program fostered by Fannie Mae and orchestrated through Countrywide loans to streamline the short sale process.  “It felt like the best Christmas present I could imagine”, said Henderson, who is working tirelessly to help  stabilize the housing market  through assisting homeowners with loan modifications and short sales.  “Arguably, the housing market accompanied by the financial institutions that lend the money is the bedrock of our economy,” said Henderson.

 

When Bob Bemis, CEO of ARMLS was approached by Fannie Mae as one of five national MLS systems to participate in this pilot program, his reaction was positive and supportive.  “We need to do something about streamlining the short sale system”, said Bemis “And this seems to be a credible program to test,” he continued.

 

Short sales eligible for this pilot program have been identified as those on the market as of December 8, 2008.  Listing agents of those properties have been contacted by Countrywide to submit the short sale package on behalf of the seller .  Countrywide, in turn, will establish a preapproved sales price which will be reflected during the 90-day pilot program as the list price.  Any price changes during the listing period will potentially disqualify the property from the pre-approved status granted by Countrywide.  The program is designed to expedite the short sale process, move inventory more quickly minimizing the lenders loss, while assisting the homeowners to avoid foreclosure.

 

“Getting the word out to Buyers and Buyers Agents that short sales are becoming the new attractive property to buy is key in helping stabilize our market”, said Henderson.  “The value in buying a short sale is tremendous.  The Seller, frequently, is still living in the home,  keeping up with routine maintenance both inside and out.   The pricing is at current market value.  And the condition  surpasses  most of its foreclosure counterparts.”

 

“Not understanding the consequences of foreclosure lead many homeowners to just give up,” said Henderson.  “And believe me there is a difference in life after foreclosure as opposed to life without foreclosure. We may not be able to save every house, but we can offer the saving hand to every financially distressed homeowner.  Currently we see lenders are  more receptive to  expediting  the short sale process.”, said Henderson.  It is important to remember that lenders are not in the business of acquiring property, they are in the business to lend money. Helping to clear these  non-performing assets (default loans) from their books will result in a quicker bounce back in this economic crisis.

For a confidential phone interview regarding your real estate questions, contact Gayle Henderson at 602-850-4335 or gayle@gaylehenderson.com

 

 

Recently a client asked me the following  question:  "I have an Equity Line of Credit (known as a HELOC), of which I spent 25% on home improvements, 25% spent on items other than home improvements, and 50% remaining unused.  If I successfully complete a short sale, what percentage of my HELOC will I have to declare as ordinary income?"  I consulted my Chief Lender Coordinator, Vanessa Lidell of Shortsale Plan to help us answer this question:  "My first comment would be if there is any money left in the line, the seller should immediately return any unused funds and freeze the line for the duration of the short sale.  You don't want to be in a short sale and find the seller used their balance of $$$$ in their equity line to buy a car or large appliance because they feared they wouldn't have the credit to do so later.  By sending back the unused funds, the balance on the HELOC is reduced and the short sale is more attractive to the lender", says Lidell.  For the tax implications and the balance of her answer to this critically important question, please see the "FAQ" section of our website www.AZAvoidForeclosureNow.com   Contact Gayle Henderson, PC, RE/MAX Excalibur Realty and a Certified Distressed Property Expert (CDPE) 602-8504335, gayle@AZAvoidForeclosureNow.com  for your questions and confidential interview.  We invite your comments or questions on our blog as well, just click on the "add comment"section below.

It's only Thursday and the media is full of breaking news on lenders participation in the loan modification process.  Understand that the landscape regarding the status of real estate loans is changing daily and there is no standardization of how the process will carry forward.  Some speculate that lenders are jumping in ahead of the government creating their own individual guidelines which may pre-empt the federal government's guidelines which could be more stringent and uniform.  For example in the announcement of Citi Mortgage willingness to modify loans, the primary criteria is that the borrrower must be current on their payments, whereas the Fannie Mae, Freddie Mac announcement  this week in the Arizona Republic indicated a minimum of three months delinquent and a 90% loan to current value requirement with specific debt ratio guidelines.  
This will not be "a get out of jail free card" for those who don't demonstrate a qualified hardship  that is required in all loan modifications.  Many experts indicate that the loan modifications will aid about 20% of the troubled current loans.  What we are sensing is the movement towards greater lender coooperation in easing the homeowner financial crisis and strong pressure to slow down the foreclosure rate.  For more information on the steps to avoid foreclosure, contact Gayle for a confidential interview at Gayle@AZAVoidForeclosureNow.com or direct at 602-850-4335.

This past weekend news reports in the Wall Street Journal and The Arizona Republic demonstrate the beginnings of some bright spots for troubled homeowners.  On Saturday, November 1st, the Arizona Republic reported that Countrywide/Bank of America are poised to enter into loan modifications with metropolitan Phoenix homeowners facing foreclosures for the sole purpose of keeping people in their homes and working towards stabilizing the housing market.

The weekend Wall Street Journal summarized the the situation acknowledging that both the economists and the government understand there will be no true recovery for the economy and the financial markets until such time as there is a halt in the plummeting prices in the housing market.  Once the housing market stabilizes and the public perceives the "market has hit the floor", many cautious buyers will begin to get off the fence and join others already purchasing properties at good value and the reduction in current inventory will continue to escalate. 

Loan modification is one of the many ways troubled homeowners can avoid foreclosure.  Several key items are required: the qualifying party must prove source of income, have experienced a hardship (perhaps a major reduction in wages) and the evidence presented with current bank statements.

There are loan modifiers offering various services at varying prices with some offering a complete money back guarantee if they are not successful.  Trying to negotiate this on your own is a complicated maze and of course, time is always of the essence.  Contact me  if you would like some guidance in this process.  I require no fee for the referral, nor do I receive referrals for this assistance.  If these steps do not produce results for you, then we can talk about the option of a short sale in which my expertise will be a valuable asset to your success. Email gayle@azavoidforeclosurenow.com or call 602-850-4335. Gayle Henderson PC. RE/MAX Excalibur Realty.

I firmly believe that foreclosure is not the answer to the current home ownership crisis looming throughout Maricopa County, Arizona.

Foreclosure, not unlike a surgical procedure, should be viewed as the only course of action left after everything else has been explored.  It is not the only available remedy.  Many Arizonans are fearful of their situations and do not realize that there are very positive steps that can be taken to avoid foreclosure.

Recently I completed the rigorous certification process for the Distressed Property Institute.  As a Certified Distressed Property Expert (CDPE), we witness nearly an 85% success ratio in assisting homeowners to avoid foreclosure.   Alex Charfen founder of the Distressed Property Institute believes that homeowners surrounded by a strong CDPE real estate agent team including legal and financial referrals have the greatest chance of avoiding foreclosure and at minimal financial investment to the homeowner.

Not having a clear understanding of the elements and consequences of foreclosure lead many homeowners to just give up.  And believe me there is a huge difference in life after foreclosure as opposed to life without foreclosure. We may not be able to save every house, but we can offer the saving hand to every financially distressed homeowner.

If you feel you may be facing foreclosureor have any questions regarding the short sale or foreclosure process, and would like to discuss some of your options to avoid that foreclosure, please contact me at 602-850-4335 or gayle@azavoidforeclosurenow.com . Gayle Henderson PC. RE/MAX Excalibur Realty.