Bank Timeline & Checklist

Bank Timeline & Checklist

The specific steps that must be taken in order to facilitate a successful short sale, will depend greatly on the Bank and/or type of lien you are working on. For example, WellsFargo will review your short sale offer differently than Bank of America will. A GSE mortgage must be serviced in a different way than would a private investor mortgage.  However, despite all these differences, the short sale review process generally take the same steps. 

1. Verification of Short Sale receipt/request.  Normally, this takes the form of the Homeowner calling in to the Lender, to relay his/her wishes for a Short Sale.
2. Lender assigns Phase 1 worker. After verifying the Homeowner's Short Sale wishes, the Lender will move/assign the file to the Short Sale department, where a worker will be assigned.
3. Verification of required Short Sale documentation. Once assigned to the file, the Phase 1 worker will review all the preliminary Short Sale documentation (Hardship Letter, Financials, etc), to make sure everything is current and that a Purchase Offer is ready to be negotiated.
4. Lender assigns Phase 2 worker. This is the worker who will review the offer, and negotiate the Short Sale terms, on behalf of the Lender & Investor.
5. Appraisal/BPO. Upon assignment to the file, the Phase 2 worker will order a valuation to be performed on the property. This is done so that the Lender & Investor have a good idea of the property's worth.
6. Offer negotiation. The valuation is returned to the Lender. The Phase 2 worker will review/respond to the Purchase Offer presented. This is the point where the Price & Terms for the Short Sale are negotiated.
7. Lender assigns Phase 3 worker. Once the Offer price & terms are negotiated, the Short Sale file is then assigned to a Phase 3 worker (closer).
8. Fees & Closing cost Negotiation. At this point in the Short Sale process, the closer (Phase 3 worker) will negotiate, on behalf of the Lender & Investor, the fees & closing costs that will be covered. Typical fees that Investors usually refuse to pay, are HOA transfer & status fees, as well as final water bills.
9. Lender Approval. If the Offer & Terms are acceptable to the Phase 3 worker, they will submit the file to upper management, for their review & sign-off.
10. Investor Approval. If the Offer & Terms are acceptable to the Lender, they will submit the file to the Investor, for their final review & sign-off.  Once the Investor agrees to the Price & Terms, they will issue an Approval Letter to close.

As previously mentioned, each loan and lien type will need to go through different steps for an Approval, and will vary greatly depending on the lien position & Investor. As such, this general "checklist" fits best with 1st mortgages, and to a lesser extent, 2nd mortgages. Since this is an oversimplified list, it is highly recommended you contact a Short Sale specialist who is familiar with your Lender & State laws.

Tigrent Learning

Tigrent Learning

Contrary to what some would have you believe, the Real Estate business is tough, especially in this market! That’s why it’s important to educate yourself properly on the ins & outs of business management, as well as learning tips & tricks to successful Real Estate Investment. There are many ways to educate yourself, from seminars to books, although the pitfalls of these resources are that they aren't specific to your situation, there’s no follow up, and it’s overly indirect & general. While books and seminars can help you decide which avenue of Real Estate best interests you, it’s still highly recommended to go one step further, and get specific training. By far, one of the best training programs out there is called “Tigrent Learning.”

In an effort to promote successful business strategy & education, “Tigrent Learning” provides advanced training courses to students of Real Estate. Their self-proclaimed goal, “…is to help people achieve their maximum income-generating potential by learning essential techniques to accumulate wealth through real estate investing, financial instruments investing, and entrepreneurship.”

            What makes “Tigrent” so great & unique? Well among other things, “Tigrent” works in collaboration with Robert Kiyosaki, of Rich Dad Poor Dad. The “Rich Dad Learn to be Rich” program focuses on Real Estate investing, with an emphasis on wealth creation. Combine this fantastic curriculum with “Tigrent’s” products and services, and you will be unstoppable. “Tigrent’s” integrated courses are taught by experienced, successful professionals. These guys not only mentor & coach their students through rigorous hands-on & practical Real Estate deals, but also provide invaluable training, resources, and materials. A lot of the mentors started out as “Tigrent” students themselves, so they can speak to the program’s success!

The vast majority of new business start-ups fail within a short period of time. Through proper planning & training though, “Tigrent Learning” gives you the best chance possible of success. How do we know? Ronda & Jorgen were inducted into the “Tigrent Learning, Rich Dad Education HALL OF FAME” in 2010.  We know because we’ve been there!!

http://www.tigrent.com/default.html

RE Broker VS Foreclosure Solutions

RE Broker VS Foreclosure Solutions

A lot of people don't realize that working with a team of experts to sell your property, instead of just a Real Estate Broker, can vastly improve your chances of a successful Short Sale. 

Can any Real Estate Agent assist you in selling your home in a Short Sale situation? YES.  The disadvantage, however, is that few Real Estate Agents know the loopholes of the Short Sale system. The fact of the matter is, most Real Estate Agents don't specialize in Short Sales, and don't want to deal with them; they are too cumbersome, labor intensive, and take too much time & patience to see it through. Therefore, it is highly recommended you work with a company that specializes in this field, and are experienced in Short Sale negotiations & Foreclosure Law, so that you can be properly represented.

While neither Foreclosure Solutions, nor any agent employed by Foreclosure Solutions is an Attorney, CPA, or Tax Professional (we are not authorized to provide legal or financial advice), we have extensive experience in dealing with the intricacies of the foreclosure process, no matter what State you live in, or what Bank you are working with. We're working in the "trenches" every single day, and deal with Banks/HOAs/attorneys every day. We're the front line, the tip of the spear, & we've seen it all!

Generally speaking, Real Estate Agents are schooled in Buying & Selling properties, not negotiating with Banks, HOAs, the Government, etc.; let alone the necessary steps that must be taken to facilitate a successful settlement. There are a lot of pieces that need to come together with a Short Sale, so it is in one's best interest to work with both a Real Estate Agent, as well as a Short Sale specialist.  Let the Agent find the Buyer, and let the Short Sale specialist negotiate with the Bank! Like the Agent, the Short Sale company will only get paid if they're successful, thereby ensuring their motivation. 

Don't let fear, uncertainty, and doubt rule your life! having a proper Team representing & working for you will lift a huge weight off your chest, and you can focus on what's important in life.

Are Short Sales in Trouble?

Are Short Sales in Trouble?

A recent article by Diana Olick, a Real Estate reporter for CNBC, seems to suggest that Short Sales may be a thing of the past, or at least dwindling back into their pre-2006 numbers.  What's her reasoning, you might ask? For Olick, it all comes down to Taxes.

As you probably already know, the U.S. Congress passed the “Mortgage Forgiveness Debt Relief Act and Debt Cancellation” in 2007, in an effort to help troubled borrowers & advocate Short Sales.  One of the main ideas behind this legislation was to make Mortgage principle reductions tax exempt. So why does this matter, and how does it connect with Short Sales?  Well, successful Short Sales often result in debt forgiveness. Debt forgiveness is, more or less, income.  Income is taxable. 

For example, let's say "Dottie" is Short Selling her home.  Her lender has agreed to the Sale, and is taking a $50,000 loss on their Mortgage.  They have agreed to waive the remaining balance due on the loan, but must report the waiver to the IRS. The IRS interprets this 50k waiver as "phantom" income, which must be taxed. So, the IRS thinks Dottie just "made" $50,000 (She borrows & uses the 50k previously, but now she doesn't owe it anymore), and so Uncle Sam needs his cut.  But, as Rep. McDermott (D-WA) notes, "Collecting federal income tax on a relief intended for struggling homeowners is not only bad policy, but is simply wrong."

The passing of the 2007 Act allowed homeowners short selling their homes, to avoid paying Taxes on any forgiven mortgage debt.  Naturally, this helped Short Sales tremendously, as it limited the financial consequences associated with such a transaction. So what's the problem?  The MFDR act is expiring at the end of this year!! 

National Association of Realtors lobbyist Jamie Gregory says, "Realtors believe if the legislation is not extended, households who are already struggling to pay their mortgages will be further burdened with tens of thousands of dollars in additional taxes that they probably can't afford to pay because the IRS would count the cancelled debt as income."

If the MFDR act is not extended, any cancelled or forgiven mortgage debt would be taxed, regardless of the occupancy status of the property.  Since capital hill is currently entrenched in politics & the presidential election, many believe that such a "necessary" extension will go un-noticed.  

But, if the MFDR act is not extended, will it slow or even kill the Short Sale industry?  Slow, probably. Kill, no. "...getting a tax bill on forgiven debt can be another punch in the gut for families who are already facing financial hardship,” says David Stevens, CEO of the Mortgage Bankers Association.  While this may be painfully true, the fact remains that a % of an amount will always be less than the amount itself.  To put it another way, would you rather pay $10.00, or pay taxes on $10.00?  A Short Sale is still better than the alternative! 

**To read the CNBC article itself, go to http://www.cnbc.com/id/49214903**

Colorado Foreclosure Timeline