Category: Orlando Foreclosures

Avoiding the Orlando Loan Modification Mine Field

Posted on by Jenny Zamora

Loan modifications have helped thousands of Orlando homeowners to keep their homes.

However, you must be aware of the fine print and know exactly what it will mean to you. Sometimes the terms of a loan modification are often worse than the original mortgage. The best loan modifications are when you are able to not only reduce your payment but reduce the principal balance of the loan. Many loan mods are structured so that your payment gets reduced but you still have to pay off the entire amount of the original mortgage plus penalties. In my opinion, these types of loan modifications are just not worth agreeing to. If your house is only worth $100,000.00 and your loan amount is $200,000.00 why on earth would you want to end up paying that entire amount?

Push for a loan modification with principal balance reduction

Banks will always try to get you to agree to what suits them better, this is why you have to be a tough negotiator, don’t just agree with the first proposal that they put in front of you. You have to remember that banks also want to come to an agreement. It costs lenders a lot of time and money to take someone through the foreclosure process. The best thing you can do is hire an Orlando real estate attorney that specializes in loan modifications. If you try to go at it alone with your lender, it could end up costing you a lot more money in the long run. Sure, a good Orlando real estate attorney may cost you a couple of grand upfront, but you’ll have a much better chance if you have an experienced negotiator in your corner.

5 things to watch out for when negotiating an Orlando loan modification

1- Your lender has the option of dropping all penalties. Don’t be bullied into a take-it or leave-it trap where they give you the option to pay off the penalties upfront or have them roll the penalties into the balance. You should demand that they wave all penalties as part of the deal.

2- Sometimes lenders will try to get you to agree that if they lose the original loan documents, you must assist the lender in reproducing them. As ridiculous as this may sound, it’s true and you should never agree to something like this. It comes down to the lender having additional legal protection if they screw up. A clause like this has absolutely no benefit to you.

3- Step by step rate increases that are too steep for you to afford or balloon payments that become due before you have time to be prepared for them.

4- Don’t agree to payments that you really can’t afford. When doing a loan modification, the idea is to make the loan affordable to you and your family. Be realistic, don’t put yourself into a position where your budget is soo tight that you’re only one major car repair away from being in default again.

5- Don’t agree to an interest rate that can automatically adjust based on an index over which you have no control.

An Orlando Short Sale may be your best option

As you can see, there are a lot of things that you need to watch out for when entering into a loan modification with your lender. The fact of the matter is that even when you have the bank’s best offer on the table, it still may not be good enough.

You may be much better off doing an Orlando short sale.  At the end of the day, it’s just a house, it’s not part of your family. By doing an Orlando short sale, not only will you be free of your lender forever, but you can get enough cash back to start over and get yourself into a much better situation than you would be agreeing to the terms of a loan modification.

As always, if you have questions about anything to do with Orlando real estate. Call us and set up a free consultation with an Orlando real estate expert.

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The world of Orlando Short Sales may be coming to a screeching halt

Posted on by Jenny Zamora

What will happen to Orlando short sales if the Mortgage debt relief Act of 2007 is not extended?

Short sales have been very popular since the market crashed in 2007,  mainly because sellers have the benefit of not being taxed for the deficiency between the mortgage amount and the actual payoff. What people worry about now is that the  Mortgage Forgiveness Debt Relief Act of 2007  is about to come to an end at the end of  2012 and so far we haven’t anything about the government extending it.

What do you think would happen if the law doesn’t get extended? In my opinion, this would be the end of Orlando short sales as we know them.

When you think about it, what incentive would a seller have to do an Orlando short sale if they end up with a massive deficiency when it closes?  That’s right… there would be no incentive. In fact, I think that most people will just end up letting it go to foreclosure. This means that Orlando REO realtors would be busier than ever.

Deep down I truly believe that this law will be extended, it just makes good business sense for everyone involved… sellers buyers, and lenders. Orlando real estate is moving right now and a big part of that is because of the short sale inventory.

If you are considering an Orlando short sale on your house, don’t take a chance on the mortgage debt relief act of 2007 being extended. Consult with an Orlando short sale specialist and find out what your options are now or you might regret it.

Jenny Zamora, Lic RE Broker. Orlando Short Sale Specialist

Orlando short sale expert

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6 Things that can Kill your Orlando Short Sale

Posted on by Jenny Zamora

The Clock is running Out on Orlando Short Sales


By now almost everyone is familiar with the term “Orlando Short Sale” that owns real estate in Orlando. In a nutshell… It’s when the bank agrees to take a substantial discount on what is owed on a delinquent mortgage.
Our office has been receiving a ton of calls and emails lately from sellers that are upside down on their mortgage all asking the same question. “ Are we still in time to do a short sale on our home without being taxed by the IIRS for the deficiency?” The simple answer to this question is yes, as long as you get it closed before 2013. However, there are many other things to consider besides the “Mortgage tax relief act of 2007”.
6 things that could kill your Orlando Short Sale

1-    The Bank refuses to take accept the short sale offer- These days this doesn’t happen that often. However, Some lenders are just not realistic when it comes to what the property is actually worth and they will just flat out refuse to do a short sale.
2-    Stubborn Homeowners Associations- In the state of Florida, HOA’s will be paid 1 year of dues if a property goes to foreclosure. However, for some reason, that I’m still trying to figure out, there are HOA’s out there that would rather let the property  go  to  foreclosure and collect a year of delinquent dues instead of collecting an amount that is  much more than that. It’s almost  like the HOA’s take it personal that a homeowner can’t pay and they want revenge!
3-    2nd mortgages not giving enough of a discount- When you do an  Orlando Short Sale on a  house that has 2 or more mortgages, the amount that you offer to that second mortgage holder as to be approved by the first mortgage holder. If the frst mortgage holder only wants the second to get $2,000.00 and the 2nd mortgage holder wants $5,000.00 guess what? That’s right… it’s a deal killer.

4-    The BPO Comes in Too High- Part of the process when doing an rlando  short sale is for the bank to order a BPO [Brokers Price Opinion]. Kind of like a mini appraisal, a BPO is usually performed by a local realtor that goes into the house and records details of the house damages, upgrades, etc. Based on all of this information the BPO agent will determine what they  think the house is worth. Unfortunately, I’ve had BPO’s done on properties where judging by their valuation of the property, they must have been either
5-    intoxicated or the more likely scenario, they want the property to get foreclosed on in hopes that they get the listing on the property from the lender as an REO listing.
6-    The buyers back out or are unable to close- Usually, you’ll know way ahead of time if you’re dealing with a legitimate buyer as opposed to a tire kicker because of a Deposit and proof of funds or a pre-approval letter. However, for whatever reason, a buyer will sometimes just not want to go through with the deal at the last second or their financing falls through. Unfortunately, It’s just the nature of the Orlando Real Estate business.

Hire an Orlando Short Sale Expert

If you’re in need of doing a short sale in Orlando, you should find an experienced short sale realtor to give yourself the best chance possible. Short sales can be tricky and hiring a good  realtor will the key to your success.

 

 

Orlando short sale expert

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Orlando short sale vs. Deed in Lieu

Posted on by Jenny Zamora

 

A deed in lieu/ foreclosure with a smile

By now just about everyone living in Orlando has heard of terms such as “short sale” , “deed in lieu”, loan modification, etc. It’s important to know exactly what the difference is between these terms are and what the implications are. For  example; many  homeowners believe that a deed in lieu is  the same as doing a short sale.  This couldn’t be further than the truth. A deed in lieu is simply put is a foreclosure with a smile on it’s face or a “voluntary foreclosure”.

An overlooked downside to a deed in lieu of foreclosure is the possible forgiveness of the deficiency balance. Under federal law, a creditor is required to file a 1099C whenever it forgives a loan balance greater than $600. This may create a tax liability for the former property owner because it is considered “income.” However, the Mortgage Forgiveness Debt Relief Act of 2007 provides tax relief for some loans forgiven in 2007 through 2012.

The key issue in a deed in lieu of foreclosure is whether the lender is willing to forgive the deficiency balance. Make sure to read the contract carefully to see how the deficiency balance issue is handled. If the document is unclear, take it to an experienced Orlando real estate attorney with experience in property law. An attorney’s time is not cheap, but will be a bargain compared to signing an agreement you do not understand and are surprised later to realize its implications.

 

Consider Doing an Orlando Short Sale Instead of a deed in lieu

I’ve had a countless number of Orlando homeowners over the years come into my office asking me to explain the difference between a deed in lieu and a short sale. By doing an Orlando short sale the lender agrees to accept less than the balance owed on the mortgage at sale. The deficiency balance may be forgiven and you also may qualify for a “Cash for Keys” program which means that by doing a short sale, your lender may give you a cash incentive [between 3- 30 thousand dollars] . On the other hand a deed in lieu of foreclosure is basically a voluntary foreclosure n which you sign the deed over to the lender and walk away. However, a foreclosure, unlike a deed in lieu of foreclosure, the ownership of the property is not transferred to the mortgage holder, and remains with the owner.

The lesson here is if you are considering either a deed in lieu of foreclosure or a short sale you must review the terms and conditions carefully and make certain you understand whether the deficiency balance is forgiven. This is why it’s absolutely crucial to consult with an Orlando Real Estate expertwhen making such an important decision.

Lenders prefer short sales over taking a property to foreclosure because they don’t want to own distressed properties. They would much rather see the owner sell the property and lose the deficiency balance than be forced to take the property through foreclosure, as foreclosure is a costly and time-consuming process.

Another reason to consider a Orlando short sale over a foreclosure is that Foreclosure auctions tend to bring significantly less money than a normal sale would bring. If the sale brings less than the amount owed on the loan, the remaining balance of the loan is called a deficiency balance. This means that you could end up with a deficiency judgment against you for the balance.

If you still have questions about Orlando short sales, come see us for a free consultation. We’ve been specializing in Florida short sales and our team of Certified Distressed Property Experts are up  to date on the latest laws and regulations when it comes to Orlando real estate ensuring that our clients get the best options available to them.

 

Jenny Zamora, Lic.  RE  Broker, CDPE

 

 

 

Orlando short sale expert

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Lenders Forcing Homeowners to purposely default on Orlando Real Estate

Posted on by Jenny Zamora

Financial Hardship is not the only reason why Orlando homeowners are not paying their mortgage

Strategic Default is when a homeowner decides to stop paying their mortgage, not necessarily because they can’t afford it, but because it’s a bad investment not worth paying into anymore. Even if the consequence means to possibly lose their house to foreclosure and damage their credit.

Orlando homeowners have been purposely defaulting on their mortgages for several years now. When people become aware of the reality of their situation, they make a conscious decision to stop paying their mortgage. In most cases, I can’t say that I blame them. Don’t get me wrong, I would never tell a client to stop paying on their mortgage. However, I do tell my clients what their house will sell for and about how long it will take to sell and they do the rest of the math on their own.
Although Orlando real estate is making a steady recovery and I believe will continue to do so. There are Orlando homeowners that will never get the money back that they’ve put into their property.

Strategic default  Vs. Moral Obligation

Some Orlando homeowners are worried about their moral obligation to pay the mortgage. The truth is that the homeowner entered into an arms-length transaction with their lender in which both parties had competing interests thus spelling out their obligations in a clear, signed contract. Unless the contract states that the homeowner has a “moral obligation to pay,” then it’s plain and simple – they don’t.
Here are the facts;  when a homeowner borrows the money to buy an Orlando property, they have entered into a business transaction. The lender evaluated the risks and concluded that it was a risk worth taking. For its protection, the lender also required that the homeowner put the property up as collateral, as well as any equity that they had in the house.
The contract spelled out that if the homeowner doesn’t pay, the lender has the right to take the property and sell it before the homeowner gets any equity back – if there were any equity left, which of course in these cases, there isn’t. The lender would not have approved the loan if they didn’t think it was a smart business decision. The homeowners choice to enter into this agreement was also a business decision.
It’s now obvious, that both the homeowner as well as the lender made a bad decision. Now, the contract spells out what happens if the homeowner stops paying, the lender gets the property.

However, there are other options available to homeowners like doing an Orlando short sale or a loan modification. In my opinion, most loan modifications that get approved just don’t make financial sense unless they reduce the principle balance of the loan.

Strategic default is actually something that is caused by the lenders. The fact is, lenders won’t even consider entertaining a short sale unless a homeowner is behind their mortgage thus forcing the homeowner stop paying the mortgage.


By doing a short sale, the homeowner is able to get their house sold and walk away from the responsibilities of the mortgage. Also, there are now several “cash for keys” programs available where lenders offer substantial cash incentives for doing a short sale, sometimes up to $30,000.00 depending on what kind of loan they have and who the lender is.


Your value as a person is not determined by the value of your real estate, or how much money you owe to a bank.  You are worth more as an individual than your bank will ever understand. Life is too short, and there are so many things more important than an underwater mortgage. For many Orlando homeowners, it’s literally the difference between happiness and depression.


If you’re in a situation where you need to do an Orlando short sale on your house go speak with an Orlando short sale expert and find a solution, you owe it to yourself and your family.

 

 

Jenny Zamora, Lic Re Broker/ Orlando Short sale Expert

Orlando short sale expert

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