Older Americans who own Orlando real estate are not immune to the foreclosure process
Many Americans that are 55+, grew up thinking that real estate in Orlando would only appreciate in value and that you need to own a house to be financially secure. That way of thinking was passed on from there parents and was shared by just about everyone else in that generation. Unfortunately, according to AARP Senior Americans got in just as much hot water as the younger generations.
The perception is that older Americans are more housing secure than younger people, but the truth is that millions of Americans that are over the age of 55 are carrying more mortgage debt than ever before, over three million of which are at risk of losing their homes. And as of December 2011, approximately 3.5 million loans of people age 55+ were upside down, meaning that their home is worth less than the loan amount. From 2007 to 2011, a staggering 1.5 million + older Americans lost their homes to foreclosure.
Even though older Americans still have lower foreclosure rates than people that are under 55, they are increasing at an alarming rate.
Older Americans weren’t immune to the Orlando real estate boom and bust. They took out equity lines of credit when Orlando property values shot up, sold their homes for retail prices and purchased investment properties that floundered just like everybody else.
The biggest difference here is that if you’re under 55 and lose your house to foreclosure, you still have time to get back on your feet through hard work and perseverance. Older Americans don’t have this option because the truth of the matter is that time is not on their side. When I think about Older people losing their homes to foreclosure, it literally brings tears to my eyes, it’s just really sad.
For generations, home ownership has been a safety net in retirement, the report notes. Equity that built up over decades could be tapped for medical bills, supplement fixed incomes or help transition into an assisted living facility. If a senior needs to transition to an assisted living facility but can’t sell his house to get the money to pay for it, then that’s a huge problem.
Gail Matillo, director of elder housing for the Florida Department of Elder Affairs, recommends seniors call a local aging resource center if they are having trouble with house payments. The statewide hot line is 800-863-5337.
If you are in need of an Orlando Short Sale, call us for a free consultation.
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.
It’s all in a day’s work for an Orlando Short Sale Realtor
Being a successful Orlando short sale realtor involves many things. For one thing, working with a short sale listing is a lot more work than a traditional listing. Listing the property is just the tip of the ice burg. There’s a mountain of paperwork involved that needs to be updated every 30 days, so I guess the correct term would be “mountains” of paperwork because short sales can take several months to complete and sometimes even up to a year, depending on the lender.
Daily checklist for a Top Orlando Short Sale Agent
1- Check emails- These days most realtors and most negotiators prefer to communicate by email and when you are handling upwards of 100 short sale files, this means hundreds of emails to read. [Daily]
2- Follow up with the short sale lenders over the phone- This is a very tedious task and can take several hours of your day, but it is a necessary evil when it comes to processing short sales. It’s not uncommon to spend up to 45 minutes on one file just trying to get the right person on the other end of the phone to see how the file is moving along.
3- Check on approaching foreclosure sale dates with the Orange County Courthouse- It’s always good to ask the short sale rep about pending auction dates. However, a lot of times there is a communication breakdown between the lenders, lawyers and the courthouse and unfortunately, that’s just the way it is. This is why at Orlando Realty Consultants we have someone that is in charge of calling the Orange and Osceola county court houses and finding out what the latest information is on each and every case. Many times we inform the lenders of an approaching sale date before they even know about it.
4- Creating accurate CMA’s- With the ever changing Orlando Real Estate market, it’s extremely important to make sure that the properties are priced correctly in order to ensure success with a short sale. Pricing the property too high or too low will only drag things out and can sometimes push the bank to just flat out refuse entertaining a short sale.
5- Scheduling the BPO’s- The BPO [Brokers Price Opinion] is a very important part of the short sale process. The BPO is almost always performed by a local realtor. Whatever the BPO comes in at is the point of negotiation between us and the lender.
6- Negotiating with HOA dues and other 2nd lien holders– It used to be easy to get an Home Owners Association to accept a massive discount on what’s owed on a client’s delinquent dues. Not any more! HOA’s are now notorious for being difficult to negotiate with. We’ve had countless cases where closings have been delayed because of waiting on the HOA’s to send us a simple payoff letter, Even for a full payoff.
7- Coordinating Closings- Having a great title company helps a lot. However there are still many things that fall on the short sale realtor such as scheduling inspections and making sure that everything runs smoothly with all parties involved on both the buyer’s and seller’s side.
8- Update our Short Sale Clients- To us, this is one of the most important things on the to do list. Here at Orlando RealtyConsultants, we understand that our short sale clients are going through a tremendous amount of financial and emotional stress because of their situation. This is why we keep our clients informed about everything every step of the way. The more you know about something then the less you will fear it or stress out about it, that’s just human nature. Our clients depend on us to help them through one of the most important processes of their lives and this is something that we take very serious.
Well, there you have it folks, a peak into the day of an Orlando Short Sale Expert. If you need help with an Orlando Short Sale or just some free advice from an Orlando Real Estate Expert, contact us, we’re here to help.
Jenny Zamora, Lic RE Broker
I’ve heard of this happening time and time again. The realtor gets the short sale done, the bank signs off on everything and everyone goes home happy. Then, one day the seller goes to check his credit report a year later and finds out that he still has an outstanding debt with the lender that approved the short sale on his house. Even though the seller has all the closing documents, the approval letters, and copies of the wire transfers to prove them wrong, it was still showing a delinquent loan.
You would think that this would be an easy fix, just provide proof of the transaction to the bank and they would report that everything was paid to the credit bureaus. Not always true. This situation has the potential to become a complete nightmare for the former homeowner. Sure you can spend countless hours and phone calls trying to get it resolved yourself, but the chances of that happening are slim.
Make Sure your Orlando Short Sale Agent follows up after the closing
After you’ve completed the short sale with yourOrlando Realtor, make sure that you or your agent follow up with your lender after the closing. It is absolutely crucial that the satisfaction of mortgage is recorded, if not, then you’re still on the hook for the balance in the banks’ eyes as well as the credit bureau’s eyes.
Banks are made up of people and people make mistakes all of the time. Sure, they have people in place whose only job is to look over these documents to make sure there are no errors and also to make sure the payoff gets recorded, but even they make mistakes. One thing is for sure, no one will care about your situation as much as you will.
I’ve been an Orlando Short Sale Realtor since 2004 and I learned early on that when dealing with Orlando Short Sales there are some extra steps that need to be taken as opposed to just a regular closing. Short sales can get very complicated at times and if you don’t know how to navigate your way through them…well…remember what happened to the “Titanic”?
As an Orlando Short Sale Expert, I have a system in place in which closed short sales get followed up with until the payoff to the bank has been recorded, at no charge to my clients. So as far as “Orlando Realty Consultants” is concerned, it’s not closed in our eyes until the client receives a “satisfaction of mortgage”. Unfortunately, most realtors just assume that everything has been done the way that it’s supposed to be done, collect their commission, and don’t give it another thought. This means that it falls on you.
Get a Credit Report after your Short Sale Closes
It’s a good idea for all of us to check our reports every so often. However, if you’ve completed an Orlando short sale recently, getting a credit report is not only recommended but necessary to ensure that you are free of your short sale lender once and for all. A good place to do that is at your bank.
Still, have questions? Call us at 407-902-7750 to consult with an Orlando short sale expert.
Jenny Zamora, Lic RE Broker/ Short Sale Specialist
