Tag: foreclosure

Benefits Of A Short Sale

Posted on by Jenny Zamora


What Are The Benefits of A Short Sale?

A short sale in Orlando is a real estate transaction where the sale price of a home is less than the full amount the homeowner still owes on the mortgage. Both the seller of the property and their mortgage company must agree to a short sale. Most lenders these days will agree to the terms of a short sale and also agree to release the lien they possess on the property.

Depending on what the lender agrees to, a short sale doesn’t guarantee that the borrower will be released from the obligation to pay the remaining balance on what’s owed on the loan AKA the “deficiency”.

This is why it’s extremely important that when you hire a Realtor to do your short sale, you don’t hire just any Realtor. Make sure you hire an Orlando Short Sale Specialist. This will ensure you have the best chance at success when doing your short sale.

By agreeing to do a short sale, lenders avoid a drawn-out and costly foreclosure and the homeowner can walk away free of their debt. Before deciding on a short sale, we recommend that you find out all the options that are available to you to see what works best for you.

Benefits of A Short Sale

Less Credit Damage Than Foreclosure
When you compare the impact of foreclosure vs. a short sale on your credit, a short sale harms your credit much less than a foreclosure will. For example, you’ll be eligible for either Fannie Mae or Freddie Mac home financing after only two years following your short sale. However, after a foreclosure, it will take you at least 5 years to be eligible for the same financing.

This is because of the way the mortgage underwriting rules were changed after the financial crisis of 2008.

Cash Back To Sellers

Just about all short sales in Orlando are sold “as-is” which means you won’t have to spend a dime on fixing the place up. In addition, all lender fees, commissions, property taxes, etc. on both sides of the transaction will be paid for by the lender.

In most cases, we’re able to get our clients anywhere from $3,000 to $30,000 at the closing for relocation costs

A Fresh Start

A successful short sale gives distressed homeowners a clean break from their financial hardship. Over 50% of homeowners that opted for a loan modification instead, wound up going into default again and ultimately ended up doing a short sale. Loan modifications are usually modified to benefit the bank in the long term and most of the time you still end up paying the entire amount of what you owed in the first place.

The Sale Date Can Be Negotiated

If a homeowner is in active foreclosure, the lender together with the judge will eventually schedule a sale date of the home at the hearing. You should show up for this hearing with written proof from your Orlando Realtor that you are actively pursuing a short sale on your home. Have your Realtor go with you and provide an MLS printout of the listing, contract, as well as any communications you’ve had with your lender thus far. From my experience as a short sale realtor, they will almost always push the foreclosure sale date a maximum of 120 days giving you ample time to close the transaction.

Easier To Rent A House

Foreclosures, bankruptcies, and evictions are all red flags to landlords who will probably deny you as a renter. However, while your short sale is being negotiated, you’ll have plenty of time to find a rental to move into.
Remember, landlords are creditors also and if they see that you’ve been proactive in doing the right thing in your situation rather than just letting your home gets foreclosed on your chances are much better for them to approve you for their rental.

If you or someone you know needs short sale services in Orlando FL, Call us at 407-902-7750 or visit our site. There’s never a charge for our services and most of the time we can get cashback to sellers.

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Will They Extend the Mortgage Forgiveness Debt Relief Act?

Posted on by Jenny Zamora

There are tens of thousands of distressed homeowners wondering the same things right now. Will Congress continue to help out consumers who are behind on their mortgages by extending the Mortgage Forgiveness Debt Relief Act of 2007 for one more year?

The act was put in place in order to help homeowners with underwater mortgages by forgiving the taxes owed on the difference between the short sale payoff and the full amount of the loan. Under the current federal tax law, the amount forgiven by the lender gets reported as ordinary income for the homeowner.


The Mortgage Forgiveness Debt Relief Act of 2007 expired last Dec. 31 and has yet to be renewed for principal reductions during 2014. These principal reductions can apply to loan modifications that were done by lenders, foreclosures, and short sales. Many believe that Congress will extend the law however if they don’t, hundreds of thousands of distressed homeowners will be hit with tax burdens that they may not be able to handle.

I’ve had several dozen Orlando homeowners that would’ve opted to do a short sale on their home but have filed for bankruptcy instead rather than hoping for Congress to renew the law. I believe that it’s for reason that we’ve seen a significant drop in Orlando’s short sales so far in 2014. The fact is that I can’t recommend for homeowners take a chance on a tax law that may or may not get renewed.

Let’s get back to the main question: Will the mortgage forgiveness act be extended?

The truth is that we just won’t know until it happens… or doesn’t happen. And for underwater homeowners that have received or plan on receiving a reduction on their principal balance, it’s going to be a stressful time until it all plays out.

Short Sale May Still Be The Best Option

Regardless of whether Congress decides to extend the law or not, a short sale may still be the way to go for some distressed homeowners. If you compare a short sale to a foreclosure, you’re still better off doing a short sale, and here’s the reason why. If a house goes to foreclosure, it will still sell for way below the full payoff amount and you would still be facing possible tax burdens. The difference is that by doing a short sale you would avoid having a foreclosure on your record and you will also have a chance at getting relocation assistance from the lender.

 

 

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Short Sales Run Parallel to Foreclosure

Posted on by Jenny Zamora

There is a common myth in the world of short sales that once you begin the short sale process, it stops the foreclosure process. I’ve been doing short sales in Orlando since 2005 and I can tell you from experience that it’s just not true. Don’t get me wrong… in some situations, it can happen and often does happen, where the lender suspends foreclosure proceedings if a house is in the short sale process and they want to see how it plays out. However, some people have the impression that starting a short sale with their lender will automatically stop the foreclosure process and the truth is that nothing can be further from the truth. The fact of the matter is that the foreclosure process and the short sale process run parallel to each other and sometimes it just comes down to a race to see which situation arrives first.

Although we have an outstanding track record when it comes to getting short sales done, even with a pending auction date, I will still tell my clients that nothing is guaranteed. And anyone who tells you differently is either lying or they’re just ignorant on the subject. The problem occurs when a real estate agent tells someone that they guarantee to complete their short sale just to get them locked in as a client and the property ends up getting sold at the auction anyway.

When I hear about this happening to someone, it makes me absolutely furious because a short sale is only one of many options to avoiding foreclosure. Not only that but sometimes it’s not even the best option for someone, especially if the seller wants to try and keep the house. It’s true that realtors get paid a commission when they complete a short sale but this is no reason to try and steer somebody into this situation when they know that another option may suit them better.

Here are some alternatives to short sales.

1- Loan Modification- This is when we try to get the terms of your loan adjusted thus making it more affordable to the homeowner.

 

2- Deed-in-Lieu- A deed-in-lieu occurs when you sign the house back over to the lender as opposed to going through the foreclosure process.

 

3- Bankruptcy Chapters 7 or 13– This will offer the homeowner the opportunity to either buy some time and try to get reorganized or eliminate their debt as well as their assets in order to satisfy their outstanding debts once and for all. Bankruptcy situations should be discussed with a bankruptcy attorney.

I learned 9 years ago when I first started in the real estate business, that to be a successful real estate agent you should always, always do what’s best for the client that you’re representing and not what’s best for your bank account. This mindset has always served me well and I truly believe that I am more successful because of it.

 

 

 

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The Truth About How a Short Sale Will Affect Your Credit Score

Posted on by Jenny Zamora

So exactly how will a short sale impact your credit score?  The short answer is a short sale can have less of an effect on your credit score than a foreclosure. But, it must be done correctly.

Should I do a short sale?

Short sales can happen if a lender agrees to accept less than the amount owed against the home because there is not enough equity in it to pay all costs of the sale.

Firstly, it’s important to get legal and tax advice before making any decision. A real estate agent experienced in Orlando short sales can be of invaluable help to you as you negotiate with your lender. It’s important to note that not all lenders will agree to a short sale.

Although there are a few lenders that will agree to a short sale if the homeowner is current, most lenders won’t even consider a short sale unless the mortgage holder is at least 30 days behind on their payment.

What tips should I know for negotiating my short sale.

When negotiating a short sale it’s important to be aware that there is no guarantee that the lender will accept the short sale offer. You should also know that short sales can take several months to complete sometimes depending on who the lender is.

If the lender does not agree to a short sale there are other options available to the homeowner such as a “deed in lieu” which is basically a voluntary foreclosure in which you sign the property back over to the bank.

Other options include trying to negotiate a loan modification or filing for bankruptcy. If neither of these options work than the property will most likely be foreclosed on and sold at public auction to the highest bidder.

If your request is approved, ask your lender to report the short sale as “paid in full,” as part of the negotiation.

So what’s the impact on my credit score?

Many sources report that a short sale has about the same impact on your credit score as a foreclosure when the seller is in arrears; however, that’s not always the case.  With some short sales, sellers report that their credit score only dropped by 100 points.

The biggest advantage of a short sale is that you will be able to qualify to buy another home within two years as opposed to five to seven years after a foreclosure.

Talk to an Orlando real estate agent experienced in short sales to discuss the possibility of doing a short sale of your home.

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