Category Archive : Short Sales

While only your lender can make a final determination about your eligibility for a short sale, you can get a good idea of your qualifications before you begin by having a frank discussion with a qualified short sale specialist.

You know the value of a short sale.

A short sale is a special arrangement with the bank that allows you to sell your home for less than what you own. By doing a short sale, you’re avoiding foreclosure, doing less damage to your credit and finalizing your obligations to the bank leaving you free and clear to get a fresh start. A properly negotiated short sale can prevent your bank from having the ability to collect more funds from you after the sale, and you can avoid bankruptcy, which many are forced to use as means to escape the legal hounding of the banks.

You’re in financial trouble.

You can’t have a short sale just because you want one. A vast majority of homeowners in Las Vegas are upside down on their mortgage if they bought during the boom years. The bank isn’t going to approve a short sale just because you don’t want to deal with the big payments anymore. On the other hand, if you can’t deal with your payments anymore thanks to a hardship like unemployment, rising interest rates and payments, pay cuts, or a new financial obligation like child support or new dependents, you’re much more likely to be approved for a short sale.

When to seek help?

If you know you’re not going to be able to keep up with your payments, now or in the future, it’s time to get a professional opinion. A great REALTOR® with a proven track record in short sales (at least 20 closed listings) will be able to look at your individual situation and advise you on your potential suitability for a short sale.

Work closely with your REALTOR® to get the application process started. It can frequently take up 60-90 days to get approval from the bank for a short sale, and starting as soon as you’ve missed payments gives you the biggest window for sale possibilities. Waiting until you’ve missed months of payments can make it hard to get approval for a short sale before you’re looking at foreclosure action by the bank.

Why is a real estate agent proficient in short sales so crucial?

It’s almost impossible to do a short sale without the help of an experienced REALTOR®. You’ll need industry connections and bank contacts to work through the various steps required to complete the process. Your agent will help you understand the process, handle all the phone calls and paper work, and give you advice on how to make your house more attractive to buyers interested in your property.

Most importantly, a short sale is a sale of your home and will be treated as such by you and your REALTOR. Any time you’re selling a property, you need to be actively working to make your house available to prospective buyers and be ready to move on to your next home at any time.

In the case of a short sale, you’ll be moving either as a result of the sale or after foreclosure if you’re unable to arrange a sale in time. Your REALTOR will help you throughout this process, and by working closely with him, you’ll be much more likely to see a positive result from your short sale giving you a chance to pursue a new life free of a huge debt obligation.

If you’re considering a Las Vegas short sale, get the help of a real estate professional with proven short sale success.  That’s us – give us a call today at 702-376-7379.

Disclaimer: I am a Las Vegas real estate expert, but not a lawyer or a tax accountant.  Nothing I’ve said here should be construed as legal or tax advice.

The Greater Las Vegas Association of REALTORS® reported last week that short sales accounted for 21.6% of all Las Vegas homes sold in June (not counting new builds).  What’s a short sale? It’s when the mortgage holder agrees to accept less than the value of your mortgage as payoff on your home (when the sales price is short of what you actually owe).

So clearly, now is still a good time to do a short sale in Las Vegas – if that’s the right decision for you.  Is it?  Here’s a very simplified decision criteria: Do you owe more than your Las Vegas home is worth?  Do you have to move?  Can you no longer afford your mortgage payments?  If you answered yes to at least two of the three questions, a short sale might be right for you.

If a short sale might be right for you, here are 5 steps you’ll need to take:

1. Hire a real estate agent with experience (and proven success) dealing with Las Vegas short sales. A short sale is far more complicated than a traditional home sale – it involves everything a traditional sale does (pricing your home right, marketing it to potential buyers, etc.) as well as negotiating with the bank (remember, the bank has to approve the short sale).

2. You’ll have to document hardship. The mortgage holder isn’t going to approve a short sale if you’ve got enough cash in the bank to cover the difference between the sales price and what you owe.  Or even if you are underwater on your mortgage but you can afford your payments and there’s no real reason you have to move.  Your mortgage holder will tell you the documents you need to gather as evidence of hardship (they’ll likely include an explanatory hardship letter, recent tax statements, a list of your assets and liabilities, pay stubs, etc.).

3. Recognize that the debt you owe might not be fully discharged in the short sale. Unless your Nevada short sale contract specifically states that the proceeds of the sale will constitute a “full and final settlement” of the mortgage debt, technically the mortgage lender has six years under Nevada law to pursue you for the deficiency (the difference between what you owed and the proceeds of the sale).  Now, I’ve never heard of a lender actually doing that, but it’s important to understand that they can – unless you can negotiate a full discharge as part of the short sale agreement.

4. If your lender does discharge the remaining debt, you’ll get issued a 1099-C. This form tells the IRS that you had a debt of x amount cancelled.  Before the 2007 Mortgage Forgiveness Debt Relief Act was passed, you would likely have owed taxes on the forgiven debt.  Now, through 2012 you likely won’t owe tax on the discharged debt as long as the debt was money used to purchase your principal residence.

5. Know that a short sale will in all likelihood negatively affect your credit score. A short sale isn’t typically as hard a hit to your credit score as a foreclosure is, but it will likely still be a black mark (typically the lender will report the debt as paid for less than the full balance).  Often more significantly, if you stopped paying your mortgage before the short sale, each of those delinquent payments will negatively impact your credit score.

Clearly, there is a fair amount of complexity involved in a short sale (and we’ve tried to simplify it!).  If you’re considering a Las Vegas short sale, get the help of a real estate professional with proven short sale success.  That’s us – give us a call today at 702-376-7379.

Disclaimer: I am a Las Vegas real estate expert, but not a lawyer or a tax accountant.  Nothing I’ve said here should be construed as legal or tax advice.

Las Vegas real estate agents have long been frustrated when a buyer walks during the short sale processing period and then have to start the process all over again, even if they had a back-up offer with identical terms ready as a replacement offer.

Bank of America will now allow Las Vegas real estate agents to submit their back up offer if they lose their buyer without having to start from scratch. This is good news and will save homeowners and listing agents both time and the ability to save deals by quickly switching in a new buyer.

If you are interested in considering a short sale or just have questions because you are facing the difficulty of meeting your mortgage obligations, please give Shelter Realty’s short sale division a call at 702-376-7379.

Even the wealthy are considering strategic defaults on their million dollar mansions in Las Vegas.

As reported by Bloomberg.com:

April 26 (Bloomberg) — Nicolas Cage, the Oscar-winning star of “Leaving Las Vegas,” bought a seven-bedroom home with a panoramic view of the city’s casino-lined Strip in 2006 for $8.5 million. By January 2010, it was in foreclosure.

The next owner, who property records show paid $4.2 million, has put the house on the market for $7.9 million — an “unrealistic” price, according to Zar Zanganeh, the broker handling the listing.

On a side note – While many homeowners of high end Las Vegas homes may consider foreclosure as a strategic business decision when they’re upside down by several million dollars between what they owe the bank and what the property will sell for, Shelter Realty has been successful in negotiating short sale transactions on jumbo loans upwards of $1.5million.

And, if you’re considering purchasing a million dollar mansion, we have mortgage companies that are able to finance Jumbo loans in Las Vegas with as little as 25% – 30% down, depending on the purchase price, loan amount, and all other basic Mortgage 101 Qualifying Guidelines.

If your Las Vegas property is secured by a VA loan with a mortgage balance that is higher than the appraised value, and you need to sell, then you may be eligible for a special program called a VA Compromise Sale.

Basically, a VA Compromise Sale is a program similar to a short sale transaction, which is designed to help veterans sell a property with an upside down mortgage balance without taking a huge financial loss.

In any case, if you bought a home with a VA loan back when the housing market was healthy, you probably didn’t foresee the need to sell your home in the depressed housing market of today.

The need to move overseas, divorce or or a station change are a few of the reasons that would force a VA homeowner into selling a property.

Obviously, for many veteran borrowers who are facing this scenario, taking a loss on the sale of their home could result in extreme financial difficulty.

How Can A VA Compromise Sale Help Me?

If you are selling your house and receive a purchase offer for less than what you still owe on your VA loan, you can turn in an application with the Veterans Administration for a VA Compromise Sale.

In many ways, a VA Compromise Sale is similar to a short sale with another type of mortgage program.

The good news is that if you receive approval for a VA Compromise Sale, then the VA will redeem you for the difference between what you can sell your house for and what you have left on your VA loan.

To Qualify, You Must Show Proof Of:

• Financial difficulties.
• The realistic market value of your house at time of sale.
• A VA appraisal.
• Standard closing costs.
• No second lien (the VA does makes rare exceptions if the total is not significant).
• The reasons why you are selling your home.

Another important component of getting approved for a VA Compromise Sale is that the total net loss should be less than if the property was taken back by the bank through foreclosure proceedings.

So basically, if it costs more to foreclose vs “short sale” the home, then there is a greater chance of getting a VA Compromise Sale approved.

On another note, if your VA loan originated before December 31, 1989 you might have to sign a promissory note as well as enter a payment plan to redeem the VA a percentage of the compromise claim payment. This sum would end up being less than what you would owe if you did not originally have a VA loan, and the payment plan itself is formulated around what you would reasonably be able to pay.

Our Short Sale team has a proven track record of successfully negotiating with banks to help homeowners sell their properties for less than they owe on their mortgages. However, with a VA Compromise Sale, most of the negotiating process is reduced to simply filling out the proper paperwork and submitting a clean and fully completed package.

Please feel free to contact us to see if your property or unique short sale scenario might be eligible for a VA Compromise Sale.

How long after a short sale before I can qualify for a new home loan?

This is the main question most of our Las Vegas underwater homeowners have that are weighing their options of loan modification, short sale or foreclosure.

And, not being able to plan for future home-ownership can add more anxiety to the equation.

It’s frustrating when you struggle to do the right thing and make your mortgage payments on time, and then feel penalized by the system by being denied for new mortgage financing due to a recent short sale that was out of your control.

Obviously, if we’re going to turn this slow market around, banks will eventually have to figure out a way of providing special circumstances for qualified borrowers that may have fallen victim to a financial crisis that was largely influenced by mortgage and real estate fraud.

Well, the good news is that according to recent changes in FHA Financing Guidelines as of March, 2011, Las Vegas home buyers who are as little as one day out of a short sale on a previous property may qualify for a new mortgage.

FHA Day Out Of Short Sale Overview:

You can read the official FHA Guidelines, but the following screenshot created by a friend Scott Schang highlights the main points.

So, what this is basically stating is that unless you did a short sale simply for financial gain, there is a chance you could be eligible for a new FHA mortgage right away.

Examples Of Possible Acceptable Reasons For Short Sale:

• Living in previously owned bachelor pad condo – got married, have kids – 1 bed 1 bath doesn’t accomodate 3+ person family
• Kids move out of home – parents no longer need 4 bed 3 bath home for 2 people
• Relocating because of job
• Death in the family
• Forced sale due to a divorce

Before writing this post, I did a considerable amount of research online, as well as speaking with one of our trusted local loan officers, Brian Maier, to ensure there weren’t any hidden challenges our buyers would face if they planned on purchasing a new home immediately after doing a short sale.

Brian said it is important that the borrowers have a clean mortgage payment history for the past 12 months.

This means that there are no 30-day late mortgage payments on your credit report in the past year.

He also stated that each lender has their own qualifying criteria based on standard eligibility guidelines, such as credit, loan-to-value and debt-to-income ratios.

I certainly understand that the words “May Qualify” probably create more uncertainty than hope, but Brian did mention that some lenders were more lenient than others on what they determined “Acceptable” reasons for a short sale.

Either way, the point is that we are moving in the right direction for making mortgage financing available for “make sense” scenarios.

Our Las Vegas Short Sale expert, Paul Rowe, definitely has the knowledge and track record to help answer any of your selling questions.

If you’re interested in digging deeper about how to qualify for a new home loan please contact us for more information.

Shelter Realty’s short sale division successfully closed a listing in the high-end condo development, Turnberry Towers located in Las Vegas, Nevada. We negotiated a full liability release on the sellers’ mortgage obligation. Sellers who may be stuck upside down in these condo projects should be heartened to know that there may be alternatives to foreclosure.

Buyers who may be interested in taking advantage of the incredibly low prices in the Las Vegas condo market need to take a look at short sales. In this case, the short sale we negotiated was below current market value, providing a fantastic buying opportunity.

If you have questions about a short sale in Las Vegas or anywhere else in the southwest, please contact us through this website or call us directly at 702-376-7379.

Paul Rowe manages the short sale division at Shelter Realty in Henderson, Nevada.

Shelter Realty closed another short sale listing last week, its 17th in a row with full liability release for our clients. In this case the subject property was also an investment, high-rise condo property. Contrary to myths about short sales that exist, investment properties may also be sold as a short sale.

Ultimately, the mortgage bank which holds your note evaluates each and every short sale approval as a unique agreement based on the individual borrower’s situation. This is why effective representation is so critical. You not only have to sell your property, but negotiate favorable terms with your mortgage bank.

If you have questions about a short sale in Las Vegas or anywhere else in the southwest, please contact us through this website or call us directly at 702-376-7379.

Savvy listing agents know that pricing the home is not simply a matter of maximizing the amount a buyer is willing to pay for a home. This may sound counter-intuitive to the average person. After all, doesn’t offering the bank the most amount of money, give you a better chance for an approval? Not necessarily.

Here are some issues your listing agent has to account for in a short sale:

• You can elicit an offer so high that it won’t appraise for the buyer’s loan.
• There may be other liens which have to be paid or monetary contributions must be made. Is there a 2nd loan? Maybe the first lien holder will only agree to a certain contribution that is less than the 2nd lien is willing to accept. Where will that money come from?
• The seller’s lender may require some sort of cash contribution by the seller or accepting a promissory note. If the seller doesn’t have it and the bank won’t budge, how do you keep your transaction from falling apart? I recently had a lien for a delinquent credit card show up right before closing. We then had to figure out how to come up with another $2300 in order to make the transaction happen after we had a previous approval that did not account for the judgment.
• What if you have delinquent homeowner association dues that exceed what the bank  is willing to allow?

I look at a purchase price as a pool of money. Yes, we have to get a qualified buyer willing to pay something reasonably close to market value to get the bank interested, but if you lock up too much of the money for the primary bank, you lose the flexibility to solve some of the difficult to foresee problems I mentioned above.

We like to work with our buyers on the pricing. Sometimes it is hard to break through the traditional mentality of a price just relating to the home itself, but it is imperative that we educate buyers and get them on our side that a short sale is more than a purchase price for a home, it is a negotiated debt settlement that includes a transfer of property. There are many aspects of that home which must be resolved in order for that buyer’s offer to get approved by the seller’s bank.

Agents who do not take into consideration the eventual need for monies to cover additional obligations often are unable to close the transaction and relieve the seller of their debt. They will often say things like ‘well, the bank just wouldn’t allow enough money for this or that’, but had they structured their offer properly, they might well have been able to get the short sale approval in the end.

In 2010, the government rolled out a supplemental program to Home Affordable Modification Program called HAFA. HAFA stands for Home Affordable Foreclosure Alternatives. This program was specifically designed to facilitate short sales and “Deed-in-lieu” of foreclosures. From the very beginning there was strong skepticism from real estate professionals who specialized in selling distressed properties about the ability of this program to deliver. Housingwire.com reported that between April and December of 2010, only 661 deals had closed under the HAFA program nationwide.

Over-Promised, Under-Delivered

HAFA has many fatal flaws. First, it was born of another complete failure, the HAMP program. Secondly, the program was supposed to fast-track short sales and deed-in-lieu’s but in doing so, participating banks were not incentivize, and in fact, lost many of their recourse options. For example, 2^nd lien holders had to accept meager payoffs and waive any deficiency balances on their losses. Thirdly, this program was completely voluntary on the banks’ behalf. They only had to consider borrowers for approval, not approve them!

2^nd Lien Holders say no thanks!

Junior lien holders if they chose to participate in HAFA had to accept a maximum payoff of $6,000 or 6% of the loan balance, whichever was less. You can see the problem. A 2^nd lien with a $50,000 balance would have to accept a $3,000 payoff and waive any right to pursue the borrower? Not likely. This rule meant that unless your 2^nd lien was the same bank as your first, you had zero chance of an approval. I recently just obtained a HAFA approval for one of my short sale listings here in Las Vegas. The home had two loans but they were with the same lender.

This week the Treasury Department announced:

• HAFA eliminated loan servicers from having to verify borrower’s finances
• HAFA also relieved loan servicers from verifying whether a borrower’s monthly payment exceeds 31% of their gross monthly income
• 2^nd lien holders may receive a max payoff of $6,000, even if the payoff exceeds the 6% of the unpaid loan balance. This should help small 2^nd liens under $50,000
• Once approved for HAFA, loan servicers have 30 days to approve an offer. The previous requirement was 10 days which was unrealistic

In the end these measures may allow more short sales and deed-in-lieu’s to proceed but it will never approach the demand represented by millions of homeowners. When you’re trying to top 661, anything will look like a victory, I guess.

It has been a long road in fighting Bank of America (BofA) over the past few years while trying to help Las Vegas homeowners settle their debt through the short sale of their homes. Bank of America steadfastly refused to release almost every seller here in Nevada because of its status as a recourse state, even if it meant that seller would not cooperate. The home would then needlessly become a foreclosure.

I am going into my 3rd straight year of managing the short sale division here for the Sena Team and tried many different tactics in dealing with BofA. There had been rumors that Bank of America was going be more open to releasing deficiencies for some time. I had even seen one of these infamous letters myself, but now, I got to enjoy seeing my own clients’ name at the top of the letter! It was so rewarding to know that we had not only found a willing buyer but also that the seller is being fully release from their loan obligation.

Potential sellers should be aware that Bank of America is not releasing deficiency as a standard policy. The actual holder of your loan (known as the investor) is and who is fighting your battle will go a long way in your deficiency being successfully released.

Las Vegas homeowners should be heartened that by this development and if interested in a short sale, should contact an experienced REALTOR for an assessment of the situation and potential for deficiency release based on who holds their mortgage note. Your agent should have a minimum of of at least 25 closings to their credit. Every short sale is unique and therefore you need a wide variety of short sale experience to contend the vast number of roadblocks that may prevent a successful closing.

Sellers who may be considering a short sale in Nevada may call 702-376-0088.

As soon as a property is listed in public record as being in default, the vultures begin to circle the dying carcass. Vultures, meaning the not so legitimate companies that prey upon these unfortunate people in difficult circumstances, and are opportunists of the worst kind.

Unlike the honorable investor in distressed properties, who truly attempts to put together a win-win situation for everyone, the scam artists, posing as lawful business people, use scare tactics and confusing language to pressure the panicked  homeowner into making hurried and thoughtless decisions, decisions that will result in the immediate loss of their home, and the scam artists acquiring the property at a below bargain-basement price.

Many homeowners facing the loss of their property are vulnerable to any suggestions that might help their situation, and are too distressed and anxious to check out the credentials of these crooks, whose tactics are designed to keep the homeowner confused, worried, and pressured to sell quickly.

The scam artist depends upon the harried homeowner’s state of mind preventing logical thought. He/she knows that if a homeowner was able to think rationally, he/she would be checking with the state government attorney’s office and the Better Business Bureau, for any complaints lodged against these firms, before concluding any business with them.

There are countless scams out there, with one purpose in mind, to steal the home out from under the home owner and resell for a fat profit. It is not within the scope of this article to detail all the many ways these thieves operate, but just as an alert to the Las Vegas Homeowner who is suffering financial difficulties and a possible loss of their home and is looking for a solution.

Above all don’t panic. Logical thought will enable you to find the answers. Definitely avoid all the come-on ads in the newspapers and online that offer themselves as mortgage consultants, “save your home specialists,” or using the words “debt elimination,” and the like.

Contact your lender as soon as you see a problem in meeting your mortgage obligations, and see if you can work with them to resolve the dilemma you are in. Remember, lenders don’t really want to be in the real estate business. Foreclosing and selling properties in default are practically always a losing proposition for them. Foreclosures are “loans gone bad,” as far as the lender is concerned.

In fact, many lenders complain that homeowners often call too late to be helped, and that there are cases in which a person suffered a home loss that might have been avoided had they contacted the lender sooner.

If it is feasible to do so, hire an attorney who specializes in real estate laws and regulations, and can evaluate your situation, and perhaps find some logical solutions to your problem.

If you decide you want to sell your Las Vegas Home and you owe more than the home is worth, feel free to give us a call to discuss doing a short sale.  We can be reached at 702.376.0088.