How far in default is TOO FAR in order to take a HUD-insured short sale.

If you’re going to list a HUD backed short sale then this video is for you.

Do not take a short sale that is over 36 to 40 months past due. They’re just going to reject that as a short sale. Unless you have extenuating circumstances. They have unwritten guidelines at HUD. Take it from me. Someone who has had a short sale fails in that situation. And we don’t have many fails. You are not going to get your HUD backed short sale approved if the homeowner is in default over 36 to 40 months.

We did get approved that was over 60 months past due. Because this gentleman had extenuating circumstances. He was an active military. He was able to provide his orders for over five years that he was unable to pay. So, we were able to get that approved. But in most situations, you’re not going to have that.

For Realtors, Attorneys, Title companies, etc interested in our services please go to http://massachusettslossmitigation.com/

For homeowners needing assistance with avoiding foreclosure please go to http://shortsalemitigation.net/

500 West Cummings Park #2400
Woburn MA 01810
978-384-0032

Broker Nick Aalerud & Maryann Little Short Sale Mitigation, LLC AA Premier Properties, LLC Serving Massachusetts and New Hampshire Homeowners with short sale negotiation.

The DEED vs. The NOTE in a short sale.

This video is for real estate agents who are taking a short sale listing. This is about the difference between the DEED and the NOTE.

I have a lot of clients who come in and they are in a divorce situation. One spouse is saying that the other spouse DEEDED the property over. This is very common in a divorce situation. Unfortunately, this doesn’t necessarily mean for a short sale that the spouse who DEEDED the property over is no longer liable. Meaning, they may have to participate in a short sale even though they don’t own the property. This is because they signed the note originally.

The homeowner can possibly get away with not having a spouse to participate in a short sale if they have a divorce decree that stipulates the spouse has to do this. There are ways to get around it, but not always. You need to know that it is a potential situation where you may have to have an ex-spouse to participate in a short sale even though they no longer owned the property.

This is important for you. When you are resetting up your listing or you’re doing your intake with your homeowner and they say they have an ex-spouse but they no longer own the home. So, you may need to check on a mortgage statement if the spouses’ name appears. If the spouses’ name appears on mortgage statement chances are they may have to participate in a short sale. However, a divorce decree stating otherwise may help you.

For Realtors, Attorneys, Title companies, etc interested in our services please go to http://massachusettslossmitigation.com/

For homeowners needing assistance with avoiding foreclosure please go to http://shortsalemitigation.net/

500 West Cummings Park #2400
Woburn MA 01810
978-384-0032

We negotiate short sales in Massachusetts and New Hampshire with many lenders such as, GMAC, Bank of America, AHMSI, Seterus, Wells Fargo, ASC, Chase, Select Portfolio, HSBC and many more.

Should You Stop Paying Your Mortgage to do a Short Sale?

The number one question I get asked by every homeowner that calls in and inquiring about a short sale is “Should I stop paying my mortgage?” 

I’m not going to answer it. I cannot answer whether or not you should stop paying your mortgage. This is a question I refer to the attorney who will work on your case that could answer that. But the question I ask in return to the homeowner is, “Are you going to see this money back when you closed your short sale?

I’m going to give you an example. On a traditional home, I have equity on my personal property. If I go to sell my property and let’s say, I sell my property for $300,000 and I only owe $100,000. So, there’s $200,000 equity. Let’s say, I make my mortgage payment of $2,000. If I put $2,000 down that’s going to reduce my principal payment. I’m going to see that money back at closing. That is if you have traditional equity in your property.

So, what are short sales? A short sale is negative-equity properties. If you pay your mortgage on a short sale, are you going to see that money back when you go to closing? 99.99% of you will answer, NO. You will not see that money back.

So, if you’re a homeowner and you say to me, “Should I continue to pay my mortgage?” My answer is, “I can’t answer that question but will you see that money back?

For Realtors, Attorneys, Title companies, etc interested in our services please go to http://massachusettslossmitigation.com/

For homeowners needing assistance with avoiding foreclosure please go to http://shortsalemitigation.net/

500 West Cummings Park #2400
Woburn MA 01810
978-384-0032

Should you hire someone to do your loan modification?

Should you hire someone to do your loan modification?

I probably get this question asked three or four times a week. I’m not in the loan modification business. We have a loan modification attorney partner which I love because they’re excellent.

But here’s the thing, the one thing that I’m going to advise every homeowner when they do a loan modification and if they’re going to pay someone or if you’re going to attempt to do your own loan modifications you need to be organized!!! You need to have a journal, or a notebook, and you need to sit down and you write in it EVERY TIME you make contact with your lender.  Record who you spoke with and what they said, because the changeover at the servicers is amazing. They will say they didn’t receive it or they’re going to lose your paper work. Your servicer/lender will ask 2, 3, 4, or 5 times for your bank statements, pay stubs and other paperwork. You’re going to be in what I call the endless circle of paperwork.

Should you hire someone to do your loan modification? I’m really not going to answer that, but what I am going to say is if you feel you need assistance to get that loan modification through. Yes. Hire an attorney. Here’s my other caveat to that, our partner firm is an attorney firm. I know they work their %#@ off to get the loan modification through for a client.  Do not hire an attorney firm outside the state you’re living. If you live in Massachusetts, hire a firm in Massachusetts, or lawyer in Massachusetts that will help you with the loan modification paperwork. Do not hire a firm in California, or do not hire a firm in Florida, if you live in Massachusetts, hire a firm in Massachusetts. If you live in Virginia, hire a firm in Virginia, hire a lawyer in Virginia. Do not hire outside attorneys to help you with a modification. Hire somebody that you can talk to that’s in your state, that’s my suggestion. Again, I’m not a lawyer. What I say on this subject really doesn’t matter in the eyes of law, but this is a true story.  I had a woman call me last week who gave $3000 to a company that only gave her a receipt to help her with her modification.  No contract, no phone number nothing, and they vanished.  In Massachusetts, you MUST be an attorney to take up front money for a loan modification.

That’s my advice, especially as we’ve done short sales for almost 10 years. You have to remember that 90% of my clients have failed a loan modification when they’ve done it themselves. I listened to these people and what they’ve gone through. When a call comes into me and they’re just in the beginning stages of default and they want to keep their property, I’m going to refer them over to my partner law firm because I know they do their work. I know our partner firm will get them through that modification in the most efficient time possible.

None of us have a magic wand,  and none of us can get a modification approved every time.  Just like none of us can guarantee short sale approval. No one can control what a 3rd party lender will do but if you work with good people the chances of getting approved are ten times better.

For Realtors, Attorneys, Title companies, etc interested in our services please go to http://massachusettslossmitigation.com/

For homeowners needing assistance with avoiding foreclosure please go to http://shortsalemitigation.net/

500 West Cummings Park #2400
Woburn MA 01810
978-384-0032

 

What are the fundamentals of a short sale?

What are the fundamentals of a short sale?

This is my 1 minute video overview of what is a short sale! You can do short sales in any state in the country.  We usually work in Massachusetts but the set-up is the same for any state in a country.

So, you have a homeowner and they want to list with you. They owe more than the property is worth. You have to determine if there is a hardship, and if there is a hardship, DO they don’t have the ability to repay the loan? If they have the ability to repay the loan then it’s not a short sale.

The next step is to put it on the market and get a buyer. The buyer should be coming in and offering market value or close to it.  Next, you will send a packet containing information the lender requires off to them.  Once the lender reviews it, they send out a BPO/ or valuation agent to the property, and if the buyer’s offer is in line with what the valuation agent’s value the property at the lender is most likely going to approve your short sale then your good to go!  One MINUTE SHORT SALE!  Ahhh….if only right?!?!

https://www.youtube.com/watch?v=0mXBQjMgX1w

For Realtors, Attorneys, Title companies, etc interested in our services please go to http://massachusettslossmitigation.com/

For homeowners needing assistance with avoiding foreclosure please go to http://shortsalemitigation.net/

500 West Cummings Park #2400
Woburn MA 01810
978-384-0032

What is a deficiency release in a short sale?

What is a deficiency release in a short sale?

Deficiency is what’s leftover on the note.   For example, let’s say you owe $300,000 on your loan and your Real Estate Agent received an offer for $275,000.  If the $275,000 is what the lender NETS when the sale closes then there is $25,000 in deficiency left.  New Hampshire and Massachusetts are recourse states meaning legally they collect the balance of your loan.  This means your lender can legally try to collect the $25,000 after closing. We always try to get an approval letter that releases the deficiency, meaning the lender releases that $25,000 after closing.  They agree not to pursue the homeowner post-closing.  This is never a guarantee, but in most cases will happen.  Don’t go into any short sale guaranteeing you can get the deficiency released.  You may end up with your foot in your mouth.

If you have a loan owned by Freddie Mac and or Fannie Mae’s they actually require any second mortgages to release any deficiency on the loan if they take money out of the proceeds of the sale.  So, for instance, both entities give $6,000 to a junior MORTGAGE lien holder.   If you, the homeowner, owe $20,000 to a home equity line, Freddie and or Fannie will offer 6K to release it FULLY.   So at closing $6,000 will be issued to the equity line to be paid off.  If the equity line agrees to accept the 6K out of proceeds they MUST release the remaining $14,000, in full per the Freddie and Fannie guidelines.  They cannot come after the homeowner for the remainder after closing.

For Realtors, Attorneys, Title companies, etc interested in our services please go to http://massachusettslossmitigation.com/

For homeowners needing assistance with avoiding foreclosure please go to http://shortsalemitigation.net/

500 West Cummings Park #2400
Woburn MA 01810
978-384-0032

Most common short sales in Massachusetts

Most common short sales in Massachusetts

The four most popular types of programs that you may run into when negotiating a short sale are Freddie Mac/ Fannie Mae, HUD/FHA Pre-foreclosure sales and of course your Non-GSE loan.  I’m not going to spend spend a lot of time on Non-Government Sponsored Enterprise loans. Realistically you have to call the servicer to find out if they have any requirements you need to adhere to when setting up your listing.

 Freddie Mac, Fannie Mae, and HUDS PFS program have a nice perk in that they will offer your seller $3,000 in moving expenses if they qualify. They need to be still living in the home and you start negotiating your short sale and for HUD not have any other secondary liens attached to title, otherwise HUD will take money from the 3K to payoff additional debt.

If you think about a short sale, what is happening?  The bank is getting shorted. Let’s say there is a $300,000 mortgage a homeowner may owe.  A buyer comes in to offer $275,000 on the property.  You have to account for your fees like commissions, traditional settlement cost, transfer taxes, so what the servicer has leftover maybe $265,000 or $250,000. The lender is taking a big short on the loan, and that’s where a short sale gets its name.  You have to consider the bank taking a loss.  Many times that is why sellers cannot receive funds at closing.  They possibly haven’t paid their mortgage in some time. 

This is the great thing about the Freddie Mac / Fannie Mae / and HUD’s PFS program.  They will give a homeowner what’s called a borrower relocation or moving incentive at closing.

For Realtors, Attorneys, Title companies, etc interested in our services please go to http://massachusettslossmitigation.com/

For homeowners needing assistance with avoiding foreclosure please go to http://shortsalemitigation.net/

500 West Cummings Park #2400
Woburn MA 01810
978-384-0032

Why pulling Title upfront is important for your short sale in Massachusetts?

Why pulling Title upfront is important for your short sale in Massachusetts?

Title work is important! If you start a short sale and you have not officially checked the title your sale could end at approval time.  Let’s say you move all the way through the approval process, only to find out there’s an undischarged mortgage on the title, an Execution, Judgment, mechanics lien, second mortgage, Department of Revenue lien,  IRS lien, or some other lien, this could prevent you from closing.  That work you just did to get approval is now gone, because you don’t have clear title.

These liens whether secondary liens or primary liens, if undischarged, can derail your short sale.

So, it’s very important that you pull the title UP FRONT for your short sales. If you don’t have a great title company, I can recommend one for you, but it’s really important to pull title UP FRONT every time you start a short sale. This way there are no surprises throughout the process. 

Are you aware Freddie Mac and Fannie Mae don’t allow PERSONAL DEBT to be negotiated out of proceeds of the sale?  How will you extinguish that lien?  How does that execution come off title if you can’t receive money from proceeds?  This is why it’s VERY IMPORTANT to do your research UP FRONT so you know how to set your short sale up for success from the beginning.  You may have to disclose to the buyer they may be responsible for certain fees you can’t get covered out of the proceeds.  Many times MLC pulled at closing, doesn’t get paid out of proceeds.  Who will pay an $800 water/sewer bill?

It’s important to know that information UP FRONT rather than when you already have approval in hand.

For Realtors, Attorneys, Title companies, etc interested in our services please go to http://massachusettslossmitigation.com/

For homeowners needing assistance with avoiding foreclosure please go to http://shortsalemitigation.net/

500 West Cummings Park #2400
Woburn MA 01810
978-384-0032

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