is short sale my best route? - Loan Modification Forum

thiskid · 10-08-2009, 05:26 PM

Hi guys, I'm new to the forum. I have a unique situation (or maybe not so unique) that I could use some advise on.

I got a huge promotion oportunity in early 2006 and subsequently bought my first house in July 2007 (oops). Knowing that this position would likely not last more than 5 or 10 years due to technology advances (Film industry.. were going digital) I went with a 5 year fixed on my first and it will reset in 2012. I also have a HELOC for my second. Both were %100 finaning -- no money down. My plan was to have sold by the time the first reset. I bought in Los Angeles area and have since seen a decline of over $200k in value. I originaly wanted to attempt a loan mod and ride out the storm but it looks like I will either be laid off due to outsourcing or just becoming obsolete before I would see any equity.
How do I convince the bank of this potential disaster if I can't realy quantify it to them. I mean, I can give them some stats or whatever, but I dont think that I have a way of comunicating the gravity of the situation to them -- at least in terms the could understand. I am currently on time with all of my payments although I have absolutely no savings left whatsoever, I have a one-off kind of job that I created for myself here that will go 'poof' at some point soon, and I have no formal education to fall back on for an emergncy career change. Basicaly, even under modified terms, there's no way I'd be able to pay either the first or the second if I lost my job. I am currently month to month with my paychecks as it is and all it will take is a major car repair or a medical bill or something to drop me in the negative. With the loss of most of my overtime pay my mortgage payments alone are about %70-80 of my income. How should I approach this situation? I'm thinking a short sale. I feel stupid for getting myself in this situation in the first place but I listened to everyone say that realestate is the best investment... now look. Will they even talk to me or will they tell me to go pack sand?

Any advice would be much apreciated.

respectfuly,

Evan Bedard · 10-08-2009, 06:09 PM

Hi thiskid welcome and thank you for joining.

Quote:

With the loss of most of my overtime pay my mortgage payments alone are about %70-80 of my income. How should I approach this situation? I'm thinking a short sale. I feel stupid for getting myself in this situation in the first place but I listened to everyone say that realestate is the best investment... now look. Will they even talk to me or will they tell me to go pack sand?

Yes I believe you lender would also much rather prefer going through a short sale than a foreclosure. You may want to consult with a local attorney or real estate agent that specializes in mortgage workouts.

Good luck and keep us posted!

thiskid · 10-08-2009, 06:17 PM

Will do! Thank you again. This site will be a blessing for me I can tell right now.

Evan Bedard · 10-08-2009, 06:25 PM

You are very welcome!

We are all here to help in any way we can

scottp999 · 10-09-2009, 08:06 AM

There is no downside to attempting a short sale while everything else is going on around you. There are key differences in how a shorsale is handled, based on state (CA is a good state to be in for their anti deficiency laws on primary residences), Investor/Owner of the note, and Mortgage Insurance Company.

Who is the mortgage company? You would get the ball rolling by calling them and asking for a letter telling you what is needed for the shortsale package and letting them know you are in "imminent danger" of default due to your current cash flow and the high probability of loosing your job.

Another thing to try to find out when you call is if Fannie or Freddie are the owners/investors on the mortgage. Why? They have policies on how servicers conduct the short sale process. Also look at your settlement statement(s) (HUD1) and see if there is a Mortgage Insurance case number or any information on who the mortgage insurance company might be. The MI companies also have known policies on short sale processes and decisions/delegations to the mortgage servicers. For instance ,MGIC and Radian, two of the largest, have their policy and proceedures online for anyone to view.

I don't think it matters how far down your property has dropped, it matters how much the offer is compared to the current market value, and the appraised value at the time the bank is evaluating the short sale.

There is tons of information here about the promissory notes many of the MI companies are requireing to approve the short sale and how to negotiate those. You have some good leverage just being in CA.

You should definitley get input from "faith" who successfully went through the process in CA.

thiskid · 10-09-2009, 08:52 AM

Wells Fargo has the first and services the second. Neither Freddy nor Fanny has either -- I checked with my broker a few months ago when I was looking at a mod.
This is awesome info and a good plac efor me to start. Thank you.

faith · 10-09-2009, 08:56 AM

Quote:

Originally Posted by thiskid

Hi guys, I'm new to the forum. I have a unique situation (or maybe not so unique) that I could use some advise on.

I got a huge promotion oportunity in early 2006 and subsequently bought my first house in July 2007 (oops). Knowing that this position would likely not last more than 5 or 10 years due to technology advances (Film industry.. were going digital) I went with a 5 year fixed on my first and it will reset in 2012. I also have a HELOC for my second. Both were %100 finaning -- no money down. My plan was to have sold by the time the first reset. I bought in Los Angeles area and have since seen a decline of over $200k in value. I originaly wanted to attempt a loan mod and ride out the storm but it looks like I will either be laid off due to outsourcing or just becoming obsolete before I would see any equity.
How do I convince the bank of this potential disaster if I can't realy quantify it to them. I mean, I can give them some stats or whatever, but I dont think that I have a way of comunicating the gravity of the situation to them -- at least in terms the could understand. I am currently on time with all of my payments although I have absolutely no savings left whatsoever, I have a one-off kind of job that I created for myself here that will go 'poof' at some point soon, and I have no formal education to fall back on for an emergncy career change. Basicaly, even under modified terms, there's no way I'd be able to pay either the first or the second if I lost my job. I am currently month to month with my paychecks as it is and all it will take is a major car repair or a medical bill or something to drop me in the negative. With the loss of most of my overtime pay my mortgage payments alone are about %70-80 of my income. How should I approach this situation? I'm thinking a short sale. I feel stupid for getting myself in this situation in the first place but I listened to everyone say that realestate is the best investment... now look. Will they even talk to me or will they tell me to go pack sand?

Any advice would be much apreciated.

respectfuly,

Hello there,
Hope all is well with you.

I think it's best to do Short Sale but make sure you hire a real estate agent that has experienced doing Short Sale. I'll start checking BBB to get the ratings of an agent,my agent works for Century 21 and he is good, honest and have ratings of AAA. If you call an agent ask if he has experienced doing Short Sale and don't do an exclusive contract, that way if you change your mind you can always cancel with no penalty.

Here's my tip about Short Sale based on having a Successful Short Sale Seller thanks to the tips and informations that Moe has provided in this forum.
1. Hire a good honest and reputable Real Estate Agent
2. Make sure you price your home right to attract a buyer, because without a buyer your lender will not approve your Short Sale. check www.zillow.com about the fair market value of your home and check the recent sold homes, your lender will approve a Short Sale if the offer is within 85% to 90% of the fair market value or the recent sold homes whichever is greater.
3. You have to give your letter an authorization letter stating you are authorizing your agent to talk to your lender and financial hardship letter explaining why you can no longer afford to make the payments.
4. Your agent will submit the Short Sale package which includes the letter of authorization, financial hardship letter, HUD 1 form, listing price and the contract.
5. Buyer's offer. Make sure your agent ask your lender to prequalify the buyer first so you will know if they will approve her or not.
6. Once the Agent submits the Short Sale package to the lender they will assign a Negotiator, the Negotiator will call your agent. Some lenders only talk to the agent, but my lender CW allowed me to talk to my Negotiator.
7. The Negotiator will request a BPO(Broker's Price Opinion) to appraise the value of the house.
8. Constant communication and cooperation with your. agent is very important in doing Short Sale.
9. Get your Negotiator's email address, the CEO's and the executive team's email address you need it to follow up on your request.
10. Be patient, bold, persistence and prepare your heart because Short Sale is a long frustrating and draining process.
11. Last but not the least, always call, email your lender's Negotiator and their executive to speed up the process. Moe always said, the squeaky wheel gets the grease. Wish you the best.

Please read the link below regarding Short Sale.
Short Sale Outpost - Loan Modification Forum - LoanSafe.org

God bless and take care.

thiskid · 10-09-2009, 09:41 AM

Thank you Faith.

I contacted my realator yesterday. He's very very reputable and has decades of experience in realestate and knows shortsales, so I feel pretty safe going with him. I used him when I bought the place so I know that he has his stuff together. He's waiting on me at this point which is nice to know.

Thanks again. I'll keep you guys updated as I go.

bevmeade · 10-13-2009, 02:03 PM

Is short sale your best route? I think it's your only route.

First thing, do not rely on www.zillow.com to evaluate properties. There's a glitch in their evaluation systems whereby the foreclosure sales back to the bank show up as a sale for comparable analysis...and that throws the figures off high. This might be a little technical...suffice it to say zillow works if the neighborhood hasn't had very many foreclosures but does not if they have.

Consult with a realtor or two or three and get a feel for pricing based on comparables also in a short sale position (or lender owned already). The condition of your house compared to others is really important also. As always, show your home in it's best possible condition.

Make sure that it is in the condition to sell with an FHA mortgage - meaning the furnace works, the roof is good, paint is not peeling anywhere, gutters are in working order (if that's normal in your area), and there are no issues that will cause an FHA appraisar to stop or hinder your sale.

Contact your lender and tell them about your situation. They'll send you a package of information that they need to have filled out completely, entirely, honestly, not too plaintively, very matter of factly - and give them EVERYTHING they ask for. Keep a complete copy of everything, preferably electronic, because they'll lose it several times...

Put your house on the market with a reputable agent. I use a title company to help me get these negotiations done. It's been a good investment at $100 per deal.

Make sure your agent fills out all the necessary disclosures regarding short sales and foreclosures required in your state. Make sure the agent discloses everything that's wrong with your home upfront - and clearly indicates it is a short sale and in as-is condition (assuming that's legal in your state/city).

When you get a contract, your agent will have to complete an estimated HUD (special form that the government uses to say what fees are going to be in a real estate transaction) for the lender to evaluate. Make sure you look at the HUD as best you can, based on the contract you are submitting. Have your agent look at it. Have the buyer's agent look at it. Have it reviewed by the escrow/title company. This is what any approval will be based off of.

If repairs need to be made on the house, include estimates for those repairs with your contract submission.

The bank will take this pile of information and order a couple of BPO's (broker price opinions). This is the bank's cheap way of getting appraisals from realtors who work cheaper than real appraisers do. The realtors should be supplied with information including what repairs need to be done. They send back price opinions based on comparables just like the ones you made pricing decisions on.

If your reason for hardship; the BPO price opinions; and the sales contract all seem reasonable, it will take a couple of months for you to get an agreement with the bank. This agreement will disclose how the bank is going to handle the indebtedness created by the short sale.

STAY IN CONTACT WITH YOUR LENDER as best you can. Hold tight and communicate with your realtor as needed.

Hope this helps you.

Beverly Meade
Meade & Co. Real Estate
www.bevmeade.com

thiskid · 10-13-2009, 07:25 PM

Thank you Beverly. This is alot of good info for me to get started with. I see where I need to go with all of this.

Y'all are too kind.

Thanks again.

10-08-2009, 05:26 PM	#1 (permalink)
thiskid Member Join Date: Oct 2009 Posts: 5 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	is short sale my best route? Hi guys, I'm new to the forum. I have a unique situation (or maybe not so unique) that I could use some advise on. I got a huge promotion oportunity in early 2006 and subsequently bought my first house in July 2007 (oops). Knowing that this position would likely not last more than 5 or 10 years due to technology advances (Film industry.. were going digital) I went with a 5 year fixed on my first and it will reset in 2012. I also have a HELOC for my second. Both were %100 finaning -- no money down. My plan was to have sold by the time the first reset. I bought in Los Angeles area and have since seen a decline of over $200k in value. I originaly wanted to attempt a loan mod and ride out the storm but it looks like I will either be laid off due to outsourcing or just becoming obsolete before I would see any equity. How do I convince the bank of this potential disaster if I can't realy quantify it to them. I mean, I can give them some stats or whatever, but I dont think that I have a way of comunicating the gravity of the situation to them -- at least in terms the could understand. I am currently on time with all of my payments although I have absolutely no savings left whatsoever, I have a one-off kind of job that I created for myself here that will go 'poof' at some point soon, and I have no formal education to fall back on for an emergncy career change. Basicaly, even under modified terms, there's no way I'd be able to pay either the first or the second if I lost my job. I am currently month to month with my paychecks as it is and all it will take is a major car repair or a medical bill or something to drop me in the negative. With the loss of most of my overtime pay my mortgage payments alone are about %70-80 of my income. How should I approach this situation? I'm thinking a short sale. I feel stupid for getting myself in this situation in the first place but I listened to everyone say that realestate is the best investment... now look. Will they even talk to me or will they tell me to go pack sand? Any advice would be much apreciated. respectfuly,

10-08-2009, 06:17 PM	#3 (permalink)
thiskid Member Join Date: Oct 2009 Posts: 5 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: is short sale my best route? Will do! Thank you again. This site will be a blessing for me I can tell right now.

10-08-2009, 06:25 PM	#4 (permalink)
Evan Bedard LoanSafe.org Homeowner Guide Join Date: Aug 2007 Location: Southern California Posts: 2,212 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: is short sale my best route? You are very welcome! We are all here to help in any way we can __________________ Keep Fighting! Evan Bedard LoanSafe.org Support Team Please donate via paypal to LoanSafe.org to help keep this forum going The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

10-09-2009, 08:06 AM	#5 (permalink)
scottp999 Senior Member Join Date: Sep 2009 Posts: 40 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: is short sale my best route? There is no downside to attempting a short sale while everything else is going on around you. There are key differences in how a shorsale is handled, based on state (CA is a good state to be in for their anti deficiency laws on primary residences), Investor/Owner of the note, and Mortgage Insurance Company. Who is the mortgage company? You would get the ball rolling by calling them and asking for a letter telling you what is needed for the shortsale package and letting them know you are in "imminent danger" of default due to your current cash flow and the high probability of loosing your job. Another thing to try to find out when you call is if Fannie or Freddie are the owners/investors on the mortgage. Why? They have policies on how servicers conduct the short sale process. Also look at your settlement statement(s) (HUD1) and see if there is a Mortgage Insurance case number or any information on who the mortgage insurance company might be. The MI companies also have known policies on short sale processes and decisions/delegations to the mortgage servicers. For instance ,MGIC and Radian, two of the largest, have their policy and proceedures online for anyone to view. I don't think it matters how far down your property has dropped, it matters how much the offer is compared to the current market value, and the appraised value at the time the bank is evaluating the short sale. There is tons of information here about the promissory notes many of the MI companies are requireing to approve the short sale and how to negotiate those. You have some good leverage just being in CA. You should definitley get input from "faith" who successfully went through the process in CA.

10-09-2009, 08:52 AM	#6 (permalink)
thiskid Member Join Date: Oct 2009 Posts: 5 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: is short sale my best route? Wells Fargo has the first and services the second. Neither Freddy nor Fanny has either -- I checked with my broker a few months ago when I was looking at a mod. This is awesome info and a good plac efor me to start. Thank you.

10-09-2009, 09:41 AM	#8 (permalink)
thiskid Member Join Date: Oct 2009 Posts: 5 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: is short sale my best route? Thank you Faith. I contacted my realator yesterday. He's very very reputable and has decades of experience in realestate and knows shortsales, so I feel pretty safe going with him. I used him when I bought the place so I know that he has his stuff together. He's waiting on me at this point which is nice to know. Thanks again. I'll keep you guys updated as I go.

10-13-2009, 02:03 PM	#9 (permalink)
bevmeade Junior Member Join Date: Oct 2009 Posts: 1 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: is short sale my best route? Is short sale your best route? I think it's your only route. First thing, do not rely on www.zillow.com to evaluate properties. There's a glitch in their evaluation systems whereby the foreclosure sales back to the bank show up as a sale for comparable analysis...and that throws the figures off high. This might be a little technical...suffice it to say zillow works if the neighborhood hasn't had very many foreclosures but does not if they have. Consult with a realtor or two or three and get a feel for pricing based on comparables also in a short sale position (or lender owned already). The condition of your house compared to others is really important also. As always, show your home in it's best possible condition. Make sure that it is in the condition to sell with an FHA mortgage - meaning the furnace works, the roof is good, paint is not peeling anywhere, gutters are in working order (if that's normal in your area), and there are no issues that will cause an FHA appraisar to stop or hinder your sale. Contact your lender and tell them about your situation. They'll send you a package of information that they need to have filled out completely, entirely, honestly, not too plaintively, very matter of factly - and give them EVERYTHING they ask for. Keep a complete copy of everything, preferably electronic, because they'll lose it several times... Put your house on the market with a reputable agent. I use a title company to help me get these negotiations done. It's been a good investment at $100 per deal. Make sure your agent fills out all the necessary disclosures regarding short sales and foreclosures required in your state. Make sure the agent discloses everything that's wrong with your home upfront - and clearly indicates it is a short sale and in as-is condition (assuming that's legal in your state/city). When you get a contract, your agent will have to complete an estimated HUD (special form that the government uses to say what fees are going to be in a real estate transaction) for the lender to evaluate. Make sure you look at the HUD as best you can, based on the contract you are submitting. Have your agent look at it. Have the buyer's agent look at it. Have it reviewed by the escrow/title company. This is what any approval will be based off of. If repairs need to be made on the house, include estimates for those repairs with your contract submission. The bank will take this pile of information and order a couple of BPO's (broker price opinions). This is the bank's cheap way of getting appraisals from realtors who work cheaper than real appraisers do. The realtors should be supplied with information including what repairs need to be done. They send back price opinions based on comparables just like the ones you made pricing decisions on. If your reason for hardship; the BPO price opinions; and the sales contract all seem reasonable, it will take a couple of months for you to get an agreement with the bank. This agreement will disclose how the bank is going to handle the indebtedness created by the short sale. STAY IN CONTACT WITH YOUR LENDER as best you can. Hold tight and communicate with your realtor as needed. Hope this helps you. Beverly Meade Meade & Co. Real Estate www.bevmeade.com

10-13-2009, 07:25 PM	#10 (permalink)
thiskid Member Join Date: Oct 2009 Posts: 5 Nominated 0 Times in 0 Posts TOTW/F/M Award(s): 0	Re: is short sale my best route? Thank you Beverly. This is alot of good info for me to get started with. I see where I need to go with all of this. Y'all are too kind. Thanks again.

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