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6 must-haves for your short sale package.

In order to have a successful short sale, the following items must be assembled asap upon deciding to list your home as a short sale.

1. Recent mortgage statements for all loans.
2. Copies of your most recent tax returns (last two years ) with W-2’s and 1099’s.
3. Copies of your last two pay check stubs (husband & wife).
4. Copies of your most recent bank account statements.
5. A letter, written in your own words, outlining the facts associated with the hardship that caused your financial distress (hardship letter).  
6. Completed financial disclosure, a form usually provided by the lender. Include copies of credit card statements, financial obligations, divorce decrees, physician letters, or anything else that shows you are having difficulty making payments.

Once an offer is received, your Realtor® will submit these items to your lender(s), along with the other documentation necessary for a succesful short sale!

For more information, feel free to contact me.

Is your Loan Modification Company legitimate?

5 Tips to Avoid Being Scammed - from the Office of the Attorney General of California (visit site)

I found these tips o the Office of the Attorney General’s website and thought they might be valuable to readers who are considering or are in the midst of loan modification. The website provides the capability to search for trustworthy resources.

1. Don’t pay up-front fees. Foreclosure consultants are prohibited by law from collecting money before services are performed.
2. Don’t ignore letters from your lender or loan servicer. Responding to those letters is your best bet for saving your house.
3. Don’t transfer title or sell your house to a “foreclosure rescuer.” Beware! This is a scam to convince homeowners they can stay in the home as renters and buy their home back later. It might also be part of a fraudulent bankruptcy filing. Either way, a scammer can then evict the victim and take the home.
4. Don’t pay your mortgage payments to anyone other than your lender or loan servicer. Mortgage consultants often keep the money for themselves.
5. Never sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them.

For further information visit the site. There you can enter the name of your Loan Modification company to see if they are a registered foreclosure consultant. Also, you can search for HUD-approved agencies here. If you have questions, feel free to contact me.

4 Elements of a Good Hardship Letter

A good hardship letter is key to a successful short sale.

Your hardship should be stated clearly in a cover letter to the bank. Keep it to one page, typed, and signed by you. Be sure to include these important elements:

1. An apology - Tell them you are sorry to be having to ask them to discount the amount owed.
2. Your story - What has happened that has caused you to not be able to make your payments? Be truthful and heartfelt.
3. A statement - Tell the lender that you have exhausted all of your options, and that you are unable to stay current on your mortgage.
4. Important: Make sure to attach any documents, receipts or notices that support the hardship, such as:

• Layoff notice, or proof of reduction in salary
• Health insurance cancellation
• Auto loan repossession warning
• Divorce decree or separation papers
• Letter from your physician
• Disability notice

Your Realtor® will include this letter with the other necessary documents in your short sale packet and submit it to the bank on your behalf.

If you need help writing your hardship letter, or would like to see an example, feel free to contact me.

The Three M’s of Short Sale Hardship

Will you qualify for a short sale? What is your hardship?

When considering the possibility of a short sale, it is important to know what your hardship is, and be able to communicate it clearly, along with supporting documentation, to the bank.

Here are the Three M’s of Hardship:

1. Medical. Something has happened with regard to your health, or to the health of one of your family members, which has caused you to lose income, or to deplete savings.
2. Marital. You are having marital problems, either separation or divorce, which has caused a decrease in income to the household, and the desire to sell the home.
3. Money. You have either lost your job or have had a decrease in salary which has impacted your ability to pay your mortgage.

Any one of these situations, when documented, will help to support your case with the lender.

For more information, contact me and I’d be happy to help.

What is a short sale? – Avoid Foreclosure

Are you considering a short sale? Here are some basics to get you started.

What is a short sale?

• When a homeowner owes more on their mortgage than their home can sell for in the current market (a.k.a, upside-down), the homeowner can try to avoid foreclosure by negotiating with the lender to accept a “short” payoff.

Are you a candidate for a short sale? Ask yourself this question:

• Do you have a true hardship that is keeping you from making your payments?
• Think job loss, job transfer, illness, or other challenge. Discuss your particular situation with your lender. Loss in value due to market condition does not qualify as hardship.

What do you need to do to prepare for a short sale?

• First, find a Realtor® who is experienced with the short sale process, who knows how to negotiate with banks, and will be your partner to get the transaction closed.
• With the help of your Realtor®, compile your hardship letter and other necessary documentation which comprises the Short Sale Packet.

What goes in your hardship letter?

• In your own words (and in your own handwriting is best), describe the circumstances that have caused you to be unable to make your monthly mortgage payments.
• Be personal and sincere about your situation, and include as much detail as possible. We want them to want to help you.

What goes into the necessary Short Sale documentation packet?

• Proof of income & assets, including:
  • Bank Statements
  • Pay Stubs
  • Assets (investment accounts, stocks, CDs, other properties)
• Proof of hardship, which might include:
  • Bills
  • Unemployment Records
  • Death certificates
  • Divorce papers
• Preliminary net sheet, prepared by your Realtor®, reflecting the price you hope to get, less the cost of the sale. Include a comparative market analysis, prepared by your Realtor®.

Prepare your home for sale

• With the help of your Realtor®, price your house to generate an offer.
• Prepare your home for sale.
• If you do not get showings and/or an offer in the first 2-3 weeks, lower the price.
• Keep lowering the price until you receive an offer.

Submit offer to the bank along with the short sale package

• Your experienced Short Sale Realtor® will take it from here
  • They will submit the package to the bank
  • They will follow up to make sure it has been received
  • They will be assigned an asset manager with whom they will communicate throughout the short sale negotiation
  • If all goes well, the lender will approve the short payoff, and your Realtor will follow the transaction through to a successful close

For more information, contact short sale specialist Noel Crider.

9 Alternatives to Foreclosure – Things to think about before you “Just Walk Away.”

Before you decide to “Just Walk Away,” here are some alternatives that you might not have considered that could reduce the negative impact to your credit score, and allow you to get back in the housing market sooner.

1. Loan modification – The lender and the homeowner agree to change one or more of the original terms of the note in order to make payments more affordable. (Be careful when hiring a loan modification company!) Common loan modifications include:

• Adding missed payments on top of the existing loan balance
• Turning an adjustable-rate mortgage into a fixed-rate mortgage
• Extending the number of years the homeowner has to repay the loan

2. Forbearance – This allows the homeowner to pay less than the full amount of their mortgage payment temporarily for a prescribed period of time. Forbearance might be considered if the homeowner can show there is some source of future income that will bring the mortgage payments current.

3. Reinstatement – The homeowner brings current the amount they are behind, usually by an agreed upon date. A reinstatement is often in conjunction with forbearance.

4. Repayment plan- The lender gives the homeowner an agreed upon period of time to repay the amount they are behind by combining the homeowner’s delinquent portion along with their regular monthly payment. At the end of the repayment period, the homeowner should then be current.

5. Refinance – Refinancing requires income, credit and equity to support a new mortgage or deed of trust. If your current income cannot pay your present mortgage, it may be difficult to convince another lender to offer you a loan with a reasonable interest rate. Based upon the tightening of qualifying criteria for loan applications, refinancing in today’s market is becoming less and less of a viable option. It goes without saying that the only reason to refinance is to lower your monthly payment.

6. Short-Refi – This is the latest trend for lenders in working with delinquent borrowers to avoid foreclosure. The lender agrees to refinance the home with a reduction in the principal balance. Sometimes the lender will also reduce the interest rate as well on the new loan. The borrower needs to provide proof of a “hardship” and fully document the ability to pay the new mortgage.

7. Short Sale- If the sale proceeds are less than the total amount owed to the lender, the lender(s) may agree to a short payoff or “short sale” and write off the portion of homeowner’s mortgage that exceeds the net proceeds from the sale.

8. Deed-in-lieu of Foreclosure – If the homeowner agrees to voluntarily transfer title of the property to the lender in exchange for cancellation of their mortgage debt, the lender may agree to a deed-in-lieu of foreclosure. In most cases though, the homeowner must attempt to sell the home for its fair market value first (at least 90 days before a lender will consider this option).  This option might not be available if there are other liens on the home, such as judgments, second mortgages or tax liens.

9. Bankruptcy – A bankruptcy may allow the homeowner to discharge some debt and reorganize others to keep the property. However, if a homeowner doesn’t or can’t make the house payment after the bankruptcy, the home is foreclosed on anyway. It is not recommend for real estate agents to list the property and try to negotiate a short sale while the homeowner is going through this process. Homeowners need to seek legal counsel if they want to pursue this option.

Contact me if you have any questions, or need a referral to a trusted professional such as a loan modification specialist or bankruptcy attorney.

Foreclosures – Auburn CA Homes

Have you ever wanted to know which homes for sale in Auburn CA and surrounding areas might be going to foreclosure that you can get a great deal on? Here is the one stop tool to help you locate those opportunities. Contact me if you would like more information on any of these properties at (530) 305-8409, or email me at ncrider@kw.com.

Click here to search Auburn CA Foreclosure Homes!