Newly Proposed Foreclosure Law

Under a bill recently proposed to Congress, people who are far behind on their mortgage can withdraw from their 401(k) to save their home without paying any penalties.

According to the language in the “HOME ACT,” the proposed bill allows homeowners to withdraw money from a retirement plan penalty-free (but not tax free) to make mortgage payments toward his primary residence up to $50,000 or one-half of the present value of one’s 401(k) account (whichever is smaller). This will be allowable as long as the funds are used for that purpose within 120 days of withdrawal. This sounds like a great idea that could potentially help millions of homeowners who are behind on their payments or struggling with a recent job loss.

However, you can look at the bill another way.

The option to withdraw from a retirement plan may just be a postponement of the inevitable. It may do little or no help at all to the millions who are hopelessly underwater, and who may eventually lose their home. Is this bill really about helping the millions of American’s facing impending foreclosure? Or is this another attempt to a bailout that we, as taxpayers, will end up paying for when folks who opt into this plan will eventually need help because their retirement funds have been depleted?

What do you think? Would you ever do this, or would you prefer a Short Sale as a solution?

Ihor Pochay
BROKER/SHORT SALE & REO SPECIALIST
Team Pochay Realty
C (562) 334-7393
ihorpochay@hotmail.com
TeamPochayRealty.com
Follow me on Twitter and Facebook

New Short Sale Policy from Bank of America

Interesting move by Warren Buffet to invest $5 billion in BofA this week. While that news may be indirectly relevant to this blog, I have another news to share regarding Bank of America’s new short sale policy, which allows real estate agents to substitute a new short sale buyer without restarting the often complicated process of a short sale transaction. Here are the details:

Bank of America now allows real estate agents to submit a backup offer on a short sale transaction if the original buyer has walked away from the sale. This means agents will no longer have to initiate a new short sale via Equator (a file management system). Instead, they can continue with the original transaction in Equator and work with the same short sale specialist. This is a HUGE change that will save time for sellers, buyers and REALTORS by not having to repeat a number of short sale processes again and again.

When a Backup Offer Is Ready
Real estate agents should send a message to their short sale specialist via Equator when the original buyer is no longer interested in the property or simply walked away from the transaction. The Bank of America short sale specialist should respond within two business days and ask if the agent has a backup offer ready to submit. If another buyer is prepared to make an offer, the short sale can proceed without having to repeat the short sale initiation steps. The short sale status in Equator will change to “marketing,” and agents will be directed to complete the following tasks within 14 business days:

1. Complete the “Listing Data” task.
2. Provide the marketing description.
3. Review the marketing plan.
4. Upload the purchase offer.

The real estate agents will then have 14 days to complete the “Listing Data” task. If the task is not completed on time, the file will be closed.

When No Backup Offer Is Ready
This new process applies only if there’s an available backup offer when a buyer walks away. If a backup offer is not ready to be submitted, the short sale will be declined. In that case, real estate agents should return to marketing the property and initiate a new short sale in Equator system once another offer is received.

This is definitely great news for the real estate industry as we continue to see short sales on the market. It’s a win-win all around. If you’d like to learn more about this topic, don’t hesitate to contact me.

Ihor Pochay
BROKER/SHORT SALE & REO SPECIALIST
Team Pochay Realty
C (562) 334-7393
ihorpochay@hotmail.com
TeamPochayRealty.com
Follow me on Twitter and Facebook

California Governor Signs SB 458 – No Deficiency After Short Sale for Junior Liens

Good news for California homeowners considering a short sale! SB 458 was signed, which is the new California law that extends the protections of SB 931, ensuring that any lender/bank that agrees to a short sale transaction for a residential property from 1 to 4 units, must agree to the short sale payment as payment in full for the outstanding balance of all loans (first/second/third mortgage liens, HELOC, etc.).

What is SB 931 any way? It was a law signed in 2010, which stated that after a short sale transaction is completed in California, lenders/banks cannot pursue the homeowner/seller for the remaining balance of the loan (amount owed minus the sale price). But unfortunately, this rule did not apply to junior lien holders (second/third mortgage or home equity line of credit/HELOC). SB 458 extends the protections of SB 931 to junior liens.

For sellers who conduct a short sale after July 2011, SB 458 means that a short sale junior lien holder cannot require additional compensation (cash contribution, promissory note, etc.) as part of the short sale approval. If needed, the agent still can contribute to make the transaction go through.

SB 458 ensures that after close of escrow in a short sale transaction, there is no possibility that the lender can pursue the borrower/seller. Therefore, the lien and (personal) liability will be released by all lenders involved in a short sale.

These two short sale laws combined with the Mortgage Forgiveness Act, make it perfect for Short Sale transactions to be conducted in California.

If you are behind on your payment or simply need to move to another area but your house is upside down (you owe more than it's worth), give me a call and I will make your transaction as smooth as possible.

Ihor Pochay

BROKER / Short Sale & REO Specialist

Team Pochay Realty

Cell: (562) 334-7393

ihorpochay@hotmail.com

www.TeamPochayRealty.com

www.shortsaleyourhome.blogspot.com

DRE# 01772584

MARS Mortgage Assistance Relief Services Disclosure

Homeowners who are facing foreclosures are willing to do and listen to any company that will say we can help you stop foreclosure, modify your home and/or conduct the Short Sale. There are many schemes out there, where some individuals and companies are taking advantage of distressed homeowners and are not performing the acts that they promised.

Recently, the Federal Trade Commission (FTC) issued a Rule to fix the unfair and deceptive practices associated with mortgage assistance relief services - Mortgage Assistance Relief Services (MARS) Rule. Here some points from this rule:

1. It's illegal to charge upfront fees. The service must be performed first and the homeowner must agree to the offer from the bank.

2. Clear and prominent disclosure of information before signing people up for services is mandatory (i.e., total cost, stopping of services at any time, that the company is associated with the government, etc.).

3. Cannot advise either to pay or not to pay the mortgage. The homeowners must be told that failure to make mortgage payments may result in losing the house and damage to their credit.

4. It is illegal to advise homeowners to stop communicating with their lenders and services.

5. No misrepresentation of services is allowed. Under this Rule, it is prohibited to make claims that are false or misleading.

6. Must disclose to customers if they receive an offer of mortgage relief from a lender or service. The companies or individuals are required to provide written notice to customers from the lender or service describing all the facts. It’s important to note that the customer must be advised that if they do not like the offer from the service or lender, they can reject it and will not have to pay for the services.

This rule applies to any company and or individuals who offer mortgage assistance relief services (Short Sales, Loan Modification, etc). If you have any questions in regards to this Rule or need to Short Sale your house, please call me at 562-334-7393.

Ihor Pochay
BROKER / Short Sale & REO Specialist
Team Pochay Realty
Cell: (562)334-7393
ihorpochay@hotmail.com
www.TeamPochayRealty.com
www.shortsaleyourhome.blogspot.com
DRE# 01772584

Short Sales and Debt Forgiveness Act

It's the end of 2010 and all the homeowners who completed a Short Sale, Foreclosure or Loan Modification are wondering what to expect in regards to the tax returns. Well, first of all the difference between the loan amount and the sale price will be considered as the income to the homeowners that were involved in Short Sale, Foreclosure or Loan Modification Process. Example:

You borrowed $400,000 and your property is sold for $320,000. There will be a cancellation debt of $80,000. The lender, at the end of the year, will have to send the Form 1099-C (Cancellation of Debt) to the borrower, showing the amount of debt canceled if the forgiven amount $600 or more. The good news is that you may be able to exclude part or all of this income if:

1. The debt was qualified principal residence indebtedness;
2. You were insolvent immediately before the discharge;
3. The debt was canceled in a Title 11 bankruptcy case;
4. You have non-recourse loans.

This exclusion of debt became available after the Mortgage Forgiveness Act was signed in 2007 and extended until 2013. The Act allows you to exclude the income realized as a result of Loan Modification, Short Sale or Foreclosure. However there is a limit on the forgiven debt up to $2 million ($1 million if married, filed separately).

The homeowners will have to file Form 982 with they taxes in order for them to cancel some or all of the forgiven debt. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as result of foreclosure on your principle residence, you only need to complete lines 1e and 2 on the form 982. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2 and 10b. You can get the form by downloading from http://www.irs.gov/pub/irs-pdf/f982.pdf or calling at 1-800-829-3676 and requesting the form to be sent to you by mail (will take 7-10 days).

One more time, please, consult your tax professional or CPA while doing your taxes this year. If you need to Short Sale you property, please, give me a call at 562-334-7393.

Sincerely,

Ihor Pochay
Real Estate Broker/REO & Short Sale Specialist

Team Pochay Realty
Cell: (562)334-7393
ihorpochay@hotmail.com
www.MyRealtorIhor.com
http://shortsaleyourhome.blogspot.com/
DRE# 01772584

Home Owner Affordability and Stability Plan and Short Sales

President Obama signed a plan designed to help homeowners stay in their homes and avoid foreclosure. The three main points of the plan are as follows:

1). It will help homeowners refinance to lower their interest rate. The Loan to Value on the loan should be no more that 105%. So let’s assume the house was bought for $500,000 with the 1st Trust Deed as $400,000 and the 2nd Trust Deed is $100,000. If the value of the home dropped to $420,000 – the homeowner still can refinance as it is 105% of the first Trust Deed. If the Value dropped more than $420,000 – the homeowner will not be eligible to refinance. This section of the plan will help about 7-9 million borrowers refinance their homes.

2). The plan will help homeowners modify their loans. All the loans which were bought by FNMA and FDMAC can be modified (in today’s market it is 60% of all the loans). This section of the plan is designed to help approximately 4-5 million borrowers. The bank will modify the loan in the way that the new PITI (Principle+Interest+Taxes+Insurance) will be 38% and the bank and FNMA will split additional 7% of the costs and bring the PITI to 31%. If the loan is not held by any of the mentioned above investors, the borrower should contact their bank directly and try to work out some options. Borrowers should be aware of the many scammers working in the loan modification field. Make sure you hire someone with a license and do not pay any upfront fees for these services. At the end you can do it yourself.

3). This part of the plan is designed to make more than $200 billion available for people who are buying homes for the first time (first-time home buyers). This provides first-time home buyers with new mortgages that are very affordable, have low interest rates and tax credits that will be available to them at the end of the year – $8000 if they purchase a home between 2009-June 2010, and up to $18,000 – if they buy from a developer.

The borrowers who will not be able to qualify for these programs will still be able and encouraged by the banks to do a Short Sale or a Short Pay Off to avoid foreclosure.

This is just short break down of the plan. If you have any questions or need to see if you qualify to any of these programs or for a Short Sale program, you are more than welcome to contact me.

Ihor Pochay
Real Estate Broker/ Short Sale & REO Specialist
Team Pochay Realty
Cell: (562) 334-7393
ihorpochay@hotmail.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogspot.com

New Guidance for Short Sales

Beginning April 5, 2010 the lenders (who participate in Home Affordable Modification Program "HAMP") will have new guidance for conducting Short Sales and Deed-In-Lieu. The new guidance is part of the Home Affordable Foreclosure Alternatives Program (HAFA). Under this program the lenders:

1) Will not be able to require a cash contribution or promissory note from borrower;
2) Will no be able to pursue a deficiency judgment against the borrower;
3) Will use the borrower's financial and hardship information, collected in conjunction with HAMP program (the borrower will not have to resubmit these items);
4) Will send to the borrowers the pre-approval of short sale terms before the property is listed;
5) Will not be able to cut the REALTORS commission;
6) Will use standard processes, documents and timeframes;
7) Will provide financial incentives to borrowers, investors and services.

In order for the loan to qualify to the HAFA program, it needs to meet the following criteria:
- The property must be the borrower's principal residence;
- The loan must be the first lien mortgage, and must be originated on or before 01/01/2009;
- The current unpaid principle balance should be no more than $729,750;
- The total monthly mortgage payment should exceed 31% of the borrower's gross income;
- Mortgage is delinquent or it can be foreseeable.

As always, if you have any questions regarding this posting or other Short Sale/Real Estate topics, please feel free to call me or write me a quick e-mail.

Ihor Pochay
Realtor / Short Sale & REO Specialist
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 364-9005 Ext. 471
Fax: (909) 364-9262
ihorpochay@tarbell.com
http://www.myrealtorihor.com/
www.shortsaleyourhome.blogspot.com/
Twitter: @ihorpochay

Ten Reasons to Purchase a Short Sale Property

I’ve put together a list of 10 reasons why Buyers should consider purchasing a Short Sale home in today's market:

1). Great Value: Short Sale properties offer Buyers great prices. On average, these properties are 5%-15% below the market price!
2). Wider Selection: Most of the properties on the market today are Short Sales (65%-80%). In some areas, the percentage is even up to 90%. If Buyers consider Short Sale properties in the current market, they'll actually increase the chance to find the property that will match their needs.
3). Good Condition: The properties sold in Short Sale transactions will be in much better condition than the ones that are sold as REO (real estate sold by banks).
4). Credit of $8,000: If the Buyer purchase a Short Sale home before the end of November 2009, they will receive an $8,000 credit from the government!
5). Tax Relief: Buyers will also be able to deduct all interest, taxes and points from their taxes.
6). Pride of Home Ownership: No further explanation.
7). Reduce REO Inventory: Buyers purchasing Short Sale properties are in fact helping Sellers avoid foreclosure.
8). Negotiations: Buyers will have the ability to negotiate closing fees, home warranty fees and credits for repairs, etc.
9). Quicker Bank Approvals: The time to obtain Short Sale approval has been shortening. Some banks are able to approve Short Sale Approval Letters within 30 days.
10). Advantageous Edge: Banks are very motivated and willing to work with Buyers in order to avoid another foreclosure.

If you have any questions in regards to Short Sale transactions, I can be reached at (562)334-7393.

Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562)334-7393
Off: (909) 364-9005 Ext. 471
Fax: (909) 364-9262
ihorpochay@tarbell.com
http://www.myrealtorihor.com/
http://www.shortsaleyourhome.blogspot.com/
Twitter: @ihorpochay

SHORT SALE PROPERTIES ARE ON THE RISE

There are more and more Short Sale properties on the market these days. In my market area (Chino Hills, Chino, Phillips Ranch, Diamond Bar) it is about 50% of all the sales. The inventory of the listings is very short. The banks are not releasing the REO properties (shadow inventory), and the government's incentive of $8,000 tax credit for first time home buyers creates a huge demand for properties including short sales.

Recently, I've listed short sale properties on the market and within a few days attracted more than 20 offers from home buyers. The homeowners who listed their properties as short sales are now seeing an opportunity to sell their homes at the current market price, and in some cases even above the market price.

On the other side, the U.S. Department of Treasury will provide a $1,000 incentive to a loan servicing company for every successful Short Sale. It will also offer $1,500 to a borrower to assist with relocation expenses. Also, many REALTORS are encouraged to do Short Sales knowing that the commission will not be reduced if the investor is Fannie Mae. So many factors lead to the increase of the Short Sale transactions in 2009. That will help the Lenders minimize their loss and also will help the borrowers to move on with their lives without going into Foreclosure.

Ihor Pochay
REALTOR / SHORT SALE & REO SPECIALIST
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogspot.com

Who Pays The Commission In A Short Sale Transaction?

Many homeowners do not want to Short Sale their homes simply because they think that they will have to pay commission to REALTORS. That is not true. In all cases, when there is a Short Sale transaction, the Lien Holder (Bank) will pay all the commission and all the expenses (taxes, seller’s escrow fees, etc), so homeowners will not have to spend any additional money from their own pockets.

The banks are very particular in regards to how much they will pay to REALTORS for the complete Short Sale transaction. If the Buyers and Sellers are represented by two different REALTORS, the banks usually will pay 5% for them to split. If the Buyers and Seller are represented by one REALTOR – 4% commission is most likely to be approved by the Bank, as they are trying to cut the cost and get as much out of the transaction as possible, and in some cases it is a policy of the Bank.

However, if the investor of the loan is FNMA or Freddie Mac, the REALTORS will be able to receive commission up to 6%. Realtors should ask the sellers to contact their loan service company and find out who is the investor of the loan (most likely the loan will be sold on the Secondry Market to different investors). In many cases it will be FNMA or Freddie Mac as they are the investors for approaximately 60% of all the mortgages in US.

If you have any questions in regards to the Short Sales or need to conduct one, feel free to call me directly (562) 334-7393.

Ihor Pochay
REALTOR®/SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext.339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogspot.com

What You Need To Know When Buying A Short Sale Home

If you are a buyer, and trying to buy a property in today’s market, most likely you will come across the properties that are sold as Short Sales. Here are a few things you need to know and to have before applying for a Short Sale.

1). You need to be flexible with time. If you need to move in ASAP, Short Sale transactions are not for you. In today’s market it might take 2-3 months for the banks to approve the Short Sale (sometimes even more – depends from the bank and/or investor).

2). You might need to come in with additional $2,000 or $3,000 dollars in addition to your original offer, to make transaction go through. Sometimes the first lien holder (bank of investor who holds the 1st Trust Deed) will not pay enough to the 2nd Trust Deed holder, or there is per diem charge. Be ready to step in and cover that difference. The sellers usually will not pay that amount as they are not receiving any money from the sale. You as a buyer are purchasing the property 10%-15% below the market price, so when the time comes – you might need to make a business decision.

3). The properties are usually come “as is.” Neither the banks nor the sellers will make repairs on the property. All the inspections are usually made just for information purposes only, and there might be no contingency for the home inspection.

4). The banks usually do not approve the closing fees paid to the buyer, and they do not provide Home Warranty Plan either. Be ready to buy the plan by yourself, after the transaction is finished, or include the plan into your closing costs.

5). You will have to be ready to deposit the Earnest Money Deposit to the Escrow right away (prior to receiving the Short Sale Approval from the banks), showing the listing agent that you are willing to wait for the Approval, and will not switch to another property. There is nothing worse for the listing agent than working hard on the Short Sale transaction for 2-3 months just to find out that the buyer will walk away at the last minute, because they changed their minds. Don’t be one of those buyers! Treat others like you would like to be treated. If you are not sure about the property simply do not apply. Let the people who really want the property to be the one who get it.

6). Be prepared when submitting the offer to the listing agent. With the offer send the following items:
a. Pre-approval letter (must be from the direct lender)
b. First page of the credit report with FICO scores
c. Copy of the Earnest Money Deposit 2%-3% of the purchase price
d. Proof of funds (copy of your checking or saving account showing the amount needed for the down payment and closing costs).

7). Have your agent to follow up with the listing agent every week. Sometimes the listing agent has 20-30 properties and they just simply do not have time to call every agent who represents buyer. Remember there might be multiple offers. Don’t blame anyone for anything. Always be polite and have a positive attitude. Being rude and blaming someone will not get you anywhere. Remember everyone is working hard in order for you to buy the property under the market value.

8). If you receive any documents during the Short Sale transaction from Escrow or the listing agent, make sure that you read them, sign them and return the documents ASAP.

9). Do as much work on your loan as possible. Always give to your loan officer updated information (paychecks, W-2s, checking and saving accounts info, etc.); sometimes you will have to close as soon as possible.

10). Stay motivated and make sure that the listing agent knows what he or she is doing. Have your REALTOR interview the listing agent about Short Sales to determine if the listing agent is knowledgeable in Short Sale transactions. It is wise to think about this detail before applying for a particular Short Sale property.

Hope this will help you in the future. Meanwhile if you have any questions, you can reach me at ihorpochay@hotmail.com. Feel free to contact me at (562) 334-7393 if you need to sell or buy a property.

Sincerely,

Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogger.com

Homeowner Affordability and Stability Plan and Short Sales

Recently, President Obama signed a plan designed to help the homeowners to stay in their homes and avoid foreclosure. The three main points of the plan are as follows:

1. It will help homeowners refinance their homes to lower interest rates. The “Loan to Value” on the loan should be no more that 105%. So let’s assume the house was bought for $500,000 with the first Trust Deed of $400,000 and the second Trust Deed of $100,000. If the value of the home dropped to $420,000, the homeowner still can refinance as it is 105% from the first Trust Deed. If the Value dropped below $420,000, the homeowner will not be eligible to refinance. This section of the plan will receive $75 billion to help seven to nine million homeowners to refinance.

2. The plan will help homeowners modify their loans. All the loans which were bought by FNMA and FDMAC can be modified (60% of all the loans in today’s market fall under this category).This section of the plan is designed to help approximately four to five million homeowners. The bank will modify the loan where the new PITI (Principle+Interest+Taxes+Insurance) will be 38% and they the bank and FNMA will split the additional 7% of the costs and bring the PITI to 31%. If the loan is not held by any of the mentioned above investors, the homeowner should contact the bank directly and try to work out some options. Homeowners should be aware of the many scammers working in the loan modification field. Make sure you hire someone with a license and do not pay any up front fees for these services. At the end, you can do the modification yourself.

3. This part of the plan is designed to make some money (over $200 billion) available for people who are buying a home for the first time (first time home buyers) by providing new mortgages with very affordable and low interest rates, including tax credits that will be available to them at the end of the year: $8,000 tax credit if new homeowners buy in 2009 and up to $18,000 if they buy from a developer.

The homeowners unable to qualify for the programs mentioned above will still be able and encouraged by the banks to do a Short Sale or a Short Pay Off to avoid foreclosure.

This is just short break down of the plan. If you have any questions or need to see if you qualify for any of the three programs discussed, or to learn more about Short Sale programs, you are more than welcome to contact me at ihorpochay@tarbell.com

Ihor Pochay
REALTOR / SHORT SALE & REO SPECIALIST
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogspot.com

You Now Want To Do A Short Sale. Top 10 Seller Short Sale Questions, Answered.

Number 10
I can’t make my house payments but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score…is a short sale right for me?

Probably not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder) it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.

Number 9
If I pay mortgage insurance and default on my loan, wouldn't that cover the deficiency amount?

The mortgage insurance is not there for your protection, it protects the mortgage lender.

Number 8
Do I have to have my home ‘Approved’ by my lender prior to offering it for sale as a short sale?

No. Technically speaking, there is no such thing as being ‘Short Sale Approved.’ The actual approval only happens with an accepted offer.

Number 7
I just missed a payment and I know I will miss more….how long does the foreclosure process take and is there time to do a short sale?

In California it’s taking 6+ months. Generally speaking a well-priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.

Number 6
Will I still have to pay property taxes if I do a short sale?

Property taxes will always have to be paid as part of any accepted short sale. Whether it’s you or the lender depends on their policies and the specific agreement you reach while negotiating the short sale.

Number 5
I owe more than my home is worth and I can’t make the payment, do I have to somehow qualify for a short sale?

The simple answer is NO. If someone can’t make their payment and they are otherwise insolvent, they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.

Number 4
Do I have to pay income taxes? I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me..the seller..is this true?!

It WAS true, now it’s not. Consult your Tax Attorney or Qualified CPA. Very recently the tax law was modified and now most people who do a short sale will have no Federal taxes due (CONSULT YOUR TAX ATTORNEY OR CPA).

Number 3
How do you, my listing agent get paid? Who pays your commission?

The bank will pay the commission along with all the other usual closing costs.

Number 2
Do I have to miss a payment to do a Short Sale?

No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.

Number 1
I want to do a short sale and have a 2nd mortgage, does this make me ineligible?

No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holder.

Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562)334-7393
Off: (909)629-6186 Ext. 339
Fax: (909)629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com
www.shortsaleyourhome.blogger.com

Ok, I Get It…A Short Sale May Be My Best Option…Tell Me More…

A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy.

For example, a homeowner, who is facing foreclosure, has an existing first mortgage of $500,000. The market value of the home is $350,000. Long story short, the lender accepts the offer for $350,000 and the home is sold.

That’s a short sale.

Why are lenders so eager to take such a huge discount? Banks do not like bad loans. If they see an opportunity where they can sell the property without the huge loss of a foreclosure, they will do it. Some lenders report that if the home goes into foreclosure by the time the home actually closes with the new buyer, the lender will be lucky to net 50% of the original loan balance.

Bottom line from the lenders perspective? They are in the business of lending money, not owning homes. If they can accept a short sale offer and rid themselves of the bad loan AND net more, vs. the home going into foreclosure, they will do it every time. It’s simply smart business.

Time is not on your side when you are considering a short sale. You must act quickly and work only with a real estate expert who has successfully completed and graduated from advanced real estate education programs.

Ihor Pochay
Realtor / Short Sale Specialist
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
http://www.myrealtorihor.com/
www.shortsaleyourhome.blogger.com/

No One is Safe in Today's Market!

No one is safe. News stories from across the country tell the tales of both celebrities and average Americans who are all considering selling their homes through a short sale.

Selling your home through a short sale doesn’t need to be a shameful, life-ruining experience. Sometimes short selling your mortgage simply makes smart economic sense, especially for homeowners who find themselves "upside down" — that is, they owe more on their mortgage than their house is worth.

Late last year, CNBC financial guru Jim Cramer was telling homeowners to ‘Just Walk Away.’ (Watch the video on YouTube.com)

We are clearly in uncharted waters. The current housing crisis is different from all the previous housing recessions. It is well known that many financial institutions sold mortgages in a deceptive manner — for example, by approving people for loans they couldn't really afford — then why should homeowners feel obliged to honor their commitments?

From a homeowner’s perspective, why should they stay in a home that is depreciating? Often times it’s possible to rent the same style home in the same area for half (or less) than their current mortgage payment. Assuming it takes years for the market to recover, the homeowner who sells their home via a short sale now will be far ahead of the person who ‘stuck it out’.

Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com

A National Epidemic of Short Sales

Are you stressed out about mortgage payments? Do you think your only option is a foreclosure? Is a short sale right for you? Millions and millions of homeowners are asking themselves the same questions. It is projected that more than 20,000,000 homeowners will have negative equity in their homes in the very near future. In other words, they will owe more on their homes than the homes are actually worth. More than 2.9 million homes have foreclosed in the last three years and the number is only expected to grow. Expect the effects of the estate recession to ripple for years to come.

What can you do now?

There is expected to be massive tsunami of homeowners who are simply making the decision to sell their homes through a short sale vs. staying in a home, hoping that one day it may be worth what they paid.

No one is safe. News stories from across the country tell the tales of both celebrities and average Americans who are all considering selling their homes through a short sale.

Selling your home through a short sale doesn’t need to be shameful, life-ruining experience. Sometimes short selling your mortgage simply makes smart economic sense, especially for homeowners who find themselves "upside down" — that is, they owe more on their mortgage than their house is worth.

To find out if you qualify to sell your home in a Short Sale transaction, call me today at (562) 334-7393.

Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com

Ten Steps in the Short Sale Process

For better understanding of Short Sales, below is the break down into such steps:

Step 1: Seller needs to talk to the Real Estate Attorney or CPA to make sure that the Short Sale is the right choice for them.
Step 2: Seller needs to find the Realtor who specializes in doing Short Sales.
Step 3: List the property with a qualified REALTOR.
Step 4: Seller should provide to the REALTOR all the documents needed by the Bank.
Step 5: The REALTOR, by advertising and conducting open houses, should obtain the reasonable offer from a Buyer who is pre-approved for a loan or has enough cash to buy the property.
Step 6: After completing the Short Sale Package, the REALTOR should submit it to the Bank(s) for review.
Step 7: The Bank will send the Appraiser to evaluate the property (usually the Bank that trying to foreclose the property).
Step 8: The Bank will make a decision about the Short Sale (to give the positive answer to the Short Sale transaction, the Bank should come to conclusion that the Short Sale will bring more money for them than a Foreclosure).
Step 9: If the decision is negative, the REALTOR should put the property back on the market and advertise the price which was specified by the Bank.
Step 10: If the answer is positive, the REALTOR should open Escrow and follow the Escrow Instructions and Instructions from the Bank(s) to complete the Short Sale transaction.

To have a successful transaction, the Listing Agent should be in constant communication with the Buyer, Seller, Selling Agent, and Short Sale Negotiator.

Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com

SHORT SALE DISCLOSURES

The following disclosures should be given to Buyer(s) and/or Seller(s) in a Short Sale transaction in the state of California:

1) Transfer Disclosure Statement (TDS form). Must be filled out by the Seller(s) and given to the Buyer(s) in every real estate transaction which involves residential 1-4 unit dwelling. This is the form where the Seller discloses all facts that he/she knows about the property to the Buyer.
2) Disclosure Regarding Real Estate Relationships (AD form). This form disclose of the relationships between the Agent and Principle (Buyer or Seller). The Listing Agent should give only one form to the Seller(s). The Selling Agent should give one form to the Buyer(s), and one form to the Seller(s), providing that the Buyer(s) and the Seller(s) are represented in the transaction by different Agents.
3) Lead-Based Paint Hazard Disclosures (FLD form). This should be given to the Buyer(s) by the Seller(s) if the property being purchased was built before 1978.
4) Statewide Buyer and Seller Advisory (SBSA form). This form educates the Seller(s) and the Buyer(s) about the inspection that they will have to do, California's laws, taxes, etc.
5) Water Heater and Smoke Detector Statement of Compliance (WHSD form). This form should be given by the Seller(s) to the Buyer(s), assuring the Buyer(s) that at the end of the transaction the Water Heater and the Smoke Detectors will be in compliance with the current law.
6) Seller's Affidavit of Non-Foreign Status (AS form). Should be given from the Seller(s) to the Buyer(s), stating the Seler's SSN or TIN number. If the Seller(s) does not feel comfortable to disclose this information to the Buyer(s), they can give this inormation to the Escrow company and the Escrow should issue the letter-certificate to the Buyer(s), that they received the AS form or certificate from the Seller(s).
7) Seller Property Questionnaire (SPQ form). This form should be given by the Seller(s) to the Buyer(s) to answer the questions and conditions about the property that is being transferred.
8) Natural Hazard Disclosure Statement (NHD form). This is given to the Buyer(s) by the Seller(s). All the Natural Hazards about the area where the property is located should be disclosed by the Seller(s) to the Buyer(s). If the Seller is not sure, they should hire a third party company to do the required reports.
9) Agent Visual Inspection Disclosure (AVID form). This should be given to the Buyer(s) and Seller(s) by the Real Estate Agent, disclosing any defects about the property that were found by the Agent during the inspection.
10) Short Sale Addendum (SSA form). This form should be given to Buyer(s) by the Selling Agent to sign, and should be submitted to the Seller(s) together with the purchase contract.
11) Short Sale Listing Addendum (SSL form). This should be given to the Seller(s) by the Listing Agent at the time when the listing is taken.

Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.comwww.MyRealtorIhor.com

Tax Effects from the Short Sale

The tax effects can be very significant on a homeowner. It is advisable to get professional advice from a Tax Attorney and a CPA before the seller will have to pay taxes on the forgiven debt (difference between the indebtness and the sale price of the home). In December 2007, the President signed a new bill, "The Mortgage Forgiveness Debt Relief Act," which forgives the debt for the homeowners who did the Short Sale or Foreclosure on their primary residence in 2007-2009. The homeowner still will receive the 1099-C Form (Cancellation of Debt) from the Lender by the end of the year. After receiving the 1099-C the homeowner should carefully look through the form and check for any discrepancy (the amount of the discharged debt is incorrect). If the homeowner finds any of the information to be inaccurate, the lender should be contacted immediately to correct the mistake and provide the homeowner with the new 1099-C form with accurate information.

The homeowners should use form Form 982 (Reduction of Tax Attributes Due to Discharge of Indebtedness) when filling their tax return. You can get this form by going to www.irs.gov or by calling 1-800-829-3676.

If part of the forgiven debt does not qualify under this act, then the homeowner will have to prove insolvency at the time of the Short Sale transaction or Foreclosure. The homeowner will have to show that their liabilities is bigger than the assets, or file for bankruptcy. The amount that can be forgiven can go up to 2 million dollars (1 million for married couples who file separately) at the time when the loan was forgiven. Debt eligible to be forgiven are those used for building, buying or improving the principle residence and should have been secured by the property. If the homeowner refinanced for the bigger mortgage, part of this debt can also be excluded up to the old mortgage amount. The other thing about this Act is that a homeowner can not apply it to second homes, vacation homes, credit card debts, etc. This Act is design to help the homeowners who were in Foreclosure, or did a Short Sale or Loan Modification for primary residence only.

You can find more information by going to www.irs.gov or www.car.org

Ihor Pochay
REALTOR / SHORT SALE SPECIALIST
Tarbell, Realtors
Cell: (562) 334-7393
Off: (909) 629-6186 Ext. 339
Fax: (909) 629-6710
ihorpochay@tarbell.com
www.MyRealtorIhor.com

How a Short Sale Affects a Homeowner's Credit Score

After a Short Sale is completed, the Bank reports the transaction to the Credit Bureau as “Settled for Less.” A Short Sale will bring the credit score down about 150-200 points. Besides the Short Sal, every late payment is reported to the same bureau as 30-, 60- or 90-day late payment, and these actions will bring the credit score down as well. Each late payment will the homeowner's FICO score 10-15 points down.

A good REALTOR/SHORT SALE SPECIALIST has to try to save a homeowner’s FICO score, by simply negotiating with the Bank. In most cases, saving the homeowner's FICO score will not likely happen, but if you do not ask, you will not receive. If the homeowner is short only $10,000 to $15,000, and the homeowner wants to save his/her FICO score (providing that a move is necessary and does not have money to cover the difference), the REALTOR/SHORT SALE SPECIALIST can negotiate with the Bank about the pay off. Usually the Bank will agree to give to a homeowner an unsecured loan for the difference (for this example, $10,0000 to $15,0000) for 5-7 years with 0-1% of interest. Instead the Bank will report the transaction as paid in full and it will not have any negative effect on the homeowner’s FICO score. And the homeowner will be able to move on with life and buy another property if desired.

After the Short Sale is reported to the Credit Bureaus, the homeowner will be able to buy another property after 2 years. If compared to Foreclosure, a homeowner will be able to purchase another property in 5 years; Deed in Lieu, 5 years; Bankruptcy 7 years; Judgment, 10 years. The 2-year wait period to purchase a property after a Short Sale is one of the biggest advantages of the Short Sale compared to the others options listed above.

Another advantage of a Short Sale is that the homeowner will be able to get a better selling price when he/she chooses this transaction (usually 10% below the market price) than if the Bank chooses to do a Foreclosure. How this will benefit the homeowner if no proceeds are received from the Short Sale anyway?

Let’s assume that after the homeowner purchases the property, down the road, he/she pulls equity from the property (majority of homeowners do) as a Second Lien. This makes the the second loan a recourse loan, meaning that the Bank (second Lien Holder) can sue the Seller for the Deficiency Judgment after transaction is over. By controlling the price in the Short Sale transaction the homeowner has a chance to reduce the amount that the second Lien Holder can sue him/her for, and that means the Bank will bring down the deficiency amount as well. Whereas, in a Foreclosure, the Bank will sell the property 30-40% below the market price and the second Lien Holder will be able to sue the homeowner for the full amount of the Second Loan.

Ihor Pochay
REALTOR/SHORT SALE SPECIALIST
Tarbell, Realtors
(909) 629-6186 ext. 339
ihorpochay@hotmail.com
http://www.myrealtorihor.com/