Does Your Agent Understand Short Sales?

In most situations, a well-planned short sale of a home has a lot of advantages over foreclosures. Indeed, a close look at the Phoenix MLS shows that there are still plenty of short sales among all Phoenix Homes for Sale. However, a short sale is not to be taken lightly — preparation and experience is essential! Among the important questions to consider when pursuing a short sale is the big question: Does my Realtor understand short sales?

To help you evaluate how prepared your Realtor is for handling a short sale, have a discussion with him or her about the short sale process, and be sure to ask lots of questions. If you don’t hear the answers or the knowledge and familiarity that you’re looking for, be prepared to keep looking for a Realtor that’s equipped to help you.

  1. Who is the service company and what do they do in the process? In general, the service company of the mortgage is the name on the mortgage statement you receive every month. Bank of America, Chase and Wells Fargo are common service companies. In most cases, the service companies are only in charge of processing the file and have very little to do in the decision-making process and negotiation of the sale itself.
  2. Who is the investor? Fannie Mae, Freddie Mack and Ginne Mae tend to be the investors of the majority of loans. Large service companies such as Bank of America, Chase and Wells Fargo may also be an investor on a mortgage. The investor is usually the decision- maker on each loan and has specific guidelines to follow in negotiating a short sale. Experience in negotiating with different investor guidelines is essential experience for a Realtor to have in order to have a successful close of escrow
  3. Who is the MI Company? Not all loans have MI (mortgage insurance), but some do. In the event that there is MI on a loan, you be certain that the MI Company is going to negotiate with you (the seller) before allowing a close of escrow. The MI Company is generally covering the loss in the short sale and paying out the investor for the loss on the mortgage, So, the goal of the MI Company is to reduce the lost payout as much as possible.
  4. How will each be negotiating with me? This is a great question for an agent. Negotiating with service companies, investors and MI Companies is not like negotiating a normal purchase contract. The process is bureaucratic, paperwork-intensive, and detailed. Experience really pays here and a good Realtor will know how to get it done and cost you very little at closing. However, a lack of experience and less-than-thorough paperwork by your agent could result in you writing a large check at closing, or worse, a foreclosure.
  5. What are the potential tax consequences? In every short sale, there are potential tax consequences that a seller must deal with. Asking your CPA or tax advisor about your particular situation and possible consequences is a very important part of planning for your future. A Realtor should have some general knowledge of the potential consequences as well as a good reference for you to get further help, but should also encourage you to discuss with your CPA or tax advisor.
  6. What are the potential liabilities after closing? Most loans are written as “non-recourse”, meaning that the lender will not be able to pursue you in the future for a loss incurred. However, some loans are recourse loans in which the financial institution may choose to pursue legal and collection avenues for the loss. When working with a recourse loan, there may be future liability and it is wise to consult an attorney about the situation.

Our Phoenix AZ Realtors have the short sale knowledge and experience to help you succeed – contact us at www.ThompsonGroupAZ.com or 480-776-5214.

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The Seller’s Market Returns!

Hey, homeowners! Do you remember when you could sell your home in less than 30 days? Do you remember when your home value appreciated faster than your bank account? Do you remember back when homes sold over list price? Do you remember when you would receive multiple offers on your home? Those are just a few scenarios last seen in the Phoenix Real Estate Seller’s Market of 2005. Well, the seller’s market is back! The year of 2012 is off to a roaring start and, if the pace continues, which we predict it will, Phoenix Arizona Homes should see nice recovery in value by year end. Here is why:

  • Overall Home Supply DECREASING. As of March 2012, the total number of Phoenix Homes for Sale active for entire Phoenix MLS is 16,036. This is decline of 50% from March of 2011. The number of sold listings for February is 7,290. Based on the February sales, the inventory of active listings represents a 2.2 month supply. This reduction in supply of Phoenix Homes for Sale allows for significant appreciation of Phoenix Arizona Homes.
  • Local ZIP code of 85224 HOT! The Chandler ZIP code of 85224 shows that in September there were a total number of 41 active real estate listings, with the total number of sold listings coming in at 60. In other words:  there’s less than a month supply for this popular Chandler ZIP code.
  • City of Chandler EVEN HOTTER! If you are looking for a “starter” home in Chandler, inventory is low. For the entire city of Chandler, the number of active listings for single family homes between 1,200 and 1,500 square feet is 57. The number of sold listings in February came in at 61. THAT means there is less than a one month supply of homes.
  • Phoenix Home Sales –Year to date, the Phoenix MLS recorded sales of 13,733 homes – or an average of 6,867 homes per month. That’s a stellar start in 2012 for Phoenix AZ Realtors and this data shows buyer demand is continuing to be robust.

Do you need to consider a short sale to unload a burden of debt? Or are you looking to maximize your selling price? Here at the Thompson Group, our goal is to show you the BEST options for your situation. Give us a call at 480-776-5214 or find us at www.ThompsonGroupAZ.com .

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Does Your Realtor Understand Short Sales?

In most situations, well-planned short sales of Phoenix Arizona Homes have significant advantages over foreclosures. Indeed, a close look at the Phoenix MLS shows a relatively high percentage of short sales among all Phoenix Homes for Sale. However, a short sale is not to be taken lightly – preparation and experience is essential. Among the important questions to consider when pursuing a short sale is the big question: Does my Realtor understand short sales?

To help you evaluate how well prepared your Realtor is for handling your short sale, have a discussion with him or her about the short-sale process, and be sure to ask the questions below. If you don’t hear the answers or the knowledge and familiarity you’re looking for, be prepared to keep looking for a Realtor that’s equipped to help you.

  1. Who is the service company and what do they do in the process? In general, the service company of the mortgage is the name on the mortgage statement you receive every month. Bank of America, Chase and Wells Fargo are common service companies. In most cases, the service companies are only in charge of processing the file and have very little to do in the decision-making process and negotiation of the sale itself.
  2. Who is the investor? Fannie Mae, Freddie Mac and Ginne Mae tend to be the investors of the majority of loans. Large service companies such as Bank of America, Chase and Wells Fargo may also be an investor on a mortgage. The investor is usually the decision-maker on each loan and has specific guidelines to follow in negotiating a short sale. Experience in negotiating with different investor guidelines is essential experience for a Realtor to have in order to have a successful close of escrow.
  3. Who is the MI company? Not all loans have MI (mortgage insurance), but some do. In the event that there is MI on a loan, you be certain that the MI company is going to negotiate with you (the seller) before allowing a close of escrow. The MI company is generally covering the loss in the short sale and paying out the investor for the loss on the mortgage, so the goal of the MI company is to reduce the lost payout as much as possible.
  4. How will each be negotiating with me? This is a great question for an agent. Negotiating with service companies, investors and MI companies is not like negotiating a normal purchase contract. The process is bureaucratic, paperwork-intensive, and detailed. Experience really pays here and a good Realtor will know how to get it done and cost you very little at closing. However, a lack of experience and less-than-thorough paperwork by your agent could result in you writing a large check at closing, or worse, a foreclosure.
  5. What are the potential tax consequences? In every short sale, there are potential tax consequences that a seller must deal with. Asking your CPA or tax advisor about your particular situation and possible consequences is a very important part of planning for your future. A Realtor should have some general knowledge of the potential consequences as well as a good reference for you to get further help, but should also encourage you to discuss with your CPA or tax advisor.
  6. What are the potential liabilities after closing? Most loans are written as “non-recourse”, meaning that the lender will not be able to pursue you in the future for a loss incurred. However, some loans are recourse loans in which the financial institution may choose to pursue legal and collection avenues for the loss. When working with a recourse loan, there is always future potential liability where you should consult an attorney about the situation and again, a competent Realtor experienced with short sales in the Phoenix Real Estate market will encourage you to discuss the situation with your attorney.

Remember – a short sale is truly a “double-edged sword.” On one hand it can usually offer significant advantages over foreclosure, but on the other hand it requires specific knowledge and expertise to successfully complete. Our Phoenix AZ Realtors have the short sale knowledge and experience to help you succeed – give us a call today!

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The Short Sale – What is the Verdict?

Not long ago it seemed no one knew of a short sale. Now, it seems that of every ten Phoenix Arizona Homes I show to buyers at least five are listed as “Short Sale.” Simply defined, a short sale means that the seller is “short” enough money to pay off the mortgage by selling the home. Therefore, the homeowner must negotiate with the lender to determine a lesser amount allowable to pay off the mortgage at close of escrow.

The list of downsides for the Short Sale are numerous: tons and tons of bank bureaucracy to work through, super-long escrows lasting three times as long as a normal escrow, waiting for bank negotiators for days on end, real estate agents who may not know how to operate in the banking world. Last but not least – the seller’s bank is always able to say no.

On the other hand, the bank industry is dramatically improving processes required to complete short sales in a timely manner. Large national banks such as Bank of America, Chase, Seterus, Wells Fargo and CITI – which received black eyes in the past for poor performance – are now able make decisions in less than 90 days if provided the proper paperwork. Even smaller regional banks such as MetLife, Green Tree, Desert Schools, Provident Funding, and American Home Mortgage Servicing are also showing improvement. With Fannie Mae and Freddie Mac – the two largest holders of mortgages – continuing to implement short sale support, short sales of Phoenix Real Estate continue to improve on closing ratios.

With that silver lining in mind, remember that a short sale is not a foreclosure! Completing a short sale is an option to unload piles of mortgage debt. A well-planned short sale should include legal, tax and credit planning. With the correct planning, a homeowner may be able to qualify for a new home in as little as two years. And as a rule, banks are approving 90% of short sales of sellers with viable financial hardships.

And, don’t forget that the Home Affordable Foreclosure Alternatives is paying homeowners for completed short sales. Do you qualify? Contact us today at 480-776-5214 or www.ThompsonGroupAZ.com and one of our Phoenix AZ Realtors with extensive Phoenix MLS experience in the short selling of Phoenix Homes for Sale can help you find out.

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The Short Sale – Help Is Here for Financial Trouble!

The last few years of economic turmoil have presented many homeowners with financial hardships and left them unsure of what to do. While some find solutions to their problems, others do not and evidence of the hardships is generally all too obvious. Many homeowners may be considering selling their home, but the economic challenges have left them uncertain as to how to go about that, and often unable to keep up with things.

A few signs of a distressed potential seller might be:

• yard work not done
• home in disrepair
• notices on the door
• the homeowners are not as friendly as they used to be
• divorce
• death in the family
• large medical expenses
• loss of job

If you notice these signs (or other signs like these), it might be a good time to stop by, just say “hello”, and possibly offer information or access to help with the process of selling their home. Many home owners simply do not know where to turn or who to trust. Some just need someone to talk with in order to sort out the details of their situation. A quick call to us about their Phoenix Arizona Home may be just the lifeline they need.

As Phoenix AZ Realtors, we are here to help. Over and over again we have witnessed homeowners of Phoenix Homes for Sale that are either simply overwhelmed, or are otherwise just “sticking their heads in the sand” and going into foreclosure when other solutions exist.

Maybe you have seen these signs of a home owner who is distressed. Most sellers showing these signs are dealing with financial hardships and qualify for a short sale, which can be the perfect help for their financial troubles. It’s possible that they’d be interested in having their home on the Phoenix MLS, or otherwise would like to sell their Phoenix Real Estate, but don’t know how to proceed. If you are interested in a short sale or you know someone who may be, contacts us at www.ThompsonGroupAZ.com or give us a call (480) 776-5214 and we can help.

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Wells Fargo, Please Wake Up and Stop Adding to the Foreclosures

On a short sale we are presently working, Wells Fargo is declining to post pone the trustee sale due to the Broker Price Opinion (BPO) being too high for the purchase contract. The first thing that comes to my mind is that the BPO was never done on the property, how could it be high? Also with 8 sold properties below the subject sale how could the BPO be high for the purchase contract? Upon further investigation, Wells Fargo confess to doing the BPO over 90 days ago as they were declining the seller’s loan modification and are still using the expired BPO to process the short sale. At other loan service companies, policies are in place for BPO’s to be disputed routinely and BPO’s always expire after 90 days. In that Wells Fargo is refusing to dispute the BPO or to stop using the expired BPO, I wonder what is going on at Wells. Is this a cost saving tactic, or is this an attempt to move this home into foreclosure without a true evaluation of the real facts?

What do you think?

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Short Sale Processing with Metlife Home Loans

Wow, I can’t believe the unbelievable slow movement from Metlife Home Loans on a current short sale I am working. I have been working a file since 7-31-2010 (that’s 53 days) and Metlife Home loans has yet to order the BPO or appraisal or show any sort of movement showing they even opened the Federal Experss package we sent to Metlife. Yes, that is right. This loan service company can not use FAX, Email, .pdfs or any other sort of modern communication to process documents and expedite the short sale process.
Most loan service companies manage to make a BPO/Appraisal happen inside of 30 days. To make matters worse, the Metlife customer service representatives we speak with on a weekly basis describe their processing of the file as acceptable business practice. Hello Metlife Home Loans, if anyone is really working short sale packages we would love to hear from you!

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CREDIT SCORE CONSEQUENCES IN FORECLOSURES & SHORT SALES

Q. How Long Does It Take For My Credit Score To Recover following a Foreclosure or Short Sale?

A. This question is frequently asked of me at client meetings, so I know it must be on

people’s minds .

We intuitively know that if we’re delinquent on our mortgage, our credit
score will be lowered. The question is, by how much? Until earlier this year, the answer was
hard to come by. Credit bureaus were uncommunicative about expressing, in points, just
how much credit scores would be reduced by different types of mortgage delinquencies.
CNNMoney.com recently reported, that Fair Isaac, which developed FICO scores, pulled back
the curtain a bit, revealing some estimates of point‐score declines following mortgage
delinquency problems.

Here are the average hits your credit will take:

30 days late: 40 ‐ 110 points
90 days late: 70 ‐ 135 points
Foreclosure, short sale or deed‐in‐lieu: 85 ‐ 160
Bankruptcy: 130 ‐ 240

According to the CNNMoney article, to come to these figures, Fair Isaac created two
hypothetical consumers, one who starts out with a fair‐to‐middling score of 680 and the
other with a very good one of 780. (FICO scores range from 300 to 850.)
The hypothetical person with the 780 FICO has 10 credit accounts versus six for the 580, plus
a longer credit history, lower utilization of total credit limit and no missed payments on any
account. The other consumer has two slightly damaged accounts. Neither have any accounts
in collection or adverse public records.

According to Craig Watts, a spokesman for Fair Isaac, "The lending industry tends to regard
an account differently when it has become 90 or more days late.”
Mortgage borrowers can lose their homes in three basic ways: a foreclosure; a short sale,
where the home is sold for less than is owed and the bank (generally) forgives the
difference; or a deed‐in‐lieu, in which the borrower gives back the property and the bank
again forgives any unpaid balance.

Maxine Sweet, vice president for public education at Experian, said credit bureaus generally
slash scores equally regardless of how someone lost his home. The important factor, is that
"it’s reported that you paid less on a settled account." Some borrowers may think that
because they never missed a payment, they can "walk away" from their homes with
relatively little impact on scores. Not true. "When a deed‐in‐lieu or short sale is reported as a
partial payment, it’s treated as a serious delinquency," Watts said, "just like a foreclosure."
And what about repairing your credit?

The effects of foreclosure, short sale and bankruptcy on your credit score are long‐lasting,
according to Sweet. In a Chapter 13 bankruptcy, which involves partial repayment over
several years, the stain will take seven years to remove. A Chapter 7 bankruptcy, which
involves liquidation, takes 10 years to get over.

And, in an interview with the President of Fair Isaac published in John Ulzeiheimer’s blog "A
consumer with a foreclosure or similar default on her credit report can expect her score to
begin recovering after a couple of years if she consistently pays all her bills on time, keeps
any credit card balances low, and takes on new credit only when needed. As the default
event ages on her credit report its influence on her score will diminish, until the credit
bureau removes the record from her file after seven years." Summarizes Ulzeiheimer, “The
bottom line is this: You can’t fully repair your credit score in as little as nine months unless
you can convince the credit bureaus to remove the items from your credit reports."

Despite the problems a poor credit score can cause, Experian’s Sweet recommends that
people in financial dead ends, like totally unaffordable mortgages, it’s better to recognize
that and cut your losses quickly; don’t prolong the problem. "You need to do what you need
to do to get your finances back in order," she said. "Don’t worry about your credit score."

Mr. Nagle is a partner with Nagle Law Group, P.C., focusing on residential transactional and
debt management matters, and can be reached at 602‐595‐3156 or robert.nagle@naglelaw.com.

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