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Jacksonville Florida Short Sales FAQ: Will the Bank Come After Me for the Difference?

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Jacksonville Florida Short Sales FAQ: Will the Bank Come After Me for the Difference?

This is a huge concern for sellers, wanting to sell their Jacksonville Florida home. After going through the short sale process, and finally making it to closing, will I have to deal with this later down the road? The answer lies in the short sale approval letter. If you see the following(may not be the exact words):

The investor of your loan agrees not to pursue a deficiency judgment for any unpaid amounts on the loan after tender of the net sale proceeds in accordance with this approval letter.

The above sentence is from an actual approval letter, and it means the lender will not come after you for the balance that was not covered by the sale of your home. It’s important to ask for this multiple times, but understand, the lender may not waive that right.

If they don’t have it in writing that they will waive it, then yes, you may be hearing from them in the near future. In Florida, they have up to 5 years to file the deficiency, 20 years to collect. You may not hear from them, even if they haven’t agreed to waive the deficiency judgment. For more information on defiency judgments written by a Florida attorney, Richard Zaretsky.

Speaking of attorneys, I am NOT one and I can not give you legal advice, so you should consult with an attorney for legal advice.

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

 

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take? 

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

Jacksonville Florida Short Sales FAQ: How long will a short sale take?

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Jacksonville Florida Short Sales FAQ: How long will a short sale take?

This is a question that does not have just one sweet little answer. Well, actually it kinda of does, the answer is, it depends on your lender. It also depends on whether this is the 1st offer or 2nd offer. The first offer will usually take longer, since the BPO (broker’s price opinion) has to be completed, and the financial picture of the seller is first revealed to the lender. If you have had another offer before, the BPO has been done, the financial information turned in and the 2nd offer has been submitted not long after the first one went out the door, then things MAY go faster. The short sales, I’ve done where we get to keep the same negotiator, seem to be less stressful and a little faster.

Here are some time lines on some short sales I’ve done in the past (This could change, these time frames are not etched in stone):

  • HSBC-I mention them first, because I’m currently working on one. They have told me 30 day turn around for this one. I’ve done a couple more with them and they have taken 30 days, sometimes 2 weeks to approve a short sale.
  • AHMSI– I just closed one that took around 68 days to approve. Would have been under 60 days, but we had some terms of the short sale to work out. I did one a few years ago, that after the last offer (offer #3), it took like a week for approval.
  • Wells Fargo Financial-They are part of Wells Fargo, but a different dept and handle their short sales differently. They do everything when the house is listed, so once we had an offer, it took them a week to approve it.
  • Wells Fargo– Well, I’ve closed many of them with Wells and they are not consistent, but I’ve seen 30 days, but more like 60. Sometimes longer. Recently however, Wells has started using Equator (online short sale program) to process their short sales and it has been very difficult as they are working out the bugs.
  • Bank Of America– When they took over Countrywide, the wait times were incredibly long! It was a nightmare. Once they worked that out and started using Equator to work the short sale process, the process has gone more smoothly. I’ve seen some 30 day approvals, but mainly around 60 days. I am currently working on one, as a buyer’s agent, with BOA HUD short sale and it’s been since the beginning of November, so we are about 8 months into it.

So above, are just 5 lenders with some examples of how long their short sale process is. Anything can and will change, so the best thing to do is to set your expectations that this will not happen overnight. Hire an agent with short sale experience, properly price your home, have everything in your control completed on time. For example, when your agent asks for your paycheck stubs, bank statements, tax returns, etc. Get those items quickly. You have control over that. Your agent has control over how complete the short sale package is. Whatever you and your agent control, do thoroughly and quickly, which can help speed up the short sale process.

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

 

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

 

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take? 

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

Jacksonville Florida Short Sales FAQ: What’s in a hardship letter?

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Jacksonville Florida Short Sales FAQ: What’s in a hardship letter?

First off, what exactly is a hardship letter?

When you put your Jacksonville Florida home up for sale, if the list price is less than you owe, and you don’t have any money to pay the difference, then you are in a short sale scenario. The hardship letter is a letter that most, not all, lenders require that explains your reason(s) for requesting a short sale.

Your short sale hardship letter should be printed and include the following:

  • Date (It can be at the top or bottom by your signature)
  • Your name
  • Property address
  • Loan Number (very important)

The body of the letter only needs to be about a paragraph or two long. You don’t need to write a novel here, but if it goes over 2 paragraphs, not to worry. Just remember, the bank’s negotiators have 100s of files to go through, each with their own hardship letter. So if possible, make it short and sweet, to the point.

Drop the ego and anger. This is not when you want to unload all your frustrations. I know sometimes, you get ticked off by the lender. Maybe they are giving you the run around or they recently turned you down for a loan modification. You gotta forget that now and be as humble as possible. Whatever your hardship is, explain your situation here. Also explain, what you have tried to do to fix your situation.

I also recommend, you request that the lender, waive their right to a deficiency judgment, which is asking them not to come after you for the balance, when it’s all said and done and your short sale is closed.

Last but not least, sign under your printed name.

Got questions? Are you in a short sale and/or pre-foreclosure situation with your Jacksonville Home? Call me at 904-910-3516 or send me an email at pam@pamgraham.com.

 

I am not an attorney or tax expert, you should seek legal or tax advice from an attorney and CPA.

 

Coming soon, more Jacksonville Florida Short Sales FAQ:

What’s in a Hardship Letter?

How long will a short sale take? 

Will the bank come after me for the difference?

How will a short sale affect my credit?

I have no money, will I have to bring money to closing?

How will the closing costs get paid?

How long does it take for the bank to foreclose on my home?

What are the tax ramifications doing a short sale?

How does the bank determine how much they will accept?

Can a family member buy my home, then let me stay and rent it from them?

How do I hire the best real estate agent to get my short sale done?

 

 

 

 

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation has been Extended!

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The Mortgage Forgiveness Debt Relief Act and Debt Cancellation has been Extended through January 1, Happy 2014. I know many homeowners in the process of doing a short sale or considering doing one in the near future, are breathing a huge sigh of relief at the news!

What is the The Mortgage Forgiveness Debt Relief Act and Debt

Cancellation?

The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. So if you’re a seller who is doing a short sale, the amount the bank has forgiven, usually is taxed as income, but with the Mortgage Debt Relief Act, it’s possible not to be taxed on that amount.

An example would be if you owe 200k on your mortgage and you sold it as a short sale for 150k, the 50k would normally be included as income, but with the this act, you may be able to have that amount completely waived. Not everyone may qualify, so it’s best to check on the IRS website or to speak to a CPA.

Now, when the Mortgage Debt Relief Act of 2007 does finally expire, it does not mean short sale sellers are doomed and have a huge tax bill. If it is possible to show that you are insolvent at the time the debt was forgiven, you may be able to reduce the amount or have it waived completely. You are insolvent when your total debts are more than the fair market value of your total assets.  To protect yourself either way consult an attorney and/or a CPA.

If you need to sell your home and want to know what you can sell it for in today’s market request a FREE Home Value Report  complete with current sales in the neighborhood and current homes available for sale.

If you are behind on your mortgage and facing foreclosure, call me at 904-910-3516 to discuss your options.

 

 

Life after a short sale. How do I NOT get myself into that situation again??????

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 Life after a short sale. How do I NOT get myself into that situation again??????

Well, besides not buying a home ever again, we need to take an honest look at what got us into this mess in the first place. Blaming the market or blaming your lender , but not taking any responsibility yourself, isn’t going to make your situation better. Really. You need to be honest with the man or woman in the mirror. What could you have done different that would have made your situation better?  

 Now, before you ask me who am I to judge, let me just say that I know where you were, I know where you’re at now, I’ve been there and you won’t get any judgmental attitude from me, just good old fashion honesty.

 I’ve decided to make this post into a series, because once I started writing more and more ideas just started to flow, that one post would be 10 pages long!!! So, let’s begin!

 Part One: GET RID OF YOUR CREDIT CARDS!

I’m starting with this one, because credit card companies really tick me off! You’re one day late paying your bill and you get this nice notice letting you know that your rates are going up. The government slaps their wrists by requiring CC companies to “do the right thing” and guess what? We pay the price by them raising the rates before their “do the right thing” deadline.

The good news is, we don’t have to put up with it! Pay them off and GET RID OF THEM! We absolutely do not need a credit card to make it in this world! I know we’ve been told we can’t live without them, but the truth of the matter is, if we go back to what our grandparents did, like save money and not buy what we can’t afford, we won’t need them.

Here’s a personal example for me that I’m dealing with right now. My flat screen tv died, 12 days after the warranty expired. OUCH! My husband is still going through withdraw. We had to bring our 19” from our bedroom to our family room. Personally I’m glad the tv is out of our bedroom! If, I’m honest tho, I do miss the flat screen and it would be easy to use a credit card to buy one. BUT, I hate being in debt even more and I HATE credit card companies too. Although it may be months before we get another flat screen, the day we pay cash for it with no interest fee, late fees and such, will feel so much better than getting it now, making our monthly payments with more going to interest than principle and end up paying more than double if not triple in interest!

 Using debit cards is a great way to keep yourself in check. You can use them to rent a car and to check in at a hotel. No need to have a credit card!

What has helped me put my finances in perspective is when a friend of mine suggested the book The Total Money Makeover by Dave Ramsey. I don’t want to sound like a commercial so go check out the link for yourself!

 

Next in the series is: What is an Emergency fund and why you can’t survive with your sanity intact without one!

 

 

 

Avoid Foreclosure in Northeast Florida Part 3

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Avoid Foreclosure in Northeast Florida

In our first blog Foreclosure in Northeast Florida we talked about some of the reasons you find your self in foreclosure and in Foreclosure in PerseveranceNortheast Florida part 2, we talked more about the time line.

Today, I’m going to discuss some options available to you.  Let’s start with the first option and the one you don’t want to do:

Do Nothing-  When you’re faced with the possibility of losing your home and your stress level has hit an all time high, you might want to throw in the towel, move out and let your house go into foreclosure. Then it’s over, done with, a chapter in the book written and time for the new chapter to begin (unless your house is sold for less than the loan amount at the auction and you receive a deficiency notice saying you still owe the difference) However, you’re faced with a foreclosure on your credit for about 7 years. It will be difficult to purchase a home again with foreclosure on your credit. You may decide not to buy a house, but having a foreclosure can affect other things, for example car insurance. You will pay more with poor credit then you would if you had good credit.

Refinance- You may be able to refinance your existing loan, however with the subprime lending in it’s current state, that may be difficult or nearly impossible.

Reinstatement- You pay the entire default amount including attorney fees, late fees, before your house goes to auction.

Loan Modification- Your mortgage company may be able to extend the terms of your loan.

Forbearance- The lender may agree to provide a temporary payment reduction or suspension of payments.

Partial Claim- A loan from the lender for a second loan to include back payments, costs and fees.

Deed in lieu of foreclosure- You give the property back to your lender without going to foreclosure. This option could be as damaging to your credit as a foreclosure.

Bankruptcy- This could allow you more time and get rid of some of your debt. This may affect your credit for 7-10 years.

Sale- You can sell your home before your house goes to auction, it’s possible to sell it even if you don’t have enough equity. Your agent may be able to negotiate a short sale (when the bank accepts less than what you owe on your mortgage) with your lender.

I hope that you walk away with some knowledge to help you decide which path you need to take.

 I am not an attorney nor do I play one on tv. :)   If you find yourself in this situation, contact an attorney. A real estate agent can not stop your foreclosure as they are not licensed to practice law.

If you’re wanting to know what your home is worth in today’s market, fill out my FREE Home Valuation form and within 24 hours I’ll send you your valuation results via email.

 Avoid Foreclosure in Northeast Florida

Avoid Foreclosure in Northeast Florida Part 2

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Avoid Foreclosure in Northeast  Florida

Welcome back to the latest blog about Foreclosure in Northeast! (this applies to all of Florida) In the last blog we talked about the Try try againreasons you found yourself getting behind on your mortgage payments. Today, we’re going to talk about the process of foreclosure and what steps are involved. Typically, when you’re 3 payments behind, your mortgage company will send you a breach letter, also known as a notice of default. 30 days later they send the file to their attorney who then files a notice of “Lis pendens” in the county you reside. You will receive a notice of “Lis pendens” as well. This becomes public record for the world to see. In most counties, the public records are online so anyone with a computer and Internet connection can search the Lis pendens. Once your Lis penden is in the public records, be prepared to receive tons of mail from people wanting to “help” for the next few months. You will even receive phone calls and even some visitors at your front door! One client of mine was even lucky enough to find a coffee mug at her doorstep filled with candy and a note. That’s great for home owners with kids who are trying not to let their kids know about the situation they’re in. You’re going to receive letters from investors wanting to buy your home, companies offering to help you save your home (for a fee) and you’ll probably receive letters from real estate agents. With all the letters, phone calls, wonderful and “thoughtful” gifts you receive you may end up very confused. Make sure you check out these companies first. Also the companies offering to help you save your home, well the things they’ll do, you can do yourself..for free!

More on that in the next blog. To continue along our timeline, once the Lis pendens has been filed, you have approximately 4 months before your home is sold on the court house steps. Approximately 3 months after the Lis pendens is filed you’ll have a hearing before a judge. At that hearing you can plead your case to have an extension. Depending on the situation, the judge may grant you more time. If an extension isn’t granted, 30 days later your home will be sold.

If you’re wondering if there’s anything you can do to avoid foreclosure, you do have options.

Also, in my next blog : ” Foreclosure in Northeast Florida Part 3″ I’ll discuss what options you do have to avoid foreclosure.

 I am not an attorney nor do I play one on tv. :)   If you find yourself in this situation, contact an attorney. A real estate agent can not stop your foreclosure as they are not licensed to practice law.

If you’re wanting to know what your home is worth in today’s market, fill out my FREE Home Valuation form and within 24 hours I’ll send you your valuation results via email.

Avoid Foreclosure in Northeast Florida Part 1

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Avoid Foreclosure in Northeast Florida

Are you getting behind on your mortgage payments? If you are, I’m sure you’re feeling a number of different emotions. You’re probably scared, HOPE!!!worried, wonder how in the world did you let yourself get into this position? Then the next question is how in the world do I get myself out? I don’t need to tell you that everyone needs a roof over their heads,but the question you need to ask yourself is, can I afford the roof I currently live under? If you weren’t behind on your mortgage payments could you afford your normal payment? Sometimes, homeowners get behind because something comes along you weren’t prepared for. Maybe your spouse was laid off, or they got sick, maybe there was a death in the family. Maybe you can easily afford your normal monthly payments, but because you weren’t prepared for one of life’s hurdles you fell behind. Or maybe you’re a homeowner who struggles every month to make your mortgage payment, you scrape and scrape to get by, and at the end of the month you wonder how you’re going to make it to next month. If you find yourself in the situation of getting behind on your payments, the first thing you should do, is to call your mortgage company. Whatever you do don’t avoid them. They don’t want to foreclose on you unless they absolutely have to. Most mortgage companies have a couple of different options for their homeowners who get behind.

I offer seller alternatives to avoid foreclosure, go check them out.

In my next post “Avoid Foreclosure in Northeast Florida Part 2” I’ll talk about what’s involved in the foreclosure process.

Tips to make your Jacksonville Florida short sale go smoother: Gotta Pay the HOA!

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Tips to make your Jacksonville Florida short sale go smoother: Gotta Pay the HOA!

If you’re facing a short sale situation, and you have either stopped making your payments, or you’re struggling to make your payments and may have to stop paying them in the future, if all possible make sure you continue to pay your HOA fees.

Here’s why: In Florida, if a house goes into foreclosure, and the house is in a neighborhood with an HOA, and those HOA fees have not been paid, the HOAs will still get some money. So what’s that got to do with a short sale you ask? Good question. Because of that law, it makes it harder to negotiate a past due amount with the HOA. They know they will get some money so some HOAs won’t budge and can kill the deal.

I recently ran into that situation with a successful short sale in St Johns County. The HOA fees were about $2500, due to being past due for a couple of years, lawn being mowed by the HOA, late fees, so on and so on. Luckily in this situation, the buyer paid the fees so the home closed and everyone was happy. Sometimes, the HOA will come down, but in this case and most others, they won’t.

The moral of the story is to pay your HOA fees if you can, or they can come back to haunt the short sale of your Jacksonville Florida Home!

If you’re wanting to know what your home is worth in today’s market, fill out my FREE Home Valuation form and within 24 hours I’ll send you your valuation results via email.

 

What are the consequences of short selling my home?

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What are the consequences of short selling my home?

This is the most frequent question I get asked from homeowners, when they are thinking about short selling their home.

Here are some situations I’ll go over with you in this post:

  • Being issued a 1099
  • Promissory Note
  • Deficiency Judgment
  • Credit issues
  • Cash Contribution at closing

Now before I go into more details, real estate agents can not give you tax or legal advice unless of course they are CPAs or attorneys. I am neither. I will share my experiences and point you in the right direction. With that said, let’s move on with the program!

Being issued a 1099. When you close on a short sale, obviously there’s an amount that the lender doesn’t collect and is forgiven. That amount can be taxable as income. So for example, you sell your house for 100k, owe 200k, the short amount is 100k plus closing costs that the lender paid on your behalf. The 100k can be taxed as income. I know that sounds bad, but you may be able to reduce that amount or eliminate it all together. There’s a Mortgage Debt Relief Act of 2007 that may help you eliminate it. Even if you don’t qualify for that, you may still be able to reduce or eliminate it. To find out more, you need to contact your CPA to discuss your tax options. I can’t give you tax advice, but I am able to point you in the right direction.

Promissory Note. The lender may ask for a promissory note, usually for 0% interest, monthly payments for 10-15 years, it depends on the amount and their new terms can vary.  If you have a true hardship, typically they will not require one. If you have PMI (private mortgage insurance), expect a promissory note from them. PMI happens when you put down less than 20% on your loan. Part of your mortgage payment you pay, goes to PMI. This helps the lender to recoup their loss in the case of foreclosure or short sale. Sometimes the lender puts PMI on your loan after the fact and you may not be aware you have it. If you’re not sure you have PMI, just give your lender a call.

Deficiency Judgment. This is when the lender pursues their right to come after the amount that was short on your short sale or foreclosure. We always ask for this right to be waived and often the lender will agree. There are times they don’t agree, but it doesn’t mean they will pursue it. If they do pursue it, you may be able to negotiate it down. Just as I’m not a tax consultant, I’m not an attorney either, so you should consult an attorney on the legal ramifications of doing a short sale.

Credit Issues. Short sale sellers are concerned about the damage a short sale will do to their credit. More than likely the lender is going to report your short sale to the credit bureau. It will say something along the lines of: agreed settlement short of full payment. That will cause a drop in points and really it’s hard to say how much. If you’re able to make your payments all the way until closing, you will minimize the damage. Late pays can really drop your score. I’ve had short sale sellers report to me a 100 point drop with the first late pay. Now, if eventually you want to buy a home again, you may have to wait 2 to sometimes 7 years depending on your situation that caused you to have to short sale, money down, what type of loan, etc.

Cash Contribution at Closing. It is very possible that you may not have to bring a dime to closing, if you have a financial hardship. If you have other assets and some cash in the bank, the bank may require a cash contribution. Sometimes, I’ve seen the net the lender wants is a little higher than what the deal will bring. Sometimes the buyer will contribute to that, the bank agrees to a lower net or the seller can contribute.

These are the major list of consequences you can expect, but it’s not the complete list. Every seller’s situation is different. Speak to a CPA and an attorney for all your options. Feel free to call me at 904-910-3516 or email me if you want to discuss your unique situation.
If you’re wanting to know what your home is worth in today’s market, fill out my FREE Home Valuation form and within 24 hours I’ll send you your valuation results via email.

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