Federal aid has offered various programs via Making Home Affordable (MHA) to help American citizens all across our nation who are struggling through the recession. Although it has been helpful, foreclosures are still increasing leaving many in difficult situations. Acknowledging this widespread dilemma, several state governments have implemented a “Foreclosure Mediation” program that allows homeowners to speak directly with their lender to formulate an agreement on the issue of their delinquent mortgage payments. Is this a remedy option worth pursuing? Studies in Washington State have shown improvement in halted foreclosures.

This bill that the Washington State Legislature passed is called the Foreclosure Fairness Act of 2011. Seeing the staggering statistics of foreclosures in Washington which was over 132,000 foreclosed homes between 2009 and 2012, Washington decided to aid its citizens by funding HUD counselors to help distressed homeowners all throughout Washington. Through the HUD counselor or an attorney, the homeowner is able to request a foreclosure mediation where they are able to speak directly with their lender, with a mediator’s assistance (HUD counselor or attorney), to reach a “fair, voluntary, and negotiated agreement.”

Who qualifies for this program?

*For Washington Residence

Homeowners are covered if they are in owner-occupied properties and have either: (1) received a Notice of Default on or before the effective date of the Act and their house has not yet been sold at foreclosure sale; or (2) after the effective date, have not yet received the Notice of Trustee’s Sale. Any lender or servicer who did 250 or more foreclosure sales in Washington during the previous year is covered. The Act is effective on July 22, 201 1. The Department of Commerce will administer the Mediation Program.

Benefits to the Mediation Program

The main benefit of this program is reaching a consensus between the homeowner and the lender. The possible outcome may grant the homeowner:

• A loan modification which will reduce the interest rate and extend the mortgage period.
• An agreement to conduct a Short Sale which is selling the property for less than what the homeowner owes.
• A Deed-in-Lieu of foreclosure which is a voluntary transference of the deed to the mortgage company that has the homeowner’s loan.
• Cash for keys program which may provide monetary incentives for homeowners to vacate the home.

The other important benefit of this mediation program is if the lender agrees to participate, the homeowner is able to obtain an extra 45-60 days after the 15 days for the meeting to be approved and scheduled once requested. This act gives homeowners more time to figure out what the best move is to make when in danger of foreclosure.

How do I utilize the foreclosure mediation program?

The cost of using the mediation program is $200. If the homeowner qualifies, it can be obtained by speaking with a HUD approved counselor or an attorney who will send a request for mediation to the lender.

Will the foreclosure mediation program ACTUALLY be beneficial for me?

Click here to see if your state is participating in the foreclosure mediation program.

This mediation program has the potential to be beneficial. Lenders typically try to forgo the foreclosure process and are willing to work out a solution with homeowners. However, the results have been variable from state to state. Some states such as Florida have brought dismal results bringing only 4% of the referrals to the program ending in an agreement. The State of Washington have had better results having halted over 600 foreclosures in just 3 months after the program started in July.

If anything, the real incentive to use this program is the delay of the foreclosure process. It gives the homeowner more time to plan and make an informative decision for their home rather than being foreclosed on and evicted which could be emotionally and financially detrimental.

If you are in a position where you received a notice of default or are already in foreclosure, this may be an extremely helpful tool for you. I suggest you call a HUD counselor in your area immediately, even if you aren’t in default but struggling to keep up with your mortgage payments. If you live in Washington, I highly suggest you contact our short sale specialists to learn more about the process and consult with our certified distressed property experts as a short sale is in most cases, the best option for homeowners. Submit your information here and I will have our experts contact you within 24-48 hours.

Hope this helps

Peter

Will there be a rebound in the housing market for 2012? Many are becoming more optimistic about this year’s housing situation as homes have reached unprecedented lows in interest rates and prices thus increasing demand. Concurrently, rent prices are rising and more people are apt to buy which will decrease the excess of supply in our market (many of which are short sales and REO properties) and ultimately, bring the prices back up. What does this mean for current homeowner’s who are struggling with their mortgage(s) and considering a short sale?

As evidenced from past experiences, the fluctuation in the housing market is so variable that even experts are unable to guarantee which direction it will go. There are expectations of stabilization or possibly a slight shift in the direction of prices in the latter half of 2012. Even then, the expected prices are definitely not 2004 prices but more at the 2008 price levels.

The rebound is largely contingent on various factors such as the strength of employment, builder activity, investor activity, and other changes in the general economy. Experts opposing the optimistic predictions of the housing market say, “Distressed properties have the lowest prices for any category of home sold. To a large extent, that’s why we’ve seen continuous home prices drop over the past three years and why those drops are likely to go on.” – Guy Cecala of Insider Mortgage Finance. An influx of short sales and foreclosures entering the market is not going to slow down soon. Even in the case that these great deals fly off the market and prices halt its decline with a slight rise, should a homeowner stay in their homes or short sell right away?

The important question is, are you able to amply afford your mortgage payments in the upcoming years? If you are struggling with payments, then this year would be the most opportune time for a short sale. Suppose the homeowner stays in the home while barely making it by with the mortgage payments. He/she doesn’t only stay at risk of defaulting and foreclosure but the home will likely build little to no equity, if not stay underwater. If the home falls into foreclosure or the homeowner decides to pursue a short sale later, the homeowner may be liable for income tax from the sale of the home which is currently forgiven via the Mortgage Forgiveness Debt Relief Act set to expire December 31, 2012.

A more reasonable option would be to short sell your current home, negotiate the deficiency owed to lender(s), stay within the mortgage forgiveness debt relief act timeline, and purchase another home that makes sense for your financial situation at the lowered interest rate the market offers. It is a good time to buy but for how long will it last? If the housing market slowly rebounds in the next few years, then promptly short selling would give the homeowner enough time to reestablish their financial situation, rebuild credit, and purchase another home within 2 years (typical after a short sale) that is within their means and at a superb price/rate. It may be delayed gratification but keeping up with the Joneses now will only precede an exacerbated financial situation on your hands.

If you would like more information on short sales or would like to speak to one of our Certified Distressed Property Experts, submit your information here and write a brief description of your home situation.
Hope this helps

Peter

Stop trying to simply increase your income to solve your financial problems. Rather, focus your efforts more on stabilizing your financial situation with the income you are already receiving. We recommend Dave Ramsey’s Babysteps program as we have found Dave Ramsey has been one of the best financial advisors having helped millions of individuals achieve financial freedom. He helps individuals get out of the system of perpetual debt, learn how to budget, save, invest, build wealth, give, and much more.

When should I purchase another home?

We do not recommend purchasing another home until you are financially ready. During this financial rebuilding, there will be the temptation where right after you save enough money for the down payment, you’ll want to buy another home immediately. Although you may enjoy the purchase of the new home momentarily, you will be right back where you were and possibly worse depending on the situation. Make sure you get financial wisdom prior to purchasing your next home and make it a goal to get a 15-year fixed mortgage or do a 100% cash down on your next home.

What is your goal? If it is to purchase another beautiful home, then there needs to be planning or expect to rent for life. Now that you have freed yourself from the costs of homeownership, use that money to work on eliminating your debt, building your assets and savings, and living in a beautiful home financially free. If you haven’t done a short sale yet but are struggling with your mortgage payments, we highly recommend you talk to HUD approved counselors and find out all the options for your home. If short sales are a viable choice for you, submit your information in the short sale tab above and we will provide you with a free consultation with one of our experts.

Hope this helps

Peter

If you pursue a short sale or any other route of letting go of your home, you will inevitably have a ding on your credit score. Although the amount varies depending on which route you take or whether you are late on your mortgage payments in a short sale, having a ding on your credit score will make it difficult for you to utilize your credit especially when purchasing another home. What are mortgage companies looking for in your credit? How quickly can you purchase another home after a short sale? We will review these questions and a solution.

What are mortgage companies looking for in your credit?

As you may have already guessed, the dramatic changes to the housing market due to the subprime mortgage crisis have made lenders and investors much more stringent on their lending practices. The three areas lenders look at when considering financing your mortgage are credit score, income, and your overall ability to repay the mortgage. Large agency investors such as Fannie Mae changed their minimum credit score requirement from 580 to 620. Anything under 620 is considered high risk. Your local bank may require a credit score of up to 660 or higher which shows you how important credit scores are in your ability to obtain another mortgage.

How quickly can you purchase another home after a short sale?

Based on the numerous cases we have seen, homeowner’s are able to purchase another home much quicker in a short sale than after a foreclosure. As far as the time it will take to purchase another home, really depends on each specific situation. Our team has personally seen homeowners purchase another home within the first year if they’ve made all of their payments.  Multiple clients have bought their home within 2 years and more clients inside three years all without missing payments.  If you miss payments (per rumor), it is understood that Freddie and Fannie won’t finance you for 2 years before you are able to start shopping again.  Whether or not they finance will depend on how many missed payments and how good/bad your credit is.  The timeline in which you are able to purchase another home greatly depends on you and your proactive decisions from this point on.

How can I rebuild my credit after a short sale?

Seattleshortsaleblog have been endorsing Lexington law credit repair for some time now. It has proven to be the best credit repair company having removed 1,297,226 negative items from credit reports in 2010 including short sales, foreclosures, and bankruptcies. This company helps individuals rebuild their credit score to good standing which will expedite the process of being able to purchase another home. I suggest all homeowners whether they are thinking about a short sale, currently executing a short sale, or have finished a short sale, to call and get consultation regarding their credit.

Next Post 1/13/12 Friday

Peter

Credit implications after a short sale or a foreclosure have been an important topic for many who want to maintain their good credit. The only way to prevent damages to your credit is by staying current on your mortgage(s) payments, selling your home via conventional sale, and paying the difference of what you owe to your lender. Otherwise, whichever direction you go, your credit will be negatively affected.

Today’s post is an explanation of how much impact your credit score will have in a short sale versus a foreclosure and a plausible solution to this problem.

*Please refer to these pictures from the Fair Isaac Corporation for the following information.

Credit impact in a Short sale vs. Foreclosure

As you’ve probably noticed, the difference in credit score reduction between a short sale and a foreclosure is no different contrary to popular myths. However, the verbiage used in reporting your short sale or foreclosure is different. In the case of foreclosure, it will be stated as a “Foreclosure” on your credit report which may be disadvantageous when looking for a job or another mortgage.
In a short sale, your sale will be reported as “settled as agreed” “settlement in full” “Account legally paid in full for less than full balance” or something along the lines of that verbiage. A mortgage company’s decision to allow another loan may be affected by the outcome of your current home.

Also, one important factor all homeowners must know is you do not need to be late on payments in order to conduct a short sale. Hence in this case, a short sale would have a significantly less ding on your credit score as you will have no late payments.

Seattleshortsaleblog’s solution

As you can see in the table above, the higher your current FICO score is, the greater the ding will be after a short sale or foreclosure. Question is, would you rather pay a large sum of cash or take the ding on your credit score? Many experts (seattleshortsaleblog included), would endorse cash every time. Why? Because damage to your credit can be repaired overtime whereas cash does not come by as easily.

Here is the best solution we’ve found. Rather than trying to save your credit by doing a conventional sale and paying out cash, we at seattleshortsaleblog highly recommend an accredited credit repair company that can expedite the rebound of your credit score. Simply call Lexington Law consultants at 888-586-6113 to see whether they can help your credit situation. The consultation is free! Hope this helps friends and I hope you had a Happy Thanksgiving weekend.

Peter

There is wisdom in a multitude of counselors. Dealing with your mortgage(s) should not be done alone as it is an extremely complicated process which naturally causes high stress and will most likely produce unwise decisions. I always recommend finding HUD approved counselors to help you based on your specific situation but whether it is a Foreclosure, Loan modification, Short sale, or filing for Bankruptcy, consulting with an attorney is just as important to safeguard your future. Key point: Find the right attorney to counsel you.

How would an attorney help me?
In America, it is wise to have an attorney on hand. We deal with legal matters more often than we realize even for the little things including overcharges for repairs, speeding tickets, returning defective products, and so on. An attorney will be in your best financial interest if you know when and how to utilize their services.

What about the more serious situations such as dealing with mortgages and deficiencies? Whether you are letting go of your property via foreclosure, deed-in-lieu of foreclosure, a short sale or pursuing a refinance/loan modification, sale/leaseback, or filing for chapter 7 or 13 bankruptcy, any decisions without an attorney can be a detriment to you and your family.

An attorney will be able to guide you to the right decision for your home and whatever route you take, their counsel will be a safeguard for your path. Some examples of the need for an attorney are:
*All laws vary from state to state.

• Foreclosure – Knowing your state foreclosure laws/processes and your rights as a homeowner is very important. Even if you live in an anti-deficiency state and your home is foreclosed on, having a subordinate lienholder will put you at risk of a deficiency judgment. You also need to know exactly what the tax and credit implications are after a foreclosure.
• Short Sale – In a real estate transaction, there are a number of documents you must review and sign. In short sales, you must be very careful in reviewing all the documents especially when you are dealing with the deficiency agreement on the approval letter. If your lender requests you sign a promissory note when closing the sale, you must understand the terms of agreement.
• Bankruptcy – Many homeowner’s have false notions on what all a BK can do for them. In a chapter 7 bankruptcy, you liquidate your non-exempt assets and can discharge unsecured debts. However, this does not eliminate liens as it does not discharge secured debts. Your lender is a secured creditor meaning the debt owed to them is secured by the lien on your property.
  If you have some income, you may file for a chapter 13 BK where you keep assets but rather than discharging your debts (some are dischargeable i.e. fraud judgments), you reorganize them to pay off overtime (3-5 yrs.) according to a repayment plan set by the court. You must still make payments to your lender according to the repayment plan. If you miss any payments under your plan, your case will be dismissed by the court
  Be sure you know exactly what pursuing a Bankruptcy entails and if you even qualify. Your attorney will be able to explain that to you and help you determine whether BK would be in your best interest based on your situation.
• Loan Modifications – Although I do not endorse pursuing a loan modification yourself, your attorney can give you consultation through the process and go through the documents with you.It is a no brainer, if you are in pre-foreclosure status, find yourself an attorney.

What if I don’t have the finances to hire an attorney?
Qualified attorney’s typically charge an hourly rate of $200-300 for legal consultation. With the difficult process of dealing with mortgages, you can easily accrue a staggering amount of expenses that would be difficult to pay especially when you were struggling financially in the first place.

Fortunately, Seattle Short Sale Blog found the solution. We understand the need of an attorney when in pre-foreclosure status but finding a legitimate attorney at an economical rate is nearly impossible to find. We’ve discovered that rather than paying an attorney $200-300 for consultation (which should really be spent for legal representation), we endorse Legal Shield services.

Legal Shield allows unlimited access to multiple attorneys with AV ratings on the LexisNexis Martindale-Hubbell. These attorneys are experts in specific fields such as foreclosures, loan modifications, short sales, bankruptcy and more but only charge at a standard rate of $17 a month. It is on a membership basis rather than an hourly basis which has proven to be an extremely viable choice being in a recession. Click here and find your attorney.

Hope this helps

Peter

Everybody’s goals are different. However, in almost every person’s dream, they see themselves in a beautiful home. Unfortunately, many people were given the option to acquire that dream prematurely without a secure foundation. They were lured by the illusion of a “fleeting opportunity” which consisted of 100% financing and the promise that the home would appreciate by many so called “Real Estate Professionals” and leverage was the “name of the game”.  This mindset helped lead to our Mortgage Crisis we find ourselves in today.

Homeowners are now in a situation where they hold on to their dream home at a heavy cost even when the mortgage is not right for them. Letting go of your beautiful home is a tough decision to make but it’s not just about selling your home and getting out from underneath the burden of payments.  There will be many brighter days ahead, your financial situation will improve, and your decision to sell could result in the opportunity for you to buy and own a beautiful home in the future.

Make it your goal: A New Home.
Your new home is waiting for you. However, the speed of achieving your new home will be determined by your proactive decisions today. Letting go of your home is a no brainer but the sooner you understand that it is necessary and move forward, the quicker you’ll be on your way to a new home.

We are fortunate enough to have the option of a Short sale where you can sell your property for less than what you owe to the bank and negotiate the difference. To adjust to the economic circumstances, this has been the popular choice especially as many wise homeowners hired professional negotiators and closed their properties on great terms. One of the key benefits of a Short sale is: You can purchase another home as soon as 2 years(sooner if you weren’t delinquent pre-short sale) as opposed to approximately 5-7 years with a Foreclosure.

What about my credit score?
Have you been late on your mortgage payments and/or bills that were given to collection agencies? This is the biggest worry of many homeowners. If you are in pre-foreclosure status or you can foresee an inevitable delinquency situation, your credit score is or will be severely affected. Regardless what you plan on doing with your current home whether it is Foreclosure or Short selling your property, your credit score will incur a considerable ding which will make it difficult for you not only to find a home loan but have a higher cost of borrowing(subprime mortgage).
If you plan on purchasing another home within 3-5 years, which is when the housing market is expected to be at its lowest prices, having a solid credit is very important.

Fortunately, there are ways to expedite the process of repairing your credit score. This can be achieved by hiring attorney’s to contest items on your credit report and legally delete them thus increasing your credit score.
Although I do not endorse the habit of taking out lines of credit and/or loans, there are benefits to increasing your credit score such as shelter(housing or renting), transportation(car insurance included), employment, entrepreneurship, utility services, and most importantly, it can be used as cushion in case of a dire emergency that unexpectedly engenders in life.

What about timing on when to buy?

Plan, plan and plan.  Many people take more time planning a vacation, than they do planning their own lives.  In the planning process, hire professionals that will not advise you to buy when you are not ready.  Many mortgage brokers advise their clients to wait until they have 6 months of expenses in the bank.  When you do buy, buy what you can afford.

Hope this helps

Peter

*The intention of this part series is to inform homeowner’s of the gravity of our recession and to give guidance on how to adjust to our economic conditions. This part series will include portions of the US economic status, financial advice from well-known experts, and the importance of Short sales.

Optimism is greatly encouraged. However, if optimism becomes delirium and delays the steps towards you and you’re family’s financial recovery, then it is problematic. Whether it is your home loan(s), car loan, student loan, credit cards and etc., the reality is, you are in debt and this debt will not magically disappear unless a plan of action is executed. Let’s establish one very sobering reality that many people are trying to remain oblivious of, we are in a recession and we cannot afford to remain in the same standard of living(SOL) that we had in our previous years.

You’ve had an unfortunate story: Divorce, medical issues, unexpected repairs on your vehicle or home, bad investments and etc. Sound familiar? Money magazine said 78% of you will experience a negative financial event in any given 10-year period of time. I am aware of these unexpected events and I have personally experienced a good portion of them. I hear hundreds of tragic stories that put homeowner’s in the difficult positions they are in today. My heart truly goes out to you which is the reason why I do what I do today.

What is the current reality and direction of the US economy? Watch This: US Debt Crisis – 2012 is only for America

Some of you may take this with a grain of salt. However, we can agree that headlines on the news have not brought hopeful projections for our near future. What have we heard recently? Slow housing market recovery, US S&P’s credit rating downgrading from AAA to AA+, sharp declines in our stock market, our ever weakening U.S. dollar, slow job recovery and many many more. These kinds of headlines are prevalent in our country yet I don’t see enough drastic changes in homeowner’s decisions to adapt to our current economic conditions.

Who is to blame for our economic crisis? Let’s try not to revolve around this question anymore. Rather, we should focus our efforts on what we can do about it and what can I do about my situation right now?

Part Two (8/31/11): Survival Mode: How do I stay alive and set myself up for recovery during our economic instability?

I have seen and heard a variety of unfortunate circumstances through Seattleshortsaleblog. Many of them were caused majorly due to one of America’s poisons: Pride.

As an expert in this field, I know the direction of the housing market is going south. I cannot emphasize this statement more to all homeowners: Eliminate Pride and be Proactive. The longer you wait, the deeper your hole will get and the harder it will be to get you out. Please read and memorize these two very important lessons that I am about to teach. I guarantee it will change your life.

Lesson number 1: Be humble.

We live in a world where social status governs our daily actions. We walk around with nice bags, cars, phones, homes, and other items when we are still in debt with car payments, mortgages, student loans and etc. I find this absolutely outrages as for most people, this not only affects them but their family’s as well. We have become so possessed with our image to the point where our selfishness put us in one of the worst positions we’ve seen in our economic history. Why are we in a recession? Largely because we are all spending money that we do not have! Our debt ceiling is around 14.2 trillion.
I believe media has exacerbated this issue as corporations have never been more aggressive in marketing their products to people who cannot afford them. Many of us consumers will use a line of credit to purchase whatever is thrown at us. This is an unfortunate practice that still exists today even in this economic slump.

If you are struggling to pay your bills, do not spend money that you need for more important things. Even if it means drinking homemade coffee rather than going to your nearest Starbucks or Tully’s for that premium $2.00 coffee every day.

For homeowners, getting rid of your home can be a humbling experience but if it is an option that you know is viable for you, then it might be an important decision to consider.

Lesson number 2: Be proactive.

Regardless what position you’re currently in whether you are in default and pre-foreclosure status or you can foresee yourself in default, please free an hour of your time now. Schedule it in your calendar and do not read on until you have done so.

Spend this hour contacting professional advisors to explain your situation.
Here are my recommendations for counselors:

U.S. Department of Housing and Urban Development – HUD Approved Counselors

Homeownership Preservation Foundation – Free and legitimate counsel

Better Business Bureau - Use to verify legitimate practices of a questionable company

Peter@seattleshortsaleblog.com – I will offer my personal expert advice.

There is light at the end of the tunnel. Do not be ashamed and lose hope as we are all affected by the recession. Our economic situation is not getting better for many years and if your friends are not struggling now, in most cases, they will be.
You however will be in an optimal position as you will have dealt with your home and reduced your debt significantly. You will be able to purchase another home that you can afford and be in a much better financial position than many of your friends who couldn’t deal with their pride and open their eyes to the reality of our economic situation.

I get an influx of requests for help from distressed homeowners but I would like to make myself available. If you are looking for more information on short sales, my team of negotiators specialize in short sale transactions and I can arrange a free consultation if you request it under the short sale tab.
Don’t lose hope friends.

Peter

Just last month three of our clients closed on their properties without missing a single payment! This is great as their credit will take minimal damage.  So when should you start your short sale? The moment you realize that you will not be able to make the payments on your home for the remaining timeline of your note. What I am saying is, if you can see that 6 or 12 or even 18 months from now your financial position will not allow you to make your payments, then I would start the process right away.

It is customary for sellers to think that if they do a short sale and have some financial stability for the next 12 months, that a bank will not allow a borrower to short sale, however this is not the case all of the time. You only need to show an “inevitable” financial hardship to start the process right away.

If you have more questions regarding this, fill out our contact form and a specialist will call you within 24-48 hours.  Our team has nearly 10 years combined experience and a stellar track record.

SSB