It’s 2010.  If you’re in the market to buy, you better be in the market to invest because a single wrong purchase (yes, even in a “down economy”) could very well turn YOU into another distressed seller in the next 5 years.  Imagine being forced to short sell or foreclose a property that you purchased in a down economy.  That is a very scary notion and I do not wish these circumstances on anyone.    

As a Washington based short sale expert, I have seen many, many Seattle area homeowners come to me having to short sell claiming their buyers agents had “duped them” into purchasing properties at prices that are now substantially above market value. 

So who is to blame?  The lender?  The buyer?  The agent?  In my opinion, everyone is to blame as each of these parties play a vital role in the buying process.  Let’s discuss exactly what happens in a bad purchase.

Let’s start with the lender:

You need to work with a lender that doesn’t bend the rules, period.  You know why?   Consider this example.  When a crooked buyers agent & lender work together, the buyer will convince you that the property is worth $300,000 to get the deal done (when it may only be worth $260,000), and the lender will step right in with a twisted appraisal to “confirm” that the property is indeed worth $300,000 to you and the official underwriter who approves the loan.  Now that everyone is convinced the property is worth $300,000, you obtain the loan, close the transaction and now you are upside down on your mortgage.  This happens, folks, so make sure that you are working with an ethical lender who knows what they are doing. 

In addition, many lenders out there will get buyers into loans that they cannot afford, by twisting around financial information to convince the underwriter that you can afford the property when you simply cannot.  Since most buyers are inexperienced, they will agree to these terms since they’ve fixed their eyes on that property and are perhaps emotionally involved in the transaction.  A professional, ethical lender will see past this and make sure you do not set yourself up for failure.

The benefit of working with an experienced, ethical lender is that you’ll be able to get a “2nd opinion” on the value of the home when the lender orders the appraisal.  If both the bank and your buying agent believes your property to be worth X amount, then it probably is (given that both the agent & lender are ethical people), and you should have peace about moving forward with your transaction.  If there is a large discrepancy, then back off and reconsider the purchase. 

The Agent:

Agents work on commissions.  If you understand this concept well enough, you’ll know not to work with agents who appear to be greedy, impatient & pushy as those are signs of a person just trying to make a sale.

A solid agent gives you the freedom to look for properties, yet will give you proper guidance on the ones that you are interested in.  They will give you access to the very listings that they themselves have access to, unlike some agents.  Did you know that some agents will sift through properties and only send you the ones they believe will close easily and as quickly as possible?  These kinds of agents look for such things as high commission rates, “overstocked” condo complexes & non-distressed properties (short sales and REOs) in order to avoid having to negotiate or bid.  Avoid these agents like the plague.  They know nothing about investing in real estate.

Lastly, a solid agent will not be a “yes man or yes woman.”  They are not going to sit there and agree with 100% of the things you say, because unless you are more experienced in the business then they are (if that’s the case then, well, run), they’re going to naturally lead the transaction and not the other way around.  Work with an agent who can kindly disagree, as that is a sign of someone who is not afraid of losing commissions, which is a good thing.

Buyer:

The fact that you are reading this article right now tells me that you understand your responsibility as a buyer, which is to carry out your own due diligence.  After all is said and done, you’re going to be the one purchasing the property, so you need to remember that you, my friend, are solely responsible for any properties that you purchase.  With that said, I’m going to answer the question of the day for you.

How do I Buy Seattle Area Homes at a Discount?

The answer is simple.  Work with an experienced Discount Property Expert.  There are aspects of purchasing discount properties that would take me pages and pages to explain.  Why not simplify the process and work with someone who has accomplished successful purchases on behalf of clients countless times over?

When it comes to buying discount properties, bothing beats partnering with someone with years and years of experience in this particular field.  Would you rather entrust your car to a college student or a veteran mechanic?  In the same way, entrust your property purchase with an expert and you’ll come out safe, successful and with no regrets. 

Click here to get in touch with a Discount Property Expert now

When seeking a Seattle Bankruptcy Attorney, it is absolutely crucial that you use a “qualifying standard” prior to hiring that attorney, or you could find yourself in a lot of trouble and perhaps even in deeper debt then you were before.

Here are a few key points to consider when seeking a qualified bankruptcy attorney:

How do they rank on the LexisNexis Martindale-Hubbell Ratings?

If you’re seeking to compare lawyers in terms of level of their experience, ethical standards, legal knowledge and overall capacity for excellence, you’re in luck, because the work has already been done for you. The LexisNexis Martindale-Hubbell Peer Review Ratings is a 3rd party ranking system established by LexisNexis & Martindale-Hubbell, two of the largest legal firm servicing companies on this planet, with active profiles of over a million lawyers.

There are only three ranks available, AV attorneys, BV attorneys and Rated attorneys.

An AV rating is designated for attorneys with only the highest level of achievement & experience.  An attorney with an AV rating is typically top-tier, the type of attorney that is highly respected among other attorneys, boasting an extremely vast list of satisfied clients & partners.

A BV rating is designated for attorneys with some level of experience and is a respected mark of achievement.  While it falls short of an AV rating, BV rated attorneys are still very qualified for the job.

When an attorney is simply Rated without an AV or BV rank, this shows that they do stand out from the crowd in terms of reputation & ethical standing.  While this ranking falls short of both the AV & BV ratings, attorneys that are rated with LexisNexis Martindale-Hubbell still remain among the finest of attorneys.

So when seeking an attorney, which ranking should you be searching for?  You tell me.  Onto the next point:

Is Bankruptcy in your Best Interest?

More often then not, homeowners will rush into bankruptcy without considering alternative options such as debt settlement (negotiating with their creditors).  Bankruptcy attorneys profit from submitting the paperwork and representing you in court, so find an attorney who is willing to give you general counsel for little to no cost (this is typically not possible unless you are working with a Pre Paid Legal attorney).  You need to make sure that if you move forward with bankruptcy, that you’ve explored every other option and have determined that it is indeed in your best interest.

How Much is the Attorney Charging you for General Legal Counsel?

In light of Pre Paid Legal (see above section), there really is no reason why you should pay any attorney $200-300 an hour for general legal consultation.  It should you cost you no more then $16 a month for unlimited consultation, so don’t trap yourself into an $800 bill for having a couple conversations over coffee with an attorney.

How Many Years of Experience does your Attorney Actually Have?

I have, in the past, worked with attorneys without verifying their track records, wrongfully assuming that just because an attorney is licensed and/or works with a reputable firm, that they have enough experience to work with my clients.  This is far from the truth.

When seeking an attorney, one way of gauging their level of experience is simply to find out how long they have been in the business.  I typically like to work with attorneys with 15-25 years in this business.  Anything less does not necessarily mean that they can’t get the job done, but I have noticed that the longer an attorney has worked in a particular field, the easier it is to figure out how competent they will be for the task at hand.

Where Can I find an Experienced, AV ranked Bankrtupcy Attorney?

Seattle Short Sale Blog endorses the use of Washington’s Pre Paid Legal Firm for general counsel and discount bankruptcy services.  The founder of this firm is an AV ranked attorney with 25+ years of experience in law.   I recommend using Pre Paid Legal to obtain general legal counsel and if it truly is in your best interest to file for bankruptcy, to work with their designated Bankruptcy Attorneys for the actual filing process.

In summary, finding a qualified bankruptcy lawyer/attorney can be an easy process as long as you abide by the golden rule:  “you know a tree by its fruits.”  Work with someone with a proven track record and you should see great results.

Right now, homeowners in pre-foreclosure are being bombarded with all sorts of offers, from solicitation letters to buyers attempting to “flip” their home.  Yet most of the offers will promise the same thing: Promises of “saving you from foreclosure.”

Well, let me ask you this.  What if I told you that, in some cases, it is in the homeowners best interest to allow their property to go into foreclosure?  For example, consider the homeowner with one mortgage who cares very little about their credit, purchasing a home in the near future or perhaps they intend on filing for bankruptcy.  Did you know that a trustee sale in Washington automatically bars the foreclosing lender from pursuing a deficiency judgement against the homeowner?

For most cases, however, homeowners tend to have 2 or more mortgages on their property, or they do care about their credit and their ability to purchase a home in the near future.  In that case, it IS in the best interest of a homeowner in Washington to pursue a short sale.

When pursuing a short sale, you must understand the basics of short sale negotiation.  The key to facilitating a successful short sale is the following:

1.  A strong realtor who specifically knows how to sell short sale properties (they must have the ability to retain buyers for 3-6 months, which is very difficult to accomplish)

2.  A negotiator who has your best interest in mind and knows how to use bankruptcy, legal loopholes & general negotiations strategies as leverage to reduce if not eliminate your liability from the property.

3.  Having a post-short sale plan, IE. getting registered with credit repair, continuing to negotiate your deficiency as much as possible, getting prepared for a 1099 c in the event of debt forgiveness, etc.

4.  Having a real buyer:  The buyer’s offer must be realistic and the buyer must remain in reality and not believe that they can move into the property within weeks of sending an offer.

Also, please make sure that you are not working with an “investor” type company.  Companies who are out there “investing” in Washington short sales usually prioritize their own profits before the interest of the homeowner.  You can identify these kinds of companies with the following:

1.  They are themselves attempting to “purchase your home in 10 days or less”

2.  They want to purchase your property based on the condition that they find another buyer to “wholesale” the property to

3.  They are promising to delete your mortgage, use forensic loan audits to incite a court case, or anything related to suing the lender on your behalf

For these companies, it’s more about “profit spread” then anything else, and I highly recommend working with other companies who are 3rd party and generally do not have an interest in your property (as that will almost always encourage alterior motives). 

Also, make sure you are not paying out of pocket for short sale services.  The best short sale companies out there are experienced enough to get paid either by the bank or buyer, so if you are thinking of working with a company that is charging YOU as the HOMEOWNER a fee, don’t.

In order to get in touch with a 3rd party Washington Short Sale expert that I personally recommend, simply click here

Sincerely,

Kevin

REO’s

1.  Bidding wars.  Some listing agents love conducting bidding wars and other’s don’t.  Bidding wars result in a ton of wasted time and more often then not, causes the price to shoot up past a desirable range.  The key to overcoming this obstacle is to have “insider information” on “friendly REO agents” who will deliver your offer to the lender as soon as they recieve it. 

2.  Prices.  Again, bidding wars will drive prices up.  Emotional / obsessive buyers will find themselves bidding on properties at prices that are above and beyond market value.  Don’t get caught up in the moment and certainly do not attempt to bid with one of those kind of buyers.  You are here for a discount, not to see who wins.

Short Sales

1.  They could take very long to close.  Short sales take anywhere from 2 weeks to 2 years to close, depending on how far the process is into negotiations.  The key to avoiding wasting your time on a short sale is to make sure that the negotiator has tons of experience under their belt. 

2.  Prices.  More often then not, banks want top dollar.  Again, the key is to make sure that the negotiator is experienced enough to politely but firmly, tell the bank to “stop dreaming.”

Foreclosures

1.  The fear of the “unknown.”  When purchasing foreclosures, one may never have the opportunity to inspect the property prior to ownership.  This is scary, since properties may have structural defects that may go unnoticed until after you make your purchase.  The key to avoiding this is to focus on “failed short sales” that have previously been on the market and/or work with an agent who is aggressive enough to inspect the property on their own.

2.  You need cash.  At auction, you need to buy properties with cash, which most buyers simply do not have.  Getting around this is easy, just borrow hardmoney under professional supervision.  Just make sure that the property you are buying is a quality property at a true discount, and that you can get out of your high interest, hard money loan via refinancing.

In summary, it’s not a matter where you look for discount Seattle Real Estate For Sale but who you’re looking with.  Nowadays, you (as a homebuyer) have as much access to property listing websites like NWMLS, Redfin, Trulia, etc as realtors do.  The big difference, however, is that you probably don’t have enough experience to make sure that you are buying a quality property at a true discount that is bound to close.

I personally work with a team of short sale, REO & foreclosure buying experts who understand how to overcome the above obstacles and get you REAL deals on properties.  So when searching for Seattle Real Estate For Sale, make sure you’ve got an expert by your side, because that, my friend, is how you get yourself a deal of a lifetime. 

You wouldn’t want a realtor who has only closed 1-2 deals in their entire careers to represent you in a transaction, right?  Well, searching for discount properties on your own (given that you are a first time or relatively new home buyer) is essentially the same thing.  Your level of experience WILL determine your outcome.

Be smart.  Use an expert and get yourself a real deal on a Discount Washington MLS Listings

Kevin

You’re in need of real help, real fast.

So guess what else you’ll find in the mail?

1.  Letters from people claiming that you can walk away by quit-claiming your property to them.  SCAM.

2.  Letters from people claiming that they will delete your mortgage if you give them 50% ownership of your property.  SCAM.

3.  Government style letters claiming to help you obtain ”government loan modifications and/or short sale assistance.”  SOLICITATION FOR BUSINESS.

4.  Investors claiming that they’ll “buy your house” in 7 days.  QUITE POSSIBLY A SCAM.

So you go off searching for “Seattle Foreclosure Help” on Google and you again run into people promising to buy your property from you or “save your home and prevent foreclosure.”

Now not every single company promising to save you from foreclosure is attempting to scam you, but you must keep in mind the key differences between a company that’s going to actually help you vs. a company that’s out there to rip you off.

And you know what that is?

It’s a track record.

Has the company closed at least 75-100 short sales?  What is their average success rate?  Of all of the loan modifications that they’ve negotiated, how many of them have been permanent? Are the companies promising to repair your credit comprised of actual attorneys experienced in litigation or random people off of the streets?

These are questions that you absolutely must be able to answer when seeking to avoid being another Seattle foreclosure statistic.

As the owner of Short Sail Solutions (a nationwide network of short sale experts), I have spent the last few years partnering with the best companies out there with the strongest track records, who are now ready and available to help you avoid foreclosure and walk away from this season in life with as little damage as possible.

We have experts all over the nation designated for the following areas of interest:  Short Sales, Loan Modifications, Credit Repair, Debt Settlement & Legal Counsel.

If you need help, simply scroll to the top of this website and click the tab that best addresses your need.

One free phone call with an expert may quite possibly save you from foreclosure.

And remember, when something sounds to good to be true, it probably is.

There is a reason why the Attorney General wrote me a letter commending my business.  When homeowners are in pre-foreclosure, the last thing they need is another person trying to take advantage of their distressed situation.  Yes it’s important to get help, but it’s even more important to get it from the right people.

Be wise,

Kevin Kim

In fact, I have personally witnessed these kinds of Realtors myself and words cannot describe the frustration that this causes with every party involved, from the bank to the negotiators to the buyers.

Here are the top 5 most common mistakes that BAD Short Sale Agents make that have ended up costing clients their home to foreclosure.

1.  Zero communication. When a short sale agent does not actively communicate with every party involved, from the negotiators to the sellers to the buyers agent, everyone assumes the worst. This causes a number of problems, from the buyer losing faith in the transaction to the negotiator simply being stuck at a particular stage in the short sale due to a lack of feedback from the agent.

2.  Laziness. When the short sale agent is lazy, nothing gets done.  For example, homeowners are often confused as to how to fill out their “short sale package.”  When the agent does not actively review the short sale package to make sure it is accurate & complete, the package ends up being returned & resent a dozen times before the bank ever receives it.  Also, there are action items that agents must carry out on a weekly basis, from price drops to making sure that buyers & their agents are being taken care of.  Agents cannot simply sit around for a buyer in a short sale, since buyers generally lose steam very quickly with these transactions. A short sale agent is not only a salesperson, but a transaction manager, and the agent is responsible for juggling every aspect and make sure everything is going smooth, or the transaction can very well collapse.

3.  Weak marketing & consulting skills. Again, buyers lose steam very quickly with these transactions.  A bad short sale agent will make the mistake of simply listing a property, asking for an offer and taking the first one that arrives to the table.  Like any good salesperson, the agent must have a strong marketing strategy in place to generate a large amount of buyer interest.  The, the agent must carefully choose the right offer that is most conducive to a quick closing.  After that, the agent must hold that buyer’s hand, even if they have a buyer’s agent and do everything possible to retain them as buyers until closing.  This is not an easy task and is only accomplished through an authoritative yet consultative style of communication.

4.  No experience. To this day, I still do not understand why agents attempt to negotiate their own short sales, when there are teams (like ours) who have collectively negotiated over a 1000 short sales with a 95%+ success rate.  To try and negotiate a short sale with no experience is like getting into the ring with a trained boxer and attempting to beat them, even if someone else’s livelihood is on the line.  It is downright foolish, since most negotiation services are free to the agent.  A successful short sale agent will not negotiate their own short sales, but rather will hire professionals to do the negotiating so that the agent can focus on the agency work.  In order to negotiate short sales, one must have a proper understanding of mortgage/foreclosure/bankruptcy law, negotiation dynamics, lender communication methods, insight on the lender’s best and worst alternatives “in the event of_______,” so on and so forth.  Explaining all of what a negotiator needs to know could be an entirely different article.

5.  Being too anxious. When the agent is too anxious, lenders hate it, buyers lose faith and sellers have no peace of mind.  Do not be anxious because it produces no results.

So what should you do if you are working with a short sale agent that is actively making these kinds of mistakes?

Don’t drop them if the agent is willing to work harder.  Yes, don’t simply terminate your agency agreement and go on looking for another Realtor in the middle of a short sale.  Transitioning a short sale file from one Realtor to another Realtor is a headache and when time is of the essence, transitioning Realtors is simply not functional.

Rather, my recommendation is that you kindly but firmly ask them to work with a professional short sale facilitation team, who will aggressively instruct the agent on what to do, how to do it and when to do it.  They will know exactly what to tell the lender, the buyers agents, escrow, etc. to keep the transaction afloat.  They would also take over the negotiations with the lender at no charge to the agent (apart from a few rare exceptions).

You can request a consultation session with our nationwide short sale facilitation team by clicking here

If the goal is to close the short sale, it is best that you give your agent the chance to carry out their fiduciary duties without “performance anxiety,” and the only way to prevent that is to have a professional take over the file and provide positive encouragement to that agent.

I have seen the worst agents close their short sales with the help of a strong short sale facilitation team.

Quite frankly, nobody is perfect, so my philosophy is two fold:

1.  All agents deserve grace and none are perfect.  You will never find a perfect agent.

2.  It is better to empower the weak agent with the tools to close the short sale then to have a strong agent take over and be overwhelmed with a “short sale in progress,” especially when strong agents are typically very busy people.

If you do not have an agent yet, you are in luck!  We have a nationwide network of agents that can help you close your short sale.

You can request a consultation session with my nationwide short sale facilitation team by clicking here.

Remember, the key is to work with a strong short sale agent or to empower your current short sale agent with a strong team of negotiators.  Either way, make sure that you have one of the above professionals working on your behalf and you should be well on your way to closing your short sale and walking away from this season in life.

Kevin

PS. Agents, do you want to be a strong short sale agent with a powerful team of negotiators to back up that claim?

Click this link to enroll in our lead program.

We’ll give you a lead, let you list it and we’ll let the results speak for itself!

Click the above link for a live podcast featuring myself & Derek Johnson, the “Mod Reporter.”  In this clip, I discuss the ins and outs of how to determine whether a short sale is truly “in your best interest.” 

Enjoy the clip!

Kevin

I also talk about this in my email reports, so sign up NOW by adding your name & email in the form located on the right side of this website.

Now one thing that I am not going to do is give you legal advice on this blog.  If you want to hire legal advice for more personalized consultation, first of all, do not hire an attorney for $300 an hour.  Use Pre Paid Legal, which gives you unlimited consultation with a top tier attorney in your area for a measly $16 a month.  I use this service myself.  With short sales, rarely will you need physical attorney representation.  Rather, you need consultation, and that comes a lot cheaper.

Plus, Pre Paid Legal attorneys WILL write letters & make phone calls for you, if it is necessary to do so. 

Follow this link to learn more about Pre Paid Legal

Before you even consider a short sale, first ask yourself, do you want to keep the property?  We’re not in the business of forcing people to do short sales if they’re desire is to keep their property.  Have you considered a loan modification? 

If you really want to keep your home, there are plenty of other options to consider.  Did you know that it is possible to file for BK, discharge a large 2nd and modify your first mortgage which would instantly “recreate” equity in your property while leaving you with a significantly lower payments AND a lower mortgage balance then you originally had on the property?  Ask a loan mod expert about this option

Now, in order to negotiate & waive a short sale deficiency, you must have the basic following:

1.  A professional negotiator

2.  A complete short sale package with an offer

3.  Updated financials

If you do not have these basic things, you’re going to run into small, administrative issues that’s going to keep you from talking about what’s most important in a short sale (ie. the deficiency).

Now let’s talk about a couple things you need to understand before attempting to negotiate & waive a short sale deficiency balance.

First, how many mortgages do you have?  If you have only one and you live in a non-judicial foreclosure state, you have the most leverage for negotiating your deficiency balance.  This is because if you allow the property to go into foreclosure, the property will sell for 60 cents on the dollar and the lender will lose all deficiency rights.  Thus, it is in the lender’s interest to simply accept the short sale as payment in full.  Alternatively, if you have a 2nd mortgage, you have less leverage,  since the 2nd lienholder can usually pursue you for the deficiency no matter what.

Now, let’s talk about a couple techniques that I’ve used to personally negotiate 100% waiver of deficiencies or a settlement for less than what is owed:

1.  Financial hardship.  If you are in true financial hardship, you must make this absolutely clear to the lender.  You must convince the lender that it is not worth pursuing you, since you have no assets, and that foreclosure means “little” to you if they are not willing to budge (this will surely scare the 1st, while it might not have so much effect on the 2nd)

2.  Threaten bankruptcy.  If you threaten bankruptcy, (esp. if you send a letter or a BK schedule), lenders will work with you.  In the event of bankruptcy, lenders are at the mercy of the bankruptcy trustee and how they decide to approve the terms of the BK.  If you are in financial hardship with much debt, you will probably be qualified to discharge that debt.  Threaten bankruptcy.  You can get Pre Paid Legal attorneys to write letters and make phones calls to your lender if you want to add serious firepower to your negotiations. 

3.  Have the buyer raise the purchase price.  This is why it is absolutely important that you do not try and haggle buyers for the highest priced offer when you intial do the short sale.  This will only harm you.  Most homeowners are under the impression that the higher the offer, the lesser likelihood that lenders will release the deficiency.  This is not true.  On the contrary, lenders will be more likely to release the deficiency if the purchase price is raised AFTER the lenders are intially given a much lower offer.   

My lender isn’t budging and is not waiving the “deficiency” language and/or is requiring me to sign a promissory note!

In the event that you are running into this issue, it is likely that your missing one of the above steps.  However, I understand that sometimes the lenders will simply not budge.

My opinion (not legal recommendation), is that you release the lien anyways and follow through with the short sale to pay off the 1st (in most cases, a short sale will allow you to at least get the 1st off of your back).  Any remaining debt with the 1st or 2nd, any promissory note or the “right” to pursue a deficiency is nothing more than unsecured debt (like a credit card) for the lender (which they hate), and if you default on that, then the lender is left with the choice of either suing you for the debt, to settle for less than owed or to simply write the debt  off and issue a 1099-c.  Releasing the debt as a tax write-off, by the way, is quite rewarding to the lender and in many cases, the lender will simply write off the debt. 

Once you corner your lender into this situation, it is in your best interest to repeat the above steps (show evidence of hardship, threaten bankruptcy).  Lenders, their creditors or their attorney firms will most likely be open to look at different options, especially if you threaten bankruptcy. 

If you have some cash or can borrow some cash, you can also do “debt settlement” with your lender (as well as with all of your other unsecured debt) and try to settle for 20%-40% of your debt. 

Can’t I just allow my property to go into foreclosure?  Don’t they lose their deficiency rights if I do this?

No.  If you live in a judicial foreclosure state, the lender can still pursue you for the deficiency.  If you live in a non-judicial foreclosure state, the non-foreclosing lender (usually the 2nd) can still pursue you for the deficiency.

OK, so what if I get the deficiency waived or the lender decides to release the debt as a “tax write off”?  Won’t I still owe taxes on the deficiency?

Yes, unless you are qualified for the Mortgage Forgivess Debt Relief Act of 2007.

Now with everything that I’ve mentioned, keep in mind that a professional short sale negotiator is an absolute necessity when dealing with a short sale.  There a billion other things that can go wrong in a short sale, so make sure you hire representation. 

One last concern I want to address:  “My credit is important to me!  How do I improve my credit after a short sale?”

I’m sure you know by now that a short sale will damage your credit, including the 30/60/90 day late payments that show up on your payment history, although a short sale is not as damaging as a foreclosure. 

Well there’s no need to worry.  We’ve recently partned with Lexington Law, an attorney firm that specializes in removing negative items from credit report, NOT based on accuracy (since most negative items are accurate), but on OTHER factors that are just as important. 

Follow this link and ask a Lexington Paralegal about removing short sales, late payments and even foreclosures from your credit report.

I hope that by now, I’ve provided you with enough resources & information necessary to close your short sale, walk away from your property and minimize the damage as much as humanly possible.  You may want to bookmark this blog post and keep it as reference for the future.

I truly wish you the best,

Kevin

“Does a short sale hurt your credit?”

“Short sales take more than 90 days, how will that affect my credit score?” 

“How long does a foreclosure stay on your credit?”

“How does a foreclosure affect a persons credit score?”

“How long does a bankruptcy stay on your credit report”

“Can credit repair actually remove foreclosures from credit reports?

 ..so on and so forth. 

Well, let me start off by saying that both a foreclosure and a short sale will impact your credit score.  The difference is that a foreclosure will be more damaging to your overall credit and will remain longer on your credit report than a short sale. 

Short Sale: 

• 200-300 reduction to your FICO score depending on the borrower. 
• Inability to obtain a standard mortgage for at least 24 months

Foreclosure

• 200-300 point reduction on your FICO score, depending on the borrower.  Yes, this is almost the same as a short sale.
• Remain on credit report for 7 years.  Inability to obtain a mortgage for at least 24 months.  Difficult to obtain a standard interest loan afterwards

Bankruptcy:

• Remains on credit report 7-10 years
• A very large ding on credit score, usually a few hundred points

The solution:

One of the major concerns that homeowners have when going through a short sale, foreclosure or even a bankruptcy are the consequences on their credit. 

However, what most homeowners do not know is that the FCRA (Fair Credit Reporting Act) requires certain steps to be made by creditors before reporting an item on a credit report, and if a creditor misses one or more of these steps (which they often do), the FCRA will not allow the item to appear on the credit report.  This includes unverifiable information, clerical errors, mistaken identities, etc. 

What this basically means is that you, as a homeowner, might be qualified to have your short sale, foreclosure, late payments (30/60/90 day lates) and sometimes even your BK removed from your credit report even if they are accurate.  This is not illegal!  In fact, it is actually the law that allows you to accomplish this, since the FCRA requires conditions beyond “accuracy” to be met by creditors when reporting a negative item on your credit report. 

If you are looking to purchase another home post-short sale or foreclosure, don’t fall for one of those high interest “foreclosure loans for bad credit” provided by hard money lenders who are looking to take advantage of your situation.  Rather, remove negative items using our lawyers, raise your FICO score and obtain a standard, low interest mortgage when purchasing your next house.   

Credit Repair & Deletion:

My job is to help people walk away from this season in life with as clean of a slate as possible.  With the help of one of our partner law firms, you can remove foreclosures from credit reports, as well as short sales and other negative items.  Deleting negative items on your credit is a sure fire way to help rebuild your credit after a short sale, foreclosure or even BK faster than you’ve ever thought possible.

—> Use this link to access the Credit Deletion section of this website and repair your credit today

When it comes to short sales and foreclosures, listen to the experts.  Don’t do what everybody else is doing, rather, take advantage of what’s out there and milk every opportunity you can find.  The reason why most homeowners are stuck having to short sale is because they ended up purchasing homes based on feelings or the opinions of a single realtor.  This time, choose differently.  Take advantage of our knowledge on the subject and you’ll be back running in no time.

Naturally, “mortgage debt cancellation” became a hot topic when short sale companies (including foreclosure prevention companies) all throughout the nation realized how well this “idea” attracted customers.  Many short sale negotiatiors will tell clients not to worry about the deficiency because the lenders “rarely ever pursue them.”

Well I’m here to tell you that though this may be true, sometimes the lender/PMI/3rd party collections agency will pursue the borrower for unpaid mortgage debt after the short sale.

You might be asking yourself, “so what on earth am I short selling for?  Might as well let my property go into foreclosure since my state is an Anti-Deficiency State.”  

Though it is true that some states do not allow lenders to pursue a deficiency judgement (ie. in a non judicial foreclosure), you must consider the non foreclosing lenders position.  Here in WA. State, a non foreclosing, junior lienholder (ie. your 2nd mortgage) can sue you for ”breach of contract,” even in a non judicial forclosure. 

Now if foreclosure isn’t an option, homeowners may consider filing for BK.  Filing for BK may be a good idea for some, but for others, a couple key factors must be considered:

1.  Repayment plan might be too high

2.  Opportunity cost of having no credit

3.  Short Sale might be “cheaper” in the long run

Now what do I mean by a short sale being “cheaper”?

Many homeowners, after hours of grueling research, consulting with attorneys, etc. will come to find out that a short sale is still the best option among the three that I have mentioned for a couple of reasons:

First, the risk of being sued at foreclosure is too high, since the deficient amount is maxed out and in the event of being sued, the homeowner will be at great risk, including liens against his/her assets, wage garnishment, etc.

Second, filing for BK eliminates the option to borrow money and/or the repayment plan is more costlier than a repayment plan that would be incurred in a short sale. 

One must conclude then that the point of a short sale is to:

1.  Generate the highest offer (to pay off the lienholders as much as possible and reduce the deficient balance).  This eliminates the validity of all of the “foreclosure prevention” companies out there seeking to flip your property for profit.  I will elaborate on this on another post. 

2.  Negotiate a reduction or elimination of the remaining unpaid mortgage debt

3.  Arrange the lowest repayment plan possible in the event that the mortgage debt cannot be cancelled. 

So finally, how do the real short sale experts deal with unpaid mortgage debt on behalf of the borrower?  We give banks the 1-2 Punch combination. 

Imagine you have a loss mitigator and one of our negotiatiors in a boxing ring.  The announcer yells, “let’s get ready to rumble!” and the fight begins.  The 1-2 Punch combination is how our negotiators end up knocking out the loss mitigators almost everytime.  It usually goes like this: 

*Feeling each other out:  We negotiate a short sale and aim for a full pay off or cancellation of debt.  Sometimes they will, sometimes they won’t. 

*First punch:  In the event that they won’t, we sell the property and remove the security / collateral on the note, rendering the note unsecured.  When you sell your property in a short sale, you essentially pull the rug from underneath the lender, because now the note is not secured by your property, or by anything from language on a contract.   So unless the lender sues you (which is expensive) they can’t really do much to collect on the unpaid mortgage balance.  We usually knock them out at this point and the homeowner ends up with a 1099 for the difference, of which there are exemptions available. 

*Second punch:  Should the lenders, the PMI or a collections agency try and pursue you for the unpaid mortgage debt, we swing them a final, knockout blow by negotiating yet another reduction to the balance with our debt settlement negotiators.  No institution likes to have non-performing, unsecured debt in their books and almost always will accept a reduction and have a cooperative borrower then to simply leave the debt “hanging.” 

This concludes our discussion regarding mortgage debt settlement, debt cancellation and our 1-2 Punch combination for reducing and ultimately eliminating your short sale deficiencies and unpaid mortgage debt.  May this information guide you into the right direction.