Another amazing year has come and gone for us here at Winged Foot Title, and our work in Short Sales is still keeping us busier than ever.
Our goals for 2013 are similar to 2012, but they are even more focused on education.
A large problem faced in the Short Sale world is keeping buyers in the transaction. There is nothing more frustrating when you have been working for 3 months or more and receiving the Short Sale approval letter only to find out that the buyer has backed out and decided not to purchase the property.
It is a hard conversation with the seller who is now one step closer in the foreclosure process. We have 5 Key Tips that can help keep the buyer on board when purchasing a Short Sale.
If so, you might not have been able to take advantage of the historically low mortgage interest rates that exist in our market right now.
Most traditional home loan programs require an appraisal, which your lender uses to determine the value of your home and to determine whether that value makes it a safe bet for them to loan you money. Very basically, if your home is worth less than you owe on it is essentially impossible to refinance your current loan.
This is of course a common problem here in Southwest Florida.
If you are currently in a FHA home loan and in this situation, there is a program that may help you take advantage of today’s great mortgage intersest rates.
It is called the FHA Streamline Refinance.
Just last week, we closed one of these loans for a couple who owed $240,000 on a FHA loan and who were paying about 5.5% interest on that loan.
Their home’s value was recently assessed by the property appraiser at $190,000 ($50,000 less than what they owed!), which in most cases would have made it impossible for them to refinance their home loan. Through the FHA Streamline Refinance program, these “under water” clients were able to refinance at a fixed rate of 3.75% over 30 years, which reduced their monthly payment of principal and interest from $1,363 to $1,109.49 – a savings of over $250 per month!
The FHA Streamline Refinance is a unique special provision. For starters, your existing loan must be a FHA loan.
According to mortgage expert Jay Beckingham, a loan officer at American Eagle Mortgage Company in Ft. Myers, Florida, FHA wants its borrowers to be able to take advantage of today’s low rates. The program therefore requires NO APPRAISAL, instead using the property’s purchase price as a baseline. The program does require that you pay your own closing costs; but the long-term savings are nonetheless clear and significant.
In the example above, those clients will save over $3,000 over the next 12 months.
Because we wanted to learn more about this program, we invited Jay to speak to us about it. Here is what Jay had to say –
If we can help you in anyway, please be sure to contact us online, or give us call at (239) 985-4142.
The tangibles are easy. Most lenders or short sale servicers require the same core set of documents and financials. So let’s start with the intangibles, the things every potential short seller must have in order to succeed.
Is my credit worthiness better off after a short sale than a foreclosure?
Or more bluntly, is the negative effect on my credit worthiness better than or worse than the cost of maintaining the payments and costs associated with owning the real property?
In the worst case scenario – where the lender retains the right to pursue me for any deficiency amounts – how might that affect my other assets?
What will be the tax consequences from the short sale and will those be any different than a foreclosure if I walk away?
The successful short seller in Florida will understand, will be committed, will be patient and will have proper expectations. To expand a bit on those intangibles, everyone pursuing a short sale must understand the issues as described above. With that understanding, the property owner should be able to decide whether the short sale is the right course of action for them. Once they have vetted the issues and made the decision to pursue the short sale, the successful short seller will be committed to the process and to participating fully in that process. This includes being quick to communicate and to provide the required documentation; and to updating expiring documents on a monthly basis.
The maxim that “patience is a virtue” is truest in short sales. Most short sales in Florida that fail are derailed by someone’s – seller’s, buyer’s, realtors’, settlement agent’s, lender’s – impatience. Given what we know about short sales – that they can take time to complete, can be frustrating, and that most of the things that cause the most consternation are outside of our control – patience should come easy. But alas, emotion gets the better of some and they are not able to stay patient.
This is the death knell of short sales. Along those same lines, the successful short seller will have proper expectations about both the process and the outcome. On the one hand, one should expect to have to provide a wealth of documentation and to do so on a regular – monthly at least – basis. On the other hand, one should also have reconciled the possible worst case scenario as it relates to their short sale approval. For example, a seller should know the standard operating procedures of their lender(s) and should be committed to the process and the outcome even if that outcome is the worst case scenario. With emotions in check and these intangibles “in hand”, the short seller will succeed.
Now to the tangibles, which most every lender or servicer will demand. You will need at least the following documents (in addition to the real estate contract and related documents):
This is a very frequent question, and its analysis is a bit complex because “cost” is such a broad term. Later in the eBook, we will look at Promissory Note requirements, cash contributions and association dues as potential “costs” of completing a Naples short sale. For this section, let’s simplify things a bit and look at standard transaction or closing costs and what you should expect to pay (or not pay).
With regard to ordinary closing costs, a short sale should cost you very little. Here’s why. In a short sale, the lender will agree to absorb many of the ordinary closing costs that are customarily the seller’s responsibility. In our experience with Florida short sales, lenders will usually agree to absorb at least the following closing costs:
If you are reading this you are likely considering or have considered a short sale of real property in Florida. Over the last few years, our title company has orchestrated the closing of over 650 short sales. In the course of our work with sellers, realtors and lenders, we have heard many questions related to Florida short sales. In order to help you prepare for your short sale, I have memorialized the most frequently asked and pressing questions we have received from people just like you who must sell their property but who owe much more than the property is worth.
NOT LEGAL ADVICE: This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area. This information is not intended as legal advice and may not be used as legal advice. It should not be used to replace the advice of your own legal counsel.
Winged Foot Tite, LLC is not associated with the government, and our [short sale orchestration] service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.