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Short Sale Alternatives

Nov 10, 2009 | Realtors, Selling Real Estate, Short Sales

I was asked recently what the practical alternatives to doing a real estate short sale were.  Although evey individual situation is unique and some other alternative may be available here are some of the more common alternatives:

Loan modification – If you want to keep you home but cannot afford the current mortgage terms, you may be able get the lender to work with you to modify the loan terms. This is not an easy process either. You will need to provide much of the same financial information that you provide for a short sale. The lender must be convinced that the modification will be a long term benefit to them and an option that will also work for you. If the lender determines that modifying the loan will only postpone a short sale or foreclosure, they will not likely work with you.

Foreclosure – Foreclosure is the judicial process that the lender will pursue to take ownership of the property in order to sell to cover the amount due on the promissory note. A foreclosure will also dramatically effect your credit and your future ability to borrow, especial for the purchase of another home. If you do nothing about your current situation foreclosure is the inevitable conclusion. If the lender does foreclose and is able to sell the real estate for more than what you owed to them they are required to return the difference to you (after the payment of all of their costs and expenses).

Depending on the circumstances, you may be subject to pay tax on the amount of the deficiency between the foreclosure sale price and the amount owed on the note.

Deed in lieu of foreclosure – This is the process where you would deed all of your interest in the real estate to the lender. This process may also have financial ramifications, and you lose all legal interest in the property. However, this may be one of the simplest alternatives if the lender agrees to accept the deed. In any event be certain that you know all of the facts and how signing a deed in lieu of foreclosure could effect you.

Bankruptcy – This is often the last resort if you cannot sell the real estate and foreclosure is not an option for you. It is possible file bankruptcy and retain ownership of owning your home, but bankruptcy will severely damage your credit for at least seven years and you will not have control of your finances.

Get Professional Assistance –Even if you think a short sale is the right answer for you, and you think you can negotiate the terms and process on your own, consult with you professional advisers beforehand. Speak with a Certified Public Accountant, a REALTOR, a Real Estate Attorney and a Bankruptcy Attorney. Having the right advice can is key to a successful outcome.

Real Estate Professionals Fed Up with HVCC

Oct 28, 2009 | Buying Real Estate, Mortgage Lenders, Realtors, Selling Real Estate

I have been speaking recently with many of my real estate business partners about their valid frustration over the Home Valuation Code of Conduct (HVCC) and how it unnecessarily jeopardizes transactions for homeowners and potential buyers.

The Federal Law imposed to protect consumers, as many others like it, is quickly becoming more of a burden then a benefit for the very consumer it is designed to protect.

There is an effort in the industry to encourage lawmakers to reconsider the HVCC. You can learn ore about the effort here and sign a petition that will be presented to lawmakers.

For those who may not be familiar with the code The Home Valuation Code of Conduct stipulates how appraisers, loan officers, lenders and real estate agents can handle the real estate appraisals in part it states that:

  • A loan officer can NOT order the appraisal, and can not be involved with the selection of the appraiser;
  • The lender must order the appraisal and must order it through a third party vendor (appraisal management company) that cannot be influenced by the lender, loan officer, appraiser or any other party to the transaction.
  • If a second appraisal is needed it must be obtained from a second, unrelated, appraisal company.

The mandate of the institution of a third part vendor has caused a pricing shift. The cost of appraisals has not yet increased dramatically which means there is less of a profit now to be shared between the third party vendor (appraisal management company) and the actual appraisal company. The result is that appraisers with little or no experience are being used to reduce cost to the appraisal companies. Appraiser work loads are being increased and appraisers are working in unfamiliar markets/geographic areas.

Read more about the Home Valuation Code of Conduct here.

Sign the petition here.