Fred Sed's Blog: November 2009

How long does a short sale take, I need to get out now!

First it comes down to how prepared you and your broker are in this situation. If your broker or short sale specialist is experience then you will have the quicker turn around. Also it depends on what banks you have your loans with. Meaning if you have your mortgage with a smaller bank who does not have as many defaulted loans then the approval should take 30-45 days to receive.

But if the bank who has your mortgage is a larger bank, meaning they have a large amount of defaulted loans then it could take up to 60-90 days for the approval.

This is very important. This complicated process takes time so to have the option of a short sale, you must act soon. If you wait until 1 week before eviction, no one can help you do a short sale. It is simply impossible. DO NOT WAIT.

Why do I have to sign a Borrower's Authorization?

In order to both determine if your lender will consider a short sale and then to actually negotiate the short sale, The Pahua Group needs be able to speak to your lender about the mortgage. The lender will only speak to people you have authorized them to speak with.

By signing a Borrower's Authorization, you give the lender permission to speak to The Pahua Group about your loan. That is all it does, but it is necessary. An authorization must be filled out for each mortgage.

Are short sales guaranteed to work?

No. Even though short sales are increasing they are still fairly complex, as I have stated. All the criteria MUST be met for a bank to even consider a short sale. It is not easy to convince a bank that the market value of the home is lower than what they are owed. They do not like to take a loss on a loan.

With short sales the banks must be convinced to discount the mortgage enough to make it viable for a potential buyer. So it is very important that every request that is made by the bank, we respond quickly and correctly. This is easily done by both us as broker and you as the homeowner on are the same page from day one.

In some short sales, we do all the paperwork and wait several weeks only to be denied. Again, the homeowner continues to own and live in the house if he or she chooses.

If the lender does not approve the short sale, The Pahua Group has no rights at all to the property and no transaction occurs. The purchase agreement becomes void and the listing continues.

From the very moment you contact us initially we make sure that you actually can qualify for a short sale. We are not here to waist your time or ours so it is crucial that you answer every question honestly so that if we attempt a short sale on your home, we are successful.

What if a bank doesn't accept the short sale?

Again, if the bank doesn't accept the short sale offer, there is no transaction and the home is still owned by the foreclosing homeowner and the foreclosure process continues.

Also if the bank does not accept the short sale, we probe the bank to find out why they won't approve it. It could be many different reasons why they would not accept it.

But then this goes back to the beginning of the short sale process and our pre-qualifying of your situation. As I said, we should know upfront whether or not we can short sale your property. If we know we can't then we will tell you. Our job is to help you not hurt you.

Orange - County - Short - Sale - Specialist - Qualifying - Terms

*Owe more than your home is worth.

*Having trouble making your mortgage payments.

*Having already missed 1 or more mortgage payments.

*Have some sort of hardship that holds you back from your payments and or monthly expenses.

*Have a loan in which the interest has adjusted up which makes the payments hard to make.

*Need to sell your home, but there is not equity to do so.

*Heading toward a foreclosure and have run out of options.

There are many other factors that would help you qualify for a short sale. Please contact our Short Sale Realtor Fred Sed 949-274-3733 to discuss if you do qualify for a short sale. We do cover all of Orange County, Riverside County, and Los Angeles County.

Watch Fred's Short Sale Video's

To Avoid Foreclosure and Save Your Credit, Call Your Orange County Short Sale Specialist Realtor, Fred Sed, and see if this would be the best option for you!

Fred Sed

(949) 274-3733

FredSed@PGcoastal.com

www.FredSed.com

What is "Financial Hardship" and why is it so important?

"Financial Hardship" is a critical part of the short sale equation. No matter what you hear about banks "not in the business of owning real estate", etc., they DO NOT give homeowners a break easily. They require GOOD REASON to give a discount for a short sale. They have entire departments called "Loss Mitigation", which means their entire job is to reduce the loss the bank takes on a bad loan. Giving big discounts to sellers increases the loss on a bad loan, so they don't take it lightly.

The ONLY reason a lender will agree to a short sale is if they determine that the short sale will net the more money that proceeding with the foreclosure. Understanding the homeowner's financial hardship is a big part of the lender estimating whether they will be paid in full for the mortgage.

IF THERE IS NOT A LEGITIMATE FINANCIAL HARDSHIP, A LENDER WILL NOT SHORT SALE EVEN IF THE HOME IS WORTH LESS THAN THE MORTGAGE BALANCE. Quite simply, the lender will make the borrower pay the shortfall if there is no hardship.

Many homeowners try to use a short sale as a "get out of jail free" card to dump their poor investment. Lenders will not allow this and it is a waste of time to try. If you are employed and have some assets, but you have simply lost value on your home and want to sell, YOU PROBABLY CANNOT SHORT SALE. If you are current on your mortgage, IT IS VERY DIFFICULT TO SHORT SALE. Lenders need to see that you simply cannot pay them back before they will short sale.

IF YOU ARE HAVING TROUBLE WITH MAKING YOUR PAYMENTS OR ARE HAVING ANY FINANCIAL DIFFICULTIES A SHORT SALE MIGHT BE YOUR BEST OPTION.

CONTACT US TODAY TO SEE IF YOU CAN QUALIFY. OUR SERVICES ARE FREE AND EVERYTHING IS KEPT IN THE STRICTEST CONFIDENTIALITY.

CONTACT FRED SED AT 949-274-3733 OR EMAIL AT FREDSED@PGCOASTAL.COM

What other options might I have at this point?

When faced with a foreclosure, some things you may be able to do are:

1.Sell your home through the normal channels

2.Bring your mortgage current by making the missed payments and paying the penalties

3.Refinance your mortgage with another lender

4.File for bankruptcy

If you can do any of the first 3, then you probably should! Those are usually the best solutions for a homeowner in foreclosure. However, if your situation is such that your house cannot be sold for the amount owed, and you have no money to bring the payments current, and you have no equity to qualify for a refinance, then you should consider a short sale before considering option #4.

Again, we encourage you to educate yourself as much as possible about your situation and seek advice from any attorney or CPA you have access to about your choices. We do caution you against paying for the advice of so-called "foreclosure work-out specialists" or other such advisers unless it is by personal recommendation.

IF YOU ARE HAVING TROUBLE WITH MAKING YOUR PAYMENTS OR ARE HAVING ANY FINANCIAL DIFFICULTIES A SHORT SALE MIGHT BE YOUR BEST OPTION.

CONTACT US TODAY TO SEE IF YOU CAN QUALIFY. OUR SERVICES ARE FREE AND EVERYTHING IS KEPT IN THE STRICTEST CONFIDENTIALITY.

CONTACT FRED SED AT 949-274-3733 OR EMAIL AT FREDSED@PGCOASTAL.COM

I am NOT in foreclosure and I have missed NO PAYMENTS, can a short sale work for me or do I qualify for a short sale?

It is difficult to do a short sale if foreclosure has not been filed but it is possible if a couple of payments have been missed and there is a good hardship story. The lender must be convinced that they will NOT BE REPAID without the short sale.

If you are not in foreclosure and you have not missed any payments, a short sale is probably not likely, but it is possible. The key is to have a legitimate financial hardship that will keep you from making the payments. A short sale is not just an easy way out of a bad investment. If you are working and your house has just lost some value, that is just unfortunately a bad investment and you are responsible to pay the shortfall.

Short sales are when lenders agree to discount a mortgage for someone who has had legitimate hardships and who has little chance of paying the amount owed. You may be hearing stories that mortgage companies are hurting and they don't want these houses and are giving big discounts away. These stories are mostly urban myths and are not true. In fact, the opposite is happening. Since profits are down, lenders are getting tougher when negotiating prices. They are not letting properties go cheaply and without very good reason. They will try ANYTHING to get you to repay the mortgage in full. A short sale is only a last resort, but we do know how to get lenders to agree to a short sale.

What if my mortgage is an FHA...or HUD...or VA mortgage?

Short sales can still be done on all these types of mortgages though each one has different criteria. Just let us know what kind of mortgage you have and we will take that into account.

IF YOU ARE HAVING TROUBLE WITH MAKING YOUR PAYMENTS OR ARE HAVING ANY FINANCIAL DIFFICULTIES A SHORT SALE MIGHT BE YOUR BEST OPTION.

CONTACT US TODAY TO SEE IF YOU CAN QUALIFY. OUR SERVICES ARE FREE AND EVERYTHING IS KEPT IN THE STRICTEST CONFIDENTIALITY.

CONTACT FRED SED AT 949-274-3733 OR EMAIL AT FREDSED@PGCOASTAL.COM

I have other liens (i.e. mechanics, IRS, court judgments) on my house; can I still do a short sale?

Yes, but again, it gets much more complicated and will take longer. If this is the case on your home, be sure to COMPLETELY list all potential liens you have. Each lien holder will have to be negotiated with individually. A short sale in this circumstance will take longer than 60 days.

I am an heir to an estate that has a mortgage it (or I) can't afford to pay. Can I do a short sale?

Yes, this is common. When you contact us, make sure to note the homeowner is deceased.

I have 2 or 3 mortgages on my house. Can I still do a short sale?

Yes, each mortgage or Line of Credit (HELOC) can be negotiated individually. It is important to know which mortgage filed the foreclosure or if more than one are in foreclosure, which filed first.

IF YOU ARE HAVING TROUBLE WITH MAKING YOUR PAYMENTS OR ARE HAVING ANY FINANCIAL DIFFICULTIES A SHORT SALE MIGHT BE YOUR BEST OPTION.

CONTACT US TODAY TO SEE IF YOU CAN QUALIFY. OUR SERVICES ARE FREE AND EVERYTHING IS KEPT IN THE STRICTEST CONFIDENTIALITY.

CONTACT FRED SED AT 949-274-3733 OR EMAIL AT FREDSED@PGCOASTAL.COM

I am behind on my mortgage payments, but not yet in foreclosure. Can I do a short sale?

Yes and this is happening with much greater regularity. Sometimes, these are actually the most attractive short sales for an buyer/investor and a lender because a lender can avoid ALL the costs of foreclosure with a short sale before foreclosure is filed.

In these case, it is more important to have a very good "hardship" story to explain to the lender why you are unable to make the payments.

My house needs a lot of repair; can you still do a short sale?

Yes, though it can make the process more difficult because the price must be substantially lower. The key is to be able to show the bank's appraiser all the work that needs to be done. Let us know if this is the case with your home.

IF YOU ARE HAVING TROUBLE WITH MAKING YOUR PAYMENTS OR ARE HAVING ANY FINANCIAL DIFFICULTIES A SHORT SALE MIGHT BE YOUR BEST OPTION.

CONTACT US TODAY TO SEE IF YOU CAN QUALIFY. OUR SERVICES ARE FREE AND EVERYTHING IS KEPT IN THE STRICTEST CONFIDENTIALITY.

CONTACT FRED SED AT 949-274-3733 OR EMAIL AT FREDSED@PGCOASTAL.COM

I have heard that I could still owe taxes after a short sale, is this true?

Yes, this is true but it is not that simple. If this is a concern to you then you need to consult an attorney or CPA, but without trying to get too complicated, we can provide our experience with this problem.

When a lender "writes off" part of a loan, it has to account for where that money went. In the case of a short sale, it is determined that the amount goes to the foreclosed homeowner, since it is their personal debt that is forgiven so that the house can be sold. The bank can account for this in one of 2 ways.

Either the bank keeps the amount of the discount on the books as a bad debt and they can go through the courts to try to collect from you on the bad debt. Or the bank can issue a 1099C form to you for the amount forgiven and that amount can be considered "income" for you.

In our experience, having the bank issue the 1099C is better for the homeowner for a couple of reasons. (Again, please consult a CPA or tax adviser if you have questions) When you receive the 1099C, the control is in your hands as to how to treat the 1099C income on your return. When the bank keeps the debt, the choice is in their hands as to whether they come after you to collect.

Most importantly, even if you receive the 1099C and declare it as income, as you should do, there is a good chance you will owe very little tax if any at all. This is because there is an IRS rule regarding "Insolvency", which essentially says if you are insolvent (more liabilities than assets) at the time of the short sale, then you don't have to count the 1099C as income. There is an IRS form to fill out to show you are insolvent. See www.irs.gov

The bottom line is the typical people who are in a foreclosure or short sale situation have little income or assets, so the 1099C is usually not counted as income, or the tax rate you might pay is very low. Again, ask your tax person or you can call the IRS for free advice.

If you are concerned about owing a debt after the short sale, it is important to remember that if you do not use a short sale to satisfy your lender, then the foreclosure process will continue. If the lender takes back the house and has to sell it for less than you owe, YOU CAN STILL BE HELD LIABLE for the amount they lost. The bank can go after you in court to collect the deficiency. So whether you choose foreclosure or short sale, you still have the potential to owe a liability to the bank. Clearly a short sale is the better way to go considering all things.

So the short answer is that you can owe taxes both after a short sale or after a completed foreclosure; however, if a short sale is done properly, the tax can often be avoided in large part. Again, each situation is unique.

IF YOU ARE HAVING TROUBLE WITH MAKING YOUR PAYMENTS OR ARE HAVING ANY FINANCIAL DIFFICULTIES A SHORT SALE MIGHT BE YOUR BEST OPTION.

CONTACT US TODAY TO SEE IF YOU CAN QUALIFY. OUR SERVICES ARE FREE AND EVERYTHING IS KEPT IN THE STRICTEST CONFIDENTIALITY.

CONTACT FRED SED AT 949-274-3733 OR EMAIL AT FREDSED@PGCOASTAL.COM

Is Laguna Beach Your Next Place Of Residence?

If your answer is yes then this is where you want to be and we offer our services for free! Our job is to find qualified tenants to occupy these properties! *

There is no cost to you as the potential tenant/renter, which means our services to you would be free. Our fees are paid for by the owner/landlord of the properties. For additional information, questions, or if you would like to set up a time to preview any property please contact Fred Sed with Fairview Realty at 949-274-3733.



(To reference a property, use the MLS # that is located next to the pictures. It is in bold and it starts with a letter then a series of numbers)

RENTAL PROPERTIES IN LAGUNA BEACH, LAGUNA BEACH LEASES

CONTACT FRED SED 949-274-3733 FOR ADDITIONAL INFORMATION OR TO SCHEDULE A SHOWING!

*Subject to credit check fee of $15.00 per person over 18.