The Mother and Daughter Realty Team

SHORT SALES LAWS: 

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation – Act 2007 -(FEDERAL):  Expires 12-31-12 unless extended.
News Break:
Impending house approval of this avoidance of the “fiscal cliff”, we will realize the extension of the mortgage debt relief for homeowners completing a short sale before 2015.

SB 458, California (STATE)
Re-birth of SB 1178 into an anti-deficiency law for short sales).  All mortgages, first, second and subsequent mortgages fall under SB 458. (SB 931 was about a first mortgage).  SB 458 is a release of liability. It will amend California Civil Code 580e with regards to a short sale only. It does not apply to foreclosures. It also prohibits a lender from demanding a seller contribution as a condition of short sale approval. SB 458 applies to one to four-unit dwellings in California, but they don't have to be owner occupied.  Effective July 15, 2011.
As always SEE YOUR TAX EXPERT, CPA or an Attorney any time you have questions about your taxes or whether you qualify for the relief offered by the state or federal government.  As usual, not everyone is eligible.  Most importantly it MUST be your primary residence.  So check with your tax specialist.
Questions and Answers:

QUESTIONS AND ANSWERS:

QUESTION: What is a short sale?
ANSWER:    A Short Sale is a sale of Real Estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property owner. In a Short Sale, the bank or the mortgage lending institution agrees to discount a loan balance due to financial hardship on the part of the borrower.
In most cases: First you list the property, get a reasonable offer, submit short sale request package to the servicer. They will review, obtain evaluations of the property, review some more and get approval from their investor.
Once the approval is granted, make sure you get it in writing and all signatures are obtained. Escrow is set and transaction is closed.  However, some lenders do have special programs that require you to check with them first to see if you should list first or after you have their approval.   
Note:   There are 2 main types of short sales - 1) Traditional Short Sale and the 2) HAFA short sale.

QUESTION: How does the Short Sale approval compare or conflict to the Foreclosure Timeline?
ANSWER:    This is a good question. The foreclosure timeline allows for a total of 111 days from the day the NOD (Notice of Default) is filed by your mortgage servicer at the county in which the property is located. Once this is file you are in pre-foreclosure – the next step if nothing is done to stop it is called Foreclosure.
Even in these confusing times and with all the programs in place, this timeline has not changed. Although in some cases it is stretched out by technicalities – the servicer can always fall back to the Foreclosure Timeline. Even if they are ones that is delaying the process! Hire an agent that knows this and will keep a watchful eye on the timelines and deadlines.
QUESTION:  How long does it take to get a short sale approval?
ANSWER:     Most banks are working on streamlining the short sale process.  It depends on the following (and more…)
•The Servicer/investor and their short sale process
•The offer verses what the servicer and their investor is expecting to get from a short sale
•The buyer and their patience with waiting…. * if buyer walks, this could delay the process
•The agent and how they present the short sale request package
•The homeowner * if they provide the necessary documents that the service require
•The hardship
•Where the homeowner is in the pre-foreclosure/foreclosure process (if you only have a few days until the Trustee sales date)… this could cause problems
•And again, the Service and their investor * and their workload & process issues

QUESTION:  Is it necessary to supply documents that I have already submitted?
ANSWER:     Yes. Always make sure you cover yourself and give updated and complete documents to the servicer. Never assume they have the document already. There could be several reasons why they will need you to submit a complete package. Lost the first one you submitted when trying to get a loan modification or a short sale
Different person working on your file… what they see is an incomplete file (avoid them having a reason to put your file in the round file).  Documents have a time restraint on them – usually it is 90 days, but never assume this – if they ask for a certain document provide it and always submit a complete package
I cannot list all the reasons you should always make sure your servicer have all the documents and if they ask for one that you have already submitted --- just do it and give it to them again.
QUESTION:  What if we get more than one offer on my property?
ANSWER:      This is common in this market. You and your agent should review the offers you have on a given date and you decide which offer you want to submit the mortgage servicer along with the required document to complete the short sale request package. Your servicer will have a list of documents that they require (Copy of the listing, offer, buyer information, estimated HUD, listing agreement, your financial documents: pay stubs, W2, bank statements, financial worksheet, hardship letter, letter of authorization, etc.).  It is wise to select the highest and best offer and also have a backup.

QUESTION:  What can we do to make sure the buyer DON”T WALK before the Short Sale approval is received?
ANSWER:     There is no special thing you can do, just make sure your agent has as firm and offer and buyer as possible. They will all say they will wait and then keep looking at other properties and if another offer comes up first… they will walk on your short sale. It’s a promise.
It is equally important that the buyer does not walk away. This all can cause delays.

QUESTION:  What if my agent forgets to ask to postpone the Trustee Sale – will my Servicer automatically postpone that date if they are working on the file?
ANSWER:     NO, NO, NO. Never forget to ask. And don’t be assume to ask more than once to be sure it is registered in the system and that you have an answer as to the new Trustee Sale date. There is no going back and correcting this…. If the trustee sale happens, it’s like the heartbeat that stopped. Its over!
QUESTION:   What do you mean "my servicer purchased the property" at the Trustee Sale?
ANSWER:      What this means is that the trustee sale was held and no outside bids were received or they were not high enough and so the mortgage servicer placed the winning bid on the property. Either way, the property is foreclosed at that sale.
More Questions and Answers:
QUESTION:  Will a Short Sale Stop a pending Foreclosure?
ANSWER: In some cases yes…each scenario is unique…best to consult an experienced agent to get the answer.
QUESTION:  How will my credit be affected by a short sale?
ANSWER: Our experience is a hit of between 50 to 150 points.  Just as your credit score is unique to you…the impact will be just as unique.
QUESTION:  How long does a short sale take?
ANSWER:  A “short sale” is to the contrary, not short in length of time. Most short sales take on average 90 to 150 days to complete after the short sale package and an accepted offer has been submitted to the Mortgage Company, bank or servicer.
QUESTION:  Can I live in the home during the short sale?
ANSWER:  Yes.
QUESTION:  I am late or past due on my Home Owners Associations or HOA dues?
ANSWER:  The HOA has equal power to foreclose or hold up a short sale from being successfully completed. Unfortunately, mortgage companies will not, in most cases pay any past due mortgage payments or fines. We always request that the homeowners continue to pay the HOA dues through the entire short sale process and if they are late, get current!

TIP: You can usually negotiate with the HOA to reduce these past dues or any associated fines by simply asking.

QUESTION:  Will my Federal (IRS) and State taxes be impacted by a short sale?
ANSWER: In most cases not on the Federal (IRS) level as you will be protected by “The Mortgage Debt Forgiveness Act of 2007“. When it comes to state taxes, this is unique to your state laws. In California, SB 401 allows California residents like forgiveness.
QUESTION:  Can I participate in the Governments Home Affordable Foreclosure Alternatives (HAFA) program?
ANSWER:  Under the current qualifications to the HAFA program, no one can guarantee participation or acceptance into the HAFA program as the decision is up to your mortgage company and its investor’s as to your approval for participation.
QUESTION:  How do Real Estate Agents commissions get paid?
ANSWER: The mortgage company and real estate agent will negotiate this amount and it will be paid by the mortgage company.
QUESTION:  I’m behind on my property taxes, do I have to pay them current?
ANSWER:  No. The Mortgage Company, bank or servicer will pay the taxes current prior to close of sale.

209-910-3706
Email: motheranddaughterrealtyteam@gmail.com