JOHN BROOKS REALTY

 

A real estate short sale predicament arises when a seller can no longer afford to continue to make payments on his property, but is unable to sell  because he does not have enough equity to pay off the loan(s), closing costs, and commissions.

John Brooks Realty offers solutions  when a real estate short sale issue arises.  Please read on....

Homeowners who purchased in the recent past (2004 through 2007) with little or no down on adjustable rate mortgages, and homeowners who have taken out large home equity loans, are seeing their interest rates rise somewhat dramatically, and many are unable to maintain their mortgage payments. Others have real additional hardships like losing a job, or becoming disabled.
 
Adding to the dilemma, housing values have dropped 30% to 50% for properties purchased in the above time frame.

Their mortgage is underwater, that is…more is owed on the mortgage(s) than the fair market value (FMV) of the home.  There is no equity in the property to consummate a sale and pay off the lender.  That is the very definition of the real estate short sale situation.

There are many options available to the owners finding themselves in this situation including deeding the property to the lender^[1], asking the lender for forbearance^[2], real estate foreclosure^[3], Treasury's loan modification program, and the real estate short sale.

We think that in most instances, if your loan is substantially underwater, the best alternative is the real estate short sale if a lender will cooperate.

In most instances of the real estate short sale, the lender absorbs the costs of closing, commissions and takes short pay on his loan with no further out of pocket costs to the homeowner.

It is advantages to the seller  because, if negotiated properly,  there is minimal damage to your credit (compared to a foreclosure) and no deficiency judgment^[4] is imposed by the lender.

It is advantages to the lender because he cuts his losses early, and is spared the costs of a real estate foreclosure and does not wait  months or even a year or more with a defaulting loan on his books.

We at John Brooks Realty have long experience in negotiating short sales with lenders dating back to the 90's when California experienced its last downturn in prices.

We offer a free consultation service with you regarding short sales.  We can discuss with you all the ramifications involved.  Referral to your tax and legal advisors may be required. For a FAQ discussion by the IRS regarding cancellation of debt (COD) with respect to mortgages click here.

If, after consultation, you agree that it is the right course of action for you, we will list your property, negotiate the sale with the buyer, and get the sale approved by the lender, usually with no commission or closing costs expenses charged to you.

Remember, the lender usually pays all commissions and closing costs in a real estate short sale and your slate is wiped clean.  Give us a call if you or someone you know must sell their home and has inadequate equity to complete the transaction.  We can help. 
      Call us today @ (916) 399-1372  or email us at cs@johnbrooksrealty.com

[1] A deed in lieu of foreclosure amounts to simply deeding your property over to the lender in lieu of the lender going through the legal steps of a real estate foreclosure.  It has the same effect as a real estate foreclosure on future FNMA underwritten loans. Quoting FNMA guidelines:

"We generally require four years to elapse before we will consider the borrower to have a reestablished credit history".

"We will, however, consider two years as an acceptable interval for reestablishing a credit history when the derogatory information in the borrower's credit record resulted from documented extenuating circumstances that were beyond the control of an owner-occupant borrower -- such as a serious, long-term illness; death of the principal wage-earner; or loss of employment because of factory slowdowns or shutdowns, reductions-in-force, etc. -- we will purchase or securitize the mortgage as long as the lender's underwriting confirms that the borrower has reestablished good credit and has demonstrated an ability to manage financial affairs."

[2] A forbearance mortgage is when your lender agrees to let you delay your monthly mortgage payments for a short period of time. Generally, you sign a forbearance agreement that states the lender will require you to pay the amount you owe at a later date. Options vary widely depending upon the type of loan you have, (i.e. FHA, VA, Conventional)  Direct negotiations with the lender are required.

[3] There are two types of real estate foreclosures in California: (Judicial) and non-judicial.  Non judicial (no court proceedings), power of sale derived from the deed of trust or mortgage foreclosures are far and away the most common form of foreclosure practiced in this state. 

^[4]CALIFORNIA CODE CODE OF CIVIL PROCEDURE 580d. No judgment shall be rendered for any deficiency upon a note secured by a deed of trust or mortgage upon real property or an estate for years therein hereafter executed in any case in which the real property or estate for years therein has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust. (Non judicial sale)

 

HOUSE UNDERWATER?