Jarad

Closing short sales and finding a buyer

Question: When closing short sales and finding a buyer in 30 days or less, are you using a land trust to avoid the seasoning issues or are you double closing in your own name? How do you avoid the seasoning issues?

Answer: -It’s becoming harder and harder to perform a double or simultaneous closing because of all the mortgage fraud going on in the lending industry. However, there are a few title companies still around in certain states that will do this for you, you just have to find them. The land trust is used to provide added protection and helps in avoiding the due on sale clause. So using a land trust is beneficial even if you can’t perform a double closing. The most common seasoning issues come when you buy a piece of real estate for $100,000 one week and sell it for $200,000 the next. They begin to wonder how it doubled in price so quickly and you or your end buyer may have to explain that you got a good deal.

Short Sale Without Spouse’s Consent

by Jarad Leave a Comment

Question: Can my spouse short sale our home without my consent?

My home has been under pre-foreclosure for almost 10 months. I’m going through a messy divorce and moved out of the home with my kids,leaving my deadbeat husband to live there by himself. He is attempting to do a short sale on the home to avoid foreclosure. My name is not on the mortgage loan. The mortgage is not on my credit report, but I am listed with him as an owner of the home. Is he within his right to perform a short sale without needing my signature to close the deal?

Just to clarify…

My name is on the title of the home. A Lis Pendins was served in Orange County Florida. The house is under foreclosure and my soon to be ex husband is still living in the home and paying the utilities. He keeps trying to accomplish a short sale but I won’t sign. Because I won’t sign the short sales, he keeps getting denied. He gets furious with me, but keeps having his realtor buddy attempting a short sale on the home which I keep rejecting. Since he keeps trying to sell the home, I thought maybe there was some legal loophole for getting around my signature since I am listed as a co-owner of the home. Thanks

Answer:

So your name does not show up on the loan, but your name is on title… So as far as a short sale goes, since he is negotiating with the lender they probably don’t know about you. So he can go as far as he can through the short sale process, but if someone wants to buy it, you’ll have to sign docs sooner or later. He can try to re-finance, or workout something out with the bank all he wants, however he won’t be able to sell it because you’re on title. We tell all our students who are doing short sales when they run across divorce situations, they have to have signatures from both parties or else get the spouse to quit claim it to the other, because in situations like this, there is nothing they can do. I bet he’s frustrated to no end.

Can the bank wreck my credit for my spouse’s foreclosure?

by Jarad 1 Comment

Question: I’m wondering if the bank can wreck my credit for my spouse’s foreclosure?

This story takes place in Florida.

My wife was divorced for two years when we got married. She had purchased a home with her ex-husband, and because he had lousy credit, hers was the sole name on the mortgage. However, both she and her now ex-husband are on the deed.

When they split up, she moved out of their marital home, which her ex-husband still occupies and made the mortgage payments on–until January, when his business collapsed, and he hasn’t made a payment since.

My wife and I have lived together for a year, ever since we got married, in a home we rent together.

The mortgage company has already started the foreclosure machine to take back the marital home which she left. Of course, there’s no way her ex-husband can save it. Thanks to the on-again off-again payments her ex-husband was making to the mortgage company, my wife’s credit is now obliterated. Now she will have a foreclosure on her credit as well, thus torpedoing any chance we might’ve had of buying a house of our own.

My question is this: Can the bank attack my credit as well, even though I’m not on the mortgage, and had nothing at all to do with the property, but am “guilty by association” for being married to the person who “is” on the mortgage?

My common-sense feeling tells me that I’m safe from attack by the mortgage company. However, when the foreclosure paperwork was being served by the bank’s attorneys, “both” my wife’s and my name were on it. That spooked me out a little. Could the bank’s lawyers try to come after me, since, because we’re married, we count as one financial unit?

Any insight would be appreciated.

Cheers!

Answer:

No, you are fine. The home is only collateral for the loan. When they foreclose, it only affects those who’s name are on the loan, not on title. So you will be fine. Her ex will be fine as well if his name is not on the loan. Your wife is the one who is stuck with the foreclosure on her credit. This is why “subject to” investing is so popular. Investors can take control of properties without any credit risks.

Hope this helps.

Short sale acceptance rate

by Jarad Leave a Comment

Question:

I know this may a tough question to answer, but what % of short sale offers can one expect to get accepted by the lenders? I am sitting on 4 deals right now and am curious. (The lenders are: First Franklin, Countrywide, EMC and Chase.) Also, do you ever consider ‘partnering” on any deals? I was hoping to bring a deal to you and follow along as you go through the process. Anyway, thanks for your help etc,

Answer:

The % really depends several factors like: how well you build your case, the lender involved, and the BPO. Understand that all lenders will discount. Sometimes they can be very difficult to work with while others you will hit a home run. You can almost always get them to discount, but the discount they are offering may not fit into your buying criteria. The real key is the BPO. We’ve thought about having a joint venture relationship with our students where they can “bring deals to the table” in a sense but we are still in the process of making that happen.

Good Luck – let us know how they go.

Example Forms to Share when doing a short sale

by Jarad Leave a Comment

I had a meeting today with a homeowner who definitely wants out of the house. I bought your reading materials on the short sales, including the forms, and now I have a deal at hand. I have a question regarding the forms when doing a short sale. Do you have some examples in which you can share on how to fill out the forms?

Especially the purchase and sales agreement. There are a couple of examples on how to fill out the forms for a couple of forms but the other are blank.

Some other questions. please explain line 2.A on the P&S agreement. Am i supposed to give her the $100 upon signing this contract? I understand the $10 for the deed. Also, she needs $5k in order to move. How best to approach this issue? When does she receive the $5k? Would that seem like a kick-back? best legal method…

Please excuse so many questions, this is my first time doing a short sale.

Can you also share how to fill out the PYA letter? What goes on the first two lines?

Please advise. Thanks very much for your assistance.

Drew

Answer:

Drew,

We just updated the short sale manual. It would be on page 54-56 and page 38. On line 18 in the P&S agreement, you need to put that the sale is contingent upon short sale(s) being accepted. That way if they are not accepted, you can back out. You do not want to purchase this home for full price.

The $100 is just a binder deposit to make things legal and to show the bank you have some skin in the game. Don’t give this to homeowner! More than likely they will just keep it and spend it. Then if the deal falls through, good luck getting it back. Probably not going to happen. You can open up an escrow account and put it safely in there if you want.

Do not ever give the seller any money (5k) in this case until the deal is finished. Meaning you have either purchased the property or you have found a buyer and have closed with them. It’s illegal to give the seller any money when you told the bank they would receive zero. You need to buy their personal belongings and make sure you have a bill of sale proving you did in fact purchase these items – couches, lawnmowers, tools, etc. with a signed bill of sale.

Advice and question on a pre-foreclosure

by Jarad 4 Comments

About 3 weeks ago we placed on offer on a house that is currently in pre-foreclosure. The house was listed for way under value (Perhaps 100K undervalue). When we placed our offer, the seller’s agent told our agent that our offer was the second to come in and that he should hear back from the bank in the next day or two.

Fast forward 3 weeks.

There are now at least 5 offers on the house and the seller’s agent is not being very up front about what is actually causing the delay other than the bank has not responded to the offers yet and that the bank may not have a decision for another month.

Here are my questions:

1) What are some possible reasons for the delay? Does this simply mean that none of the offers are good enough?

2) The real estate market in the area is quite good. I’m curious why the seller would have a short sale and list the property below market value when it would probably sell for market value. Is it just a tactic to get more bids?

3) In this type of competitive (multiple-offer) environment, how important is it to have an offer that the bank can accept outright and not have to counter with? For instance waiving contingencies such as the inspection contingency and/or finance contingency? What about escalator clauses?

If you have ideas on any of the question, I would be happy to hear your opinions as I have very little experience w/ pre-foreclosures.

Thanks!

Jarad

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