Short Sales

Short Sale Without Spouse’s Consent

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.

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.

What is effect of short sale, Deed-in-Lieu, etc…on credit report?

by Jarad 6 Comments

This is a question I receive a lot from people. Please understand these are generalities. Everyone’s credit will be affected differently depending on other factors. I’m also not a credit expert or credit repair expert. However, I’ve done enough of these to know generally what happens.

When helping a homeowner I’d like to be able to intelligently explain the effects of all these options below. What effect does the following options have on ones credit report? Are there any other things a homeowner should be concerned about when considering these methods to avoid foreclosure?

– short sale
– forbearance
– loan modification
– mortgage refinancing
– deed in lieu of foreclosure
– foreclosure
– bankruptcy

Answer:

Any option is better then just letting the property go to foreclosure, however, you must understand that no matter what happens, the homeowners credit has already been hit because of late payments.

All of the options listed above generally don’t occur unless the homeowner has been late on payments except for maybe mortgage refinancing. That you can still do without being late.

A credit score will be affected based on how many late payments are missed. If only one is missed, credit score is affected just a bit. As more late payments occur, credit score will be affected more.

A lot of times, if homeowners are not making mortgage payments, they may not be making other payments as well, which also affects their score.

A mortgage refinance generally needs be done early in the process because they look at your credit score more than anything. So if the homeowner can do a mortgage refinance, this will not have any impact on their credit as long as they are current.

A forbearance usually happens sometime after a payment or two is missed. The lender will agree to add on what was missed to the back of the loan. So credit is affected slightly, but should recover soon.

Loan modification, again, homeowner has probably missed some payments, needs some help and the lender agrees to lower the interest rate and modify the terms to help the borrower. Credit is affected because of missed payments. Again not a huge credit concern.

Deed in Lieu, the homeowner basically walks away, gives the house back. Credit will be affected a little bit more but should recover with time and as long as they are current on other obligations. It may show up on credit report as a settlement.

A short sale is another type of settlement. Both parties agree on a certain price which settles the debt. Depending on how it’s settled, credit is usually affected for a year or two.

Foreclosure is not a good option. Neither party gets what they want and the effects on credit can be 3-7 years. Try to avoid this as much as possible.

Bankruptcy is the worst. This will stay on their credit for 7-10 years and make it very difficult to have borrowing power for some time. It will be a derogatory mark against them for a long time. Try to avoid this as much as possible.

Circumventing short sale assignment problem and funding

by Jarad 1 Comment

What techniques can be used to circumvent short sale assignment problems?

FYI…
I am brand new to short sales/pre-foreclosure investing and have NO experience. I posted to several real estate discussion boards that I am looking for a mentor to help me. Some investors who replied offered short sale education to me at a price I could not afford.

One gentleman said he ordinarily charges, but he would work with me. He proposed that if all I do is find motivated sellers in foreclosure who are behind in payments and who:

1 – just want to get out of their situation
2 – do not expect any money out of the deal
3 – are willing to let him handle the situation with their lenders and stop the foreclosure process
4 – are willing to sign an offer to purchase and other paperwork

He will take care of everything to close the deal. He has years of experience and knows the ins and outs of short sales…how to deal with lenders, loss mitigation dept, etc. His LLC has all the key ingredients already in place to close a short deal transaction quickly:

Attorneys on Call
– Title Agent
– Lenders, Private and Hard Cash
– Mortgage Brokers
– Repair Contractors
– Inspectors and Appraisers

The only thing I will be doing is bringing motivated sellers to this investor. If the deal closes, he has agreed to sign a promissory note assuring me that I will get paid $2,000 or 10% of profits (since he will only consider deals with $20k or more profit). He has also agreed to teach me the short sale process, the paperwork involved, etc so I can learn to do this on my own. I felt this was a good way to learn a process that can be expensive to get if I had to pay for seminars, bootcamps, etc. I have decided to work this way…for now.

I have studied and understand how short sales work, but… If one has no good credit or source of private and hard cash and no short sale experience, what other alternative do they have where they could do the deal and keep all the profits themselves? And advice would be greatly appreciated. Thanks in advance.

How do I recognize a good short sale deal?

by Jarad 1 Comment

I am new and I understand how short sales work. I have a few short sale investors who have agreed to work with me where I find good prospects and do the research and if the property is short saled I get a portion of the profits.

But after I find a motivated homeowner in foreclosure, I need to know how to recognize a good short sale deal. When I look at the numbers, how can tell if it is a good deal? Please advise.

Short Sales

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