Loan Modifications

Loan Modification For Dummies – Getting Your Home Mortgage Loan From Bank of America or Wells Fargo Modified With The Help of Companies Offering Loan Modification Programs27 Jul

home loan modification

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Recession has brought about the mortgage crisis and continues to cause homeowners to lose their homes to bank foreclosures, so when news of loan modification came out, real estate professionals are in agreement that this could be the answer to home foreclosure problems and allow homeowners to continue to live in their well-loved houses.  According to the latest RealtyTrac data, for first half of 2011, there are 20 states in the country with a highest foreclosure and unemployment rate, with west states on top of the list namely  Las Vegas Nevada ,  Arizona ranks 2nd, and Los Angeles California. Other states include Utah, Georgia , Idaho Michigan,  Florida, Colorado, and Illinois. Losing one’s home can be extremely nerve-wracking but consumers now have several options to preserve home ownership through  Freddie Mac, Fannie Mae, and the Federal Housing Administration (FHA). Here, loss mitigation works to negotiate mortgage terms for the homeowner that will prevent foreclosure.

What is Loan Modification?

A loan modification is a change in one or more terms of a borrower’s home loan, allowing the loan for renegotiation or to be reinstated, and leads to a payment scheme the homeowner can afford.
The FHA loan modification plan is  known as “Hope for Homeowners Program” and a bit different vs the general federal loan modification programs like Home Affordable Modification Program (HAMP), Home Affordable Foreclosure Alternatives and Making Home Affordable Programs in relation to terms and conditions associated with the program. FHA loans have very limited options within the agreement of loan modification in comparison to general loan modification.
Although programs and guidelines are changing and easier for homeowners to get the financial help that they need today, sadly, not everyone will qualify.  Interested borrowers will have to meet certain eligibility requirements. Second, all applicants should go through the process of completing loan modification application forms, and provide proof of their income. Loan modifications have become such a booming business opportunity that brokers and lenders wanting to provide assistance complete the process make use of specialized software called the SX3 Loan Modification Software so that borrowers can secure an application package online and follow up on their case on the web.

How To Get Your  Home Loan Modification Approved

In line with President Obama’s HAMP,  $75 billion dollars was allocated from the Federal government so that lenders can participate in this government subsidized plan. Using mortgage calculators, homeowners are encouraged to learn how they can qualify for refinance or mortgage modification basing on income and calculation of FICO scores.
What is FICO? Wikipedia defines FICO as a “publicly-traded corporation (under the ticker symbol FICO) that created the best-known and most widely used credit score model in the United States. A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from credit bureaus.”
Increasing your chances of success of getting your loan application approved can be done by following these tips.

1.  Show proof of hardship. Prove that you are not able to make payments on your current loan such as unforeseen expenses. If you’ve just been made redundant you can provide a redundancy letter.
2. Show past and recent payment records. Provide proof of  past payment habits on loans before you got into difficulty. Your ability to repay the reworked loan amount will improve your chances of being approved.
3.  Know your accounting 201. There are three main financial documents that are important: the Income Statement, Statement of Retained Earnings, and the Balance Sheet. Have an accurate and detailed record on a worksheet of your present expenses versus your income. Using a mortgage calculator, work out a sample financial statement and carefully examine. Samples of DIY worksheets can be found on the internet. Don’t  try to hide anything. Dishonesty will count heavily against you and will lead to your application being denied.
4. Write a hardship letter. When writing these types of letters, describe how  you got yourself into the current financial status and your need for assistance.  Examples of acceptable reasons lenders consider valid are divorce or separation, loss of income, death of spouse, co borrower or family member, illness, and job relocation.

Here is a list of the authorized lenders approved by the Treasury Department to offer President Obama’s Federal loan modification plan.
Aurora Loan Services, LLC.
Bank of America, NA
Bayview Loan Servicing, LLC
CCO Mortgage
Carrington Mortgage Services, LLC
Chase Financial, LLC
Citimortgage, Inc (Citigroup)
Citizens First Wholesale Mortgage Co.
Countrywide Home Loan Servicing LP
Ditech
Everhome Mortgage
First Federal Savings and Loan
GMAC Mortgage LLC (Ditech)
Green Tree Servicing LLC
Home Loan Services Inc
IBM Southeast Employees Federal Credit Union
Lake National Bank
National City Bank
Nationstar Mortgage LLC
Ocwen Financial Corporation, Inc
RG Mortgage Corporation
Residential Credit Solutions
Saxon Mortgage Services
Select Portfolio Servicing
Technology Credit Union
Wachovia Mortgage FSB
Wells Fargo Bank, NA
Wescom Central Credit Union
Wilshire Credit Corporation

Among America’s largest HAMP services list are:
Bank of America – has been  leader in modifications since the beginning of the HAMP program. It is one of the oldest banks in the USA, now stands at number three in terms of largest bank in the country and ranks third in mortgage services in America with nearly 84,000 active HAMP modifications.

Ocwen Financial Corporation – a leading provider of residential and commercial loan servicing, special servicing and asset management services, had 24,454 permanent HAMP modifications active in 2010.

American Home Mortgage Servicing Inc (AHMSI) – With a multibillion portfolio under management, AHMSI is one of the country’s largest servicers of Alt-A and subprime loans with 16,167 active HAMP Modifications.

JP Morgan Chase – One of the oldest financial institutions and has the largest market capitalization among the banks in the US.,  JP Morgan offers a number of services namely commercial banking, investment, card and retail financial services namely mortgage lending and car and auto finance. Has 67,722 active HAMP Permanent Modifications.

Wells Fargo – this financial giant started in 1852 and is now one of the largest banks in the US and one of the most reputed companies in the US offering mortgage services today.
>America’s Servicing Company (ASC) is a division of Wells Fargo Home Mortgage that services loans for other investors.

CitiMortgage – Considered by many experts as the leading mortgage company world wide. It was started in 1970 in America and operates in 54 countries today, with 52,856 active HAMP Permanent Modifications.

GMAC Mortgage – one of the nation’s largest home mortgage originators. The number of HAMP Permanent Modifications that started with Citi was 36,718, and 34,116 Permanent Modifications were active as of Nov 2010.

Wachovia Mortgage Company  – It is another reputed company in US for mortgage services. The company offers almost every service related to banking. Wachovia has now become a part of wells Fargo.

Residential Capital LLC – Residential capital is a real estate finance company offering innovative capital solutions to customers from across the world. The company is a market leader both in the US and UK.

MetLife Inc – offers financial services together with insurance services to its customers in India and most parts of Europe and Asia.

Quicken Loans – A variety of home mortgage loans are offered by the company. It is one of the best online home mortgage loan processing company and retail mortgage lender.

SunTrust Bank Inc – with more than 1500 branches in VA, United States, it specializes in a number of services like banking, mortgage lending, credit card, mutual funds, insurance and asset management services.

US Bank Home Mortgage – offers online home mortgage processing and refinancing services and  specializes in online banking, credit card processing, especially mortgage loans and wealth management.

PHH Mortgage- With its process efficiency, multi channel business, and customer service, it offers mortgage loan and refinancing services. It provides one of the leading and best of Mortgage Solutions in the country.

Other mortgage companies include HSBC, Impac , Everhome, Litton Loan Servicing, Midland Credit Management, EMC, Citibank New York,  Nationstar.

For the past three years the banking industry continued to reel from recession and mortgage meltdown causing more than 300 banks to fail since Jan. 1, 2009.  A few of these banks are:

Flagstar Bank
IndyMac Bank Pasadena in 2008 (OneWest)
Bank of Miami, N.A.  in 2010
San Diego National Bank, Ca in 2009
City Bank Lynwood in 2010
WaMu in 2011
Loan Modifications Helpline

Realistically, not everyone will get fair assistance they need. If you feel you are being pushed too far, you can get help from government agencies. The National Mortgage Help Center assists homeowners with home foreclosure through their network of foreclosure prevention specialists. You can also get help from  NACA (Neighborhood Assistance Corporation Of America) to help you through the process. Initially, you may have to fax your documents for them to assess. If you need a lawyer,  lawyer listings can be searched on the internet including phone numbers, reviews and forum. Lawyer Central is one website where you can look up lawyers listed according to regions, cities and states. The site also provides a free case review form to assess you for loan eligibility.

Why Lenders Agree To a Mortgage Loan Modification?

Mortgage loan modification is a term that is used to describe changes made to an existing mortgage loan to make it easier for you to continue repaying your loan payments.  In general, modifications rarely happened in the past because mortgages are legal contracts and are not normally altered once created.  However, with the foreclosure crisis today, modifications to mortgages have become common.

So why then would a lender be willing to modify your mortgage?  Banks and mortgage companies do not modify mortgage loans out of compassion but rather to prevent its own financial loss. Foreclosures are expensive for lenders and cost them the profit that they hoped to get from lending you the money in the first place. So if your lender can help you avoid foreclosure by agreeing to a mortgage loan modification such as changing the terms of the loan by extending the period of time or refinance the loan with a lower interest rate so that  you can afford the payments, they will do so.

Applying For A Wells Fargo Loan Modification

Although you do not technically need a lawyer, it is recommended that you seek help from a legitimate loan mod adviser if you have never done this before.  Wells Fargo home loan modification requires up to six months of documents and specific requirements to receive a permanent mortgage modification so professionals who have had experience and adequate training with loan modification and previous relationships with lenders would prove to be a big contribution to the speedy approval of your application.

How To Choose The Best Loan Modification Companies

Despite homeowners facing home foreclosures, scams and con artists continue to target home owners. And because brokerage laws are not well regulated, mortgage fraud and scam is still a problem; from borrower to broker to lender. There is so much money in mortgage brokerage that lead companies to surface on the internet, selling real-time, fresh, recycled and aged mortgage leads. We should therefore be wary in selecting mortgage companies. Select those that have BBB or Better Business Bureau ratings.
Common Loan Modification Programs Scam Types
Charges – clarify backend, upfront fees or high fees for work such as in the case against Procity
Affiliate claims – claims of being backed up by a reputable attorney but  no lawyer or law firm is identified or mentioned.
Lease or rent-back – homeowners are told to transfer title to a third party, grant exclusive rights to rent the home and then promises to buy it back later at a cheap price. Transferring your deed gives the con artists the power to evict you and sell your home.
Bait and Switch–homeowners think they are signing agreements for a new loan to make the mortgage current, but sign away the home and are left holding the mortgage on a home they no longer own.
Equity Stripping–a buyer purchases the home for the amount of the arrear-age and flips the home for a quick profit.
Request for “power of attorney” to the loan modifier –  The fraud may use the power of attorney to sell the home right out from under you.
Complaints for Fraud and Scam can be reported to the following agencies:
The Federal Trade Commission
Federal Bureau of Investigation (FBI)
HUD (Housing and Urban Development)
The Federal Deposit Insurance Corporation (FDIC)
The Better Business Bureau
The Chamber of Commerce

Who Are Qualified For Bank Of America Loan Modification

Bank of America is a participating lender in the President Obama’s HAMP. It is funded with $75 billion dollars of Stimulus Bill money  to help struggling homeowners avoid foreclosure and keep their homes. It  has three available options for loan modification namely conventional, Fannie Mae and Freddie Mac.  Bank of America promotes retention of home ownership or reinstatement options under their Forbearance,  Repayment Plan, and Loan Modification. These plans intend to bring the loan current or provide relief until they can be reinstated while Short Sale and Deed-in-Lieu liquidate the loan. These options would  assist homeowners in default and aid in transition to lower-cost housing or relocation.
People who are qualified are those who are already in default on their Bank of America mortgage and facing foreclosure. Some people not yet in default may also qualify if they are facing foreclosure in a very short time. For example, people who had no real change in income, expenses, or house payment amount, but rather poor money managers and not victims of financial hardship are not qualified for this program.

Loan Modification In Broward County Florida

It is saddening how Florida, the Sunshine state, is now one of the states with the highest foreclosures with hundreds of homeowners being evicted from their homes everyday. The state of Florida provides a statutory guideline for filing a 3-Day notice eviction but many jurisdictions have interpreted it in different ways.  Broward County is one of those jurisdictions where an eviction notice is not clear, making it difficult for a non-lawyer to successfully evict a tenant. Still, homeowners are in battle whether to short sale or apply for a loan modification.

To help reduce home loan financing costs, the Housing Finance Authority of Broward County has launched a 2010 Mortgage Credit Certificate Program  for qualified homeowners in the county. The program entitles a qualified applicant to a federal income tax credit in an amount of up to $2,000 annually. This will enable qualified owners or buyers to benefit from a dollar-for-dollar reduction of their tax bills even those who owe federal income taxes. Moreover, the homeowners continue to receive tax credits each year as long as they continue to live in the home which is financed by the program.

Loan Modification For Dummies

With so many homeowners on the brink of foreclosure, loan modification attorneys and loan modification companies have mushroomed. Be careful with whom you deal with though as fraudsters are also taking advantage of the real estate debacle. They disguise themselves as loan modification experts ready to help beleaguered homeowners, when, in fact, they are there to bilk them of some money. For this reason, other homeowners prefer to handle their loan modifications by themselves, rather than pay upfront payments, backend fees and monthly charges to the agency for their services. If you want to take the Do-It-Yourself route, there are plenty of resources which can serve as your guide. Again, prudence is essential in choosing the right material. One resource you may consider is the Loan Modification for Dummies, which you can buy online. It includes tips and advice on what to ask your mortgage lender, mistakes to avoid when modifying your mortgage loan, and a list of documents you need to prepare and submit to your lender.

Many people are still ignorant of the processes of loan modification. Whatever option is best suited to  the homeowner, thoroughly studying and understanding the terms and conditions is usually the first step.

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Tax Implications For Short Sale, Foreclosure

Short Sale Foreclosure

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Do You Owe The IRS After Short Sale, Foreclosure?

The law says that if the debt you owe is forgiven by your creditor, the forgiven amount could be subject to tax. If you went through a short sale or foreclosure, you may be wondering if this applies to you. Let us take a look at how these two ways of letting go of your home may cause you to owe the IRS.

Is The “Income” You Get From A Short Sale Taxable?

In a short sale, your lender agrees that you sell your home at a price lesser than your mortgage balance. So for example, your mortgage balance is $200 and you sell the property for only $150, the bank incurs a loss of $50. But by consenting to a short sale, the bank forgives the debt considers it written off. Naturally, you are relieved that you avoided the negative impact of foreclosure and that your lender granted you loan forgiveness. You relish the idea that you are free from this financial obligation. Not so fast, dude! The government thinks otherwise. You may just owe the IRS tax on the $50 that you have been forgiven. When your lender forgives the $50, this means that you earned $50. Your lender may hand you a 1099 form.

Before, homeowners are advised to negotiate with the bank to waive its right to a deficiency judgment and accept the payment in full. There is a good chance that your lender will agree to this since if they foreclose on your home and it gets sold in a foreclosure sale, the will incur the same or even greater loss. If the bank does not agree to this, your insolvency issues may also exempt you from paying this tax, otherwise, you may just have to pay some tax.

But still you are lucky because of the Mortgage Debt Relief Act of 2007. This law permits homeowners to exempt income from the release of debt on their primary home. This includes discounted debt after restructuring and debt forgiveness for mortgage, such as that in a short sale and foreclosure. This pertains to debt that has been excused within 2007 to 2012.

Tax Ramifications In A Foreclosure

When your lender forecloses on your home and is sold at the sheriff sale, no debt is forgiven. Foreclosure legally forces you to sell your home so that the bank can recover as much money as they can. Although you are now somehow free from your mortgage obligations, they cannot call it debt forgiveness since the bank did not voluntarily forgo your debt and you did not willingly sell your home. Hence, it is considered that no income has been generated. So you are not liable for any tax.

Short sale and foreclosure is a tough way of losing a home; it is a good thing that the law has exempted homeowners who went through these from being taxed.

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Expect Streamlined Loan Modification Help With New Foreclosure Law

Loan Modification Help

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Current Loan Modification Help Not As Helpful

Although a number of homeowners were able to save their homes from foreclosure with loan modification help, quite a number are still dangling in suspense while their request for revision of their mortgage terms is still awaiting verdict from their lenders. Many cry foul over the alleged deliberate negligence and lack of concern and urgency among lenders to give an immediate answer. They often use “losing some emails, faxes and receipts” as excuse for the delayed process and rejections. Bank representatives handling loan adjustment requests are said to play the role of having insufficient authority to give straightforward answers. Meanwhile, the number of requests stuck in the lead-footed process continue to grow.

Government Rescues Loan Modification Help

Enter Foreclosure Fairness Act…

With this law coming into force by middle of July, homeowners can now expect a mandatory mediation. Just like in the existing regulations, you first meet with an accredited housing lawyer to consult if you think that reworking your mortgage will help you afford your payments and save you from foreclosure. But with the new law, after your lawyer agrees that your request is reasonable, he can ask for a negotiation with an independent mediator present who can verify if your lender is acting with sincerity of intention. With this change, lenders are required to have representatives who have the authority to make decisions on reworking the loan during the mediation.

Foreclosure Freezes While You Go Through Loan Modification Help

The law also ensures that your lender cannot proceed with the foreclosure process while the arbitration is still in process. Many homeowners complain that lenders keep them preoccupied with paperwork so that the latter can get on with foreclosing their house. With the new law, foreclosure proceedings must be put on hold while your case is still in the middle of mediation. If unfortunately, your modification loan has been denied, and you have no choice but to face foreclosure, at least, the new law gives you an entire three or four months to reflect and figure out what to do next.

While waiting for the law to take effect, you can meanwhile use the federal agreement between the US Comptroller of the Currency and several leading banks to stop your lender from pressing on with foreclosure proceedings while you are seeking for loan modification help. This agreement is a consent decree where the said banks assented to bring to order their procedures in loan modification, foreclosure and refinancing.

With the Foreclosure Fairness Act taking effect, homeowners can anticipate to get more streamlined loan modification help, to wit clearer answers, faster processing and protection from foreclosure while still in mediation.

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7 Steps in Executing A Mortgage Short Sale

house for sale by owner

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Mortgage Short Sale – One Option To Avoid Foreclosure

Are you in the throes of foreclosure and looking for a way out? Is your financial difficulty temporary or do you think this could last for a long period? While a forbearance agreement would serve well a homeowner going through a temporary financial difficulty, a mortgage short sale, a deed in lieu of foreclosure or a short refinance would be more suitable options for homeowners with more permanent financial hurdles to wriggle out of foreclosure. In a mortgage short sale, you, with the mortgage company’s consent, can sell your house for less than the amount of your mortgage. If you are considering to take this road, here are the steps to guide you in the process.

Mortgage Short Sale Steps

Step 1. Get to know the mortgage short sale process to manage your expectations, such as reading these steps, and studying the tax implications of the process by consulting a qualified tax lawyer or accountant. It may be heartening for you to find out that a law that frees the short sale seller from any tax obligations has recently been signed by the president.

Step 2. Get in touch with a real estate agent to help you get familiar with the market for homes that are comparable with yours in your location. A realtor who already has experience in short sale would be a big plus in helping your in this endeavor. When I say experience, I am referring to actual exposure to the process and not just a certificate in a short sale course.

Step 3. Communicate with your mortgage company to request for a mortgage short sale. Your lender will give you a short sale package so that you can file your application. The content of this package will vary from lender to lender but some of the common items are: a Cover letter, Hardship letter, W2’s, Pay stubs, bank statements, documents to support the hardship information you have mentioned in the Hardship letter, etc. To make sure that your lender will not go after you once the short sale has been executed for the difference in sale price and your mortgage, initially ask for a short sale without recourse. If you cannot secure this, you may be liable for this difference.

Step 4. Have your home listed with a realtor if you do not yet have an interested buyer. Often buyers will offer low bid prices for mortgage short sale homes. Once you get at least one offer, you can proceed to Step 5.

Step 5. Accomplish the short sale package and send it back to your lender for evaluation and wait for their approval.

Step 6. Meanwhile, get ready for the possibility that you may have to vacate your home soon although you may be entitled to certain number of days to stay once it is sold. So start looking for a new place to move to. You can start selling stuff which you may no longer need to make your transfer easier and you could use the proceeds to augment your finances. Expect interested buyers to inspect your home while you are still living there. You have to endure this inconvenience so that you can avoid foreclosure. Emotional preparation may also be necessary since the process can become draining.

Step 7. Once the mortgage company approves your short sale request, contact the realtor with which the property is listed for them to proceed with the sale of your home.

Getting familiar with the steps in executing a mortgage short sale will help the seller manage expectations and smoothly proceed with the process.

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Writing Hardship Letters for Loan Modifications That Get Approved

Writing

Why Write Hardship Letters For Loan Modifications

Hardship letters for loan modifications are a key requirement. Whether you like it or not, you have to write a hardship letter for loan modification since it is one of the main requirements. Through this letter, your lender can determine if your situation merits a loan modification and can also assess if you can make good on your payments with the modification.

It is a great avenue for you to explain your situation. Since the lender puts much weight on this letter, exploit this opportunity to explain your financial condition. Elaborate on how you got into such financial difficulty and why you defaulted on payments. The following are important elements that must be spelled out in your letter.

4 Essential Elements In Hardship Letters For Loan Modifications

1. Circumstances Behind The Hardship

Explain the circumstances why you can no longer afford to pay your mortgage. The most common ones are loss of a job, reduced salary, divorce, death of a spouse or a family member, sickness, and others. Spell out the details including the time frame when you first experienced the hardship. The date must tally with the time that you were delinquent in your payments. Relate the circumstances with the late payments.

2. Steps You Took To Address Your Situation

You would not want to give your lender the impression that you did not do anything to correct the circumstances. That would be a hint of irresponsibility, an attitude that may not merit a second chance. Show to them that you are trying to do everything to save your home from foreclosure, and relate to them your recovery plan. This could include: looking for a new job, or applying for extra work; selling off some stuff for additional funds to add to payments; cutting back on expenses; consulting a counselor and many more.

3. Show Them That You Are A Responsible Citizen

In your letter, paint to them a picture (in words, of course) of how responsible you are by subtly sharing about your community involvement, or the activities of your kid in school or in sports. Responsible borrowers can be rewarded with the lender’s trust by giving them another chance on their homes.

4. Duration of Hardship

Indicate whether your hardship is temporary or permanent in nature. If it is temporary, state a date when you expect the financial difficulty would end.

Some Pointers On Writing Hardship Letters For Loan Modifications

1. Keep in mind the objective in writing your hardship letter for loan modification – make the lender consider a possible loss by modifying your loan. Be honest, direct, and specific, and make the lender see that you deserve another chance.

2.Be as concise as possible without missing the important elements. While you want to explain your situation to the lender, do not write a novel. Keep it to one page as much as possible; a maximum of two.

3. Make sure that you support the financial details that you have spelled out in the letter with the appropriate documents, such as latest pay stubs, W-2’s, and your usual monthly budget.

4. If you think you cannot write a convincing hardship letter for loan modification, consider seeking professional help. They can also help you in negotiating with your lender. Choose your service provider well, though.

Writing hardship letters for loan modifications that get approved is easy if you know the goal in writing the letter and understand the factors that the lender takes into account to merit a thumbs up.

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Top 3 Famous Celebrity Foreclosed Homes

Foreclosures and CelebritiesWith the economy and housing market performing far less well than everyone would hope, foreclosure is an issue on many Americans’ minds. People who underemployed continue working to make their mortgage payments, and economists frantically try to determine the best way to ease the crash of the burst housing bubble. One group of people we expect to be able to easily weather the storm are our Hollywood rich and famous, but this isn’t always the case. Here are the Top 3 Celebrity Foreclosed Homes:

 

1. Chris Tucker’s Florida Mansion Foreclosure

This Rush Hour star paid $6 million dollars for his five-bedroom sprawl in florida. At 10, 000 square feet, the house featured an outdoor kitchen, five bedrooms, and a pirate-themed basement. The mortgage payments were $26,000, and even with his salary of $20 million for Rush Hour and $25 million for Rush Hour 2, he somehow managed to get $4 million dollars in red with his bank and $11.5 million with the IRS. The mansion was foreclosed upon in October 2011.

2. Nicholas Cage’s “Frat House Bordello” Foreclosure

Nicholas Cage’s extensive career starring in acclaimed movies such as Leaving Las Vegas, Adaptation, Moonstruck, and Valley Girl couldn’t save him from financial problems due to poor tax planning. By 2010, he allegedly owed millions in back taxes, and in April there was an auction in Bel Air to sell the home he had lost to foreclosure. Often ridiculed for its style, which real estate expert Bret Parsons declared as “frat house bordello,” the house did not sell.

3. La Toya’s Karma Foreclosured Condo

The Jackson family is known for their controversy and inter-sibling rivalry, but things took a turn for the worse in 2009, when the Prince of Pop’s sister was forced to give up her Las Vegas condo, which had gone into default and received multiple liens. While the condo was only $25,000, capital gains allowed mortgaging of over $750,000. People speculated that her time on reality shows Celebrity Apprentice and Armed & Famous did not pay as well as she lived. The foreclosure happened right after her brother died, and now there is more controversy regarding Michael’s estate, so it may be a while before La Toya is back square on her feet.

The moral of these celebrities’ home woes is that no one is immune to poor financial planning, unexpected decreases in income, and the Internal Revenue Service. After bringing in millions of dollars, these three still managed to live above their means. These are some of the most famous foreclosed homes, but certainly not the most tragic, as many people around the country are scraping by on much, much less.

How to Buy a Foreclosure House

Buying a house doesn’t have to be difficult. Just ask Borat!

Buying a House in Skyrim

One of the most popular games in the country, Skyrim. The real estate market is bad, but you can buy a house in Skyrim that is affordable. Living in it is another question.

Foreclosure House That You Wish Were Available

House like the one below are ones that do not go through the foreclosure market unless you look closely for them. Talk to your real estate agent and see if they can find you a gem like this house in Genolier.

Short Sale Information Every Buyer Must Have Before Buying

Short Sale Information

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Gather Short Sale Information Before Jumping In

The price tag figuratively dangling on short sale homes is enough to salivate an over eager buyer. However, a savvy real estate investor knows that he must hold his horses and carefully study the tempting deal first. If you wish, you can ask your real estate agent’s help researching about the short sale listing. After all, a short sale is notorious for taking too long and many such transactions do not clinch and buyers end up wasting their time and effort in working the deal out. There are areas where only 10 percent of the short sale homes push on. This is because a short sale is subject to the approval of the lender, without such go-signal, it cannot completely materialize. Below are six vital questions to ask for you to gather the necessary short sale information before getting your feet wet.

5 Pieces of Short Sale Information To Collect Before Buying

1. Is the seller eligible for short sale?

One critical factor that determines the fate of a short sale is whether or not the seller qualifies and that he has submitted all the necessary requirements. You can inquire from the listing agent if he has gotten an accomplished short sale package from the seller, and get to know about what is contained in the package. In order for the package to be considered complete, at the least it must contain these:

  • Hardship letter
  • Payroll stubs
  • Tax returns
  • W-2’s
  • Bank statements
  • Financial statement

Also find out if the seller is willing to short sell his property as there are some who are unwilling to do so, hence, they are uncooperative and disinclined to submit these documents. Remember, incomplete paperwork is one of the main reasons why short sales are so sluggish or are rejected.

2. What are the comparable sales for the particular property?

Although a short sale may carry a price below market value, nevertheless they are still priced according to impending sales. Since short sales take between two and four months to close, prices of pending sales become the comparable sales once you close.

There are short sales sold at insanely low prices. They get numerous offers, but with such dirt-cheap prices, it is unlikely that the lender will accept them. For your offer to be accepted, you have to bid close to the property’s market value. Forgo the short sale if you are not ready to pay much more on a short sale listing with an unrealistically low price. Offering 20 or 30 percent of the mortgaged amount may not get you anywhere.

3. How much is owed against the property, how many loans are there and who are the lenders?

You can delegate the task of finding these particular pieces of short sale information to your agent. A second or third mortgage lender may possibly pose problems and cause the process to get bogged down as they will receive not as much as the primary lender will receive. It would also be great if your agent can inform you about the reputation of the lenders involved as there are those who may be ticklish to work with. Experienced short sale agents often are familiar with these details.

4. How many offers have been submitted for the short sale?

Naturally, many would-be buyers would be interested in properties priced below the market value, hence, short sales often will get multiple offers. An agent may not divulge to you the terms of the offers, but at least find out how many other offers are there besides yours to get an idea of the competition.

To give you an idea how it goes, here’s how:

Initially, the first offer would usually be somewhat lower than the list price. The second would be equivalent to the list price. The third offer is expected to exceed the list by $1,000 to $2,000. The succeeding offers would be considerably greater. The key here is to offer a bid that is below market value but would still knock the other bidders. Otherwise, you may just be squandering your time.

5. How good is the short sale listing agent?

A listing agent is often the one who advertises the short sale, submits the short sale kit to the lender and negotiates with them. A number of listing agents, especially inexperienced ones, hire other companies to perform their role, which can compromise the results of the negotiation. Your agent cannot talk to the bank. So if you think the listing agent is still unseasoned, consider spending your time looking for other deals.

Besides competence, you must also find out how the listing agent goes about with the short sale process. The Realtor Code of Ethics mandates realtors to give everyone the fair treatment. However, you must realize that not all agents are realtors. So there may be listing agents who submit only the first offer to the lender and sit on the other offers. Such a practice can be deemed to violate the fiduciary relationship established between the listing agent and the seller since the seller has the right to get the highest and best bid. Also take note that even if the listing agent submits your offer to the bank, as the bank takes its time to make a decision, another buyer could beat your price.

So to make the short sale process worth your while, first gather the necessary pieces of short sale information that serve to indicate the potential of the transaction.

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Is Buying A Real Estate Short Sale Worth It?

Real Estate Short Sale

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Real Estate Short Sale – Sweet Deal Turning Sour

The rock bottom prices of short sales propel many homebuyers and real estate investors to buy them. You can buy a short sale in real estate for as low as 73 percent of its market value! Despite this tempting sweetener, an increasing number of homebuyers are losing their patience and deciding not to carry on with the purchase owing to the thorny process.

First-Time Homebuyers Opt Out of Real Estate Short Sale

The staying power of first-time homebuyers are tested in processing short sales. Less than forty percent of all short sale transactions are represented by consumers buying a home for the first time, but this number is going down by about 15 percent from the highest statistics as these hopeful homebuyers lose hope amidst the maze of the proceedings. Let us find out their reasons for packing it in.

Why First-Time Homebuyers Change Their Mind About Buying a Real Estate Short Sale 

Sluggish assessments, missing paperwork, understaffed mortgage servicers, and dealing with numerous investors are the common reasons why these newbie homebuyers turn their backs on the nearly 30 percent price cut. If you are planning to buy one, expect the processing period to take over 16 weeks, the average processing period of a typical real estate short sale. The most part of this more than four months of processing is taken up waiting for the lender’s approval. Lenders say the drawn-out process is not just caused by the inadequacies of the processing system, but also point to the inadequate submissions of the required documents by either the homebuyers, sellers, or both.

Going After Multiple Real Estate Short Sales

Although many homebuyers have gotten cold feet in acquiring real estate short sales, there are still a number of persistent homebuyers who are determined to buy a real estate short sale. In answer to the strung-out process and uncertain outcome, some of them place numerous offers at one time since they doubt that all their offers would really push ahead on time. In this way, when one offer gets approved, they can abandon the others.

Buying a short sale in real estate is enticing especialy for first-time homebuyers and real estate investors because of the huge discount that they can potentially get. However, thanks to the inefficient process along with its many twists and turns, a significant number of would-be homebuyers throw in the towel and decide not to pursue the purchase.

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Tax Implications For Short Sale, Foreclosure

Short Sale Foreclosure

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Do You Owe The IRS After Short Sale, Foreclosure?

The law says that if the debt you owe is forgiven by your creditor, the forgiven amount could be subject to tax. If you went through a short sale or foreclosure, you may be wondering if this applies to you. Let us take a look at how these two ways of letting go of your home may cause you to owe the IRS.

Is The “Income” You Get From A Short Sale Taxable?

In a short sale, your lender agrees that you sell your home at a price lesser than your mortgage balance. So for example, your mortgage balance is $200 and you sell the property for only $150, the bank incurs a loss of $50. But by consenting to a short sale, the bank forgives the debt considers it written off. Naturally, you are relieved that you avoided the negative impact of foreclosure and that your lender granted you loan forgiveness. You relish the idea that you are free from this financial obligation. Not so fast, dude! The government thinks otherwise. You may just owe the IRS tax on the $50 that you have been forgiven. When your lender forgives the $50, this means that you earned $50. Your lender may hand you a 1099 form.

Before, homeowners are advised to negotiate with the bank to waive its right to a deficiency judgment and accept the payment in full. There is a good chance that your lender will agree to this since if they foreclose on your home and it gets sold in a foreclosure sale, the will incur the same or even greater loss. If the bank does not agree to this, your insolvency issues may also exempt you from paying this tax, otherwise, you may just have to pay some tax.

But still you are lucky because of the Mortgage Debt Relief Act of 2007. This law permits homeowners to exempt income from the release of debt on their primary home. This includes discounted debt after restructuring and debt forgiveness for mortgage, such as that in a short sale and foreclosure. This pertains to debt that has been excused within 2007 to 2012.

Tax Ramifications In A Foreclosure

When your lender forecloses on your home and is sold at the sheriff sale, no debt is forgiven. Foreclosure legally forces you to sell your home so that the bank can recover as much money as they can. Although you are now somehow free from your mortgage obligations, they cannot call it debt forgiveness since the bank did not voluntarily forgo your debt and you did not willingly sell your home. Hence, it is considered that no income has been generated. So you are not liable for any tax.

Short sale and foreclosure is a tough way of losing a home; it is a good thing that the law has exempted homeowners who went through these from being taxed.

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Expect Streamlined Loan Modification Help With New Foreclosure Law

Loan Modification Help

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Current Loan Modification Help Not As Helpful

Although a number of homeowners were able to save their homes from foreclosure with loan modification help, quite a number are still dangling in suspense while their request for revision of their mortgage terms is still awaiting verdict from their lenders. Many cry foul over the alleged deliberate negligence and lack of concern and urgency among lenders to give an immediate answer. They often use “losing some emails, faxes and receipts” as excuse for the delayed process and rejections. Bank representatives handling loan adjustment requests are said to play the role of having insufficient authority to give straightforward answers. Meanwhile, the number of requests stuck in the lead-footed process continue to grow.

Government Rescues Loan Modification Help

Enter Foreclosure Fairness Act…

With this law coming into force by middle of July, homeowners can now expect a mandatory mediation. Just like in the existing regulations, you first meet with an accredited housing lawyer to consult if you think that reworking your mortgage will help you afford your payments and save you from foreclosure. But with the new law, after your lawyer agrees that your request is reasonable, he can ask for a negotiation with an independent mediator present who can verify if your lender is acting with sincerity of intention. With this change, lenders are required to have representatives who have the authority to make decisions on reworking the loan during the mediation.

Foreclosure Freezes While You Go Through Loan Modification Help

The law also ensures that your lender cannot proceed with the foreclosure process while the arbitration is still in process. Many homeowners complain that lenders keep them preoccupied with paperwork so that the latter can get on with foreclosing their house. With the new law, foreclosure proceedings must be put on hold while your case is still in the middle of mediation. If unfortunately, your modification loan has been denied, and you have no choice but to face foreclosure, at least, the new law gives you an entire three or four months to reflect and figure out what to do next.

While waiting for the law to take effect, you can meanwhile use the federal agreement between the US Comptroller of the Currency and several leading banks to stop your lender from pressing on with foreclosure proceedings while you are seeking for loan modification help. This agreement is a consent decree where the said banks assented to bring to order their procedures in loan modification, foreclosure and refinancing.

With the Foreclosure Fairness Act taking effect, homeowners can anticipate to get more streamlined loan modification help, to wit clearer answers, faster processing and protection from foreclosure while still in mediation.

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7 Steps in Executing A Mortgage Short Sale

house for sale by owner

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Mortgage Short Sale – One Option To Avoid Foreclosure

Are you in the throes of foreclosure and looking for a way out? Is your financial difficulty temporary or do you think this could last for a long period? While a forbearance agreement would serve well a homeowner going through a temporary financial difficulty, a mortgage short sale, a deed in lieu of foreclosure or a short refinance would be more suitable options for homeowners with more permanent financial hurdles to wriggle out of foreclosure. In a mortgage short sale, you, with the mortgage company’s consent, can sell your house for less than the amount of your mortgage. If you are considering to take this road, here are the steps to guide you in the process.

Mortgage Short Sale Steps

Step 1. Get to know the mortgage short sale process to manage your expectations, such as reading these steps, and studying the tax implications of the process by consulting a qualified tax lawyer or accountant. It may be heartening for you to find out that a law that frees the short sale seller from any tax obligations has recently been signed by the president.

Step 2. Get in touch with a real estate agent to help you get familiar with the market for homes that are comparable with yours in your location. A realtor who already has experience in short sale would be a big plus in helping your in this endeavor. When I say experience, I am referring to actual exposure to the process and not just a certificate in a short sale course.

Step 3. Communicate with your mortgage company to request for a mortgage short sale. Your lender will give you a short sale package so that you can file your application. The content of this package will vary from lender to lender but some of the common items are: a Cover letter, Hardship letter, W2’s, Pay stubs, bank statements, documents to support the hardship information you have mentioned in the Hardship letter, etc. To make sure that your lender will not go after you once the short sale has been executed for the difference in sale price and your mortgage, initially ask for a short sale without recourse. If you cannot secure this, you may be liable for this difference.

Step 4. Have your home listed with a realtor if you do not yet have an interested buyer. Often buyers will offer low bid prices for mortgage short sale homes. Once you get at least one offer, you can proceed to Step 5.

Step 5. Accomplish the short sale package and send it back to your lender for evaluation and wait for their approval.

Step 6. Meanwhile, get ready for the possibility that you may have to vacate your home soon although you may be entitled to certain number of days to stay once it is sold. So start looking for a new place to move to. You can start selling stuff which you may no longer need to make your transfer easier and you could use the proceeds to augment your finances. Expect interested buyers to inspect your home while you are still living there. You have to endure this inconvenience so that you can avoid foreclosure. Emotional preparation may also be necessary since the process can become draining.

Step 7. Once the mortgage company approves your short sale request, contact the realtor with which the property is listed for them to proceed with the sale of your home.

Getting familiar with the steps in executing a mortgage short sale will help the seller manage expectations and smoothly proceed with the process.

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Writing Hardship Letters for Loan Modifications That Get Approved

Writing

Why Write Hardship Letters For Loan Modifications

Hardship letters for loan modifications are a key requirement. Whether you like it or not, you have to write a hardship letter for loan modification since it is one of the main requirements. Through this letter, your lender can determine if your situation merits a loan modification and can also assess if you can make good on your payments with the modification.

It is a great avenue for you to explain your situation. Since the lender puts much weight on this letter, exploit this opportunity to explain your financial condition. Elaborate on how you got into such financial difficulty and why you defaulted on payments. The following are important elements that must be spelled out in your letter.

4 Essential Elements In Hardship Letters For Loan Modifications

1. Circumstances Behind The Hardship

Explain the circumstances why you can no longer afford to pay your mortgage. The most common ones are loss of a job, reduced salary, divorce, death of a spouse or a family member, sickness, and others. Spell out the details including the time frame when you first experienced the hardship. The date must tally with the time that you were delinquent in your payments. Relate the circumstances with the late payments.

2. Steps You Took To Address Your Situation

You would not want to give your lender the impression that you did not do anything to correct the circumstances. That would be a hint of irresponsibility, an attitude that may not merit a second chance. Show to them that you are trying to do everything to save your home from foreclosure, and relate to them your recovery plan. This could include: looking for a new job, or applying for extra work; selling off some stuff for additional funds to add to payments; cutting back on expenses; consulting a counselor and many more.

3. Show Them That You Are A Responsible Citizen

In your letter, paint to them a picture (in words, of course) of how responsible you are by subtly sharing about your community involvement, or the activities of your kid in school or in sports. Responsible borrowers can be rewarded with the lender’s trust by giving them another chance on their homes.

4. Duration of Hardship

Indicate whether your hardship is temporary or permanent in nature. If it is temporary, state a date when you expect the financial difficulty would end.

Some Pointers On Writing Hardship Letters For Loan Modifications

1. Keep in mind the objective in writing your hardship letter for loan modification – make the lender consider a possible loss by modifying your loan. Be honest, direct, and specific, and make the lender see that you deserve another chance.

2.Be as concise as possible without missing the important elements. While you want to explain your situation to the lender, do not write a novel. Keep it to one page as much as possible; a maximum of two.

3. Make sure that you support the financial details that you have spelled out in the letter with the appropriate documents, such as latest pay stubs, W-2’s, and your usual monthly budget.

4. If you think you cannot write a convincing hardship letter for loan modification, consider seeking professional help. They can also help you in negotiating with your lender. Choose your service provider well, though.

Writing hardship letters for loan modifications that get approved is easy if you know the goal in writing the letter and understand the factors that the lender takes into account to merit a thumbs up.

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Top 3 Famous Celebrity Foreclosed Homes

Foreclosures and CelebritiesWith the economy and housing market performing far less well than everyone would hope, foreclosure is an issue on many Americans’ minds. People who underemployed continue working to make their mortgage payments, and economists frantically try to determine the best way to ease the crash of the burst housing bubble. One group of people we expect to be able to easily weather the storm are our Hollywood rich and famous, but this isn’t always the case. Here are the Top 3 Celebrity Foreclosed Homes:

 

1. Chris Tucker’s Florida Mansion Foreclosure

This Rush Hour star paid $6 million dollars for his five-bedroom sprawl in florida. At 10, 000 square feet, the house featured an outdoor kitchen, five bedrooms, and a pirate-themed basement. The mortgage payments were $26,000, and even with his salary of $20 million for Rush Hour and $25 million for Rush Hour 2, he somehow managed to get $4 million dollars in red with his bank and $11.5 million with the IRS. The mansion was foreclosed upon in October 2011.

2. Nicholas Cage’s “Frat House Bordello” Foreclosure

Nicholas Cage’s extensive career starring in acclaimed movies such as Leaving Las Vegas, Adaptation, Moonstruck, and Valley Girl couldn’t save him from financial problems due to poor tax planning. By 2010, he allegedly owed millions in back taxes, and in April there was an auction in Bel Air to sell the home he had lost to foreclosure. Often ridiculed for its style, which real estate expert Bret Parsons declared as “frat house bordello,” the house did not sell.

3. La Toya’s Karma Foreclosured Condo

The Jackson family is known for their controversy and inter-sibling rivalry, but things took a turn for the worse in 2009, when the Prince of Pop’s sister was forced to give up her Las Vegas condo, which had gone into default and received multiple liens. While the condo was only $25,000, capital gains allowed mortgaging of over $750,000. People speculated that her time on reality shows Celebrity Apprentice and Armed & Famous did not pay as well as she lived. The foreclosure happened right after her brother died, and now there is more controversy regarding Michael’s estate, so it may be a while before La Toya is back square on her feet.

The moral of these celebrities’ home woes is that no one is immune to poor financial planning, unexpected decreases in income, and the Internal Revenue Service. After bringing in millions of dollars, these three still managed to live above their means. These are some of the most famous foreclosed homes, but certainly not the most tragic, as many people around the country are scraping by on much, much less.

How to Buy a Foreclosure House

Buying a house doesn’t have to be difficult. Just ask Borat!

Buying a House in Skyrim

One of the most popular games in the country, Skyrim. The real estate market is bad, but you can buy a house in Skyrim that is affordable. Living in it is another question.

Foreclosure House That You Wish Were Available

House like the one below are ones that do not go through the foreclosure market unless you look closely for them. Talk to your real estate agent and see if they can find you a gem like this house in Genolier.

Short Sale Information Every Buyer Must Have Before Buying

Short Sale Information

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Gather Short Sale Information Before Jumping In

The price tag figuratively dangling on short sale homes is enough to salivate an over eager buyer. However, a savvy real estate investor knows that he must hold his horses and carefully study the tempting deal first. If you wish, you can ask your real estate agent’s help researching about the short sale listing. After all, a short sale is notorious for taking too long and many such transactions do not clinch and buyers end up wasting their time and effort in working the deal out. There are areas where only 10 percent of the short sale homes push on. This is because a short sale is subject to the approval of the lender, without such go-signal, it cannot completely materialize. Below are six vital questions to ask for you to gather the necessary short sale information before getting your feet wet.

5 Pieces of Short Sale Information To Collect Before Buying

1. Is the seller eligible for short sale?

One critical factor that determines the fate of a short sale is whether or not the seller qualifies and that he has submitted all the necessary requirements. You can inquire from the listing agent if he has gotten an accomplished short sale package from the seller, and get to know about what is contained in the package. In order for the package to be considered complete, at the least it must contain these:

  • Hardship letter
  • Payroll stubs
  • Tax returns
  • W-2’s
  • Bank statements
  • Financial statement

Also find out if the seller is willing to short sell his property as there are some who are unwilling to do so, hence, they are uncooperative and disinclined to submit these documents. Remember, incomplete paperwork is one of the main reasons why short sales are so sluggish or are rejected.

2. What are the comparable sales for the particular property?

Although a short sale may carry a price below market value, nevertheless they are still priced according to impending sales. Since short sales take between two and four months to close, prices of pending sales become the comparable sales once you close.

There are short sales sold at insanely low prices. They get numerous offers, but with such dirt-cheap prices, it is unlikely that the lender will accept them. For your offer to be accepted, you have to bid close to the property’s market value. Forgo the short sale if you are not ready to pay much more on a short sale listing with an unrealistically low price. Offering 20 or 30 percent of the mortgaged amount may not get you anywhere.

3. How much is owed against the property, how many loans are there and who are the lenders?

You can delegate the task of finding these particular pieces of short sale information to your agent. A second or third mortgage lender may possibly pose problems and cause the process to get bogged down as they will receive not as much as the primary lender will receive. It would also be great if your agent can inform you about the reputation of the lenders involved as there are those who may be ticklish to work with. Experienced short sale agents often are familiar with these details.

4. How many offers have been submitted for the short sale?

Naturally, many would-be buyers would be interested in properties priced below the market value, hence, short sales often will get multiple offers. An agent may not divulge to you the terms of the offers, but at least find out how many other offers are there besides yours to get an idea of the competition.

To give you an idea how it goes, here’s how:

Initially, the first offer would usually be somewhat lower than the list price. The second would be equivalent to the list price. The third offer is expected to exceed the list by $1,000 to $2,000. The succeeding offers would be considerably greater. The key here is to offer a bid that is below market value but would still knock the other bidders. Otherwise, you may just be squandering your time.

5. How good is the short sale listing agent?

A listing agent is often the one who advertises the short sale, submits the short sale kit to the lender and negotiates with them. A number of listing agents, especially inexperienced ones, hire other companies to perform their role, which can compromise the results of the negotiation. Your agent cannot talk to the bank. So if you think the listing agent is still unseasoned, consider spending your time looking for other deals.

Besides competence, you must also find out how the listing agent goes about with the short sale process. The Realtor Code of Ethics mandates realtors to give everyone the fair treatment. However, you must realize that not all agents are realtors. So there may be listing agents who submit only the first offer to the lender and sit on the other offers. Such a practice can be deemed to violate the fiduciary relationship established between the listing agent and the seller since the seller has the right to get the highest and best bid. Also take note that even if the listing agent submits your offer to the bank, as the bank takes its time to make a decision, another buyer could beat your price.

So to make the short sale process worth your while, first gather the necessary pieces of short sale information that serve to indicate the potential of the transaction.

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Is Buying A Real Estate Short Sale Worth It?

Real Estate Short Sale

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Real Estate Short Sale – Sweet Deal Turning Sour

The rock bottom prices of short sales propel many homebuyers and real estate investors to buy them. You can buy a short sale in real estate for as low as 73 percent of its market value! Despite this tempting sweetener, an increasing number of homebuyers are losing their patience and deciding not to carry on with the purchase owing to the thorny process.

First-Time Homebuyers Opt Out of Real Estate Short Sale

The staying power of first-time homebuyers are tested in processing short sales. Less than forty percent of all short sale transactions are represented by consumers buying a home for the first time, but this number is going down by about 15 percent from the highest statistics as these hopeful homebuyers lose hope amidst the maze of the proceedings. Let us find out their reasons for packing it in.

Why First-Time Homebuyers Change Their Mind About Buying a Real Estate Short Sale 

Sluggish assessments, missing paperwork, understaffed mortgage servicers, and dealing with numerous investors are the common reasons why these newbie homebuyers turn their backs on the nearly 30 percent price cut. If you are planning to buy one, expect the processing period to take over 16 weeks, the average processing period of a typical real estate short sale. The most part of this more than four months of processing is taken up waiting for the lender’s approval. Lenders say the drawn-out process is not just caused by the inadequacies of the processing system, but also point to the inadequate submissions of the required documents by either the homebuyers, sellers, or both.

Going After Multiple Real Estate Short Sales

Although many homebuyers have gotten cold feet in acquiring real estate short sales, there are still a number of persistent homebuyers who are determined to buy a real estate short sale. In answer to the strung-out process and uncertain outcome, some of them place numerous offers at one time since they doubt that all their offers would really push ahead on time. In this way, when one offer gets approved, they can abandon the others.

Buying a short sale in real estate is enticing especialy for first-time homebuyers and real estate investors because of the huge discount that they can potentially get. However, thanks to the inefficient process along with its many twists and turns, a significant number of would-be homebuyers throw in the towel and decide not to pursue the purchase.

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