Confession of Judgment - sounds SCARY!

     Another way that a bank will try to mitigate their loss is using something called a "Confession of Judgement".  Sounds scary, doesn't it?  Basically this is an agreement that they are asking you to sign that allows them to enter a judgment against you after the closing of the short sale.  These are controversial because many view them as a violation of due process by courts because by agreeing to it is essentially contracting away your right to raise any defenses.

    We RARELY have these come about and when we have, the banks draw a hard line that they will only agree to the short sale if you sign the confession of judgment.  In those cases, the seller has signed and closed on the short sale.  We have not yet heard of the bank actually going through with the judgment.  

     In my opinion, it is another scare tactic by the bank.  Keep in mind, they are trying to do EVERYTHING possible to get you to get current on your mortgage.  

     For any questions about your best options or to learn more about the process of short selling your home feel free to contact us or visit our website at any time. Have a great day!

Will the bank make me sign a promissory note?

     One thing to keep in mind throughout the whole short sale process is that all of the parties on the "other" side (banks, investors, mortgage insurance companies, etc) are trying to minimize their loss. In order to do so, they are going to try to get as much money as possible from you as the borrower. One of the ways to do this is to ask for you to sign a "promissory note".
     A promissory note is basically an unsecured debt. For example, if you owe $200,000 on your home and the net proceeds from a short sale are $150,000, the bank is losing $50,000. When you are negotiating a short sale, they will POSSIBLY counter and ask you for a $15,000 promissory note. This would basically mean that you would still owe them $15,000 and are promising to pay it over time. Generally the terms are 10 years and you do not pay interest. So, in this example, you would pay $125/mth towards that note.
     It has been our experience that 9 times out of 10, the bank is will to take a smaller amount they offered and sometime we can have them remove it all together. It is important to remember thought that even if you do have a promissory note, it may be better to have a $15,000 as opposed to owing the total difference of $50,000 or worse, have a judgement for even more from a foreclosure!
     For any questions about your best options or to learn more about the process of short selling your home feel free to contact us or visit our website at any time. Have a great day!

They countered at what??

So you have submitted all of your information to the bank and they counter with some REDICULOUS number.  What do you do now??

It is so important to understand that you are not the only person that is trying to sell your home short right now.  Banks are dealing with hundreds of these and with some of the big banks; they are dealing with tens of thousands of these.  So it is understandable that they are going to do EVERYTHING possible to prevent from losing as much money as possible. 

One way they do this is when they counter the initial offer that you submit.  A lot of times, the bank will counter the original offer with some ridiculous number.  Just recently, we have a bank counter our initial offer by almost $100,000 MORE than the list price and almost $150,000 more than our initial offer.  At first, this is very discouraging and intimidating.  Don’t let it get you down!  Again, they do not want to lose any more money than they have too and will do whatever possible to prevent that.  In this same situation we countered back and settled on a price that was nearly $100,000 less than the bank’s counter. 

At the end of the day, if you have a good agent representing you and one that can provide the bank with the information they need either about the value or any other areas, you will be in good shape.  As I have mentioned before, it is a process, and one that can be done well. 

For any questions or to learn more about the process of selling your home feel free to contact us or visit our website at any time. Have a great day!

The MYTHS of Modification!

A popular "option" of a foreclosure or short sale is called a "Loan Modification".  In a modification, the bank will agree to adjust the terms of the loan in an effort to reduce the monthly payment.  The modification process is no short process and you will have to jump through the same hoops that you would for a short sale.  It could definitely be a great option for you, you just need to make sure you CLEARLY understand the terms of the modification. 

Will you qualify?  There are certain guidelines in which you will have to be.  Be VERY cautious of a “principle forbearance” and remember that most of the time, the life of the loan is extended to 40 years.  Is this the home in which you plan on spending a very long time? 

For any questions or to learn more about the process of selling your home, feel free to contact us or visit our website at any time. Have a great day!

What does the short sale process look like?

So you have found yourself at the point of needing to move forward in the short sale process.  What are the basic steps?  In a later post, I will cover the details of each step to have a short sale go through to closing.  For now, here is a quick outline of the steps and timeline of the short sale process.  Keep in mind that these time frames are estimates and can always be different.  

1. Put your house on the market and get a contract -- 30-45 days.  When you submit an offer to the bank to short sell your home, they are going to want to see that you have done everything you can to sell your home at the highest and best price.  Now, to some of you, this may seem unrealistic because of what you are hearing about the market.  I will tell you that even in this market, a properly priced and marketed home will go under contract in 30 days... plain and simple.  
2. Get ratified contract and submit it to the bank --5-7 days.  This is another confusing area where a lot of people misunderstand.  In order to get the short sale process going, you must have a contract with a buyer on your house.   
3. Have a bank negotiator assigned to “the file” --30-45 days.  After you get your contract submitted to the bank, it will then go into a stack of other files that are being submitted to sell short.  When your file is reviewed and they see that it has everything it needs, it will be assigned to a negotiator who will be your main point of contact on the file.  
4. Bank to determine fair market value --15-30 days.  In this process, the bank will evaluate the value of the home to make sure the contract price is realistic.
5. Bank will counter or accept the contract and short sale --20-40 days.  Just like the original negotiations of the contract, the bank will now decide whether or not to move forward with your contract or re-negotiate.
6. Buyer to complete inspections and close on the house -- 20-30 days.  Once the bank has agreed to the short sale process, the buyer will have all of their inspections done and move forward with closing.

Over the next few days I will be addressing each one of these steps in much more detail.  This will give you an idea of what to expect and what the process looks like.  As always, feel free to email me or visit our website with any questions you may have.  Have a great day!

Should I Try To Do A Short Sale?

When the market for short sales became prevalent, you needed to fall into a very specific, limited criteria in order for the bank to allow you to short sell your home. There was a time where the banks would even say, “Well, if you're not behind on your payments, we aren’t even going to look at the file.” Oh times, they are a-changing. The bad news is there is not a definite yes or no answer to be given to this question. However, I can tell you this: if you have a lot of money in the bank, a great credit score but simply decided you don’t want your home anymore, you probably don’t have a good chance of getting a short sale approved.

What a bank is looking for in order to prove a short sale is a "hardship.” What does that mean? Ask yourself, "Am I in a hardship financially, where it is getting harder and harder to keep my head above water, and I might have to foreclose this year?" Keep in mind, banks don't really want to own the home. Some banks are starting to look at what is called a “projected” hardship. This is simply where you, the seller, are fine now, but if anything were to change (a relocation, job loss, a new baby...) then there will be a financial hardship if you still own the home. One of the more difficult parts of the short sale process is having to paint the ugly picture of your financial reality. Frustratingly, sometimes the only way to know if you even qualify for a short sale is by submitting a ratified sales contract to the bank. Obviously before you go through all of that, it is best to evaluate your current home situation with a real estate professional who can give you a better indication of whether or not we think it is possible. Keep in mind we might not know for sure, but we can save you some time.

We are always more than happy to discuss this further if you want to call (843) 416-1401 or email us. Just remember, you are not stuck. If life has thrown you a curve ball and you need to get out of your home for whatever reason, there are options. And most importantly, you are not the only one.

What Is A Foreclosure?

This part of our website is probably one of the most painful and for some, the most embarrassing. For whatever reason, you have gotten behind on your payments and facing foreclosure. The important thing for you to realize is that you are not alone. There are literally millions of people going into foreclosure. Although it might feel like it, we can assure you that the sky is not falling and the world is not ending. It just is what it is in this economy. The best thing is for you to accept that this your reality. But remember - how you got here is not as important as what to do next. Your NUMBER ONE priority is to find out how to avoid foreclosure!

So what is a foreclosure? Many people do not have a clear understanding as to what that means for them. In a nutshell, your lender has the right to call your loan “due in full.” Think back to when you purchased your home. At the closing, you sat through a lengthy explanation of hundreds of pages that you signed- well, that was your mortgage. One of the most important documents stated that if you were to ever fall behind on your payments, the lender could demand you pay it in full if you were unable to bring your loan current within a period of time. If you are unable to do either, they have the right to sell your home at a public auction.

There are 2 types of foreclosures. The first type is handled through a court system and is referred to as a “judicial foreclosure.” The second type does not use the court system and is referred to as a “non-judicial foreclosure.” Here in South Carolina, lenders use mortgages to secure properties (as opposed to security deeds) and all foreclosures are judicial. The good news? This process takes longer. In non-judicial states, if you fall behind on your payments, you can lose your property in 30 days! Regardless, you should remember that if you are behind on your payments, or if you have even received a notice for a foreclosure hearing, the worst thing you can do is nothing!

As always, we are here to help at anytime. We will keep updating our site in order to give you the best information possible. You can always contact us with any questions you have. If you would like to set up a free, confidential consultation with one of our specialists, please click HERE. We hope that you are finding this information useful and wish you the best!