Homeowner’s Guide To Nevada Short Sales

Table of Contents

 Contact Information

 Options for Distressed Homeowners

 List of Non-Profit Agencies

 HAMP & HAFA Information

 Short Sale Flowchart

 Hardship Letter Samples

 Steps of Submitting a Short Sale

 Life of a Short Sale Escrow

 Short Sale Prequalification & disclaimers

 What is Escrow & Title

 Inspections

 Home Warranties

 Moving Expenses

 Helpful Reminders

 Terminology

Sellers Contacts

*To Receive the Contents of this book - please send an email with your:

1. Property address, full name, phone and e-mail to sold@yournevadaagents.com .

2. Full Name

3. Phone (multiple if you would like)

4. E-mail

5. Loan Amounts if you know them and who they are with (ex. Bank of America, Wachovia etc.) - Do Not Send Account numbers in your e-mail.

6. No Obligation, No Hassle, Free Consultation IF you desire.

Options for Distressed Homeowners

Although Homeowners who are at risk of default or who have defaulted or who have defaulted on their mortgage may believe that foreclosure is their only solution to mortgage problems, there are options available to them.

Home Affordable Foreclosure Alternatives Program (HAFA)

HAFA is the government’s newest tool to help homeowners avoid foreclosure. HAFA provides for lenders and homeowners to carry out a short sale or deed-in-lieu of foreclosure. The current incentive for homeowners is $3,000 for a successfully completed short sale or deed-in-lieu of foreclosure.

Home Affordable Modification Program (HAMP)

HAMP is for homeowners who are struggling with mortgage payments and think that a lowered interest rate could bring their payments to an affordable level. These loan modifications are ideal for homeowners whose mortgage payments are just out of reach.

Second Lien Modification Program (2MP)

2MP is for homeowners who are struggling with payments in part because of a seconds lien on their home. For those who are eligible, the program offers a way to lower payments on their second mortgage. 2MP is a complementary program to the Home Affordable Modification Program (HAMP), so it is me and for those who have already modified their first mortgage through HAMP.

Home Affordable Refinance Program (HARP)

If you are unable to lower the interest rate on your mortgage (possibly due to decreased home value), but are caught up on your mortgage payments, HARP may allow you to refinance.

Sell and Bring Cash to Closing

Although many homeowners today may not have the necessary cash to cure deficiencies at closing, they may have to liquidate assets, e.g., U.S Treasury Bonds, individual retirement accounts (IRAs), to do so. By Curing deficiencies at closing, homeowners can avoid the credit damage that a short sale or foreclosure can cause. However, homeowners are strongly encouraged to consult with their finance and tax professionals before bringing liquid assets.

Lender Workout

Lenders often will work with distressed homeowners to help them keep their homes by reducing or rolling back interest rates, forgiving back payments, adding them to the loan amount or possibly recasting the entire loan and wrapping all fees into a fixed-rate mortgage.

Mortgage Loan Workout Options

Forbearance – Lenders may let you make a partial payment , or skip payments, if you have a reasonable plan to catch up. Tell your lender if you expect a tax refund, a bonus, or a new job.

 

Reinstatement – Reinstatement refers to making a payment that covers all your late payments, usually at the end of a forbearance period.

Repayment Plan – If you can’t afford reinstatement, but can start making payments to catch up, the lender may let you pay an additional amount each month until you are caught up.

Loan Modification – Your lender may agree to amend your mortgage to help you avoid foreclosure.  This option may include:

*Adding all the missed payments to the loan amount and increasing the monthly payment to cover the larger loan.

* Giving you more years to pay off the loan, lowering your interest rate , and/or forgiving part of the loan, to lower your monthly payment.

* Switching from an adjustable rate mortgage to a fixed rate mortgage, so you aren’t exposed to increases in your monthly payment.

* Requiring amounts for taxes and insurance to be included with your monthly mortgage payment so you avoid big bills in addition to your mortgage.

*Sign over the Property to the Lender in Exchange for Debt Forgiveness. This can hurt your credit, but is better than having a foreclosure on your credit history. (www.realtor.org)

Qualifying for a Short Sale

Not every owner is a short sales candidate and, unfortunately, not every owner can be saved from foreclosure. 

In the qualifying process, the real estate professional should confirm, among other items:

·         Whether or not the homeowner has a valid hardship

·         Whether or not there is sufficient time to accomplish a short sale

·         That the homeowner will contract or had already contracted with the                  appropriate finance,  tax and legal professionals

·         The amount that is owed on the property

·         Whether or not the homeowner has liens in addition to the mortgage, e.g.,           tax liens, homeowner association (HOA) liens

·         The condition of the property

·         That the homeowner will be cooperative in completing the short-sale                  documentation and in maintaining the property for showings

Defining Hardship

Many panicked homeowners seeking a short-sale solution may be unclear on what constitutes a valid hardship – an event and events that change a homeowner’s ability to keep current in mortgage payments. Loss of equity, for example, is not considered a hardship. However, lending institutions may entertain short sales for homeowners who have experienced any of the following:

·         Job Loss

·         Business failure

·         Illness and medical costs

·         Divorce or death of a spouse

·         Natural disasters

Homeowner is at risk of imminent default

Home Affordable Modification Program: Overview

The Home Affordable Modification Program is designed to help as many as 3 to 4 million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term. The program provides clear and consistent loan modification guidelines that the entire mortgage industry can use.

Borrower eligibility is based on meeting specific criteria including:

1. Borrower is delinquent on their mortgage or faces imminent risk of default.

2. Property is occupied as borrower’s primary residence.

3. Mortgage was originated on or before Jan. 1 2009 and unpaid principal balance must be no greater then $729,750 for one-unit properties.

After determining a borrower’s eligibility, a servicer will take a series of steps to adjust the monthly mortgage payment to 31% of a borrower’s total pretax monthly income:

First, reduce the interest rate to as low as 2%

Next, if necessary, extend the loan term to 40 years,

Finally, if necessary, forebear (defer) a portion of the principal until the loan is paid off and waiver interest on the deferred amount.

Note: Servicers may elect to forgive principal under HAMP on a standalone basis or before any modification step in order to achieve the target monthly mortgage payment.

The HAFA Mortgage Program

HAFA – Home Affordable Foreclosure Alternatives

In light of the rising number of property foreclosures in the United States, the government has expanded the Home Affordable Modification Program (HAMP) to include provisions and incentive for servicers to allow short sales or deed-in-lieu as positive options for eligible homeowners in default who wish to avoid foreclosure. The new program is called Home Affordable Foreclosure Alternatives (HAFA).

Participation in HAFA cannot save the homeowner form losing his or her property, but it can eliminate the effects of a foreclosure on the homeowner’s credit. Financial incentives for participation in the program include a $1,000 servicing bonus for lenders and a $1,500 relocation bonus for displaced homeowners. HAFA is designed for homeowners who have applied to HAMP for assistance but have had no success with their loan modification program. To participate in HAFA, homeowners must still meet HAMP’s eligibility criteria (principal residence, first-lien mortgage, serious delinquency, unpaid balance under $729,750, and a mortgage payment over 31% of gross income). Homeowners must be considered for HAFA within 30 days if they cannot meet HAMP’s requirements of it they specifically request consideration for HAFA. However, the homeowner only has 14 days to respond to a written notice that HADA may be available to them, giving the lender time to meet their 30-day deadline. As with other short sales and deeds-in-lieu, the lender or loan servicer of the primary mortgage must approve of the transaction and conduct their own independent appraisal. Under HAFA, however, they must also agree to accept the proceeds from the sale of the house as payment in full, waiving their right to collect the balance of the loan from the homeowner.

It is up to the lender or servicer of the first-lien mortgage whether they or the homeowner negotiate with any subordinate lien holders. Lenders of HELOCs and other subordinate liens may be allowed to keep a limited portion of the proceeds (up to $3,000 each) of a short sale, with the first-lien lender’s approval. These funds are part of an incentive program for subordinate lien holders to waive their right to collect the balance due on their loans. The original lender may not be held responsible if any subordinate lien holders decline to participate and decide to sue the borrower for the amount of their unpaid debt.

HAFA’s Short Sale Agreement (SSA) has certain stipulation for all parties involved. Their SSA

requires that the deadline for the homeowner to find a buyer and complete the transaction be not less than 120 calendar days from the date the SSA is mailed to the homeowner. Then lender has the option of extending this deadline another 245 calendar days, for a total term of 12 months. The SSA also mandated that a HAFA transaction must be ‘arms-length,’ and that the end buyer must agree to hold the property for at least 90 days after closing. Finally, the SSA gives the listing real estate agent the right to an undiscounted 6% commission at closing.

A short sale is any sale of property usually during the foreclosure process, in which the lender(s) agrees to accept less than the balance due on the mortgage(s) or lien(s) in order to avoid the cost of foreclosure. Per HAFA requirements, the primary lender may not pursue the homeowner, but the secondary lenders do not have to agree to that provision. Assuming that they agree to the short sale in general, they can forego the financial incentive to waive collection rights and continue to pursue the homeowner for their own balances due, in which case their recovery options are then covered by state law. The vacancy date is determined by the terms of the closing. Unlike a short sale, a deed-in-lieu simply allows the homeowner in default to transfer the deed to the property back to the lender in exchange for partial or full payoff of the mortgage. The vacancy date must be at least 30 days after the deed-in-lieu agreement is signed. In either case, HAFA requires that the lender agree to suspend all foreclosure sale in good faith, pending the outcome of either transaction. In the case of a short sale, the lender also must agree to pay the administrative closing costs.

The Department of the Treasury, which authorizes all programs under the Making Home Affordable umbrella, has designated Freddie Mac as its compliance agent.

The HAFA program is set to begin on April 5, 2010. Servicers may initiate a HAFA transaction earlier in 2010 under certain conditions. As of this writing, all HAFA agreements must be finalized and signed by December 21, 2012.

Nevada FORECLOSURE Timeline

Beneficiary/Lender Records Notice of Default (NDF)

A notice of Default may be recorded the day after the default occurs, unless the note provides for a grace period, in that case, the day after the grace period expires.

Foreclosure time clock starts the day after NDF is recorded.
Curative Period

Owner (Borrower) has 35 days to bring loan current. On day 36, Lender/

Beneficiary can call the loan due in full. *Owner-occupied properties have up to 5 days prior to Trustee’s Sale.

Notice of Sale (NOS) Recorded

Approximately 90 days after the NDF is recorded it is published in the newspaper once a week for three consecutive weeks. Notices must also be posed in three public places.

Trustee’s Sale

Generally held at the Courthouse a week following the last publication, and a minimum of 21 days after the NOS is recorded

Trustee’s Deed Upon Sale

30 Days from the Trustee’s Sale a Trustee’s deed must be recorded

The Foreclosure process takes a minimum of 120 days

Approximately 90 days after the NDF is recorded it is published in the newspaper once a week for three consecutive weeks. Notices must also be posed in three public places.

Trustee’s Sale

Generally held at the Courthouse a week following the last publication, and a minimum of 21 days after the NOS is recorded 

Trustee’s Deed Upon Sale

30 Days from the Trustee’s Sale a Trustee’s deed must be recorded

The Foreclosure process takes a minimum of 120 days
 

 

The Hardship Letter

The central document in the Short Sale package that will be submitted to the mortgage lenders that will be taking a loss in the Hardship Letter. The Hardship Letter provides the homeowner with an opportunity to state their case as to why they can no longer afford to make their mortgage payment.

The Hardship Letter should be any honest, heartfelt statement outlining the circumstances that have created the problem. It should include these components:

1.   A brief apology for having to ask the lender to take a loss.

2.   A description of the steps the homeowner has taken (used credit cards, borrowed from family, borrowed from retirement accounts) to stay current on the mortgage.

3.   A clear statement that the homeowner has extended all available options to stay current on the mortgage and that a Short Sale is the only remaining option, other than foreclosure.

While it is important for the homeowner to provide a complete picture of their hardship, it is also important to avoid a letter that is excessively long. In order to get a loss mitigator to understand the hardship, the loss mitigator needs to read the letter and connect with the writer. Limit the letter to a manageable length. If possible, attach to the Hardship Letter any documents, receipts or notices that support the homeowner’s hardship.

Examples:

·        Layoff notice

·        Letter from employer outlining a reduction in pay or a reduction in hours

·        Cancellation notices for medical insurance or auto insurance due to non              payment

·        Delinquency notices from creditors and/or services and utility providers

·        Letters from doctors regarding injury or illness

·        Disability benefits letter

·        Divorce or separation papers

·        Receipt for excessive payments for medication or emergency payments

·        Any documents supporting a family crisis hardship

Borrower Hardship Letter Example #1

I am unable to keep current with my mortgage due to divorce. I am receiving no financial support from my husband and I have been a homemaker for the past 12 years. I am employed, but because of my lack of skills, I am unable to earn much more than minimum wage. I have two children at home ages 7 and 9. With the cost of daycare and my other obligations, there is just no way to make the mortgage payment. I have used up any available credit just to keep food on the table. I cannot keep up my home and must sell it. The real estate market is such that I owe more than my home is worth. My only other option would be to file bankruptcy. I am an honest, hardworking person and it is devastating for me to find myself in this awful position. I would deeply appreciate any help you can offer.

Sincerely,

Borrower Hardship Letter Example #2

My wife has recently suffered a devastating illness. She is unable to continue working and it may be years before she is well enough to work. She has been the primary wage earner in our family for the past 10 years. My income cannot come close to covering our monthly expenses. We find ourselves deeper in debt every month with no relief in the foreseeable future. I have sold our second car and anything else we do not absolutely need. Our home is large and the minimum monthly expenses for the upkeep, electricity, gas, etc. are very high. Our only hope at this time is to sell our home. Unfortunately, if we sell our home in the present slow real estate market, we will be upside down about $30,000.00. Our only other alternative is bankruptcy. We would appreciate any help you are able to provide.

Sincerely,

Borrower Hardship Letter Example #3

As a result of upward adjustments to our monthly mortgage payment, my wife and I are unable to afford our mortgage. As I sit here today it’s not clear to me how I ever thought that we could afford the mortgage once payments started adjusting. I wish my loan officer would have explained to us where our monthly payments were going to be when they adjusted. We have borrowed money from family and we have taken cash advances on credit cards, but we are falling further and further behind with no real hope of affording the payment. At this point, we can’t do it any longer. Both my wife and I are very sorry that this has happened. We are losing our dream house, and we know you are losing too. We just don’t have any other options. Please work with us on a Short Sale. We don’t want to go through foreclosure, but if we can’t do a Short Sale, we will not be able to avoid it. Thank you for your consideration.

Sincerely,

 

Tried and True Steps in Submitting a Short Sale Package

 

Determine if the client is in the process or has declared bankruptcy

Copy of the not to determine type of loan and prepayment

Signed Authorization from Seller to Realtor and First Centennial

Hardship Letter

Back up Documentation for Hardship

Financial Statement if provided by the lender

Federal Income Tax Returns – two years back

W-2’s for two years

Bank statements for three months (check, savings, mutual funds)

Paycheck stubs – last three for each mortgagor

Benefits i.e. disability, unemployment, retirement and/or social security

Listing agreement

Purchase Contract

Comparables if required

Marketing efforts…how long listed, what prices, condition of property

Settlement Statements—Estimate of proceeds – showing $-0- to Seller

Copies of any invoices supporting figures on settlement statement

Junior lien holder’s balance or releases

When faxing in the documents, be sure you include the loan number on all pages. At the bottom of each page please write the page number of the total number of pages sent (page 5 or 105).

Suggest these be sent in smaller packages to avoid jamming.

Ask if the Lender would prefer to receive via Federal Express as this could be tracked.

Lender may want to know the value of mortgagor’s 401k or retirement benefits.

 

A huge amount of patience is a necessity during the course of this process.

Need to sell – but owe more than your property is worth? We can help! With one of the highest success rates in closing Nevada Short Sales, The Ballen Group is on your side.

Visit http://www.ShortSaleInNevada.com or Call 702-482-7739 to sell your property today.

*To Receive your FREE Nevada Short Sale Kit - please send an email with your:

1.     Property address, full name, phone and e-mail to sold@yournevadaagents.com .

2.     Loan Amounts if you know them and who they are with (ex. Bank of America, Wachovia etc.) - Do Not Send Account numbers in your e-mail.

3.     No Obligation, No Hassle, Free Consultation IF you desire.

 

Life of a Short Sale Escrow

1.Open Escrow

2.Prepare HUD – email to agents

3.Order Title Search

4.Receive buyer prelim, upon receipt, send prelim to agents

5.Review other liens (if any) and taxes, receive updates statements as necessary

6.Revise HUD several times for agents as needed

7.Receive short sale approval letters

8.Update HUD send to agents

9.Update prelim for lender, agents, clients once we have a close date set

10. Review Addendum, needed to update final terms

11. Finalize Escrow Instructions & Pertinent documents according to final terms

12. Order HOA docs only upon short sale approval

13. Obtain signatures

14. Process Financing (taking 35-45 days)

15. Buyer’s request or prepare new loan application

16. Buyers obtain loan approval and determine that terms are correct

17. New Lender requests HUD with our fees

18. Receive loan documents or instructions, revise HUD & GFE

19. Request loan docs, can be concurrent with loan documents or separate

20. Lender generates final TIL we can set final signing appointments (buyer & seller)

21. Submit for Short Sale Final Approval

22. Review file to determine that all conditions have been met and that all documents are

correct and available for signature

23. Termite inspection, contingencies released, fire insurance ordered, additional

documents, bill of sale etc., have been prepared or waived

24. Signing appointments buyer & seller

25. Return loan documents

26. Cannot close without final short sale HUD approval

27. Obtain funds from buyer/seller via wire if possible

28. Request Loan funds

29. Receive Loan funds, authorization to record

30. Order recording

31. Close File, prepare statements and disburse funds

32. Complete closing forward final documents to all interested parties (buyer, seller,

lender, agents)

33. Final e-mail, fax and federal express to complete short sale process

 

Distressed Property Terminology 

 

 

Foreclosure:

Action taken by a lender to repossess real estate thus ending the homeowner’s rights to the property. The property is sold to pay off the debt owed against the property.

Short Sale:

When the payoff amount of the loan is greater than the fair market value of the property. The parties may qualify to sell the home for less than what is owed. Permission must be obtained from the lender in writing.

Pre-Foreclosure:

Period between recordation of Notice of Default for non-payment of the homeowner’s loan and the Bank repossessing said property. Time period approximately 4 months.

REO – (Bank Owned):

REO stands for Real Estate Owned. The Bank has gone through the state governed foreclosure process and now has title to the property which gives them the ability to sell.

NOD:

Short for notice of default (NOD), this is an official notice from the lender that the borrower has defaulted on the mortgage. The NOD formally begins the foreclosure process. The NOD also outlines the reinstatement period.

Reinstatement period:

The time stipulated in the NOD in which the borrower may reinstate the loan – making required payments and brining one’s account into good standing.

Notice of Sale:

If, after receiving the notice of default, the borrower does not or is unable to reinstate the loan, a notice of sale is recorded. The notice of sale explains when and where the foreclosure sale will be held.

Foreclosure Sale:

Also known as the sheriff’s auction, sheriff’s sale, or trustee’s sale, this is when the property is auctioned for sale to the highest bidder.

Short Sale:

A short sale is a situation in which the seller (1) owes more money on the loan (and any other liens on the property) than the sale of the property will likely produce on the market and (2) isvunable or unwilling to bring money to closing. In a short sale, the lender has not yet foreclosed on the property, which provided a window of opportunity for the owner to sell the property in order to at least partially satisfy the amount owed to the lender.

Why Short Sales Are Preferable to Foreclosure:

Short sales are considered preferable to foreclosures because short sales (1) lessen the impact of a foreclosure can have on the surrounding community and (2) won’t damage the distressed owner’s credit as much as a foreclosure. For example, if the borrower is still current with other payments, a short sale may lower the borrower’s credit score by as little as 50 points.

Deed In Lieu of Foreclosure:

A deed in lieu of foreclosure occurs when the borrower agrees to trade the property to the lender in exchange for the cancellation of the note. This foreclosure alternative is more likely to work in states where there is a long foreclosure timeline. The lender will be able to get the property much sooner that going through the foreclosure process, which lessens the probability of the property being in disrepair as well as eliminates the lenders costs to foreclose. Market conditions as well as state specific laws will influence whether and how a lender accepts a deed in lieu of foreclosure. Typically, lenders are less willing to consider a deed in lieu of foreclosure in declining markets. However, in appreciating markets, lenders may accept properties in lieu of foreclosure.

Foreclosure:

If the homeowner is only weeks away from the foreclosure sale taking place, the homeowner may not be able to pursue any of the previous options, including a short sale. The homeowner should contact the lender immediately and see if there is any way to explore foreclosure alternatives. Also, in some situations, foreclosure may even be in the best interest of distressed homeowners, although doing so will wreak the most havoc on their credit. If the lender will not explore foreclosure alternatives, real estate professionals should instruct their clients and customers to contact their attorneys for advice.

Do Nothing or Walk Away:

If homeowners are simply unhappy that the value of the property is less then what they paid or owe, they need to contact an attorney for advice. Walking away from the loan or asking the lender to proceed with a short sale simply because the value went down may not be a viable option and it is, there will often be additional financial consequences.

 

Stop Nevada Foreclosure. Las Vegas Short Sale Specialists - We Can Help with your Short Sale NV

Stop Nevada Foreclosure. Las Vegas Short SaleSpecialists - We Can Help  HELPING HOMEOWNERS *HARDSHIP * HEALING * HAPPINESS  Las Vegas Short Sale Specialists - We can help  •· Do you owe more than your home is worth?  •·Have you received a notice of default in the mail?  •·Do you want, need, or are being forced to move?  •·Did you buy an investment property that you need to unload?  •·Are you in a divorce situation?  •·Recently unemployed?  •·Have you fallen on medical hardship?  If you answered yes to any of these questions above, you may want to consider a short sale in Nevada. Do you need to sell your home, but owe more than it's worth? You are not alone. Many people are stuck in unaffordable loans, or simply need to move. Our qualified team of Las Vegas Short Sale Specialists (and Henderson too!) can help short sell your home. We handle all bank negotiations so you can move on with your life. Call702.482.7739 Now. We Can Help. Don't wait until it's too late. Act Now. Henderson Short Sales and North Las Vegas Short Sales are in our area too!  What is a Las Vegas Short Sale?  A Las Vegas Short Sale occurs anytime the value of the property is less than the amount owed to the lender and the lender agrees to write off the difference. In other words, the homeowner is "upside down" on his loan. Short sales may be forced by a variety of situations: job loss, loss of income, divorce, medical bills, or changing payments on adjustable rate mortgages (ARMs).  Why would a lender agree to a Las Vegas short sale? Lenders make their own business judgments when accepting or rejecting short sales. Lenders are in the business of making and servicing loans, not taking properties back through foreclosure and reselling them. They want to avoid spending time and money to foreclose, evict borrowers, and resell properties. They want to avoid paying property taxes, insurance, maintenance and repairs. They want to avoid risking theft and vandalism to the property. Before the mortgage lenders will consider a short sale, they need to know financial information about the seller and why the seller cannot pay the loan. The seller will need to submit information to the lender to assist the lender in deciding whether to accept a short sale.  Contact us today to get help from an agent that specializes in your area.  http://www.ShortSaleinNevada.com for additional Short Sale Information Nevada Short Sale, Short Sale in Nevada, Las Vegas Short Sale Agent, Las Vegas Short Sale Specialist, Green Valley Short Sale, Stop Nevada Foreclosure, Avoid Nevada Foreclosure, Short Sale Help