Your Questions About Foreclosures |

Your Questions About Foreclosures

Your Questions About Foreclosures

Laura asks…

I know foreclosure and bankruptcy has an effect on your credit, but does a “short sale”?

A bank needs to AGREE to a short sale, so maybe it doesn’t have an effect? (A short sale is selling the home for less than what’s owed on it.

Your Questions About Foreclosures

The Expert answers:

Short sales pretty much suck and only help the bank.

It will effect your credit. Also, a short sale is usually not even possible until the house has been listed at market value for the last 3 months. And I’m assuming, because you are even looking at this option, that you will not be paying the mortgage during that time. So your credit will also take a hit there.

ALSO, selling in this market, even at a loss is still difficult. Took the woman in detroit who was selling her house for $1 nineteen days to find a buyer.

ALSO, in most states, the bank can still come after you for the difference.

So all you are doing is allowing the bank to avoid the foreclosure process and selling the house themselves. But its less embarrassing then a foreclosure.

ALSO, if you had an 80/20 or any second mortgage on the home, the bank will not agree to a short sale because a lien will be placed on the home from the other creditor.

Your Questions About Foreclosures

Betty asks…

Legal Responsibility after Foreclosure or Short Sale?

What are the ramifications after a foreclosure or Short Sale for a homeowner losing the home? Which do they owe the most on after the 2 choices ? Calif.


Your Questions About Foreclosures

The Expert answers:

It depends on whether the home was purchased using a Trust Deed or a Mortgage.

Contrary to conventional wisdom, a Mortgage is not the home loan. It is the document that tells the banker, “If I don’t make my payments on this property, then you can foreclose on me”. That’s what a Mortgage really is. And from a practical perspective, a Trust Deed does basically the same thing. However, there is one large difference between the two.

Under a Mortgage, if a lender begins the foreclosure process, it must take place in a court of law. This is a very expensive procedure for a lender.

Conversely, under a Trust Deed, a lender may initiate sale of the property without going to court, thus avoiding a big legal bill. Most lenders use Trust Deeds for this very reason.

For you to owe the rest of the money after a short sale or foreclosure, a lender would need to obtain a “deficiency judgment” through a court of law. Again, the lenders would rather avoid court costs.

Soooo….if your lender is already in court to foreclose under the auspices of a Mortgage, they’ll think, “I’m already in court for this property, so I might as well get a deficiency judgment while I’m here”. It’s almost automatic.

BUT…if your lender is selling the property out from under you via a Trust Deed, then your lender will likely say, “Hey. I’m not in court for this, and I don’t want to go to court for this, so I’m not going to get a deficiency judgment against this guy, because that would require me to go to court!” This is what happens the vast majority of the time when the home is secured by a Trust Deed.

In fact, I’ve never seen anyone have a deficiency judgment brought against them when they lost a home through a Trust Deed, and I’ve seen quite a few of these things happen. I’m not saying it can’t happen, I’m just saying that I’ve never seen it or even heard of it.

Find out if the foreclosure is taking place via a Mortgage or a Trust Deed. That should answer your question for you.

Your Questions About Foreclosures

Helen asks…

real estate question about a foreclosure home that was bought by the bank at auction and now for sale?

A bank forecloses on a house and puts it up for auction and ends up buying it themselves at the auction, with the intent of listing it on the open market.
If I know the name of the bank and have financing ready, can any real estate agent get in touch with the bank so I can be the first person to make an offer?
Any way to do this myself?
I’ve tried to speak to the bank already myself before the auction is held. They won’t talk until after the auction. Since I may not be able to get the house insured until the tenant is evicted, and risk lots of vandalism or fire, I might attend the auction and bid but hope to let the bank have it at their price. That way they have to evict the tenant and put it on the market. In the meantime, while they are evicting and getting it ready to sell, I need a way to contact and be first in line with financing before the MSL is sent to 1000’s of people.
public sector of the MLS…
where to see?

I have 3 agents sending me MSL updates but they are usually a couple days late to get to me.

Any way to stay on top of new listings?

I’m sure the bank will ask the most they can right off the bat in case they have to go lower. I might offer them what they want, but I got to be an early bird. I’ve been 2nd twice and lost out, and in one of those I had the largest offer and they did not wait on my offer to get to them. They took the first offer morning of Dec. 28th. My larger offer got there 1pm but too late. And my agent knew the selling agent and was told that the bank would wait on my offer. They didn’t. Finishing 2nd is almost as bad as last, when wanting a house.
also since the auction told me the name of the bank, I know the seller before the public does, me and the others who watch the auctions.
Somebody, maybe the bank should be able to tell me when the house will be listed or what they are asking.

and there are such things as short sales.
the bank in my case is Wells Fargo.

Your Questions About Foreclosures

The Expert answers:

Some banks are willing to work with you before listing a property on the market. My husband and I went through this with Wells Fargo a while back. We found a property that they had listed on their website that had not been put into MLS or listed with a realtor yet. We contacted them and they simply said to email an offer to them.

However, not all banks will. I believe Chase will only work with you after the property has been listed with a realtor.

So really, it’s going to depend on the bank. If they’re telling you they won’t talk to you until after the auction, then you’re probably out of luck. Talk to a realtor and see if they can get the listing to you the second it’s put on the market, and make sure you have your financing in line prior to that. That way when you submit a contract and say you already have your financing approved, they’ll be likely to go with your offer.

Your Questions About Foreclosures

Susan asks…

anybody gone through with a short sale on their home?

we were letting our home go into foreclosure but decided to put it up for a short sale.
is this still gonna look bad on my credit?
and i heard you get a 1099 on it. true?

Your Questions About Foreclosures

The Expert answers:

If it goes through, I believe your credit is fine, because the bank is treating the “short” payment as payment in full to satisfy the debt, so you’d be clear. They may report the payments that are already delinquent to credit reporting.

Also, the bank MAY issue a 1099 for the portion of “income” you received for a lesser payoff. For instance, if you owe $100k, but they take $80k, then that $20k of debt relief is a form of income on paper. If they issue a 1099 then you have to claim it on your tax return b/c Uncle Sam should have received a copy as well.

Your Questions About Foreclosures

James asks…

Commission on foreclosures and short sales?

Do realtors get their regular commission on foreclosures and short sales? Also, if you know the process for these kinds of home sales, could you explain the step by step process?? Thanks!

Your Questions About Foreclosures

The Expert answers:

“Regular” commissions…no such thing, especially nowadays. Many REO companies selling foreclosure properties will lower the listing agent’s commission below 3%, but pay a buyer agent a 3% commission. HUD typically pays the listing agent 1% and the buyer’s agent up to 5%.

Lenders doing a Short Sale usually pay both agents less than 3%. Depends on how bad a hit the lender feels they are taking.

How to buy a foreclosure or short sale. It’s a lot to go into here. 2 different processes.

Suggest you contact a local real estate agent in your area who is experienced in these types of transactions to get the best information about your area. It varies a lot from area to area based on other posters comments here.

Besides you should definitely have a licensed agent acting as your Buyer Representative in this type of transaction.

Good Luck

Powered by Yahoo! Answers

Your Questions About Foreclosures
Your Questions About Foreclosures
Your Questions About Foreclosures
Your Questions About Foreclosures
Your Questions About Foreclosures

Your Questions About Foreclosures

Your Questions About Foreclosures