Mortgage hardship knows no prejudice. It doesn’t care about your age, the number of years on the job or the size of your mortgage. This is not just a sub-prime issue, anyone can suddenly fnd themselves in a mortgage mess, even if you have done everything right! Chances are, you or someone you know in the Hudson Valley is facing the possibility of foreclosure. But you need to understand that you are not alone.
Today, 1 out of every 10 homeowners in America is behind on mortgage payments. These are tough and frustrating times. Now more than ever, it’s important to identify your options. Foreclosure can be avoided, your credit can be saved, and your financial future can be salvaged.
Through my experience handling distressed properties in the Hudson Valley, I’ve found that homeowners today have more questions than answers about their circumstances. Many people just don’t know where to turn to get real unbiased answers and as a result do nothing until it is too late. I have created this site to help you understand the possible solutions to foreclosure, as well as provide a detailed explanation of short sales, which may be the best course of action for some homeowners. The idea of losing a home can be overwhelming, and I feel it is vital for you to have all the facts necessary to make an informed decision.
As an agent with the CDPE® (Certified Distressed Property Expert) Designation, I have a strong and unique appreciation of the factors affecting the market, and know that there are options available to you.
We understand the stress you are dealing with as you battle this economic crisis. We do not make judgements about your financial decisions, and are simply here to help you find a path to a brighter future by avoiding foreclosure.
If you are behind on your mortgage payment or anticipate that you will be in the near future, we encourage you to learn about all of the options available to you. As your Hudson Valley Short Sale Specialist, our goal is to help you determine which option is best for you. All of our services are free to you the homeowner. Please contact us today for a free, no-obligation consultation to determine your best option. We urge you to act now, do not ignore the problem!
What is a Short Sale?
In brief, a Short Sale is when a lender agrees to accept less than the amount owed on a mortgage in order for a property to be sold at fair market value. In addition to being “underwater” on their mortgage, the seller must have a verifiable hardship that is accepted by the lender, must have a monthly shortfall on income and thirdly, be financially insolvent.
The Short Sale process has improved dramatically since April 5, 2010. That is when the US Treasury implemented the HAFA Short Sale program. Up until that date, the Short Sale process was not standardized, and thus led to much confusion and delays, so Short Sales had the reputation of taking forever to close and often not reaching the closing table. There has been a marked improvement in how quickly deals close, and indeed participating lenders may be penalized if they do not adhere to these stringent timelines. If you are a buyer and have been conditioned to avoid Short Sales, you may want to reconsider as deals now close much faster than before and there are some excellent values available.
Will I qualify for a Short Sale?
As your Hudson Valley Short Sale Specialist, we will help you determine if you are a good candidate for a Short Sale. We'll do a brief telephone interview to make sure a Short Sale is a viable option for you.
Should I try a Loan Modification before a Short Sale?
As your Hudson Valley Short Sale Specialist, one of the things we will review with you prior to beginnnig the Short Sale process, is if you should attempt a Loan Modification first. It has been widely reported that the Loan Modification program administered by the government, called HAMP, has been less than successful, but it may be an option for you. CAUTION: You should not pay upfront fees to anyone other than an attorney for assistance with a Loan Modification or a Short Sale.
Why would a bank agree to a Short Sale?
Many homeowners are hesitant to attempt a Short Sale because they think their lender would not cooperate. This is a myth and in fact the opposite is true. Banks will always prefer a Short Sale to a Foreclosure. The reason is quite simply that they loose less money on a Short Sale than if they have to take the property back in Foreclosure, repair and maintain it, pay taxes, pay off liens and still pay a commission to a Realtor to sell it later. In addition, banks must keep reserves of a multiple of the property value, which reduces the money they can lend. Banks are in the money business and not in the real estate business. They don't want to own your house!
What is Foreclosure?
As with a Short Sale, Foreclosure is a process, not a one time event. It begins once a homeowner is more than 30 days late on a mortgage payment. This is called a ‘Default ’ If arrears and late fees are not paid up and the homeowner stops paying their mortgage, the bank then files a ‘Lis Pendens’ with the court. This puts a cloud on the title and warns others that a lawsuit is pending. The next stage is a ‘Final Judgement’. Here in New York, due to backlogs in the court system and internal bank policies it may currently take from 2 to 3 years for a final judgement to be issued. Once the bank secures a final judgement they then petition to establish a ‘Sale Date’ and notify the homeowner of this date in writing. The homeowner may have from 30 to 60 days before being evicted from their home once they receive notice of the sale date. There is usually time to do a Short Sale right up to about 30 days before a foreclosure auction.
If your property is part of a Homeowner’s Association and you fall behind in monthly maintenance or association dues, the Association has the right to Foreclose on your property. In this case the timeline is usually shorter.
Please consult with an attorney if you have specific questions about the Foreclosure process.
Q&A with your Hudson Valley Short Sale Specialist
How much do I have to pay you to help me with a Short Sale?
Unlike some other real estate agents, your Hudson Valley Short Sale Specialist does not charge any upfront fees or any other fees at any time. We are compensated through commission paid at closing by the primary lender. We split this commission with any cooperating broker who may represent a buyer.
Does my home have to be worth a certain amount for you to help me?
No. We understand the agony and stress that many homeowners find themselves in nowadays. We believe all homeowners need and deserve our help. We will handle a Short Sale of your home without regard to the asking price. This does not mean we will accept everyone as a client. There are other criteria we use to determine if we are best suited to helping your particular situation.
Can I do a Short Sale on a second home or investment property?
Yes. You may sell any number of properties by the Short Sale process. The lender will look at your ‘big picture’ financial position and you will need to disclose all of your assets including other properties.
Will the condition of my home impact a Short Sale?
No. The condition of your home has no special bearing on a Short Sale. Keep in mind that a Short Sale is still a sale, and you must attract a buyer. We encourage you to keep your home in good condition, but it is not necessary to make major repairs in order to complete a Short Sale.
In what areas of the Hudson Valley county do you handle Short Sales?
We assist distressed homeowners throughout Orange, Ulster, Sullivan and Dutchess counties.
What documentation is required for a Short Sale?
There is substantial paperwork involved in a Short Sale and we ask you to assist us by providing the most recent 3 months statements for all your financial accounts, including bank statements, 401k, investment accounts, the last two years tax returns and two most recent pay stubs. As the process is ongoing, we ask that you save new relevant documents as you recieve them, so that we may present them to the bank when an offer is received. In addition, you will be asked to sign an authorization for us to represent you, disclosures about your property and miscellaneous documents. A Short Sale differs from a regular sale in that you must provide your Realtor with all of this financial information. Rest assured we treat all your confidential infomation with the utmost of care.
How much less will the bank accept on a Short Sale?
There is no easy answer to this question. Even the same lender will make adjustments to their policy depending on their risk exposure. Very often the bank is only servicing the loan and they will have to get approval from the investors who own it. We will be happy to disuss this in more detail with you.
If I do a Short Sale, how will my credit score be impacted?
As of today the major credit bureaus do not have a code to indicate a Short Sale on a persons credit report. If you are late with your payments or do not pay off your loan in full, your credit score will be penalized as normal. Therefore the impact of a Short Sale on your credit will be much less than if your home is lost to Foreclosure. Typically a homeowner is eligile to buy another home 3-4 years after a Short Sale, whereas they may have to wait up to 7 years to obtain financing after a Foreclosure. The other big diffference is that a borrower will always be asked if they have ever had a Foreclosure, not if they had a Short Sale. In addition, if you hold a security clearance it can be jeopardized by a foreclosure.
Can my relative buy my home in a Short Sale?
No. A Short Sale transaction must be at “arms length”, meaning there must be no relation between or among the parties involved. This means you may not sell the property to a family member, coworker, friend, neighbor etc. A real estate agent must list their Short Sale property with another broker.
Does the State of New York allow Deficiency Judgements in a Short Sale?
Yes. In New York, the homeowner may be subject to a Deficiency Judgement in a Short Sale or Foreclosure. The advantage of a Short Sale over a Foreclosure is that the borrower will have an opportunity to negotiate the amount, if any, of this deficiency. HOWEVER - Under the HAFA guidelines, the participating lenders have agreed not to pursue a deficiency judgement. This is great news for distressed homesellers. The majority of short sale, HAFA or not, have the deficiency language removed from all short sale approvals.
What are the tax consequences of a Short Sale?
All we can say is that there may be some tax consequences if you complete the sale of your home by the Short Sale process. You may be liable for taxes on any amount forgiven by your lender, especially on second homes, home equity loans and lines of credit. Please consult your tax advisor or CPA for an accurate assessment of your personal situation.
Why does it take the bank so long to approve a Short Sale?
The good news is that since the introduction of HAFA, it now takes a lot less time to complete a Short Sale. At the beginning of the mortgage crisis, banks developed a bad reputation for being slow or non-responsive with Short Sales. This has changed recently as the banks have put systems in place to handle the volume of Short Sales. Nowadays the biggest reasons for a delay in the Short Sale process are due to improper or incomplete offer packages being submitted to the banks, so it is important to work with a Real Estate Agent who understands what is required to get a Short Sale completed. Another reason is the banks need to wait for approval from the investors who own the original mortgage. Keep in mind that very few banks still own the loans they originated. They usually sold the loans to investors and now collect revenue for servicing these loans.
If there are any questions we have not answered, please make a note of them and we will be happy to get you the answers.