Short Sale Blog

This Bellevue, WA, homeowner avoided foreclosure through a short sale. He owed $687,000 on his first mortgage with Chase, and another $72,000 on his Chase second mortgage - a total of three quarters of a million in debt! But his home was valued at only $350,000.

Chase has just issued their short sale approval letter for the first mortgage, accepting $313,000 net proceeds on the $687,000 mortgage balance owing - a discount of $374,000.

And the best news is that Chase’s short sale approval letter waived the Bellevue homeowner of ever having to repay that $374,000 deficiency!

You can read the Chase short sale approval letter here: 5.9.12_Chase_1st_Lien_374k_Deficiency_Debt_Settled_Short_Sale_Approval.pdf

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

Great news for this Seattle, WA, homeowner! Not only did he avoid foreclosure through a short sale, he also had the $141,000 deficiency balance waived.

He owed over $215,000 on his Wells Fargo mortgage, as well as another $31,910 in arrears - a total of $247,000 of debt. But his home was valued at only $124,000.

Wells Fargo issued an approval letter for the short sale, accepting $106,000 net proceeds on the $247,000 mortgage balance owing - a discount of $141,000. However, the approval letter did not waive the deficiency - which means that down the road, debt collectors could pursue our Seattle homeowner to repay that deficiency.

We had our lawyer write a letter to Wells Fargo, explaining to them that if they did not waive the deficiency balance, they would end up owning the home outright (and have to absorb all of the costs of marketing it) - either by the homeowner declaring bankruptcy and not having to repay the deficiency, or through foreclosure.

Wells Fargo promptly reissued the short sale approval letter, waiving the Seattle homeowner of having to repay the deficiency balance.

You can read the original Wells Fargo short sale approval letter here: 4.25.12 - Wells Fargo - 1st Lien - 141k Deficiency - Lien Release - Short Sale Approval

You can read the revised Wells Fargo short sale approval letter, waiving the deficiency, here: 5.16.12 - Wells Fargo - 1st Lien - 141k Deficiency - Debt Settled - Short Sale Approval

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

These Snohomish, WA, homeowners avoided foreclosure through a short sale. They owed over $460,000 on their Bank of America first mortgage, and $108,000 on their Bank of America second mortgage - a total of $568,000 of debt. But the purchase offer they received for their home was for only $425,000.

BofA has just issued their approval letter for the short sale. Since both mortgages were with the same lender, the mortgages were processed together. BofA accepted net proceeds of $366,000 on the $568,000 debt, for a discount of nearly $203,000.

Since the short sale was processed through HAFA, the Snohomish homeowners were waived of ever having to repay that deficiency.

You can read the BofA short sale approval letter here: 3.13.12_Bank_of_America_1st_and_2nd_Lien_203k_Deficiency_Debt_Settled_Short_Sale_Approval.pdf

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

The homeowners in Renton were under severe financial pressure. One had been laid off, and the other had been diagnosed with cancer.

They owed $377,000 on their first mortgage with PHH, and $125,000 on their second mortgage with Sound Credit Union. (Read the entire Case Study here).

While owing over $500,000, the best offer on their home only came in at $349,000. This would only allow them to pay $308,000 to PHH and $6,350 to Sound Credit.

PHH issued an approval letter for the short sale - but that short sale approval letter did not explicitly waive the sellers of having to repay the $69,000 deficiency balance. And that’s where our lawyer came in.

Our attorney wrote a letter to PHH’s short sale negotiator, requesting that they reissue the short sale approval with a full written deficiency waiver. She informed them that if the deficiency waiver was not issued, there were only three possible outcomes:

• the sellers would file for bankruptcy, and PHH would end up with the property and nothing else,
• the sellers and PHH would move into mediation pursuant to WA’s Foreclosure Fairness Act, where PHH would have to either show that the beneficiary of the promissory note would have a higher financial return owning the home in foreclosure with no right to collect the deficiency rather than accept the short sale proceeds currently being offered, or
• the sellers would terminate the short sale, and PHH would own the home in foreclosure with no right to collect the deficiency balance

Since Washington is a non-recourse state, a foreclosing first lien-holder can only take title to the property; they may not collect on the promissory note. So any of the three outcomes above would end up with PHH owning the property (and then taking on all of the costs associated with foreclosure, and marketing and selling the property) and with no right to collect the deficiency balance.

PHH saw the light. As more and more lenders are realizing, in most cases lenders make more money from a short sale (and they make it more quickly) than they do from foreclosing. PHH reissued the short sale approval letter, clearly stating “deficiency waived” (page 1, point #3) - not only a better solution for our Renton homeowner, but also a better solution for PHH.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

This Everett, WA, homeowner avoided foreclosure through a short sale. She owed over $294,000 on her Seterus mortgage. But the purchase offer on her home was for only $125,800 - not even half of what she owed.

Seterus has issued their approval letter for the short sale, accepting $111,500 net proceeds on the sale - for a discount of $182,500.

This means that this Everett homeowner paid off only 38% of the amount due on her Seterus mortgage - and the best news is that the short sale approval letter waived her of ever having to repay that deficiency balance!

You can read the Seterus short sale approval letter here: 4.19.12_Seterus_1st_Lien_183k_Deficiency_Debt_Settled_Short_Sale_Approval.pdf

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

Good news on the national front regarding mortgage payment delinquencies - but, as usual, the Seattle area and Washington state seem to be lagging behind the national trends.

According to a new report by TransUnion, as published in the Silicon Valley Mercury News, the percentage of homeowners who are 60 or more days delinquent on their mortgage payments dropped in the first quarter of 2012. The nation-wide delinquency rate is now at its lowest level since 2009.

But that drop is small. The national delinquency rate was 5.78% for the first three months of this year - down from 6.19% a year ago. Before the housing crash, the delinquency rate was about 2%, and it peaked at nearly 7% in late 2009.

Throughout this housing crisis, though, Washington state seems to lag behind national trends. As the national delinquency rate declines, there are only eight states where the delinquency rate is still increasing: we in Washington are one of those eight.

The regions that were hit hardest and earliest by the financial crisis and high foreclosure rates are showing very strong signs of recovery. A report published this week by HousingWire, using figures published by Move Inc., lists the regions that show the “top turnarounds.” These are the towns showing the highest level of housing market recovery, as reflected by declining inventory and increasing house prices. Those top turnaround towns include Phoenix-Mesa in Arizona; Orlando, Florida; and Oakland and San Jose in California - all of which have already been hit hard by foreclosures.

We are confident that Washington state and the Seattle real estate market will also follow those same trends and see recovery in the housing market. We just seem to continue to be a year or two behind the national trend.

As delinquency rates are still on the rise here, homeowners who are struggling to make their mortgage payments will continue to look for solutions such as short sales, in order to avoid foreclosure and the negative affects that mortgage payment delinquency will have on their credit rating.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

This Edmonds, WA, homeowner avoided foreclosure through a short sale. He owed over $440,000 on his Suntrust first mortgage, and $259,000 on his Chase second mortgage - a total of $700,000 of debt. But his home was valued at only $429,000.

Chase has just issued their approval letter for the short sale, accepting $20,000 net proceeds on the $259,000 mortgage balance owing - a discount of $239,000. The short sale approval letter waived the Edmonds homeowner of ever having to repay that deficiency.

You can read the Chase short sale approval letter here: 3.7.12_Chase_2nd_Lien_240k_Deficiency_Debt_Settled_Short_Sale_Approval.pdf

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

Spring and fall are the busy times for us, and spring 2012 is no exception to that. Short sales are booming - as we reported to you earlier this month, short sales have now outpaced foreclosures. We have just finished putting together the figures for last month: in March, 2012, we managed to negotiate $3,951,000 of loan discounts from lenders for our short sale clients.

The discount, or deficiency, is the difference between what the homeowners owes on the mortgage, and how much she or he is able to pay back on that loan following the short sale. Many homeowners whose home is now worth less than the balance owing on their mortgage may worry that they will never be able to get out of debt. But this March, sixteen of the thirty short sales we negotiated were for loan discounts of over $100,000. And nearly all of those homeowners - twenty six out of the thirty - had the deficiency balance waived. This means that that loan discount is permanent: the lender has put it in writing that they will never pursue the seller to pay it back.

Total debt discounts that we negotiated through short sales in January was $3,370,000, and in February was $4,390,000. Adding March’s $3,951,000 to those figures brings us to a total of $11,711,000 of mortgage relief that we have negotiated for distressed homeowners through short sales for this first quarter of 2012.

All of our short sale approval letters are posted on line: http://seattleshortsales.com/approvals.htm. Here you can see what a real approval letter looks like, what each loan discount is, and how different lenders word a deficiency waiver.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

Two different groups that compile data on the housing market have released reports this week that indicate that short sales have now surpassed foreclosure sales in America.

Lender Processing Services (LPS), as reported by Bloomberg on Tuesday, indicates that in January, short sales accounted for 23.9% of home purchases. By comparison, 19.7% of sales were foreclosures that month. A year ago, only 16.3% of home sales were short sales, and 24.9% were foreclosures.

And Realtor Mag reports similar numbers released by RealtyTrac, which indicate that short sales increased by 33% from January 2011 to January 2012. Short sales increased over that period in 32 states.

These numbers reflect the reality that a short sale is often the best solution for both homeowner and lender, when the homeowner finds himself or herself “under water” - where they owe more on the mortgage than their home is currently worth, and are struggling to make their monthly mortgage payments.

Daren Blomquist, vice president at RealtyTrac, told Realtor Mag that he believes that 2012 could be a record year for short sales. With short sales on the upswing, and lenders working at shortening their response time for short sale requests, we think so too!

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/

Under direction from the Federal Housing Finance Agency (FHFA), Freddie Mac and Fannie Mae have issued new guidelines to their loan servicers about minimum response times for short sales. Starting June 15th, servicers will be required to provide a response to a short sale request within 30 days of receiving a completed Borrower Response Package requesting short sale consideration, or of receiving a purchase offer.

In cases where a decision has not been reached within 30 days, the servicer may take an additional 30 days to reach a decision - but they must notify the borrower within the initial 30-day time limit that the case is still under review. They must also then provide weekly status updates that include an explanation of why the decision is still pending.

These guidelines apply regardless of whether the short sale is being processed through HAFA or through Freddie’s or Fannie’s own short sale program.

Servicers also must promptly acknowledge receipt of documents. They must acknowledge to the borrower that they have received the Borrower Response Package within 3 days. If any items are missing from that package, they must inform the borrower of that within 5 days of receiving it.

These guidelines are similar to those proposed in Senate Bill 2120, which, if passed, would require lenders to make a decision on a short sale request within 75 days, with a possible extension of a further 21 days. Senate Bill 2120 has so far been read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

The majority of conventional mortgages are backed by Freddie and Fannie, so their stricter guidelines (of 30 to 60 days) will apply to most short sales. Although the guidelines come into effect on June 15, servicers are encouraged to start implementing them as soon as possible.

If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/

If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/