There are three major changes in short sales about to come into full affect.

1.) Prior to new HAMP and HAFA guidelines, a homeowner short selling their house could not receive any proceeds from the closing whatsoever. But, as of November 2009, a new HAFA (Home Affordable Foreclosure Alternatives Program) allow the homeowner to be paid $1,500 as a borrower relocation fee. HAMP stands for (Home Affordable Modification Program) and applies to loan modifications.

2.) Prior to these guidelines, 1st mortgage lenders could also request a promissory note which was usually a 0% interest note paid over a certain number of years to cover a deficiency.

3.) Lenders could come after the homeowner for the difference of what was owed and what the lender received as a payoff.

These guidelines apply to loans not owned or guaranteed by Fannie Mae or Freddie Mac. Also, these new guidelines apply to servicers who are participating in these HAFA and HAMP programs.

* Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.

* Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.

* Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

* Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).

* Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).

* Uses standard processes, documents, and timeframes/deadlines.

* Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis).

* Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

The fourth point down, about the lender not being able to file a deficiency judgment or ask for a promissory note, is a big one. Many homeowners in Georgia who we have helped have always worried about the lender coming after them or having to owe huge amounts of cash after a short sale.  If your 1st mortgage lender participates in the HAFA program, it prohibits them from doing so. Find out if your servicer is participating in the HAFA program, please visit http://www.MakingHomeAffordable.com/contact_servicer.html

For tons of questions and answers for these programs, go here: http://makinghomeaffordable.gov/borrower-faqs.html#1

So, I had a guy call us from Alpharetta about processing his foreclosure. I was taken back and I actually thought it was someone messing with me. He asked me, “I’m behind on my payments, can you process my foreclosure?” asked him if he understood what a foreclosure was and he said, “It’s where the lender gets your house back.” So, I knew we were on the same page, but there was a little confusion.

I explained what a foreclosure was, which is, the bank takes your house back by filing notice with the county courthouse and your house is then sold to the highest bidder on the steps of the courthouse the first Tuesday of the month. Then, I explained what a short sale was, which is, the bank accepts an amount less than what you owe as a settlement amount…paid in full.

After we talked for a couple minutes, we cleared up the confusion, but it made me realize how much misinformation is out there and how much conflicting info there is out there locally here in Georgia as well as nationally. The press covers a lot of the statistics, (how many foreclosures in Georgia, how many short sales on the market, job loss, unemployment filings, etc) but they don’t cover the options available and the steps you need to take to avoid losing your house to foreclosure. If you have questions about short selling your Georgia home, download our Free Short Sale Ebook or give us a call.

We get this question a lot still, so I thought I would address it again in another blog post and get it back up to the top of the post entries. The question is,

Will a short sale cost me anything?

We all know that in order to sell your house, you need an agent to list it (real estate agent commission) and there are seller closing costs that need to be paid. How do you pay for these items if you’re upside down on your house and you don’t have a lot of cash? Simply stated, none of these items come out of your pocket.

Let me give you a simple example, let’s just say (using simple numbers) your bank allows a short sale on your home that you owe $140,000. The bank says they are willing to accept a purchase price of $100,000. Now, let’s say the commission is $6,000, (could be more, could be less, just for example) your portion of the closing costs are $500, and the buyer needs $2000 to cover some of his closing costs…

What this means is that the lender is really willing to accept a NET of $91,500.

They are accepting the purchase price of $100,000, but the costs associated with the short sale are also coming out of their bottom line.

$100,000
-$6,000
-$2,000
-$500

= $91,500

So, none of this money comes out of your pocket, even though on the closing sheet is shows as being paid by the seller. Your lender is really just accepting less of a total net amount.

I hope this helps clear up some questions a lot of people have. If you have other questions, just call us.

As of right now, you’ll find over 400+ short sales as seen here, Atlanta Short Sales.  From a $1.5MM property in Druid Hills, seen here, to this Mid $100K’s Atlanta Short Sale, with plenty of room for a large family, and plenty more in between. Point is, there are more and more short sales hitting the market, but compared to the number of new foreclosure filings scheduled for go to the courthouse steps March 2nd, 400+ doesn’t seem like such a big number. There are still a lot of Atlanta families who don’t  know about the opportunity to short sell their house.

I didn’t have time to count them all, but if you want to take a look at Fulton  forelcosure notices for March 2nd or you were wondering where they are published, go to Daily Report Foreclosure Public Notices.

Okay, so we’ve been a little busy and haven’t been able to complete the Georgia Short Sale Guide. We’ve had the animated page peel up in the corner for a while, but no link. So, please don’t get frustrated with us. We’re almost finished with it and will post it very soon for free download for any Georgia homeowners wondering if a short sale is the right decision.

Get ready to be walked through the short sale process, see some actual short sale forms, and learn about some little dirty secrets your lender DOES NOT want you to know.

Keep in mind, this is not regurgitated material from some short sale course. The information in this Ebook is from our personal experience with short sales. We hope you enjoy it.

No personal information needed, just enter your email address on this page, Georgia Short Sale Guide, and it will be instantly sent to your inbox.

I’m not sure if it’s just us and only the short sale deals we’re working on, but they all seem to be moving along very quickly. The team around here is convinced many lenders are looking to speed up Atlanta short sales in order to get them off the books by the end of the year, which could be what’s going on. Either way, it’s nice to get answers when we need them and short sale approval letters in a snap.
With the new short sale guidelines for lenders coming in March, lenders may be beefing up the short sale departments and loosening up the strict requirements on each file. We’re hoping to help 500 Georgia families in 2010 with a short sale, so get those calls in to get the process started.

Monday, The US Treasury announced new guidance to simplify the short sale process. These new guidelines to speed up short sale approvals, prohibit the reduction of real estate commissions, and set new limits for second lien holders, have long been awaited by everyone involved in a short sale transaction.

Whether or not we will be able to get short sales approved here in Atlanta in 10 days or less is still unknown. We’ve had some approved quickly, but none that quick. We only hope that the new pressure “incentive”on lenders to “hurry it up” and stem new foreclosures in Georgia will not be met with quick denials because of the lack of time to quickly analyze the short sale file.

Shorted Lenders and Servicing Companies

The new short sale guidance offers servicing companies a $1000 payment and investors up to $1000 to sign off on payments to subordinate lien holders. Second mortgage holders have been demanding, in recent months, more money than the primary mortgage holder have allowed them to be paid.  Many times, this dispute holds up the closing of a transaction, but the new guidance caps the subordinate lenders proceeds to $3000 which should eliminate the bickering. Should…

Atlanta Short Sale Sellers

Until now, most sellers have not been allowed to receive any funds in a short sale transaction, but the new guidance will allow for borrowers to receive up to $1500 in moving expenses at closing.

Short Sale Real Estate Agents

Many agents have avoided short sales because many servicing companies would demand to reduce the real estate commission paid to agents involved. New guidelines prohibit lenders from reducing real estate agent commissions.

While this guidance from the Treasury is promising, we shall see how lenders and servicing companies respond in the coming months.

Countless short sale deals are falling apart around Atlanta as buyers walk. Due to the $8,000 buyer tax credit expiring on November 30th, 2009 many buyers are walking away from short sale negotiations in an effort to find a quicker close date to take advantage of the tax credit. Atlanta short sale agents are scrambling to get acceptance letters on short sales to ease buyers minds and keep them on board.

Sadly, there have been a number of deals we are in the beginning stages of short sale negotiation on where our buyers are bailing, but some buyers understand the short sale process and are vowing to stick it out as the discount outweighs the $8,000 tax credit.

There have been talks about an extension of this tax credit, but a firm decision has not been made. I do know that the tax credit will remain for military families. Congress agreed that our troops should be able to continue to benefit from the buyer tax credit so they are able to purchase homes for their families even if they are overseas.

We will continue to keep you posted on the outcome of Congress’ decision to extend the tax credit and how it can affect short sales in Atlanta at least in the short term.

We are eagerly awaiting an announcement that was thought to come from the Treasury Department near the end of this month. To date, the short sale process both here in Georgia as well as throughout the nation has been a long and grueling process. Many local GA agents will roll their eyes at the thought of attempting a short sale and some have even been known to deter buyers away from making offers.

This new program would give lenders an incentive to speed up the approval process, which would surely be good for homeowners nationwide. But, as mentioned in our last post, would this program even work? There has been a huge learning curve for lenders who have been slammed with thousands of requests for short sale on top of loan modification applications.

“We had a learning curve…Any stakeholder has a right to disapprove the sale. Realtors out there were used to regular sales. Now, all of a sudden, the servicer and Realtor have had to learn a lot,” says David Knight, Sr VP of Default Retention Operations, Wells Fargo Home Mortgage, in a recent USA Today interview.

We certainly hope the program helps Atlanta homeowners, but we’re not holding our breath. We try to stay ahead of the curve and embrace short sales, as they are a large percentage of Georgia home sales. Other Atlanta agents may run away, but signs in the market show that short sales are going to be around for years to come, luckily for Atlanta we’ll be here too.

Do any of these new foreclosure mediation programs passed on state and local levels even work? The National Consumer Law Center says that there is no data to support any claims that these programs have made any substantial affordable modifications. NCLC, just came out with a report where they reviewed 25 foreclosure mediation programs in 14 states.

Our review of the status of foreclosure mediation programs has shown that there can be a danger in viewing them as an alternative to legislation that directs servicers and mortgage holders to make affordable loan modifications.

Despite the potential to do so, the existing foreclosure mediation programs have yet to establish that they can exert any significant control over servicer conduct.

In other words, they really aren’t working. If you’ve attempted a loan mod, you probably already understand this first hand. We handle many short sales that were once loan modifications. Why don’t they work? Well, there really hasn’t been any effort that can force real change. It’s sad that many families continue to experience a failed loan modification, but there are other options.