Short Sale in San Diego

Recently, both Fannie Mae and Freddie Mac (the Government Sponsored Entities or GSE's) announced their HAFA Guidelines, with a mandatory implementation date of August 1, 2010. These critical and much awaited announcements propel HAFA toward becoming the #1 Short Sale program in the Nation... and make it a 'first choice' program for every distressed homeowner who cannot afford to retain ownership of their home due to financial hardship.

While the GSE version of HAFA is substantially similar to the non-GSE version of HAFA, the GSE's in their role as Investors have provided critical, helpful, and unique program implementation details that apply just to their HAFA transactions. Some of the unique aspects of the GSE HAFA programs include:

• Freddie Mac HAFA Eligibility requirements (in addition to standard HAMP program eligibility requirements) that Borrower be more than 60 days delinquent and Borrower’s cash reserves must be less than the greater of $5,000 or three times the currently monthly payment.
   
• Clear definition by Fannie Mae of allowable transaction costs for a HAFA Short Sale including:

• "Real estate sales commissions customary for the market. The Servicer may not require that the commission be reduced to less than 6 percent of the sale price of the property"
• "Homeowners or condominium association fees that are past due, if applicable"
• "Wood destroying pest inspections and treatment, when required by local law or custom".
   

• A foreclosure sale is scheduled to be held within 60 days of the Borrower's request for a HAFA transaction, or
• A foreclosure proceeding could be initiated and reasonably be expected to result in a foreclosure sale being held within 60 days of the Borrower's request for a HAFA transaction, or
• A foreclosure sale is scheduled to be held or a foreclosure proceeding could be initiated and reasonable be expected to result in a foreclosure sale within 60 days of a determination that a Borrower is ineligible for HAMP, or
• The loan is secured by a property in Florida on which foreclosure proceedings are pending, judgment has been obtained, or a hearing on summary judgment or trial is scheduled within 60 days.

Importantly, in addition to releasing their HAFA guidelines, the GSE's also provided their own standard HAFA forms which are to be used on all GSE transactions. These forms have been provided in a user friendly editable format by the GSE's.

People have been asking me these the past few days so I wanted to lay out the guidelines for those who were curious. But understand this only apply to loans that are NOT Fannie Mae or Freddie Mac owned, and it is completely voluntary for your bank, servicer or the investor to comply with the HAFA Program.

•        Must be Your Primary Residence

•        Loan must be originated before Jan 1^st, 2009

•        The mortgage is delinquent or default is reasonably foreseeable

•        The current unpaid principal balance (UPB) is equal to or less
than $729,750

•        The borrower’s total monthly mortgage payment exceeds
31 percent of the borrower’s gross income.

•        Homeowner Requests a short sale

•        Must Fail A Loan Modification Requirements / Or trial Period (HAMP)

•        POSSIBLE: Make reduced monthly payments determined by lender or servicer

People have been asking me these the past few days so I wanted to lay out the guidelines for those who were curious. But understand this only apply to loans that are NOT Fannie Mae or Freddie Mac owned, and it is completely voluntary for your bank, servicer or the investor to comply with the HAFA Program.

•        Must be Your Primary Residence

•        Loan must be originated before Jan 1^st, 2009

•        The mortgage is delinquent or default is reasonably foreseeable

•        The current unpaid principal balance (UPB) is equal to or less
than $729,750

•        The borrower’s total monthly mortgage payment exceeds
31 percent of the borrower’s gross income.

•        Homeowner Requests a short sale

•        Must Fail A Loan Modification Requirements / Or trial Period (HAMP)

•        POSSIBLE: Make reduced monthly payments determined by lender or servicer

Did you know there is a certification for real estate agents to take in regards to the new government short sale program within the state of California? This certification is recognized by the California Association of Realtors Education.

If you are considering selling your home you and your real estate broker need to be informed of the HAFA guidelines, so that you can walk away from your home without any obligation, and with $3,000 for moving expenses. The real estate agent you chose to work with needs to be familiar with the government programs, the servicer (lender) guidelines, and well as know all of the proper paperwork and timelines to comply with so that you as a homeowner can be in compliance with the program.

If your agent is NOT familiar with this new program it can literally cost you thousands of dollars. I am certified and fully informed of ALL of the guidelines for this government program for short sales (HAFA), which went into effect on April 5^th of this year.

Please call or email if you are interested in learning more about the new government short sale program (HAFA).

Short Sale Kurt

NO MORE STATE TAX ON FORGIVEN DEBT

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification.  Enacted into law yesterday, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law.  For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences.  The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012.  Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.

  Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions.  Most notably, taxpayers who are bankrupt are exempt from debt relief income tax.  Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

 I have recently got 5 calls in 5 days, from numerous short selling homeowners in San Diego and across the country and one call from a real estate agent who in essence asked from me…”HELP!”. The calls have ranged from home owners who have been trying to short sale their home for over a year, to others most notably who have gotten approval letters that they are not comfortable with. The problem is these people are under contract with another agent and it is against my code of ethics to talk to them about their situation. I have however talked to them briefly and answered their questions, the problem is that I could spend hours on the phone consulting these people, and this is their current agents job to do so.

Unfortunately the home owners across the country are experiencing something that is all to common place and that is they are hiring inexperienced real estate agents to handle their short sale, who don't know what they are doing. There are too many agents who are starting to do short sales, who don't have the knowledge base or experience to properly inform their clients of the ramifications, or let them know about the possible outcomes of their particular case. Then when it comes near the end, the homeowners who are trying to do the short sale receive their approval letters and don't know what to do. So they turn to the internet and read my blogs about getting deficiency waived with Bank of American, or Chase or whichever lender and ask for my help because their agent doesn't know what to do.

At that point it is difficult for me to step in on the short sale file because I don't know what the current agent has already done to the file, what financial information has already been provided to the lender, or how the deal was structured.

If I can say anything to homeowners who are considering doing a short sale, that is to call me first and at least have an initial consultation, to talk about your case. It is imperative that you hire a real estate agent who is familiar and ahs experience doing short sales. They are VERY difficult transactions to handle, and you need experience and connections within the banks in order to get deals done and get them done with the BEST results for the client. Yes, I can get deficiencies waived with Bank of America, Greentree, National City, PNC, and Chase but it is because I know what I am doing and have connections with these lenders that I have established over the past 5 years that allows me to do this. So again please call me BEFORE you list your short sale home, NOT after you receive your approval letter and I can better serve you.

Short Sale Kurt.

Days like this make up for a hundred hazy days here livin at the beach. Anyone up for enjoying the day here at my beach pad?

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Kurt Wannebo
San Diego Real Estate & Investments

So recently I have discovered a way to get the standard verbiage on a Bank Of America short sale approval letter, to state they will NOT pursue my clients for any further deficiency. I have done this several times now and the tactics that were employed were somewhat out of the box for my thinking but thanks to the help of a college of mine, I was able to use these techniques that work just as well with many other lenders. Since I have implemented this new system, I have been able to get deficiencies waived from other tough lenders such as Chase, National City, and Greentree.

The good news for my clients is that they will know rest assured and not have to worry about these particular lenders any further, even my past clients will benefit as my new system can help my past clients as well.

The bad news is for other home sellers  out there that are using real estate agents that are not as experienced may still be left to deal with these issues.

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Just met and spoke with two major firms who are supposedly getting pre approved short sale programs in place. This is different from a traditional short sale in that it is initiated from the top down approach. Meaning that the bank initiates the short sale process with the homeowner. Basically when a homeowner is in trouble, missed payments or declined for a loan modification, the bank directs the homeowner to short sale their home. The Bank will give guidance to the homeowner in regards to the price that is should be listed at, promise a quick turnaround time, and hopefully forgive the home owner for the debt. Some programs also talk about giving the homeowner cash to move out and cooperate with the process. The bank wants to direct which real estate agent that the homeowner uses, so that they can pay lower commissions but at the same make sure that everything is being done in the best interest of the bank. The problem with this is that is can violate RESPA and steering laws in place because a homeowner still has the right to chose their own agent or representation to make sure that their agent is working on their own behalf and best interest. I have heard a few ways the banks are getting around this and are very interesting to say the least. It will more interesting to see how the homeowners and general public respond to this in their short sale process.

If a bank is asking you to use an agent of their choice it is always best to get a second opinion from someone that has experience with this such as myself or an attorney. If this happens to you, I always offer a free hour consultation to anyone who needs help or further information. Just give me a call Short Sale Kurt.