It’s all too common that most Homeowners in the U.S. are “upside down”. --- Meaning that they owe more on their mortgage than what their home is actually worth. In this respect, some homeowners seem to have the false notion that letting their home go into foreclosure means getting all their Mortgage debts settled.
Well, in Washington State, it will be the case if the homeowner only has one mortgage/lender on their property, and if they were foreclosed via a non-judicial foreclosure. HOWEVER, it is simply a false notion if the homeowner has more than one lender, as in having a 1st and 2nd mortgages. Please read my post on September 18th, 2009 for a detailed explanation.
Regardless of the case, a foreclosure on your credit history means you’ll be carrying this shameful mark for 7 years which may also translate to NOT being able to qualify for another home loan for just as long.
In my September 18th, 2009 post, I did mention that there is a better way to mitigate your debts (from all your lenders), preserve your credit, and possibly come out NOT owing any money at all!
I’m talking about short sale mitigation. A short sale is the process of selling your home for less than what you owe on your mortgage/s, negotiating with your lender/s to release the lien and take a smaller payment than what you owe them, and mitigating that the short fall (meaning the difference between the sales proceeds and amount owed) will be forgiven. Obtaining a waiver of the Lenders’ right to seek deficiency has yielded varying results depending on the borrower’s financial situation and with each lender. Short-sale, however, gives the homeowner the chance to mitigate the short fall as opposed to a foreclosure.
One caveat however: It is easier said than done! This is the very reason why a seller or a buyer contemplating about doing or getting involved in a short sale transaction would need to seek the services of an experienced Short Sale Specialist.
It is but a sad truth, however, that there are a lot of Agents out there perpetuating to be short sale specialists yet have nothing to show for in way of closed short sale transactions. Having successfully closed several short sales transactions, I’ve frequently interacted with “know it all” Real Estate Agents claiming to have closed “lots” of short sales; yet their actions stray very far from those of an experienced short sale specialist’. In a sense, their own actions give away their ignorance and lack of experience regarding the subject.
Here’s the real kicker: Whenever a Real Estate Agent claims that he/she has closed lots of short sales, yet therein exists a big disparity between their actions and claim, I make a point to go to the MLS and check their previous closed transactions. All too often, I find that they have NOT closed one single short sale transaction. Or if they did, they’ve hired a 3rd party negotiator to negotiate their transaction for them.
Personally, I’d rather have an Agent approach me with full honesty even if it means revealing the fact they don’t have an inkling of how a short sale process goes. The success of a Short sale relies on the concerted efforts of all the parties involved. Otherwise, the experience would be compared to a “back-seat driver” telling you how to drive when that very person has never actually driven in their lifetime.
All I’m saying is that, make sure you hire an Agent who has actually been in the front-lines negotiating with the lenders; someone who actually knows how to put together a short sale packet; someone who actually knows the triggers and the elements needed in a hardship letter; someone who knows how to interact with the BPO Agent/Bank’s Appraiser.
As a consumer, you have the right to ask for references and proofs: Ask for MLS print-outs of their closed short sale listings; make sure it does say short sale somewhere in the ‘Marketing or Agent Remarks’ section. Ask for HUD1 of those transactions as secondary proofs.
In the short sale business, you don’t want to hire an Agent because he/she’s your friend or relative, or because you were referred to them. Whether you are a seller or a buyer, you’d want to hire an Agent that has the credentials of a Short Sale Specialist, but more importantly who can give you printed and tangible proofs of short sale listings negotiated and closed. Otherwise, you’ll be in for a very unpleasant experience.
Indeed, a short sale is a better way to mitigate your mortgage debt/s as an alternative to foreclosure. However, it is easier described than done. In my next post, I will talk about what the involved parties should expect in a short sale transaction. --- This includes the Seller, Buyer and the Buyer’s Agent.
For the meantime, if you have any urgent concerns or questions, please e-mail me at realestate@carlodelizo.com or call me at (425)444-1010. Take care.
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