September 19, 2015
Me: I tried calling at 5pm and again at 6:30pm and thought it would be best to send you a detailed email that you can digest at your own pace. I have completed the research on the property and it is not good. On a scale of 1 to 10 with 1 being a simple transaction and 10 being the most difficult, i would assign your file an 8.5.
The HOA, second mortgage, and first mortgage (in that order) have all filed for foreclosure. The first of the three cases to reach summary judgment and auction/sale will result in you no longer owning the property and the termination of the listing. This means you have very little time.
It is most doubtful that the payoff on your first mortgage with Ocwen is $189k. The balance may have been listed as that amount on a statement, credit report, or alleged in the foreclosure complaint, but the payoff is not the balance. If payments have not been made on the property then the lender force places insurance at a cost of 3-4 times the actual policy, advances escrows for property taxes, charges late fees, interest, court filing fees, attorney fees, etc. I would guess your actual payoff could be more than $50k higher than the $189k. This means the first would have to be shorted even if the purchase price on the first was $265,000 or higher.
Next is the second mortgage. It is a line of credit. These are typically looked at like credit card debts and there is a good chance that BB&T will reject the short sale because Ocwen will only allow them a small payment ($6,000 to $12,000 depending on loan type). My guess is that they will require a promissory note or contribution from you and/or your ex – neither of these are good.
The HOA is in foreclosure. The amount of the past dues appears to be $3,800. The first mortgage will only allow a payment of one years worth of the dues which is $2,268. Unfortunately, the amount the HOA will require because it is in foreclosure will probably be closer to $8,000.
We also have a judgment attached to title from Citibank for $4,700. This is a lien on the property and you will not be able to sell the property without this being satisfied or by some other legal means. The first mortgage will not allow the judgment creditor any money.
Then, we have a bankruptcy filed by ex-husband in May. It appears there are entries in the docket after the suggestion of bankruptcy – i don’t know if this means the cases have stalled or they are all still proceeding at this stage. Either way, the property is still tied up in the bankruptcy estate and either a dismissal or trustee’s consent to abandonment of asset would be required to short sell. This is not an easy task and can be very time consuming.
I appreciate the referral and talking with you on the phone today. I have closed transactions with all of the problems listed above but it is a lot of extra work. On our phone call today i did not sense a strong motivation to get this closed (as a short sale) and so based on all of this information I am going to respectfully pass on the transaction.
Her: I appreciate you taking my call and the research and information that you passed along about the property, I’m glad that you emailed the details as I’m certain that my ears would have fallen off, as I had no idea the matter this complicated!! Nor that ex filed for bankruptcy.
I regret any misunderstanding that I wouldn’t be interested in a short sale; I was hopeful that there could be a better outcome, or creative options, but clearly, that is not the case. I plan to receive guidance as it relates to the bankruptcy side, so that I can plan that angle as necessary.
Paul; respectfully, your hesitation is understandable as there are challenges with the legal side of the property, along with the length of time for resolution, however, I’d consider myself fortunate to match your experience in the world of short sales.
I invite you to look at the house in person for you to access the possibility for moving forward with me. Obviously, I’d like a bit of help sorting out the path of least resistance to make the best of these real estate issues to where both parties are equally represented. Thanks kindly for your help thus far and ask you reconsider, or perhaps an offer of a referral to another broker.
Me: There were some redeeming attributes. For one, the standard incentive on a short sale is $3,000 typically paid to the seller who resides in the house; however, the incentive changed for certain loan types. if you type into Google ‘fannie mae loan lookup’ and then do the same with ‘freddie mac loan lookup’, enter your details and see if you have a match. if you do NOT have a match with Fannie or Freddie then there is a very good chance you would be eligible for the new incentive which started 2-15-15 of this year and is $10,000. $10k can be life changing to many of my sellers.
The fact that you mention ‘I plan to receive guidance as it relates to the bankruptcy side, so that I can plan that angle as necessary’ evens the field with BB&T because that could be used as leverage. if they insist on a promissory note but believe that you and ex will bankrupt then there is a very good chance they would accept the $6,000 they are offered from Ocwen as a full settlement.
All of the negatives i listed in that email can be countered and overcome, but having been doing this for seven years i can tell you the main reason for short sales not closing 9 times out of 10 is because the seller gives up. For this reason, the most important consideration in accepting an assignment is to gauge the seller’s motivation. We got off on the wrong approach/strategy to the short sale (by looking at it is an equity sale) and we did not discuss the other primary motivators for doing a short sale – namely, that the transaction is contingent uppn the first, second, and HOA all agreeing to the transaction as a full settlement. Florida is a deficiency judgment state and lenders can foreclose and then ask the court to grant a deficiency decree which can be used to levy a bank account or garnish wages. Closing the short sale would mean that we have estoppel letters from all three agreeing to waive any deficiency.
I suppose what i am saying is that i am on board as much as you and ex would be on board. You’d have to talk to your ex and let him know that you found an agent who will condition the short sale as being a full settlement and make sure that he is on board with completing all paperwork timely. if that is the case then let me know and i’ll come to see you at the property.
April 16, 2015
OK, so they filed a lawsuit against you. Perhaps you were served in a Florida foreclosure suit. What happens next?
First, there is a shock of the reality that the lawsuit was filed. A process server was parked in your driveway waiting for you to come home. Then that stranger parked in your driveway asks you if you are so and so and then hands you a stack of papers. Not a very pleasant experience. You have been served and are in a state of shock.
Shortly after, the shock is replaced by the emotion of fear. This is where this article can help. What happens next is your choice. You can stay in this state of fear and worry incessantly. Or you can come up with a game plan – a strategy. If you choose the latter then that fear is replaced with confidence. There is confidence in the knowledge that you have done everything you can or should do to protect your future. After you have taken the steps that your plan has established are necessary, then rest. And that’s the last phase, peace.
March 3, 2015
Some changes to F.S. 702 that went into effect in 2013 are resulting in Florida foreclosure cases moving quickly through the courts. In Pinellas and Hillsborough those cases from filing to judgment have been as quick as four months. This is in stark contrast to previous Florida foreclosures filed under the previous Florida Foreclosure Law which continued on for years and years in the past.
October 18, 2014
An article on Housingwire suggests “extending the tax break through 2015 and making it retroactive to cover all of 2014 would be a good start. Congress should follow the leadership of Sen. Debbie Stabenow, D-Mich., and Sen. Dean Heller, R-Nevada, and move immediately to extend the bipartisan Mortgage Forgiveness Debt Relief Act before more damage is done”.
I like the sound of that but these articles always center around the 1099-C which a short seller can receive on a short sale but never discuss the 1099-A that they get when they do a deed-in-lieu or complete a foreclosure. On top of that the foreclosing lender can also pursue a deficiency judgment in the state of Florida where a short sale can provide debt forgiveness with no deficiency collection.
Even if the Mortgage Debt Relief Act is not extended, there is always the insolvency exclusion to debt forgiveness, so please be sure to check with your tax advisor.
August 10, 2014
My client went missing for three weeks and then called me out of the blue. I asked him where he was living and he said on the street. I said you mean you are sleeping outside on the ground? He said no, i sleep in a cardboard box behind the Cumberland Farms on Seminole Boulevard. I said why aren’t you living in the house? He said i didn’t know i could. I said i’m coming to get you right now. OK, I’ll pack my bags he says.
I pull up to the Cumberland Farms on Seminole Blvd and there he is with a glad trash bag filled to the max about four feet tall. We put it in my trunk and my trunk still smells today. Anyways, brought him back to the house and explained that BofA’s short sale letter states that you may be eligible for $5,000 if you live in the house. He wrote a handwritten letter that i attached to the HUD that was submitted stating he was now living in the house.
BofA tried a couple times to get me to remove it but fortunately they agreed to pay it in the approval letter i received today even though they knew he wasn’t living in the house at the time he made application.
I think this $5,000 is going to change his life.
April 24, 2014
If you’re curious why your short sale lender is asking you to pay them either by way of cash contribution or promissory note executed at closing of your short sale then the below information may be useful. Here is an excerpt from the article:
Is your mortgage current or delinquent? And if delinquent, how delinquent? Shorting lenders are going to look at your short sale through different glasses depending on whether your mortgage is up-to-date or past due at time of short sale request. When a mortgage is current and not past due, the short sale lender presumes there is no hardship. We’ll get into this in more detail in a future article but generally, a short sale lender will not even consider completing a short sale for a borrower who is current unless there has been a death, divorce, disability, or distant employment transfer. The ideal situation for completing a short sale with no contribution is when..
April 13, 2012
I have a home in Clearwater, FL under contract for a short sale since 12/5/2011. Second lender ($80,000 heloc) wants $6,000 from first lender to release the lien plus 50% promissory note and will not bend. First lender has approved us for HAFA, which will require full release from second who will not do so. How can this be reconciled- if at all? If closing occurs outside HAFA, we don’t have confirmation that the first will waive their deficiency. We’ve talked about bankruptcy but would like to avoid it if possible. Any suggestions?
April 8, 2012
If I Florida short sale my property my understanding is the mortgage holder / home equity second lien holders do not have rights to my 401K which is basically all I have left in terms of assets. Due to loss of job I may be forced to cash in the 401K in order to survive unemployment.
Would the banks have recourse to this cashed in money?
Are there actions I can take to prevent this?
March 5, 2012
As a Florida licensed real estate agent working short sales in Pinellas, Hillsborough, and Manatee counties, I check the lis pendens filings in each of those counties each day shortly after they are filed. A couple of weeks ago I saw a foreclosure filing for a property in the subdivision of my own residence in St Petersburg, FL. Looking a little closer I discovered that it was for the home directly next door to my own.
I do mailouts to folks in St Petersburg, Clearwater, Seminole, Tampa, Bradenton, Sarasota, Palm Harbor, Largo, Pinellas Park, Safety Harbor and basically all areas in and around the Tampa Bay area for those who have recently been named defendant in a foreclosure action. I get a good response I think partly because my services are free to them and partly because my mailers are chock full of information that can help them get out of this foreclosure mess, containing the harm to their credit report, and getting them a check for $3,000 for relocation – again all of that is free. You see licensed real estate agents in Florida represent sellers in short sale transactions in a fiduciary relationship yet shorting lenders pay their fee upon closing the transaction. Banks need Florida real estate agents to get short sales closed and if you are a Florida short seller then you need a real estate agent too. The idea that there is a short sale expert who can guide them through the process is appealing and perhaps even more so if it is someone that they don’t already know. My friendly mailer is timely. But I’m getting sidetracked here, back to my neighbor.
I’m not sure he speaks English. I waive to him every now and then when I see him in the front yard. He smiles and waives back. I’ve tossed a few volleyballs back over the fence that landed in my backyard when the kids were playing – I hear a child say thank you as the ball bounces back into their yard. The kids speak English but I don’t think the father does. Anyways, I saw the foreclosure filing and decided not to send my mailer to him.
Why you ask? I’m not sure but something felt strange about it because I never know how someone might react. When I send the mailer offering Florida short sale help to strangers in the Tampa Bay area I learn that almost all of them know, are related to, or are friends with another Florida real estate agent yet they choose to work with me, and perhaps the fact that I don’t already know them is what is appealing. People need to come to grips with the fact that homes are upside down, incomes have been reduced, living expenses have increased, etc. and it is easier to talk with a realtor-stranger who you know is an expert than it is to bear your soul to the local realtor-agent-friend whose kid plays on the same little league team as your own.
A few minutes before writing this article I stepped outside. It was around 9 pm Monday night. A creepy pick up truck was parked in front of my neighbor’s house. I hadn’t seen it before and it was parked in an odd way blocking the driveway. A few more steps outside and the pick up truck starts its engine and drives away. The first thought that came to my mind was that my neighbor has just been served his foreclosure complaint by the driver of the creepy pick up truck. After that I started thinking about how many people are going through this exact situation right now – just served with a Florida foreclosure complaint by a process server. And finally, I wrote this article.
February 19, 2012
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I live, breathe, eat, drink and occasionally sleep in what is considered by experts to be the heart of our Nation’s foreclosure crisis. I am a Florida licensed real estate agent whose practice consists solely of representing sellers in Florida on short sale transactions. Frequently, I am asked the following question by Florida homeowners: “A foreclosure has been filed against me, should I hire an attorney?” My answer is always: “You can, that’s up to you.”
I deal with Florida foreclosure defense lawyers every day. They represent the Florida homeowner in defending the foreclosure action through the courts and then refer their clients to me to handle the short sale. I deal with the bank on behalf of the homeowner, get the approval of the shorting lender typically as a full release of liability with $3,000 paid to the seller by the bank for relocation costs and we close the file. As a result of the successful HAFA short sale of the property, the lis pendens is discharged, the foreclosure case is dismissed, and the seller/borrower is forever free of this monstrous mortgage debt. The Florida attorney in that scenario filed a notice of appearance and an answer to the foreclosure complaint and that’s it – case closed – full settlement.
I received a call after 8 PM on Friday night from a Florida foreclosure defense lawyer working late. I didn’t get the message until Saturday morning. It looked like he was playing catch up on his files and was asking about a specific file that we were working on together – he was handling the foreclosure defense for a client in Clearwater, Florida and I was handling the short sale for the same clients. He wanted to know the status of the short sale. Below is the email that I sent to his paralegal in reply:
Hey *paralegal name and attorney name redacted*,
*attorney name redacted* left a message for me at 8:17 pm last night asking for the status of *seller name redacted*. *seller name redcated* was a HAFA short sale that closed on 12-30-2011 in your office. The HUD1 is attached and there was a $900 attorney fee included for *attorney name redacted* on line # 1304.
Bear in mind that he was asking about the status of this file on 2-17-2012 and he was unaware that the file closed on 12-30-2011. Some law offices are able to handle real estate closings so I sent the title work back to the law office and also had the shorting lender pick up an extra $900 tab for attorney fees for him. I had sent him the HAFA short sale approval earlier that month and we had the closing in his office so it was a surprise that he was unaware that the closing took place.
But I’m getting a little sidetracked away from my point. My point is that there has to be an end game for Florida homeowners in all of this. Florida homes mortgaged prior to 2009 are in large part underwater and many that I deal with are severely underwater by $50,000 to $100,000 or more. What is the goal in all of this? To lengthen the amount of time that the foreclosure will take to complete? And then what? Be left with a Florida deficiency judgment and/or continued collection on the mortgage deficiency for up to 20 more years? Is the goal to modify the loan? When lenders modify mortgage loans they typically make them temporary and do not modify the principal. This means that the lender can recall the loan and send you a past due bill at any time whether months or years later. I have repeatedly encountered Florida homeowners who have been told –by no fault of their own – that the lender decided that they did not qualify for the loan mod over a year after having being given the mod and now the lender demanded all of the past due amounts at once.
The fact is that we are in the throes of a housing crisis and it is going to be a slow crawl out of all of this mess. The foreclosure programs such as HAFA (the Home Affordable Foreclosure Alternatives) which allow a home to be short sold and require the bank to provide a full release of liability and give $3,000 to the home seller at closing are set to expire at the end of this year. Also, there are some dire tax consequences written in the IRS code for those who wait until after 2012 to complete a short sale. This means the time to settle the debt and get out of it without having to repay the deficiency or taxes on the debt forgiveness to the IRS is now, this year. Those who wait it out may find that these programs no longer exist come 2013.
This article is not to say that hiring an attorney won’t help the homeowner. Other than the cost, it certainly won’t hurt. And I don’t know your situation – maybe you have equity? Maybe you made all of your payments on time and were never late? Or maybe you came home one night and there was a creepy process server sitting in your driveway who handed you a Florida foreclosure complaint and the first thing that came to mind was: I should hire an attorney. So, I get asked that question a lot – a foreclosure has been filed against you and you want to know if you should hire an attorney? My answer: You can, that’s up to you. I will help you with the short sale.
Do you like what you read, then contact me for help with your Florida Short Sale
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