July 4, 2012

Independence From Debt

The Declaration of Independence was the document that announced to the world the American colonies status as free and independent states.  It was adopted in Congress on July 4, 1776.  The final sentence reads: “And for the support of this declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our fortunes and our sacred honor”.


I want the best for everyone everywhere and this article won’t travel down a political road, other than to make a comment that we, as a people, have become complacent.  I’m reminded of these words: “But many [that are] first shall be last; and the last first”.  I’ll now turn this article’s steering wheel into the Personal Finance Path.  Woah!  Look out!  It’s a rocky road and for some there’s a roadblock up ahead.  Fortunately, with a little maneuvering, the roadblock can be avoided altogether.  And don’t ask me about the cliff – we’ll get to that later.

The Broken Credit Blog is thankful for the many positive responses from readers who’ve shared true to life experiences of how they’ve triumphed over adversity.  It’s the goal of this site to be a positive voice in the marketplace sharing free information to anyone desiring credit score improvement.  This month marks our eighteenth-month on the internet and we’ve recorded over two million hits in one month.  We are at the same time, amazed and thankful – it keeps us writing and working for you.

In my view, personal finances are similar to personal fitness.  I regularly see people working out at the gym with a personal trainer.  The same trainer may be working out with one person on one day and another on another day.  Regardless of that person’s fitness level, the trainer’s goal is to improve that individual at that time.  It doesn’t matter how out-of-shape or how Olympic-world-champion someone might be – the trainer’s goal is to assist that person with improvement.  Such is the same as the Broken Credit Blog’s role.

So, wherever you are, and whatever your station in life, this trainer wants to see improvement in you.  I hope everyone enjoys their 4th of July and remembers what prompted the celebration in the first place.  Now then, after everyone has finished eating hamburgers and hotdogs, it’s time to start working out.

Hey you with the 672 FICO, give me eight more reps!

June 18, 2012

HAFA Short Sale Credit Report

Filed under: Credit Reports,Short Sale

There is something that the readers of the Broken Credit Blog will learn today that hasn’t been posted anywhere on the internet.  Of course, once it’s posted by yours truly it will then become fodder for so-called pseudo credit experts to post on their blogs but I say so be it!  The accurate, correct, credit reporting information is what is most important – accurate, correct, credit reporting – now there’s an oxymoron!

OK, enough with the suspense.  There’s been a change to non-GSE HAFA short sales that went into effect this month.  Quoting from HAFA Supplemental Directive 12-02 (page 19):

The requirements in Section 11.2, Chapter IV of the Handbook related to credit bureau reporting of HAFA transactions are amended as follows:

If the real estate is sold for les than the full balance owed and the deficiency balance is forgiven, report the following Base Segment fields as specified:

Account Status Code = 13 (Paid or closed account/zero balance) or 65 (Account paid in full/a foreclosure was started), as applicable.

Do you know what that means Broken Credit Bloggers?  That means that a short sale under HAFA guideleines for non-GSE loans is required to appear on a credit report the same as a full sale.  Did you do a short sale they will ask in the future?  Shhhhhh!  We’ll keep it a secret.

This has been a public service announcement from the Broken Credit Blog.

We now return to our previously scheduled programming.

April 16, 2012

Sorry Daughter But No Pay No Stay

I hold a private note and deed of trust on a house in Calif.  If I foreclose on that note, does that effect the trustors’ credit(it’s my daughter going thru divorce)?

John (more…)

April 14, 2012

Debt Collection after a 1099-C

First of all I want to say you have an excellent and very informative web site.  I have a question that I think will stump you. 

Let’s assume I have a credit card with a credit card company.  Let’s also assume that I quit paying on this account and the credit card company reports that loss on their taxes as most businesses do.

If a business would write that account off and the credit was given by the IRS on the proper form then in my opinion there is no debt anymore.  If anybody owns it the government does.

My question is this.  If the credit card company writes it off as a loss how can they turn around and sell that account to a Junk Debt Buyer?  Just to make this more interesting I will ask a second question.  If the account was written off how can the Junk Debt Buyer purchase anything that really no longer exists? 

I personally don’t know of any company after a debt has been written off that will even attempt to collect it at a future date.

It just appears to me that the credit card company is trying to have it both ways.  First claiming the loss on taxes.  And secondly then turning around and selling something they really don’t have the right to sell. 

Can I please take my star now or must I continue to try and Stump The Experts.

Thanks again for a really great web site.

Robert (more…)

April 13, 2012

Two Florida Mortgages, Ten Headaches, One Answer, One Realtor

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?

Mike (more…)

April 10, 2012

Court Spanks Clandestine Wells Fargo With $3.1M Damages

A federal judge who has fiercely criticized how big banks service home loans is fed up with Wells Fargo.

In a scathing opinion issued last week, Elizabeth Magner, a federal bankruptcy judge in the Eastern District of Louisiana, characterized as “highly reprehensible” Wells Fargo’s behavior over more than five years of litigation with a single homeowner and ordered the bank to pay the New Orleans man a whopping $3.1 million in punitive damages, one of the biggest fines ever for mortgage servicing misconduct.

“Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed,” Magner writes. “But perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods.”

The opinion reflects Magner’s disgust with tactics that Wells Fargo used to fight the case — and perhaps frustration with an appeals court ruling in a separate, but similar case, that overturned her order that would have forced Wells Fargo to audit and provide a full accounting for more than 400 home loans in her jurisdiction.

As The Huffington Post previously reported in a story co-published with The Center for Public Integrity, sources familiar with the preliminary findings said that the bank made costly accounting errors in the administration of practically all of those loans. (more…)

April 8, 2012

Banksters Eyeballing My 401k

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?

Scott (more…)

March 5, 2012

St Petersburg Florida Process Server

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.

March 4, 2012

VA Loan Short Sale

Filed under: Short Sale,VA Loan

A property secured by a Veteran’s Administration (VA) mortgage loan may be short sold.  The VA refers to a short sale as a ‘compromise sale’.  The program requires that “[t]he servicer must waive any amount on the loan not covered by the sum of the VA guaranty claim amount and the greater of the net value or sale proceeds” which in layman terms means that they have to provide the seller/borrower with a full release of liability.  They can not pursue the borrower for the deficiency.

If this news about the VA short sale program (the compromise sale) was not enough to make an upside-down VA home mortgage seller happy then how about $1,500?  That’s right – for a limited time only (actually through 2013) the VA pays the seller/borrower $1,500 upon closing the VA short sale.

The information in this article summarizes the Department of Veterans Affairs Circular 26-11-1 which is dated January 6, 2011 and is slated for rescission by January 1, 2014.

February 19, 2012

Foreclosure Filed: Should I Hire An Attorney?

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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