The New Face of Short Sales: Part 1

Dear KCM Community,

Our next guest blogger, Phil Tesoriero, is a Short Sale expert.  He will be putting out his Short Sale trilogy, “The New Face of Short Sales”, that will take us through three separate parts of the new Short Sale process.

The KCM Crew, along with its lead author, Steve Harney, believe that Short Sales will be crucial this coming year.  Phil Tesoriero is a leader in the field, and we are fortunate that he has agreed to share with us his knowledge and passion on the subject.  For more information on Phil and his work go to http://thebigforeclosuresecret.com/.

-The KCM Crew

The New Face of Short Sales: Part 1 of 3

By Phil Tesoriero

Click on the "Rescued Home" for Short Sale Info.

Many changes have arrived in the processing of short sales. Recently the Treasury department published new short sale guidelines which they refer to as the Home Affordable Foreclosure Alternatives, or HAFA. It is important to discuss the process, manage expectations and consider all outcomes. The goal of course, is to prepare and submit an offer that will be approved so you can resolve your financial challenges related to your home.

The first thing you need to consider is what conditions need to exist to engage in a short sale. By definition a short sale is when the unpaid balance of liens[1.1] against your property exceeds the market value. This is also referred to as being “upside down” or “underwater” . You will also need to demonstrate the inability to make your monthly mortgage payment, and prove a significant level of hardship. Acceptable hardships are generally broken down into 5 categories:

• Death
• Illness
• Divorce
• Involuntary loss of employment/income
• Natural disaster

That is the “old” definition; and it still holds true.  However, there is more to it now than ever before. Lenders and servicers who are now processing short sales are in agreement with the new Treasury guidelines, which are scheduled to begin on April 5, 2010.  These guidelines require that a loan modification was attempted unsuccessfully, or you did not qualify under the HAMP[1.2] modification standards. If these conditions are not met, there is a good chance you will not qualify under the HAFA program

Contrary to popular belief, it is not necessary to be late on your mortgage as long as a default is reasonably foreseeable. It is also important for you to establish the following as well:

1) Did you get this loan prior to January 1, 2009?

2) Is it a first lien?

3) Is the current balance on the loan less than $729,750?

It is important to speak to your servicing company in order to determine if they will approve the short sale.  The good news is once this is done, they have 30 days to note your file with the outcome of the request.

[1.1] The right to take another’s property if an obligation is not discharged

[1.2] For more information on Home Affordable Modification Program (HAMP) https://www.hmpadmin.com/portal/index.html

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Phil has been actively teaching on defaulted real estate for the past 3 1/2 years.  He has written and teaches the only class in the country approved by NAR to satisfy the prerequisites for receiving SFR certification.  He is also one of only a few speakers NAR acknowledges to speak on the topics of Short Sales and REOs.  As a former New York City firefighter, Phil knows what it is like to help a family in need.  He extends that same helping hand when rescuing families from foreclosure.

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For more information, click on the Short Sale tab at the top of the page.

Tagged as: Short Sales & Foreclosures