Wednesday, July 23, 2008
Now I Need a Short Sale!
Dear Sue
I read your article last week about the poor lady’s “bad upside down loan.” I am in a similar situation. I think I had better consider a short sale. I would like to know how to get started.
I admit that I am in this mess because I signed a bogus loan application reporting more income than I really had. Because I was able to get a loan that I didn’t qualify for, I thought my loan officer was an angel. I should have known better! Today with payments more than I can afford, I think my loan officer was the devil incarnate!
How could the country have gotten in this mess and what can I do about getting a short sale now?
Sad Sam
Dear Sam
A little over ten years ago the mortgage industry came out with “designer loans.” One of those loans was a 125% loan to value. Yes, the lender would make a 100% loan and pay the borrower an additional 25% of the property’s value as an incentive. As far-fetched as my thoughts seemed at the time, I thought it was a plot to have the government own a good part of our nation’s real estate.
Today that doesn’t seem so far out. The current government involvement with the mortgage giants, Fanny Mae and Freddie Mac, along with a measure, if passed, will get taxpayers involved in the mortgage business whether we like it or not. The extent of the government’s involvement is yet to be seen.
You ask what caused all this? I believe that lack of regulation and supervision in the mortgage industry, non-disclosure, greed and fraud are the culprits in this debacle.
This won't make me popular, but it is also my opinion that allowing the same person who sells the property to lend on the property is bad news. The realtor and the lender should never be one and the same. Unless there is owner financing I believe it is a conflict of interest.
I also want people to know that everything happening right now is the “lagging edge” not the “leading edge” of the mortgage fallout. The banks are experiencing the late consequences of all the bad loans.
I also believe that our situation is compounded by fear. If we don’t panic we will soon come to another equilibrium. At this moment it is more of a confidence crisis than a financial one.
If you want to start the short sale process, it is important to know that the requirements differ from lender to lender. New rules are being written as we speak. The first step is to engage a real estate agent experienced in short sales. Next, contact the loss mitigation department of your bank. That would be the person or entity that sends you your mortgage statements. You will be required to complete a “work out” or short sale package.
The package includes a request for a hardship letter, financial statements and a list of all of your expenses. They will also want W-2’s, two paycheck stubs and your previous month’s bank statement. You will also be required to give written authorization to the lender to speak with your agent.
The bank will then request a “BPO” (broker price opinion) that estimates the value of the property. The BPO’s are done by impartial Realtors or appraisers who are an “arm’s length” away from the transaction.
The package, after being assembled, is taken to a review committee where it is approved or disapproved.
Your agent and lender will guide you through the process once you have made contact. It sounds like in your case that a short sale is a matter of good Home $$s and Sense.
I read your article last week about the poor lady’s “bad upside down loan.” I am in a similar situation. I think I had better consider a short sale. I would like to know how to get started.
I admit that I am in this mess because I signed a bogus loan application reporting more income than I really had. Because I was able to get a loan that I didn’t qualify for, I thought my loan officer was an angel. I should have known better! Today with payments more than I can afford, I think my loan officer was the devil incarnate!
How could the country have gotten in this mess and what can I do about getting a short sale now?
Sad Sam
Dear Sam
A little over ten years ago the mortgage industry came out with “designer loans.” One of those loans was a 125% loan to value. Yes, the lender would make a 100% loan and pay the borrower an additional 25% of the property’s value as an incentive. As far-fetched as my thoughts seemed at the time, I thought it was a plot to have the government own a good part of our nation’s real estate.
Today that doesn’t seem so far out. The current government involvement with the mortgage giants, Fanny Mae and Freddie Mac, along with a measure, if passed, will get taxpayers involved in the mortgage business whether we like it or not. The extent of the government’s involvement is yet to be seen.
You ask what caused all this? I believe that lack of regulation and supervision in the mortgage industry, non-disclosure, greed and fraud are the culprits in this debacle.
This won't make me popular, but it is also my opinion that allowing the same person who sells the property to lend on the property is bad news. The realtor and the lender should never be one and the same. Unless there is owner financing I believe it is a conflict of interest.
I also want people to know that everything happening right now is the “lagging edge” not the “leading edge” of the mortgage fallout. The banks are experiencing the late consequences of all the bad loans.
I also believe that our situation is compounded by fear. If we don’t panic we will soon come to another equilibrium. At this moment it is more of a confidence crisis than a financial one.
If you want to start the short sale process, it is important to know that the requirements differ from lender to lender. New rules are being written as we speak. The first step is to engage a real estate agent experienced in short sales. Next, contact the loss mitigation department of your bank. That would be the person or entity that sends you your mortgage statements. You will be required to complete a “work out” or short sale package.
The package includes a request for a hardship letter, financial statements and a list of all of your expenses. They will also want W-2’s, two paycheck stubs and your previous month’s bank statement. You will also be required to give written authorization to the lender to speak with your agent.
The bank will then request a “BPO” (broker price opinion) that estimates the value of the property. The BPO’s are done by impartial Realtors or appraisers who are an “arm’s length” away from the transaction.
The package, after being assembled, is taken to a review committee where it is approved or disapproved.
Your agent and lender will guide you through the process once you have made contact. It sounds like in your case that a short sale is a matter of good Home $$s and Sense.
# posted by Sue Thompson @ 10:12 AM 
Subscribe to Posts [Atom]
