Deed in Lieu of Foreclosure and Short Sale Rules and Policies

How informed are you about a deed in lieu of foreclosure or a short sale?? If you are going through foreclosure or you are late on payments, the following legal rules and procedures will help you determine the best option.

According to eHow Contributor, Constitution Guru, there are five important rules and procedures a homeowner must know.

Homefront Realty experts give their take at the end of each step.

 

What do you need to know?

1.    There’s No Legal Requirement

•  Florida mortgage lenders are never required to accept a foreclosure avoidance alternative, such as a deed in lieu of foreclosure or a short sale. Likewise, the borrowers are not legally required to enter into the above arrangements.  However, according to Constitution Guru, Florida law allows both arrangements if the mortgage lender and the borrower agree to it. It is highly important that the homeowner always explores his/her options before making a decision that would affect them for many years.

2.    What is a Judicial Foreclosure?

•  A mortgage lender in Florida can foreclose in only one way, and that is through a lawsuit called a Judicial Foreclosure.  A judicial mortgage foreclosure is a lawsuit filed with and heard before a Florida state court judge. The judge can order a sheriff’s sale of the property, which is a public auction where the Sheriff sells the property to the highest bidder.

• According to our HomeFront Realty Experts: This is not the end for the homeowner, but the beginning of a whole new set of problems. The lender can come after the homeowners for a deficiency for up to 20 years after a foreclosure. When the homeowner gets back on their feet, even after years, they will always have to be looking over their shoulder wondering if the bank is going to come after them.

• Best Choice: A short sale is a sale of a property in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank’s loss mitigation or workout department. With a short sale, you can sell the property and get a fresh start.

 3. Short Sale Options

•  Foreclosure can be an expensive process for Florida mortgage lenders. Meeting the Florida statutes requirements is extremely time consuming and costly. They require a strict compliance with notices and procedural requirements. To add, a lawsuit for judicial foreclosure can result in large legal fees. Therefore, lenders may be willing to accept a short sale instead of dealing with the expense of foreclosure. A short sale results when the lender agrees to accept a reduced payment on the mortgage loan. That allows the homeowner to sell the home for a price that is less than the amount otherwise due to the mortgage lender. The mortgage lender simply forgives the difference.

• Our Take: According to the HomeFront Realty experts, the lender does not always forgive the difference. Therefore, you need a team of experts like ours to do the negotiations with the banks. We have buyers ready to make offers. They stand by their word. No last minute walk aways!

4.    Deed in Lieu?

• A deed in lieu of foreclosure is a voluntary transfer of title from the homeowner to the mortgage lender in exchange for the mortgage lender forgiving the balance due on the mortgage loan. The primary motivation for a lender accepting a deed in lieu of foreclosure is to avoid the expense of holding a foreclosure sale. The Florida state laws allow mortgage lenders to accept a short sale or deed in lieu at anytime before the foreclosure sale actually occurs.

• Our Advice: This option is more harmful to your credit report. A short sale will affect your credit report a lot less than the deed in lieu.

5.    Warning

•  The Florida law does not require lenders to forgive the unpaid balance on a short sale or a deed in lieu of foreclosure. To explain, a bank may agree to release its mortgage lien form your property allowing you to sell or transfer the property. However, the bank may not fully release you from the obligation to repay the mortgage. Note: prior to agreeing to a deed in lieu of foreclosure or a short sale you should clarify in writing whether you have to repay the “forgiven” balance on the mortgage.

• WE CAN HELP! We negotiate the best possible settlement for the homeowner, and we are very successful. We can get the homeowner released from all the future mortgage obligations. So far, we have been 100 percent successful at getting homeowners a FULL SATISFACTION at closing.  Our process will give the homeowner the best possible out come.

Article Source: Article by Constitution Guru, Ehow.com 

What sets us apart from others!

Foreclosures have gone mainstream!

It’s mind-blowing, isn’t it?  It’s sad, but true. We’re trying to do something about it. We are fighting back!

We’re getting people out of “limbo” allowing them to rebuild their financial lives.  Often times, people go into foreclosure because attorneys push them into bankruptcy or they hire realtors who claim to be experts and wait for months to get an offer on their homes.

In contrast, we at HomeFront Realty do business utterly different from the traditional real estate companies. We solve today’s housing mess. We are “the go to company” for homeowners in distressed situations. We have the experience, the knowledge, and the resources to get the homeowners out of the foreclosure with the least amount of scrapes and bruises with the best possible outcome…at NO CHARGE to the homeowner.

How do we accomplish that? We have realtors, negotiators and attorneys, all under one roof, to ensure everything goes smoothly during the short sale process. We have built up quite a list of buyers for almost every property type. This really helps ensure the property will get sold in the shortest amount of time.

How does it work? In it’s simplest form; the buyers commission HomeFront Realty to find properties. HomeFront Realty works directly with TLC Property Solutions, which negotiates with the banks trying for a full loan satisfaction. TLC Property Solutions strictly follows the current rules and regulations during the process. The buyers are always ready to make offers on short sales and they always stick around until the very end. (no last minute walk-aways!)

The traditional realtors are a thing of the past. Back in the day, realtors had the same interest as the home sellers. The homeowners sold their homes for the highest amount the market allowed, and the realtor got more commission in their pockets.  In a foreclosure situation, the homeowners’ interests change. Their goal is to get the property sold with little to NO DEFICIENCY or recourse from the bank.  Many realtors are encouraging their sellers to reject offers for being too low… this makes no sense.

We succeed because we really care about the people. Members of our team have been through the process, so they really understand what homeowners are going through. We don’t just talk the talk, we walk the walk!

We did not make anything up. Our clients tell us everyday.

“Ahh, what a relief… HomeFront Realty took a load off of me,” Paula from Tampa said. “They were there when I needed them the most.”

“Thank you for your professionalism, honesty and attention to detail,” Carolyn from St. Pete said.

“Thank you for selling my house, and getting me out of this jam,” Scott from Palm Harbor said.

Watch the latest testimonial video from our YouTube Channel.

So, don’t hesitate. Visit the HomeFront Realty website and contact us right away.

Contact Info: 727-641-4444

What is a Short Sale?

A short sale is the process by which a homeowner can sell a house for less money than actually owed on the mortgage(s). There are alternatives to bankruptcy or foreclosure proceedings for homeowners/borrowers who can no longer afford to keep mortgage payments current. One of those options is called a “short sale.” Sometimes, to avoid going through the costs of foreclosure, a lender will sanction a short sale by allowing a homeowner to sell (allowing a buyer to purchase) the home for less than the mortgage balance while the home is in pre-foreclosure stage.

Sample steps of a short sale:

• Seller signs a listing agreement with a real estate agent subject to selling as a short sale with third-party approval.

• The owner, or if the owner has an agent, finds a buyer who makes an offer for less than the amount of the mortgage.

• Seller accepts the buyer’s purchase offer subject to the lender’s approval.

• Seller’s lender accepts the buyer’s purchase offer.

• Transaction closes when the buyer delivers the funds, the lender releases the lien and the seller delivers the deed.

The decline in market value of a property below the total debt owed on that property does not automatically qualify a homeowner for a short sale. Banks take several factors into consideration when determining if it will allow for a short sale to occur.

Qualifications for a Short Sale

• The Home’s Market Value Has Dropped. Comparable sales must substantiate that the home is worth less than the unpaid balance

due the lender. This unpaid balance may include a prepayment penalty.

• The Mortgage is in or Near Default Status. It used to be that lenders would not consider a short sale if the payments were current, but in many cases, lenders realize that other factors

contribute to a potential default making them eager to head off future problems.

• The Homeowner Has Fallen on Hard Times. The homeowner must submit a letter of hardship that explains why they can not pay the difference due upon sale, including why the homeowner has or will stop making the monthly payments.Examples of hardship are:

•  Unemployment
• Divorce
•  Medical emergency/sudden illness
• Bankruptcy
•  Death
• Other unforeseen circumstances that caused financial hardship

• The Homeowner Has No Assets. The lender will probably want to see a copy of the owner’s tax returns and/or a financial statement. If the lender discovers assets, the lender may not grant the short sale because the lender will feel that the homeowner has the ability to pay the shorted difference. Homeowners with assets may still be granted a short sale but could be required to pay back the shortfall.

Short Sale Consequences

A short sale is dependent on a buyer making an offer to purchase. If you do not receive an offer, you will not qualify for a short sale. So even if you meet all the other criteria, it is possible that no one will buy the short sale. It is also dependent on the lender accepting the buyer’s offer. If the lender rejects the offer, a short sale will not take place.

• Tax Consequences. If the lender agrees to the short sale, the lender may possess the right to issue you a 1099 for the shorted difference, due to a provision in the IRS code about debt forgiveness. Many situations are exempt from debt forgiveness, according to the Mortgage Forgiveness Debt Relief Act of 2007. You should speak to a real estate lawyer and a tax accountant to determine the amount of short sale tax consequences, and whether you can afford to pay those taxes, if any.

• Blemished Credit Report. A short sale will show up on your credit report. It’s a pre-foreclosure that has been redeemed. Short sales affect credit ratings. While the damage to your credit report maynot seem as bad as a foreclosure to you, creditors may not make the distinction. Always seek legal counsel before attempting to pursue a short sale. A real estate agent cannot give you legal advice.

Article from: http://phoenix.gov/NSD/fshortw.pdf

Welcome to the HomeFront Realty Blog!

Hello everyone!

Welcome to the HomeFront Realty blog. Starting today HomeFront Realty will start posting helpful articles about Real Estate, especially short sales and foreclosures. We will have lots of great information.

Since this is our first blog we want to introduce you to our amazing staff.

Thank you for visiting us! Hope you come back again soon!

Kevin Richards

President