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As the Apple Valley Real Estate boom continued through the early 2000's, money became more and more available to less and less qualified buyers. No meaningful oversite was given to the appraisal process, and home values were artificially inflated by increased demand from newly qualifed first time home buyers, second home and vacation home buyers, and investors. New risky loan policies were given the green light by a Congress that wanted to increase home ownership to historic levels. Housing was talked about as a right by some legislators, touted as a way to reduce crime by others, and ignored by the rest. With an unsubstainable increase in prices for Apple Valley Real Estate during the first six years of the 2000's, tied with the collaspe of subprime mortgages and low teaser rates in the spring of 2007, the real estate market imploded on itself. The result is either a disaster or huge opportunity for buyers and sellers of Apple Valley Real Estate! I know this seems impossible that both buyers and sellers could have an opportunity, but let me explain. If you are a seller of Apple Valley Real Estate then you are going to take a beating when you sell your home. Luckily, most sellers are upsizing or moving sideways. If you are upsizing and buying more expensive Apple Valley Real Estate then you will be in great shape. If you are selling a 200,000 dollar Apple Valley home, you have lost 25-35% of its value. This means you have lost $50,000 to $70,000 in this example. If you are moving up to Apple Valley Real Estate worth $400,000, they have lost the same 25%-35% in value, which means you are buying for $100,000 to $140,000 less, therefore you've made $50,000 to $70,000. They are upsizing to $800,000 so they will recoup their loss and make up to $140,000 once they buy a bigger home, etc. If you are moving sideways, the money you lose on your sale will be saved on your Apple Valley Real Estate purchase. The 25%-35% that you lost on your sale will be made up when you buy your next home that is selling for 25%-35% less. If you are buying your first home, then you have won the lottery in Apple Valley Real Estate and may not know it. You will be buying at a 25% to 35% discount with rates that are the lowest in history. You also have had the federal government giving you $8,000 dollars as a buyer who has not owned a home in three years or $6500 if you are buying and have owned your home for five of the last eight years. Now, if you are downsizing or selling and not buying new real estate somewhere, you are not going to be very happy. You'll still be receiving any appreciation that occured in the 70's, 80's and 90's, so that may still mean you are ok. If you bought after 2001, you may owe more than your home is worth. If you bought and put 20% or more down, you may have lost a good chunk of that. I am more than willing to do a free market analysis for anyone in Minnesota. I enjoy doing it, plus it gives me a great chance to meet future clients. Feel free to use the free home valuation tool above. It is a free tool for Apple Valley buyers and Apple Valley Real Estate sellers. No Apple Valley Blog or Apple Valley Real Estate Information would be complete without Apple Valley Short Sale Real Estate information so I have included that below. All of the information provided is gathered from numerous sources. If you are in need of help, contact us for a private meeting about your particular situation. Some provisions may not be applicable in all states and may change daily based on new laws and interpretations. This infomation is provided as a public service to help troubled borrowers and lenders minimize the economic and emotional damage that foreclosures have had on society. Legal advice should be obtained from an attorney. I. Lender's Options Upon Borrower's Loan Default Q 1. What options does a lender have on a debt secured by real Apple Valley property if the borrower does not make the payments on the loan? Answer: Depending on the situation, a lender may consider one of the following: A lender may foreclose on the defaulting borrower's real property which secures the loan. There are two types of "foreclosures" available to a lender: a trustee's (sherriff's) sale and a judicial foreclosure. Technically, a sherriff's (trustee's) sale is not a "foreclosure" but the term has been used for both a trustee's sale as well as a judicial foreclosure. For certain loans, a lender has no choice and must conduct a sherriff's(trustee's) sale. With a sherriff's(trustee's sale), a lender cannot go after a deficiency judgment. A deficiency occurs when the current market value of the property is less than the loan on the property. See Questions 3 and 4 for more details. Q 2. What other options may the lender consider instead of foreclosure when the borrower is delinquent? Answer: Loan Workout or Short Payoff/Short Sale Basically, a loan workout is any resolution of a problem loan between the lender and borrower that modifies the original loan agreement. Some of these options include forbearance (e.g. forgiving a portion of the debt or late charges); deferment; renegotiating interest rate, monthly payment amount, principal amount, maturity date; or the enforcement of an acceleration clause in the loan. The lender may also be able to pursue "guarantors" of the debt who have signed written guarantee agreements (not including the borrowers). *: With a Apple Valley short payoff, the lender accepts less than the remaining mortgage amount as full payment of the loan. The property need not be sold. *Note: Some lenders do not differentiate between a Apple Valley short sale and a Apple Valley short payoff. Q 3. What is a deficiency judgment? Answer: A deficiency judgment is a judgment obtained by the lender in court against the borrower for the difference between the unpaid balance of the secured debt and the amount produced by sale or the fair market value of the security, whichever is greater, in a judicial foreclosure. A lender may obtain a deficiency judgment only with a judicial foreclosure. With a sherriff's(trustee's) sale foreclosure, the lender cannot go after a deficiency judgment. See Question 4 for more details. Q 4. Can a real estate lender obtain a deficiency judgment against a defaulting borrower following foreclosure? Answer: It depends. Some states have "anti-deficiency statutes" that protect certain borrowers from deficiency judgments. Under those circumstances, a lender would opt for a sherriff's (trustee's) sale foreclosure which is quicker and less expensive than a judicial foreclosure. A sherriff's (trustee's) sale foreclosure does not involve the courts. Generally, there are five situations in which a deficiency judgment is prohibited.: 1) Purchase Money 2) Seller Carryback. 3) Trustee’s Sale. 4) 3 Month Time Limit. 5) Fair Value Limitations. When a deficiency judgment is permitted, the lender may obtain one only following a judicial foreclosure, or when the security has become valueless (such as when security for a second trust deed loan is wiped out when the first trust deed lender completes its foreclosure). Holders of a junior deed of trust (second, third, etc.) should note that if the "wiped-out" junior lien is not purchase money or seller carryback, then the junior lien holder may sue on the note and the borrower on the junior loan may be personally liable. Q 5. Can a lender avoid the foreclosure process and just sue the borrower on the note (i.e., treat it as an unsecured note)? Answer: No. A lender cannot sue on a debt secured by a mortgage or trust deed except for a judicial foreclosure. This is called the "one action rule" or "one form of action rule." One exception to this rule is if the security for the loan has become "valueless" after the lender's security interest was recorded (e.g., a "wiped out" junior lien holder). In this case, the lender can sue directly on the debt (note) unless the borrower's loan falls into category 1) or 2) in Question 4. A deficiency judgment is limited by the difference between the amount of the indebtedness and the fair market value of the property, unless the actual sale price exceeds that value. An action for a deficiency judgment must be brought within 3 months from the time of judicially-ordered sale. A lender may not pursue a deficiency judgment against the borrower should the lender opt to foreclose by a trustee's sale foreclosure (a non-judicial action). If the purchase money loan for any type of real property is financed by the seller and secured by that same property, the lender/seller may not obtain a deficiency judgment against the defaulting borrower/buyer. . If the loan is obtained to purchase a residential 1-4 unit dwelling all or part of which is owner occupied and the loan is secured by that property, the lender may not obtain a deficiency judgment against the defaulting borrower. This loan is entitled to "purchase money" protection. Note, however, that should the buyer refinance the home, the new loan is no longer "purchase money." Thus, the buyer would lose the protection against a deficiency judgment in the event of a default Q 6. Why would a lender agree to accept a Apple Valley short sale? Answer: A lender will typically evaluate the financial situation of the borrower as well as current market conditions to determine whether or not to agree to a short sale. It is really a business decision for the lender to determine whether it would receive more money by accepting the Apple Valley short sale, or completing a foreclosure, reselling the property, and pursuing personal liability (i.e., deficiency judgment against the borrower and/or claims against guarantors, for loans on which those remedies are available.) Lenders may have ample incentive to negotiate a Apple Valley short sale with a distressed borrower. For example, should the lender take back a property pursuant to a foreclosure sale, the lender would become responsible for a variety of costs, including property maintenance, utilities, HOA fees, and might risk destruction of the property by vandalism. Furthermore, lender-owned properties (REO) may take a long time to sell, in part because so many REO properties are now for sale. II. Effect On Borrowers of Apple Valley Short Sales Q 7. Does a Apple Valley short sale adversely affect a defaulting borrower's credit rating? Answer: Yes, but the amount and length of damage is significantly less then a foreclosure. Lenders will report the Apple Valley short sale as being settled for less than the full balance. This would show up on the borrower's credit report as a negative mark for up to seven years. It is not reported and recorded the same as a Apple Valley Foreclosure which allows the Apple Valley seller other options to remove the short sale from their credit report. Q 8. Suppose the borrower is late with his/her mortgage payments, causing the lender to begin the foreclosure process by filing a notice of default. Before the Apple Valley foreclosure sale occurs, the borrower pays the lender what is owed on the note. Could these activities appear on the borrower's credit report? Answer: Yes, it is possible for the lender to report any late payments. The lender could also report foreclosure proceedings started, etc. Yes. The lender can report to a credit bureau receipt of any payments made 30, 60, 90 or more days after their due date. This may appear on a borrower's credit report as a "foreclosure in process," "foreclosure proceedings," "current was 30," or in some other way. Any such terms, or other similar reporting comments, harm that individual's overall credit rating. Q 9. Is the method by which lenders report a Apple Valley short sale a negotiable item? Answer: Yes, but it varies by negotiator used and lender. The Apple Valley short sale is usually reported to credit reporting agencies as settled for less than the full balance. However, a borrower may try to negotiate this at the time the Apple Valley short sale is being arranged. Q 10. Must a real estate property disclosure statement be given to a buyer in a Apple Valley short sale transaction? Answer: Yes, all Apple Valley residential short sales require the owner to disclose any issues that are know. A seller can still sell the home "as-is" but needs to disclose all know isssues. Q 11. Must other disclosures be given to a buyer (or seller) pursuant to a Apple Valley short sale? Answer: Yes, your real estate agent should give you a list of disclosures that are required for your property Q 12. Suppose a distressed seller enters into a contract to sell his/her home to a buyer pursuant to a Apple Valley short sale. Should the listing agent inform the lender if and when other offers are made on the property? Answer: Only one purchase agreement can be signed by a seller of real estate. The seller can sign other offers as backup offers but most negotiators believe that it is not in the sellers best interest to submit more then one offer to the lender. Q 13. Should a Apple Valley listing agent working with a distressed seller attempt to negotiate a future listing agreement with the lender? Answer: No, this would be a conflict of interest with the current seller. Listing agents working with distressed sellers owe them a fiduciary duty. Since in a Apple Valley short sale situation a lender could choose to foreclose on the seller, the lender's interests are potentially adverse to the seller's interests. Attempting to negotiate a future listing agreement with the lender raises the issues of "to whom is the agent's loyalty devoted" and "has the agent violated the fiduciary duty he/she owes the seller." The safer practice is to avoid putting oneself in such a position. IV. Other Issues Q 14. Are there any tax effects of a Apple Valley short sale? Answer: Tax effects vary depending on your situation. It can range from nothing owned to the entire shorted amount counting as taxable income. Talk to your Apple Valley Agent and your Tax Accountant for your specific situation. Generally speaking, any relief of indebtedness is included in gross income. There are, however, some exceptions to this rule that may benefit a taxpayer involved in a Apple Valley short sale. Q 15. What is the process for applying for a Apple Valley short sale? Answer: You should try and find the most experienced Apple Valley short sale agent or Apple Valley Short Sale Negotiator you can find. Ask for a list of short sales that the agent or negotiator has negotiated successfully. First, the borrower must find a buyer for the property. Second, the borrower must prepare all the necessary documents. See question 16. Third, the borrower must submit all documents to the lender. Fourth, the lender will send out their own appraiser to make sure that the buyer's offer is at fair market value. Fifth, the lender will make a determination on whether or not to agree to the short sale. Q 16. What documentation will a lender typically require? Answer: Written explanation (and proof) of the hardship the borrower is experiencing; Copy of the purchase contract signed by both the buyer and seller (borrower); Proof of the buyer's ability to purchase the property, i.e., a completed loan application, pre-approval by another lender, or evidence of cash on hand (bank statement); Preliminary title report; Estimated net/closing statement certified by an escrow officer acceptable to the lender; Completed and signed IRS Form 4506, "Request for Copy of Tax Form;" Completed and signed personal financial worksheet; Previous two years tax returns; Employment paycheck stubs for the past two months; Profit and loss statement (if the borrower is self-employed); Past three months' bank statements. Q 17. Where can I obtain additional information? Answer: You may consult the seller's lender directly about their policies and what is required to apply for a Apple Valley short sale of a property. The internal departments that handle Apple Valley short sales differ by lender. You may try asking for the problem loan department, loan workout department, loss mitigation department, or foreclosure department. Lenders will typically require a distressed borrower to furnish a variety of documents, which could include the following: It is always in the best interest of the borrower to keep the lender informed. If the borrower is in default of the loan and is contemplating a Apple Valley short sale, it would be best for the borrower to let the lender know before the foreclosure proceedings are well under way. The lender may or may not grant more time to the borrower to find a buyer. In general, the process goes as follows: Probably. Although the lender is technically not a party to the real estate contract, lender approval is nearly always a contingency of the agreement. Therefore, REALTORS® should obtain the client's permission to keep the lender apprised of any relevant developments, including the presentation of other offers. Yes. Apple Valley Short sales are treated just like any other sales transaction. III. Disclosure Requirements in Apple Valley Short Sales Yes, if the property being sold is a residential 1-4 unit dwelling and the transaction doesn't fall into one of the regular TDS exemption categories. No exemption exists for a Apple Valley short sale transaction in which the borrower sells the property to an outside buyer, using the sale proceeds to pay off the lender. Deed in Lieu of Foreclosure: After the borrower is in default, the borrower voluntarily delivers title to the lender for consideration and the lender accepts the conveyance of the property in full satisfaction of the mortgage debt. Using this method, the lender saves the costs of foreclosure and the borrower avoids having a notice of default on his/her records. Apple Valley Short Sale*: A Apple Valley short sale is a transaction in which a lender allows the real property securing the loan to be sold for less than the remaining mortgage amount due and accepts the proceeds as full payment of the loan. A lender may accept a Apple Valley short sale when the borrower is in severe financial straits and market conditions make a Apple Valley short sale the best choice to mitigate the lender's damages. Like a deed in lieu of foreclosure, this saves the lender the costs of foreclosure and the borrower avoids having a foreclosure on his or her credit report. Rules differ for multiple mortgages. Minnesota Foreclosure and Minnesota Short Sale Joe Niece 612-508-4100
Buy Apple Valley Real Estate and How do I Sell Apple Valley Real Estate ?
Apple Valley Real Estate and Apple Valley Home prices have continued to flow up and down in most of Minnesota and
Apple Valley is no difference. Apple Valley homes and Apple Valley Real Estate continue to be sought after as of now.
Homes in Apple Valley under 200,000 are seeing full price offers and in many cases multiple offers.
Buyers of
Apple Valley Real Estate need to be fully pre-approved,
as well as working with a top
Apple Valley Realtor.
Short Sales and foreclosures are not as common in Apple Valley as other surrounding cities but the ability for buyers to
buy so much home for so little money in surrounding cities has put a strong downward pressure on
Apple Valley Real Estate and Apple Valley Homes.
Foreclosures and bank mediated properties account for upto 30% of the real estate market at any one time.
Experts believe that Apple Valley Homes and Apple Valley Real Estate may still see a collapse in the higher end markets if we do not start to see some movement but opinions vary as to when and how bad this collapse might be. This type of home does not account for a high percentage of the Homes and Real Estate in Apple Valley so it should not hurt as bad as other cities.
This is one bright spot for owners of Apple Valley Real Estate .
The consensus is that if you are selling a home in Apple Valley or any Apple Valley Real Estate that you need to be exact in your pricing, marketing and value. Find a Realtor with experience, a successful track record and one that works nights, weekends, days, etc.
This is the time for agents to show how committed they are to the Apple Valley homeowner and to Real Estate in general.
Search every listing of every home for sale in Apple Valley
Search Apple Valley MLS Listings
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HAFA or Home Affordable Foreclosure Alternatives Program
Do You Qualify?
The Home Affordable Foreclosure Alternatives (HAFA) Program is the governments program to help homeowners avoid foreclosure.
HAFA gives incentives to lenders and $3000 to homeowners to allow and complete a short sale or deed-in-lieu of foreclosure.
Use the tool below to determine your eligibility:
Joe Niece and his team of Apple Valley Real Estate Agents welcome you to JoeNiece.com.
We specialize in the Apple Valley Real Estate market.
612-508-4100 Call now!
Apple Valley Minnesota Short Sale Help and Information
