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East Bloomington Minnesota Short Sale Information and Advice. Let us help you now, Call us at 612-508-4100.
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We can negotiate for your lender to pay your closing costs and Realtor fee's. The agent you choose to help you with your East Bloomington Short Sale will determine your success rate. Most agents do not specialize in East Bloomington Short Sales. The average agent has less then a 30% chance of completing a successful short sale with you. You have almost a 300% better chance if you use our specialized short sale team. East Bloomington Short Sale versus East Bloomington Foreclosure, which is the best option? In almost all cases, a East Bloomington Foreclosure is a bad option if you have the choice of doing a East Bloomington Short Sale. Why is this? If you think about it, it starts to make more sense. Let's look at the differences between a East Bloomington Short Sale and a East Bloomington Foreclosure. A East Bloomington Short Sale is when you need to sell but owe more then your home will sell for. The process similar to a normal sale in some ways. 1. You need to sell. (same) 2. Your home is worth less then you can sell it for. (different) 3. You contact a Realtor. If you are looking in Minnesota, you can contact us. Do not use a Realtor that does not have free information and/or Short Sale video on their website about East Bloomington Short Sales. The choice you make when picking a Realtor will in most cases determine if you will be successful or not with your short sale. Find someone like us that has helped hundreds of homeowners with their foreclosure or short sale needs versus 99% of the agents that have done less then five short sales. This will increase your chances of being successful from about 30% to about 90%. (similar) 4. You negotiate with the bank if you chose a bad Realtor or we negotiate if you picked us. Most people agree that negotiating for yourself has some very big negatives but you need to do what you are comfortable with. (different) 5. We negotiate for the bank to pay your closing costs and fee's. (different) 6. Your lender pays your Realtor fee's (different) 7. You sign at closing to sell your home. (same) If you are missing your payments and you do nothing, you will most likely end up as a Foreclosure in East Bloomington. The process can take five weeks, it can take nine months, it can take a year depending on your situation. Once your redemption period ends, you must leave your home. Let's talk about the main problems with letting your home become a East Bloomington foreclosure versus a East Bloomington Short Sale. 1. The bank does not want to force you into foreclosure. It is much better for them to allow you to do a East Bloomington short sale versus ending up as a East Bloomington Foreclosure. They will work with you if you just follow the instructions that they give you. 2. A East Bloomington Foreclosure will double or triple the time it will take for you to fix your credit and get another loan on a home. This might be far down on your list now but why ruin your credit for longer then you have to. 3. If you have private mortgage insurance, the private mortgage insurance company may pay part or all of the money that the bank loses. The problem is that they will come after you once you have become a East Bloomington Foreclosure. Having a collection agency going after you for ten or more years may not seem like a great option to most people. 4. If you have more then one loan, the junior lien holders are still owned the money they have lost after you East Bloomington Home Forecloses. They can and will come after you and file a deficiency judgment which you will have to pay. If you do a East Bloomington short sale instead, we can get the second mortgages to settle. 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 East Bloomington 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 East Bloomington 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 East Bloomington short sale and a East Bloomington 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 East Bloomington 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 East Bloomington 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 East Bloomington 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 East Bloomington Short Sales Q 7. Does a East Bloomington 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 East Bloomington 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 East Bloomington Foreclosure which allows the East Bloomington 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 East Bloomington 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 East Bloomington short sale a negotiable item? Answer: Yes, but it varies by negotiator used and lender. The East Bloomington 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 East Bloomington short sale is being arranged. Q 10. Must a real estate property disclosure statement be given to a buyer in a East Bloomington short sale transaction? Answer: Yes, all East Bloomington 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 East Bloomington 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 East Bloomington 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 East Bloomington 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 East Bloomington 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 East Bloomington 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 East Bloomington 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 East Bloomington short sale. Q 15. What is the process for applying for a East Bloomington short sale? Answer: You should try and find the most experienced East Bloomington short sale agent or East Bloomington 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 East Bloomington short sale of a property. The internal departments that handle East Bloomington 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 East Bloomington 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. East Bloomington Short sales are treated just like any other sales transaction. III. Disclosure Requirements in East Bloomington 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 East Bloomington 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. East Bloomington Short Sale*: A East Bloomington 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 East Bloomington short sale when the borrower is in severe financial straits and market conditions make a East Bloomington 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
A East Bloomington Minnesota short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor located in Minnesota. This Short Sale negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the Minnesota mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale.
Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation.
A short sale in East Bloomington Minnesota typically is executed to prevent a home foreclosure. Often a bank will choose to allow East Bloomington property to short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, the advantages include avoidance of having a foreclosure on their credit history and the partial control of the monetary deficiency. Additionally, a short sale is typically faster and less expensive in Minnesota than a foreclosure in Minnesota due to the redemption laws. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount.
Minnesota Short Sale Information
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HAFA or Home Affordable Foreclosure Alternatives Program
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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.
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