Final Powerpoint with audio 7.20.11

Slide 1: 

Find Out the REAL Truth About Short Sales

Possible Options : 

Refinancing Loan Modification Short Sale Deed-in-Lieu of Foreclosure Foreclosure Possible Options

Reasons to Avoid Foreclosure : 

Reasons to Avoid Foreclosure Pursuit of strategic defaulters Must disclose foreclosure on all mortgage applications It continues to affect your credit rates even after it’s off your report Credit scores can be lowered by 300+ points The most devastating credit issue you can have for future credit availability You’ll be ineligible for a government insured loan for 5 to 7 years (only 2 years in a short sale)

Reasons to Avoid Foreclosure : 

Reasons to Avoid Foreclosure You may end up with Deficiency Judgment* Reasons to Avoid Foreclosure

Deficiency Judgments : 

In 100% of Foreclosures the homeowner is exposed to a Deficiency Judgment In many Short Sales lender waives right to Deficiency In almost all cases a short sale will result in lower possible deficiency judgment HELOC Second Mortgages are handled completely different than true 2nds Deficiency Judgments

Reasons to Avoid Foreclosure : 

Reasons to Avoid Foreclosure You may end up with Deficiency Judgment Many employers run credit checks Employee background checks can put your position in jeopardy Security clearances, government positions Military and law enforcement and more As your agent I will explore every option with you and work towards a resolution. In the future, you reflect on this situation and want to know that you did everything you could. Reasons to Avoid Foreclosure

Foreclosure Process : 

TRUSTEE DEED SOLD TO BANK CANCELLED Foreclosure Process NOTICE OF DEFAULT NOTICE OF TRUSTEE SALE SOLD TO 3rd PARTY POSTPONED AUCTION

Slide 8: 

WHY YOU SHOULD CONSIDER A SHORT SALE Quicker Recovery Elimination of potential liability Ability to purchase a new home sooner Possibility to get cash at closing to help participate in closing Satisfaction of knowing you didn’t give up on your home Ability to satisfy HELOC debt Potentially reduce some of your debt Protection of neighborhood home values Assists the community by dealing with the properties before they become vacant and run down /vandalized/destroyed Gives the homeowners control over their situation.

Parties Involved In a Short Sale : 

Parties Involved In a Short Sale INVESTOR AGENT HOMEOWNER SERVICER MI

Slide 10: 

Cash Contributions and Promissory Notes Must Determine if you have a true 2nd Mortgage or a Home Equity Line of Credit (HELOC) HELOC follow Mortgage and Credit laws. They WILL come after homeowners for deficiency unless satisfied 1st Mortgage may contribute a couple thousand dollars to get 2nd mortgage satisfied Any party involved in the short sale can request a cash contribution or promissory note Cash Contributions usually minimal amounts or a promissory note with 0% interest Relatively easy to get debt satisfied and sometimes buyers may help contribute if seller is unable

SHORT SALE TIMELINE : 

SHORT SALE TIMELINE

Tax Implications : 

Tax Implications Originally HR3648 Prior to passage any debt forgiven was “cancelled” and was required to be claimed as 1099 income Signed into law on December 20th 2007 Mortgage Forgiveness Debt Relief Act of 2007

MFDRA Details, Phantom Tax : 

MFDRA Details, Phantom Tax January 1st 2007 to December 31st 2012 Eliminates Phantom Tax. Debt must have been incurred to acquire a principal residence. Cancelled debt up to $2,000,000 is eligible. Sets forth rules for determining the allowable amount of the exclusion for taxpayers with non-qualifying indebtedness and taxpayers who are insolvent. Debt from a second (non-acquisition) mortgage or HELOC is not eligible (unless used to improve basis of property). Debt from a cash-out refinance is not eligible (unless used to improve basis of property) Cancelled debt from investment properties and second homes is not eligible.

Credit Implications : 

Credit Implications If there is someone telling you that a foreclosure avoidance method will lower your credit by on X amount of point…beware. Your credit score is unique to you and based upon a very specific formula involving many different credit factors. What we do know for sure is that the longer we wait to seek a solution, the longer you miss payments and severely damage your credit.

SHORT SALE HURDLES : 

SHORT SALE HURDLES VALUE DISPUTE Buyer cancels Foreclosure date Insufficient Paperwork renters bankruptcy “Success is how high you bounce when you hit the bottom.”

Required Paperwork : 

Required Paperwork Hardship Letter Financial Statement Last 60 days of income verification Last 60 days of bank statements Last 2 years of tax returns Authorization Listing Paperwork Disclosures Bank Specific forms Lease Agreements Retirement Accounts Divorce Decree/ Death Certificate

RESOURCES : 

RESOURCES Avoiding Foreclosure www.hud.gov/foreclosure HAMP Program www.MakingHomeAffordable.gov Servicemembers Civil Relief Act (SCRA) http://www.military.com/benefits/legal-matters/scra/frequently-asked-questions HUD Approved Counselors http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=UT The Mortgage Forgiveness Debt Relief Act http://www.irs.gov/individuals/article/0,,id=179414,00.html