AVOID SHORT SALE NIGHTMARES

I am here at Peet’s Coffee & Tea in the Carlsbad Community of Bressi Ranch with Troy Huerta Broker/Realtor/Short Sale Expert and Mentor, to discuss issues that one can have when trying to do a short sale and avoid foreclosure.

JR Liens

What are JR Liens?

JR Liens are loans or financial obligations that are attached to your property and are not in ‘first position’.

So, for example if you have two loans, your first mortgage is in first position all others are ‘JR LIENS’. Most of the time the first mortgage is in first position, unless you owe the Government, which always takes first position.

Here we are going to talk about issues that arise when working with JR Liens, many times inexperienced Realtors take on a short sale only to find out many months later that a JR lien has already doomed them from ever closing the sale.

It is not all bad news though, we talk about these problems so we can advise you of actions to take before you commit a buyer to a long escrow that will go nowhere. Knowing issues upfront are key to a successful outcome in the world of short sales. More successful outcomes, more buyers who are willing to buy your home.

Here are a few items we discussed…

HELOCS (Home Equity Lines of Credit)

HELOCS have become very challenging to settle in short sale transactions, many times this lender will look harder for a detailed explanation as to what the money has been used for. Many times these lenders will require the seller to make a cash contribution or agree to repay some of the debt. Homeowners need to know this upfront, this is the first step to start over and put this massive debt behind them. You need to know how to make a case for your hardship and work with the servicer to work out a deal so you can move on with your life and put your financial life in order.

CHARGE OFFS

Some pool of loans serviced by lenders like Chase and Bank of America have began to sell off JR Liens to default note buyers after 6 months of non performance (nonpayment) These type of investors will then contract collection attorneys who practice the most aggressive collection tactics to try and collect on SOME of these JR Liens, this ironically makes settling your debt very difficult in the process. The most effective way to protect yourself from having this issue is knowledge, knowing will help you keep these debts from being charged off is key. Most of these second loan payments tend to be smaller and may be kept from charge off by paying the minimum required every month.

If this has already happened, do not just ignore the it, it WILL GET WORSE unless you proactively plan to remedy this situation. Remember this does not mean a short sale is impossible, it just means that a review is necessary to create a successful plan of action. In some cases short sale will not help and you may need to resort to more drastic measures such as bankruptcy. This is the time to prepare yourself, the quicker you do the quicker you can move on. We can help…

FORECLOSE AND FORGET MYTH

Some homeowners believe that if the home forecloses, then all other loans are wiped out and go away. We have found that many homeowners who had homes foreclosed in 2007 and 2008 are now beginning to get collections notices from their JR LIEN holders for money owed to them. Letting the “home go” will not make the problem go away. Now they not only have a foreclosure but their credit will continue to be dragged thru the mud for months and possible years to come.

The Realtor you choose to work on your short sale has to be familiar with your servicer (Bank of America, Chase, Wells Ect). You need a complete evaluation to see whether you qualify for your short sale.

I invited Troy Huerta to share his knowledge with you because he has been instrumental in my short sale success and he is someone I consult with on very difficult transactions.

Troy continues to educate REALTORS on secrets to a successful short sale and will start offering new classes for processors and assistants that work with REALTORS, so Realtors can spend more time working with their clients. This classes will begin in 2011, if you need more info on his courses just email me.

I hope you have enjoyed our series on short sales. My goal is to educate homeowners and agents that are new to short sales get a better understanding of what this market is like. Once you know more about short sales you can begin to see that not everything you hear about short sale are true. Most people hear about the horror stories surrounding short sales. Once you are familiar to this process you too will begin see short sales in more positive light.

The secret to success in Real Estate is knowledge.

Thank you and check us out tomorrow as we continue to share more about this topic affecting our Real Estate Market in Carlsbad California.