How to sell a San Mateo home you can't afford is a webinar given by Raymond Stoklosa and Rebecca Williamson of The RayChel Realty Group in San Mateo. Raymond and Rebecca explained to San Mateo home owners what they can expect during the short sale process, who is involved with a short sale, what Realtors can and can't do to help and how to increase their chances of getting an approved short sale.
1. How to Sell a Home You Can’t Afford
Thanks for joining tonight’s webinar. We will begin
shortly. To download the slides, please visit
http://budurl.com/WebinarHandout
Tonight’s Speaker
Raymond Stoklosa
Managing Broker and Co-Owner
The RayChel Realty Group
Phone: (650) 655-2500
www.LivingWellinSanMateo.com
The RayChel Realty Group
2. Questions During the Webinar
Short sale experts are available to answer
questions throughout the presentation
This is an interactive learning environment. You
will get the most value from this program by
having your specific questions answered.
The only dumb question is the one you don’t ask
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3. Questions During the Webinar
You may type questions in at any time during the
presentation – Question box on your screen
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4. How to Sell a Home You
Can’t Afford
Presented by
Raymond Stoklosa
Managing Broker and Co-Owner
The RayChel Realty Group
Phone: (650) 655-2500
www.LivingWellinSanMateo.com
The RayChel Realty Group
www.RayChelRealtyGroup.com
5. Purpose and Goals of This Evening’s Webinar
Purpose
Share our Passion for Your Education
Goals
Increase your awareness about your
options when you can no longer
afford your home
Show what you can expect and what
your lender expects from you
Educate and empower home owners
in ways that improve their lives
The RayChel Realty Group
6. Life Got Hard?
Have you hit a pothole on the road of life?
Is your home worth less than you owe the bank?
Does the month last longer than your money?
Is your monthly mortgage payment unaffordable?
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7. Can’t Afford Your Home?
If you can’t afford your mortgage payment,
here are your options…
Refinance – replace existing with a better loan
Loan Modification – loan terms adjusted
Forbearance – suspended payments
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8. Can’t Afford Your Home?
If you can’t afford your mortgage payment
and selling is your only option, here are
the possibilities…
Short Sale – Sell for less than amount owed
Deed in Lieu – Transfer to Bank
Foreclosure – Home sold at public auction
Bankruptcy – Court reorganization plan stays
foreclosure
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9. Primary Benefit of Short Sale
Seller Avoids Foreclosure
• Ineligible FNMA for 5 years
• Shows on Credit for 10 years
• Foreclosure could mean loss
of security clearance
• Current & future employment
in jeopardy
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10. Short Sale Myths
• Bank is desperate to dump nonperforming
assets
• Bank has no choice but to capitulate to
demands of buyers and needs of sellers
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11. Short Sale
Apt Solution
or
Wishful Thinking?
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12. What is a Short Sale?
• Arms Length - FMV – Sale to Buyer
Subject to Lender Approval
Lender Agrees to Accept Less than Amount Owed
Usually Considers the Debt Repaid in Full
Seller Receives No Money
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13. Who is Eligible?
Eligibility of Seller is…
• Completely Up To Lender
• Rules Vary Lender/Loss Mitigators
• Each Lender Sets Own Rules
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14. Getting an Approved Short Sale
Single Factor Common
to All Approved Short Sales
is…
Hardship
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15. What is a Genuine Hardship?
• Job Loss
• Serious Illness
• Divorce
• Involuntary Relocation that Depletes
Homeowner’s Assets
• Cannot Pay New Loan Payment – ARM
Adjustment
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16. What is Not a Hardship?
Personal Preferences
• Home Worth Less than
Borrower Paid
• Borrower Does Not Want
Home
• Borrower Does Not Want to
Make Payments
• Borrower Wants to Buy
Another Home
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17. Who May Not Qualify?
Show Stoppers…
• Homes with Substantial Equity
• Homeowners with Significant Assets or Income
• Homeowners with 2nd Homes or Rentals
• Homeowners in Bankruptcy
• Home Loan is Government Insured
• Investors
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18. General Rule
Borrower Must Be Delinquent
Before Lender Will Approve – or
even consider – a Short Sale.
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19. It’s a Numbers Game
• Lender Makes a Financial Decision
Strictly the “Bottom Line”
More now, less later
• Avoids Expense of Foreclosure
Uncollected interest and penalties
Attorney’s Fees
Trustee’s Fees
• Eliminates Non-Performing Loan
Non-Performing loans are Liabilities
• REO Inventory Unaffected
Avoid Carrying Costs
Opportunity Loss
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20. Who are the Initial Players?
Homeowner
Home-
Servicer owner’s
REALTOR®
Initial
participants
Buyer’s
Buyer
REALTOR ®
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21. Who are the Players?
Homeowner
Junior Home-
Lien owner’s
Holders REALTOR®
Private
Mortgage Short sale Buyer’s
Insurance participants REALTOR®
Company
Investor Buyer
Servicer
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22. All Parties Must Be Aligned
• Seller/Borrower - Debtor
• Lender – Made the Loan
• Servicer – Collection Service
• Investor – Owns Loan
• Mortgage Insurer – Insures lender/investor loss
• Junior Lien Holders – Other creditors
• Real Estate Agents – Authorized 3rd party
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23. Seller’s Final Position
In the end, the Seller…
• Avoids Foreclosure
• Eliminates a Financial Burden
• Salvage Credit Rating
• Receives No Money
• Loses Property Voluntarily
• Vacates Property
• Moves on with Life
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24. Uncertain Outcome
• Most Short Sales are Not Attainable
Seller Cannot Demonstrate Hardship
Price NOT Acceptable to Lender or Investor
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25. Challenges of Short Sales
• High Failure Rate
• Lengthy Processing Time
• Paperwork Intensive
• Lenders Unfamiliar with Local Market
• Lenders Overwhelmed
• Seller’s In-Difference
• Real Estate Agents Ill Informed
• Real Estate Agents Not Proactive
• Recovery Demand Unacceptable
• Foreclosure Date Too Near
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26. Potential Tax Consequences
Federal Government passed law in 2007
Directing IRS NOT to include the mortgage debt
forgiven by the lender as income, however…
Applies only to purchase loans
Does not apply to debt on cash-out refi’s
Does not apply to 2nd homes
Dollar Limitation
$1 Million for married couples filing separately
$2 Million for married couples filing jointly
Seek Professional Tax Advice!
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27. Pitfalls of Secondary Debt
• Typically, Junior Lien Holders do not forgive the
unpaid debt.
Accept partial payment
Then, sell the unpaid debt to Collection Agency
Junior Loans are normally recourse debt
Collection Agency pursues the seller
• Negotiate a Release for Full Satisfaction of Debt
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28. Beware of Schemers and Predators
• Money Up Front “Problem Solvers”
• Illegal Kick Backs
Seller cannot receive money “under-the-table”
• HUD-1 Must Account for all Funds
• Lender Fraud is a Felony
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29. Nothing Short About Short Sale
The Only Thing Short
About a Short Sale is the
Lender is Short Changed!
Short Sales are…
Complicated
Legally Complex
Technically Difficult
And, They Are Doable.
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30. Special Word About Investor Sales
Home Equity Sales Contract Law
Special Contract required when…
• Buyer is an Investor
• Property Being Sold is Residential 1 - 4 Units
• Owner Currently Occupies the Property
• Notice of Default (NOD) has Been Recorded
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31. Seller Has Legal Rights
Upon Recording Notice of Default
• 5 Day Cancellation Period
Seller may cancel
• 2 Year Contract Rescission Period
Rescission for any unconscionable acts
• No Waiver by Seller
Any waiver is void
• No Limitation on Damages
Limiting investors liability is void
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32. Why Short Sales Derail…
• Seller cannot document hardship
• Seller will not agree to approval conditions
• Seller will not sign promissory note
• Seller will not make property accessible for
showing
• Lender and/or Junior Lien Holders will not
approve
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33. Why Short Sales Derail
• Investor will not approve
• Mortgage Insurer will not approve
• Buyer unable to get financing
• Property has clouds on title
• List price is too high or too low
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34. Keys to Short Sale Success
• Be Engaged
• Respect the Process
• Be Mindful of the Details
• Send Complete Short Sale
Package
• Respond in Timely Manner
• Set Realistic Expectations
• Retain Professional
Representation
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