It seems everyone is claiming to be a “Short Sale Expert”. Many REALTORs, Agencies and Lawyers have started adding a tag-line to that effect to their marketing.

We are in a time where many people are desperate financially and as is always the case, there are those out there who are eager to take advantage of people who are looking for help. There are some companies out there that are professional and legitimate that focus on short sales, but you have to know the difference between the good and the bad…and beware of the wolf in sheep’s clothing.

To truly be an expert you have to have closed a variety of short sale transactions with a myriad of complicating factors, in a slew of different situations. You have to have closed short sales with every lender (as every lender has different guidelines), Freddie and Fannie, primary home, second home, multi-lien holders, HELOC loans and a whole bunch of other factors that dictate the direction of the approval process. Personally, I believe you have to live and breathe short sales on a daily basis to consider yourself an expert as guidelines and lender protocol can change that fast.

In a recent short sale negotiation (where we were getting nowhere with the bank’s customer service representatives), we made our appeal for approval directly the the CEO of the bank and sent copies of our communication the The President of The United States. Why? Because this CEO has been making public statements to Congress that he is actively working to prevent foreclosures. I say… put your money where your mouth is Mr. CEO. We are holding you accountable for your claims.

If you need help and think that a short sale is your solution, then interview several companies — not just the one that advertises to be “The Expert”. Here are some things to look for:

** Ask how many short sales they have closed, and how long they have been involved in short sales. Ask who negotiates the short sales. Ask if they have daily access to attorneys. Ask who the qualified specialist is and what makes them qualified? Ask if the qualified person is actually doing the negotiating on your behalf (as opposed to using their qualifications as marketing tools to lure more clients their way). Also ask for past references of clients they have helped with short sales.

** If they ask for any money up-front, consider that a red-flag. I would be very wary of any company asking for any type of compensation before they performed any work. Real estate agents get paid at closing and ONLY at closing. That’s the deal REALTORs signed up for when they got their license and nothing has changed. Agents must produce results to get paid.

** Be wary of any company that claims to specialize in this type of negotiation but has no affiliation to a real estate broker. There are companies out there that are running scams or offer no real service and are not affiliated with a broker for a reason. Brokers have to follow a legal, moral, and ethical code to our clients and consumers. These types of companies do not affiliate with brokers for that very reason, so they don’t have to follow these codes.

As always… that’s my opinion.

It is said there are 7 deadly sins, I say there are 7 deadly myths being circulated about short sales.

1) Short Sales are impossible and never get approved. FALSE

TRUTH: Short Sales are difficult and you need to learn a new process, but they are NOT impossible. While there are no guarantees in any transaction, more and more short sales are being approved monthly. However, an agent MUST be educated on the process, or it will be nearly impossible. Our success rate is over 90%. I don’t take no for an answer and always look for a solution to any problem.

2) Banks are NOT accepting Short Sales; They are waiting on a bailout. FALSE

TRUTH: The reality is that banks have already been bailed out, and are really trying to do anything they can, within reason, to avoid foreclosing on a property. More banks are aggressively pursuing Short Sales and Agents who understand how to process them. It is strictly business, it costs the bank (in most cases) far less to short sell than to foreclose.

3) You must be behind on your mortgage in order to negotiate a short sale. FALSE

TRUTH: At one time this was true, but today it is not. Today lenders are looking for verifiable hardship, monthly cash flow shortfall or pending shortfall and insolvency. If you meet these three requirements and are in a position where you will soon not be able to afford your mortgage, now is the time.

4) Buyers are not interested in short sales and avoid them. FALSE

TRUTH: Some buyers are not interested because of the time it takes, especially with time constraints like the first time homebuyer credit. On the other hand, many agents are getting calls from buyers who say “I only want to look at foreclosures and short sales.” These have become synonymous, not with issues, but with Good Deals.

5) Listing a home as a short sale is an embarrassment. FALSE

TRUTH: Most sellers don’t want the world to know they can’t pay their bills, but according to recent estimates, 1 in 5 homeowners in the US owe more on their house than it is worth. Even wealthy owners have to stop the bleeding somewhere. Most sellers are to be congratulated for admitting they need help, taking action and finding a professional who can work toward a solution.

6) The bank would rather foreclose than bother with a short sale. FALSE FALSE FALSE!!

Truth: This myth started with collection people working for lenders on commission. The reality is that banks do not want to foreclose on property, it costs too much. An average foreclosure can cost the bank up to $40,000 and they still have holding costs, insurance, etc. and still get less than market value. Do the math, which would you do?

7) There is not enough time to negotiate a short sale before a foreclosure. FALSE

TRUTH: The foreclosure process is lengthy. Almost all lenders will stall a foreclosure with a legitimate contract for short sale.

Current homeowners who sign a contract to buy a home on or before April 30 get a dollar-for-dollar reduction on their taxes of 10% of the purchase price of the home, up to a maximum of $6,500 (first-time buyers can get up to $8,000).

But according to the National Association of Realtors, buyers spend about 12 weeks home shopping before making an offer, so if you haven’t already started looking, you may be pressed to meet the deadline.

Plus, to qualify for the full credit, your household income must be under $225,000 if you’re married and less than $125,000 if you’re single; repeat buyers must have lived in the home they are selling for five of the past eight years.

The good news: Once you’ve signed the contract, you have until June 30 to close the deal.

There has been some talk about a new FHA guideline that allows short sellers to re-purchase a home providing they were never late on the payments from the loan they sold short.

Lets take a look at the actual text from the FHA guidelines:

1. Borrowers are NOT eligible for new FHA financing if they pursued a short sale to take advantage of the declining market in order to acquire a similar or better property near their current residence.

2. Borrowers ARE eligible for new FHA financing if they had zero late payments on the mortgage in the last 12 months AND the proceeds from the short sale serve as payment in full.

3. Borrowers whose mortgage was in pre-foreclosure status at the time of short sale are NOT eligible for FHA financing for 3 years unless they qualify for an exception (see 4155.1, 4.C.2.1)

4. On an FHA refinance, borrowers ARE eligible if the current lender chooses to write down the mortgage due to declining values or reduction in income.

The problem is that you can’t just meet guideline #2. You must meet guideline #1 as well.

One lender told me this week that a move of at least 50 miles from your current home might qualify. It also depends on the employment situation and the credit scores…etc. In my opinion… the only way to get a new FHA loan prior to a 3-year wait is to re-locate to a new state!

This post courtesy Bankrate.com & CNBC.com (portions edited)

HAFA SHORT SALE RULES MAY HELP SELLERS
By Michele Lerner • Bankrate.com

Homeowners struggling to sell their homes in a short sale are getting some relief, thanks to the federal government’s Home Affordable Foreclosure Alternatives, or HAFA, program.

Up to now, many short sales — in which the lender accepts a sale of the property for less than the full amount owed — have taken months to complete.

Sometimes, the complex and lengthy process has failed, resulting in foreclosure.

HAFA establishes streamlined short sale rules and provides incentives for borrowers and lenders to work together to avoid foreclosure. The rules (in effect between April 5, 2010, and Dec. 31, 2012) also are intended to speed up the short sale process.

Prior to HAFA, homeowners often listed their home for sale without an idea of what the lender would accept.

Under HAFA, borrowers receive pre-approved short sale terms from the lender prior to putting the home on the market.

The HAFA guidelines apply to lenders who voluntarily participate in the HAMP program. The Department of Housing and Urban Development says more than 100 servicers have signed up to participate in HAMP, covering more than 89 percent of mortgage debt outstanding in the country.

To be eligible for HAFA, homeowners must first apply for a loan modification through the Home Affordable Modification Program, or HAMP. Owners who do not qualify for a loan modification or miss payments during the initial loan modification period qualify for HAFA.

Other HAFA requirements include:

* Property is principal residence.
* Mortgage originated before Jan. 1, 2009.
* Mortgage is owned or guaranteed by Fannie Mae or Freddie Mac.
* Borrower is delinquent or default is foreseeable.
* Homeowner demonstrates hardship.
* Borrower’s total monthly housing payment exceeds 31 percent of gross income.
* Unpaid principal does not exceed $729,750.

According to HAFA rules, lenders now must offer a short sale in writing to the borrower within 30 days if the borrower does not qualify for or complete a loan modification. Borrowers then must respond within 14 days to the lender’s short sale agreement.

When a purchase offer is made, borrowers must submit the sales contract to the lender within three days, along with the buyers’ mortgage preapproval and the status of negotiations with other lien holders on the seller’s property.

Finally, lenders must approve or deny the contract within 10 days.

HAFA rules also state that lenders must release borrowers from the obligation to repay the difference between the sales price and the loan amount. No deficiency judgments are allowed for a first or second loan.

In my opinion… help is on the way.

These videos say it all…

Visit msnbc.com for breaking news, world news, and news about the economy

Published : Tuesday, 16 Feb 2010, 8:37 PM MST and aired on FOX10 News.

CHANDLER — You often hear about people ripping items out of foreclosed homes. Now a Chandler man has been arrested for it.

Police say 35-year-old Daniel Clark removed two air conditioning units, a water heater, a water softener, doors, toilets, sinks, cabinetry, counter tops and a the garage door opener.

Clark was arrested for removing the items from his former home before it was to be sold by a bank.

Clark was charged with defrauding a secure creditor and criminal damage.

If you see a neighbor performing this kind of behavior, call 911. Police want to catch them in the act.

Watch the TV News coverage of this story below:

The Wall Street Journal recently reported that the number of people underwater on their mortgages (those who owe more than the property is currently worth), has increased to 23% nationally.

Arizona is second only to Nevada with 47.9% of all home owners with a mortgage having negative equity in the third quarter of 2009.

Another 4.5% are classified as “near negative” – within 5% of being in a negative equity position.

So much for the Dry-Heat. The heat this puts on homeowners is truly unbearable.

Something has to give… soon.

The latest act of civil disobedience surrounding the housing crisis involves a University of Arizona professor who is advising homeowners that they should walk away from their home if it’s underwater.

According to the LA Times, University of Arizona law school professor Brent T. White has published an academic paper titled, “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.” In it, he says people could save “…hundreds of thousands of dollars that they “have no reasonable prospect of recouping” in the years ahead. Plus the penalties are nowhere near as painful or long-lasting as they might assume.”

His theory is that people should not throw good money at bad and due to shame and embarrassment of foreclosure, their emotions control them, where in fact, it’s probably the best thing to do in the long term financially.

I meet with distraught sellers in desperate situations… every week.  While most of them are at their wits end as to how to solve their personal financial crisis… they do not want to “walk away”.

Sorry Brent, but most of the people in my community are fighters, not quitters.

If you fee like “walking away”… please call me.  602-909-2845.  24-hours a day.

I was watching CNBC this morning when this news story broke.

If you add the number of homeowners who are behind on their mortgages to the number of homes that are in foreclosure you will get a number that is greater than than the number of homes on that are currently active on the market!

The bad news: That logic says that we are heading for a big wave of new inventory of bank owned homes.

The good news: I have a pipeline FULL of buyers that are ready, willing and able to scoop up those homes when they hit the market.

I wish we didn’t have to see the bad news happen before the good news could happen.

That’s my opinion.