Yes! Loan modifications and short sales are two sides of the same coin. The coin is the “loan workout” with the loan mod and short sale as simply two types of loan workouts. Here is the most important thing to know: you cannot do both simultaneously. The banks will kill a short sale in favor of a loan mod every time. The reason being they keep you on the hook and continue to get more money from you. In a short sale they are liquidating the property and unless they have recourse to pursue you after the short sale is closed their relationship with you will be terminated upon the short sale closing.

As a reader of this article, please understand that the correct context here is for states with severely falling prices. If you live in a state that has not experienced severe deflation, then a loan modification may be a great option. Here in Nevada, Arizona, and many times California, the loan modification should be renamed: Operation: Investigate-the-Borrower. Most borrowers have no hope of ever getting a permanent loan modification that makes sense. They are so far upside down or already in default that the banks aren’t going to refinance them. They banks are just using the carrot to extract as much financial information that may be used against the borrower in the future, along with more cash.

I am often times robbed of legitimate short sale techniques because the seller (borrower) has already told the bank too much and we have a harder time proving a hardship. Short sales can be very difficult. The quicker you can get a buyer and get the processing going with the bank, the better chance you have to close in a falling market.

My advice is simple. Be honest with yourself! If you have a true hardship (death, divorce, job loss, income loss, job transfer) and you can’t afford your home, look to sell it in this market. Playing around with loan modifications can cost you valuable time you could have spent doing a short sale. The loan modification numbers in our states are abysmal. The banks think nothing of taking months and months processing your request for a loan modification only to tell you– sorry. Remember, FORECLOSURE ACTIVITY IS NOT SUSPENDED WHILE YOU ARE DOING A LOAN MODIFICATION! They continue the march toward foreclosure and since you cannot do a short sale at the same time, you may be left with no time to every attempt one.

Paul Rowe is the managing agent for the short sale division with the Sena Team at North American Realty of Nevada. You can contact Paul or Tony Sena at 702-376-0088.

A non-recourse loan is a loan where the bank can only seize the collateral used in the loan (your home) and you have no personal liability beyond that. With a recourse loan, you continue to have liability even after the home is seized after default or sold as a short sale.

Your loan will be labeled according to the terms in the note along with the laws of your state as Recourse vs. Non-Recourse. Primary loans used as purchase money only in some states such as California and Arizona mean that at foreclosure or on a short sale, the bank holding the note has no opportunity to pursue you. Whatever money they received at the closing is it, no lawsuits and deficiency judgments to hound you in the coming years.

If you live in Nevada, where I live, the banks have full recourse ability, so unless they waive their rights, they can come after you. I am not an attorney and this information should not be viewed as legal advice. I have been told by attorneys here that banks have the following recourse options to them.

Foreclosure: For purchase money (money used to buy or improve a home and not money pulled out as cash or home equity lines of credit, banks have six months to  file legal action against you once the home is sold at auction on a short sale.

Short Sale:  Unless the bank waives its deficiency rights they have up to 6 years. This doesn’t mean that they will, just that they reserve the right. In fact, the bank may just take the loss and write it off. In that case you will be receiving a 1099C (cancellation of debt). You’ll have to consult a tax professional but this essentially means the bank is showing their loss as your gain and will be treated as taxable income. What, if any tax liability depends on your individual tax situation.

If you are considering a short sale, you’ll need to consult an experienced short sale agent, attorney and tax professional versed in short sales.

Paul Rowe manages the short sale division for the Sena Team at North American Realty of Nevada.

If you have a loan being serviced by Wachovia Bank or had your loan originally serviced by World Savings, you may be eligible for a short sale approval in as fast as 7-10 days after a valid offer to purchase is presented to Wachovia as a part of a short sale package.

Wachovia will also evaluate you for the possibility of a loan modification. The major difference is that unlike other lending institutions you may have heard taking months and months to make a decision, Wachovia wants to evaluate you as quickly as possible. They recognize that the key to making a short sale work is partnering with experienced real estate agents and offering fast approval decisions to increase the likelihood of a successful closing.

Here are some of the plan’s highlights:

1. Get your property listed with a licensed REALTOR® (make sure they have short sale experience)
2. Agent will put you in touch with the local Short Sale Manager assigned to your local area. This is a key difference. You actually get to meet face to face with the bank’s representative who will be overseeing the processing of your file.
3. You don’t yet have to be delinquent; a chance to actually protect your credit!
4. Borrower can receive $2,500 for relocation assistance.
5. Loan must be a “proprietary loan”. This means that Wachovia is now the actual investor/note holder and not simply the servicer of your loan. If Wachovia is only the servicer on behalf of another investor holding the note to your home, this plan will not be available; however, from my experience with Wachovia, they are still one of the faster servicers around on traditional short sale approvals, so don’t let that stop you. If you would like to know if you have a proprietary loan or not, just give me a call and I will contact the local rep for you.
6. Wachovia will also evaluate you for participation in the HAFA program. HAFA is the new set of short sale guidelines put out by Treasury Department which speeds up the short sale processing for certain types of loans- only applies to primary residences and homes which are not owned or guaranteed by FHA, Fannie Mae, Freddie Mac or VA.

To get started or get additional information, call us at 702-376-0088 or you may submit a contact form.

Paul Rowe manages the short sale division for the Sena Team at North American Realty of Nevada.

Bank of America, along with the former mortgage giant it absorbed, Countrywide, had such an atrocious reputation for loan modification; many borrowers wouldn’t even attempt a short sale. Many real estate agents also would strongly discourage their clients from making offers on Bank of America (BOA) properties due to the unlikelihood of receiving a timely approval. It was not uncommon to see approvals taking 6 months or more. Buyers would withdraw their offers in frustration, leaving sellers having to begin the process all over again.

Last fall, Bank of America expanded its on-line portal previously used to manage foreclosure listings, to include short sales. Distressed borrowers and their agents could now directly request a short sale. You will have to have an MLS-listed property, along with a valid offer to purchase from a prospective buyer.

Agents can now quickly upload the necessary documents into the system. Previously, we would send long, physical faxes which then would have to be organized, sifted and managed into a file. Eventually, the file would be assigned a series of negotiators to process and approve the file. It could take months just waiting to be assigned a negotiator. Here in the Las Vegas area we would routinely lose buyers during this long waiting period. We are now typically assigned to a negotiator in 2-3 weeks. I now have files taking only 2 -3 months from start to finish, whereas under the old system I still have files over a year old!

There are some drawbacks. Government-backed loans such as FHA, VA along with Home Equity Lines of Credit (helocs) cannot be processed through the Equator system. The system also does not allow for the complexities of an individual’s financial situation. The system only speeds up the processing, but does not automate the terms associated with settling the debt. That requires a strong real estate agent to represent the seller’s interests with respect to the sale terms, shortfalls due to the loss (deficiencies), promissory notes etc. A seller should also consult an attorney and tax professional with short sale experience to help evaluation if a short sale is a good option for them.

Paul Rowe is the managing listing agent for the Sena Team at North American Realty of Nevada. The Sena Team can be reached at 702-376-0088.

This is one of the questions I am asked most by sellers who are interested in a short sale. In most cases, it is not really an issue as the majority of sellers face very difficult times. These people are already behind on their payments or are current, but having exhausted nearly all of their available cash and credit trying to stay afloat, will begin missing payments.

There is a lot of confusion out there. Most of it born of perceptions created in the loan modification process. Many banks told their servicing clients they would not be considered for a loan modification unless they missed payments. Some banks even required them to be seriously delinquent in order to demonstrate a hardship.

The short sale is a very similar process to loan modification; both are considered “workout” programs. Examples of these programs may include short sales, deed-in-lieu of foreclosure, forbearance, loan modification. The purpose of a loan workout is to modify the terms of a loan in order to prevent the borrower from becoming delinquent or worse, default. The difference is in a short sale, you don’t have to be late to begin the short sale process.

If a seller determines quickly that loan modification is not a remedy that can really solve their problems, then there is no reason to delay, and a short sale should be considered quickly. This is especially true here in the Las Vegas real estate market where values have plummeted 50% in many areas. Without a write-down of the loan balance, how much can playing around with interest rates, balloon payments, and the length of the loan term really mean to someone whose $300,000 home is now worth $140,000?

There are a few key points to a potential seller wanting to do a short sale while being current. First, you will have to demonstrate you are facing imminent default. You can make it a few payments but the end-game is known. A seller with a lender with a reputation of making very slow decisions on short sale approvals might make this option impossible or at the least very expensive. The last factor is your agent. Your agent cannot listen to every $8 dollar an hour customer service rep stonewalling them with their command of “bank policy” and must know to demonstrate their clients’ immediate need for a short sale to an uncaring institution.

While there is no guarantee that a short sale will be completed without the seller eventually having to miss payments, I hope this dispels the myth that a seller must be delinquent in all cases when attempting to do a short sale.

Paul Rowe is the listing agent team leader for the Sena Team at North American Realty of Nevada. For a personal evaluation, click here to request an appointment or call our team at 702-376-0088.

The signs seem to be pointing that way. The current administration has been flailing away on many areas of the economy and one of the most glaring weak areas have been the loan modification plans such as the Home Affordable Modification Plan (HAMP) which has seen less than 10% of individuals successfully modify their loans and a whopping 40 – 50% of those people are re-defaulting after receiving a modification.

To their credit however, the White House along with the Treasury Department, have recognized the need for a more orderly transfer of homes and avoid foreclosure. Treasury has been pushing hard for banks to transfer properties via short sales and deed-in-lieu rather than taking homes back in huge numbers.

The next program on the horizon is called the Home Affordable Foreclosure Alternatives Program (HAFA) which will become active this April. This program is a supplement to the previously mentioned HAMP program. Any bank who is participating in HAMP must also participate in HAFA. The new program encourages banks to approve short sales on a faster timeline. The average short sale file now takes 4 months to approve. The actual time period is often longer as buyers frequently walk out before an approval for the sale is obtained, forcing the seller to find another buyer and start the process all over. A shorter approval process will encourage buyers to stay the course and increase the closing percentages for short sales.

The final set of indicators I have seen are changes within the real estate industry. Banks are cutting back dramatically on their REO staffs. These departments handle the liquidation of foreclosed properties. On my end of the business, residential real estate, agents are also gearing up for a switch from foreclosure to short sale transactions. Short sale education classes are packed, REO listing agents have been cutting their staffs and many agents are now looking for a new place to land within the industry.

Our team is expecting our current inventory to double and is actually adding staff to accommodate the business. This is a far cry from last year when most Las Vegas real estate agents cringed at the very thought of getting involved in a short sale. I have been listing short sales almost exclusively for a year in anticipation of what is now becoming a reality.

If you are considering a short sale and have questions, I can be reached at 702-376-0088.

Paul Rowe is the listing team leader for the Sena Team at North American Realty of Nevada. You may reach the Team Sena at 702-376-0088. They offer representation for buyers, sellers and operate a full service property management division.

One of the premier views on the Las Vegas Strip!  Sky Las Vegas is a sheik building located right on the boulevard.  This corner unit is on the 15th Floor and looks out directly at the famous Las Vegas Strip.  Sky Las Vegas has all the amenities you expect, such as valet, professional front desk service, fitness area, pool with four cabanas, spa, private theater for up to fifteen people, business center and racquetball courts.

This unit is approximately 1,467 square feet with two bedrooms and two full bathrooms.  It features stainless steel appliances in the kitchen, granite counter tops and ceramic tile and carpet throughout.  This property is a short sale and is currently available for a purchase amount of $359,000.

For information on this desirable Las Vegas High Rise Condo or for a private showing, please contact Paul Rowe or Tony Sena at 702-376-0088.

We have an epidemic of foreclosures in America. Las Vegas, Nevada has been leading the pack in this grim statistic for over two years. I was at a real estate conference in Las Vegas last week and one of the panelists who consults on a committee working with the government made a comment which stunned me, 80%-85% of homes that are foreclosed across the nation were never listed on their local MLS (Multiple Listing Service) for as a short sale prior to being foreclosed!

Many sellers who are stuck underwater usually end up feeling powerless after fighting within the system, and eventually give up. Sellers need to know that there are still options open to them that involve little or no cost which may save them from a foreclosure or even bankruptcy. Your REALTOR assumes the burden of dealing with your bank on your behalf, but the results can offer a buyer a much quicker return to normalcy.

A short sale is when a homeowner sells a property for less than is owed on the current mortgage. Permission must be obtained from the seller’s lien holders to do so, but if successful, foreclose is avoided. The process is complex, but the results are far more favorable to a seller than foreclosure. Under short sale, the debt is usually settled in contrast to a foreclosure where the bank gets the home back, but the issue of the debt is not settled and the bank may have strong recourse available to them to pursue the unpaid debt depending on State law. You will have to consult with an attorney on these issues.

People who know they have to alter their loans to maintain their ownership engage in an activity known as a “workout” of their loan. Most major workout options consist of the following:

1. Repayment of past due payments
2. Forbearance (temporary suspension of payments)
3. Loan modification
4. Short sale
5. Deed-in-Lieu of foreclosure. Investment homes are not eligible. Borrowers voluntarily give the property back to the bank. This is however, still a foreclosure.

With over 4 million foreclosure filings expected in 2010, alternatives to foreclosures are being encouraged by the Federal Government. In a market like Las Vegas, where plummeting property values have excluded many homes owners from curative programs such as Hope For Home Owners, the short sale is a viable option for many homeowners who know they cannot maintain the mortgage.

Sellers, go seek counseling on all the potential options up front. You want to move from one option to the next rather than try only one, stop to learn the next, and on an on. The problem with this strategy is you will run out of time to really mount a successful short sale effort. Don’t wait until two weeks before your home is due to be foreclosed and then try to take a stab at a short sale.

Going back to the original statistic that over three quarters of people who lose their home did not try to sell it demonstrates that the public is unaware or at the least uninformed that they can work with their bank to sell it, rather than have the bank simply come and take it!

Please contact Sena and Associates at 702.376.0088  for a free consultation on short sales and whether it may be a good option for you.

After much speculation within the industry, news out of Washington D.C. this week confirmed that Senate is moving forward on extending the $8,000 first time home buyer tax credit. The Senate still has to approve the measure; however, it appears to have bi-partisan support amongst Republicans and Democrats.

The latest version would offer a slightly lower credit of 10% of the purchase price with a maximum payout of $7,290. As long as the home you are purchasing has a price of $72,900 or higher, you will receive the full credit. That is still a nice credit for buyers to enjoy. The median home price here in the Las Vegas real estate market is around $140,000, so most buyers will qualify for the full credit. The tax credit is limited to individual buyers earning $75,000 or less and married couples who earn less than $150,000 per year. Buyers would have to be in contract to purchase a home no later than April 30th, 2010 and must close on their home no later than June 20th, 2010.

The credit is also being expanded to include current homeowners looking to purchase a new home may also qualify for a credit. They must have been living in their current residence for a minimum of five years. Individuals earning over $125,000 and couples earning over $250,000 per year would not be eligible.

Unfortunately, the misconceptions many sellers in Las Vegas may have about this question often prevents them from pursuing one of the best options to a foreclosure—the short sale. They just assume that they won’t be able to pay any closing costs, have the money to cover buyer requested repairs and mostly believe they cannot afford a REALTOR.

In reality, if the seller’s bank approves a short sale, they will allow for the majority of these costs to be taken right out of the sales proceeds, including the REALTOR’s commission! In some cases, the seller may never have to contribute any money at all.

Now that being said, there is no guarantee that a seller will never have to contribute something to the closing. If you’re interviewing prospective real estate agents to list your property, and they tell you this, run! No REALTOR can make such a guarantee. You don’t even have an offer yet; you don’t have an appraisal; the bank has not evaluated the seller’s financial profile; and lastly, you certainly don’t yet have an offer from the seller’s bank with the terms of the short sale they are willing to accept.

Example:

Seller has a home on the market as a short sale for $200,000. The bank usually allow for many of these costs to come directly out of the $200,000.

• Escrow and Title fees
• Title Insurance
• REALTOR Commissions
• Taxes (both property and transfer taxes)
• Home Owner Association fees
• Legal Fees (if applicable)

I always try to minimize any potential costs my sellers will have to incur, and present in a straightforward manner, exactly what the benefits and negatives of the seller covering a certain cost, so that the seller can make an informed decision.

In the current Las Vegas real estate market, we are literally trying to settle hundreds of thousands of dollars of debt per property, so in some cases, the sellers may have to contribute something and should not automatically expect that they will not have to contribute in some fashion. When you look at what is often asked from sellers as compared to how much debt is being settled, the amounts are often staggeringly meager.