If you’re thinking about doing a short sale, the time to act is now. It takes several months to get to a successful close on a short sale, and there isn’t much time left before the Mortgage Forgiveness Debt Relief Act expires.

Assets held in a revocable living trust are not subject to probate. This avoids the administrative delay and expense which may cost anywhere from 5 to 15 percent of the estate’s value and may take six months to over a year to complete. In contrast, assets held by a trust generally allow for a seamless transfer of assets to the beneficiaries without involvement of the courts.

Privacy with a revocable living trust is a benefit not granted to those with a simple will or those who die intestate (without a will). Wills are probated and decedent’s assets become part of public record, allowing the general public access to a very private matter. Not only is this an unnecessary disclosure of sensitive information, but it may lead to unforeseen problems for the beneficiaries in the event such information lands in the hands of unscrupulous persons.

While a revocable living trust does not protect the Grantor against creditors, it can be designed to protect the ultimate beneficiaries’ interests. This is accomplished by including a spendthrift provision in the trust document, and retaining trust assets in trust for the benefit of the beneficiaries. While the assets are retained in trust, they will be protected against creditor claims and judgments filed against a beneficiary of the trust. These could include divorce, bankruptcy, and unforeseen claims against the beneficiary.

A revocable living trust was once viewed as something only the ultra-wealthy had, but today is a mainstream tool used by families from all walks of life.

Seller Advantages:
Seller is able to defer income taxes, as the income may be reported over time. If the seller currently has an outstanding mortgage or note on the property, the agreement for sale may not trigger the due on sale clause that is likely a stipulation of the underlying debt.

Buyer Advantages:
Buyer may have an easier time qualifying for seller financing than for traditional financing. Buyer is not going to have to meet the strict underwriting guidelines for FHA, conventional, or other financing.

First of all, the terms exchanged back in forth via email are usually subject to investor approval. Also, there are probably written guidelines in place that require that any short sale purchase terms be formally documented in a letter from the lender.

Review the purchase contract and any addenda applicable to your transaction. Also look closely at all of the short sale documents and policies provided by the servicing company or lender. Any of these documents may contain information that addresses the issue of whether the content of emails can be construed as binding on either party.

These documents may contain language clearly indicating that there is no binding obligation unless and until the lender/servicing company issues an official Agreement Notice or Approval Letter.

Contact a local real estate attorney experienced in short sales for help if you are currently trying to short sale your property.

After a trustee’s sale, the foreclosure appears in the public records. The buyer is shown to be the lender if there are no successful bidders at the trustee’s sale. In this situation, the new owner after the foreclosure is the bank.

Homeowners do not necessarily have to be in default in order to qualify for a short sale. In other words, many borrowers can do a short sale without having missed any mortgage payments.

If you short sale your home without having missed any payments, your credit report will be impacted less than if you do a short sale with missed payments or foreclose. For example, a borrower’s credit score could be impacted by as little as 50 or 100 points after completing a short sale.
In contrast, if the borrower permits the property to go to trustee’s sale or foreclosure, his or her credit may be hit by 200 to 300 points.

Furthermore, when applying for a new mortgage in the future, a applicant who let a home go to foreclosure will have to disclose this fact. The applicant will have to affirmatively answer the declarations in Section VIII of the 1003 form that ask whether the applicant has had a property foreclosed on or has done a deed in lieu.

Specifically, the applicable questions on the 1003 mortgage application are:

c. Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?
†
e. Have you directly or indirectly been obligated on any loan which resulted in foreclosure, transfer of title in lieu of foreclosure, or judgment?
(This would include such loans as home mortgage loans, SBA loans, home improvement loans, educational loans, manufactured (mobile) home loans, any
mortgage, financial obligation, bond, or loan guarantee.)

There are no specific questions on the application regarding short sale history.

1003 Uniform Residential Loan Application

Call or email The Chubaty Law Firm, PLLC today to discuss whether you and your property are candidates for a short sale.

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation

Some homeowners have reported amounts from a few thousand up to over $30,000 in cash offered for cooperating with the short sale of the property.
Similar to the popular “cash for keys” programs seen around the nation, the short sale incentive programs are intended to facilitate a smooth transaction for all parties involved. Homeowners are able to avoid foreclosure, banks are able to write off the loans, and buyers are able to get a deal on a home that is in good shape.

*incentive eligibility is determined on a case by case basis and depends on several factors, including lending institution, investor approval, amount owed, market value of home, inception of mortgage.

Since the beginning of 2011, each month has demonstrated an increase in the number of short sales closed in Maricopa county.
In January of this year, there were a total of 1227 closed short sales. That month there were $198 million in closed sales.
In June, there were 2284 closed short sales. June’s total volume of sales was $33i million.

Total volume of closed short sales in Maricopa county for 2011 is $1,660,545,955

Call or email for specific short sale statistics in your area.

Using Zillow and other real estate websites is a good way to start to generate comparable sales on a subject property.
For example, Zillow lists recently sold properties that are similar to a subject property.
BUT, be aware that it will show all sales, and will not take out homes that are in a different condition or have more/less upgrades than the property you are comparing to.

ALSO NOTE that the “recently sold” list on Zillow might contain some properties that were sold not-so-recently. To establish comparable value, you need to look at similar homes that were sold within the last few months. With our volatile market you should look back 3 months. You can go back 6 months if needed to generate more data, but take these older sales with a grain of salt.
Market value means what a property will sell for at a given time. Comparing to sales that took place a year ago, or even 9 months ago, does not accurately reflect what the home is worth now.

The easiest way to get accurate comparables is through the resources that realtors themselves use. Realtors have access to resources that enable them to precisely select closed properties in a given neighborhood. Realtors can hand-select closed listings that have features and characteristics that are most similar to the subject property.

Buyers are encouraged to pull their own “comparables” by using Zillow and similar sites, AND THEN compare the closed homes to what a realtor pulls up. Then buyers should ask their realtor to explain why he/she picked the homes that were selected in his/her comparable market analysis.

In sum, it will be the most recently sold homes with the most similar features and condition that will reflect the most accurate picture of a subject property’s current market value.