If you are a home buyer, know this, you should prepare yourself for a long process but be ready to close when the time comes.

If you’re a seller who needs foreclosure avoidance assistance, it is imperative that you speak with a qualified attorney and a real estate agent who knows the process and has closed several short sales. That being said, even the pros can run into just a very poorly managed bank or loan servicing company or a very difficult investor during the process.

As someone who’s completed many short sale transactions, I know some “good” banks and I know some very poor ones. But I don’t know them all. I have contacts in the business that can provide me a heads up on certain deals and advise me as to how well or poorly things might go. But no one knows everything and therefore, the short sale process can be unpredictable.

Why am I writing this article?

I recently received some emails from a customer who was complaining to me about how long they’ve been in contract and about some other things which I won’t discuss here.

And I want to make this point clear.

We had a lengthy conversation months ago about how this short sale process could play out given the circumstances of the seller. And this customer knew this going in.

It’s been over 6 months and we are still waiting on the short sale to be approved.

Now of course I’ve had short sale transactions take longer than 6 months to go through, but nevertheless, as a buying customer, my heart goes out to them and the sellers involved. This is a tedious process and a tough business.

Short sales are not for the faint of heart.

But no pep talk will do the trick. To fully understand the frustration you might have to endure as a buyer and a seller can’t really be explained in an online article like this and nor can it be fully understood by having upfront conversations. However, I think an article like this, is long overdue on my website and others that discuss the topic.

If there’s one thing I want to be, with my home sellers and buyers of short sales, it’s honest. I want to honestly tell you (whomever is reading this) how hard it can be.

I recently visited with a doctor regarding a personal health matter regarding my wife and this doctor was very confident. The doctor told us everything would be fine. However, he of course went over the “X factors” as I like to refer to them and explained how there is a chance of this complication or side effect, etc.

This came from one of the top surgeons in the nation.

I don’t consider myself to the one of the top short sale experts in the nation by any stretch. I’m good. I’m very good and I have an excellent understanding of the short sale process and an excellent record of helping people avoid foreclosure. That being said, having this conversation with this nationally recognized doctor today made me think of how I need to “keep it real” with my current and potential future clients and customers.

Short sales can be tough. Short sales can be miserable. Things can go wrong. Things might not turn out the way you want them to.
Again I want to stress to any buyer or seller out there, that no matter what you hear or read, be prepared for anything.

I also want to point out that there are also many other variables I’ve discussed before, that can be a detriment to the process of a short sale such as unorganized or unmotivated sellers, terrible attorneys, unscrupulous third party negotiators, ill-advised listing brokers, uncooperative buyers, the economy, the job market, health issues, death, and the list goes on and on. With me at the helm, I help to minimize these variables and (for sanity’s sake) this goes a long way toward making the process, when it does take a long time, at least be narrowed down to a select few variables such as the sellers lender(s) being at fault.

In closing, at the end of the (possible) long road, whether you’re a buyer or a seller of a short sale, when I help get the short sale approved and closed, that is a good thing. I can’t tell people to be appreciative of that “good thing”. I can’t tout how successful things were, especially when the buyer and/or seller may be a “glass is half empty” type of person. But in the large scheme of things, getting a short sale transaction successfully closed with all parties accepting all terms is a great accomplishment. Period.

Most of my short sale transactions are very calculated. I narrow down most variables, pre-qualify the home being sold as a short sale and the marketing runs smoothly. The process of contract is seamless and the care that goes into negotiating with lending institutions is incredible. I set a high standard for myself and my team. My short sale transactions are by the numbers.

Should you have any questions about how I can help you sell or buy your home via a short sale, please call me at (631)831-9048. If you want to vent about how your short sale deal is going poorly – post it at facebook.com/longislandshortsales.
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By Thomas McGiveron, LSA

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Under HAFA, homeowners can avoid foreclosure by selling their home as a short sale or by giving the house back to the bank through a process called a deed-in-lieu of foreclosure.

What Banks Are Impacted By HAFA?

The best way for anyone to find out if their home is HAFA-eligible is to contact me at 631-831-9048 or email me here. But generally speaking, there are many banks that are participating in the HAFA program.

The first step you should take as a homeowner who needs information, is to contact your mortgage servicer (or lender). You will need to know what your options are. There are basic criteria you must meet in order to be eligible and they include the following:

1. Borrower’s total monthly payment must exceed 31% of gross income.
2. Unpaid principal cannot exceed more than $729,750 (for single-family).
3. High likelihood of mortgage delinquency or default
4. First lien originated before 2009
5. Must be principal residence

How has HAFA impacted the short sale process?

For prospective buyers, if you go in to a short sale deal, it’s important that you do some up front analysis of the home you’re looking at, especially if it’s a short sale. What do you want to look for and where? Well that’s where a professional like myself comes in. In order to avoid “bad deals” and capitalize on “good” ones, you’ve got to know if HAFA applies to a given homeowner. Unfortunately this is not easily determined.

For sellers and buyers, HAFA has helped streamline the process for all parties. It outlines how you can qualify and provides you, your mortgage servicer and your buyer with a road map for getting things done faster. The process of a short sale typically takes 4 to 6 months. Try having a buyer wait around that long. The process is not an enjoyable one for anyone.

For sellers, it’s important to start evaluating your loan to see if it is a candidate for HAFA. You do this by contacting your mortgage servicer or lender(s). But before doing this, you must determine if your income meets the basic qualifications (your monthly mortgage payment cannot exceed 31% of gross income). And make sure if you have two loans, that your first mortgagee knows you have a second mortgage. Other items like property valuation (to determine if the home’s value is less than what you owe on mortgages) and HAMP ineligibility.

Remember, HAMP (Home Affordability Modification Program) is the first step usually in determining whether or not a short sale is the most viable option for you to avoid foreclosure. These programs from the government start with helping people remain in their homes rather than having them sell and move. However, HAMP has been largely ineffective for many homeowners based on the sheer numbers nationwide.

This slide below is actually a little scary in that, in the millions, taking just the middle-of-the-road numbers, there are about 5.5 million homes in foreclosure (waiting to come to the real estate market). Now measure that with the homeowners who have gone through the HAMP (not HAFA) program (about 350,000 homeowners nationwide).

Clearly, the HAMP (modification program) has not reached enough homeowners and in most cases, will not. People just don’t have jobs. If your income is zero, obviously, your not going to be able to modify your mortgage successfully. So going through the HAMP process to modify your loan isn’t going to change anything or be successful. You need income of some kind and that income amount must be enough so that you can A. Feed yourself and your family B. Pay bills C. Pay household expenses D. Make a modified mortgage payment and E. The monthly mortgage payment must make sense for the bank in some economically sound fashion. The lender or investor must make some kind of money.

You can’t have a $400,000 mortgage and expect to pay the bank or loan servicer $1,100 a month. Banks can’t give away their money either. They have to recoup what they’ve loaned in a way that makes sense.

In closing, if you’re a seller, it’s important that you start the process yourself. You must follow up with your mortgage servicer. If you need help, please feel free to contact me. As a buyer, don’t go out there by yourself looking on your own. Trust me, you don’t want to get tied up in a property that just doesn’t make sense (too many variables exist that could delay your purchase for months and worse, never work out at all). I can help you avoid “bad deals”.

Should you have any questions about how I can help you sell your home via a short sale, please call me at (631)831-9048.
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By Thomas McGiveron, LSA

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For the purposes of this article, I’ll provide some basic information about the process of foreclosure along with some current data.

The Process Of Foreclosure

Rather than give you the boring information you can get anywhere if you just google “process of foreclosure”, I’m going to give you the reality of the process starting with 90 days late. And remember, before I proceed with this article any further, please consult a qualified attorney if you are falling behind on your mortgage payments.

Now, 90 days late is a big turning point in the process. Once you’ve fallen behind 90 days on your mortgage payments, normally…and again I stress “normally”, your bank(s) will file what’s called a lis pendens with the county clerk. This is the first part of the process where the bank begins the legal process of making it known publicly that you are in default of your mortgage obligations.

Due to the current economic conditions of the country, many banks are behind on this process. How far behind? We’ll get to that in the current data portion of the article.

Now your bank will continually attempt to allow you, the borrower, to “cure” your mortgage default. This “cure” is usually a full payment of all monies owed the bank that you are behind on. The more you fall behind, the more fees will be piled on top of what you owe, as the bank incurs further legal expenses and investment losses on the lack of collection from your mortgage.

Because banks are so far behind on much of their paperwork, it is my belief, that many homeowners in this situation do not pay much attention to the process. But sooner or later, you will be served a notice to appear in court regarding the matter. This is when most borrowers start to pay attention.

Even during the short sale process, the bank doesn’t stop with these other proceedings. Even when you’ve decided to call me and list your home as a short sale, the bank will continue the process of foreclosure because they have to. A short sale process doesn’t stop the bank from pursuing foreclosure against you. This is important to remember.

One of the final processes of foreclosure is an auction sale of your home that must be publicly advertised. Once this occurs, you could still be living in the home. You still have rights to remain in the home and in many cases, you can continue living in the home for many months. Again, consult a qualified attorney to represent you in these matters.

What’s The Deal With The Banks?

Under “normal” conditions, banks have a streamline process by which they keep track of default loans and process a foreclosure. Fortunately for homeowners in default and unfortunately for the banks, the current conditions of the economy and housing market are so out of line with tradition that this process of foreclosure is not so cut and dry.

According to recent statistics featured in this slide, the average time it takes a homeowner in default to lose their property to foreclosure has increased 75% since 2008. That is a staggering statistic that’s costing banks and loan servicing companies millions of dollars and perhaps the industry billions of dollars a year.

On average, borrowers in default can maintain living in their home nearly 438 days before a bank forecloses and I don’t believe this statistic includes the amount of time after the bank repossess the home, that the borrower (now occupant of the residence) remains in the home before actually leaving.

So if you’re asking how long it takes a bank to foreclose, there isn’t any real clear-cut answer. But one thing is for sure, and I want to make this very clear, sooner or later, there will be yellow signs on your home that say “Bank Owned” and all the neighbors will know what’s going on. Foreclosure is very public whereas a short sale is much more discreet.

Should you have any questions about how I can help you sell your home via a short sale, please call me at (631)831-9048.
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By Thomas McGiveron, LSA

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If you’re in a situation where you’re faced with foreclosure, you may be wondering what the advantage of a short sale over a foreclosure is exactly. Right Now, lenders and loan servicing companies are cooperating much more with borrowers to get short sales completed and get the headaches and expense of foreclosures off their backs. Incentives like the HAFA program offered by the US Treasury for TARP banks is one major reason and of course, it has to do with money (banks that expedite short sale transactions get money as in incentive to cooperate with borrowers).

Foreclosure or Short Sale?
While government programs like HAFA may not be having as great an impact as people hoped, it is definitely something that may help homeowners and their real estate agents complete a successful short sale.

One main component to seeing if you qualify for the HAFA program is to know if your lender(s) accepted TARP funds. If so, then HAFA may be a viable option. Secondly, with any short sale, in most cases, some form of financial hardship must exist and there are several categories that certainly impact finances such as divorce, death, or loss of business or employment.

But what’s the advantage of a short sale over a foreclosure? Simple, you avoid foreclosure. A foreclosure on your credit record is devastating and the process of having the bank put up yellow signs in your home as they evict you or you move out, can be very embarrassing. With a short sale, there is no yellow sign that says “bank owned”, rather there’s a real estate for sale sign that says Coldwell Banker and has my name on it.

A short sale is a little more discreet. Of course, once the home is on the Multiple Listing Service, then Realtors and their buyers will know you’re selling the home via a short sale, but it’s better than having as public a default as a foreclosure (which is also placed in several newspapers to announce public notice of foreclosure).

A short sale also will give you, the owner, more options for moving on faster in your life. A short sale demonstrates to creditors that you worked with your lender(s) responsibly rather than just walked away and let your credit and a home go down the drain.

Short sales help communities continue to stay afloat and will help home values remain stable as well. I guarantee that all your neighbors will welcome a short sale over a public foreclosure. So a short sale is better for the community and your neighbors.

Now a short sale transaction is definitely more work than just allowing your home to be foreclosed on. There’s paperwork to fill out and there’s a home selling process and negotiating with your lender(s) that takes time and patience. But in the long run, a few years from the date of you closing this chapter in your life, when you can afford a new home and have the credit worthiness to start over again, you will know the greatest advantage of a short sale over a foreclosure is, you can move on with your life much faster.

Should you have any questions about how I can help you sell your home via a short sale, please call me at (631)831-9048.
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By Thomas McGiveron, LSA

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What’s the deal with Loan Modifications?
In my previous article, Government Programs For Homeowners Behind On Mortgage, I talked about some of the basics of government interventions.

With the information I’m getting, like less than 1 in 10 homeowners was actually helped by HAMP, I’m starting to really wonder, is it worth it to even try and modify a mortgage. Well, the short answer would be yes, mainly because banks usually require a homeowner who decides to sell their home for less than what they owe (a short sale), the banks want to see that all other avenues have first been exhausted, like a loan modification or refinance (which if you’re underwater on your mortgage, is completely out of the question due to lack of equity).

According to this statistics, less than 1 in 10 homeowners actually achieved a permanent loan modification. Of course, 1 in 10 is better than zero, but if you’re having trouble paying your mortgage due to a financial hardship, then discussing a short sale with an expert may be a sound alternative.

One of the first steps is getting as much information as possible about your options. Should you have any questions about how I can help you sell or buy your home via a short sale, please call me at (631)831-9048.
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By Thomas McGiveron, LSA

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The Long Island area foreclosures are up and most people know this. However, what you don’t know is that your town could be one of the hardest hit in the nation! The Federal Reserve Bank of New York did a report recently analyzing the data by the zip code level. What they found was that Suffolk and Nassau county had very high markets…and we’re not talking A’s or B+’s either. In towns like Central Islip, Mastic and Shirley, the report found that instances of mortgage defaults were extremely high.

What’s happening to Long Island Real Estate?
In many towns, investors are on the prowl. They’re looking for deals and they’re finding them. In towns that are heaviest hit by mortgage defaults and increased bank owned homes, investors are buying up properties and renting them. This has many people concerned about how this will impact home values.

It’s well-known by homeowners that having a majority or a high number of rentals in a given area does not mold well for home values. High concentrations of owner-occupied properties lend well to home values in general. But with the Long Island real estate market undergoing a typhoon of increased foreclosure sales and short sales, the landscape of owner-occupied homes is changing.

According to the report by the New York Fed, twenty percent of homes in Suffolk County, that are not necessarily distressed (meaning the homes are not in default), have a negative equity position – they are worth less than what is owed on the mortgage. In Nassau county, that number is 14 percent.

Many of these negative equity homes had loans provided that were very low money down. When there’s very little money put down, any dip in the value will result in the home being worth less than what is owed.

Could that be the next problem with these low money down loans? From 2007 through the middle of 2009, I believe, any homeowner that purchased a home with little money down, better not find themselves in a position where they must sell within the next 3 to 7 years.

That could be a real mess. After 2009, I think the FHA 3.5% down buyers are probably going to be okay in that if they can hang on to their homes (not get divorced, not lose their job, etc.), the drop in their value will not be as significant as it was in the years 2007, 2008 and most of 2009.

The overall decline in home values has slowed dramatically due to increased demand as a result of the home buyer tax credit and low (incredibly low) mortgage rates. Hopefully, the market will remain strong, people will not flood the market with more homes for sale, and the recovery to a more normal and stable market will being taking place in 2011.

Until then, should you have any questions about how I can help you sell or buy your home via a short sale, please call me at (631)831-9048.
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By Thomas McGiveron, LSA

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If you googled, “government programs for homeowners behind on mortgage” and found information about HAMP, and you subsequently attempted to modify your mortgage loan through HAMP (Homeowner Affordability Modification Program), you might be asking yourself, “Why did I do this?” Right Now, there are plenty of people out there that are asking that question. I know more people that waited over 12 months to get any word from their lenders about the opportunity to modify their mortgage loans, only to find out they were denied and oh by the way – you’re in default for not paying your full mortgage!

Why Government Programs Don’t Work?
I’m not saying they don’t work. There are plenty of people (about 300,000 or so nationwide) who were helped by the various programs out there for homeowners behind on their mortgage who’ve suffered a legitimate financial hardship.

But I’ve heard the “war stories” and seen more people tell me how miserable it was trying to deal with the systems in place, to simply lower their mortgage for a while so they could get back on their feet.

Of course, when you’re talking about money, nothing is simple but I’m not going to get into that here. For the purposes of this article, I want to stress to people, that if you begin the process of trying to work with your bank on any government program to lower your monthly payment so you can keep your home, be prepared to be frustrated or, and this is important, decide up front, to keep a positive, go-with-the-flow attitude, because you’re going to need it.

One thing you’ll be dealing with on the other end of the phone will be a person handling 100’s of cases, perhaps even thousands and they’ll be constantly fielding phone calls from people who are angry and frustrated, broke and losing their homes. These people are definitely in a unique job.

So when you call them, try and not be the person who calls them at the exact time they start their shift (when they receive 85 other phone calls). And don’t be surprised if that person never calls you back. Have you ever come to work or gone home to find 110 voice messages…from 110 unhappy people?

So bear with them and again, be positive.

Next, get everything in writing. If they tell you to pay a reduced amount while they work on your loan modification application, get it in writing. Ask nicely to have them mail it to you – an agreement, anything that says they’re giving you permission to pay a reduced amount.

Next, do not have any expectation that one department of the bank talks with the other departments. They don’t. You will be speaking with someone at a loss mitigation department of some kind. This is separate from the default services department or the company that the bank hires to handle defaults.

Next, double check all the instructions from the loss mitigation department and get it in writing. Please ask them to email you, again in writing, directions specifying exactly what they want from you. Expect them to ask repeatedly for the same items or, worse, expect the person you’re getting instructions from to give you the wrong information or expect them to get the wrong information and give it to you.

Yes, that’s right. Read it again. Expect the wrong information.

Like any other government program, they’re not organized and “decoding” the requirements of the government programs is not easy. So the bank or loan servicing company you’re dealing with, may decipher information incorrectly and thus, provide you with this information and ultimately, delay your application being approved.

Going into this process, know up front, that if you have a spouse who is gainfully employed and/or you are earning unemployment with six or more months left to receive, there is a very good chance you will be denied altogether.

That’s when your bank will send you default notices for the left over money you weren’t paying on your mortgage (that they told you was okay not to pay)!

Yes this all sounds insane and maybe even a little humorous, but it is the reality of today’s government programs. When and if you get into this, please just think of all the stuff you heard about “Cash For Clunkers” and how messed up that was for the dealerships getting their money from the government.

If you’ve been through this process and it hasn’t worked for you and you’re now wondering what to do, consider a short sale over foreclosure. Unfortunately, this problem you’re faced with is not going to go away. I can help. Should you have any questions about how I can help you sell your home via a short sale, please call me at (631)831-9048.
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By Thomas McGiveron, LSA

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All things like this are tough to think about and I have spoken to enough homeowners, young and old, that have poured their feelings out to me over their situation. One thing I want to make clear though is, this challenge in your life is not just going away.

When I meet with homeowners who have lost their home to foreclosure (after the bank has foreclosed and the homeowners become “occupants”, no owners), I always ask them why they didn’t consider a short sale, even as a last resort. Almost all say that they just thought the problem would go away or that somehow, things would change.

When homeowners call me to discuss negotiating a short sale with their lender, I try to be the voice of sound mind. I try to present the facts and stick to them.

One of the facts about negotiating with your lender to sell your home for less than what you owe on the mortgage is, putting the package together. There are many challenges to getting a short sale done. And here’s the thing about that.

It’s tough enough for families to experience the scenario of losing their home. The last thing you want is to hire a real estate agent and an attorney who do not know what they’re doing when it comes to completing a short sale. They may sound very nice and listen very intently. The agent might even offer very kind words of encouragement and offer a warm smile.

But if they don’t know what they’re doing, that will not change your situation and will most likely add stress to your life, rather than reduce it.

My client’s…my families that are experiencing the loss of their home don’t get phone calls from me trying to fix what I have broken. They do not see me running around unorganized with no answers.

Most times, my families receive calculated phone calls about the transaction. And I’m not saying that things don’t fall apart, because they do. I’ve had short sale negotiations fall flat on their faces, meaning a lender has come up with some ridiculously high pay off or a buyer has walked away from a deal due to waiting too long. These things happen.

But the number one thing that most homeowners experience is an agent who simply doesn’t put a complete application into the bank or worse, an attorney that doesn’t know how to complete a package.

Now this can also result from banks that consider a package incomplete because the bank statements are 2 months old…because the bank’s loss mitigation department took 2 months to finally respond or it took that long to “scan the file into their ’system’…”

Believe me, the banks and loan companies are struggling still, to keep up with this housing market turmoil.

But the more I speak with other real estate agents, the more I still hear them making the same mistakes, submitting the wrong paperwork and incomplete packages to the lenders.

So when the dust clears and you can finally think somewhat clearly, I urge you to think like a machine. A machine is built to do something exact. Think of anything around you that mechanical, even your computer. It is built to process and complete tasks.

When dealing with your lender(s), it’s not about how nice I am (even though I’m really nice), and it’s not about how much you may like me (although you will), it’s not about how nice of a car I drive or how expensive my clothing is, it’s about how I can:
A. Market your home effectively.
B. Get a qualified buyer to make a good fair market offer.
C. Get you to contract.
D. Advise you on all necessary paperwork for your bank.
E. Send that offer and paperwork as complete as possible to your lender.
F. Manage the negotiating as quickly as possible.
G. Help your file close and help you successfully avoid foreclosure.

I can help you sell your home via a short sale. Please call me at (631)831-9048.
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By Thomas McGiveron, LSA

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