Minnesota Short Sales Homes

Ron did a longer more detailed article at this link for mn short sale homes

This article is written by Mario….

I have an answer for you on these questions. I am a licensed agent and

I also buy. (name) your comment makes sense coming from an agent but as

for short sales it is not true. When I buy and when i represent a

seller are two different types of strategy but when i buy i 99.9% of the

time will not send over a listing contract because i buy direct from

sellers. My listing contract doesnt get filled out until i sell (paying

myself/company commission). When you begin doing mn short sales regularly you

will see that rules can be broken and exceptions can be made. Certain

lenders will ask for a listing contract and if you dont have one you

tell them that you have not listed it. The majority of lenders will tell

you that you need to submit a written explanation of why u have not

listed the home and in that case all you need to explain is that you were

selling the house for sale by owner because the amount you owed was more

then market value and you couldnt afford to pay an agent out of

pocket. you have to understand that they lender deals with ignorant people

all day and the majority of people in this situation dont even know they

can short sale their house until they have someone approach them about

buying the house and says they can only pay less then what is owed. If

they say you need to list the house before you can submit the package,

they are lying, and you need to speak with another loss mitigator. If

you explain they will understand. the reason i disagree with 4rmgt is

because he is telling you that you should list the house with an agent

because they will see you have tried to effectively market the house. You

need to remember that the lender is simply looking at their bottom

line. If they continue to tell u that you need to list and you already

have a buyer then the person is brand new in that department and you need

to speak with their supervisor. With an offer already on the table…

would you (the lender), want to pay an additional 3-6% for no reason…

No. And by the way, most agents dont have a clue how to do a short sale

and end up blowing the deal or making the bank take much longer then

needed. I strongly suggest you read some of my other posts and see how i

go about submitting and negotiating with loss mitigation. Dont listen

to agents because MOST dont understand a simple retail transaction let

alone dealing with a bank. PS. there are a few good agents that do them

well but not many because they still structure it like a retail deal

when its not.

Your questions about the hud… you should not be doing the estimate

hud1. you need to pass the purchase agreement on to your title company

that you will be closing with and tell them that you need an estimated

hud worked up for the sellers lender and make sure to tell them it is a

short sale and to zero out the “net to seller” and have any proceeds

goto the 1st mortgage. The catch is that title companies are sometimes

ignorant to this type of transaction too. so you need to find a title

company that does them REGULARLY and they will know how to set it up. the

sellers bank doesnt care about the buyers side of the hud at all because

it doesnt effect them. so when you get it from the title company it

will usually only have seller side on it. Make sure to tell the closer

that they need to include any tax assessments, back due taxes, back due

association dues, and any unpaid utilities like city water bills. The

lender will pay taxes and association stuff and usually pay the unpaid

utilities (not gas or electric or cable. only bills that would need to be

paid before title transfers). if not at least you asked and if they

say no then you can always negotiate for buyer or seller to bring funds

to the table to cover them. The worst thing you can do is not do your

due diligence or have your title company do it because all it takes is a

back due association bill for $800 that was not noticed until 2 days

before closing to blow the whole deal. take your time and make sure all

those things are on the hud in the beginning for the lender to cover.

Ps. for any agents that get offended by the way i refer to agents, i

did say that i am licensed also. I am for peace and not war, just want to

help.

At the bottom of this article we have added the new   “Financial Incentives and Uniform Process for Short Sale” that just came out in late May, 2009 by the Obama Administration, see the bottom of this article for details.

Your first step for solving this problem is to please call 763-300-1648 Ron ron@minnesotainvestors.com, we will help you with the entire short sale process.  Most people over financed have about 4-5 main fears:

1. Will I be able to get another home with bad credit?  There are tons of c/d and rent to own homes, we have the solution

2. Will it affect my credit? Yes, but what’s credit these days, you can get rent to own and c/d’s with bad credit, maybe finance 2-3 years

3. Will there be a tax burden? Currently there is a great tax benefit in effect,take advantage  http://www.irs.gov/individuals/article/0,,id=179414,00.html

4. Will I have to move out right away and be on the street?  Likely not, the foreclosure timeline is quite long, giving you planning time

5. Will it be a big hassle?  No, there is some upfront signing of paperwork, we negotiate with the bank and handle the rest

Now that we have that out of the way, call us 763-300-1648 or email ron@minnesotainvestors.com and let’s get started, more info below

Minnesota Short Sale Homes

What is the difference between a real estate short sale vs. foreclosure home and what does it mean and how does it work? This is a popular and important question in today’s national economy. I will define a short sale for you later in this article, but first I want to tell you why their seem to be so many short sales going on right now, so I will get into the definition of short sale in just one moment, but first please let me go over some of the common reasons and situations on how a homeowner gets into the situation and then on how to save your home from foreclosure through what’s known as the short sale process. I believe some of the most common situations that the homeowner gets into resulting in pre-foreclosure, is that they get behind on payments, and soon they are facing foreclosure, they soon learn that due to the current real estate market and how home values are going down quickly It’s then, that the homeowner realizes they have little or no equity and therefore they can’t afford to even pay real estate commissions. If it’s an investor or burnt out landlord they may get into a situation where it needs too many repairs, of which they can’t afford, and then the property becomes a vacant house due to many reasons like a job transfer, or a sudden need to move. Here is where the homeowner needs help and at this point we will call upon a short sale specialist as we now have an owner with a mortgage with a lender like Countrywide or a bank like Wells Fargo with a short sale house situation.  We may have you talk to a real estate attorney about Minnesota Foreclosure short sale law.

The definition of a Real Estate Short Sale is: A lender’s agreement to accept less than is owed (short payoff), as an alternative to foreclosure.

A message to all of my readers, I am going to try to keep updating this article over a period of time as I learn new ideas and information to help homeowners, investors, buyers, and anyone related to real estate with this popular subject. Let me now get into some short sale information and see if I can help answer a lot of the questions about the process and how shortsales work in Minnesota, let’s go over why a lender would even do a short sale.

Why Would a Bank do a Short Sale?

Banks are not in the real estate business and what I mean by that is the banks do not want your house back through the foreclosure process, they don’t want to own the property, they want to only lend money. Banks are in the lending and interest business. The reason a bank is willing to do a short sale is that the entire foreclosure process in addition to other costs can equal $50,000+ easily by the time the bank sells the house they get back through foreclosure. The lender offering the property for less than the underlying debt, or anything under $50,000 discount could be worth it to them. For example, let’s say a home owner owes $200,000 on a house and it’s now worth only $175,000 and the seller found a buyer for the $175,000. In this scenario, there is $200,000 owing on the property, so therefore it would take a “short payoff” on the banks part, just to get the deal done. Sometimes lenders will even count the loan as paid in full even with the discounted difference, but not always, it’s a negotiable item. The Four parties that are involved in a short sale are:
1. The owner of the property that is being foreclosed upon
2. A buyer that is interested in the property; maybe an investor seeking a discount
3. The third party that is servicing the loan, the lender itself, or a servicing company
(Conventional, FHA, VA, Freddie Mac, Fannie Mae, etc.)
4. PMI- Private Mortgage Insurance company with the lender

What is the Timeline for Foreclosures in Minnesota?
Here is a diagram: http://mnrealtor.com/consumer/ForeclosureProcess.pdf

2: The Mortgage: After the promissory note is signed, the borrower then gives the bank a mortgage and he/she(buyer) becomes the mortgagor and the bank becomes the mortgagee. This mortgage document will contain the following provisions:

• Acceleration Clause upon default: this provision would give the lender the right to seize the property if the borrower were not to honor the terms of the promissory note. This right, that the borrower has, would end as soon as the borrower cures the default by catching up on any delinquent amount in the arrears, if the buyer refinances, or if the buyer sells the property and pays off the loan.
  
• Due On Sale Clause: this provision would give the bank the right to call the loan due upon the transfer or (conveyance) in the property. The lender does have the right to do this per the provision in writing, but doesn’t always enforce it.
  
• Mortgage Covenants: these covenants known as rules or (promises) force the borrower to do certain things such as: make sure the property is insured and keep the property in good repair, pay property taxes, essentially it’s in there to protect the lender.

What then is considered default status?

The mortgagor is required to make the agreed upon payments on a monthly basis; however, a typical real estate mortgage would include terms requiring the mortgagor (borrower) to do more than just make the agreed upon payments. Such as, the mortgagor is required to maintain property insurance on the property, pay all real estate taxes that become due, and maintain the property for the benefit of the mortgagor and the mortgagee (lender) which was just stated above. In addition, the mortgage may include a provision that would prohibit the sale of all or of any portion of the property without the prior written consent of the mortgagee. These provision, as mentioned above, would be the due on sale clause. If the mortgagor would fail to abide by any of the terms in the mortgage, he or she (by definition) is in default status. Most real estate mortgages would have a “Power of Sale Clause” that would give the mortgagee the ability to legally take possession of the property.

Under Minnesota law, there are two methods of foreclosing a real estate mortgage:

Foreclosure by Advertisement (Non Judicial) (most common method)

To initiate a foreclosure by advertisement in Minnesota, the creditor(lender) would need to prepare what is referred to as a “Notice of Mortgage Foreclosure Sale”. This notice must specify in writing, the name of the mortgagor, the mortgagee, as well as the original principal amount that is secured by the mortgage, the date the mortgage was originated, the amount the lender claims to be due on the mortgage including taxes paid by the mortgagee, when and where the mortgage was recorded, a description of the mortgaged property, the time and place the sale will take place, and the time that will be allowed by Minnesota law for redemption by the mortgagor. When this notice has been prepared by the creditor, it must be published in a “qualified” newspaper in the same county in which the foreclosing property is located for a period of at least six weeks prior to the sheriff sale. After the foreclosure notice has been prepared and the publication (advertisement) has now begun. The debtor may have the right to reinstate the mortgage. This right the borrower(debtor) has to reinstate is. to be guaranteed by actual Minnesota law even though the creditor/lender may have already accelerated the balance due under the mortgage prior to the initiation of foreclosure proceedings. For the borrower to reinstate the mortgage, the borrower must pay to the mortgagee the amount of the default at the time the mortgage foreclosure proceedings were first initiated plus all accrued costs of foreclosure up to the date of reinstatement, this would include half of any attorney’s fees allowed by law or $150, whichever is greater. If the borrower were to reinstates the mortgage that they are behind on, the foreclosure proceeding would stop at that point, but to reinstate the mortgage, the required back payments in arrears must be paid prior to the sheriff’s sale taking place. I wouldn’t recommend waiting until the last minute on this.

2) Foreclosure by Action (Judicial) (Very rare method in Minnesota)

To initiate a foreclosure by action in Minnesota, a summons and complaint would need to be served according to the “Minnesota Rules of Civil Procedure”. The complaint would name as it’s defendants, all current owners of the property, any other lien holders, and those with any right to possession of all or even a portion of the premises. If no party were to defend the action, then the mortgagee may obtain from the court that it be deemed a valid mortgage. If any of the defendants object, a trial may be necessary to establish the right of the mortgagee to whom will foreclose. Once the court has made its decision, the sheriff would then publish a notice of sale for a six-week period of time.

If the debtor (borrower) is a resident of the county in which the mortgaged property is located, a copy of this judgment of the court and in addition the sheriff’s notice of sale must be served to the the one in debt (borrower). After serving the notice of sale on this debtor, the sheriff must post the notice of sale for the six weeks. At the sheriff sale, the sheriff may sell the property only to cash bidders, except for the mortgagee, which can bid (pledge) its total mortgage and debt. Following this sheriff sale, the sheriff would report the sale to the court, which would then confirm the sale.

Once the court has confirmed this sale, at that point the statutory period of redemption for the debtor would then begin. The time periods for redemption of a foreclosure in Minnesota are the same as for foreclosure by Advertisement. Under either method of foreclosure in Minnesota, any junior lien holders may redeem at the foreclosure sale if the mortgagor fails to redeem. These junior lien holders may redeem if, before the expiration of the mortgagor’s redemption period, they have filed for record, a “notice of intention to redeem”.

The junior lien holders are each given a period of five days within which to redeem the property, and this is based on the priority of their claims or liens on the property (the recorded order) in most all cases, against the property. If the amount that is realized at the sale turns out to be less than the amount due on the underlying debt, the creditor may then be able to obtain a deficiency judgment against the mortgagor, but if the statutory redemption period is six months (very standard) a deficiency judgment can be obtained against the mortgagor “only” if foreclosure was by action. No deficiency judgment can be obtained against a mortgagor, if the “redemption period is six months”, and “foreclosure was by advertisement”. If the redemption period is twelve months, a deficiency judgment could be sought after the borrower.

The Redemption Period:
The redemption period is the time immediately following the Sheriff Sale. During the redemption period the mortgage on the home is no longer valid and the lender will not accept anything, but full payment of the loan. This leaves the homeowner with two options at this point: either sell the property or refinance the property. The mortgagor must redeem within six months of the date of the sale unless one or more of the following did apply, in which case the redemption period can be up to twelve months:

-The mortgage was executed prior to July 1, 1967. • The amount claimed due and owing as of the date of the notice of foreclosure sale is less than 66-2/3 percent of the original principal amount secured by the mortgage. • The mortgage was executed prior to July 1, 1987, and the mortgaged property, as of the date of the execution of the mortgage, exceeded ten acres in size.

-The mortgage was executed prior to August 1, 1994, and the mortgaged property, as of the date of the execution of the mortgage, exceeded ten acres but did not exceed 40 acres in size and was in agricultural use as defined by Minnesota statute. • The mortgaged property, as of the date of the execution of the mortgage, exceeded 40 acres in size. • The mortgage was executed on or after August 1, 1994, and the mortgaged property, as of the date of the execution of the mortgage, exceeded ten acres but did not exceed 40 acres in size and was in agricultural use, as defined by Minnesota statute.

What is the Authorization to Release Form?
View this Authorization to Release info form
This form would be 1 of many items in the Short Sale to Package.

Here is an example of the language you would see in a Authorization to Release info:

Borrower/Owner:

Social Security Number:

Property Address:

I/We hereby authorize______________________

and it’s agents to obtain any and all information with respect to the following items:

1. Any and all information on my existing loan, including but not limited to:

My mortgage loan with (Lender)_______________________________

Under Loan Number:________________________________________

2. Any and all information on any existing liens against the above named property, including but not limited to information for any lien holder/and or their attorneys

3. This document may be reproduced by the individual or company to obtain information from multiple sources as needed

Please provide________________________________________

with any and all information requested on our behalf

{Borrower’s Signatures}

{Co-Borrower’s Signatures}

How Does a Short Sale Hurt or Affect Your Credit Score or Report?

This is a very common question asked all the time as far as what effect it will have, how a short sale on your record will affect your credit score and credit report. A short sale in general will affect your credit report less than a full foreclosure or deed in lieu of foreclosure. You can have a “settlement paid in full” negotiated with the lender, and obviously this will show better than simply doing nothing. No one may know exactly to perfection what the difference is in points on how your credit score would be affected whether you do a short sale vs. a foreclosure. If you are behind in payments and you owe too much on the house, what choices do you really have anyways, you are over financed. If you have lots of money, assets, reserves, and a high net worth and you just don’t feel like making payments or feel like paying down your principle balance, your lender won’t want to do a short sale. They will first want to get financial info from you, and a written hardship letter. This will make it quite clear to the bank that your only option is some help from the lender. This is where you see a seller that has a property listed on the MLS reading as “subject to bank approval”. A full foreclosure can stay on your credit for up to 7 years. I recently heard that Freddie Mac was trying to pass some new laws for their company that would not allow some borrowers to finance a home for up to 5 years through them. This was more in the cases where people were just walking away, and didn’t have a true hardship case. Currently you can get a FHA loan where your last foreclosure was only 3 years ago. That’s how it is in the current market. You can always just go buy on a contract for deed, get into a rent to own, or rent a property while you are improving your credit. As a general rule you can still get loans with 30 day late payment on your record, it becomes less likely with a 60 day late, and very hard with 90 day late mortgage payment, etc. Also in today’s market you can get a lender and the loss mitigation department to agree to a short sale without being behind on payments. In the recent past you had to be behind up to 90 days. It’s slowly been easier and easier as the lenders want to solve this currently large problem with foreclosures. You will probably have many questions about credit, credit repair, bankruptcy, and how all of this affects you and works together, the guy you will want to talk to locally is: Todd Rooker 763-383-0959, he is the owner of Armor Financial Services Credit and Debt Specialists. He is good to talk to about credit repair, financial planning, and he can even refer you to a specialized bankruptcy attorney that understands short sales and a tax specialist on how the “short payoff”, 1099, or deficiency judgment could affect you as it relates to your taxes. There are situations where you, as the seller, are “insolvent” as the definition put forth by the IRS. Please consult a tax advisor on this. You should check out the new Fannie Mae guidelines for foreclosures and short sales. This is why you don’t want to walk away Walk Away Vs. Short Sale

How Does Bankruptcy and Short Sale Work Together

I am going to refer this over to Todd Rooker 763-383-0959 a specialist mentioned above with credit repair knowledge, Todd can refer you to an attorney that specializes and understands the affect of bankruptcy and the foreclosure process. As a general rule a bankruptcy doesn’t stop a foreclosure, and in some cases it can only slow it down. Situations where a bankruptcy is done before the sheriff sale could slow down, or postpone the sheriff sale, whereas if it happens during the redemption period it would just take place within that redemption window, so my understanding is that before the sheriff sale would be where you are slowing it down. Being in foreclosure prior to the sheriff sale and prior to the foreclosure being filed by the bank would be considered a pre-foreclosure. Also the lender must file a motion asking for the foreclosure to proceed. I would highly suggest that you go over this with a bankruptcy attorney who does this every day for a living. You will be getting a letter known as an “Affidavit of Abandonment for Real Estate & Asset”.

How Do I Buy a Short Sale?
As a buyer you want to know what is in mn for sale and when you find out you’ll ask how to make an offer to buy a short sale house? When buying a short sale home it’s recommended you work with a buyer’s agent or a listing agent that is working with the 3^rd party short sale negotiator, or directly talking with the loss mitigation department at the bank. They will be able to update you on what’s going on. You are probably wondering where to find them. Typically you are looking for an agent that is listing houses on the MLS stating in the agent remarks such as “subject to bank approval”, “subject to a short sale”, this is a “lender mediated transaction”, “subject to 3^rd party approval”. These are the types of phrases you are looking for. This agent could likely be in the business of negotiating short sales all of the time. When you call them just tell them you are a buyer looking for some help. After you look at some of the available properties they have on their short sale list. After you find the right property you like just like any other transaction, you will have the agent write up a short sale offer that will get submitted to the bank.

How Do I Work With a Short Sale Real Estate Agent
There are REALTORS® that do specialize in short sales and foreclosures. That is the type of real estate agent you should work with. They are going to understand the paperwork, the short sale process and all of the timelines that are involved. The agent will meet with the homeowner and they will go over the paperwork, have you sign it, collect it and get it into the negotiator, so that they can submit it with the package to the lender. The agent could put a sign in the yard if the seller agrees as well as get the property listed, and start getting showings on the property, make phone calls, return phone calls. The listing agent can review purchase agreements, write up purchase agreements, sometimes can even work with the buyer’s also. The listing agent works very hard along the way to keep the homeowner informed throughout the entire process. When these houses are listed on the MLS, it may read something like subject to 3rd party approval or subject to lender approval, since it requires the lender to lower the price to get it done.

After the sheriff’s sale during the redemption period?
Some questions that often get brought up are about the redemption period which takes place after the sheriff sale (This section will be updated soon, check back)

How Do I Get Additional Short Sale Classes and Training?

One of my favorite training classes I have taken is a Saturday class based on the program Secrets of the Short Sale created by Steve Dillon also presented by Curtis Brooks. This is a short sale course that these two came up with that they spent a lot of time and research on from their experiences, and someday I hope to check it out myself. There is a popular course out there by Tom Butler called Short Sale Magic. I see it advertised online everywhere. Either of these programs are perfect for those investors that want to get into the business and start there own short sale company. It’s important that you learn the proper requirements and procedures in the business, proper forms, laws, tips and how to properly service your clients after you have sent in the initial short sale full packet. Please remember when listing your properties for sale to put in the “agent remarks” online that the sale is “subject to a short sale”, so that the buyers know it’s not a conforming traditional sale. One of the things you will get from the many training books and classes out there is how to really be an expert at how to do negotiations with the bank and their loss mitigation department. Soon after doing many transaction and calls in which you have spoken to this department at the bank, after enough times you will be known as the loss mitigation specialist! When you first meet with your seller(clients) you will be collecting a lot of their personal information (this is listed at the bottom of this article) and after you gain all of this info and decide that you can move forward with their situation, you will be getting some contracts signed for the short sale. One of the many items you will need from the seller is what’s referred to as a “hardship letter”. This is best presented to the bank if it’s hand written by the seller describing their current situation and why they are not able to make the payments in the coming future. This will be one of many items in your package that you will send into the lender before you would get an approval later on. Your goal would be to eventually build up a lot of referrals and leads and create a very efficient short sale system.

How Does a Short Sale Affect Me With Taxes?

This is a very imporant question, and has a newer answer as of the end of 2007, in regards to a big tax rule that took place: http://www.irs.gov/individuals/article/0,,id=179414,00.html Being that I am not a tax advisor I will not get into this question and topic too deeply, and also I have attached numerous great articles from the IRS, and attorney’s below for further reading about short sale taxes and the 1099 the homeowner could receive in the future. We will want to make sure that the short sale expert negotiator does his/her best to help you out. I have listened to many experts and been to many short sale seminar and training, and they all seem to have a different view, or at the very least explain it in a different way. As a general rule in Minnesota, when you go through the foreclosure process, that lender who does go through a standard 6 month redemption by the way of advertisement has in effect relinquished their rights at coming after the borrower for a deficiency judgment on the short sale. However, you are looking to sell the property for less than what is owing before it would go back to the bank. Therefore with this situation, when the short sale negotiator talks to the bank they will need to get a letter approved by the lender to waive any future deficiency judgment against the seller and consider it a “full settlement paid in full”. Please keep in mind that lenders can still come after anyone that signed on the original promissory note that guaranteed and signed this note. In addition the other lien positions didn’t initiate the foreclosure, so they still have the right to come after the seller for a deficiency judgment. Also many lenders will do what’s called a “partial release” where they detach the lien (mortgage) from the property so that the property can be sold and clear title can be passed to the next buyer. Depending on the negotiations with the lender, this promissory note can become a judgment and the lender can later come after the homeowner for that amount they guaranteed. Also please keep in mind if you sell it on a short sale, or the bank ends up with it back, eventually their will be a “loss” showing to the lender of which the lender will take that difference (amount owing – amount sold for) and even if they don’t’ come after you for a deficiency judgment they can always pass that information onto the IRS, and at the timing and choice of the lender can 1099 the homeowner possibly 1, 2, or 3 years later when it would make sense for the IRS, to show it as a loss on their tax records for that year. This part of the transaction can get pretty complicated, so I think you should seek advice of a tax advisor, I would also recommend you talk to Todd Rooker on this as well as he can put you in touch with the right tax advisor.

How to Find My Next Property Now That I Have Bad Credit?

Now that you feel that you have bad credit currently or know that you soon will have bad credit, you need to plan on your next property that you will live in. You will want to consider the fact that the foreclosure process in Minnesota is long, and during negotiations with the bank it takes some time, so you will have to make a decision if you are able to make future payments, if you are going to save that money up, or what you decide to do. If you need a Minnesot place to rent. All of them allow for bad credit and previous foreclosures, bankruptcy, etc in almost all cases. The more money you have to put down, the more rights you’ll have on the home, and the closer to ownership you’ll be. Check this site for updates, and as of right now, for only 6% down you can buy and own a house on a contract for deed, allowing yourself a few years to get your credit better and qualify for a home in the future. There are plenty of properties out there for those even with not so great credit, so please don’t worry about that, there are plenty of vacant properties.

CONCLUSION:

Let me first say that I always appreciate the opportunity to educate everyone on the short sale and foreclosure process here in Minnesota, and how I can answer everyone’s questions in this article. Let me say I am a real estate agent and broker and I am not an attorney and not a tax advisor, so I please ask everyone to seek guidance in regards to those topics as there are many foreclosure laws as well as many important tax consequences to consider when doing a short sale. Please see my disclaimer at the bottom of this page. I also would like to add that I am more than happy to talk to homeowners that decide to get help to do the short sale procedure. In addition, also short sale and foreclosure agents that want to refer their leads for negotiating a short sale. I will only be able to take leads for the state of Minnesota for right now, possibly on the border of Wisconsin. I welcome all leads of yours. Please read below as I let you know which questions I will need the answers to. You may fax the answers to these questions to 763-390-0011, you may email the answers to ron@minnesotainvestors.com, or I can email you a form and you can fill it out, which could save us all some time. Before working with myself or a short sale agent please read Minnesota’s agency disclosure.

Please contact me at the following info:
Ron Orr, Jr.
Real Estate Agent/Broker
MinnesotaInvestors.com, Inc.
Phone:763-546-9090
Fax:763-390-0011
ron@minnesotainvestors.com

LEAD INFO NEEDED FROM SELLER:

1^st Lender Info:
Lender Name:
Amount Owing:
Monthly Payment:
Payments Behind:
Reinstatement Amount:
Type of Loan: Conventional, FHA,VA
Do you pay PMI:
Account #:

2^nd Lender Info:
Lender Name:
Amount Owing:
Monthly Payment:
Payments Behind:
Reinstatement Amount:
Type of Loan: Conventional, FHA,VA
Do you pay PMI:
Account #:

Property Info:
Are you working with a real estate agent currently? MLS#?
Address: City: Zip: County:
Bed: Bath: Garage Stalls:
Property Style Type: Multi-Unit? Sq Ft? Year Built?
Estimated Market Value:
Does it need repairs: Estimated $:
List of repairs needed:
Sheriff Sale Date:
End of Redemption Date:
Is the property currently occupied or vacant?
Have you had a bankruptcy? Date When? Date Discharged: Chapter 7? Chapter 13?
Other liens on the property? Any judgments? Past due water bills? Past Due Taxes?

Short Sale Documents that we will need soon from the homeowner are:
1. Signed Authorization to Release form
2. Tax returns for the last 2 years (1040)
3. Pay stubs from last 2 months (+spouse)
4. Bank statements last 3 months+ (joint accounts)
5. Recent mortgage statements for all properties
6. Hardship letter (handwritten)
7. Financial form will be provided
8. P&L statement for Self Employed and Properties

Related Articles:
Taxation of Forgiven Debt: The 1099C & You written Feb 24, 2006

Excerpts from IRS publications 544 and 507 Regarding Form 1099-C

Seller’s Legal and Tax Liability in Short Sales April 22, 2008

H.R. 3648 The Mortgage Forgiveness Debt Relief Act of 2007
Questions and Answers on Home Foreclosure and Debt Cancellation

Also the recent reset chart of ARM loans about to adjust

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Disclaimer: MinnesotaInvestors.com, Inc. is a licensed Minnesota real estate broker. Minnesotainvestors.com, Inc. handles the marketing end of short sales, provides education and answers questions. Our affiliate short sale specialist will later assist you. The information on this page and the website are for information and educational purposes ONLY and cannot be deemed as legal or tax advice. Please consult your attorney for any legal advice regarding your foreclosure process, your CPA and/or account for tax related questions.

Please contact me at the following info:
Ron Orr, Jr.
Real Estate Agent/Broker
MinnesotaInvestors.com, Inc.
Phone:763-300-1648
Fax:763-390-0011
ron@minnesotainvestors.com

Obama Administration Announces

*Financial Incentives and Uniform Process for Short Sales*

Responding to the call of the National Association of REALTORSR, the Obama

Administration has announced incentives and uniform procedures for short

sales under its new Foreclosure Alternatives Program (FAP). For borrowers

who do not qualify to have their loans modified on a permanent basis under

the Making Home Affordable Program, the servicer may consider a short sale

or, if that is not successful, a deed-in-lieu of foreclosure (DIL).

* Borrowers (Homeowners). Borrowers qualify under the FAP if they meet

minimum eligibility requirements for the Home Affordable Modification

program but don’t qualify for a modification or do not successfully complete

the three month trial period. Before proceeding with a foreclosure,

servicers must determine if a short sale is appropriate.

* Incentives. Incentives include: (1) $1,000 for servicers for successful

completion of a short sale or DIL; (2) $1,500 for borrowers to help with

relocation expenses; and (3) up to $1,000 toward the cost of paying junior

lien holders to release their liens (one dollar from the government for

every $2 paid by the investors to the second lien holders).

* Standardized Documents. The program will include streamlined and

standardized documents, including a Short Sale Agreement and an Offer

Acceptance Letter. The goal is to minimize complexity and increase use of

the short sale option.

* Property Valuation by Appraisal or BPO. Servicers will independently

establish both property value and minimum acceptable net return, in

accordance with investor requirements. The price may be determined based on

an appraisal or one or more broker price opinions (BPOs), issued no more

than 120 days before the date of the short sale agreement.

* Timeline. Servicers must give borrows at least 90 days to market and sell

the property, or up to one year, depending on market conditions. Property

must be listed with a licensed real estate professional with experience in

the neighborhood. No foreclosure may take place during the marketing period

(at least 90 days) specified in the Short Sale Agreement.

* Commissions. The Short Sale Agreement must specify the reasonable and

customary real estate commissions and costs that may be deducted from the

sales price. The servicer must agree not to negotiate a lower commission

after an offer has been received.

* No Borrower Fees. Servicers may not charge fees to borrowers for

participating in the FAP.

* Program Expiration. The program is in effect through 2012.

DIL Option. Servicers have the option to require the borrower to agree to

deed the property to the servicer in exchange for a release from the debt if

the property does not sell within the time allowed in the Short Sale

Agreement (plus any extensions).

Minnesota Short Sale Homes

A More updated version of this short sale homes page is now available here What are Short Sales the Process in Minnesota

Short Sale A House: How To Do a MN Short Sale

Do you have a house in MN for sale? If you owe too much on your house, and are affected from falling home prices, you may find it tough to sell  your house. You may simply just need to sell your house for less than what you owe on the house. This could be done if you are as little as no payments behind but are soon about to not be able to afford your home, from an approaching ARM, or a loss of job, or health issues.  You can’t do a short sale just because you don’t feel like paying.

Here is how it works, and here are the questions we would ask someone in a short sale situation.

If your house is behind in payments, or about to be behind, and you owe too much on the house to sell for what’s owing.  We would negotiate with your lender to get them to take less than what’s owing (short sale). Please contact us today so we can get started on selling your house on a short sale.  It’s going to be much better for your credit if you sell the house on a short sale rather then just giving the property back to the bank and losing it in foreclosure.

Questions about credit.. Todd Rooker who is the owner of Armor Financial Services Credit and Debt Specialists. Any questions regarding tax, bankruptcy, credit and financial planning, foreclosures, how it affects your future purchases, how to improve your credit score, etc.  Todd Rooker is excellent when it comes to understanding how all these situations relates to short sales. Todd will then refer you to a CPA or Bankruptcy attorney if needed. Todd’s phone number is 763-383-0959.  Tell him Ron Orr told you to call him.

Questions about taxes… http://www.overfinanced.com/taxes

Example Scenario http://www.overfinanced.com/shortsale

Questions about foreclosure process… http://www.overfinanced.com/foreclosure

Questions on how to find another place to live now… Generally speaking, most foreclosure process, include 3+ payments behind before you get a NOD-Notice of default.  At this point you have to come up with the full amount to reinstate the loan.  Soon after in most cases the banks will file a foreclosure proceeding, and will advertise your property in the legal newspapers for 6 weeks advertising a sheriff sale.  Their is a 6 month redemption after the sheriff sale, in most cases, their are situations where 1/3 of the principle balance is paid off or you have 10+ acres where the lenders would give 12 month redemption.  The choice is yours, if you feel it’s in your best financial interest to save up a down payment from the foreclosure process and redemption period.  We won’t advise either way. We would encourage meeting with an attorney, CPA, and/or financing planner. If you did decide to save up the money along the way,  What we will say is we have some nice new construction available for as little as 5-6% down payment. Our lenders are telling us that some buyers can finance a house in as little as 2 years after foreclosure.  Please keep in mind this is a short sale, and that’s not the same as a foreclosure. http://www.minnesotainvestors.com

What are the next steps… 1. First you have to want to sell on a short sale, and help provide us with your info. After you submit this form, we’ll email a lot of paperwork for you to review and sign. 2. We will need information about your loan and financial situation 3. Your information and signatures will be provided to our agent 4. The negotiator will submit your info and paperwork into your lender 5. The negotiator will work on negotiating with your lender 6. The property will get listed on the MLS for sale 7. We will try to find agents that have buyers 8. We should eventually get an offer from a buyer for less than what’s owing 9. We would set up a closing date 10. We would close the property Again, It will be important that you put an effort to get us your paperwork in a timely manner.

Here are some questions the short sale expert would need to know the answers to:

Borrower
First Name
Last Name
Home Phone
Cell Phone
Co-Borrower
First Name
Last Name
Home Phone
Cell Phone
1st Lender
Lender Name
Amount Owing
Monthly Payment
Payments Behind
Account#
2nd Lender
Lender Name
Amount Owing
Monthly Payment
Payments Behind
Account#
Market Value
Sheriff Sale Date
Bankruptcy
Had Bankruptcy When
Other Liens
Judgments
Past Due Water Bill
Past Due Taxes

Minnesota Short Sale Homes

Ron wrote a detailed article about minnesota short sale homes

Steven Dillion: Anatomy of a Short Sale CD Review

Right before midnight I just finished listening to an audio CD on the anatomy of a short sale by Steve Dillion.  This is about a 45min+ CD I got from his seminar.  What’s great about this CD that was different than his 1 day seminar is that about 35 minutes of this CD is him on a few live calls with a loss mitigator trying to talk a $24,000 2nd mortgage down to $1,000.  To hear the different loss mitigators try to understand what’s going to happen is good to hear.  Steve understands the process more than those on the other end.  It’s a great learning experience. He gives them the example of the 1st lender and who it is and what they will take.   It’s definately good practice to listen to someone do a live call and the interaction and the communication between the short sale expert and the loss mitigator.  Steve definately is persistant.  He talks about deficiencies, and lien releases.   He had to go through a few people though to get finally get the OK.

I wrote another blog about Steve Dillion yesterday, I was at his seminar yesterday, this is a very smart guy. It’s fun to hear since he did about 8000+ short sales, most from the loss mitigators end, so now he is on the other side and he knows it better than they do.  It definately sounded like he was teaching them.  Their are a lot of supervisors he has to talk to, and managers, etc.  The bank took $1000 when they were owed $24,000.  As a seller or investor you need to just understand that a bank is going to short a 2nd or 3rd mortgage if a seller is upside down.  You would send in a short sale package, and get an agreed upon offer, and commissions can be paid by the bank.  Curtis Brooks talks on this CD as well.  Curtis is a certified life coach.   There are going to be a big wave of short sales over the next few years. I’d say from 2008-2011. This is because of all of the ARM’s that will readjust.

I know top mn short sale people that know how to negotiate, if you know a seller that owes too much on the house, please contact me and I’ll get a negotiator to help out.  Currently only working the Minnesota market on leads and properties.

You can contact MNREIA.com if you want to buy Secrets of Short Sales by Steve Dillion.

If you have questions about real estate at anytime please email me ron@minnesotainvestors.com

Do you have a house in MN for sale?

Please do me a favor and tell just 3 friends today, to subscribe to this daily blog feed by going here:
http://www.minnesotainvestors.com/blog/feed/

Minnesota Short Sale Homes

Ron did a more detailed article of the mn short sale homes process

I just got back from an all day 9-5 seminar put on by Curtis Brooks with the majority day with Steve Dillon.  Both great.

This Steve Dillon guy really knows his stuff. He is as great dynamic speaker, Steve knows his details very well about short sales.  They talked about their short sale program “Secrets of the Short Sale”.  He said 9lbs. of paper.  A few books, and I can only imagine how much info were in those books.   They have a seminar (bootcamp) coming up soon, and they had a special if you get the book and seminar at the same time.

This is the event I just got back from

http://www.mnreia.com/public/calendar/special_events/ShortSales/index.html

From MNREIA

“Steve Dillon is an ex-loss mitigator who worked in the banking industry for several large lending institutions. Steve negotiated over 8,000 short sales while in the banking profession. He left loss mitigation to do real estate and has been helping hundreds of real estate investors negotiate bigger profits on short sales for several years now.”

Wow 8000, they think it may even be 10,000, they were trying to be conservative, that’s amazing. No doubt this guy knows his stuff.  Fannie Mae, Freddie Mac, VA loans, FHA loans.  He tought us what to say to customer service, what to say to loss mitigators.

This was the date and time:

Date:	Saturday, May 10, 2008
Time:	9:00am - 5:00pm

If you want to go to events like this in the future you should get a membership at MNREIA

http://mnreia.usinternet.com/login_sub_select.cfm?PageID=16

He taught about how to decide between a deficiency judgment or a partial release with a promissory note.  He talked about how a lot of the questions you’ll get from a customer service rep, like PMI, BPO, type of loan, etc.  What I liked about him as a teacher is most of his years were spent as a loss mitigator for the banks, now he is on the investors side and teaches you how it works from the inside.

Steve talked about PMI  insurance claims, claim curtailments.  Steve spoke about many reasons a lender has to negotiate a short sale with a buyer instead of going through the foreclosure process.  He spoke about deficiency judgments for the difference of what’s owed with the lender and what it sold for.  He briefly touched upon how at the sheriff sale the lenders are bidding less than what’s owing on the property, which increases the deficiency judgment for the owner of the property.  Minnesota has some laws that help home owners in deficiency situations.  A couple of other hot topics were 1099’s from lenders.  Tax Relief on owner occupied properties, that new 2007 legislation. I would definately recommend these two guy, they are very smart.

There are so many changing and hot topics in the foreclosure and short sale business right now.  Banks and loss mitigators are swamped and this will be a very busy business for the next 2-3 years.  If you want to go to one of their bootcamps, please go to MNREIA.com and ask about it.    Other seminar and books are available at www.RonOrr.com

If you have questions about real estate at anytime please email me ron@minnesotainvestors.com

Do you have a house in MN for sale?

Please do me a favor and tell just 3 friends today, to subscribe to this daily blog feed by going here:
http://www.minnesotainvestors.com/blog/feed/