Many homeowners here in Phoenix, and the surrounding Maricopa and Pinal county areas, are still in danger of foreclosing.

This is a tough question to ask (and to be asked, for sure), but it is a question I ask these days of homeowners when they contact me inquiring about selling their home.  There are many people here in the Valley that are facing ARMs that are ready to adjust, or have already adjusted, or have had any other life happenings that would bring them to the need (not necessarily the want) to sell their homes…quickly…

As the real estate market has changed here in the Chandler, Gilbert, Mesa, Queen Creek, and other Phoenix areas (and across the U.S.), home prices have tumbled (to put it lightly), and many homeowners have found themselves upside down in their homes, otherwise known as owing more than the home is worth.

Homeowners who need to sell, and owe more than the home is worth, need to sell their home short of what is owed, also referred to as a short sale.

Click here for a basic overview of a short sale.

If you have come to the decision that a short sale is your only course of action, one of the first questions that may come to your mind is this: “How do I go about selling my home short, and what can I expect over the next several months?”

The first thing you should do:

Call 888-995-HOPE (the Homeownership Preservation Foundation), schedule a counseling appointment and GO SEE THEM!  The Homeownership Preservation Foundation was founded to help you keep your home by working out an arrangement with your lender(s). Visit them online: http://www.995hope.org/   If you really want to stay in your home, this should be your first step.

***Click here for an overview of new housing legislation, enacted to help you stay in your home***

If there just isn’t any possible way to keep your home, then you may want to proceed to the next steps:

***Remember each individual’s situation is different. There are many different circumstances, from who one’s lender is, to one’s annual income and other life matters.  Please use the following only as an informational piece.  Consult your Realtor, accountant, and/or lawyer for specific information for your specific needs!***

Get a copy of your credit report at www.annualcreditreport.com.  This is a free service (from a government mandated site) and will not only let you know where you stand financially, but could also be a piece of the short sale “package” that your Realtor may send to your lender.

Get your records ready and make copies of all of your financial statements. This will also be a part of your short sale “package”.

Next, contact a Realtor in your area and schedule an appointment to talk about putting your home on the market.  Once you have decided on a Realtor, and decided on an initial list price, it will be time to put your home on the market.

Here in Phoenix it’s extremely difficult (impossible, really) to predict when and at what price a home will ultimately sell.  Each market (the East Valley, for example) is different, and there are many smaller markets (Chandler, Gilbert, Mesa, Queen Creek, and the subdivisions within those cities) within those markets.  You will need to have patience and need to keep up with the current market in your area to be sure you are in the correct pricing “ballpark”. This will allow you to get the most showings possible, with the end result being an offer presented.  When offers finally come in, be prepared for some offers to be quite a bit lower than your asking price.  This doesn’t always happen, but it is very possible.  These “lowball” offers are typically fishing expeditions (someone looking for a great deal).  Consult with your Realtor on how to proceed, just keep in mind that if you’re receiving offers, you’re most likely in the correct pricing area.

As soon as you’ve decided on an offer, your agent will send in the short sale package to your lender(s).  At that point you will play the waiting game.  Remember, your lender, and the associate assigned to your file (in the department sometimes referred to as loss mitigation), are also working hundreds, if not thousands of files just like yours.  Patience is the key here! Keep in mind that your Realtor will continue to “work” the file and keep in contact with your lender as much as possible.  Be ready to wait up to two months or more to receive a response from your lender on the offer you’ve submitted to them.

Every lender is different, and there are a countless number of circumstances that may surround your particular situation.  Not every lender will agree to a short sale, and typically there is no way of finding out if they will or not until you get to this point.

If your lender has agreed to the terms of the offer you’ve presented to them, they will send you an agreement letter and you will then be able to proceed with the sale of home, assuming the buyer that has put in the offer is still waiting to buy the home.  In many short sale cases here in Maricopa and Pinal counties, the first potential buyers have moved on because they are just unwilling to wait so long for a response. Thankfully they DID put an offer in, and ultimately helped you to receive an agreement letter from your lender!  At that point, you’ll have to continue marketing the home until you find a buyer at the lender’s agreed upon price (or maybe you already have backup offers).  Then, if all goes well, within 30-45 days or so (after having a contract) you will have accomplished your goal, and sold your home, rather than letting it foreclose.  You can now get on with life.

**NOTE**  There may be tax and or legal ramifications in regards to selling your home short.  It is highly recommended that you consult an accountant and/or attorney before deciding on a course of action.

If you have more questions about short sales in Chandler, Gilbert, Mesa, Phoenix, Queen Creek  or the surrounding Maricopa or Pinal county areas, please feel free to contact me, my phone number is 480-529-6329.  My email address is Nathan@ezlistaz.com.

… in a nutshell…

FHA Mortgage Refinance and Insurance Program

This would assist troubled homeowners by allowing them to refinance to a lower mortgage with an affordable rate.  It’s a voluntary program to both the borrower and the existing mortgage holder.  The existing mortgage holder would need to agree to release the lien at an amount less than owed.  There will eligibility requirements that both borrower and mortgage holder will have to meet.  In addition the new loan may not exceed 90% of the appraised value of the home.  No second liens will be allowed for at least 5 years.  HUD will be entitled to 50% of the appreciation in the appraised value of the property (HUD will be entitled to 100% of the first year’s appreciation).

Federal Housing Finance Agency to Oversee Fannie Mae and Freddie Mac

This will be a new independent agency to oversee, and regulate Fannie Mae and Freddie Mac.

The Treasury Department will also be granted emergency authority to purchase securities, including equity, and will also increase the existing credit lines of both Fannie Mae and Freddie Mac.

Mortgage Disclosures

The Truth in Lending Act requires delivery of certain disclosures 7 days prior to loan origination.  These disclosures must include examples of how payments would change with a rate adjustment.  The maximum possible payment must be disclosed.  The borrower must receive these disclosures before paying any significant loan fees.

Loan Originators Must Be Licensed

The licensing can be either State or federally regulated, as necessary.  All individuals involved in originating loans must be licensed and registered with the State or HUD.  Minimum standards must be met, including education (and continuing education), and testing. 

FHA to Raise Loan Limits

Limits will be raised to a minimum of $271,000, and the minimum down payment will increase to 3.5% of the purchase price.

Other Noteworthy Inclusions

$3.9 billion in community grants to purchase abandoned and foreclosed properties.

The extension of servicemembers foreclosure protections from 90 days to 9 months.

Creation of credit and housing counseling programs

A first time homebuyer tax credit and increase of the standard deduction for property taxes.

There are other provisions to this Act.  Please feel free to visit this website http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf

for more information.