Lately I've been cleaning out my email inbox and combing through old notebooks. I use these notebooks to jot down bullet points from countless conversations and exchanges I've had with people about a myriad of real estate topics. This exercise got me thinking...there's a wealth of valuable information that could be shared to help other people who have similar questions.
So I asked a number of my clients if they mind me sharing with others who might also be in need of help, and they agreed.
Going forward, I will regularly share detailed excerpts or brief tidbits from these exchanges in a NEW series called...
"ASK AMBER"
NOTE: I am NO "Dear Abby" but I'll give it my best shot. :)
*Please note that certain details and names have been changed to protect the privacy of the individuals*
Below is an actual email I received from a homeowner facing mounting economic challenges, and is looking for answers.
Dear Amber,
I was referred to you by my friend Tony. I know you've tried to reach me a few times over the phone, but I work crazy hours on my job so it is easier to reach me on my email.
I live in Manalapan with my kids and my wife. We purchased a townhouse in 2006 with almost no money down. Right now we're in the process of separating. Most likely we will be getting a divorce. I gave you this background info to lead me to the real reason for writing you which is we need help fast.
My wife lost her job last year so we fell behind on our mortgage. We are now 8 months behind in our mortgage payments. I just thank God that they haven't foreclosed on us yet or else we'd have no place ot go. We have two children (ages 2 and 13). The oldest in a private school we just had to take her out of because we can't afford it. I've worked on my full time job for 7 yrs. To make ends meet I now have a second job too.
A guy on my job said I could do a short sale but I don't really understand what that means. He made it seem like anybody who is backed up in their mortgage payments could just call their loan company and tell them they want a short sale. I want to avoid foreclosure if I can. My wife is mostly worried about what the neighbors on our block will think but I could care less what they think. My main concern is making sure my wife and kids have a roof over their head. I would also like to save my credit if possible as well so I can get a fresh start.
Is there any help you can give us to figure this mess out?
Sincerely,
S.D.
DEAR S.D:
I am sorry to hear you & your wife are having such tough time. You have nothing to be ashamed of. Trust me, millions of Americans are dealing with the very same issue.
Since it's hard for us to connect via phone, I will explain "SHORT SALES" in this email to you as easy as possible.
In real estate, a "SHORT SALE" is a pre-foreclosure sale that happens when the outstanding loan against a property is greater than the current market value of the property itself. A short sale is a solution for homeowners who are behind on their mortgage and cannot afford to pay. Usually they want to be able to walk away from the property without blemishing their credit to the same extent that a foreclosure or bankruptcy declaration would. Not all banks will allow a "SHORT SALE," but in these challenging economic times most will.
These are the basics of how it works...
Let's pretend a homeowner is behind in their mortgage payments a few months is facing foreclosure. Now the letters from the bank or mortgage company demanding payment begin. The homeowners owe a mortgage of $345,000 but let's say the house in today's market is only worth $320,000. In order to get out of this home there additional costs that need to be paid to cover real estate transfer taxes, marketing fees, etc.
The homeowner should first call their mortgage lender to explain the situation. They need to make sure they get they write down the date, time and name of the person they spoke to. The homeowner will also have to fill out a "financial package" provided by the lender. This package typically includes paperwork that needs to complete and must be accompanied by a letter explaining a legitimate financial hardship, a year or two worth of tax returns, multiple bank statements, an authorization letter to allow the Realtor whom they eventually choose to discuss their business matters with the lender and whatever other documentation they require. The lender will indicate exactly what items need.
In my experience with short sales, the lenders almost always tell the homeowner that they cannot tell them if the short sale will be 100% approved or not until someone actually writes an offer to purchase the home, and submits additional documents.
The next step is for the homeowner to do what you just did; ask a friend, family member or neighbor for a referral to a good Realtor (who knows how to handle SHORT SALES). Or they could go to the Internet to www.google.com and type in the words "MANALAPAN NJ SHORT SALE REALTOR."
The listing agent (SHORT SALE REALTOR) whom is interviewed by the homeowner would give a presentation to show exactly how they would market the home. The listing paperwork would be filled out, the would be listed for sale, exposed to millions of buyers with aggressive marketing and eventually a qualified buyer would make an offer to purchase the home.
Let's say the buyer and seller negotiate back/forth, then settle on a written offer of $315,000. The listing agent would then present that written ofer to purchase to the mortgage lender's "mitgation" dept. The offer would then be circulated through a variety of departments within the lending institution, and IF accepted by the lender as an acceptable offer to purchase, the contract will be considered full payment for the loan by the lender. This is a "SHORT SALE."
That's only the beginning though, as there are additional steps that must be completed in order for the home to actually go to settlement and close. The good part is that by selecting a Realtor who is trained to do short sales and has experience with this kind of real estate transaction, you can focus on your family while the agent handles all the details of getting your home sold.
I would be happy to meet with you in person to give you a complimentary home value analysis to show you what your home is really worth in today's market. I'll also go over remaining details about how a "SHORT SALE" works.
I am available to meet with you Wed, Thurs, Fri, Sat or Sun of this week between 2pm-8pm. Which day/time works best for you & your wife?
Many thanks,
Amber
Weichert, Realtors (Marlboro office)
455 Route 9 South
Manalapan, NJ 07726
917-723-5645 - cell
732-536-4400, ext 199 - office
