According to sources, some of the lenders will use the Andover HAFA but since it is not mandatory, there are lenders that have not signed up. Some of the features of the HAFA include the following:

• Viable alternatives to borrowers who are already HAMP eligible.
• Additional analysis of eligibility is no longer required since the financial or hardship info that was initially collected through the HAMP
• Borrowers can receive pre-approved terms for short sale before the property listing
• Through the new program, the borrower will be freed from the debt liability
• The program uses standard timeframes, documents, and processes
• Provides financial incentives to investors, servicers, and borrowers

The borrower will be evaluated for the HAMP modification and once the eligibility criteria are met, the lender will inform you. Within 14 days, you will need to respond to it. The bank will perform their financial analysis and determine whether they will opt for DIL (deed-in-lieu) or a short sale. For those applicants of the HAMP, the financial documentation will be used by the servicer for evaluation. After that, the property’s market value will be determined through a BPO (Broker Price Opinion) or through appraisal.

There are times when the title will be reviewed by the servicer to ensure that it is marketable. Just in case you don’t qualify for the HAFA, you will be notified in writing.

If you live in Andover Minnesota, you will need to inquire about the HAFA HAMP in your area. You can ask the lender if they have signed up for the Home Affordable Foreclosure Alternative program. In most cases, the lenders that joined the HAMP will likely support the HAFA.

You can’t assume that all lenders will participate in the new program so there is a need to search and inquire. Use the internet to find the perfect opportunity and purchase the appropriate property that can meet your needs. Don’t miss this chance to take advantage of the Andover HAFA HAMP.

Do you really think that the bank will immediately and easily give in to such loss? Of course not! Just the thought of dealing with such loss to your lender can be overwhelming. For this reason, you need to contact an expert Minnesota short sale team who will work with you throughout the process.

The Minnesota short sale team will be the one to negotiate with your lender when you intend to sell your property to a third-party buyer. The negotiation requires skill and right understanding so if the transaction is new to you, you cannot do it all successfully. It is highly advised that you contact experienced MN short sale agents.

If you are from Minnesota, you need to find a team from the same state because every state has different home selling requirement and different programs that are offered by the government. One of the best ways to find a Minnesota short sale team is to study the process and look for a reputable real estate company who can work with you. You can find them online, in MN real estate directories or through referrals.

Who Gets the Benefits

A lot of MN homeowners think that when they sell their property due to mortgage problem, they get a share from the sale. The truth is that, as the seller of the problem property, you will not gain anything from the sales proceeds but you will definitely benefit from avoiding foreclosure. Your credit record may look more favorable than foreclosure and you get to stay at the property longer enough for you to find a new place to live. You will also be able to buy a new home after 2 years compared to 5 or 7 years with foreclosure.

In addition, the lender may benefit from the sale if it is found to mitigate the losses from unpaid mortgage. In some cases, banks would approve short sale because the moment they foreclose the property they will carry it on books where no one will possibly bid during auctions.

Buyers can also benefit from properties that are on short sale because they can buy them at a lower price than the actual market value. To them, this could result to reduced future taxes and reduced mortgage payments.

Finally, the Minnesota short sale team will get commission from the sale but it is up to the lender to share the proceeds. This means that when you hire professional agents for the sale, you will not be obliged to pay them. Yet, they will help you sell your home to a third party buyer and negotiate with your lender for the offers on your behalf.

•    Documents will be stuck at the bottom of the pile if lenders found them to be incomplete.
•    Talk to a new person every time he calls and explains the same case all over again.
•    Request for negotiator may be ignored.

How to Deal with the Lender Directly

In any way, it is still important for you as the seller to know how to negotiate short sale. First on the list is to get the number and the name of the current negotiator of the lender. You can get this from the short sale department. Once you get a hold of the negotiator, ask direct questions such as whether the bank does short sales or the offer you have with you is feasible. If the negotiator tends to disregard your queries, ask where you need to ask the question or be persistent.

The most important thing that you need to do is to be relentless. The response from the bank might challenge you, but you should stand your ground. To be sure, ask Minnesota short sale help from experts or professionals before you face your lender. You also need to understand the following:

•    Your lender is not entitled to agree on whatever you have to offer.
•    It is important that any agreement you have with your lender should be in writing, so ask one from them or    make it and let them conform.
•    As much as possible, keep a record of your conversation with the bank that includes the date and time.
•    Always ask for a time frame with the bank about when you can call back or when you can get documents. Be persistent with your call and be diligent in following when the bank says you should call.

To make things easier, you can ask for Minnesota short sale help from a realtor who specializes in short sales. He can deal with your lender directly on your behalf and prepare the required documents for you.

Why Short Sale?

To solve delinquent mortgage payments, it is sometimes better to sell the property rather than allow the bank to foreclose it. But this is not so you can gain something from the sale. In fact, only you as the seller do not gain anything from the sales proceeds from the short sale. Although this is the case, you can still benefit from selling the property. For one, you avoid the social stigma of a foreclosure. Your credit may also not be severely affected because selling the property on a short sale is done just like any regular real estate selling. You also have the control over who buys the property. Finally, by avoiding the foreclosure records, you are allowed to buy a new home after 2-5 years as opposed to 7 years with foreclosure.

Actually, the lender can benefit from the MN short sale as well because the moment they foreclose the property, they will carry it on their books and might find it hard to dispose it during auction. In a way, you are helping them mitigate some losses. But you and your short sale agent MN should prove to them that they get more financial benefit from the short sale compared to foreclosure.

Aside from the lender, the purchaser can also benefit from the sale because they can get a property at a price that is lower than the actual market value. This means lower future taxes and mortgage payments.

Of course, the short sale agents MN can benefit from the sale but it is up to the lender to share the gains. So don’t worry about how to pay the agents for their services. Just be sure to work with professional short sale agents because they have the understanding and experience needed to complete a short sale transaction.

To get the right agent, you need to study the track records, the background and the profile of the short sale agents on the list. With the right agent by your side, you have higher chances of getting your short sale approved and getting the benefits that goes with it.

When you and your agent are in the process of selling your MN property to a third party buyer with a price that is lower than the market value, you will need to negotiate with your lender. If the lender approves the short sale, this means that they agree to receive the payment as full even if the price of the property is actually lower than your total mortgage amount.

Many Minnesotans are asking short sale help MN to solve their mortgage problem because in reality, a short sale gives them the following benefits:

• They get to choose the buyer.
• They escape the social stigma of having a foreclosed home.
• They get to sell their home just like any home sale.
• They don’t have to vacate their home immediately as opposed to getting their homes foreclosed.
• They can buy a new home after 2 years as opposed to foreclosures which enables them to buy homes after 5-7 years.

The only thing that they will not get is profit from the sale. In fact, they are the only ones who will not get any profit at all.

Who Profits?

There are many who can extend short sale help because they can benefit from the sale. Some parties who profit from the sales are:

• Escrow Companies. The escrow companies usually act as an independent party during a short sale transaction. They get paid by the lender for the real estate transactions.
• Mortgage Brokers. If the buyer loans through the arrangement done by a mortgage broker, that broker will earn from points of the loan.
• Title Companies. These companies get paid for their services that include issuance of an owner title policy to the new buyer, and issuance of the ALTA policy to the lender.
• Listing Agents. The listing agents also get commissions from the sale since short sales are handled just like any property sale.
• Real estate lawyers. Lawyers get paid for the legal service they extend to sellers who normally seek legal advice and documentation relating to the short sale transaction.
• Appraiser. Usually, lenders require appraisal of the property so sellers contact an appraiser who provides the market value of the property. The appraisal is one of the important documents required by the lender during a short sale transaction.
• Tax Consultants and accountants. Sellers need tax advice and documentation relating to the property transaction so tax consultants and CPAs can earn by providing the services.
• Insurance companies. Buyers need insurance policies for the new home so this means a new sale for the insurance companies.
• Lenders. The sale of the property is a new business to the lender.

Aside from the profit itself, the lender benefits from the short sale because if they foreclose the property, they would file for foreclosure and carry the property that may not be disposed during auction. They would be the one to look for the buyer of that property instead. In other words, if they agree on a short sale, they would spare the recordings and the time and effort in selling the property. Plus, they would mitigate their losses.

Also, buyers benefit from a short sale because they would be able to acquire a property that costs lower than the market value.

Overall, getting short sale help benefits not only the seller but also other parties who may be involved in the transaction as well.

In reality, the list price of the short sale may not be the actual price that the bank accepts. It could be so high that no one would offer to buy, or it could be so low that banks cannot accept. Remember that the bank has the right to approve or disapprove the short sale because they get to receive an amount that is less than the mortgage due of the seller.

So what are the factors that cause the bank to reject a short sale?

One is that the price of a short sale is too low. In negotiating for a short sale, banks require appraisals and sometimes BPO. They also require a comparative market analysis so they could see if the price of the offer can be justified. If they find out that foreclosing the property is more financially sound, they would reject the short sale. The seller or short sale agent can argue through comparable sales to prove that a short sale is more valuable to the bank than foreclosure.

Another reason for rejection is an incomplete package for short sales. If the documents are not complete, the short sale may not be approved. In some cases, some documents may even be misplaced by the bank itself. What the seller or agent should do is always keep a second copy and lists of documents that they submitted so that they can provide the lacking documents required.

If a seller does not qualify for Minnesota short sales, the bank would reject the short sale. Disqualification may be due to invalid reason reflected in the hardship letter and availability of assets that can be used for a repayment plan. It is important that the seller’s hardship letter will show valid reasons such as job loss, death of a family member, severe sickness or accident. There should also be a negative value on their profit and loss statement or monthly budget.

Finally, the buyer’s disqualification can be a reason for rejecting the short sale. An evaluation of the buyer’s credit history, debt ratio, years on the job and other criteria will determine if the buyer is qualified for the short sale. The buyer has to submit a loan preapproval letter to gain credibility to the seller’s bank.

The approval of Minnesota short sales usually takes such a long time that manybuyers give up. The reason is that lenders do not usually approve a short sale without receiving an offer from buyers. For this reason, some agents reflect a low price in the comparable sales just to attract offers. However, banks usually accept a price higher than what is listed because sellers pick the higher priced offer.

 There are several steps taken before the actual approval of a short sale. Here are the steps:

1. Minnesota short sale agent lists the sale.
2. Agent receives from the seller the documents required by the lender.
3. Buyer submits an offer to the lender for approval.
4. The listing agent sends the package, including the accepted offer and HUD, of the seller to the bank.
5. Buyer waits on approval, which can last for more than a month.
6. Once approved, the agent of the seller is informed and will in turn inform the agent of the buyer.
7. If the buyer finds another property during the waiting period, the buyer’s agent will inform the listing agent.
8. Transaction will then be cancelled by the buyer.
9. Listing agent will have no choice but to put the property back to market as an approved short sale.

Typically, this is how a short sale is approved. In most cases, Minnesota short sale properties are offered to the market while they are in the second step as an unapproved short sale.  The approved short sales are those that reached the ninth step specified above.

There are buyers that still cancel the approved short sale even when they do not wait. Other reasons for cancellation include:

1. Low appraisal, possibly due to HVCC, and bank refuses to approve lower sales price.
2. Buyer is not qualified for loan or is not willing to comply with the funding conditions of the lender.
3. The property requires several repairs but the bank won’t pay for the cost of repairs.

Typically, the offer from the buyer should match the terms of the approval letter of the short sale. Once it matches, the short sale is considered closed.

When the bank approves of your short sale, they agree on receiving payment that is less than the amount due. This means that they are giving discounted payoffs on delinquent mortgages. Because of such arrangement, not all lenders may approve of short sales, especially if foreclosure is more financially beneficial. In addition, not all properties and sellers are qualified for the sale. Dealing with this kind of real estate requires the right knowledge and understanding so one must ask advice from legal, accountants or short sale agents before deciding on a short sale.

Although lenders may have different requirements and demands when it comes to a short sale transaction, you need to have a basic idea of what they are looking for. Below is the list of things that you would need to negotiate a short sale.

1. Name of the person responsible for short sale. Call the department that handles short sale and get the name of the supervisor or the person that is capable of decision-making.
2. Authorization letter for disclosure of information. You may need the help of Minnesota short sale agent who will do the hard work on your behalf. Before lenders give the details about your nearly-foreclosed property to the agent, you need to give them permission to discuss the details about the property to your agent. The letter of authorization should contain the property address, loan reference, name of mortgagee (that’s you), date of the letter, agent’s name and contact details.
3. Estimated closing statement. This shows the sales price and its related costs, amount of unpaid loan, outstanding payments and all late fees of the property. It is in this part where you need the knowledge of your Minnesota short sale agent or lawyer. When the computation shows that you receive cash at the end, you most likely do not need the short sale.
4. Letter of hardship. The more difficult your financial situation, the better. This letter serves as your plea of why your lender should accept payment that is less than the total due. Valid reasons include job loss, death of family members, divorce or severe illness.
5. Records of assets and other income. Lenders want proof that you are incapable of paying your debt so they want to know your other assets and income. They need to know if you have saving accounts, stocks, negotiable instruments and properties before they decide to “forgive” your delinquency. They would even require that you explain your unaccountable deposits on your bank statement so they can determine if deposits are still possible or not.
6. Comparative market analysis. This can be prepared by your short sale agent as this shows the prices of similar homes that are active on the market, are on pending sales and sold within the past 6 months.
7. Copy of the purchase and listing agreement. Lenders need to have a copy of the purchase and listing agreement. It is possible that lenders will not pay certain items like termite inspections and home protection plan or they may renegotiate commissions as opposed to what is written on the agreement.

Now after examining all these things, it is up to your lender to approve your short sale. Once approved, they may or may not reflect the short sale in your credit report.

In order to qualify for HAFA, a homeowner must meet the basic eligibility requirements for HAMP. They are:
• The property is the borrower’s primary residence.
• The mortgage loan is the first lien originated before 01/01/09.
• The mortgage is delinquent or default is reasonably foreseeable.
• The current mortgage balance is $729,750.00 or less.
• The borrower’s monthly mortgage payment exceeds 31% of the borrower’s gross income.
• If the borrower has mortgage insurance, the insurer must waive any right to collection from the
borrower.

If a borrower meets the following criteria, the participating servicer must give the borrower the option to enter into the HAFA program:
• The borrower did not qualify for the HAMP trial period.
• The borrower did not successfully complete the HAMP trial period.
• The borrower is delinquent on their HAMP modification.
• The borrower requests a short sale or deed-in-lieu.

The good news for sellers who participate in HAFA:
• The lender is required to forgive any deficiency (no more waiting and wondering if they going pursue the deficiency.)
• The sellers will get $1500.00 at close of escrow.
• Servicers are expected to provide an approval letter 10 days from the date the offer is received (no more waiting for months with no guarantee that the short sale will be approved.)
• The short sale will be pre-approved and the server will provide the listing agent with a pre-approved listing price.
• The server will pay up to 3%, but no more than $3000.00, to junior lien holders.
• If a borrower meets the HAMP qualification requirements listed above, they can participate in HAFA without going through the HAMP program first; as long as their servicer is participating in the program. However, if the borrower hasn’t gone through HAMP first, it will be very difficult for a servicer to get an approval letter to the borrower ten days from the offer submission date, and it will more than likely create delays. During the HAMP program process the borrower’s hardship is evaluated. The servicer becomes very familiar with the homeowner’s situation and all the obstacles that cause short sales to take forever are dealt with. Short sale pre-approval is pretty much determined through the HAMP process, so going through the HAMP program first will help the short sale to move quickly through HAFA.

The good news for buyers:
• The endless waiting for short sale approval will be eliminated. Short sale approval in 10 days or less.
• Lenders must allow at least 45 days for close of escrow.

This program will take all those frustrating unknowns out of the short sale
process.

The HAFA summary states that it is the borrower’s responsibility (with the assistance of their Realtor) to “deliver clear marketable title to the purchaser or investor.” It further says that the servicer can assist the borrower and the listing agent in the negotiations with lien holders, but they are not required to do so. An experienced Short sale agent knows how to negotiate with junior lien holders; however juniors could create problems based on HAFA guidelines.

The program provides $3000.00 for junior lien holders. It also requires that junior lien give up the right to pursue any deficiency. If a junior wants more than $3000.00 and/or is not willing to forgive the deficiency, the borrower will not be able to obtain clear title as required. Multiple junior liens could create a problem. If there is more than 1 junior lien holder, $3000.00 may not be enough to satisfy them all.

Another potential issue is that senior liens are not mentioned in the program guidelines. Property taxes are considered a senior lien and currently lenders will pay past due property taxes in order to attain clear title. Since the HAFA program stipulates that providing clear title is the borrower’s responsibility, one could assume that the borrower will have to pay any past due property taxes, before close of escrow, so clear title can be provided.
definitely
One other important requirement:
• The transaction must be completely arms length. No one involved in the transaction can be related. This includes the Realtors, the buyers and the sellers.

Currently in a short sale transaction the lender does not automatically give up the right to pursue. Large numbers of short sales fail because borrowers are concerned that the lender may pursue the deficiency. The fact that the HAFA program requires that the lender forgives any deficiency is a huge relief for borrowers struggling with their mortgage. Other than the problems that may arise with other lien holders, this program is a major step in the right direction for borrowers who are “under water.” It gives them a real chance at a fresh start. There are so many borrowers out there that are responsible people who find themselves in a night mare they never imagined, this program is an opportunity to move beyond the night mare and begin again. It is also a win for everyone who lives in the neighborhood of the borrower who participates in HAMP. Short sales generally do not bring down the value of the neighborhood as much as an REO does. Overall we see this as a positive solution for a homeowner in a very difficult situation.

US Treasury sets guidance on housing short sales

(Adds financial incentives)

By Al Yoon

NEW YORK,  (Reuters) – The U.S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed “short sales” of homes and other loan modification alternatives to stem a rising tide of foreclosures.

The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed, according to an announcement on the Treasury’s website.

Guidelines address barriers that have often sidelined short sales by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims of subordinate lenders.

The incentives, first announced in May, expand on the government’s Home Affordable Modification Program, known as HAMP, that has seen limited success in lowering payments for distressed homeowners. The Treasury earlier on Monday stepped up pressure on mortgage companies to make permanent the 650,000 trial modifications they have started. See: [nN30451859].

“While HAMP program guidelines are intended to reach a broad range of at-risk borrowers, it is expected that servicers will encounter situations where they are unable to approve” or offer a modification, the Treasury said in its announcement.

Financial incentives for completing short sales or similar deed-in-lieu transactions — in which the deed is simply transferred to the lender — include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would receive $1,500 in relocation expenses.

Short sales are favored by real estate agents and community groups over foreclosure because they can preserve the borrower’s credit rating and leave the property in better condition than when a homeowner is evicted. While primary lenders typically realize steep losses, their recovery is typically far better than under foreclosure.

But short sales have been frustrating for borrowers and real estate agents, often hung up by negotiations with multiple lien holders and mortgage insurance companies. Real estate agents have complained that sales fall through as lenders bicker over the sales price, what they should receive from the proceeds, and whether the borrower will be held accountable for the debt in the future.

Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt.

It also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.

In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.

Second lien holders in recent months have begun demanding more money from the first lender, seller, buyer or agent in exchange for releasing their claim, agents have said. Because primary lenders would face larger losses in a foreclosure, some subordinate lenders have felt empowered, the agents said.

The largest second-lien holders are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co and Citigroup Inc.

Second lien holders may proceed with a short sale outside of the Treasury program, if they felt the cap was too low, a Treasury official said in October.

“If there was a short sale program that didn’t recognize the second lien holder position, it could have pretty damaging consequences for the industry,” Sanjiv Das, chief executive officer of CitiMortgage, said in an interview last week.

(Editing by Leslie Adler) ((albert.yoon@thomsonreuters.com; +1 646-223-6347; Reuters Messaging: albert.yoon.reuters.com@reuters.net))

Source:

http://www.reuters.com/article/idUSN3046464720091130?loomia_ow=t0:s0:a49:g43:r1:c1.000000:b29133320:z0

A short sale occurs when the homeowner’s mortgage company agrees to accept less than the full balance of the loan at closing. This sounds like a very easy definition, but it actually can be an involved and time-consuming process if not handled properly.

There are many myths about short sales that must be addressed. Let’s take a look at a few myths and truths.

Myth: Your lender would rather foreclose than do a short sale.

Truth: It’s just the opposite. The foreclosure process is long and costly for the lender. Some national statistics show that on average a lender will receive 30 percent more from a short sale than a foreclosure.

Myth: I have to be behind in my mortgage payments to do a short sale.

Truth: That may have been the case in the past, but today lenders are looking for a verifiable hardship, monthly cash flow shortage or a pending shortfall. If you are facing any of these situations, call  your lender immediately. Waiting will only limit your options as to what the lender may be able to do to help you.

Myth: There’s not enough time to complete a short sale before my foreclosure.

Truth: A foreclosure is a long process. In many cases a lender will stall the foreclosure process if they know you are trying to sell your house. But, they want to know you are making a real effort to get it sold. They will want proof that it is listed at a reasonable price, and they will most likely want to speak with your Realtor.

Myth: Listing my house as a short sale is an embarrassment.

Truth: There are many Americans that are in the same situation you are. Some estimates show that one out of eight homeowners is in some state of distress with their mortgage. You should be congratulated for admitting you need help and are trying to save your credit.

Myth: Short sales never get approved.

Truth: If you are upfront with your Realtor and give them all the information they need to supply to the lender, a short sale has an excellent chance to be approved. But, you need to stay in contact with your Realtor concerning any changes in your financial situation and your Realtor needs to stay in regular contact with your lender. Short sales do take more time and are more involved than a regular transaction, but if handled properly your short sale will get approved.

Myth: Buyers are not interested in buying short sale properties.

Truth: Buyers are always looking for a good deal. As with any real estate transaction, a home in good condition and properly priced will attract attention. Buyers just need to be aware of the differences between a short sale and a regular transaction.

Myth: I will have to pay back the difference of what the property sells for and how much I owed on the property.

Truth: In most cases, that isn’t the case. You will want to get something in writing from your lender saying that the difference has been forgiven. You will want to seek legal advice and speak with a tax adviser to know the legal and tax consequences.

The final thing to keep in mind is that no two cases or no two lenders are exactly alike in how they will handle a short sale.

A foreclosure is the last thing you want to happen. It will destroy your credit and change your life.

Source:  http://www.htrnews.com/article/20091129/MAN04/911290357

A Minnesota short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.

But to be technical, here’s a more official definition:

• A homeowner is ’short’ when the amount owed on his/her property is higher than current market value.
• A Minnesota short sale occurs when a negotiation is entered into with the homeowner’s mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then ’sold short’ of the total value of the mortgage.

For homeowners to qualify for a short sale, they must fall into all of the following circumstances:

• Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
• Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
• Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

Source:  http://www.cdpe.com/what-is-a-short-sale.html

What Happened? Reasons for Foreclosure in Minnesota

Some of the most common reasons for foreclosure are as follows:

Job loss/ unexpected unemployment – in August 2009, the unemployment rate in Minnesota was at 8.0% which is the same as what it was in April 2009. What this means is that, although the global economic recession appears to be slowing down, jobs are actually not picking up and more and more Minnesotans are finding that their temporary unemployment status is turning permanent.

Sudden illness or medical emergency – another common reason that more people are losing their homes to foreclosure is because they are struggling to overcome an illness or medical emergency and simply cannot pay for the bills. In 2007 there were over 4 million cases of injuries at work that cause problems in the financial sector. If you or the main income earner all of a sudden cannot work, then you could easily fall behind on your payments and end up in trouble with your mortgage.

Divorce / Loss of second income – 1 in every 2 marriages end in divorce and many more people split up every day causing not only a problem in their emotional life but also in their financial life. The reason is because, with a separation also comes a split in income. Furthermore, divorce proceedings can be extremely expensive and thus many people are struggling with even more debt once they have ended their marriage.

Unexpected Home Maintenance – another problem that Minnesota families face is that their home is suddenly damaged. Although most families will have insurance that will cover accidents, there are certain problems that will need your out-of-pocket expenses. The fridge could break; the heating could crack down or the roof could leak. All of a sudden you are spending your monthly paycheck on home repairs instead of on the mortgage.

The Short Sale in Minnesota Option

One of the best options to avoid foreclosure is to opt for a Minnesota short sale. A short sale is a real estate transaction that occurs when the banks agree to take an offer on a house that is less than what you currently owe. They are willing to ignore the additional money you owe and you are able to sell your house without worrying about that dreaded ‘foreclosure’ status on your credit report. If you are having trouble making your mortgage payments, regardless of what the reasons are, you do not have to commit to the foreclosure status. A MN short sale is an option that just might work for you.

How to Start your MN Short Sale Letter of Hardship

Start your letter with the following formalities:

• Lender Name/ Lender Address/ Lender Fax Number
• Today’s Date
• RE: Hardship Letter – Short Sale for YOUR ADDRESS
• To Whom It May Concern

The Bulk of your Minnesota Short Sale Letter of Hardship

Your short sale letter of hardship does not have to be a novel but it should be a typed page in length outlining the details of your current situation. This will include:

• Where you purchased your home and your financial situation at that point. You will need to include your salary and other incoming income.
• What happened to cause the payments to pile up and for the missed payments? This may include a job loss, unexpected bills or medical payments, a loss of a spouse, a divorce or separation, an increase in interest rates or anything else that has happened to cause financial hardship. You will need to be as honest and detailed as possible when explaining your situation.
• The details of the MN short sale. You will then need to explain that you are now trying to sell your home and ask the lending company to accept your offer as ‘payment in full.’ Let them know that you just “want to move on” with your life.

Conclude your letter by informing the lending company that you are available to answer any questions or provide any more details and include your name, address and contact number at the bottom.

The Importance of a Letter of Hardship in a Minnesota Short Sale

Your letter of hardship is your plea to the lending company on a human level. If your letter is well written and compelling, then it will be a lot easier for the lending company to accept the short sale offer. Many people are not naturally poetic and have trouble finding the right words. That is why it’s important to get the help you need from a qualified short sale agent in Minnesota when composing your letter of hardship.

Make your home desirable – when it comes to a short sale, the first step is to attract a potential buyer to your home. And, the better your home looks, the higher the offer is going to be. This does not mean you need to spend a fortune on renovations but you should try to up the curb appeal by doing little things around the house. Keep the yard and the inside of the house as clean as you can. Try to rearrange the furniture to focus on the house’s best assets. There is nothing worse than arriving at a potential home and seeing an unattended lawn. It may seem silly but it’s the little things that make the difference in real estate offers.

Be as Detailed as Possible with the Documentation – once an offer has been put on your house, you and your Minnesota short sale agent will need to sit down and complete the documentation. This will include the purchase agreement as well as your letter of hardship and reasons for needing a short sale. The process of gathering the documentation can take up to two weeks but you can help this process by including any relevant details. Go through all your old financial statements and make sure you include any pay slips, termination letters, medical bills and other evidence of your hardship. Make copies if you cannot give the originals.

Make sure you Choose a Qualified Short Sale Agent in Minnesota – finally, much of the short sale in MN transaction comes down to the lending company. However, if you choose a qualified Minnesota real estate agent to handle your short sale, you will most likely have an answer sooner. Although technically your short sale agent cannot go into the bank and demand they hurry up, they are able to speed things along once the BPO has been processed and the negotiation is taking place. The negotiation process can take around 45 days to complete; with a professional and experience short sale Minnesota agent, you can expect this to happen a lot faster.

If you are undergoing a short sale then you probably feel like the process is taking forever. It can be hard to keep your head up and continue on as if nothing is different but this is your best bet to succeeding in this situation and getting out ahead. Patience is of utmost importance when it comes to a Minnesota short sale. And, in many cases, your patience will pay off in the end.

Avoiding MN Foreclosure Before it’s too Late

One of the biggest mistakes people make when it comes to foreclosure is that they avoid the current situation. The letters come, the payments are due and things just keep being pushed aside with the hope that it’s going to get better next month. Although it’s important to keep your hopes up, it’s also time to be realistic and make a plan of action.

The first thing you can try to do is speak to your lending company about forbearance or changing the terms of your loan. If you speak to them early and explain the situation, you may be able to hold off the legal actions and adjust your mortgage rate to suit your current financial situation. However, in many instances, the situation has progressed beyond this and the lender has already filed a Notice of Default.

Notice of Default and the MN Short Sale Alternative

Receiving that Notice of Default can feel like a ton of bricks being shoved in your throat. But you need to take a deep breath and understand that this burden can actually be avoided. You simply need to contact a MN real estate agent and discuss a Minnesota short sale.

During a Minnesota short sale, you are selling your home for less than what you owe on it. Although the banks do not want to do this, short sales are a better option for them than foreclosure and thus they are willing to negotiate short sales on Minnesota homes. A short sale in Minnesota will not help you profit from your home but it will ensure that you get out of a very messy situation and on with your life. Furthermore, when you are back on your feet, a short sale will allow you to start again without worrying about poor credit that comes with a foreclosure.

When it comes to the short sale in Minnesota process, it’s important that you act fast. A short sale transaction is extremely complicated and due to the frequency of them, it can take up to 100 days or more for a lending company to approve the short sale transactions. That’s why the sooner you contact a professional MN short sale agent; the better it is for everyone involved. Furthermore, the quicker you act the better chance you have of getting the short sale transaction approved and avoiding the dreaded foreclosure.

What can you expect when it comes to time and a short sale?

On average, MN short sales will take anywhere from 60-120 days to complete. However, this is a rough estimate and, as more and more families look for short sales as an option, you can expect the wait period to continue to lengthen.

Reasons for the Lengthy Short Sale Transaction Period

So what’s taking so long? One of the reasons you can expect a long wait period when it comes to Minnesota short sales is simply because of the current real estate market. According to the National Association of Realtors, over 50% of properties sold are short sale or REO properties. What this means from a lending point of view is that there are so many different short sale packages coming in each day that is can take a while to get to all of them. For the short sale seller and the short sale buyer, there is nothing to do but wait.

Another reason for the long wait in Minnesota short sale transactions is because there is a lot of paperwork and organization involved in the process. And, finally, short sales in Minnesota take so long because there are so many steps involved. Below is a timeline for the typical short sale process in MN.

A Break Down of the Short Sale Transaction Timeline

First of all, you will need to get authorization on file with the lender. This can take around 2 days. Next you and your real estate short sale agent will need to compile all the short sale documentation which can take anywhere from 7 to 14 days. You can expect another 3 to 7 days for the short sale package to be filed by the lender and another 10 to 14 days for your package to be assigned to a negotiator in the lending company. These are only the first steps involved.

Next the BPO will need to be ordered and scheduled which will take anywhere from 19 to 30 days to do. The BPO will need to be sent to the negotiator who will then be in touch with the short sale agent about the negotiation or approval of the short sale. All of this can take between 30 to 45 days to complete. And thus, your grand total for the transaction process is between 70 and 107 days to complete the entire process.

You will notice that most of the waiting time occurs due to the lending company, BPO and negotiation process and, unfortunately, there really is no way to speed this up. It all depends of the efficiently and the availability of your lending company at the time of your short sale transaction.

Saving your Money during a Short Sale MN Process

The first reason why stopping payments on your current mortgage could be a good move is because you can put that money towards something else, such as the funds to move elsewhere or pay for a deposit on a rental home. If you have credit card debt or other large debts that are damaging your credit, you could also put the acquired mortgage money towards lowering these debts.

Accepting Defeat during a Minnesota Short Sale

Another reason why many people stop paying the mortgage when negotiating a MN short sale is simply because it is not their house anymore. If they are struggling to make payments and have been warned that foreclosure is in the near future, it may seem fruitless to even try. If the short sale does not go through and you know that foreclosure is the only other alternative, it might be best to save your money to start over again.

Providing Incentive for the Banks to Make a Decision

Finally, those who are in true default and are not paying their mortgage may take the top priority spots in the lending company lineup and thus, the short sale transaction may be sped up. By not paying the mortgage, you are actually speeding up your short sale in MN transaction and providing the lender with an incentive to accept the short sale offer. However, while you are not paying your mortgage, you will be incurring a poor credit rating in the process.

Keep in mind that choosing to continue to make payments during a short sale or stopping these payments is something that every individual must decide on his own and will come down to your personal financial situation and what is best for you. Understanding the pros and cons on each side will allow you to make the right decision. To see a list of the pros to short selling, see the blog titled Continuing Payments When Negotiating a MN Short Sale. And, keep in mind that there are always two sides to every decision in life. The big question is – which is right for you?

First of all, not everyone can afford to make this choice. It is important that you do not let other parts of your life suffer when trying to continue with your mortgage payments during a MN short sale. If you can, make sure your family is supplied with food, clothing and the basic living essentials. Make sure the electricity is paid, that the car insurance is up to date and that there is fuel in the car to get to work. If there is money left over, then putting it towards your mortgage can offer some serious advantages in the long run. They are outlined below:

Keeping Your Credit and Future in Order during a Minnesota Short Sale

One of the biggest advantages to continuing to make payments is that you will be able to qualify to purchase a new home right away. If you have kept your payments up to date and have not been classified as a ‘delinquent’ then you will be able to immediately buy another home after a short sale. For some families, this can be a big incentive to continue with their payments.

Another big advantage to continuing your payment is that you will be able to protect your credit rating. Every time you miss a mortgage payment, your credit rating will go down which can result in higher interest rates and stricter loan terms in the future. Although undergoing a short sale in MN will drop your FICO rating a little bit, it will not nearly be as substantial if you continue with your payments during the waiting process.

Peace of Mind in Continuing Payments during a MN Short Sale

Although this is not true with everyone, many people find that continuing with their mortgage payments gives them a peace of mind and a sense of pride that they have not completely given up and accepted defeat. Understand that in a short sale, you are not accepting defeat- you are simply choosing the better alternative to a foreclosure. However, for some, this payment will help them sleep better at night.

Finally, perhaps the biggest advantage of continuing your mortgage payment is that, if the short sale is not accepted by your lending company, you do not have to necessarily give up your home. Furthermore, if the deal falls through, you can continue to list your home and hope for another short sale offer in the future without worrying about the lending company foreclosing right away.

If you are looking into a short sale in Minnesota as an alternative to foreclosure, there are only two abbreviations that you need to be familiar with – BPO and CDPE.

What is BPO in a Minnesota Short Sale?

BPO stands for Broker Price Opinion and is, essentially, the same thing as an appraisal. In a short sale transaction, the lending company will hire a broker company to appraise your home. This usually occurs after you have submitted the paperwork for the short sale. You can expect it to take a couple of weeks before a BPO is done on your house. This is because, in many instances, the lending company’s head office will not be located in the same area as your home and thus, the lending company will need to contact a brokerage agent in the Minnesota area to see the value of the house. The broker company will then assess the house both inside and out in relation to several different factors to determine its current market value.

A BPO can affect you because it can determine whether the lending company will accept the offer of the short sale. Let’s say, for example, that a potential short sale buyer was offering $200,000 on your home. If the BPO comes back that the home is valued at $175,000, then the lending company may accept the short sale and simply ignore the difference. However, if the BPO is only $100,000, then you may have a harder time getting the lending company to accept the Minnesota short sale. The closer the BPO is to the short sale offer, the better chance you will have of the short sale transaction going through.

What is a CDPE in a Short Sale?

Another abbreviation you will need to know is CDPE which stands for Certified Distressed Property Expert. A professionally trained CDPE is someone who can help you out with the short sale of your Minnesota home. They are a trained real estate agent who specialize in short sales in MN.

When it comes to the short sale process, having an experienced professional on your side is by far the best move you can make. They are there to act as the middle man between the lending company and you. Instead of worrying about the approval process and the paperwork involved, you can concentrate on supporting your family while a CDPE handles the dirty work. This will ensure the transaction is handled in an effective manner and approved ASAP.

The Small Profiteers in a Short Sale in MN

The first person who is going to provide from a Minnesota short sale is the lending company. Although they may be taking a small hit by accepting the sale of a house for a smaller amount than what it owed on the house, they are still making back their investment money and thus benefiting. In most instances, the money they have made from the interest incurred on the mortgage loan will more than make up for the additional money that they may lose by allowing a short sale to go through. Furthermore, if the house is foreclosed, the lending company will have even more expenses on their hands and usually lose a large profit if the house does happen to sell again.

Another person who benefits from a short sale is the buyer in the short sale. Although they are paying for the house and inevitably going into debt and incurring a mortgage, many short sale buyers are using this home as investment property. In the end they are getting a great deal on a decent home and will be able to profit from it once the market picks up or once they determine what they want to do with the house.
Although the MN short sale seller will most likely not have to worry about additional taxes and fees for their house, the lending company or the new buyer will take on this responsibility. And thus, the Internal Revenue Service is still profiting from a short sale.

The Biggest Winner in Short Sale Transactions

However, perhaps the person who comes out on top is the original home owner. Although technically they are not pocketing any money, they are walking away from a very tough situation with hardly any damage done. Their credit report will not suffer as much as it would if they were go foreclose their home. Furthermore, they are not left with the emotional stress or shame that comes with a house foreclosure. And, finally, instead of worrying about what’s next, short sale sellers are able to walk away and start over. So, although there is no money involved in the transaction, the short sale seller will most certainly walk away with a bargain – their financial freedom.

Family Short Sales in Minnesota and the Lending Company

One of the reasons why short selling to a family member will, in most instances not work is because short sales must be approved by your lending company. If your lending company discovers who the buyer is, they will not be too pleased in letting this happen. Why not? Well, first of all, because it could come off as fraud or a scam. After all, in a short sale, the lending company is not making any money – they are losing money on their investment – and thus they will not be too happy to know that you and your family could be benefiting from the transaction.

But what if it is an honest deal? Well, if this is the case, your best bet is to speak to a certified Minnesota short sale agent who can help determine if this will work in your case. In some instances, for example, if the offer is high enough that the banks cannot say no, then the short sale transaction may be accepted. However, you will need to get professional help in order to avoid being denied, or worse, being accused of real estate fraud.

Emotional Problems with Short Sales in MN to Family Members

Another thing to consider when it comes to short selling a home to a family member is that often the entire burden of the home is passed on to your family. This does not only include the new mortgage, but also any additional taxes and fees that you, the short sale seller, has been able to pass on. There is a lot more to consider in a Minnesota short sale than just the price of the house.

Finally, although family should always come first, it’s never a good idea to mix family with business. And, when you are dealing with real estate, it can often get messy when these two combine. What happens if your family has trouble keeping up to the mortgage? What happens if you cannot afford the rent or if something major goes wrong and there is a fight about who is supposed to pay for the cost of the damage? The real estate game is a slippery one and can often cause family feuds that could easily be avoided.

Furthermore, there is nothing worse than feeling like you owe your parents or your brother something huge. Holidays are often put on hold in order to make additional household payments and there is always a feeling of pressure and guilt, no matter how relaxed you think the transaction is. When you are paying a loan back to the bank, there is no emotional connection and thus, you often feel freer to spend your money as you see fit. With family and a MN short sale, this is not the case anymore.