Solving the Knoxville Foreclosure Crisis
One Homeowner at a Time

Rick Smenner

RE/MAX Preferred Properties
[email protected]

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Short Sale Or Rent Your Home??

Just had a meeting with seller who bought their home in 2008 for $525,000 and did a 100% loan at the time. They have been trying to sell it for over a year now because of a job transfer. The seller just wanted to payoff what he owed on the property wasn't worried about making any money. The problem has been the home is only worth about $450,000 in today's market He didn't think he would qualify for a short sale because he had a job. But he was living out of town while his family still lived here in Knoxville. But it was getting difficult maintaining two different house holds. So we setup a time to meet and explore all of his options. We covered all of the aspects of a short sale with them. Both the positives and negatives of selling his home short. In this situation I told him it would be highly unlikely his lender would just let him walk away and forgive the debt. That they would most likely need to sign a promissory note for all or part of the short fall. But we have had success with promissory notes being at 0% interest and payments that would be affordable for him. The other option we looked at was renting the property for a few years and waiting to see how soon the market would take to come back and get closer for him to a break even sale. Looking at the rental income he could get on the home it would be negative cash flow of about $300 per month. There was also the concern of the tenant trashing the home and not wanting to be a long distance landlord. But what I explained to him we could hire a professional management company for him to screen the tenants. They would be responsible to making repairs that come up, collecting rent etc.  I told him yes it would cost him some money each month but I felt it was a better solution for him than selling it on a short sale. He agreed with me so we contacted a management company for him they found a very good tenant who wanted to rent it for two years. They where able to get more rental income than I thought so his negative income was only $175 per month. This is the difference a trained professional with the CDPE designation can help sellers determine when they are facing tough times selling their home. Untrained Realtors don't know what your options are in order to avoid foreclosure a CDPE can help you. My team and I are the most qualified team of professional in the Knoxville market. We can help you determine your best option in order to avoid foreclosure at no cost to you. Call me at 865-696-9002 or email [email protected] and let's talk about your situation.

Short Sales..Why Won't My Realtor Show Them To Me?

I was contacted the other day by a frustrated buyer who was interested in buying a short sale.  She had an interesting question.... Here is Tamra’s question. “I am looking to buy a home. Some of the best priced properties are short sales. However, my agent won’t show me these homes. She keeps on telling me the prices are lower than the lender will accept and that short sale never close. What should I do? I am really interested in these homes, especially at the price they are being offered at.” Here was my answer. Tamra, you should talk to your agent and see what they dislike about short sales. Your agent may have had a bad experience with short sales in the past. Short sales are a great way to purchase a home at a good price. They are tougher and take a lot longer than your average real estate transaction. However, that doesn’t mean you shouldn’t consider them. Just be cautious with your search. Make sure the agent who has the house for sale has prior short sale experience. Your agent can ask them what short sales they have sold in the past. If they or the people working with them have a good track of working with the banks, then you should be ok. Remember, not every short sale is going to be approved at the listing price. But, if they banks feel the price is fair, then they will accept the offer. So go look at some of those short sales. With a little luck one of them will be the perfect home that meets exactly what you are looking for. If you are interested in buying a short sale give me a call. They can be a very good value and as long as you understand the process it can be worth the wait. Call me at 865-696-9002 or email me [email protected]

Can You Get A Short Sale Closed In Knoxville?

Are short sales in Knoxville impossible? Well, short sales are not impossible. They just take time. Here is an example. We were attempting a short sale on a property. The bank turned down an offer for $195,000 on the house. Today it looks like an offer for 185k will be approved. Why is that? The first offer was submitted 4 months ago. The bank did an appraisal. The appraiser thought the house was worth $265,000. The lender rejected the offer because it didn't meet their guidelines. We put the home back on the market and waited for another offer. The property values continued to decline. The next offer came in for $185,000 several months later. The bank re-opened the short sale process and ordered a new appraisal. This appraiser thought the house was worth $197,000. The bank approved the short sale offer. As you can see, short sales can get approved with a little luck, time, and persistence. With some luck, the bank will see that the short sale makes financial sense and approve it. We've seen over 85% of our short sales sell, get approved, and close in 3-4 months. And that's the first attempt at negotiations. The majority of the remainder will get approved, but we will have to submit more offers. Having trouble making your mortgage payments want to know your options? Let's setup a time to meet and talk about your situation. You have solutions available to you other than foreclosure. As a trained Realtor with the CDPE designation I can help you avoid foreclosure. My team and I help more homeowners than anyone else in the greater Knoxville area solve their housing crisis. We are up to date on all the different solutions and changes going on in the market place. Our assistance to you is at no cost to you. Give me a call at 865-696-9002 or email me at [email protected]

Will I Owe Income Tax After I Sell My Knoxville Home On A Short Sale?

This is one of the first questions potential short sale sellers ask us. “I heard of something called “forgiveness of debt income and that it is taxable. How does that work?” they ask. In most cases the answer is that a short sale will usually not cause you to owe income tax. It used to be that you owed income tax on any forgiveness of debt. When a lender decides to forgive all or a portion of a borrower's debt, the forgiven amount is considered as income for the borrower and is liable to be taxed. Here are the following ways you can qualify to short sale a property without any tax liability. Short Sale of a Primary Residence. The Mortgage Forgiveness Debt Relief Act of 2007 (and it’s extension in the 2008 Federal Bailout) now allows you to short sale a primary residence without any tax liability. Today when a homeowner short sales a primary residence, they can file a simple form and the forgiven debt is no longer taxable. The amount of forgiven mortgage debt allowed to be excluded from income tax is limited to $2 million per year. Short Sale of a Non-Primary Residence: If the property you are selling is not a primary residence, then you may be eligible for tax relief if you are considered insolvent. I don’t know the exact guidelines, but insolvent is usually considered when your total gross debts are more than your total gross assets. I’m sure a good tax professional can give you more information. Click here to view the IRS’s website about the Mortgage Forgiveness Debt Relief Act and Debt Cancellation. Click here to view the article on the IRS’s Website: Mortgage Workouts Now Tax-Free for Many Homeowners. If you are having trouble making your mortgage payments you do have options other than foreclosure that won't cost you a dime....Contact me for a free consultation let's setup a time to talk about your situation and we can explore your options. Call me at 865-696-9002 or email me [email protected]

GMAC Short Sale Who Really Approves My Short Sale?

We recently started working on a short sale for one of our sellers their original loan was with GMAC. Our seller wanted to know who is really going to approve the  sale on his home? That is a very good question and it really depends who is truly in control of that loan. GMAC, was the financing arm of General Motors. It was taken over by Uncle Sam and has been mostly privatized as Ally Financial. However, many people still have loans from the original GMAC. Some of these homeowners want to short sale, but are curious about how it works. Most of GMAC’s loans have been sold. The first thing we do is to find out who really owns the loan and who is going to be calling the shots once we have an offer on the home. On our last GMAC short sale, the loan had been sold to a Wall Street “Sliced and Diced” Fund. In this case, that fund made the decision on whether or not to accept the short sale. GMAC was simply handling the file for them. Another owner of loan might be Fannie Mae or Freddie Mac, both highly controlled by Uncle Sam. Or, the loans might be owned by a private investor, but insured by VA or FHA. The guidelines to approve a short sale will be set by the owner or insurer of the loan. For example, FHA allows a homeowner 120 days to successfully short sale their house. FHA will accept a net equal to 88% of an FHA appraisal for the first 30 days. After 30 days, that number is reduced to 86%. After 60 days, it is reduced again to 84%. So yes, Bank of America short sales are tough. However, if you know who the investor (or insurer) is on a loan (and their guidelines), it makes it much easier to get a short sale approved. Fannie Mae, Freddie Mac, FHA, and VA own or insure between 60% and 75% of all loans. If you are thinking of doing a short sale, then make sure your agent understands their guidelines. Their guidelines are all a little different. Thinking about a Knoxville short sale? I can help you we have the most experienced team in Knoxville in getting them done. And it won't cost you a penny our services are free...Give me a call at 865-696-9002 or email me [email protected] Discover how other Knoxville sellers successfully completed a short sale

Rent Your Home Or Sell It On A Short Sale?

I received a call from an owner who used to live in Knoxville but was transferred because of his job. He couldn't afford to sell his home at the time because he was upside down. He couldn't afford to carry two households either. Here was his question to me... "Rick when I moved from Knoxville to Nashville because of my job transferred. I couldn't afford to sell my Knoxville home because I was upside down. But I also didn't want to do a short sale on the home. So I decided to rent it. Well the tenants moved out and trashed the place. I could rent the house out again, but I would have to spend several thousand dollars fixing it up first. What would you recommend that I do?” Chuck asked. Here was our recommendation. That is a tough situation. You could fix up the house and rent it out again. But, you risk having the same thing happen all over again. Here is the other problem. The amount you can charge for rent has gone down in most areas around Knoxville. This means you will probably have to write a check every month. If you are able to rent it and cover all the costs, then I would recommend you keep the home. Here is why I recommend that. If you can break even, then the house will be a good investment as the Knoxville real estate market recovers. However, you will always risk large unexpected costs like the one you are experiencing right now. If it the rent does not cover all the costs, then more than likely you are in an area where the housing prices are still dropping. This means the burden will only get bigger as time progresses. Hire a good property manager this time instead of taking care of it yourself. They will do a complete background check on the tenants. That way you limit the chances of something like that happening again. if you need some recommendations let me know an I can refer you to some good companies who can help you out. Renting you home is just one way to avoid foreclosure if you are upside down on your home. If you are having troubles making your mortgage payments and want to know your options call me at 865-696-9002 or email me [email protected]

Wells Fargo Rule Changes Will Help Some Knoxville Homeowners

We have successfully closed many Knoxville Short Sales with Wells Fargo because they are prevalent lender in the Knoxville Area. There have been some changes recently if you have a Wells Fargo mortgage and they have already started the foreclosure process. If you have a short sale contract on your home you can get the sale stopped if you meet certain criteria. DSNews reported new rules regarding Wells Fargo short sales when foreclosure is within 30 days. The bank’s new policy will allow for only one foreclosure postponement given the following criteria:
  • Wells Fargo has an approved short sale sales contract in hand (if necessary, approvals from junior lien holders and mortgage insurers as well)
  • buyer has proof of funds or is pre approved for financing; and
  • the short sale can close within 30 days of the scheduled foreclosure sale.
Beyond these restrictions, Wells Fargo did note that investors may vary in what they allow, and some states require the courts to approve any delay. If you find yourself against the clock with a Wells Fargo short sale, there is still hope. The bank expressed its willingness to address situations outside these qualifications on a case-by-case basis. My team and I have the experience and the expertise to get foreclosure sale stopped when we have a pending short sale on one of our listings. Since we have worked with all the major lenders we have been able to establish relationships with many decision makers at these lenders. If you are having trouble making your mortgage payments don't wait until it is too late. You do have options available to you other than foreclosure. Let's setup a time to talk over a cup of coffee and talk about your situation. Let me explain your options to you so you can make an informed decision. Call me at 865-696-9002 or email me [email protected]

Know Who Really Owns Your Loan Before Doing a Short Sale Or Loan Modification

When helping people in Knoxville avoid foreclosure most people think the person they mail their mortgage payment to every month is the owner of their loan. Not so. That is why if you are considering a short sale or loan modification on your Knoxville home. It is important to understand who will be calling the shots while you are negotiating with your lender on a short sale or loan modification. In fact, most of the time, they are not the owner. As an example, 80% of all loans that Bank of America handles are not owned by Bank of America. The largest owners of US mortgages are two companies that some would allege are owned by Uncle Sam. They are Fannie Mae and Freddie Mac. They own an estimated 55-60% of all US Mortgages. Another estimated 10-15% are insured by Uncle Sam as well, thru the FHA and VA loan guarantee programs. Another estimated 10-15% are owned by Wall Street Firms, Pension Funds, and other entities. That means the company you mail your check to every month is essentially a hired gun. They are paid to collect payments, handle accounting and escrow, collect on delinquent accounts, and act as the front person for the owner of the loan. They forward the money received to the lender, minus a small fee to themselves. This small fee on thousands of mortgages means they are paid very well. In fact, the business is so profitable that IBM Computers opened a subsidiary loan servicing company. Now that I have laid the groundwork, let me explain how the loan servicing companies have worked against the loan owners best interest. Acting as a servicers puts them close to the legal equivalent of a trustee. This means they can do whatever they want to, right? No. Let me explain. See, a trustee has a fiduciary duty to whoever they represent. They are required to act in their client’s best interest. If they do not do this, then they can be legally liable for any loss their loan owner incurs as a result of the trustee’s negligence. Just as real estate agents are required to act in their client’s best interest, loan servicers are also required to act in their client’s best interest. Let’s say an agent listed a house and double-sided it to a buyer for 200k. A 225k offer came in earlier, but the agent never presented it to the seller. Do you think the seller would be angry? Of course they would be. Or, let’s say you managed an apartment community. You only had a leasing person on site one day a week. You did this to save money. As a result the apartment complex only leased half of their apartments for the next year. You caused them to lose half of their year’s rents. Would that apartment manager be unhappy? You bet they would be. The loan servicers are doing the same thing. Here are a few examples of them breaching their fiduciary duty to their clients. Example #1: Not giving buyers an answer on a short sale within a reasonable time period. Loan servicers should help their investors recoup as much money as possible from short sales. Example #2: Turning down loan mods that amortize at a higher value than what is netted on a short sale or thru REO. Let me explain in a little more detail. A homeowner had a reduction in income and can’t afford his original mortgage payment. The borrower has a stable income and agrees to pay $1,000 a month for the next 30 years. $1,000 a month for 30 years, at a 6.5% interest rate will repay a $158,210 mortgage. The loan servicer turns down the loan mod and forecloses. The house sells for $125,000 as an REO and the servicer nets $115,000. Did the loan owner lose money? I think most people would agree that they did. Obviously there are other factors involved, but I think they would have done better if they had approved the homeowner’s offer. Example #3: Not listing foreclosed properties quickly enough. I have witnessed several examples of banks foreclosing on a house and then taking 6 months to a year to put it up for sale. As an example, I had a home early this year in the Karns area and we had tried to work out a short sale with BOA for over 4 months. The offer we had on the home was for $181,100 Freddie Mac was the owner of the mortgage. They wouldn't accept our short sale or give us a counter offer on the property. So they foreclosed on the home in July and bought it back for $181,600. Brilliant idea I couldn't believe it our tax dollars at work. That was 5 months ago the house is vacant and it still hasn't come back on the market. This is a sad story and most of our short sales are successful. If you are a Knoxville homeowner having problems with your mortgage payments. Don't wait until it is too late...I can help you at no cost to solve your issue. You have many options available to you and I'm more than happy to explain them to you. Call me at 865-696-9002 or email me [email protected]

Don't Let An Untrained Realtor Handle Your Knoxville Short Sale….

I  just had a meeting with a homeowner who had been trying to sell his home on a Knoxville short sale for last 5 months. They had listed their home with a friend who was in the real estate business. My fellow Realtor was a good agent but inexperienced a doing short sales here in Knoxville. They put the home on the market and obtained an offer from a qualified buyer but that was the only thing that he had done right. Once they had that is where the nightmare began for this homeowner. His agent had never done a short sale but thought it would be "a breeze". Their agent contacted the lenders to find out what information they needed to get together in order to submit the offer to the lender. The agent dropped the ball and was slow at getting the information to the lender. Instead of putting together a detailed short sale packet and sending it in all at once. The agent got some of the information together and send it in piece meal a little at a time. Next thing you know 5 months have gone by the lender still doesn't have a complete packet, the buyer has walked away and foreclosure proceeding have started on the home. We were called in to try to save this homeowner from foreclosure and get another short sale going on the home. We only had 2 weeks till the sale so we got on it right away to get the sale stopped for our sellers. The lender was Wells Fargo on the first and SunTrust on their second mortgage. Wells had started the foreclosure proceedings so that is who we had to deal with to stop the foreclosure. Once we got in touch with Wells we found out Fannie Mae was the investor who owned the mortgage. So in order to stop the sale we had to get their permission to do it. We talked with Wells and explained in great detail what had happened and were confident we could obtain another offer on the home and make this a win-win for everyone. The problem was Fannie Mae you never know what they are going to do when it comes to stopping a sale. We have had success with them and times when they said no way. Well unfortunately in this situation they said no to us and our seller lost their home to foreclosure. This is a perfect example why if you are in trouble don't trust an unskilled professional when it comes to a Knoxville short sale. Short sales are a step by step process and if you miss something you can end up in trouble. My team is the absolute best at it in the Knoxville Area. We can get the job done for you and avoid what happen to this seller. Our services cost you nothing. We can review all your options with you and you can decide what solution is best for you. Call me at 865-696-9002 or email me at [email protected] let's talk

Another Knoxville Success Story

I was contacted by a West Knoxville homeowner who recently had just lost their job. They had been told to sell their home on a short sale by another Realtor they had talked to about their situation. But they were unsure if that was what they really wanted to do. They knew they didn't want to lose their home to foreclosure and wanted to explore all their options. They know a Knoxville short sale was one option but want to consider all of them. They were referred to us by a friend who knew my team was experienced in helping area homeowners who may be facing foreclosure. We had a meeting and looked at their situation and explained all their options to them. They decided they didn't really want to sell their home at this time and wanted to prosue a loan modification with their lender. They weren't currently behind on their payments and had some income from a severance package they had recived from work. Since any time a you are in trouble before a lender will consider a loan modification or short sale. You need to put togerther a finaincial package on yourself and present it to the lender to consider. We help our homeowner assemble all their personal information and put them in touch with their lender to consider the loan modification. In the meantime while they where waiting to hear from their lender they were able to secure a new job. It wasn't making the type of income they were making before but it was income and a job. They contacted me for advice and I told them to call their lender and share the information. I said there is very good chance they will reduce your interest rate for 3-5 years if you asked them to do it. After about 45 days our homeowner called and said their lender reduced their interest rate for 5 years which made their payment affordable in their current situation. They were excited and grateful they called us and didn't sell their home on a short sale like the first Realtor had told them. They is why if you are a Knoxville area homeowner who made be facing foreclosure contact a trained professional. Most Realtors who don't specialize like we do in helping people in trouble don't have a clue on what the solutions are in order to help you. I am a well trained CDPE and my team and I help more people in Knoxville avoid foreclosure than anyone else. Call me and let's talk about your situation 865-696-9002 or email me at [email protected]

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