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]
What Do I Do If My Realtor Has Never Done Knoxville Short Sale?
I got a phone call from a Knoxville homeowners asking about selling her home on a short sale. She had her home for sale with another agent. Here was her question to me
“I have had my house for sale for a little while, but it hasn’t sold. No buyers have come to look at it. At first I thought the price was fair. But, now that no one has come to see the home, I am beginning to realize that I am upside down. I need to sell because i have lost my job. My realtor hasn’t talked to me about a short sale. What should I do?” Jennifer asked.
Here is what I would recommend to her. First, talk to your current agent about a short sale. The might be uncomfortable with bringing it up.
Short sales are a sensitive issue. Some people get offended when you ask them about a short sale. It doesn’t look like that is the case with you.
Tell your agent that you think you might be upside down. Ask them what they think they can realistically sell the house for in today’s market.
Then, ask them for a “Net Sheet.” This is a sheet that details all of the costs and fees associated with selling a home.
The fees and costs are subtracted from the sales price to give you the net amount you will receive from the sale. Compare that number with your mortgage payoff.
If it is less than what you owe your lender, then you will need to consider a short sale. Ask your agent if they can handle your short sale.
If not, then you may need to hire someone else. Short sales are a lot more complex than a normal real estate transaction.
Make sure the person you interview has closed short sales in the past and knows what they are doing.
Ask them how the short sale process works. Have them explain it to you. This will help you determine if that person can do the job for you.
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny.
Send me an e-mail at [email protected] or call me for a free consultation at 865-696-9002. I will explain all your options to avoid foreclosure I have the most experienced Short Sale Team in Knoxville and we can get your home sold for you.
Getting Divorced ..Should You Sell Your Home On A Short Sale
If you are getting a divorce and neither one of you can afford the payment on your own. Then I would suggest you sell your home. Now, if you are reading this blog, then you must be researching a Knoxville short sale.
Which means that you are probably upside down on the home. You have three options.
Option #1: Let your lender foreclose on the home. You just stop making the payments and surrender the home to your lender.
Option #2: Short Sale the house and get the debt wiped out. A short sale offers the following benefits over a foreclosure.
Issue: Can I get a Future Fannie Mae Loan?
Foreclosure: The current Fannie Mae Guidelines require you to wait 5-7 years before you can buy another home with a Fannie Mae Loan. Most other banks and lenders have the same or even stricter procedures.
Short Sale: If are back on your feet 2 years after the short sale, then Fannie Mae guidelines allow you to get a loan from them.
Issue: Can I get a future loan from any mortgage company?
Foreclosure: Any future application will require you to answer the question, “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” you’ll have to answer that question yes.
Short Sale: You can state “No” because you short sold your home. You only have to say yes if the bank completes the foreclosure.
Issue: Credit Score Impact.
Foreclosure: Your score is typically lowered by 250 to 300 points, or even more. This often stays on your credit score for over 3 years.
Short Sale: Only late payments show up. After a short sale, the mortgage is normally reported as “paid in full, settled.” This lowers your score as little as 50 points if all other payments are being made. Oftentimes, this is off your credit report in as little as 12 months.
Issue: Will I owe the bank any money for the shortfall?
Foreclosure: Many lenders take 6-12 months to foreclose upon a property and resell it. This dramatically increases the loss and makes any deficiency judgment potentially bigger.
Short Sale: Few lenders ask for a promissory note on a short sale. As an example, on one short sale, the bank lost over $120,000. They settled with the seller for $15,000 to be repaid over 8 years with zero interest. The seller’s monthly payment was only $178.57. It is rare in our short sales that our sellers end up paying anything back to the bank
Option #3: Rent the property. This is a good way to earn some extra money. However, if you are upside down, then it is more than likely that the rent will not cover the mortgage. That means someone will have to write a check each month covering the loss.
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Give me a call at 865-696-9002 or email me [email protected]
Discover how other sellers successfully completed a short sale. You do have options other than foreclosure I will explore them all with you
What Do You Think??
– The New York Time had an interesting article about one man’s mission in the fight to stop foreclosure. According to the article, Mark Guerette, attempted to make use of all the empty, abandoned
houses he saw.
I get frustrated when I see homes sitting empty for months and months. “Those homes should be put to good use!” I thought to myself.
It bugged me that homes would sit empty for months and even years at a time. The lawn would become overgrown.
A window might leak. Or, vandals would break the windows. Rain would start getting inside the house, thereby causing mold on the walls and ceiling.
The house would get uglier and uglier. As a working short sale realtor, I knew how much this would cause the home’s value to drop.
Most of the homes were in foreclosure. The owners had moved out to avoid being kicked out. But, the banks didn’t take care of the homes.
It bugged me to see these trashed homes come on the market and sell at a substantial discount.
“Those banks are hurting the housing market. Someone needs to do something!” I thought to myself. But, I never did anything about it.
Apparently this guy did. Mark would find abandoned homes, fix them up, and rent them to needy families.
An old English Common Law principle called “Adverse Possession” would make him the owner of the home after several to a dozen or more years.
Of course, he was responsible for keeping the home up, paying all the property taxes (including past dues taxes), and risking having a former homeowner confront him.
’s Adverse Possession law would give ownership after 7 years. He thought that law was enough to make what he was doing legal. Apparently not!
According to the article, he now faces up to 15 years in prison. This is after he disclosed what he was doing to everyone.
He mailed the owners of the homes and the banks with the mortgage and told them of his plans. The lease with his tenants disclosed that he wasn’t the legal owner.
And yet, he still faces a prison sentence? Do you think that is fair? I don’t. Please tell me what you think in the comments section below.
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Call me at 865-696-9002 or email me [email protected]
When we talk, I will explain how the process works in detail and answer any questions you may have.
Why Would I do a Knoxville Short Sale Instead Of A Strategic Default?
I was on appointment the other day with Knoxville homeowner talking about there options to avoid foreclosure. This seller was pretty educated already on their options but wanted to meet with me because of a referral from a past client we had helped early this year. They were trying to decide between a strategic default and a short sale on their Knoxville area home.
“Why would I do a short sale instead of saving the monthly payments and letting it go into foreclosure?” they asked.
Here is the answer. If you stop paying your mortgage, then you can live in your home rent free for 9-18 months, depending on your lender.
I have seen lenders wait a year after the first missed payment just to file for foreclosure. Yes, you can live in your house for free for a long time. However, a short sale has many advantages over a foreclosure.
It does less damage to your credit and allows you to buy another home in 2 years versus the 5-7 years after a foreclosure. In addition, you can get some money as an incentive for doing the short sale.
You really have the benefits of both with a Knoxville short sale because you have to market the home, get an offer and work out the short sale. That whole process itself takes time maybe up to 9 months.
This will allow you to salvage your credit and live “rent free” for awhile. You will be able to wipe out all that upside down debt and move on with your life. Best of all, you will be eligible to buy another home in 2 years once you are back on your feet.
I have helped many Knoxville Home Owners stop foreclosures on their home. If you are unsure of what your options are contact me and we can setup a time to meet. We can discuss your situation and determine what option is best for you and your family. My services to you are free of charge and I’m here to help you.
If you would like to know more about your options, please call me at 865-696-9002 or email me at [email protected]
I am here to help … in any way I can.
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]
