The Short Sale Glossary

Bankruptcy: A legal alternative that allows the borrower to clear any debt obligations by restructuring the payment terms. A bankruptcy stops the foreclosure process until the bankruptcy process is completed or the court allows the lender to resume the foreclosure.

Deed in Lieu: Voluntary conveyance of title in exchange for a discharge of debt. The house must be free of other liens and must have clear title. In simple terms, the borrower agrees to transfer titel of the property to the lender, who accepts the property in exchange for the total debt.

Deed of Trust: A legal document that dictates the terms of a loan used to buy a property and transfers the ownership of the property to a third party called a trustee until the loan has been paid in full.

Default: Occurs when the borrower does not meet its legal obligations according to the loan terms.

Forbearance: Under a forbearance agreement, the lender agrees to stop the foreclosure process and determines payment terms that, at a certain time, will bring the borrower current.

Foreclosure: A process in which a lender attempts to recover the amount owed on a defaulted loan. The lender has the option of selling the property or repossessing the property. The beginning of a foreclosure process starts after a borrower defaults on mortgage payments and the lender files a Notice of Default or Lis Pendens.

Lien: A legal claim on a property by a lender or other entity (called the lien holder) against the property owner that owes the money.

Lis Pendens (LIS): A publicly recorded notice of a pending lawsuit against a property owner that may affect the ownership of a property. This process is required in a few states to begin the foreclosure process if a borrower is in default.

Modification: A transaction in which a lender agrees to modify any or some of the terms of the mortgage. This is a process where an existing note is modified, but not cancelled. Changes may include: extending the term of the loan, changing the monthly payments, changing the interest rate, etc.

Notice of Default (NOD): A publicly recorded notice stating that a property owner is behind scheduled loan payments for a loan secured by a property. This process is required in a few states to begin the foreclosure process if a borrower is in default.

REO (Real Estate Owned): A class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction.

Reinstatement: Occurs when the property owner pays off the amount in default to bring the loan payments current in order to stop the foreclosure process and return to the original terms of a loan.

Short Sale: (Also called "Short Pay" or "Pay Off") A process in which a lender agrees to receive a lower amount of an owed debt in exchange for the sale of the property to a third party.

5 Tips from a Short Sale Expert that Could Save a Home

(PRWEB) February 12, 2007 -- Millions of Americans are faced with the possibility of foreclosure yet do not realize they have definite and reliable options to save their home. Short sales expert, Eli Tene is working to inform distressed property owners of these viable alternatives, the foremost being a short sale transaction.

"We have seen a wave of 100% financing, refinancing and cashing out beyond the real affordability level of the buyer in the last few years," said Tene, CEO of I Short Sale Inc. "Buyers are taking cash out of their properties as casually as if they were making an ATM withdrawal." Tene explains that, unfortunately for the buyer, payday comes at a time when they are least prepared for it. "Mortgages used to be up to 25% of your total income. We now see in many cases that the mortgage is 60, 70 and 80% of the buyer's total income. There is no way to survive it. Any slight change in your life or income immediately affects your ability to pay," says Tene.

I Short Sale Inc. has seen a dramatic increase in distressed property owners opting for a short sale rather than letting their home go into foreclosure. The real estate market is just now "catching on" to this wave of alternative and creative financing options; however, Tene has been facilitating short sales for over 16 years.

Most property owners who find themselves unable to pay their mortgage still have opportunities to preserve their home and protect their credit. Tene offers five tips that could save your home:

1. Talk to your lender as soon as possible. Don't wait to go further into delinquency. Time works against you. Once your payment is overdue, your opportunity to get the lender's cooperation declines.
2. Don't be afraid of your lenders. The lender is in the lending business, not the real estate business. They do not want your property. They want to work with you to ensure the loan is paid.
3. Beware of scam artists. Predatory lenders and distress opportunity scammers often target people in financial distress. They try to force you, in a time of panic, into high cost mortgages, which increase your financial problems and the risk of losing your home. Predatory lenders usually offer loans with hidden fees and rate increases. Be aware of "magicians" who pitch dream solutions that sound too good to be true. If it sounds too good to be true, the dream will likely become a nightmare. There are no magicians in this industry. Don't agree to promises that are unrealistic. Look for a real solution.
4. If your loan is insured by the department of Housing and Urban Development or the FHA, you may be eligible for a one-time payment to bring your mortgage payment current.
5. Don't try to negotiate a "short sale" on your property by yourself. When you are sick, you go to the doctor. When you go to court, you take a lawyer. For a successful short sale, seek professional advice. In most cases, you will have ONLY ONE chance at a successful negotiation with your lender.

I Short Sale, Inc. has assisted thousands of property owners and a large number of lenders in the intricate and sensitive business of short sales, modifications, forbearances, deeds in lieu and other creative financing solutions. For over 16 years, the company's principals have developed solid experience and created an extensive network of contacts with lenders, realtors and property owners. The purpose of short sales, as well as the other financing solutions I Short Sale provides, is to help property owners and lenders avoid the lengthy and costly process of foreclosure, the stressful act of eviction and the REO sale that follows.

http://ishortsale.com/

What's the single biggest headache for anyone trying to pull together a short sale right now?

by Kenneth R. Harney, RealtyTimes.com


Raffi Tal, chief operating officer of one of the country's largest short sale advisory firms -- IShortsale.com -- doesn't hesitate to answer: Lenders who hold junior liens -- second and third trusts or mortgages -- on properties are gumming up the works and stalling closings.

"They can be incredibly irrational," Tal told Realty Times in an interview this week, "They want unrealistic (payoff) numbers," even when they face total losses if the holder of the first lien proceeds to foreclosure.

Tal's firm works with lenders, investors, realty agents, and borrowers nationwide to put together and close short sales. Currently it's handling roughly 1,800 pending transactions -- up from 1,000 at the start of the year.

In a short sale, the primary mortgage holder agrees to accept less than the full amount owed by the borrower. A new buyer, either an investor or an owner-occupant, offers to purchase the property at a discounted price. Often the sale proceeds leave little or nothing for second or third lien holders, such as banks that extended piggyback seconds.

But because junior lien holders have the legal right to approve the short sale, or disapprove and block it, they may demand payment of some small part of what was owed to them out of the short sale proceeds.

The problem, according to Tal, is that junior lien holders increasingly are holding transactions hostage - demanding fat payoffs as the price of their approval. Traditionally they'd agree to nominal amounts out of the deal -- say $1,500 to $2,000. But now some of the largest banks are holding out for $10,000 to $30,000.

Tal cited one recent example of a major lender that had already written off a second mortgage for accounting purposes on a house that had dropped dramatically in market value.

"The bank had nothing - they zeroed it out on their books," said Tal. But when his firm approached the bank about a short sale to avoid foreclosure, "suddenly they began asking" for $10,000 to $30,000 as the price of their participation.

The deal finally closed at the eleventh hour, but only because the home sellers came up with $10,000 out of their own pockets to satisfy the bank.

Bottom line here: If you are pursuing a short sale as an investor, make sure you have a strategy to deal with junior lien holders up front.

They can run the clock on your deal -- and even kill it if you don't cut them in.

http://realtytimes.com/rtpages/20080516_investorreport.htm

The Benefit of Short Sale to Homeowners

I Short Sale, Inc. acts on behalf of the property owner, negotiating with their lender to come to an agreement on a dollar amount that allows the lender to be paid and the seller to divest themselves of their home without having to face the long-term negative ramifications of foreclosure. It is a tricky proposition, to be sure, and one that requires financial knowledge, equal amounts of professionalism, expertise, and understanding.

“We are dealing with people in the most sensitive time of their lives, because their home is their most important asset, and they are faced with losing it,” said Tene. “You need to be very sensitive and knowledgeable throughout this process, and remember that this is not a situation where, if you don’t perform, someone might not be able to buy the house they want. Here, the risk is losing their house. The potential outcomes are of paramount importance. With our Fresh Start program, we offer them an opportunity to recover financially by working with the most informed, capable, and caring professionals in the business.

“We are the leaders of short sale processing company in the country,” he added, “and the key to our success is experience and customer service. Our staff of professionals brings with them hundreds of years of combined experience in this field, which is critical because doing short sales properly requires a particular kind of expertise. You have to understand the language lenders speak, the inner workings of the financials, and be able to package everything correctly. In many cases, title and foreclosure knowledge is required. It’s in a homeowner’s best interest to work with a team that can provide the kind of guidance and professionalism required of a successful short sale.”

Scott Sawyer, the company’s vice president of lender relations, was formerly at Citibank Mortgage, and jumped at the opportunity to use his skills and experience to make a positive impact on people’s lives.

“I chose I Short Sale because I spent 13 years working for large lenders, including running the loss mitigation department for Citibank Mortgage, and I had a desire to help homeowners directly,” said Sawyer. “I had noticed a lack of knowledge on the homeowners’ and agents’ side, and thought I could use my expertise to help them. This company has the borrowers’ needs in mind, and I appreciate that I am able to make a difference for a lot of people who otherwise might not have any acceptable options.”

A tremendous advantage for homeowners who choose to do a short sale is the ability to better safeguard credit. Once a homeowner falls
behind on house payments, their credit score has most likely been compromised, however a foreclosure is a black mark that remains for
up to 10 years and can affect a person's creditworthiness as negatively as a bankruptcy.

"A short sale, on the other hand, is reported as a settlement, which is far better than a foreclosure repossession," said Sawyer. "A foreclosure looks like a repossession on a credit report; a short sale does not impact credit anywhere near as drastically. Additionally, we have many cases of property owners who never stop making payments."

I Short Sale, Inc: Education is Key

Most experts predict the real estate market will remain depressed and/or in transition for several months. If real estate agents representing those homeowners who are facing foreclosure knew more about short sales and where to turn for expert help, those numbers would change dramatically, said Sawyer.

“The average agent can help someone sell their home, but isn’t necessarily qualified to negotiate with a lender on a short sale,” said Sawyer. “And because lenders don’t always portray a short sale as an option, home buyers aren’t aware of the possibility and agents aren’t informed about the advantages of working with a company that has experience and expertise to help them navigate this niche market. We are seeing more and more situations where homeowners who are in trouble with their home think that foreclosure is all they can do to get out from under. They think that once they have missed enough payments, they have no choice but to allow the bank to foreclose on their home, and so they walk away defeated. It is so important to educate homeowners about short sales. Being able to take my years of experience and help someone is a gift to them, and to me.”

Added Tal: “When it comes right down to it, the lender doesn’t want to take a property back; they want to be paid. They are not in the real estate business. We meet regularly with loss mitigation departments of the largest lenders and see how motivated they are to find a quick solution. This market is obviously tough for many people and for many reasons, but for someone looking for the path of least resistance out of their home, the short sale is the answer. If they end up in foreclosure, it has to be because their agent either wasn’t familiar with the short sale process or didn’t know they could utilize I Short Sale as their resource. Once those agents become aware of the advantages of partnering with us, they are excited to take their business in a new direction.”

By all accounts, that direction is up.

“Smart, ambitious agents are looking at what they can do to transform their business, and they should have a good, long time to excel in short sales when they work with us,” said Cavarra, whose investment banking background gives him a unique insight into the real estate and financial industries. “I think the market is going to get worse over the next 18 months to two years. We are just starting to get everything to the surface, with subprime lenders being bought out and other lending institutions taking big hits. In the last two weeks, there has been an article in the paper every day hinting at a recession. The hard truth is that anyone who wants to remain successful in this business has to know how to change with the times, or they will get passed by.”

I Short Sale’s success is certainly evidence of that. They have paved their way in a market that most professionals and homeowners are afraid of today, and created opportunities for homeowners to salvage their credit and their sanity, and real estate agents to excel.

I Short Sale Helps again: Struggling Chatsworth family won't lose home

By Tony Castro, Staff Writer, Daily News - Los Angeles

It was one piece of bright news in what has otherwise been a rough decade for Avinoam and Rachel Hen.

The Chatsworth couple were on the verge of losing their home to foreclosure this month - after suffering previous tragedies in recent years that included the deaths of their two children a few months apart, a vicious Rottweiler attack on Avi and the collapse of his automotive business.

But now the couple has learned that they will be able to stay in their home for the foreseeable future because their lender approved a loan modification, after initially resisting any changes.

"I feel that a great weight has been lifted from us," said Rachel Hen, who had been emotionally overcome at the prospect of losing the home that she has turned into a virtual shrine to the two children she lost in tragedies almost eight years ago.

Wells Fargo Home Mortgage canceled last week's scheduled foreclosure sale of the Hens' home and is in the process of finalizing the loan modification documents, said Raffi Tal, the real estate solutions specialist who has been assisting the Hens.

"Wells Fargo showed that it was human," Tal said.

The decision to halt the foreclosure process was actually made by an unidentified private lender that was responsible for the loan and had imposed almost impossible-to-meet guidelines, officials said. Wells Fargo was administering the loan on behalf of the lender, a common industry practice.

"The loan terms have been modified, and the Hens will be able to remain in their home," said Wells Fargo spokesman Kevin Waetke in an e-mail.

The possible loss of their home culminated a series of tragedies the Hen family has experienced in the last eight years.

In 2002, their 25-year-old daughter, Victoria, was fatally shot in a terrorist attack at the El Al ticket counter at Los Angeles International Airport. Their son, Nimrod, 18, died a few months later of injuries suffered in a car accident.

While still mourning his children's deaths, Avinoam was viciously attacked by a stray Rottweiler. He broke both hands, required 120 stitches and was on disability for nearly a year.

Later the family's automotive business went under, and the Hens refinanced their four-bedroom house to cover mounting expenses. When their new adjustable rate mortgage reset and their mortgage payments soared by 50 percent, the Hens found themselves unable to keep up. At that point, the loan was for an amount more than $100,000 greater than the depressed value of their house.

Bankruptcy soon followed, and over the past year Wells Fargo denied a series of requests for a loan modification.

What made Wells Fargo and the private investor change their minds?

According to the Hens and Tal, the turning point was a March 17 Daily News account detailing the Hen family's tale of personal woe and tragedy that brought pressure.

Tal said the Hen case underscored the national home foreclosure crisis in the country, coming three years after the housing bubble burst.

Roughly 3.4 million homes went into foreclosure last year, up from 1.2 million homes in 2007. More than roughly 8 million homeowners are at risk of losing their homes in the next two years, according to John Taylor, president of the National Community Reinvestment Coalition.

As of Friday, the Hens were still awaiting the documents with the details of the loan modification. But they anticipate the new mortgage will be closer to the $2,000-a-month payments they had sought instead of the more than $3,000-per-month imposed by their adjustable rate under the old agreement.

"I am jumping up and down with joy," Avinoam Hen said upon hearing the news.?

Facing foreclosures? A short sale may be a better option

Click here to listen or download (short sales.mp3, 14.89 MB)

• Why more distressed homeowners are taking the short route
• ‘Reduction of principal used to be taboo’

Millions of Americans, especially in California and a few other states, are living underwater – in homes whose market value is less than their mortgages.

For those unable to make the payments, foreclosure is often the result, since government “help” programs have often been seen as too little, too late and applicable to too few.

But Southern California real estate investor Eli Tene says there is a better way for many: the short sale.

“Reduction of principal used to be taboo. Finally, they are getting to it,” says Mr. Tene, managing president of IShort Sale Inc., which describes itself as one of the largest short sale firms in the U.S.

“They are still putting some limitations. It only works for people who didn’t missed payments,” says Mr. Tene, who notes that as many as 10-12 million homeowners face a serious risk of foreclosure over the next three years.

But he says lenders are waking up to the fact that getting something in a short sale is better than getting stuck with owning the homes they have foreclosed on.

(Eli Tene talks about when the short sale may be the right sale in today’s CVBT Audio Interview via Skype. Please left-click on the link below to listen now or right-click to download the Mp3 audio file for later listening.)

Mr. Tene has some advice for those faced with mortgage problems.
• Communicate with your lender from the moment you are having difficulties making the mortgage payments. Many times, continuous communication with the lender prolongs the time frame from the beginning of the default to the initiation of the foreclosure proceedings.

• When communicating with lenders and when being asked over the phone to provide financial information, never furnish such data without organizing it on a piece of paper and studying it. People tend to provide wrong or un-audited financial information over the phone, which is being recorded by the lender. Changing these figures later might be difficult.

• Substantiate an income. The most important key factor of obtaining a modification is to substantiate an income. A lender will not grant a workout to anyone who is not able to show hard proof of income. Make sure your records are straight, especially if you are self-employed. Go thoroughly over your income and expenses. Cut all unnecessary expenses and trim existing ones. Lenders like to see the borrowers living on a tight budget before they are being asked to cut their mortgage charges. Make minimum payments to credit cards. ?

• Know the programs available on your loan. Obtaining a loan modification is somehow considered as a "mini loan." As such, you have to know the programs available on your loan, know the exact numbers and ratios the lender is looking for (in most cases the lender will not provide it to you), and understand the lender's language. If you don't feel secure communicating with the lender and obtaining the modification, consult a professional.

Loan Modifications

A Loan Modification is when a lender agrees to modify any or some of the terms of the mortgage, making it more affordable for you.

These changes may include:

1) Reducing or modifying the interest rate
2) Extending the term of the loan
2) Changing the monthly payments
4) Combining any of the above

A Loan Modification will give you a fresh start, bringing your mortgage up to date after capitalizing any delinquent interest, escrow, fees, and other costs based on investor guidelines.
Acting quickly should be your number one priority, as I Short Sale, Inc will need to develop a plan, document your current financial situation, and contact your lender to begin negotiations on your behalf in order to stop foreclosure and save your home.

Other solutions to avoid foreclosure and KEEP YOU IN YOUR HOME include:

Reinstatement: Occurs when the property owner pays off the amount in default to bring the loan payments current in order to stop the foreclosure process and return to the original terms of a loan. After identifying that a reinstatement is the best and most feasible foreclosure alternative, I Short Sale will work with you to determine how best to produce the funds.

Repayment Plan: This foreclosure option lets you repay part of your delinquency each month, in addition to your regular monthly payment. A repayment plan is the perfect option for someone that experienced momentary financial hardship, but is now back on their feet. I Short Sale will negotiate with your lender to spread the past-due amount over a specified period of time.

Forbearance: In order to stay in your home, a lender will agree to delay or reduce payments for a short period of time, with the understanding that another option will be used to bring your balance current. I Short Sale will negotiate to get you the time you need to determine the best solution for you and, in many cases, will succeed in combining a Forbearance Agreement with a Reinstatement or Repayment Plan.

Default situations are time sensitive, avoiding the situation is simply unwise.
Contact Us Now for a Non-Obligation Consultation Toll Free: 1.877.907.4678

http://ishortsale.com/

Short Sale Myths De-Bunked

05.01.2010 – With short sales making up almost 35% of home sales in March and the country in a national foreclosure crisis, I Short Sale, Inc., one of the largest short sale firms in the U.S. sets the record straight on common short sale myths.

Short Sale Myths

1. You must be default on your mortgage to negotiate a short sale.

Short sales are not a function of default status on a mortgage. They are the result of the bank mitigating a potential default situation that, in the long run, will cost more money to the investors. We have completed many short sales in instances when the borrower was not in a default situation.

2. Listing my home as a short sale is embarrassing.

Anytime we get ourselves into a tough financial situation it can cause some embarrassing feelings. It is important to remember that those feelings will not help us get back onto stable financial ground. We need to overcome our feelings and do what is right to protect our financial futures.

3. Buyers aren't interested in short sale properties.

Short Sale properties are often times available at a competitive price to other properties on the market. In many cases, short sale properties are very well cared for and have not had to endure the deferred maintenance of a REO property. Short Sale properties are in great demand in the marketplace.

4. There's not enough time to negotiate a short sale before foreclosure.

A good negotiator takes into account the timeline affiliated with a foreclosure. There is always a chance that a short sale can be negotiated. However, the only way to know for sure is to try.

5. The bank would rather foreclose than complete a short sale.

Banks do not want to foreclose on property. It is expensive and carries a high level of liability once the bank owns that property as an REO. Wherever possible, banks are seeking other loss mitigation options before foreclosure.

6. Short sales are impossible and never get approved.

Short sales are complicated, but not impossible. We negotiate short sale approvals every day, with a very high success rate.

About I Short Sale, Inc.

I Short Sale, Inc. is a leading nationwide short sale and loss mitigation advisory firm that has assisted thousands of property owners and lenders in the intricate business of short sales, loan modifications, forbearances, deeds in lieu and other loss mitigation solutions. Since 1991, I Short Sale's principals have helped property owners and lenders avoid the lengthy and costly process of foreclosure and the stressful act of eviction. With over 18 years of experience, I Short Sale principals have developed a far-reaching network of contacts consisting of property owners, mortgage companies, banks and realtors. The firm's success is based on integrity and delivering on their client needs. Compliance with all State and Federal laws is our mandate. Learn more at http://ishortsale.com.

You Wouldn't Go to Court Without an Attorney At Your Side, So Why Go To Your Lender Without Us By Your Side?

I Short Sale is a leading nationwide short sale and loss mitigation advisory firm that has assisted thousands of property owners and lenders in the intricate business of short sales, loan modifications, forbearances, deeds in lieu and other loss mitigation solutions. Since 1991, I Short Sale's principals have helped property owners and lenders avoid the lengthy and costly process of foreclosure and the stressful act of eviction.

With over 18 years of experience our principals developed a far-reaching network of contacts consisting of property owners, mortgage companies, banks and realtors. The strength of I Short Sale experience, knowledge and relationships is invaluable. Our success is based on integrity and delivering on their client needs. Compliance with all State and Federal laws is our mandate.

How Can I Short Sale Help?

• Protecting your credit from further degradation.
• Presenting a solution to the lender and negotiating favorable terms.
• Helping to minimize your debt obligations.
• Allowing the borrower and her/his family to get a fresh start.
• Expediting the process with a fast resolution.

Why I Short Sale?

• Experience - since 1991, thousands of Short Sales
• Aiming for a Win/Win solution for all parties involved
• We specialize in short selling
• Exceptional volume of cases
• Reputation - nationwide leading loss mitigation company
• High success rate
• Strong relationships with lenders and familiarity with lenders’ language
• This is all we do!

http://ishortsale.com/