We're number 1, we're number 1....in up-side-down mortgages. Again, not the thing you really want to be leading the nation with, but that's our market right now.  There is a great report just released from First American CoreLogic on the Fourth Quarter housing statistics.  Over 11.3 million mortgages are under water.  Nevada seems to be the epicenter of the housing meltdown, even though prices have stabilized, the numbers are surprising. Here's an excerpt from the report:

 Negative equity continues to be concentrated in five states: Nevada, which had the highest percentage negative equity with 70 percent of all of its mortgaged properties underwater, followed by Arizona (51 percent), Florida (48 percent), Michigan (39 percent) and California (35 percent). Among the top five states, the average negative equity share was 42 percent, compared to 15 percent for the remaining 45 states. In numerical terms, California (2.4 million) and Florida (2.2 million) had the largest number of negative equity mortgages accounting for 4.6million, or 41 percent, of all negative equity loans.

The blog "Calculated Risk Blog" reported:

These homeowners are far more likely to default.

The rise in negative equity is closely tied to increases in pre‐foreclosure activity and is a major factor in changing homeowners' default behavior. Once negative equity exceeds 25 percent, or the mortgage balance is $70,000 higher than the current property values, owners begin to default with the same propensity as investors.

 Here is figure 4 from the report.

The default rate increases sharply for homeowners with more than 20% negative equity.

This graph fits with figure 2 above and suggests a large number of future defaults in Nevada, Arizona, Florida and California.

The aggregate dollar value of negative equity was $801 billion, up $55 billion from $746 billion in Q3 2009. The average negative equity for an underwater borrower in Q4 was ‐$70,700, up from ‐$69,700 in Q3 2009. The segment of borrowers that are 25 percent or more in negative equity account for over $660 billion in aggregate negative equity.

Because Nevada is SO upside down, loan modification programs, and short sales have taken over our market.  Out of the 10,135 Single Family Homes, Townhouses, and Condos that are currently available on the multiple listing service in Las Vegas/Henderson, 4900 are short sales, and 1550 are foreclosures or bank owned properties.    Banks are now on board the short sale wagon.  They want to work with sellers to avoid foreclosure.  Bank of America, one of the most notorious banks in the short sale world, is the first large bank to sign on for the Second Lein Holders program-H.A.M.P. (Housing Affordable Modification Program).  If you'd like more information regarding a loan modification, please visit Making Home Afforable.   These programs also facilitate the short sale process.  Some of these programs do seem to be making a difference.  Short sale closings have increased to 22% of all home sales in January 2010.

If you would like a FREE, confidential short sale consultation, please give me a call toll free at 1-866-589-1646.  We're here to help you avoid foreclosure, get a loan modification, or assist you to short sale your home.  Certified Short Sale Professional and Certified Distressed Property Experts handle every aspect of your short sale.

Felipe Crook

Prudential Americana Group Realtors

Las Vegas, NV 89117

1-866-589-1646

I just saw some great information on THE FEDERAL TRADE COMMISSION's website about mortgages, short sales, loan modifications, and foreclosures for the consumer.   It goes over all kinds of scenarios and options people have if they are struggling with their mortgages.  This is a copy from their website. The full article is available by clicking here, or you can read below:

"Mortgage Payments Sending You Reeling? Here's What to Do

The possibility of losing your home because you can't make the mortgage payments can be terrifying. Perhaps you're having trouble making ends meet because you or a family member lost a job, or you're having other financial problems. Or maybe you're one of the many consumers who took out a mortgage that had a fixed rate for the first two or three years and then had an adjustable rate - and you want to know what your payments will be and whether you'll be able to make them.

Regardless of the reason for your mortgage anxiety, the Federal Trade Commission (FTC), the nation's consumer protection agency, wants you to know how to help save your home, and how to recognize and avoid foreclosure scams.

Know Your Mortgage

Do you know what kind of mortgage you have? Do you know whether your payments are going to increase? If you can't tell by reading the mortgage documents you received at settlement, contact your loan servicer and ask. A loan servicer is responsible for collecting your monthly loan payments and crediting your account.

Here are some examples of types of mortgages:

• Hybrid Adjustable Rate Mortgages (ARMs): Mortgages that have fixed payments for a few years, and then turn into adjustable loans. Some are called 2/28 or 3/27 hybrid ARMs: the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate. Others are 5/1 or 3/1 hybrid ARMs: the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes. In a 3/1 hybrid ARM, for example, the interest rate is fixed for three years, then adjusts every year thereafter.
• ARMs: Mortgages that have adjustable rates from the start, which means your payments change over time.
• Fixed Rate Mortgages: Mortgages where the rate is fixed for the life of the loan; the only change in your payment would result from changes in your taxes and insurance if you have an escrow account with your loan servicer.

If you have a hybrid ARM or an ARM and the payments will increase - and you have trouble making the increased payments - find out if you can refinance to a fixed-rate loan. Review your contract first, checking for prepayment penalties. Many ARMs carry prepayment penalties that force borrowers to come up with thousands of dollars if they decide to refinance within the first few years of the loan. If you're planning to sell soon after your adjustment, refinancing may not be worth the cost. But if you're planning to stay in your home for a while, a fixed-rate mortgage might be the way to go. Online calculators can help you determine your costs and payments.

If You're Behind On Your Payments

If you are having trouble making your payments, contact your loan servicer to discuss your options as early as you can. The longer you wait to call, the fewer options you will have.

Many loan servicers are expanding the options available to borrowers - it's worth calling your servicer even if your request has been turned down before. Servicers are getting lots of calls: Be patient, and be persistent if you don't reach your servicer on the first try.

• You may qualify for a loan modification under the Making Home Affordable Modification Program (HAMP) if:
• your home is your primary residence;
• you owe less than $729,750 on your first mortgage;
• you got your mortgage before January 1, 2009;
• your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner's association dues, if applicable) is more than 31 percent of your current gross income; and
• you can't afford your mortgage payment because of a financial hardship, like a job loss or medical bills.

If you meet these qualifications, contact your servicer. You will need to provide documentation that may include:

• information about the monthly gross (before tax) income of your household, including recent pay stubs.
• your most recent income tax return.
• information about your savings and other assets.
• your monthly mortgage statement.
• information about any second mortgage or home equity line of credit on your home.
• account balances and minimum monthly payments due on your credit cards.
• account balances and monthly payments on your other debts, like student loans or car loans.
• a completed Hardship Affidavit describing the circumstances responsible for the decrease in your income or the increase in your expenses.

For more information, see www.makinghomeaffordable.gov/modification_eligibility.html

If you're interested in refinancing to take advantage of lower mortgage rates, but are afraid you won't qualify because your home value has decreased, you may want to ask if you qualify for the Home Affordable Refinance Program (HARP) or the HOPE for Homeowners (H4H) program. For more information, see www.hud.gov/foreclosure.

Avoiding Default and Foreclosure

If you have fallen behind on your payments, consider discussing the following foreclosure prevention options with your loan servicer:
Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.

Repayment plan: Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you've missed a small number of payments.

Forbearance: Your mortgage payments are reduced or suspended for a period you and your servicer agree to. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance isn't going to help you if you're in a home you can't afford.

Loan modification: You and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A modification also may involve reducing the amount of money you owe on your primary residence by forgiving, or cancelling, a portion of the mortgage debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov. A loan modification may be necessary if you are facing a long-term reduction in your income or increased payments on an ARM.

Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you've reduced other expenses, your loan servicer may be more likely to negotiate with you.

Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.

Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to get credit, buy another home, get life insurance, or sometimes, get a job. Still, it is a legal procedure that can offer a fresh start for people who can't satisfy their debts.
If you and your loan servicer cannot agree on a repayment plan or other remedy, you may want to investigate filing Chapter 13 bankruptcy. If you have a regular income, Chapter 13 may allow you to keep property, like a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income toward payment of your debts during a three-to-five-year period, rather than surrender the property. After you have made all the payments under the plan, you receive a discharge of certain debts.

To learn more about Chapter 13, visit www.usdoj.gov/ust; it's the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that oversees bankruptcy cases and trustees.

If you have a mortgage through the Federal Housing Administration (FHA) or Veterans Administration (VA), you may have other foreclosure alternatives. Contact the FHA (www.fha.gov) or VA (www.homeloans.va.gov) to talk about them.

Contacting Your Loan Servicer

Before you have any conversation with your loan servicer, prepare. Record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value less the balance of your first and any second mortgage or home equity loan.

Then, write down the answers to the following questions:

• What happened to make you miss your mortgage payment(s)? Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?
• Is your problem temporary, long-term, or permanent? What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?
• What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?

Throughout the foreclosure prevention process:

• Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.
• Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, "return receipt requested," so you can document what the servicer received. Keep copies of your letter and any enclosures.
• Meet all deadlines the servicer gives you.
• Stay in your home during the process, since you may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional "workout" assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.

Housing and Credit Counseling

You don't have to go through the foreclosure prevention process alone. A counselor with a housing counseling agency can assess your situation, answer your questions, go over your options, prioritize your debts, and help you prepare for discussions with your loan servicer. Housing counseling services usually are free or low cost.

While some agencies limit their counseling services to homeowners with FHA mortgages, many others offer free help to any homeowner who is having trouble making mortgage payments. Call the local office of the U.S. Department of Housing and Urban Development (www.hud.gov) or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency nearby. Or consider contacting the Homeownership Preservation Foundation (HPF) at 888-995-HOPE or www.hopenow.com. HPF is a nonprofit organization that partners with mortgage companies, local governments, and other organizations to help consumers get loan modifications and prevent foreclosures.

When choosing a counselor, beware of anyone charging large up-front fees or guaranteeing you a loan modification or other solution to stop foreclosure. They shouldn't be charging you high fees or making any guarantees. Take your business elsewhere.

Consider Giving Up Your Home Without Foreclosure

Not every situation can be resolved through your loan servicer's foreclosure prevention programs. If you're not able to keep your home, or if you don't want to keep it, consider:

Selling Your House: Your servicers might postpone foreclosure proceedings if you have a pending sales contract or if you put your home on the market. This approach works if proceeds from the sale can pay off the entire loan balance plus the expenses connected to selling the home (for example, real estate agent fees). Such a sale would allow you to avoid late and legal fees and damage to your credit rating, and protect your equity in the property.

Short Sale: Your servicers may allow you to sell the home yourself before it forecloses on the property, agreeing to forgive any shortfall between the sale price and the mortgage balance. This approach avoids a damaging foreclosure entry on your credit report. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov, and consider consulting a financial advisor, accountant, or attorney.

Deed in Lieu of Foreclosure: You voluntarily transfer your property title to the servicers (with the servicer's agreement) in exchange for cancellation of the remainder of your debt. Though you lose the home, a deed in lieu of foreclosure can be less damaging to your credit than a foreclosure. You will lose any equity in the property, although under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe. However, it still must be reported on your federal tax return. For more information, see www.irs.gov. A deed in lieu of foreclosure may not be an option for you if other loans or obligations are secured by your home.

Be Alert to Scams

Scam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:

• The foreclosure prevention specialist: The "specialist" really is a phony counselor who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
  
  Some of these companies even use names with the word HOPE or HOPE NOW in them to confuse borrowers who are looking for assistance from the free 888-995-HOPE hotline.
• The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the "rescuer" walks off with most or all of the equity.
• The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don't know they've been scammed until they get an eviction notice.

For More Information

To learn more about mortgages and other credit-related issues, visit www.ftc.gov/credit and MyMoney.gov, the U.S. government's portal to financial education.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. "

If you would like more specific information regarding your situation please contact Felipe Crook toll free at 1-866-589-1646 or email me at felipe@felipecrook.com

Felipe Crook

Prudential Americana Group Realtors

Las Vegas, NV 89117

1-866-589-1646

I have been working with short sale and foreclosure for the last two year in Las Vegas and sometimes I want to scream at how stuborn some banks have become.  They are clearing cutting off their nose to spite their face.  I've given up trying to understand the logic behind their choices, but I'm not giving asking for short sale approvals.   I was recently contacted by a local lawyer who has a very interesting and LEGAL way to deal with banks not approving a short sale or the banks insistance for a deficiency judgement.  

 Jim Stout of the Stout Law Firm wrote a great article about dealing with these pesky banks. Full Article.  His contact information is:

James R. Stout, Esq.
STOUT LAW FIRM
4560 South Decatur Boulevard., Suite 201
Las Vegas, Nevada 89103
Tel: 702-794-4411
Fax: 702-794-4421
jstout@jstoutlaw.com

He also offer FREE consultations which is rare for a law firm.  Here's the article:

"Leasing out your home to a renter during the short sale negotiation process is fraught with risks for the homeowner, lender and renter. The homeowner and renter risk the lease agreement being declared void by a judge. The lender risks the lease agreement being declared valid by a judge. It is a way, however, that the homeowner can earn a monthly payment from the home, a much needed benefit, since his home will ultimatley cost him dearly.

THE HOMEOWNER SHOULD DISCLOSE HER INTENTIONS TO THE LENDER

If the homeowner decides to lease out the home during short sale negotiations, all documents related to the lease should be disclosed before, during and after the execution of the lease. Once the lender becomes aware of the homeowner's intent, the lender must choose between a) accepting the short sale and waiving the deficiency judgment, or b) rejecting the short sale, foreclosing and geting stuck honoring a long-term lease.

If the lender rejects the short sale and chooses foreclosure, it will get stuck with a tenant, or at least having to be the landlord to a valid lease. TITLE VII-PROTECTING TENANTS AT FORECLOSURE ACT SENATE BILL 896 requires the new owner (bank) to honor the existing lease, unless the new owner will live in the home. If the new owner will live in the home, the new owner must provide a 90 day notice.

THE LEASE MUST BE PROVEN TO BE BONAFIED

After the lender forecloses and takes title to the house, it must then chooose between a) honoring the lease pursuant to federal law, b) challenging the lease in court as invalid, or c) paying off the renter to get out of the lease.

A lease will be considered bonafied, and valid if it was executed before the "foreclosure notice" and:
(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
(2) the lease or tenancy was the result of an arms-length transaction; and
(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy.

The lender will try to get out of the lease by arguing that the lease was entered into after the foreclosure notice; the homeowner and renter were in collusion; and the monthly rental rate is below market.

PROVING THE LEASE RESULTED FROM AN ARMS LENGTH TRANSACTION REQUIRES PROVING THE PARTIES WERE NOT IN COLLUSION

The arm's length principle (ALP) is used specifically in contract law to arrange an equitable agreement that will stand up to legal scrutiny, even though the parties may have shared interests (e.g., employer-employee) or are too closely related to be seen as completely independent (e.g., the parties have familial ties).

A simple example is the sale of real property from parents to children. The parents might wish to sell the property to their children at a price below market value, but such a transaction might later be classified by a court as a gift rather than a bonafide sale, which could have tax and other legal consequences.

To avoid such a classification, the parties need to show that the transaction was conducted no differently than it would have been for an arbitrary third party. This can be done, for example, by hiring a disinterested third party such as an appraiser or broker, who can offer a professional opinion that the sale price is appropriate and reflects the true value of the property.

EXPERT TESTIMONY CAN BE USED TO PROVE THE RENT IS AT MARKET RATE

The lender's defense that the rent is below market rate can readily be defeated through testimony from a seasoned Las Vegas real estate appraiser stating that the market rate for renting a home that is in default is 10% (or whatever deep discount) of renting the same house out prior to default. Who wants to enter into a long-term lease if the house is on the verge of a foreclosure sale? As long as the lease agreement specifically calls for "market rate" or even a few hundred dollars a month, it should easily defeat the not at market rate defense.

PROVING THE LEASE WAS EXECUTED BEFORE FORECLOSURE REQUIRES ESTABLISHING THAT FORECLOSURE BEGINS WHEN TITLE TRANSFERS

The defense that the lease is invalid because it was entered into "after foreclosure" is up for debate. Technically speaking the homeowner will argue, foreclosure begins after title is transferred, not after the Notice of Default was mailed which is what the lender will argue. When foreclosure actually begins has not been adjudicated in Nevada as it applies to the law here. Like most cases, the judge will have to make a ruling after hearing from both sides. This issue has not been settled by the courts.

STATES HAVE EXISTING LAWS THAT CAN BE USED AS GUIDELINES TO DETERMINE IF A LEASE IS BONAFIED

There are several elements which are used in other state jurisdictions as considerations to validate a lease document and demonstrate the parties' intent. These elements may or may not be considered by Nevada judges. Those elements include:
1) the length of the lease, including the beginning and ending date;
2) a statement giving the lessor the complete and exclusive use of the property for the entire duration of the lease;
3) execution in good faith, without deceit or fraud;
4) a sufficient description of the leased property;
5) a statement that the lease contains the complete and sole agreement;
6) a provision that the lessee will pay an agreed amount of rent; and
7) a statement containing the due date, frequency and address for payment of the rent.

CONCLUSION

If the judge validates the lease, the renter can live in the house for the term of the lease. If the judge invalidates the lease, the renter moves out and having learned a lesson, tries it again, under different terms, with hope that the judge will approve the lease next time."

If you have any information about property value or would like some more information on the short sale process, please feel free to call Felipe Crook directly at 1-866-589-1646.  I will help any way I can.

Felipe Crook

Prudential Americana Group Realtors

7475 W. Sahara Ave Ste 100

Las Vegas, NV 89117

1-866-589-1646

With more and more foreclosures on the rise, banks are starting to cross the line with their "potential" new properties.  I am currently working on a short sale in Las Vegas for a client who is unable to make payments.  I've submitted the entire short sale package to the lien holder Aurora Loan Services.  We received the offer and have worked with them every step of the way, providing all necessary documents in order to approve the short sale.   Every time I call, they tell me the same thing over and over "We will review the documentation and will respond within 60-90 days."  Great, I'll keep checking in just to make sure.

     Two weeks go by, and I went to the property to make sure it was still secure and a new mechanical lock box is attached to the door. Hmmmm....that's weird.  When I took the key out of MY lock box, the key didn't work.  HUH??  The bank had apparently used my lock box to key the lock on the door.  The is totally normal with a foreclosure, but this bank has NOT FORECLOSED ON THIS PROPERTY!! Where do these bank get the idea that they can change locks on a property that is not theirs yet?

This is a small reminder to all banks: People are trying to do the right thing by short selling their homes.  We don't want any more foreclosures in our neighborhoods, and we want to work things out with our banks.  But the banks have to help this process!  Get your acts together and streamline this process so we can start to recover from this recession.   Changing locks of people's properties BEFORE YOU OWN IT IS ILLEGAL! Every step of the way, banks are putting up more road blocks.  Please, stop making your own rules.

If you are looking to short sale your home and want more information on the process, please visit my website: Las Vegas Short Sale Connection or give me a call toll free at 1-866-589-1646.

Felipe Crook

Prudential Americana Group Realtors

Las Vegas NV 89117

I recently was able to help a client remove a federal tax lien from her property so we could short sell it.  Ok, if that's a lot of confusing terms, let's start with Short Sale.   A Short Sale is when a seller is trying to sell a property for less that what is owed on the property.  The bank who holds the mortgage has to approve the sale of the property in order for title to change names into the new buyers name. You can read even more about Short Sale by visiting my posts at http://www.LasVegasShortSaleConnection.com. I'm not quite sure why they call this type of transaction a short sale, because it typically takes a lot longer than a traditional transaction.   Bank have been so inundated with short sales, that they do not have the staff to cope with the thousands and thousands of short sale packages they are receiving each and everyday.  Having said that, the process is getting better and is becoming more streamlined.  I have a current buyer who got an approval on his offer in 30 days!! That's remarkable compared to the 200 day waits other clients have seen.

Anyway, in a short sale, the bank pays all of the real estate commission which is a question I hear all the time.  The bank will decide on the commission amount, the amount of closing cost it will consider for the new buyer, and all of the fee that you would normally see on a settlement statement.  The sellers DO NOT pay real estate commission.  If you have a federal tax lien on the property, all liens must be removed or discharge before clear title can be conveyed to the new buyer.  One of my clients recently had a tax lien and she was FREAKING out that the short sale processed was ruined.  After some carefully investigating on the IRS website and a few phone calls, I was able to find out how to discharge the lien in order to sell the home.  Here's a list of what they require:

First of all, there is no form to fill out. It's simply a letter typed out with certain verbiage and I would list each item in the package you're sending:

• Description of the property (Full Address) requesting the lien removal
• Show when the owner will be divested of all rights (The approval letter from the bank.  Sometimes the bank won't issue the release until the lien is discharge, but the IRS won't discharge until the bank approves the short sale.  That was an interesting hurdle to cross, but the IRS was shockingly helpful. GO IRS!!)
• A full copy of the lien OR a Pre-Liminary Title Report (Your Realtor should be able to provide this to you)
• A list of encumbrances OR a Pre-Liminary Title Report (Your Realtor should provide this or he's doing a bad job)
• A estimated HUD-1 showing all expenses of the property.
• An Appraisal of the property or two Broker Price Opinion from two disinterested parties qualified to give an opinion of value (I was able to use the bank's appraisal of the property instead of getting a comparative market analysis from colleagues of mine.)
• Your Full name, address, phone numbers and contact information where you can be reached.
• If you have an attorney, provide his contact information
• You must also copy a perjury statement VERBATUM and sign the letter.
• Also, you will need to get your escrow officer handling your short sale to sign an Tax Information Authorization.  Make sure you specifically name your escrow officer and not the entire title company.  That form is 8821 and can be downloaded from this link.

The full instructions available from the IRS.gov website is available by visiting this link:

Certificate of Discharge of Property from Federal Tax Lien

Now, all of this sounds like a lot of work, but actually your realtor will need to gather most of this documentation anyway.  Now, once you send it to the appropriate Tax office, (make sure you send it by certified or overnight mail so you can track the package) they will contact your escrow officer and start the process.  The have a total of 30 days to issue a letter of discharge.  When I sent my client's package overnight on a Monday, the package was received on Tuesday.  They called my escrow officer in TWO DAYS!! I was shocked.  After sending the IRS email statements from my client's lender, they issued a letter of discharge for the lien in one week.  I was absolutely, pleasantly surprised.   That was the easiest part of the short sale process.   It is definitely worth doing if you're serious about short selling your home.  If you'd like to discuss your options for your home, please contact me toll free at 1-866-589-1646 or email me at felipe@felipecrook.com.

Felipe Crook

Prudential Americana Group Realtors

Las Vegas NV 89117

1-866-589-1646

Do you know all your options to avoid foreclosure?

Don't be in denial, you have choices!

Did you know that 44% of all the available home on the Multiple Listing Service in Las Vegas are SHORT SALES?  That number is larger than the current bank owned homes.  What exactly is a short sale?  A short sale is when the bank allows you to sell your home for less than what you owe.   Let me clear something up right now, they should call these kinds of transactions LONG sales, because they take on average 90-180 days.  Hopefully with legislation passed to encourage lenders to approve short sales, the process will be easier.  I have a client who just bought a short sale and he was able to close in 60 days.  That's really fast for our market, so maybe the legislation is working??

Here are some common questions about short sales:

• Will the banks approve my short sale?: Each short sale is different and each bank is different.  Some banks can be more difficult, like ones that start with the letter B and end with America, but some banks are streamlining the process.
• How long does it take? I would plan on anywhere from 3-6 months. 
• Why not just foreclose?  Foreclosures stay on your credit report for 7 years.  With a short sale, you will be able to purchase with in 2-3 years.  Short sales are able to negotiate a payment in FULL or a full satisfaction of the loan.
• Can I stay in the property? Many times a short sale can delay the foreclosure process allowing the sellers to stay in the property while the short sale is being approved.
• What documentation do I need? Every short sale package needs to have the following documentation:
  • Last two years tax returns
  • Last two bank statements
  • Last two pay checks
  • Hardship Letter (Bank need to know you are having a hard time making your payments)
  • Financial Statement (I can provide you with one)
  • Listing Agreement to sell your home
  • An Offer on your home
  • .....and various other documents your Realtor will provide for the bank.
• What are the tax consequences? This is a question for your accountant.  There are definitely tax implications that you need to discuss with your accountant.
• Will I owe the bank money? In certain circumstances, the banks will ask for a promissory note for the difference. My goal when negotiating a short sale is to have a satisfaction in full from the bank.  Certain banks are harder than others. 
• I don't have money to pay the commission.  Who pays the real estate agents?

THE BANKS PAYS ALL REAL ESTATE COMMISSIONS

These are just a few questions I hear consistently from my clients seeking to do a short sale.  If you'd like to read more about short sales, visit www.LasVegasShortSaleConnection.com  or you can call me toll free at 1-866-589-1646. Don't keep your head in the sand about your options to avoid foreclosure!

Felipe Crook

Certified Short Sale Professional

Prudential Americana Group Realtors

Las Vegas NV 89117

1-866-589-1646

Felipe@felipecrook.com

My team at Prudential, the Crook and Abiera Team, successfully closed two short sale transactions this week. These short sales were with Wells Fargo on one, and Select Portfolio Servicing and Citibank on the other property. Both of these owners purchased during the peak of the market and had experienced a loss of income with the economic downturn. Let's talk about the scenarios:

Property 1:

1. Bought in 2005
2. Sellers Owed $305,000
3. Got the offer in July for $145,000
4. Had an IRS tax lien.
5. Successfully released the Federal Tax Lien
6. Got Bank Approval in 3 months
7. Closed 4 1/2 months from the listing date
8. NO Deficiency judgement for the seller
9. Bank took a $160,000 loss

Property 2:

1. Bought in 2007
2. Sellers Owe $290000
3. Got an offer for $155,000 in September
4. Successfully negotiated the first and second loan
5. Got Approval 45 days after offer
6. Successfully closed in 97 days
7. NO deficiency judgement for the seller
8. Bank took $150,000 loss on the property

The best part about these short sales is the fact that that BOTH short sale approval letters, from ALL the banks involved, gave the seller's FULL SATISFACTION of debt. The banks are not going to be pursuing the sellers for the amount they were deficient! That is the whole point of trying to do a short sale, a full release of the debt. Many banks are becoming ruthless and are seeking deficiency amounts from the sellers. It's a very difficult task to get the banks to change the verbiage on their approval letters, but luckily these banks worked out well.

Does all of this make sense? Are you struggling to pay your mortgage? My team and I can help you with your short sale. We also have recommendations to lawyers and accountants we have used before to help you make an educated decision on your home. You do have options, so don't give up. Read more below or feel free to contact me on my toll free line at 1-866-589-1646.

What is a Short Sale?

• A Short Sale is when the home sold for less than the debt against the property and the lender(s) agree to accept a discounted payoff. The lender agrees to accept less than what is actually owed on the mortgage.
• A Foreclosure is when the lender seizes the home that the loan is secured by through the foreclosure process, which is notice of acceleration of note, notice of default, notice of sale, and then actual forced sale of the home known as a 'trustee sale.'

What are the tax consequences?

• Short Sale & Foreclosure....all debt forgiven results in 1099C debt. Whether it is a primary or rental property makes a difference as to how much tax you may pay. Simply stated, if you get released from debt the IRS sees that as income to you, just like you got a pay check. See this publication from the IRS http://www.irs.gov/pub/irs-pdf/p4681.pdfon "Canceled Debts Foreclosures Repossessions and Abandonments."
• You may qualify for an exemption under the Mortgage Forgiveness Debt Relief Act - visit this IRS article for more information: http://www.irs.gov/individuals/article/0,,id=179414,00.html

What are the Credit Issues?

Foreclosures and Short Sales will appear on your credit history and affect you for up to 10 years. This may affect a.) employment or b.) security clearance, etc. Rumor is that a short sale is better than foreclosure for these items? There is no evidence to back this up. Arguments on both sides are out there. We do know that there is a specific spot on the credit reports for foreclosure, whereas short sales are reported differently. We have also seen examples of the credit score being impacted based on the total number of missed payments.

What is the liability for the Debt AFTER the foreclosure or short sale?

6 Months Foreclosure - The foreclosing lender has the right to sue the home owner after the foreclosure for the difference between the amount gained at the 'trustee sale' discussed above and the balance of debt owed. The lender has only 180 days (six months) from trustee sale to file, after that the owner is no longer liable.

6 Years Foreclosure 2^nd Deeds - All deeds that are junior to the foreclosing lender have different rights than the foreclosing bank. These lenders are called 'sold off junior lien holders' and they have six (6) years to recoup their debt. That means you get foreclosed on November 12, 2009, these junior lien holders have until November 12, 2015 to sue you.

Short Sale - All lenders that agree to a discounted payoff and 'release the lien' from the property to allow the short sale are no longer 'secured lenders' and are now 'sold off junior lien holders' as described above and have six (6) years to sue you. UNLESS, the short sale is negotiated so the lender releases the homeowner from any future liability as to the forgiven debt. Many lenders are taking a hard stance on this issue and NOT fully releasing and satisfying the forgiven debt.

As always, consult a lawyer when handling any legal issues and always consult an accountant for any tax advice.

Felipe Crook

Prudential Americana Group Realtors

Las Vegas, NV 89117

1-866-589-1646

2009: A Year of Declining Inventory and Increasing Lender Involvement

During the past year, the number of available listings fell by one half, while the count of properties under contract nearly tripled. By year-end, availability reached 11,359 units, which was well below the 23,014 properties listed when the year began. Movement was primarily sourced to a reduction in the number of vacant properties listed for sale, which witnessed a decline from nearly 14,600 homes to 6,300 during the past 12 months.

The count of vacant properties listed as available was impacted bank-owned properties (REOs). At the beginning of the year, Realtors identified nearly 8,200 units as bank-owned, which represented 35.4 percent of total inventory; by the close of 2009, the number of REOs listed as available dipped to 2,246, or 19.8 percent of availability. The total number of REOs remains much higher than the nearly 5,900 listed as available, contingent or pending. Properties held by banks at year-end is estimated at approximately 12,000, while another 7,000 units remain in the foreclosure process, suggesting vacant inventory levels have the potential to remain somewhat volatile in the near term.

With vacant properties accounting for nearly 71 percent of the inventory reduction, owner-occupied inventory contributed 23 percent of the decline, while tenant-occupied properties accounted for nearly 6 percent of the market-wide drop. The aggregate decline is sourced to several factors, including, but not limited to, increased demand (sales and contracting activity), home sellers opting to wait for price improvements before listing their properties and an escalation in the number of home sales pending bank approval.

While the count of properties listed by Realtors as "available" was down materially, the count of contracted but contingent properties escalated throughout the year. Jumping nearly three-fold, contingent units rose from nearly 3,700 units at the beginning of the year, closing out 2009 with 10,761 properties awaiting some action to take place. The bulk of contingent homes (77 percent or 8,300 units) are awaiting lender approvals on short sales. Should these properties not gain lien releases from their lenders in exchange for less than they are owed, a number of properties may potentially reenter available status.

Pending units, or properties that are awaiting customary closing procedures and likely to close, fluctuated throughout the year based on market demand. As of year-end, pending units totaled 3,077, which represented an increase of 18.7 percent compared to the same time one year ago.

Overall, resale home inventory conditions improved throughout the year with inventory declines noted in 42 weeks, while increases were posted during 10 weekly counts. Foreclosures and the success of hopeful short-sellers remain x-factors going into 2010.

The Obama Administration continues to take steps toward assisting struggling homeowners and the overwhelming number who are "underwater"  - amount owed vs. the current value of the home.  There are options to consider, research and attempt to avoid foreclosure - loan modification is one of them followed by a short sale. Here is a report from the AP referencing the latest influx of money to encourage loan modifications:

 
The U.S. government is offering another $3.1 billion to mortgage servicing companies to encourage them to modify loans for borrowers facing foreclosure. 
 
More than 9 percent of 45 million U.S. mortgages, or about 4 million loans, were delinquent in the first quarter of 2009, according to the Mortgage Bankers Association. 
 
The Obama administration put up $50 billion in March as an incentive to encourage the mortgage industry to modify loans to make monthly payments more affordable. So far, however, the plan hasn't been very effective with relatively few borrowers able to qualify.  
 
To increase the numbers, the administration last month expanded the program to provide incentives for lenders to streamline their short-sale processes.  
 
As of this week about 50,000 borrowers are enrolled in three-month trial modifications under the plan, the Treasury Department says. 
 
Part of the problem, lenders say, is the volume of applicants, which has overwhelmed workers charged with modifying the loans. 
 
Source: The Associated Press, Martin Crutsinger (06162009) 

If you are a homeowner facing foreclsoure - there are solutions!  Please contact me for more information and referrals to competent and ethical professionals and to discuss the possibility of a short sale.

Felipe Crook - Prudential Americana Group Realtors

felipe@felipecrook.com

1-866-589-1646

Ive had a lot of clients interested in returning to our market to pick up a steal or two. Invariably, they start their home search on the internet by clicking "Search Las Vegas Homes for Sale" and they find these fantastically priced homes.  When they call me and ask me about the listing, 4 out of 5 times its a bank owned property or a short sale.  I wanted to write a post about the difference between the two.  First lets talk a little statistics to get you up to speed with our current market:

As of February 15, 2009 there are:

• 15,652 Single Family Homes on the market.
• 5,429 of those properties are Short Sales
• 5,563 of those properties are Bank Owned
• 4,544 of those are traditional sellers
• 169 Short Sales are under contract in contingent or pending status
• 3,544 Foreclosures are under contract in contingent or pending status
• 629 traditional sellers are in contingent and pending status.

I originally wrote this post on November 24,2008.  While I was updating this post, I was a little surprised to see some of the numbers.  Take a particular look at the drop in inventory of homes(a great sign the market is improving).  Also take a look at the HUGE increase in foreclosures going into contract. A lot of buyers and investors are picking up these very well priced homes. Let's take a look at the statistics from November:

• 17,035 Single Family Homes on the market.
• 5,676 of those properties are Short Sales
• 5,770 of those properties are Bank Owned
• 5,589 of those are traditional sellers
• 1,818 Short Sales are under contract in contingent or pending status
• 701 Foreclosures are under contract in contingent or pending status
• 523 traditional sellers are in contingent and pending status.

So having brought you up to speed on the market, let me tell you from first hand experience the difference between Short Sales and Foreclosures.  The biggest difference between the two is a short sale is still owned by the seller and they are trying to sell the property at a loss. The bank who holds the note has to approve of the terms of sale.  This process on average in Las Vegas takes about 200 days.  Only 15 % of the short sales that go to contract  are actually closing and the long escrow is one of those reasons.  I personally have a client who submitted an offer on a short sale on July 10th, and we had not received a response as of January 1, 2009. That is almost 6 months!!  Buyers run a couple of risks on short sales:

• The bank foreclosing on the property even while youre in escrow.
• Tying up earnest money for months at a time.
• The bank countering at a higher sales price than agreed upon by the seller.

Now, having said some of the down sides, if you are patient there can be some substantial deals with these short sales and there are short sales that have APPROVED sales prices.  What does that mean?  It means the agent has already started the short sale process with the bank, an asset manager is assigned to the property, and they have a green light to proceed at that specific list price.   If a buyer comes in with a lower amount, they would have to go through the same process...just a little bit faster.    Another experience I had with a client:  We put in an offer on a short sale listed at $600,000.  We offered $500,000 and the bank rejected it.   Three weeks later it was foreclosed on, and put back on the market at $430,000.  Yes folks, that is the kind of logic that were dealing with in this market.    Banks are ill equipped to handle the extraordinary amount of short sales landing on their desks and consumers....actually we ALL are paying the price.

Foreclosures or REO (Real Estate Owned) are properties that a bank has taken back from a seller for non-payment.  Banks do not want to have these assets and try to sell them within 30 days of being put on the market.  Banks have never stepped foot into these homes, and have no idea what has happened inside the property;therefore they are sold "AS-IS" with no repairs and no disclosures.   They work just like a normal sale but there are a couple of things to be aware of if youre purchasing a foreclosure:

• Although faster than short sales, they take time too. 45-60 days for a "normal" escrow.
• Response times for offers can be slow. (I had a client wait 3 weeks for a response and then they reject it)
• Banks send out addendums to clients after an agreed upon price, close of escrow, closing cost, home warranty etc.  READ THESE ADDENDUMS TWICE!!  These addendums basically rewrite the contract to protect the bank.  There can be steep penalties for specific performance.
• Many of the properties are not in move in condition and are usually priced to reflect that. The foreclosures that are in good condition and are priced well are receiving multiple offers. 

84% of all closings in Las Vegas are Foreclosures.  In fact, I have only sold 2 "normal" property in 2008. EVERYTHING else has been a foreclosure.  These properties are usually priced in the bottom third of the market.  Buying a foreclosure is very similar to a regular sale. You still have your inspection period, you still get to approve of the Home Owners Association documents, you still have appraisal contingencies BUT READ YOUR ADDENDUMS!!  All of these terms are spelled out in the addendums and can favor the bank.

Felipe Crook

Prudential Americana Group Realtors

Las Vegas, NV 89117

1-866-589-1646