Foreclosure Alternatives

DisclaimerThe content in this presentation is based upon our research, knowledge and experience. In no way is any information contained herein to be interpreted as legal or tax advice. To be assured of sound legal advice with regards to foreclosure, real estate, bankruptcy or agency laws, please employ the use of a competent legal or tax professional and/or your real estate broker. Please consult your broker, accountant and attorney, as appropriate, for advice specific to your situation. Although every effort is made to keep this presentation current and relevant, it is your responsibility to seek guidance from qualified professionals in order to keep up with rapidly changing market conditions and periodic changes to the law.

Who We Are Brian L. Woods, Owner/Broker • Broker/Owner of Team Realty and Investment Solutions, LLC• Full time Real Estate Professional currently working with buyers, sellers,

and renters• Licensed Broker and active real estate investor • Successful in closing business, working with Clients, and developing long

term relationships with clients. • Rental and Sales of Single Family Homes, Condominiums, and Townhomes

sales of all price ranges. • Contact Information

– Office: (561)459-4361 – E-mail: Teaminfo@TeamRealtyDelivers.com– Website: www.TeamRealtyDelivers.com

The Foreclosure ProcessThe Foreclosure Process varies by State, and falls into two categories: Judicial, and Non-Judicial.

• Non-Judicial – foreclosure process happens without the courts.

• Judicial – foreclosure is processed though the courts, as in the state of FL.– Pre-foreclosure Period - A foreclosure in Florida begins when a lender files court action and records a notice of a

pending lawsuit (Lis Pendens) against the borrower. The lender notifies the borrower and any other affected parties in person or in some cases by mail or publication. If the borrower does not respond to the court action within a specified amount of time, the county clerk can find the borrower in default and the lender can ask the court to make a final ruling. If the court rules against the borrower, the ruling will include the total amount owed to the lender and the foreclosure sale date. The lender is not required by state law to notify the borrower before initiating the foreclosure process, but individual mortgages or deeds of trust might call for this. The borrower can stop the foreclosure up until the date of the sale by paying the total amount owed to the lender.

– Notice of Sale / Auction - The sale date is typically 20-35 days after the court ruling, but this may vary depending on the individual court. The clerk of court issues a notice of sale containing the location, date, and time of the sale. The notice is published once a week for two weeks, with the second notice appearing at least five days before the sale. The clerk usually oversees the sale. After a successful sale, the clerk gives a certificate of sale to the winning bidder. Within 10 days of the sale, the clerk transfers ownership to the winning bidder if no one disputes the sale. In most instances, a borrower has no right of redemption after the certificate of sale is issued.

What is a Short Sale? In a short sale, the borrower is unable to sell the property for a price that will cover the total amount due on the loan. Your Lender may be willing to accept less than the total payoff due, which is referred to as a short sale. The decision to accept a lesser amount is usually based on the property value. If the fair market value is less than the payoff, an amount closer to the current fair market value of the property may be accepted to pay off the loan.

Short Sales vs. Foreclosures• Property is sold, lender accepts proceeds as payment in full vs. Lender takes title and forces the

sale of the property. • Likely that deficiency judgment will not be filed vs. Lender files deficiency judgment.

• Settled for less appears on credit vs. Foreclosure appears on credit.

• Short sale reflects on credit for about 2-4 years vs. Foreclosure reflects negatively on credit for about 7 years.

• FICO scores drop between 45-65 points vs. FICO scores drop between 85-105 points.

• You could stay in your homes until the short sale closes vs. You are evicted from your home

7 Short Sale Myths 1. Short sales are impossible and never get approved –

Nothing could be further from the truth! While there are no guarantees in any transaction, more and more short sales are being approved monthly.

2. Banks are not accepting short sales; they are waiting on a bailout - Many have heard this, but the reality is that banks (and the government) are trying to do anything they can, within reason, to avoid foreclosing on property.

3. You must be behind on your mortgage in order to negotiate a short sale – While it is true that initially some lenders wanted you to be in default before they were willing to consider a short sale, this trend has almost all together reversed. Today lenders are looking for verifiable hardship, monthly cash flow shortfall or pending shortfall and insolvency.

4. Buyers are not interested in short sales and avoid them - Short sales and foreclosures have become synonymous –not with issues—but with good deals.

5. Listing as a short sale is an embarrassment to the seller- With 40 to 60% of the sales in the US predicted to be short sales or foreclosures, homeowners are not alone.

6. The bank would rather foreclose than bother with a short sale - The reality is that banks do not want to foreclose on property. Short sales make financial sense to lenders.

7. There is not enough time to negotiate a short sale before foreclosure - The foreclosing party can stall a foreclosure up to the final day of the process. These days many lenders will stall with as little as a phone call from homeowners letting them know that they are trying to sell.

Is a Short Sale My Best Option? • In Palm Beach County, 1 in every 319 homes are in pre-foreclosure. There are 14,793 homes in pre-foreclosure right now!• In Broward County, 1 in every 112 homes are in pre-foreclosure. There are 21,304 homes in pre-foreclosure right now!• In Dade County, 1 in every 187 homes are in pre-foreclosure. There are 16,595 homes in pre-foreclosure right now!

Consider the fact that banks DO NOT want to own your home! Lenders are increasingly more willing to work with homeowners faced with "legitimate" financial hardship to accept a discounted payoff on a mortgage balance. If you are faced with a "legitimate" hardship that makes it likely you will be unable to meet your obligation on your mortgage payments, the lender would prefer to settle the matter with you as opposed to taking the property through foreclosure. As you consider the option of pursuing a Short Sale, keep in mind that your lender is looking to limit any potential loss on the loan. By successfully completing a Short Sale, your lender has arrived at a solution, that is, for them, much better than a foreclosure.

*Facts from Realtytrac.com

Who We Are

Jeffrey Harrington Esq, Attorney at Law• Jeffrey started his own practice in 2008, at that time the real estate market had just gone into a full tail

spin. His client base at that time consisted largely of real estate developers and investors, all of whom were suddenly in need of foreclosure defense or other types of loss mitigation services. At that time, there were virtually no experts on these subjects, so Jeffrey set out to master all matters related to distressed property. His efforts in this regard have been rewarded. His articles on the topic are sought by such publishers as Thomson Reuters, a premier name in the legal arena, and he has been regularly interviewed by members of the media as a leading practitioner in the field. For example, Jeffrey was a primary contributor to the recent 60 Minutes report on foreclosure fraud. As the real estate crisis continued, Jeffrey's firm, Harrington Law Associates, quickly established itself as a leader in the industry and enjoyed unprecedented growth. Jeffrey continues to write and speak on the subject of distressed property and remains at the forefront of innovations in the field.

• Licensure: Florida Bar Association; Federal Bar (Southern District of Florida); Washington D.C. (pending); Title Agent; Settlement Agent

• Memberships: American Bar Association; Florida Bar Association; Palm Beach County Bar Association; International Law Section; Real Estate Section; Business Law Section.

• Contact Information: – Office: (561)253-6690– Website: www.MyHLaw.com

Florida Short Sales: Tax Implication

The distressed homeowner in Florida, and throughout the country, often has several options to consider, which may include a mortgage adjustment, refinance through a government-insured program, deferral, etc. Where those options are not viable, the distressed homeowner usually has to decide whether to attempt a short sale or go through a foreclosure. The bottom line is the homeowner in that situation must weigh the following factors: damaged credit rating, potential tax liability, and likelihood of a deficiency judgment.

Short Sales: Tax Implications • A short sale is where the lender agrees to sale the distressed property for less than

the borrower owes on the mortgage. Since the lender accepts the short sale net proceeds as full satisfaction of the mortgage, the borrower is “forgiven” the difference between what was owed on the mortgage and the net proceeds of the short sale. That difference will be considered income by the IRS and taxed accordingly unless an exception applies. – Sale price less closing costs – Under the new Fannie Mae guidelines, the waiting period after a foreclosure is

five (5) years. – Or partial payments.

• Under the Mortgage Forgiveness Debt Relief Act (2007), taxpayers who were forgiven part of their mortgage on their primary residence can likely avoid tax liability by including Form 982 with their tax return. See IRS Form 982 instructions for full explanation of qualifying criteria.

Florida Foreclosures: Tax ImplicationForeclosures: Tax Implications • After a lender goes through the foreclosure process and obtains a final judgment, the next step is usually a “sheriff sale” of

the property. In this scenario, the taxpayer is not considered to have been forgiven any portion of the mortgage debt even if the property sells for less than what is owed on the mortgage; therefore, there is no tax liability. The presumed logic behind this difference is that a sheriff sale is a forced sale rather than the result of negotiation with the lender.

Deficiency Judgments • Where a home is sold for less than what is owed on the mortgage, there is the potential that the borrower will be liable for

the deficient amount. In the case of virtually all Florida foreclosures, the lender is entitled to petition for a deficiency judgment if the sale of the home does not cover the balance due on the mortgage. Since foreclosure in Florida is a judicial process, the lender is already obligated to pay attorney fees and court costs. As a result, the lender may choose to request a deficiency judgment unless the discrepancy is relatively minimal.

• In the case of a short sale, the matter is not as clear. Whether the lender is entitled to a deficiency judgment may depend upon the terms negotiated with the borrower. In some cases, the lender will waive its right to a deficiency judgment in exchange for the borrower’s cooperation. If the lender does not waive this entitlement, whether it seeks a deficiency judgment or not will be a business decision based on the amount of the deficiency, costs of litigation, etc.

• Because state laws vary and each homeowner’s circumstances are different, it is important that homeowners in distress consult a mortgage broker they trust and a local real estate attorney.

Real Estate Foreclosure Defense

When homeowners default on mortgage payments, at some point, the lender begins foreclosure proceedings. In Florida, foreclosures have to be done through the courts, so the lender initiates a lawsuit against the homeowner and anyone else who might have any interest in the property (e.g. homeowner's association, spouse, tenants). • First, it is important to understand that once the complaint has been served on the

homeowner, time is of the essence. In other words, anyone in this situation should contact a real estate attorney as soon as possible in order to preserve their legal rights and available options. Unfortunately, when homeowners delay at this stage, they risk losing options that would otherwise have been available.

• Second, please be aware that only an attorney can defend you against foreclosure proceedings (i.e. not loan modification specialists, mortgage brokers, etc.), and taking on the bank by yourself is a bad idea for many reasons.

Real Estate Short SaleGiven today’s real estate market, selling a property short is sometimes the best option available to homeowners. As everyone knows by now, the lender’s approval of the short sale is required, and there are many things that can complicate the process: • Some lenders are very reluctant to approve short sales; • Some lenders have onerous requirements regarding disclosure of financial information; • Some lenders want the owner(s) to be responsible for the deficiency; • Some homeowners associations will not approve the potential purchaser; • Some second lien holders refuse to sign off on the short sale; • Buyers get frustrated and withdraw their offer;

There are many things that can go wrong during the process of a short sale and, more often than not, something does go wrong. This is a reality that real estate agents understand, which is why many realtors refuse to do short sales. Unfortunately for the whole country, this dilemma keeps the real estate market from recovering.

Real Estate Loan ModificationThe concept of modification has received a lot of attention over the past year and a half. The Obama administration created a program known as Home Affordable Modification Program (HAMP), which has helped homeowners. It may depend on the person you talk to as to whether the program has been a success overall but, from our point of view, the program has been very useful in helping our homeowners find a long-term solution to their situation. In essence, modification is a non-judicial process that involves negotiating with the lender(s). The homeowner needs to demonstrate a hardship and meet certain financial requirements. The process seems straightforward but, in fact, it is usually all but impossible for an individual to successfully negotiate a modification with a lender. Although HAMP does provide lenders with certain incentives to modify, by and large, lenders are reluctant to do so. There are many reasons for that, but the bottom line is that a homeowner who is serious about modification will likely have to engage the services of a professional. When it comes to choosing the professional to trust with your modification, you should know that Florida law prohibits loan modification companies from accepting up-front payments for this service. The reason this law exists is the existence/perception of ongoing problems with fraudulent loan modification companies. There are not many law firms that offer loan modification services, and fewer still that really have the experience and personnel to bring about optimal results. Notwithstanding, with a law firm, the client has peace of mind in knowing the attorney and firm are regulated by the Bar Association.

Who We AreMari Ormstead, Account Executive at Guarantee Title, Inc. • Before Mari joined Guarantee Title in August 2011, Mari worked for a national

underwriter for 12 years. She markets Title services to Real Estate Brokers, Agents, Lenders and Builders. She enjoys serving as a consultant in helping customers grow their business. In addition, she performs purchase and refinance closings.

• Guarantee Title, Inc. (GTI) is a privately held, independent title company established in April of 2008 on the principles of integrity, exceptional customer service and low fees. Operating out of Palm Beach Gardens, Florida, Guarantee sells title insurance and facilitates all aspects of the title transaction, from refinances to purchases, short sales and bank-owned properties, with an emphasis on maintaining a personable, friendly staff. In 2010, GTI establish its Short Sale Resource Center, using its short-sale expertise to relieve its clients of burdensome paperwork and to speed transactions. GTI also specializes in clearing title on foreclosed properties.

• Contact Information: – Office : (561)296-0904, – E-mail: MariO@mygti.com– Website: www.mygti.com

Title Insurance What Is Title Insurance?Title insurance is protection against loss arising from problems connected to the title to your property.

Why You Need Title InsuranceWhen you purchase your home, how can you be sure that there are no problems with the home's title and that the seller really owns the property? Problems with the title can limit your use and enjoyment of the property, as well as bring financial loss. That is what a title search and title insurance are for.

The Title SearchAfter your sales contract has been accepted, a title professional will search the public records to look for any problems with the home's title. This search typically involves a review of land records going back many years. More than 1/3 of all title searches reveal a title problem that title professionals fix before you go to closing. For instance, a previous owner may have had minor construction done on the property, but never fully paid the contractor. Or the previous owner may have failed to pay local or state taxes. Title professionals seek to resolve problems like these before you go to closing.

Title Insurance The Owner's Title PolicySometimes title problems occur that could not be found in the public records or are inadvertently missed in the title search process. To help protect you in these events, it is recommended that you obtain an Owner's Policy of Title Insurance to insure you against the most unforeseen problems. Owner's Title Insurance, called an Owner's Policy, is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you or your heirs have an interest in the property. Only an Owner's Policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include: • Errors or omissions in deeds • Mistakes in examining records • Forgery • Undisclosed heirs An Owner's Policy provides assurance that your title company will stand behind you — monetarily and with legal defense if needed — if a covered title problem arises after you buy your home. The bottom line is that your title company will be there to help pay valid claims and cover the costs of defending an attack on your title. Receiving an Owner's Policy isn't always an automatic part of the closing process, and is paid for by different people depending on your state. Be sure you request an Owner's Policy and ask how it is paid for where you live. No matter who pays for the Owner's Policy, the fee is a one-time fee paid at closing. The Owner's Policy protects you for as long as you or your heirs have an interest in the property.

Title Insurance The Loan PolicyThere are two types of title insurance: Owner's title insurance, as mentioned above, and Lenders title insurance, also called a Loan Policy. Most lenders usually require a Loan Policy when they issue you a loan. The Loan Policy is usually based on the dollar amount of your loan. It only protects the lender's interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off.

Common Title ProblemsFraud & ForgeryThose involved in real estate fraud and forgery can be clever and persistent, which can spell trouble for your home purchase. Fraud and forgery are examples of hidden title hazards that can remain undetected until after a closing despite the most careful precautions. Although emphasizing risk elimination, an Owner’s Policy protects you financially through negotiation by the insurer with third-parties, payment for defending against an attack on the title as insured, and payment of valid claims.

Conflicting WillsConflicts over a will from a deceased former owner may suggest a study topic for law school. But the subject can take on a reality dimension and all too quickly your home ownership is at stake.

Missing HeirsWhen buying a home, it's important to remember what you don't know can cost you. An Owner's Policy is necessary to fully protect a home buyer. Lender's title insurance, which is usually required by the mortgage lender, serves as protection only for the lending institution.

Title Insurance I'm refinancing, why do I need title insurance?When you refinance you are obtaining a new loan, even if you stay with your original lender. Your lender will usually require a new title search and Loan Policy to protect their investment in the property. You will not need to purchase a new Owner's Policy; the one you bought at closing is good for as long as you and your heirs have an interest in the property. Even if you recently purchased or refinanced your home, there are some problems that could arise with the title. For instance, you might have incurred a mechanics lien from a contractor who claims he/she has not been paid. Or you might have a judgment placed on your house due to unpaid taxes, homeowner dues, or child support for instance. The lender needs reassurance that the title to the property they are financing is clear.

I'm buying a newly built home, do I need title insurance?Construction of a new home raises special title problems for the lender and owner. You may think you are the first owner when constructing a home on a purchased lot. However, there were most likely many prior owners of the unimproved land. A title search will uncover any existing liens and a survey will determine the boundaries of the property being purchased. In addition, a builder may have failed to pay subcontractors and suppliers. This could result in the subcontractor or supplier placing a lien on your property. Again, lenders want to be sure the property has clear title, and they are insuring the correct property. Purchasing an Owner's Policy will protect you against these potential problems and pay for any legal fees involved in defending a claim.

Who We Are Ken Choy, Mortgage Loan Originator at Fidelity Funding Mortgage Corp• As a seasoned 20 year real estate investor and a residential & commercial

loan professional, we are keenly aware that financing is a key factor in your decision to purchase an investment or a primary residence. Our network of lenders puts us at a distinct advantage that makes available the best loan products to suit your circumstances. Purchasing your home or investment is an important financial decision. Your transaction is a priority and we are here to assist you in any way that we can.

• Fidelity Funding Mortgage Corp is a mortgage lending Company serving the entire State of Florida. We are a direct lender originating, processing, underwriting, and funding our home loans.

• Contact Information:– Office: (772)288.1771 – E-mail: Ken@goffmc.com

The Truth About Getting a New Mortgage After a Short Sale

There is a lot of misinformation going around about what the impact of a Short Sale is on your credit and whether you can get a new mortgage after short selling a home. Below are the current Guidelines for FHA, and Fannie Mae. • FHA has recently changed their rule so that if a short sale occurred and all of the borrowers

payments were made on time (no late payments) then they may be eligible for a new mortgage as long as the short sale was due to extenuating circumstances. Otherwise, if any payments were made late or you cannot demonstrate extenuating circumstances, then it is a 3 year period before new FHA financing can be considered.

• Fannie Mae policy is pretty straight forward – It is a minimum of 2 years to re-establish credit after a short sale.

• Borrowers Current at the time of Short Sale Borrowers are considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage All mortgage payments due on the prior mortgage were made within the month due for the 12 month period preceding the short sale, and all installment debt payments for the same time period were also made within the month due.

• Borrowers in Default at the time of Short Sale Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale.Note: Borrowers who sold their property under FHA’s pre-foreclosure sale program are not eligible for a new FHA-insured mortgage from the date that FHA paid the claim associated with the pre-foreclosure sale.

• This is Fannie Mae’s Guideline: Pre-foreclosure Sale - A two-year period is required to re-establish credit, measured from the completion date.

When Can You Get a Mortgage Again? Experiencing a damaging credit event like a foreclosure, short sale or bankruptcy doesn’t mean you will never be eligible for a mortgage again.

Contact Information Team Realty and Investment Solutions, LLCOffice: (561)459-4361E-mail: Teaminfo@teamrealtydelivers.com Website: www.TeamrealtyDelivers.com

Harrington Law AssociatesOffice: (561)253-6690Website: www.MyHLaw.com

Guarantee Title, Inc.Office: (561)296-0904E-mail: MariO@mygti.comWebsite: www.MyGTI.com

Fidelity Funding Mortgage Corp. (Ken Choy)Office: (772)288-1771E-mail: Ken@Goffmc.com