Welcome to the Asheville Short Sales Blog!

I’ve included a varied assortment of topics – everything from loan modifications to successful short sales.  Browse the categories or use the search box to read about judgment deficiencies, junior liens, and even attempts by homeowners’ associations to foreclose on homes.  If you have an idea for a blog article or a request for a specific topic, send me an email and I’ll make it the subject of the next article.

Asheville Short Sale with 2 Wells Fargo Liens

This short sale involved a beautiful townhome near the Asheville Farmer’s Market.  I am still amazed that homes in this neighborhood are selling around $200,000.  But that’s the reality of the real estate downturn.21 Jeff Drive

This short sale scenario was one that I see quite often – a first mortgage and a home equity line.  While both of these mortgages were with Wells Fargo, it’s important to note that Wells Fargo Home Mortgage and Wells Fargo Home Equity are two completely different entities as far as short sales are concerned.  Wells Fargo Home Equity is not all that difficult to deal with in my experience, and you will probably get to speak with a live person more often than not.  But Wells Fargo Home Mortgage uses the cumbersome Equator online system, which means that the majority of the communication with them is through this electronic system.

But all of this is still navigable territory for Realtors and attorneys with ample experience with short sales.  The hardest part of this short sale was actually with the buyer’s lender.  Because the homeowners’ association was not yet formed, there were certain lender requirements that could not be met.  Long story short…the lender was a local credit union, and that meant they had the flexibility to approve a different loan for the buyer.

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Luxury Homeowners have more Pre-foreclosure Options

For high-end, luxury, or executive homeowners, there is typically more time to work out a foreclosure alternative with lenders, whether it be a short sale, a loan modification, a forbearance agreement, or deed-in-lieu.  Additionally, some lenders will even pay cash to the homeowner of up to $30,000 (this only happens in a short sale, and it actually happened to my cousin).  There are several reasons that luxury homeowners have these options.
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The Hard Decline (aka the Short Sale Mulligan)

I currently represent the buyer in a short sale transaction, and the lender is Wells Fargo.  Within a couple of weeks of submitting our purchase contract to the lender, the list agent received a “hard decline” from Wells.

A hard decline is short sale lingo for starting over.  The frustrating thing is that there is usually no clear reason for why the process must start over.  In my experience, it can be anything from a computer glitch within Wells’ Equator online short sale system to the expiration of some non-written deadline that only Wells is aware of.  And in most cases, the Realtor and the homeowner will never know the actual reason.  But it means that the Equator system essentially kicks everything out, and all the borrower’s documents, purchase contract, short sale addenda, buyer’s proof of funds, and third party authorization forms must be re-submitted.  From the bank’s perspective, this is like a mulligan…whatever the bank’s reasons, they have decided that this file needs to be started fresh from the beginning. Read More »

Posted in Bank of America, Short Sale Info for Buyers, Short Sale Info for Realtors, Short Sale Info for Sellers, Strange but True, Wells Fargo | Comments closed

Yet Another Successful Asheville Short Sale with Wells Fargo

This condo was a pretty typical Asheville short sale.  There was one mortgage with Wells Fargo.  At the time I took the listing, the mortgage was not in default, and HOA fees and property taxes were also current.  There is a misconception among borrowers that they must be in default by as much as 90 days before their lender will consider a short sale.  This was true several years ago, but is usually not the case today.

Appeldoorn condo

Banks look at a borrower’s financial hardship, and sometimes that means that a borrower is not currently in default, but default may be imminent.  I am thankful this borrower contacted me before missing any payments – because of this, we never had to worry about foreclosure proceedings and it was a very easy process.

Many borrowers ask me how long a short sale will take.  While there is no definite time frame, this short sale took just over 5 months from the time we put the condo on the market until it closed.  But it only took 60 days from the time we received an offer from our second buyer.  Our first buyer did walk away, and our second buyer (the one that did close) needed financing.  It’s quite common for a borrower to walk during a short sale, and so it’s important that the property be priced aggressively to attract multiple offers.

My advice to borrowers who are contemplating a short sale is this: do not wait to ask for help, or to at least ask for more information.  Give me a call or send me an email anytime, and I’ll gladly give you as much information as I can.  Short sales are not right for everybody, but they are better than a foreclosure.  And when they are done quickly and without the borrower going into default, there is less damage to the borrower’s credit rating.

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Wells Fargo Home Equity Short Sale near Asheville

This just sold in February 2013.  It was a bit unusual in that there was a HELOC (home equity line of credit), but no purchase mortgage ahead of it.  The loan was with Wells Fargo Home Equity.  Dealing with WF Home Equity is completely different than negotiating with WF Home Mortgage.  WF Home Mortgage uses the “Equator” online software system to process short sales, while WF Home Equity uses a fax machine.  Seriously.  

But for those who are familiar with Equator, I submit that the fax machine is more efficient and far less frustrating than Equator.  But I digress…this home in Swannanoa (just east of Asheville, NC) was many months delinquent, the well was on the adjoining property, and it had even had some trouble with vandals.  These factors may have drug out the process a bit longer than would have been necessary, but the deal did close and the homeowner was able to walk away.

Swannanoa, NC short sale

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Mortgage Forgiveness Debt Relief Act Extended for 2013

Homeowners facing the possibility of short sale or foreclosure got a little bit of good news this month.  As part of the “Fiscal Cliff” deal reached by Congress, the Mortgage Forgiveness Debt Relief Act was extended until the end of 2013.  According to Forbes.com, homeowners who go through a short sale or foreclosure (on their primary residence) will be able to avoid the resulting taxable income on the forgiven debt (up to $2 million or $1 million if married filing separately).

This is the second time that the law has been extended.  But there is no guarantee that the law will be extended for a third time, which means that homeowners who may need to do a short sale should start the process soon.  Short sales can take several months (or longer) to complete.

If you’re considering a short sale and have questions about the tax ramifications, it is a good idea to speak with a CPA or attorney (let me know if you need some referrals).  Or if you just have questions about the short sale process, just give me a call or send me an email.  

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Biltmore Lake Condo – 3 Lien Short Sale!


This condo sale closed just before the end of the year, and it took only about 3 and a half months from the time we put the property on the market until the time it closed.  Once the offer came in, we needed just about 2 months to close the sale.  There were 2 mortgages – owed to America’s Servicing Company (ASC – a division of Wells Fargo) and Green Tree Mortgage.  In addition, there were homeowners’ association dues outstanding.  

Thanks to a great team – including an excellent short sale attorney – this sale was closed and the homeowner got a great Christmas present in the form of the foreclosure monkey off her back!

exterior

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What does the Fiscal Cliff mean for Short Sales?

By now, we’ve all heard of the looming “fiscal cliff” that awaits us if Congress doesn’t come to an agreement on tax legislation by the end of 2012.  There are several tax laws that must be extended, modified, or allowed to expire, but one is of particular importance to the real estate industry.

The Mortgage Forgiveness Debt Relief Act of 2007 (which has already been discussed at length on this site), is set to expire at the end of 2012.  

Let’s take a brief look at why this is important to the real estate market, and particularly short sales.  Nationally, short sales account for roughly a quarter of home sales, and they have been a huge factor in the fragile housing market recovery.

In a short sale (and in most foreclosures), the property is sold at a price less than the amount owed on the mortgage.  This results in a deficiency balance, which is typically “forgiven” by the lender.  One key reason that banks will do this is explained by John Schoen at NBC News:

The five biggest mortgage lenders also got a powerful incentive to forgive more mortgage debt following a $25 billion settlement in April with 49 states and the federal government. Under a complex formula, the lenders earn credits against a portion of the settlement payment for each dollar of mortgage debt forgiven.

Sounds good, right?  Well, not when that forgiven amount results in taxable income in the eyes of the Internal Revenue Service.  After all, what good is it for a borrower to sell their home in a short sale if they end up having a huge tax bill?

According to Schoen, from March 1 until June 30 of this year, the average short sale resulted in $77,000 in debt relief.  This would usually result in about $19,000 owed to the IRS.

If Congress doesn’t act to extend the law, homeowners will have significantly less motivation to complete a short sale, resulting in more foreclosures.  Because foreclosures typically sell for less money, neighborhood values will drop and real estate prices could go back into decline.

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Investment Lot – Fairview, NC

This was an investment lot near Asheville, North Carolina with a Bank of America loan.  The final sale price was approximately 44% of the outstanding loan balance.  

Exterior Bank Signage | Bank Logo Branding | B...

 

But that’s not the best part…the best part is that the short sale approval letter from Bank of America waived any right to pursue the deficiency balance and considered the debt settled.  This is always the goal of a short sale, and it’s a great feeling to reach that goal on a property that is not a primary residence.  Many thanks to all involved – the sellers, the buyers, the attorney, and the other Realtor!

lot-photo

Photo of vacant lot in Fairview, NC

 

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North Carolina Receives Aid for Short Sales

In April, 49 state attorney general offices and several federal agencies reached a $25 billion settlement with 5 major lenders (Wells Fargo, Bank of America, Citi, Chase, and Ally/GMAC).  The settlement was the result of suspect lending practices and automated foreclosure processes (“robosigning”).

The state of North Carolina received approximately $338 million from the settlement.  According to the Charlotte News & Observer, the state’s funds are to be allocated as follows: Read More »

Posted in Bank of America, North Carolina Short Sale News, Short Sale Info for Realtors, Short Sale Info for Sellers, Wells Fargo | Tagged , , , , | Comments closed