Short Sale to Avoid a Deficiency Judgment

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short_saleMany homeowners, and realtors alike (offering short sale advice to their clients), are unaware that a short sale on a primary residence in Florida, will result in a complete forgiveness of debt to the homeowner seller.  The American Taxpayers Relief Act of 2012, which extended the Mortgage Forgiveness Debt Relief Act through December 31, 2013, provides full protection to homeowners who sell in a short sale and have part of their mortgage debt written off or forgiven.  Under this Act, if the home is the primary residence of the borrower and either a short sale, deed in lieu or certain other loss mitigation was completed, resulting in the forgiveness of debt to the homeowner, then that loan forgiveness is tax free and forever waived.  The lender can never again pursue the borrower to claim any penny of it.

Many homeowners in foreclosure wrongly think that “riding it out” is the answer.  They arrive at the incorrect conclusion that they can live years mortgage free and then, once the home sells in foreclosure, they are wiped away of the debt.  This is an INACCURACY.  If the foreclosure sells at auction, the lender may still claim the judgment or difference against the homeowner, which could result in a garnishment of wages, a freezing of debtors assets, bank accounts, seizing of any cars or boats or other methods to satisfy the debt. While unfortunately many colleagues continue to charge monthly for foreclosure defense,  all they are buying is time.  At the end, a trial or motion for summary judgment will creep up and if the borrower has done nothing to try and sell the property or modify, then most likely a judgment will result against them.

I always encourage foreclosure clients that I defend to find a solution early. Finding a solution early does not mean you have to move out.  On the contrary.  You may actually buy yourself more time, while a solution is found.  Be it either a short sale, loan modification, a deed in lieu of foreclosure, a HARP refinance or any other alternative that exists today, simply riding it out is not the solution.

Contact me for a complete analysis of your financial situation to see if you qualify for a short sale, for a loan modification and whether your home can be saved.  Only by hiring the services of a professional attorney will you be provided accurate and complete information to save you from a deficiency.

TRUST  |  COMMITMENT  |  RESULTS

Law Offices of Jacqueline A. Salcines, PA

706 S. Dixie Highway

Second Floor

Coral Gables, FL 33146

305 |  669  | 5280

 

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LOAN MODIFICATIONS MAKING A COMEBACK

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It is estimated that 40 percent of loan modifications fail and the borrowers default the first time around.  It is no surprise, as many are locked into a price that they can afford. However, due to the fact the Making Home Affordable HAMP Program obligates the borrowers to include escrows (taxes, insurance and PMI) in their loan modification payment, as soon as taxes or insurance rise, so does the payment. This results in the borrower once again defaulting. Loan Modification Green Road Sign with dramatic clouds and sky.

A recent report prepared by Barclays revealed that “75 percent of remods occur after 18 months of the previous modification, and about a quarter of those remods were given to borrowers who were current”.  Source: DS News February 18, 2013.

Moreover, as more bank have faced an avalanche of lawsuits, investigations, audits by the Department of Justice as well as penalties, when older loan modifications did not see principal reductions, nowadays the lenders are much more agreeable to reducing principal and interest rates.  “Our largest principal reduction to date was $302,000.00 off a primary loan”  Says Jacqueline A. Salcines, Esq., an attorney handling loan modification in Coral Gables, Florida.

“The best advice I can give to anyone out there looking to modify their existing loan is  do your homework.  Make sure your lender participates in HAMP. Make sure your numbers are right. Many borrowers submit RMA Loan Modification Packages thinking they have to show a deficit every month.  That is, more expenses than income.  This criteria will actually get you denied, FAST.  You must follow the ratios of the bank to make sure your numbers qualify you. And if they dont, there are avenues to pursue to get them there.  Lenders allows contributions to income from food stamps, family members, rental of rooms inside the home, cash tips, etc.  But if the borrower does not know this, provides their financials over the phone and gets disqualified, there are no second chances.” Jacqueline A. Salcines, Esq.

If you are having trouble making your mortgage payments, consult a Loan Modification professional that is familiar with the rules and regulations specific to each lender.  Make sure your numbers are run before you are charged.  “At my firm, my practice is to qualify the borrower first and foremost during the initial consult. Unless you qualify, I will not take your case”.  Jacqueline  A. Salcines, Esq., Jacqueline A. Salcines, PA

Call us anytime for a no fee consultation to see if you qualify. Even if you have modified in the past, you may still be eligible for a principal reduction and lower interest rates under the new regulations.

TRUST  |  COMMITMENT  | RESULTS

Jacqueline A. Salcines, PA

Telephone:  305  |  669  | 5280

 

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THE SOUTH FLORIDA LUXURY HOUSING MARKET IS BLAZING HOT!

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September 2012 saw the priciest home sale in Florida history, with the sale of 3 Indian Creek Drive at $45 Million.  Few can believe that the Florida housing market is experiencing such a quick recovery and how rapidly it has turned into a Seller’s market again.  But the proof is in the listings.  Take for example the following:

4 Tahiti Beach Island Road currently listed at $30,000,000.00 or 41 Arvida Parkway in Gables Estates listed at $27 Million and 9151 Arvida Lane in Gables Estates listed at $18 Million.

Are we safe to assume that South Florida is out of the woods and back to the 2005 home sales era?  Well that’s just whats happening is some of the nations most competitive and sought after housing markets such as Coral Gables, Pinecrest and Coconut Grove.  Sales of upper high-end properties are booming in the double digit figures, with tight supply driving prices of highly desirable prices skyrocketing and creating bidding wars (who ever thought we would use that word again so soon).

So what is driving the prices high and creating this Seller’s market?  Well, across the nation there are various explanations. But, in South Florida, a few come to mind.

1.   Turmoil in Europe and South America.  The luxury market is clearly being driven and often times kept afloat by the flurry of foreign investors seeking to place their capital in a safe environment.  Countries such as Brazil, Venezuela, Argentina, as well as now shaky Europe. These investors are coming in droves and pouring their money here, be it individual investors  or by pooling their capital through LLC’s and seeking EB-5 Visas for automatic residency.  Cities such as Coral Gables, Miami and Pinecrest are reaping the rewards of foreign global financial markets that have been thrown into chaos such as Europe.  Paul Bishop, Vice President of Research at the National Association of Realtors agrees.  “foreign buyers are very active for many of the same reasons domestic buyers are”.  “Assets in the U.S. including real estate, look pretty appealing as opposed to other parts of the world”.

2.  Financial Flexibility. Buyers that are considering large purchases, are generally borrowing at very low interest rates, or have the liquid cash on hand.  And what better place to invest then a recovering real estate market, that will offer a return on investment far exceeding any national institution.

3. Perception of Value. Even at the very top of the real estate market, buyers still want to ensure that their money is being invested correctly. This means that once savvy home buyers who were holding off in prior years, now are seeing the market recovering.  And the recovery is blazing.  While years previous have shown large declines, luxury home buyers seem to think, as do market professionals, that the luxury market has seen its worst and is now headed to the top once again.  Therefore, the time to buy is now before prices get any higher.

4.  Low Inventory.  Many seeking high end homes in either Gables Estates, Cocoplum, Old Cutler Bay, Star Island and other secluded sectors, have found inventory dwindling.  So when a house goes on the  market, the high end buyers are jumping on it.  “Take for example, the recent sale of Pat Riley, former Miami Heat Coach’s pad” says Jacqueline Salcines, Esq. with the Law Offices of Jacqueline A. Salcines, P.A. “This luxury home recently sold for $16.8 million and it is reported that the buyer intends to demolish the current structure and build anew”. This was unheard of in the recent South Florida real estate market but truly a sign that the market has taken a turn for the better and is recovering at record speed.”  What better proof than the boom in condominiums going up in the Downtown, Brickell and South Beach area.  “Being of Argentinian decent, I can definately attest to the fact that … the Argentinians are coming in swarms” says attorney Jacqueline A. Salcines, Esq.

All said, what is one to expect in the coming months?  “If my 15 years experience in the housing market and practicing real estate law serves as a guide, we will see a continued influx of foreign investors, Brazilians, Argentinians, Venezuelans, and perhaps a few new ones, Russians, Italians, all looking to reap the rewards of a stable and blazing hot real estate market.”  South Florida is the poster child of a quick recovery and I am honored and excited to be a part of it.” -Jacqueline Salcines, Esq.

Dont Go it Alone.  Seek the assistance of an experienced Real Estate Attorney to assess your investment, review title, and make sure that your investment is a sound one.

Call me today for a no fee consultation.

LAW OFFICES OF JACQUELINE A. SALCINES

305 |669 | 5280

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SHORT SALES HELD HOSTAGE BY SECOND MORTGAGE HOLDER

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You’ve all heard the story before, months and months of laboring to get the short sale approval, you finally get it and the second lien holder or mortgage company will not accept what the first lien holder is agreeing to pay them.  Result:  Now your short sale is held hostage.  The first will not pay more, the second will not accept less.  What are the alternatives to get this approved after so much hard work?short_sale

Well, first of all, anyone negotiating or selling their home in a short sale must be familiar with their rights. Under the HAFA (Home Affordable Foreclosure Alternative) Program, the first lien holder MUST, not may, MUST, pay the 2nd lien holder $8,500.00. There are rules that regulate this payout and therefore the 1st lien holder can not wiggle its way out of this.  And the 2nd lien holders are keenly aware of these regulations.

Now, if the short sale falls outside of the HAFA Program, then you have a dilemma.  For the most part, the 1st lien holder will request a payoff statement of the first and typically (I say typically because in short sales there is nothing typical), they will pay 10% or a maximum of $6,000.00

“I have been negotiating short sales for quite some time and they (the lenders), for the most part, do adhere to the 10% rule.  But, in the event they pay less and the 2nd lien holder demands more, this is NOT necessarily the end of the line.  There are still options.  If the borrower is receiving an incentive at closing from the 1st lien holder, the 1st bank will allow the borrower/seller to contribute that money towards paying off the 2nd.  They will also permit you to enter into a promissory note, usually at 0% interest, ten (10) years, in order to reach that number.  Or, in the alternative, all the other parties in the game can make some contributions. Often times, realtors as well as the buyer are agreeable to making certain concession in order for the great deal to go through.  After all, if the closing falls through, the nobody gets paid and the buyer doesnt get their property.”  –  Jacqueline A. Salcines, Esq.

So, while the 2nd lien holder can certainly hold a short sale hostage and there are no laws you can use to force them to agree to a payout, there are still some alternatives to make the short sale go through to closing.

Short sales are crafty games played by crafty players.  Everyone has to have some skin in the game to make the process work smoothly.

And, if it goes smoothly, then as in any games, there will be many winners, and perhaps a few losers (the banks).

Dont go it alone. Consult a professional real estate lawyer to handle your mortgage problems.  We are a phone call away.

LAW OFFICES OF JACQUELINE A. SALCINES, P.A.

JACQUELINE A. SALCINES, ESQ.     TELEPHONE:  305  | 669 | 5280

 

 

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