At Negotiating Partners, LLC, we understand that as a homeowner, falling behind on your mortgage payment or dealing with the dreaded possibility of foreclosure can be a traumatic experience and an extremely stressful prospect. If for whatever reason you are currently behind on your mortgage payments - or foresee that you will soon be unable to continue making your payments - take heart: you do have options. The best thing you can do in this situation is to get fully educated on your options and to be proactive about solving the problem.
Negotiating Partners, LLC is here to help you identify and implement the best possible solution and to help you avoid foreclosure. Following a thorough analysis of your situation by our specialists, we will work with you and your lender to come up with the appropriate solution for your particular situation. Negotiating Partners, LLC will diligently work on your behalf to negotiate and secure a fair agreement with your lender.
Quite understandably, many distressed homeowners simply give up and give in to the foreclosure process, often without being fully aware of the options available to them. Depending on your particular situation, the following options may be available to you:
What is a short sale?
Also known as a real estate short pay-off or a pre-foreclosure workout, a short sale is an agreement with a lender to accept less than the amount owed by a borrower via a sale of the property to a third party. With this agreement, the lender releases the borrower from the mortgage, thereby preventing foreclosure. We feel that in most cases this is your best option. Negotiating Partners, LLC will attempt to negotiate away any deficiency judgments on your behalf to help insure your financial future.
What is a deed-in-lieu?
Also known as voluntary conveyance, with a deed-in-lieu of foreclosure the borrower voluntarily transfers title back to the lender to avoid foreclosure. The lender then releases the borrower from the mortgage and repossesses the property. A Deed-in-lieu is almost as bad as a foreclosure on your credit so that is one reason we recommend pursuing a short sale instead. In a Deed-in-lieu, however, once the lender repossesses the property, the homeowner is typically defenseless with respect to what follows next. A Deed-in-lieu does not automatically release you from any deficiency judgments that may follow you.
How can I keep my house?
· A Loan Modification is a change in one or more of the terms of a borrower’s loan, and results in a payment that the borrower can afford.
· With a reinstatement, the homeowner brings the mortgage current making up for all missed payments and paying any late fees and penalties.
· Typically, when foreclosure is a result of a temporary loss of income, the lender may agree to a forbearance wherein they will allow the homeowner to delay payments for a short period or negotiate a payment plan to make up for missed payments over the course of several months. The lender may also agree to some combination between reinstatement and forbearance, enabling the homeowner to delay payment for a short period and then bring payments current by a specific date.
· A repayment plan enables the homeowner to submit payment of a portion of the past-due amount and penalties with future payments until the past-due amount and penalties are paid-off.
Minimize damaging impact to credit
Foreclosure can remain on your credit for up to seven years while a short sale usually gets reported as a “settled debt” and is significantly less damaging. A Foreclosure that results in a Judgment can stay on your credit for up to 20 years. With a short sale, your FICO score may not be as negatively impacted as it would be with a foreclosure, and you will be able to get into a new home much sooner as well. A credit report is like a fingerprint, specific to the individual, therefore no one can say for certain what the effect on your individual score will be.
Minimize financial exposure/liability
In many foreclosure situations, the lender will ultimately sell the property at a significant discount once they foreclose and repossess the property. The homeowner can then be financially liable to the lender. While the same may be true with a short sale, the difference is with a short sale a good Negotiator may be able to minimize the financial exposure by mitigating a deficiency judgment. In a foreclosure, however, once the lender repossesses the property, the homeowner is typically defenseless with respect to what follows next. A Short Sale will lessen the impact of losses to the lender and also helps maintain property values in your neighborhood so many consider the short sale path as a good moral decision.
In order to be eligible for a short sale, a homeowner must be able to prove to the lender that they are a victim to a “hardship” and are therefore unable to continue making payments on their mortgage.
A hardship situation is one that is the result of some extenuating circumstance that forced the borrower into a position where they can no longer afford their mortgage payments. While every situation is unique, some common examples of hardship include:
· Unemployment or loss of primary income source
· Inability to work due to health crisis
· Mounting medical expenses
· Employment relocation
· Failure of business
· Death of spouse or significant other
· Divorce or separation
Not every owner is a short-sale candidate and, unfortunately, not every owner can be saved from foreclosure. In the qualifying process, you must confirm, among other items:
· The homeowner must be motivated to preserve their credit
· The homeowner must be willing to list the property with a Realtor and maintain the property for showings
· The homeowner will be cooperative in completing the Short Sale Documentation
· Whether or not there is sufficient time to accomplish a Short Sale (typically need at least 90 days)
· Whether or not the homeowner has liens in addition to the mortgage, e.g., tax liens, homeowner association (HOA) liens
· The homeowner has few if any resources available to pay the shortage with the lender
· What is the condition of the property, how much in repairs is needed
What do I need to do to get started?
In addition to the homeowner proving hardship, lenders require a specific set of supporting financial documents to consider a short sale. Contact Negotiating Partners, LLC today and one of our specialists will help you get started.
When should I begin the short sale process?
As soon as you possibly can, Foreclosure situations tend to be extremely time sensitive. The sooner we can begin the negotiations with your lender, the greater the chances of a successful resolution. There is no need to wait until the lender sends you a notice of default or initiates formal foreclosure proceedings against you. Time is of the essence! Please contact Negotiating Partners, LLC today for a free consultation with one of our specialists.
How much will a short sale cost me?
Absolutely nothing! Unlike other loss mitigation companies, Negotiating Partners, LLC provides our services at no cost to the homeowner. Our fees are never paid by the homeowner, and we are only compensated if we successfully negotiate a short sale. Please contact us today for a free consultation with one of our specialists.
Every short sale situation is unique and follows its own timeline. Typically, a short sale is completed within one to five months from the time we present a complete short sale package to the lender. The advantage of working with Negotiating Partners, LLC and an Investor like NSH Partnership, LLC is that we speed up the process considerably; we discuss this in more detail in a later chapter. Timing depends on how quickly we can begin negotiating with your lender and we start the negotiating process in the beginning which saves you valuable precious time. If you are imminently facing foreclosure or even if an auction date has already been set, the process can certainly be expedited and we have even had lenders postpone the auction date.
Foreclosure can remain on your credit for up to seven years while a short sale usually gets reported as a ”settled debt” and is significantly less damaging. With a short sale, your FICO score may not be as negatively impacted as it would be with a foreclosure, and you will be able to get into a new home much sooner as well.
Negotiating Partners, LLC is not a credit counseling agency, but credit experts say that a foreclosure will typically reduce a borrower’s FICO score by 200 to 280 points and the borrower would usually need to wait more than 60 months according to FNMA before a lender will offer any kind of interest rate that makes sense. A short sale, on the other hand, will typically only result in an 75 to 125 point hit to the borrower’s credit and a significantly shorter waiting period before buying another home, usually about 18 months or less.
The big key here is to avoid foreclosure. By nearly any measure, a foreclosure is the most damaging event your credit status can encounter - worse than bankruptcy. In the course of getting your short sale approved you may miss your mortgage payments, and these will show on your credit.
By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly.
As with all foreclosures, there are several potential tax and liability considerations when doing a short sale. With a short sale, however, these potential tax and other liabilities are typically less frequent and less severe.
Tax Ramifications: After completing the short sale your lender may decide to issue you a 1099 for the difference between the price your home sold for and what you owed, and you can later be taxed by the IRS on this amount as income.
It is important to note that if specific criteria are met, the IRS may release the borrower from this tax liability. Furthermore, -The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence per IRS Publication 4681 or IRS news release IR-2008-17. You should consult a qualified tax advisor with any questions as it relates to your personal financial situation.
Lender recourse: In some states and with certain types of loans, lenders can pursue a court decision called a “deficiency judgment” for up to five years making you personally liable for the remaining amount owed to them above the short sale price. In some cases, the lender may ask you to pay a portion of the difference back in the form of an IOU or unsecured promissory note.
The lender has sole discretion whether to pursue a deficiency judgment in those instances when a deficiency judgment is permitted. Unlike other loss mitigation companies that offer “basic” and “premium” services, at Negotiating Partners, LLC, as a matter of course, we diligently apply ourselves to every short sale case with the goal of negotiating with the lender to eliminate a deficiency judgment, minimize your tax liability, and to consider your debt as settled.
Negotiated Promissory Note with a Short Sale vs Deficiency Judgment with a Foreclosure, which one is worse to have?
Many are asking us whether the seller should agree to a negotiated promissory note in a short sale or allow the house to go to foreclosure. While this is a highly discussed issue in today’s marketplace, it really is a very simple decision.
My view is that a negotiated promissory note is ALWAYS better than a deficiency judgment resulting from a foreclosure. Here is why:
· The foreclosure judgment will be something you MUST disclose on any application regarding your background. It will be present on your credit report and will hurt you whenever credit is a factor in a decision, including getting a job.
· A deficiency judgment is a monetary judgment. Thus anything you purchase could be attached by the Lender, be it an automobile, jewelry or a new swing-set for your kids.
· Your wages can be garnished.
· Your bank accounts can be frozen and attached, without any advance notice.
· You will be subject to periodic depositions in aid of execution and have to provide copies of all of your financial matters, several times a year. If you repeatedly don't show up for these proceedings, the court can hold you in contempt and even put you in jail (YES - JAIL!!) until you comply.
· In Florida (check other states) you can enjoy each of the above for 20 full years before the judgment is no longer enforceable.
· The judgment usually carries interest. Check your state for the rate. For judgments rendered in 2009, the statutory rate in Florida is currently 8%.
· Fannie Mae underwritten mortgages cannot be obtained until 5 years after the foreclosure judgment.
Negotiated Promissory Note
· You pay an agreed amount according to the promissory note, which is usually monthly and often at no interest.
· If you no longer can pay the note, you may be able to negotiate a new payment amount or abate payments, for a period of time.
· You may be able to re-negotiate the terms of the promissory note in the future.
· The promissory note is not a judgment so it does not show up on the credit report.
· If a foreclosure suit was entered, even if it went to a foreclosure judgment (but not a sale), the lender will likely dismiss the suit and vacate the judgment, clearing your record, even before you start paying on the promissory note.
· If you stop paying on the promissory note the note holder can then seek a monetary judgment for the unpaid amount.
· FANNIE-MAE underwritten mortgages can be obtained after a short sale in just 2 years.
· Once you repay the promissory note the lender should remove any derogatory credit report postings concerning the negotiated payoff of the mortgage, instantly repairing your credit score.
In most distressed mortgage situations, foreclosure is a last resort for all parties involved. Simply put, both the homeowner and the lender usually want to avoid foreclosure at all costs. That is why lenders have come up with various alternatives to foreclosure, which they are typically very motivated to pursue prior to going to foreclosure.
A short sale gives the lender the ability to cut its losses upfront thereby avoiding the expense and time of a foreclosure and potentially greater losses. Lenders want to make loans. They do not want to be in the business of owning and managing real estate. Whether the lender chooses to go through with a foreclosure or agree to a short sale, they are taking a loss either way, but in many cases they would take less of a loss with a short sale and resolve the matter in a comparatively shorter time frame. In nearly every case, a short sale offers a better return on the lender’s investment than a foreclosure does.
Why should I use a Short Sale Negotiating Company? What is your relationship with lenders? Why shouldn’t I negotiate with my lender directly?
Negotiating Partners, LLC works with an independent third-party loss mitigator "NSH Partnership, LLC", it is because of their objectivity and neutrality that homeowners and the lenders can count on them to be an impartial driver of the loss mitigation process. NSH Partnership, LLC stands apart from the crowd because they strive to equally serve all parties to the transaction, and affect a win-win outcome for all.
We firmly believe that just as most borrowers use a professional to initially get into a mortgage, it is in their best interest to do so if they are in the unfortunate position that they need to get out of a mortgage. At best, you only get one shot to negotiate your way out of foreclosure, and while it is certainly possible to negotiate with the lender yourself, it is highly unadvisable.
Most lenders’ loss mitigation departments are understaffed, and the overworked loss mitigators are usually overloaded with all parties vying for their attention. Unfortunately, the Loss Mitigator can be very difficult to get a hold of, and when you finally do get through, you have very little time with which to make your case. Furthermore, the added stress of foreclosure in itself makes it difficult for a homeowner to effectively and calmly negotiate their way out of foreclosure.
Our Negotiators work with all lenders and represent homeowners from all across the country, and since they specialize in loss mitigation, they understand how to collect, prepare, and effectively present the information that lenders require to seriously consider a loss mitigation solution such as a short sale. They have excellent working relationships with the lenders’ loss mitigation departments and they will leverage their network and expertise to help you solve your problem.
Our Negotiators work as an advocate for the Seller thus working to negate any deficiency judgments. This is very beneficial to the Seller so they can move on with their life. We work with top notch Bankruptcy Attorneys and other Experts in the Industry to help the Seller get out of an unfortunate situation.
We utilize state of the art software that provides 24/7 access to its back office so the Seller, Realtor and any interested third party can access up to date information of the Short Sale Process. Please contact us today for a free consultation with one of our specialists so that we can be of immediate assistance to you.
A Realtor plays a very important role listing your house and finding a buyer thus helping facilitate a short sale. We allow the Realtor to do what they do best which is selling houses and we will do what we do best which is negotiating with your bank. If you have a preferred Realtor that you would like to use, Negotiating Partners, LLC can partner with them as well, provided they agree to conform to our standard Realtor terms and conditions.
Negotiating Partners, LLC has a national network of Realtors who are well versed in the intricacies of valuing, listing, marketing, and selling short sale properties. Once we begin working with you we will assign a local affiliate Realtor from our network to assist in quickly getting offer(s) on your property, so that we can negotiate a short sale with your lender. It is of vital importance that we work with a Realtor that is capable of working in a distressed property situation so that we can effectively negotiate with your lender and secure a short sale agreement.
Negotiating Partners, LLC may still be able to help negotiate a short sale with your lender even if you file for bankruptcy protection, once the debts are discharged then we can pursue the short sale. However, in our experience, bankruptcy is usually employed only as a last resort in a foreclosure situation. Typically, filing for bankruptcy only temporarily delays the foreclosure process (or in legal terminology, it provides a “stay”). Eventually the property is sold to satisfy debts to creditors. We strongly urge you to seek the advice of a bankruptcy attorney if you are considering this option.
Absolutely! We are experienced in negotiating all kinds of government loans, including FHA or VA owned mortgages and Fannie Mae / Freddie Mac insured mortgages, as well as privately insured mortgages. We are highly proficient in all of the specific rules and regulations governing the acceptable short payoffs of these mortgages.
What role can an investor have in a short sale?
Investors often play a valuable role in a short sale, in that, in order to successfully complete a short sale, an offer must be made on the property that the lender will accept as fair market value. An investor can step in as a buyer and be the crucial link to making the short sale possible. Working with an Investor such as Williams Asset Conversion, Inc. helps shorten the process considerably in most cases. We start the negotiation process on day one thus giving you the competitive advantage of getting the lender to agree to a sale price.
Because we have teamed up with NSH Partnership, LLC a Top Notch Negotiating Company the Realtor is freed up to do what they do best “show and sell Real Estate”. This type of team work is why we have a much higher success rate on getting short sales done. Most if not all lenders will not even consider establishing a sale price on the property until an offer is made from a potential buyer. If it takes 90 days to get an offer from a listing on your home this is valuable time wasted.
Basically the short sale process starts the moment an offer is made to your lender. Many potential home buyers have been lost because of the lag time from the initial offer until the bank approves short sale. The banks are working in a triage fashion and will not put forth the resources necessary until offers on the home are made.
-Negotiating Partners, LLC’s experienced negotiating team will work with your lender in trying to facilitate the sale of your house as quickly as possible, while keeping you updated, and informed.
Negotiating Partners, LLC is a leader in the field of facilitating short sales. Our principals and affiliates have over four decades of combined experience in all areas of the mortgage and real estate industries. Our expert loss mitigation specialists are highly trained and thoroughly knowledgeable in every aspect of this often complicated process. Our expertise and experience is what differentiates us, our commitment to our clients is what sets us apart. It is this unique combination of industry-leading expertise, impeccable professionalism, and extraordinary customer focus that enables us to offer the highest level of service to our clients nationwide.
Negotiating Partners, LLC
OFFICE (727) 434-1021
FAX (727) 498-2970