Brandon Brittingham

Since I get so many inquiries from consumers asking generally the same questions as it relates to foreclosures and short sales I have decided to do a blog series where I will post two questions every few days. See below the first two questions to start the series:

Commonly asked Foreclosure Questions

What takes place if I miss my mortgage payments or I am behind on my mortgage payments?
Foreclosure can occur, but it does not have to and can certainly be avoided. You can take action to stop foreclosure, even if foreclosure has been filled against you. You now have more options than ever to prevent your home from going to foreclosure. The consequences of foreclosure can have lasting effects on your credit, and you may still owe the bank and the IRS money afterwards. Foreclosure does not wipe the slate clean. In the State of Maryland once you have missed three mortgage payments the bank can file foreclosure on you. This does not mean if they have filed that you do not still have time for other options, but you need to react quick and do not wait. The longer you wait the worse it can be.

What should I do if I am in danger of or miss my mortgage payments?

By reaching out for help from a professional early, when you start missing payments, there is a greater chance of success in avoiding foreclosure. As soon as you anticipate an issue with paying your mortgage payment, contact a qualified professional to help you assess your situation. Many banks are willing to work with you if you reach out to them immediately, because they understand that individuals and families can face temporary job loss, serious illness, or other major life events that can impact their ability to pay their mortgage. However, it is in your best interest to have somebody represent you that does not work for the bank. If you are interested in a loan modification you need to reach out to a HUD approved counselor in your area so they can help decide if you will qualify for a loan mod. If a Short Sale is the option you seek, you need a qualified Realtor, who has experience with handling short sales. It takes a realtor with a significant amount of experience to handle these complex transactions, make sure you have one that has that experience, and has not just done one or two short sales.

If you are facing foreclosure a short sale may be your best option check out my website at www.moorebrittingham.com or my blog at www.easternshorehomesolutions.blogspot.com for more details, or contact me direct anytime.

Acceptable Types of Hardship in the eyes of a bank when it comes to a short sale:

Seeing as one of biggest determining factors when applying for a short sale is a viable hardship, I have taken the time to go over what is commonly accepted by every bank when it comes to hardship. Regardless of hardship remember whatever your hardship is, you have to be able to prove it to the bank.

See below here are the basic qualifications for a short sale, I hear the question all the time " how exactly do I qualify for a short sale" Although there are a few exceptions this covers the broad base of what all the banks agree on. There are some "grey" areas but this is a basic over view.

1. Need to sell : Meaning that this not just a want to sell, because of certain circumstances the homeowner needs to sell(usually caused by some type of financial hardship)In this situation no other work out options will alleviate the hardship, causing the homeowner to have to sell the property. The homeowner may have lost equity and wants to sell, that does not mean they qualify for a short sale.

2. Hardship Here is something that a lot of people over look or have confusion on. As mentioned before different banks have different views as to how much they scrutinize a consumer's particular hardship, but overall here is how they view it: a. The homeowner had a material financial change that has taken place since they took out the loan b. This change in turn prevents them having the ability to pay the mortgage. The bank is going to ask for all the homeowners financials to determine if they have a financial hardship, and if they do not see a legitimate hardship the may deny the request or ask for a promissory note/cash contribution.

3. They have a hardship and don’t have the assets to pay off the mortgage. If a homeowner has significant assets from other sources this can also affect the short sale request. The bank may move forward with the short sale but may request the homeowner relinquish some of their assets to cover the short fall, if a homeowner has asset's to cover the short fall or mortgage balance, this could affect the outcome of the short sale approval. The bank is going to look at all the seller's financials, and if they have significant asset's this could affect the short sale.

4. The Seller must have or will soon have a financial short fall. This one pretty simple, more expenses going out than income going in, and again the bank will look at bank statements and pay stubs to verify the information.If the seller has a surplus of income on a monthly basis in some cases the short sale may be denied. In other cases they may ask for a cash contribution or promissory note because they fell the seller has expendable income.

for more information on short sales check out my website at www.moorebrittingham.com or my blog at www.easternshorehomesolutions.blogspot.com
In the next post we will go over what banks consider exceptable hardships

When it comes to a short sale there is a significant amount of confusion on how exactly each process is structured and in many cases there is an assumption that all processes are the same. The reality is that this is not true and depending on the bank and loan type, the processes can differ greatly. I have been getting a lot of questions lately about FHA short sales and how the process works, and how to qualify. Below is just a basic overview of the qualifications and guidelines and we will look at the process of the short sale in the next post. See below for all our consumers out there who need this information, but agents feel free to use this as well. Keep in mind this only applies if you have FHA backed mortgage which means you got an FHA loan. You can determine this by looking on your deed which will have your FHA case number on it, or usually your mortgage statement will say if you have an FHA loan. You can also call the number on your statement or go to the servicer’s website( for those who pay online) to obtain that information from your Servicer.

Here is a summary of the requirements to perform an FHA-insured HUD Short Sale or "Pre-Foreclosure" Sale:

1. You must be delinquent 31 days or more at the time of application for the short sale.

2. You must list the property with a Licensed Real Estate Broker who you are not related to.

For the first 30 days of marketing, the short sale lender (mortgagee) may only approve offers that will result in a minimum net sale proceeds of 88% of the "as-is" appraised Fair Market Value (FMV). During the next 30 days of marketing, the lender may only approve offers that will result in minimum net sale proceeds of 86% of the "as-is" appraised FMV. For the rest of the marketing time (60 days), the lender may only approve offers that will result in minimum net sale proceeds of 84% of the "as-is" appraised FMV.

4. The property must be owner-occupied, except for cases of job transfer, death, divorce, job loss. This means you need to be living in the property to perform a short sale under FHA guidelines.

5. There should be written proof of your decrease in income showing an inability to pay the mortgage.

6. HUD will pay up to 1% of buyer's mortgage as part of closing costs if the new mortgage is also FHA, plus reasonable "seller" costs. I have been able to get up to 3% on FHA short sales, but you have to get a special approval from HUD in the form of a variance.

7. HUD allows 6% Realtor commission

8. HUD will not pay for Home Warranties, points or lender's title insurance.

9. You must get approval to participate in the HUD Pre-Foreclosure Sale Program in advance

10. Upon acceptance into the program, you will be given an Approval to Participate Form which will outline program restrictions

11. You have to have a viable financial hardship to participate in the PFS FHA program.

12. All settlement costs and commissions are paid by the bank not by the seller of the property.

These are just a few basics, and I hope this helps. We will go through the process on an FHA short sale in the next post. Please note that these apply regardless of who the bank or servicer is on the mortgage as HUD/FHA is the end investor. As always if you need more information contact me anytime.

It seems that there is a significant amount of confusion when it comes to purchasing a short sale. There is a lot of confusion and misconception when it comes to these types of transactions, so below I have provided some information to potential buyers of short sales. If you are looking to purchase a short sale, understand that it is not the same as a normal sale and the approach is very different. There could be several parties involved and issues that are unknown to the buyer and buyer’s agent that can affect the transaction. If you are looking to purchase a short sale here is some helpful information.

1. On average to get a short sale approval it can take 60-90 days. There could be mortgage insurance and an end investor on the loan as well as the servicer, which means it has to go through three different processes. Bank of America could be the servicer on the loan but they do not actually own the loan, so, the short sale has to pass their guidelines, then go to the mortgage insurer if there is one, then to the end investor like Fannie Mae and Freddie Mac. If you are a buyer and can’t wait at least 45-90 days for an approval and then another 30 days to go to closing, then you need to look at other houses. The worst thing you can do is tie up a house that is in a short sale with no intention of being patient while waiting for a short sale approval.


2. There is a general assumption that you can purchase a short sale for 40-50% under market value. To that point you may be able to get a reasonable deal on a short sale, it will not be, in most cases, as much of a deal as you may be able to get on an REO (foreclosed property). The bank comes out and does a valuation of the property and will expect under market value, but will not except a huge amount under market.


3. Short sales are a very difficult process and it takes a qualified person to handle these types of transactions. With these types of transaction it takes a very experienced agent on the listing side as well as the buying side. Make sure before you move forward on the transaction that the listing agent has ample experience dealing with these types of transactions, or you could be tied up into a transaction for months that never goes to settlement. There are several different types of short sale processes and each bank’s process is different, it takes a professional who has had experience with all of these different types of short sales to help facilitate a successful transaction.


4. In most short sale transactions the properties are sold “as-is” and no repairs will be made. Although there are some exceptions to this rule, speaking in general, short sales are sold “as-is” and no repairs will be made even if they are found during a home inspection. In most short sale transactions the bank will require both the buyer and the seller to sign an addendum that states the property is being sold “As-is” and no repairs will be made.

These are just a few short pointers for buyers looking to purchase a short sale, if you need any more information contact me anytime.