Thomas Janos

Many homeowners that are in Pre-Foreclosure have no idea what the difference is between a foreclosure and short sale and how they will effect their FICO score.

The initial credit hit of a foreclosure and a shortsale are virtually the same. Mortgage experts tell us that there will be up to a 300 point credit hit when you do a foreclosure or a short sale.

So why would you bother to do a Short Sale and not just walk away from your home and let the bank deal with it?

The difference is how long your credit will be effected and if there will be any deficiency judgments filed against you.

There are definite advantages to going through the Short Sale process and it has nothing to do with your credit score.

Fannie Mae recently established a 2-year elapsed time period for reestablishing credit for homeowners that chose the Short Sale option over the foreclosure option. 2-years may feel like a long time to become a homeowner again but compared to what will happen if the homeowner goes through a foreclosure. Fannie Mae's guidelines effective May 31st, 2008 state that a homeowner who has filed a foreclosure will be ineligible for a mortgage loan for 5-years.

Another benefit of doing a short sale is that when a house is sold at auction (foreclosure), the chances of the lender filing a deficiency judgment increases. What is a deficiency judgment? It is a debt that has to be paid. They are a debt that can only be removed by paying them off or by filing bankruptcy. They often will earn interest over time and can effect your employment wages.

A judgment will be base on many factors such as the amount owed on the loan and what the property sells for, REO (Real Estate Owned) fees, handling fees, attorney fees, etc. This amount can become very large, very fast and can often keep you from buying a new car, new home, and can even cause your insurance premiums to go up. This debt will effect you much longer then the 2-years from the short sale.

Since April of 2006 I have been to Honor Missions, Welcome Home Missions and Send Off Missions. Like all of you I did it because It was and is the right thing to do. Tonight I had the chance to see what the PGR does from the other side of the flag line. The sight of all of the flags coming around the corner and filling the sidewalk in front of the Stillwater Armory, lining the inside of the armory during the final formation and presenting the signed PGR flag and then, once again lining the sidewalk again as our Soldiers boarded the buses, leaves me with feelings that I can't describe. To everyone that gave up part of their evening to support the families and the Soldiers of the 34th MP Company...Thank You! I want to extend a special Thank You to Kingpin for the flag, to Jeff for organizing the mission and to Woody for making the speach that I never could have. Thank You

Thanks for your indulgence as I rambled on.

If your interested in becoming a member and helping to support our troops please let me know. You do not have to own or ride a motorcycle to become a member as many members attend in their cars.

Just a few photos from a few past Honor Missions that we attended in 2008.

Oh ya I forgot to mention I am the Big Ugly Guy in the bottom photo 2nd from the left. The bottom is a Honor Mission (Funeral) for a young man from North St Paul that lost his life in Iraq last year. These are the toughest missions to attend but in my opinion the most important ones and we usually have around a 100 members in attendance and they are usually two full day events.

To all my fellow past and current Vets.... Thank you

What you should know if your landlord lets the property your renting go into foreclosure.

A foreclosure does not change your lease terms. You must continue to follow the terms of your lease. You must keep paying rent unless you have a legal reason to withhold it and you should have an attorney representing you in this case. Your landlord must also follow the terms of your lease and they must also keep the property in good repair as indicated in your lease and Minnesota Law. You must also keep you utilities paid current.

If you move out early it may be a voilation of your lease. Both you and your landlord must give legal notice to end your lease. I would also recommend reading your lease to see if there is anything about your rights if the property is in foreclosure.

Your landlord still has a six month redemption period after the Sheriff's Sale to pay off the property and redeem it. After the six month redemption period if your landlord does not redeem the property the property will be turned over to the holder of the Sheriffs Certificate or the Lender. The new owner may have the legal right to ask you to move even if your lease is not over, but they still need to give you written notice stating that you must move out of the property.

For more assistance contact:

HOME Line
(866) 866-3546
http://www.homelinemn.org

Law Help Minnesota
http://www.lawhelpmn.org

Home Ownership Center
(866) 462-6466
http://www.hocmn.org/renters.cfm

If your decision is to market your property when your in foreclosure, then choosing the right Real Estate Professional to assist you is very important. The average Realtor does not have the experience in foreclosure properties and that could make matters worse. There is a lot of work involved in listing a normal property, but there is a lot more work and legal issues involved with listing a foreclosure property. The Real Estate Company and the Realtor you choose will have to be a full sercie company that has a marketing strategy to sell your property quickly in the time remaining. The Realtor will have to know which person at the Mortgage Company, their attorneys office and other lien holder's offices to contact with problems or negotiations. They will have to contact the city and county to verify and liens for taxes and assessments.

They will need to be a Foreclosure Specialist and know exactly wha tthe mortgage company will need and look at when making a decision on your property.

Most "discount brokers" will not do this. The discount brokers will only list your property in the Multiple Listing Service (MLS) and maybe run a few advertisements and put a sign in the yard. This will not sell your property in the time allotted. It needs to be marketed propertly, networked with all real estate companies in the area and most importantly priced correctly.

If you need to sell your home as a Short Sale (Less then what is owed) your Realtor will need to be on top of everything during the listing and again know what the mortage company will require from them and from you to close the sale. Only 45% of Short Sales ever make it to closing. We at The Janos Group average 75%. We just sucessfully sold and closed a property in Isanti on January 30th that we co-listed with another Realtor from a different company because they did not have experience in doing Short Sales and wanted someone to handle the bank negotiations for them.

Most Realtors will send the Mortgage Company a Short Sale Package of only 45 to 50 pages (This means they are not sending EVERYTHING the Mortgage Company needs to make the decision on your home. We at The Janos Group usually send 80 - 150+ pages depending on the property. This means we have few call backs from the Mortgage Company asking for additonal information and costing YOU valuble time.

The same goes for selling your property yourself (For Sale By Owner, FSBO). Most homeowners do not know where to begin in order to market their property quickly let alone know how to negotiate with big mortgage lenders for a short slae or even how to find out detailed information about their property in the legal system.

We know how to do all of this and can show you step by step how we will market your property.

Sometimes because of the condition of the property, property values declining (like todays market), or lenders giving 125% equity loans, the homeowner will owe more than the property will sell for in the current market. This situation usually occurs when there is more than one mortgage on the property or a declining real estate market. When you mortgage a property there is both the mortgage agreement and a promissory note. Even though the property is the collateral, the lenders can obtain deficiency judgments because of the promissory note. Junior lien holders will often accept "short sales" otherwise they are faced with paying off larger mortgages to protect their smaller ones.

In today's market many of the first mortgages are accepting "Short Sales" because they would not be able to sell the property for what is owed on it and they have high fees that would be attached to the property if they take it back, causing even more of a loss.

Many homeowners qualify for the Mortgage Debt Cancellation Relief (H.R. 3648-Public Law 110 - 142 Signed December 20th, 2007). Speak with your tax adviser or Real Estate attorney regarding receiving a Tax Form 1099 from the mortgage company and if you qualify for the Mortgage Debt Cancellation Relief or the possibility of having to pay taxes on the amount the mortgage company writes off. The IRS will consider the write off as a taxable income. If you do qualify you will need to attach a Tax Form 982 and your Tax Form 1099 to your Tax Returns. Again speak with you tax adviser as we can not give tax or legal advise.

Even though the homeowner would not receive anything at closing it is important to satisfy all liens on the property to avoid possible deficiency judgments and to help in re-establishing credit to become a future homeowner again.

Again to get a copy of our foreclosure handbook please contact us or visit our website to download a copy.