Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc

In my opinion.....no...it’s not.

And here’s why. The Lenders want as much money as possible for the property. They want the property exposed on the open market to attract a Buyer at the highest price possible. They want it to be an “Arm’s Length Transaction”. The Landlord (Seller/borrower) and the Tenant have a “business relationship”. In direct conflict with most “Arm’s Length Transaction Affidavits” they “Share a business interest”.

Here’s what three of the major Lenders say about the “Arm’s Length Transaction”.

• Wells Fargo Arms Length Transaction Notice:No party to this contract is a family member, business associate, or share a business interest with the mortgagor. Further, there are no hidden terms or special understandings between the seller or buyer or their agents or mortgagor.

• Bank of America Arms Length Transaction Notice: The Parties acknowledge and agree that the Subject Property must be sold through an “Arm‟s Length” Transaction. Arm‟s Length means two unrelated parties characterized by a selling price and other terms and conditions that would prevail in a typical real estate sales transaction. No party to this contract is a family member, related by blood or marriage, business associate, or shares a business interest with the mortgagor (Sellers).

• SunTrust Mortgage Arms Length Transaction Notice:The Short Sale must be an “arm’s-length” transaction. The property may not be sold to anyone the seller has a close personal or business relationship with, including family, friends or neighbors.

Now folks, I know there are exceptions. I know that some lenders in some cases will allow the Tenant to purchase the property. But what’s the advantage to the Seller? I can’t think of any. To me it’s just an easy fix to try and soothe a Tenant that doesn’t want to move.

And it’s risky. What if the Seller spends several months trying to have this exception approved by the Lender only to have the Short Sale denied over it? Now they have just wasted good time that could have been spent finding an “Arm’s Length” Buyer.

Recently I had a Seller who was being pressured so hard by the Tenant to sell her the house that the Seller almost cancelled the listing over it. The Tenant who is staying in the property, at a reduced rent, is telling the Seller that the price doesn’t matter and that the Lender will have no problem with it and blah blah blah. The main problem is that the Tenant can’t afford the property and is trying to pressure the Seller into accepting a offer that will cost the Lender about $25,000. This is EXACTLY why Lenders do not want the Seller to sell the house to the Tenant.

This particular Short Sale is a Bank of America Florida Enhanced Co-op Short Sale. It gives the Seller a full “Waiver of Deficiency” and is paying the Seller more than $10,000. Because of these great incentives Bank of America gets to control the price and wants an “Arm’s Length Transaction”. Isn’t that fair? I think so and I’m glad the Seller now agrees.

So folks, play it safe. Don’t be bullied into making a costly mistake. What say you?

Are you facing foreclosure in Florida?

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

Hi folks. OK so I feel compelled again to write about Short Sales and knowing how to get paid. There is so much bad information out there.

There are many agents, brokers, attorneys, negotiators and others that are just adamant that agents are at the mercy of the lenders when it comes to commissions.

I read an article on another site where the agent asked a simple question wanting to know if his seller could pay him additional commission above the 6% the lender approved.

Responders were shocked that he would even consider taking more money from his “distressed seller” others stated is was illegal or a violation of RESPA and no lender would EVER allow it.

I guess my questions are:

1. Why do so many agents not understand how to get paid?

2. Why do so many agents believe RESPA has control over every transaction?

3. Why do agents assume all short sale transactions are from distressed sellers?

4. Why do agents believe lender guidelines are laws?

5. Why do so many agents not know how to negotiate?

Here’s what I suggest.

• Seek legal advice from a competent attorney in your State to see what you can and can’t do. Make sure the attorney can back up his opinions by case law. Remember attorneys are also giving you an opinion. It may be wrong.

• Ignore most of what NAR and our local boards say about short sales. Their job is to err on the side of caution to protect REALTORS(R). Their opinions and suggestions may very well be harmful to your customer/clients and your pay check..

• Always verify. Ask to see the law. Then read it an form your own opinion.

• Know when RESPA applies and when it doesn’t.

• Understand the difference between laws, guidelines, suggestions and opinions.

For example, this blog article is my opinion based on my research. Don’t take my word for it.

Folks, your ability to help people with their Real Estate needs is greatly limited if you don’t become a student of Real Estate. Do your own research and figure out a business plan that works of you and your customer/clients. You may be surprised to find out what you can do. What say you?

Are you facing foreclosure in Florida?

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

Hi Folks. I’ve ran across agents, several times this week, not sure how to handle a Short Sale when the property is owned by a trust. So I thought I’d take a minute to explain how this works. Actually I can do it in about 1 second........

…......exactly the same as you would handle any other Short Sale!!

Here’s why.

Short Sales are done for Borrowers. Even though the property is owned by a Trust the note was more than likely signed by an individual. The individual is the one you are doing the Short Sale for. He is the Borrower.

The ownership of the property was probably placed in a Trust after it was purchased. Usually this is done for estate and/or tax purposes.

So.....your listing agreement and the purchase contract would be in the name of the owner of record. This could be a Trust, LLC, INC or a person(s). You would need a copy of the Declaration page for the Trust, LLC or INC to see who is authorized to sign and act on the entity’s behalf. This is the person who signs the agreements.

The Borrower(s) is the person that took out the loan and signed the Note. This could be the same person that is authorized by the Trust or it could be someone else. Whoever it is, this is the person who must go through the Short Sale process. Simple.

Any questions?

Are you facing foreclosure in Florida?

Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

This Week's Discussions

Commission Dispute Question: I submitted an offer on a short sale which took 2 months for approval and were schedule to close, however, a day before closing t… Started by Tavo	9	42 seconds ago Reply by Bryant Tutas
Seller taking an offer before it hits MLS We are seeing a lot of agents pre selling their own own listings that are short sales before putting them on MLS. I know we have a fiduciar… Started by Stephen	64	1 minute ago Reply by Bryant Tutas
LCS and Buying Its Debt I have a client who wants me to take over a short sale that failed. She was offered $25,000 from Chase Bank. LCS is the second. LCS blocked… Started by ElizabethWeintraub00697006LyonRE	9	1 hour ago Reply by Bryant Tutas
Approval of a Trust Has anyone had a short sale approved for a property that was owned by a trust? If so, what documents did the lender require? Started by David Zagorsky	1	1 hour ago Reply by Bryant Tutas
I have personally bonused being part of the Advanced Traing Group! What is keeping you from joining? Just having help closing a deal made it worth it taking the worry and pain out of the paperwork, especially HUD-1 issues. Bryant and Wendy… Started by Teresa Simon	1	1 hour ago Reply by Bryant Tutas
HAFA vs. non HAFA What's the difference between a "HAFA approved" and a conventional short sale? Started by Eddie Kearns	3	18 hours ago Reply by Smitty
Looking for a good basic short sale program for organizing files w/o the hype & program salesmanship. We, an attorney paralegal and myself sat and watched as much of a webinar as we could bare today. With the reinvention of the mls, picture… Started by Teresa Simon	7	19 hours ago Reply by Joseph Alfe
How to get the smaller deals closed Looking for tips on getting higher commissions paid. On lower priced listings ($65k & below). The lenders will not pay more then 6% o… Started by Jeanine Whitehead	4	19 hours ago Reply by Joseph Alfe
Help - Freddie Mac HAFA demands from seller Has anyone had this happen? The seller is being asked to pay them over $2,000 per month while we try to short sale the home and if we are n… Started by Kathy Marlowe	5	yesterday Reply by Bryant Tutas
Innacurate BPOs, Why? I may have just figured out why there are so many inaccurate BPOS. Check out this email that I just got from someone who will do my BPOs fo… Started by Jeff Payne	22	yesterday Reply by Jim Schneider

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1. Do I have to be behind on my mortgage payments to qualify for a Short Sale?

• Not necessarily. Some lenders will negotiate a settlement if you are current on payments. You won’t really know until you go through the process. If you are current on payments the lender may very well require you to “participate in the loss” by making a cash contribution, signing a promissory note or both.

1. What is a deficiency and how do I avoid it?

• A deficiency is the difference between the amount of money you owe and the amount of money paid to or collected by the lender. The deficiency is the “Short” in a Short Sale. A deficiency ALWAYS exist with a short sale. You cannot avoid it unless you just keep paying on your mortgage obligation. The real question is..........

1. What happens to the deficiency?

• The deficiency can be waived, written off, paid later, settled or the lender can, at least in Florida, choose to go in front of a Judge and ask for a Deficiency Judgment against you.

1. What is a Deficiency Judgment?

• A Deficiency Judgment is when a Judge issues a Judgment making you personally responsible for the deficiency and giving the creditor the right to go after you for the money you owe. In Florida the creditor has 5 years from the creation of the deficiency*** to ask for the Judgment and another 20 years to collect on it if granted. To collect they may take assets, levy bank accounts and garnish wages. ***Please seek legal advice on this matter.

1. Will I have to pay taxes related to the short sale?

• Maybe. A short sale IS a tax event. Just as with any real estate transaction the sale is reported to the IRS. In addition the “Short” may be written off as a loss to the lender. A loss to the lender is income to you. How this income is taxed is a question for your tax professional. You may also refer to the Debt Relief Act. Unless extended the Debt Relief Act is set to expire at the end of 2012.

1. How will a Short Sale affect my credit?

• How credit scoring works is one of the great mysteries of the universe! The Short Sale itself is not reported as “Short Sale”. Missed and late payments are reported. Also, how the transaction is reported makes a difference. Is it reported as “settled..”, “paid...”, “charged off..”? And have you been paying your other bills? There are just too many variables to be able to give you a precise answer. If your credit score is important to you then my advice is to make your mortgage payments.

1. What advantage is there to doing a Short Sale over just letting the lender foreclose?

• Credit scoring aside....on average you can get another mortgage within 2-3 years assuming you pay all of your bills after a Short Sale. A foreclosure will affect your ability to get a new mortgage for 5-7 years. A Short Sale also gives you the opportunity to negotiate a settlement. It gives you some control over the situation. With a foreclosure you are 100% at the mercy of the lender.

1. How long will the Short Sale process take?

• A normal Short Sale with no complications will take on average 2-3 months from time of contract. Some go much quicker and some take much longer.

1. Will my Short Sale be approved and closed or am I wasting my time?

• We close more than 90% of our Short Sales. As long as you participate, by providing me what I need, when I need it, then yes, your Short Sale will be approved and get closed.

1. When will I have to vacate the property?

• Unless we are able to negotiate something different the day of closing belongs to the Buyer. Most lenders will not allow you to rent the property back after closing so plan on moving. You will normally have 30-45 days notice prior to closing.

1. Who pays your commission?

• The listing agreement is between you and I. So legally you are responsible for paying my commission. However, just as in a regular transaction, the costs of the sale are deducted from the purchase price. This means the buyer brings money to purchase the property and we pay everything out of that. The lender gets whats left. You pay nothing. Unless it is required by the lender and you agree to do so.
  

Additional information:


• CDPE Site
• Contact Bryant
• FannieMae/HAFA Program
• FHA Preforeclosure Sale
• From The Lawyer's Mouth
• HAFA FAQ
• HAFA Guidelines
• IRS Debt Relief Act
• Is Your Loan Owned By FNMA?
• Military HAP Program
• My Short Sale Story
• Property Search Map
• Sample Approval Letters
• Short or Stay?
• Short Sale Approvals
• Short Sale FAQ
• Short Sale Network
• Strategic Short Sales
• Testimonials

I hope this helps. Please feel free to contact me with any additional questions you may have.

Are you facing foreclosure in Florida?



Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.

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