Welcome! You’ve come to the right place.

This is Anson Wenzel’s short sale blog. Feel free to use the helpful information contained in this site and to post questions or comments. If you need additional information or representation, contact me directly at 702-768-5888 or abwenzel@gmail.com. You can also contact my associate Brittany Jones at 702-997-9888 and leave your information.

I’m here first and foremost to provide information and education to homeowners who may be considering a short sale. It is important to know that there are options to avoid foreclosure. I am more than happy to discuss these with you and give you useful information. Short sales are a complicated and lengthy process, and they should be handled by professionals who can successfully close them to the advantage of the homeowner. 

The secondary aim of this site is to serve as a collaborative and beneficial resource to other real estate professionals who wish to enhance their knowledge of short sale procedures and requirements. Any information that is beneficial to others viewing this blog is welcomed and appreciated! Thank you for visiting. 

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What is a “Short Sale?”

A “short sale,” also referred to as a “negotiated settlement“ or “short pay,” occurs when a lender agrees to accept less than the amount owed on the original note or total payoff, as an alternative to foreclosure.

How a short sell can benefit the homeowner…

The homeowner can avoid having a foreclosure or a deed-in-lieu of foreclosure on their credit record by short selling. Most lenders report “settled” upon successful closure of a short sale, and in many negotiated settlements, the lender agrees not to file a deficiency judgment and the borrower may receive relocation assistance. Many reports state that if a borrower misses 3-5 mortgage payments and short sells, their credit score will be brought down by an estimated 30-60 points. A foreclosure will severely damage credit, between 150-400 points. Every mortgage application asks the buyer if they have ever foreclosed on a home, and having a foreclosure on record is a huge obstacle to attaining a future mortgage.

Assuming the homeowner is not making monthly mortgage payments, then they can continue to live in the property without making payments for the duration of the short sale process, which can take many months. A successfully negotiated short sale will result in the release of the homeowner from the loan, and make the bank agree to not pursue a deficiency judgment or lawsuit. This will allow the seller to recover from the short sale and repair their credit relatively quickly. A short sale will not be reported on a person’s credit history, and is not a challenge to employment.

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2nd mortgage timetable to file deficiency judgment

Nevada is a recourse state, so lenders can go after the difference between the balance of the loan and the fair market value of the property on the date of the foreclosure.

The time limit to file a deficiency judgment is 6 months after the date of foreclosure/trustee sale, pursuant to NRS 40.455- this applies to foreclosure recourse, not for a short sale. Deficiency not expressly released in a short sale can be collected through litigation for up to 6 years after completion of the short sale. That’s why it’s important to have an experienced real estate agent lead successful liability release with lenders.

Why HAMP is such a disaster, and how it gave rise to HAFA short sales.

Home Affordable Modification Program, or HAMP, was introduced in early 2009 and is the administration’s primary foreclosure prevention program. This was designed to provide loan modifications to help struggling homeowners stay in their homes. Mortgage payments paid by the borrower were to be reduced according to income levels and hardship factors.

When it was introduced, HAMP was allocated a $50 billion budget to facilitate loan modifications by paying incentives to servicers, investors, and homeowners. Only a measly $1.6 billion in subsidies have actually been paid to this point, underlining the ineffectiveness and seeming intention to not actually help borrowers.

Government supervision and oversight of HAMP had been laughable and almost nonexistent. ProPublica, a non-profit investigative organization, through Freedom of Information Act requests, has obtained government audit reports of GMAC, the nation’s 5th largest mortgage servicer. These reports showed that the company operated with impunity and zero oversight for the program’s initial 8 months. When auditors finally conducted a major review more than a year into the program, they found that GMAC had seriously mishandled many loan modifications, miscalculating homeowner income in more than 80% of audited cases.

ProPublica has sought the audits of 10 of the largest program participants, but the Treasury Dept. only released GMAC’s because the mortgage servicer consented to the release. Abuses of the foreclosure process, from robo-stamping and forgeries, to creating false documents to force the borrowers out of their homes have been extensively documented, along with fumbling in government to regulate the programs they created. The biggest failure to date is the fact that most of the incompetence, fraud, and lack of oversight occurred just as the vast majority of homeowners, approximately 3 million, were being evaluated by servicers for the HAMP modifications. HAMP was intended to help 3-4 million homeowners, but fewer than 800,000 have received a loan modification. In many cases, the reduction in monthly payment is negligible and ineffective.

The massive failures of HAMP have paved the way for HAFA, which in part qualifies homeowners as being a participant in HAMP’s trial payments and not succeeding. Banks and servicers are under such intense scrutiny now that they are often willing, cooperative participants in HAFA and want to save some face and act like the good guy again. HAFA is NOT a loan modification program; it’s most successful arm is the loan extinguishment through short sale program. This allows the homeowner to short sell the property and walk away without a foreclosure on record.

Through HAFA, the participating 1st mortgage holder must release the lien and not file any deficiency judgments or recourse rights directed at the homeowner, and the homeowner is provided with up to $3,000 at close for relocation assistance. Successful state funding programs such as Nevada’s “Hardest Hit Fund” also provide additional mortgage relief to homeowners who were victimized by HAMP. If there is a 2nd mortgage, such as a HELOC, then that lien can be negotiated to satisfaction and release as well, including a max $16,500 payoff from the state fund (to participating servicers) with no further seller obligation or liability. This scenario is beneficial for many homeowners in Nevada today- many simply aren’t aware of it. HAFA and state programs that provide the homeowner funds at close are the Fed’s “make-up calls” for HAMP, and have had measurable success thus far.
Some HAMP/ProPublica info provided by Las Vegas Sun, 10/10/11

NOD to NOTS

A notice of trustee sale can be given 21 days after notice of default. This is a public notice of sale which progresses the foreclosure process to an auction or sale to 3rd party. To stop this, a postponement can be requested by the short sale listing agent to allow ample time to get a buyer or contract.

In escrow with a short pay? Slap a home warranty on your house to prevent costly repairs

Tell your listing agent to order a home warranty called “seller’s coverage” on your place the moment it is listed. A home protection plan is free to order, and will cover major systems such as A/C  and electrical during the entire escrow process. The only cost in most cases is a $60 service call.

Condenser and coil go out on your roof-mounted A/C unit? $60 for the service call, instead of a $2,000 repair!!

Water heater leaking and thermostat go out? $60, not $1,250 payable to “Joe Shmo the plumber”  

Dishwasher bite the dust? $60

A tremendous investment, and a great way to make sure the deal doesn’t fall through because neither party wants to pay for an expensive repair. The warranty can then be transferred to the buyer at close if they choose to purchase a 1 year plan, usually around $350.

Short sell with an attorney or real estate broker?

A short pay/negotiated settlement conducted by a short sale certified, licensed real estate agent is a no-cost service to the homeowner. Except for a few quick fixes and advice on curb appeal, the property is commonly conveyed “as-is” so the seller is not responsible for costly repairs during the escrow process. The real estate agent’s commission is paid by the bank, not the homeowner. An experienced real estate brokerage and listing agent can achieve better results than an expensive law firm.

An attorney-negotiated settlement usually costs thousands up front to the homeowner (often $3,000-$6,000), and sometimes on a per month basis ($500/mo). Attorney fees are also applied to the transaction, with some firms charging the bank thousands on the back end at close. The bank obviously hates this, and often prefers not to involve law firms because of increased red tape, communication problems and a lower bottom line. Many struggling homeowners are under the wrong impression that law firms are better suited and have a higher chance of success negotiating the settlement, but this is simply incorrect.