Dave Halpern (502) 664-7827

Sellers who are “upside down” often try to sell their house by themselves through various unnecessarily methods. However, a short sale with a Realtor can usually get the house sold even if the seller can’t afford to pay a Realtor commission.

“Upside down” or “underwater” means there is more owed on the house than the house is worth. Lenders understand that sellers are upside down on their mortgage and they encourage short sales.

In a short sale, the lender accepts an amount SHORT of what is owed so the seller can avoid foreclosure.

Who Pays the Commissions and Closing Costs? Answer: The Seller’s Lender

The seller’s lender DOES NOT WANT TO FORECLOSE. It is too risky and costly for the lender. The lender does not want to own the house, they would rather settle and take what they can, even if they have to pay the seller’s closing costs and commissions.

Since the lender pays the Realtor commissions, selling For Sale By Owner, FSBO, or FiSBO uneccessarily causes the seller to scramble on their own instead of putting a short sale expert Realtor on their side to do all the work and get it done.

In Louisville, or anywhere in Jefferson County, Oldham, Shelby, Spencer, or Bullitt County, call Dave Halpern at (502) 664-7827 for a free and friendly conversation about the benefits of a short sale and how it works.

Thousands of short sale Realtors nationwide have experienced the exasperation of banks illogically turning down logical short sale offers.

Banks traditionally have pushed valid offers over the cliff with answers such as:

• “We don’t care. The PMI company will pay us more.”
• “We don’t care. FHA will make us whole.”
• “We don’t care. We’re closing the file.”
• “We don’t care. That’s our policy.”

Time and again, banks turn down short sale offers, then spend many months foreclosing, only to resell the house at a greater loss than the short sale offer. Many Louisville foreclosures could have been avoided if the banks would listen to the Realtors.

Now the woes of the banks are being compounded by the new foreclosure delays resulting from botched paperwork.

Will this cause the banks to rethink their short sale processes and policies? We can only hope so.

What is a short sale?

• When the lender accepts an amount SHORT of the amount owed.

What's the process?

• The lender requires the house to be listed with a Realtor who specializes in short sales.
• The Realtor procures a buyer who makes an offer.
• Once the offer is accepted by the seller, the Realtor presents it to the foreclosing lender with additional required documentation.
• Once the short sale offer is accepted by the lender, the buyer closes on the house.

Who pays the Realtor commission?

• The short sale lender pays the Realtor's commission so the seller doesn't have to.

Thousands of homeowners in Louisville lose their home to foreclosure because they do not try the short sale option. Let's reduce the number of foreclosures in Louisville.

Please call Dave Halpern at any time for further information.

In a Short Sale “Is it better that I move out?”

Sellers ask this all the time. The answer is the seller can stay in the house all they up to the sale to the new buyer.

There are actually many questions behind this question:

Question: Will the bank be angry that I’m living in the house without paying?

Answer: The bank realizes that many borrowers can’t pay. That’s why they have the short sale program. You didn't create this housing slump or job market crisis.

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Question: Does the bank want me to move out because I’m not paying?

Answer: No. The bank prefers you stay in the house. If you are in the house they know the house will be maintained, the grass will be cut, the utilities will be on, pipes won’t freeze, and the likliehood of vandalism will diminish.

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Question: So the bank is OK with me living free in the house?

Answer: Actually, some lenders REQUIRE that you stay in the house until it sells. That’s how important it is to them that you remain.

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Question: But I’m afraid that the sheriff will show up with no notice and throw me out.

Answer: The sheriff cannot evict you before the house actually sells at the foreclosure auction. You will get many letters and notices prior to the auction. Please read a previous article xxxxxxxxxxxxxxx for more details.

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Question: What if I must move out or really don’t want to stay in the house anymore?

Answer: want to stay In most cases that’s fine also. If you have to move on with your life that’s understandable. Please check with your short sale specialist Realtor if moving out will impact your eligibility.

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Also, a skilled short sale Realtor will keep you informed of progress and will get your auction postponed to enable the short sale to be completed so you can avoid foreclosure.

These questions are all valid concerns. But notice that the answers are the exact opposite of conventional wisdom. Such is the nature of short sales.

If you are in the Louisville, KY area please call me (502) 664-7827 at any time with any questions you may have. Nights and weekends are welcome, too. Call me at any time that is most convenient for you.

Dave Halpern

Real Estate Broker, Louisville Short Sale Expert Realtors

(502) 664-7827

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Sellers looking for foreclosure help in Louisville, KY should call Dave Halpern, Realtor, Louisville Short Sale Expert Realtors, (502) 664-7827. I will dedicate to you all the time you need for a full explanation of the process. We are compassionate, caring and patient.

I will provide detailed information about foreclosure options and short sales. We help dozens of sellers avoid foreclosure every single year in Louisville, Jefferson County, Oldham County, Bullitt County, Shelby County, Nelson County and Spencer County.

We can help. You have options. Call even if you think your house isn't sellable. Many testimonials available.

"The short sale pulled me out of this housing hole.”

“I’m glad I had someone on my side.”

“People said it was too good to be true but now I owe not a thing.”

“It restored my dignity.”

There is hope and there are options.

If you are behind on payments you are undoubtedly under tremendous stress.

Imagine the future without this overwhelming debt in your life. Banks accept “short sales” all the time. In a short sale, the lender accepts an amount SHORT of what is owed. In most cases the shortfall is forgiven, in writing. Your lender pays the Realtor commission so you don’t have to.

A short sale can never be guaranteed in advance. However, please read these testimonials and success stories. The emotional relief shines through.

It's not your fault that the housing market collapsed and took the job market with it.

You deserve the peace of mind. Please call me, I will give you all the time you need. I will answer all your questions. No pressure, no obligation. You will benefit from my 15 years of experience. There is no cost to you.

Many times one of the spouses or co-owners of a house is not obligated or liable for the loan and therefore their credit may not be impacted. Sometimes one of the co-owners did not have had good enough credit while the other co-owner had strong enough income and credit to qualify for the loan by himself or herself.

The credit bureaus do not publish their secret formulas, so I cannot give a definitive answer to the question.
Important disclosure: I am not a lawyer, a mortgage underwriter, or a credit repair specialist. The above professionals should be consulted to get an authoritative answer. Laws and practices may also differ from state to state.

Okay, we have to get a little bit technical for a minute, to clarify often confusing concepts:

A loan has two primary parts

1. A commitment to pay the loan back: This is evidenced by what is called the promissory note. Whoever is on the note gets the benefits of building up their credit when payments are made on time but they also get the disadvantage of damaging their credit if the payments are not made.
2. An additional document that is called a mortgage. The mortgage pledges the house as security for the loan. The mortgage document permits the lender to go through legal process of seizing the house in a foreclosure if the loan payments are not paid. At the end of foreclosure process the lender sells the house to a new buyer to recover their investment.

You can be on the mortgage but not on the note. You may have pledged your house as security but not made a personal promise to pay.

If you are not on the note, then falling behind on payments, doing a short sale, or even losing the house to foreclosure may not hurt your credit at all.

How do you know if you signed the note?

• Check your monthly mortgage statement. Is it addressed to you or only to the other co-owner.
• Call your lender. Ask them if they report payment history on your credit report. If they won’t even talk to you, you’re probably not on the loan!
• Run your credit separately from the co-owner. Does your mortgage even show up?
• Check your closing documents. Is your name on the note?
• Call the closing attorney who closed your loan. Ask them to interpret your closing documents.
• Ask a mortgage broker to review and interpret your loan documents.
• Ask a credit repair professional to review and interpret your loan documents.

Caution: Even if your credit report may not reflect foreclosure activity, you may still have to report on future loan applications that a house you owned had foreclosure activity.

I get these questions often in divorce and separation situations.

The internet is full of conflicting information about the impact of foreclosure and short sale activity on your credit. Each case is specific and my intent here was to point you in the right direction to determine your situation.

Dave Halpern

Louisville Short Sale Expert Realtors

(502) 664-7827

Original content by Dave Halpern 2010

The summary answer is "NO". A short sale is a voluntary agreement between the short sale lender and the borrower who is the selling the property for less than owed. The borrower is not obligated to accept the terms of the short sale or any of the lender’s demands.

Likewise, the lender is not obligated to agree to a short sale.

If the short sale lender stipulates that the seller must cash in their protected retirement fund and contribute it at closing, the seller should consult professional legal and tax advisors. The owner of a 401(k), IRA or other retirement device has both rights and obligations.

The SELLER Does Not Have To Agree To Anything - It is a Choice!

If the lender wants the borrower to break open their retirement fund to contribute towards the shortage, the borrower can refuse and opt for other courses of action including but not limited to foreclosure, bankruptcy or a variety of loan modifications.

Likewise, The LENDER Does Not Have To Agree To Anything - It is a Choice!

If the borrower refuses to bring their retirement funds to the real estate closing then the short sale lender needs to make a business decision if it’s better for lender to lose more through foreclosure or if the borrower files bankruptcy.

Here are some specific questions that the seller should ask a lawyer and/or tax professional:

1. Is it legal for the lender to demand the borrowers break open their retirement account?
2. If the lender obtains a deficiency judgment, is the retirement fund protected?
3. If the borrower files bankruptcy, is the retirement fund protected from creditors?

With all that said, here’s an actual case study of a successful short sale we closed in Louisville, Kentucky:

• Debt over $200,000
• Highest offer $172,000
• Seller, single mom, had $40,000 in her 401(k)
• The lender wanted $10,000 seller contribution, told her to use her 401(k) which after taxes and penalties would leave her with almost nothing, especially after tough separation and divorce
• Long story short: Seller said no, would rather file bankruptcy, lender backed off, short sale closed with lender waiving the deficiency.

Sellers should always seek the advice of professionals; Real estate agent who specializes in short sales, CPA or tax attorney and a bankruptcy attorney if the seller deems it necessary.

Dave Halpern

Louisville Short Sale Expert Realtors

If you owe more than your house is worth and you're struggling with payments - please call Dave for short sale help (502) 664-7827