Ethical Foreclosure

IN BASIC, a Short Sale, the mortgage holder accepts a discount on what they are owed and in turn agrees to release their interest in a property. A short sale does much more to help protect your credit and get you back on your feet, here are just some examples, in brief.

  • Avoid the foreclosure stigma – Homeowners will always have to disclose that they had a foreclosure on any mortgage application and (many job applications) that they submit in the future. This can have an adverse affect on their future mortgage rates. Foreclosure is asked about specifically in credit inquiries. There is NO seven-year time limit on this item.
  • PROTECT credit score – Credit scores will be lowered by 300-plus points (per loan) by foreclosure. The impact of a short sale—about half that much.
  • Improve eligibility for a government insured loan – The homeowner will be ineligible for a government insured loan for 5-7 years (only two years in a short sale). A foreclosure is the one credit report item that is almost impossible to have repaired.
  • Avoid a deficiency judgment – Lenders can seek a deficiency judgment against the homeowner and collect any amount they do not recover at sale if your home goes through the foreclosure process and is sold at auction..
  • Protect employment prospects – Many employers run credit checks on prospective employees. Foreclosure is one of the top items that will put a potential new hire, or even current employment, in jeopardy.

In a Short Sale, a discount may be given by anyone owed money. Some entities who may discount are bankers, liens, judgments, and IRS liens. If the entity is in the first position (your primary mortgage) every other lien is negotiated or alloted a portion to release their interest in the property.

Your lender will most likely be motivated to do a short sale because they will save money. If your property ends up going in to foreclosure or headed in to an auction, the lender will incur many extra expenses (20%-40% or more of the fair market value) which can be avoided if they negotiate a successful Short Sale. Our current national housing situation states that we have millions of homes owned by the bank due to foreclosures, banks aren't in to owning property or houses, they deal in paper and don't want any more houses to take care of due to the monthly expenses they would incur. This also makes the bank stock holders unhappy as they bank is not showing a profit, which would result in the bank loosing investors or clients or in the worst case scenario closing as many did in 2009.

Each lender is different but it may take between two to four months to complete and as long as 18 months depending on the lenders back log, however we KNOW WHAT and HOW to submit for each lender, dramatically cutting down this time frame in many of our clients cases. If you are curious about how banks (even your lender) are doing in performance on Short Sales, you can read the Short Sales Report published on ForeclosureRadar.com.

When your lender agrees to accept a short sale, this process will avoid a foreclosure and deficiency judgments against you, the home owner.
  • PROTECT credit score – Credit scores will be lowered by 300-plus points (per loan) by foreclosure. The impact of a short sale—about half that much.
  • Improve eligibility for a government insured loan – The homeowner will be ineligible for a government insured loan for 5-7 years (only two years in a short sale). A foreclosure is the one credit report item that is almost impossible to have repaired.
  • Avoid a deficiency judgment – Lenders can seek a deficiency judgment against the homeowner and collect any amount they do not recover at sale if your home goes through the foreclosure process and is sold at auction..
  • Protect employment prospects – Many employers run credit checks on prospective employees. Foreclosure is one of the top items that will put a potential new hire, or even current employment, in jeopardy.

There are absolutely NO out of pocket expenses for you. The bank pays all associated fees.

If you feel that you can no longer afford to pay your monthly mortgage payment, or if you are already late on your payment, then you should get started immediately. The more time that we have to negotiate with your lender, the greater our chance of a successful transaction.

This depends on which state you live in, we can work with just about every state with the exception of Florida due to their new laws. However if you are in California for example, the Governor changed the time period from 90 days to 180 days after the NOD is publicly filed. Currently with the back log of foreclosures, we have seen some of our clients well beyond 90days before even getting a NOD letter. After that you have 21 days, your home can be sold at the court house steps. An Unlawful Detainer may or will be filed to evict you from the property. The sheriff will come and evict you, you will not be allowed in the home to remove your belongings, except by appointment within the following 10 days. Obviously you have seen these news stories on TV, they are embarrassing not only to you, but your family. Let us help save your dignity.

Not necessarily, in many cases the exact opposite occurs. Once the Short Sale process is started, most lenders will postpone or stop the foreclosure process and place it on hold. The Short Sale procedure is tedious and complicated and takes a good amount of time for us to negotiate your house sale and to get the acceptance letter to pay of your current loan to relieve you of your mortgage obligations. In our experience, we can often extend the amount of time you have in your home to sort out your affairs by initiating and processing your Short Sale.

WARNING!: Some Short Sale "specialists" even those with a "Certified Short Sale Professional (CSP)" are claiming "that it is possible to rent back your property if the new buyer is an investor. In this case you won't have to move." THIS is a GREY area in the law and every state has different RULES regarding this tactic. At Ethical Foreclosure, we recognize this as NOT being ethically responsible to our clients. We will confirm with you 2-3 weeks prior to "closing" of the Short Sale process, when you will have to vacated from the house..

Unfortunately NO*. California, for any member of the household or an extended family member, is unable to receive a gain from a short sale. The program where you get UP TO a $1500 cash at closing for moving is a HAMP approved HAFA short sale. We do NOT do HAFA Short Sales. If your lender is HAMP approved and is trying to push a HAFA short sale on you, understand that they have NO RIGHT to force you or us to work in the HAFA guidelines. HAFA further damages your credit and only gives you up to $1500 upon the completion of the Short Sale. The HAFA Short Sales tend to have more red tape and take longer, they are of NO benefit to ANY party involved. Please read our News report on HAMP/HAFA program.
* Depending on your situation, outcome and cooperation, we may be able to arrange something that could make your transitional move easier. Ask us during our initial conversation.

A foreclosure will show up on your credit file as a foreclosure and can stay on your file for up to 10 years, making it extremely difficult to get a loan. A foreclosure MORE serious than a bankruptcy. This can affect future rental housing and job considerations. However by doing a short sale, your house loan may appear on your credit report as either a 'satisfied' (being the best outcome) to 'settled', which is viewed far better than a bankruptcy or foreclosure. Satisfied or settled only remain on an individuals credit file for 1 to 3 years, thus allowing for faster credit recovery. We advised you to consult a competent tax professional and or credit consultant to see how your situation may affect your credit file.
  • Homeowners will always have to disclose that they had a foreclosure on any mortgage application and (many job applications) that they submit in the future. This can have an adverse affect on their future mortgage rates. Foreclosure is asked about specifically in credit inquiries. There is NO seven-year time limit on this item.

If this is your thought process, we would like to explain what happens....
  • IF you do nothing and let the lender foreclose on you, the lender could possibly come after you for a deficiency balance judgment.
  • If you have a Home Owners Association, they will most likely persue a claim against you for the unpaid balances on the dues with a small claims court judgment or superior court judgment.
  • There is a high risk of your wages bieng garnished. If your employer receives more than one wage garnishment from a judgment creditor, they could terminate your employment based on that.

We have seen this as a possibility, however we have yet to have any of our clients have a tax liability. We do strongly suggest that you consult a competent tax professional for your situation. The good news is in 2007, the government instituted the Mortgage Forgiveness Debt Relief Act which allows homeowners who use the property as their principal residence to generally not have any tax liability. There are some exceptions if you have done a Cash Out Refinance on that property and did not use the funds to improve the property. One important thing to remember is that if you do have some potential tax liability, that liability will probably be worse if the property goes into foreclosure because the bank will loose more money and the likelihood of them perusing you is greater. Many people make this mistake and think that if they let the property go in to foreclosure, they are released of all liability. This is incorrect. We advise you to consult with your real estate attorney and/or CPA to see if you might have a potential tax liability.

If you do a short sale on a rental property or second residence, most homeowners will qualify for exclusions on tax liability through the Insolvency exclusion. What this basically states is that if immediately before the cancellation of debt (when you sold the property) your total liabilities exceeds your total assets, you would be insolvent at that time by the amount that your liabilities exceeds your assets. We strongly advise that you seek the advice of a competent real estate attorney and/or CPA to see your potential tax liability.
To help you try to figure this out, we have created this page.

The quick answer is NO ONE CAN make that guarantee or should, it is really up to your current lenders. We will work with you and the current lenders to negotiate the best possible outcome to lead to a successful transaction. However, having successfully done over 300+ short sales should tell you something about our dedication and confidence to handle your situation with professionalism.

NO, We are only presenting an offer and the bank still has the legal right to collect the balance from the client/debtor/you. We have found though that if you get a collection call you can inform them that you are in the middle of a short sale and often the calls may be reduced, however it is not always the case. You may also defer the calls to us and we will talk with them on your behalf.  How is that for peace of mind?

NO, We are NOT Foreclosure Consultants, California and the rest of the nation has CLAMPED DOWN HARD on Foreclosure Consultants recently with CIVIL CODE SECTION 2945-2945.11. READ the LAW (full law). What we do is help you understand what your options are by helping you sift through and understand a lot of information about whether or not a Short Sale is your best option. We are professional negotiators that work to assist distressed home owners avoid a foreclosure. In preforming this service, we purchase the house from the bank at a discount through the Short Sale Process and then based on its condition, work with it to place it back on the market. CONTACT US TODAY for a FREE 1 Hour Meeting to evaluate your options.

NO, we are not, we are professional real estate negotiators that have gone through FAR more intense training than a home study $299 class you can buy from the web, as many Real Estate agents/brokers have done. (see their curriculum outline) They have purchased this in the hopes of demonstrating credibilty. Our real estate negotiators have gone through intense hands on training, mentored by seasoned professionals in the specialty area of distress homes and short sales. This mentorship and training program often takes our real estate negotiators months to pass our stringent guidelines that far surpass the CSP program. Just remember, the old saying "You get what you pay for" and our team paid heavily for their training, not only in their funds, but in real time.

Let our professionals help you and remember one thing,

California Association of Realtors (C.A.R.) gave a "special offer" to Real Esate Agents and Brokers for $179. (see their web page) What do they get...Internet video, 3-4 hours of it, some forms and a small "test" to get this badge -->

BUT to answer your question, WE KNOW HAFA and we know it will make YOUR Credit worse and possibly just delay your financial situation while it becomes bigger. See our article on HAFA.

NO, We are not SFR certified, this is another ploy to get Realtors^® in to a "Bandwagon" market, however this certification is one that is done on a national level. Realtors^® must be "in good standing of the National Association of Realtors^®" (see their curriculum)
So what does it take to get this displayed badge?
  1) "in good standing of the National Association of Realtors^®"
  2) Complete a qualifying course such as "Short Sales and Foreclosures Course: What Real Estate Professionals Need to Know formerly known as Foreclosure Prevention: What Buyer's Representatives Need to Know" NOTICE the Change...can you say BANDWAGON MARKET? OR
Short Sales and Foreclosures: Protecting Your Clients' Interests
either one is only 1 class day
  3) View 3 1hour webinars
  4) Submit your application WITH your $175