The first thing that you do in an emergency situation is call your lender. When you reach someone if possible ask to be talk to or be transferred to the loss mitigation department or the department that handles short sales.
Once you have found the best person that seems to know they are talking about, you want to let them know that you’ll have an offer very soon. Ask “What are the requirements to submit an offer in order to get a short sale acceptance.” Create a check list based on what they say.

Your lender is going to tell you a few things that you may need to submit a short sale offer. But for sure you’ll need the following things. You’re going to need a purchase agreement. In a minute we will talk about how to find a buyer in a jiffy. You’ll also need a HUD 1 which is a settlement statement that’s required to be used by all title companies and closing attorneys when they close the sale of a home. It shows all the details of a real estate sales transaction.

The first thing you need to do after you have found out the banks requirements is to find a title company. You might say something like, “Hi, I’m looking for a title company to help me in the sale of my home doing a short sale and I have a few questions for you. Can you do a title peak?” A title peak is a quick view of the title to see if, at first glance, there appears to be any liens on my property. You’d be surprised of what can pop up and attach to your property. You want to know about these things as quickly as possible. They can typically do a 5 minute search for free and tell you exactly what’s happening on your property. You also want to ask them, “hey I have an offer [or I’m getting ready to have an offer] and I need the bank to evaluate it, but before I do that, I need a preliminary HUD 1 net sheet. Can you help me prepare one if I give you the offer? If they say yes, great you have a title company.

How do you find the buyer? I told you I’d help you find one in a jiffy. There are thousands of ready, willing, and able buyers. The only reason they need in order to make an offer on your home is if they have the opportunity to get a good deal. They don’t need you to spend beautify it or spend thousands of dollars doing all sorts of repairs, like most Realtors are going to ask you to do in order to make it retail ready. All they want to know is “May I have an opportunity to get a good deal on your property.”
It benefits you to work with these people because they’re offering you the opportunity to be able to get out of your house with the least damage to your credit and also they’re your one opportunity to use a sale to help delay the foreclosure on your property.

During the period that you are negotiating the short sale you’ll have time to possibly find a better offer as well. Essentially an investor buyer will help you do what you need to do in order to arrange your finances properly. So how do you find this crappy low buyer that’s going to low ball your house? One of the best ways is on the internet. Do a Google search for “I buy houses”, “we buy houses” or “home investors”, you can also search for specific cities like if you live in San Diego, Can you can say “San Diego we buy houses.” You want to look for someone who’s willing to make a cash offer on your property. You don’t necessarily need someone who is a foreclosure investor, especially if you’re planning on handling the negotiation of the short sale on your own home. All you need is someone that has cash and is willing to make a quick offer even if its probably going to low.

The other thing you can do is visit Craigslist.org. Pick your city go to the services section and go to real estate. You’ll find a lot of Realtors and people offering various real estate services. Some of these may be great services, but there are specifically looking for adds that say, “we buy houses” and or “cash offers for homes.” Go after those people and see what they can offer. Along the same line you can go to your local newspaper and check out the real estate wanted section. Typically there’s a bunch of “we buy houses” ads and stop foreclosure ads and real estate wanted ads, so you can call some of those people and see how they work and see if they can put an offer on your property. Also you can check out the for sale section and look for numbers that re-appear over and over again. Especially rent to own ads. If it is not a Realtor then it’s probably an investor. Talk to to these people and see if they’re interested in your property. Keep your eyes open. In the next week you’re going to see “we buy houses” on bus stops, TV ads saying “we buy ads” and “I buy houses” billboards.

You want a buyer that’s going to pay cash. Ask them how they’re getting their cash. Make sure they offer proof they can actually buy your property with a bank statement or letter from their banker. Let them know you need this in order to present it with their offer to the bank. Often times banks do require what’s called a proof of funds. So just ask them for that, to make sure that your buyers qualified. As long as your buyer is qualified there is no reason to turn down an offer. Just accept the offer with the following line written in the contract. You will always write in a contract, hand written on the front page with big ugly blue pen the following “This offer is contingent on bank acceptance of short sale and forgiveness of debt. All title and escrow will be performed by XYZ title company.” Insert your title company name. Initial next to that and have the buyer initial as well. This phrase will now supersede the offer and it protects you if the bank doesn’t offer you the terms you need in order to close the short sale and feel good about it. If for some reason the bank doesn’t give you really good terms for a short sale letter it’s your option not to continue the short sale and the buyer can’t force you to go through with it.

Once you have this offer you can put it together with the packet you’ve compiled and present it to the title company and have them create a correlating HUD 1 that matches the contract. Then you submit it the bank along with the required hardship information.

Once you’ve submitted to the lender you want to follow up every 24 to 48 hours to see how things are going and you want to make sure that the lender sends somebody out to value the property. The lender valuation, also known as the Brokers Price Opinion (or BPO) is actually the most essential part of the entire short sale process. There’s a whole set of things that you can do to influence how that value comes out, which for this introductory course is a little too much to talk about. In the full Short Sale Your Home and Get Paid course I talk in depth about all the ways to make sure that the BPO value supports your offer.

Now I want to talk about what happens after you have gotten your offer, you’ve gotten a BPO value, your lender has evaluated the offer and they’ve accepted it. They are going to give you something called an acceptance letter. In the letter that they give you, it’s going to spell out all of the details of the short sale and what they’re accepting and how they’re going to do it. There’ll be terms for whether the deficiency is forgiven or not. If you see something that says, “this is a settlement” or “this will be marked as paid in full on your credit” then typically that means that your debt is going to be forgiven. The amount of money that comes from this sale and goes to the bank is going to actually pay off the loan. If you see the phrase “lien release,” then be very careful. The phrase “lien release” means the mortgage or trust deed may be released but unless other wise stated you may still be obligated to pay on the short sale defficiency. Sometimes they will try and collect and sometimes they won’t. If you’re filing chapter 7 bankruptcies or have already, then a lien release is just fine chapter 7 removes all your personal obligations any ways.

I always advise that you have an attorney review the short sale letter.

In addition to negotiating how the deficiency is handled there are other terms that can be negotiated as well. One term that is definitely negotiable is the you have to close. Very often your buyer will need more time than the lender offers in order to close. Banks don’t want to take back the property and they will typically give you almost has much time as you need to get things closed. They’ll tell you they won’t but when they understand that it’s not going to close anyways they will always give it to you because they want it to close.

Understand that short sale letters are negotiable sometimes. Other times there they’re completely non negotiable. For a lot of the bigger investors like Fannie May and Freddy Mac, and some of the bigger servicers, the short sale letter is a standard legal letter and it really can’t be changed outside of special circumstances. It may also be worth while try to negotiate how the short sale will be reported on your credit report. Ideally you would request that the loan will be reported as having been paid in full and that it all payments will be reported retroactively as having been made on time. You can ask for things like that and its always worth you asking.

Below on this page (see the actual lesson- get Immediate access to video and lesson resources by opting at the bottom of this page) I show an PDF example of a pay off letter before negotiation and then afterwards with the language changed protecting my client from deficiency collection. I also show several other payoff letters so you can get a better idea of what you can expect for various lenders.

If you think a short sale is for you then your homework is to call your lender and ask them what the requirements are for a short sale. Till we talk again… good bye.

Welcome to day 4 of the trial version of Short Sale your Home and Get Paid course.  Today we’re going to talk about the best way to file an answer if you live in a judicial foreclosure state. I talked about filing an answer in the delay strategies in the last lesson and I wanted to go into more detail because this is a practical thing you can do that may very well give you 30 to 90 days extra time.  Please remember that I am not an attorney and pretty much have to advise you to run everything you do by an attorney.  I do give you a sample answer which you will see in a link below this video (if you are a subscriber), but it will be well worth your time and money to have an attorney draw you up an answer.

When you draft an answer you can either do it with a bunch of legalese and actually answer every numbered paragraph on your summons, point-by-point or you can kind of put it more in a letter form and just talk about your hardship, explain everything that’s happened, what you’re doing to correct the situation, and of course ask for more time.

You could also do a kind of hybrid version where you answer the points on the summons and then explain a little bit of your situation and ask for more time. By telling a story you can paint yourself as a poor, unsophisticated person, who has been taken advantage of by a big mean bank. The idea being that you pull on the empathy strings of the judge or magistrate that would be reading that answer. A more formal style however might get more precise results.

In the foreclosure packet there will be numbered sections which I just eluded to.  They set the facts as the plaintiff sees them and then ask for a judgment based on those facts by the judge or magistrate.  In a formal answer you would typically address each numbered section, as a single fact and answer whether you, one, agree or two, disagree, with that fact.  Based on your answers for each numbered section you would then state your conclusion or plea, to the judge at the end of the formal answer.  In the sample answer which you can download from the link below, you can see I included a little phrase, “Deny for lack of knowledge.”  You can say that you deny any fact for a “lack of knowledge” even if you have the slightest doubt about the smallest part of that section. So even if you’re not totally sure about something you can deny that.  The plaintiff will then be forced to come back before the court with actual documentation proving their assertions.  That can take time and it keeps the lenders attorneys from using the automated assembly line approach to foreclosure.  So if you agree with all the facts and agree with what the plaintiff is asking for, or, if you simply don’t answer at all, your case will go to default judgment.  A default judgment simply means that it is a judgment by default for the plaintiff because nothing is needed to be proved or argued because you didn’t argue anything.  Typically if your case is expedited and goes straight to default judgment the process to foreclosure in the Cleveland area is 5-7 months from start to finish.  Other local areas will differ time wise from as short as 4 months to as long as 18 months.

After you answer each numbered section you would ask for something that benefits you based on your answer.   In the example answer I include here I state, “Wherefore defendant asks that the plaintiffs complaint be dismissed.”  I asked that the plaintiffs complaint be dismissed on that example, however you could also possibly say something like “Defendant wants to avoid another foreclosure in X county, is attempting to sell property and has listed it with the local licensed real-estate agent, wherefore, defendant asks that plaintiffs complaint be delayed for 90 days while defendant attempts to sell property and pay plaintiff amount due.”

After you’ve completed your answer you would simply file that with your county clerk of courts office.  Filing should be completely free for you.  You may want to check with the clerk of courts office to see if they have any extra bits of advice they can offer you.  Usually you can file your answer by simply mailing it to the clerk of courts office, but call and ask first. Otherwise you have to go to the clerk of courts office and file it in person.

Also make sure you insert your name and plaintiff attorneys name.  Obviously don’t make the mistake of leaving some of the specific bits of information that are currently on the sample answer I provide.  Change it to your situation with the proper case number, proper court name and make sure you mail a copy of it to the plaintiffs attorney as well.

In addition to this sample answer, I also have a sample continuance, you would file it the day the first hearing is set. This could easily buy you an extra 30 to 90 days as well.  As always please give me your questions and comments below, I’ll attempt to answer them as best as possible and I’ll see you in the next lesson.

Welcome to day of the trial version of sort sale your home and get paid course, today we’re going to be talking about ways to extend the time you have in foreclosure. I’ve come up with over 15 different ways and if for some reason you found one that I haven’t included and fill in the feedback down at the bottom of this page to let me know. I’m going to talk about these different ways but I want to make it clear that I don’t condone all of these activities for all instances. By using these strategies you may be able to buy yourself some more time for your particular situation. Remember I’m not an attorney, the only legal advice I’m giving you is to check with an attorney for legal advice.

This information is for educational purposes only and you should always consult with an attorney first and by the way making sure you consult with an attorney.
Delay foreclosure technique number 1- The first and probably one of the more well known ways of delaying a foreclosure is chapter 7 bankruptcy. Any kind of bankruptcy will immediately stop your foreclosure where ever it is. A chapter 7 bankruptcy will actually dissolve all debt and absolve you of the responsibility to pay your debt. It will temporarily delay foreclosure with the US bankruptcy court. Usually it will buy up to 45 to 75 days, sometimes more sometimes less depending on your local foreclosure system and your local bankruptcy court judge as well.

Delay foreclosure technique number 2- The second way of delaying is chapter 13 bankruptcy. This type of bankruptcy reorganizes your debt and creates a payment plan. The most recent law changes mean that more people will be forced to file this type of bankruptcy. If you were to simply file this bankruptcy but never make the payments it will still buy you has much as 45 to 75 days and sometimes even more. Again it differs from municipality to municipality. If you make payments according to the plan and properly include mortgage debt in the bankruptcy you should be able to permanently stop foreclosure, however, I warned you in lesson one of that typically a chapter 13 payment plan is not realistic. It is very difficult to be successful with a chapter 13. However it will force your lender into a payment plan.

Delay foreclosure technique number 3- Another way that people use to delay foreclosure is what I call a “hybrid bankruptcy solution.” You want to check with an attorney on this but it is where you could actually file a string of bankruptcies to increase the time even more. Typically you can’t file one bankruptcy after another. However I have known people who mixed it up a little bit. For example a husband could file Chapter 13 and delay the foreclosure. Then when that gets kicked out of bankruptcy court and is days from the foreclosure sale he could file Chapter 7 bankruptcy and delay it more. Then when that gets kicked out of bankruptcy court and is approaching the sale date the wife could do the same thing filing Chapter 13 and Chapter 7 strategically. Such a strategy used by itself has been known to delay foreclosure for more than a year of extra time. Obviously there are attorney fees involved but what’s an attorneys fee when you didn’t have to make your house payment.

Delay foreclosure technique number 4- File a written answer in the court system, asking for more time. You need to do that as soon as you get notice of legal action. This could easily buy you an additional 30 to 60 or more days. If you don’t file a answer typically the case goes straight to default judgment and the foreclosing lender doesn’t even have to prove the facts of the case which makes it much cheaper, easier and quicker for the plaintiff.

Delay foreclosure technique number 5- Related to the technique number 4 is the filing of a continuance. You would file a continuance after the first hearing is scheduled. A continuance like all court documents should probably be filed by an attorney. A continuance is simply a request that the judge or magistrate give you more time because you need to prepare for the case or your attorney can’t make that date or other reasonable excuses. You can do a continuance pro se, however an attorney would know how to do it properly in your situation. If you do do it pro se you might want to examine some similar cases in the local court house and learn about how other people have filed the same paper work. An attorney might be willing to write it up for you for cheap. That at the least would be a good thing.

Delay foreclosure technique number 6- Technique number six is something that I especially don’t recommend however it is an idea for you to look into. I’m trying to give you as many options as possible so that you can find a useful solution. This is called switch the deed. Again make sure you ask an attorney about this because of the legal implications. I know of people that have gotten a blank quick claim deed from a legal forms company and just used that to deed their property to someone else or to add someone else to the ownership. The court will then typically require the plaintiffs to basically start over and notify the new owner of record about the foreclosure action. You want to be careful about this if it’s just simply to delay things it could be construed as contempt of court or something similar to that. I’m not an attorney but I can see that there’ll be issues with that. Someone might not like it too much.

Delay foreclosure technique number 7- Another strategy  that I know has worked in the past is for a defendant to challenge the sheriff’s appraisal. Once your property has worked all the way through the court process and they’ve scheduled a sheriff sale typically the sheriff appraises the property for the purposes of auctioning it off. The property is then auctioned off and the starting minimum bid is for a certain percentage of that appraisal amount. You could challenge that appraisal and make a case to the sheriff and/ or the judge that, “hey you appraised it wrong so you need to go out and re-appraise it. I think it should be X price because of this , this , and this. You need to go re-appraise it and reschedule the sale because it’s been appraised wrong and you’ve advertised it for this price. Otherwise I am going to suffer a loss because of your mistake.” This has worked in the past and it’s something you could try if you think it’s something that would apply in your situation.

Delay foreclosure technique number 8 & 9- The 8th way to delay your foreclosure is through payment plans like forbearances and low modifications. Banks will delay or stop foreclosure when you go to do a loan work out and plan to start making payments. Loan modifications are harder to get and will usually completely stop the foreclosure. It typically will actually stop the foreclosure and move the back payments to the end of the loan. A forbearance plan is easier to get but only pauses the foreclosure until you’re completely caught up which means there will be less of a delay. Also typically a forbearance includes unrealistically high payments. Also you’re more likely to need a significant amount of money to start the forbearance plan. Either one of these though if you’re able to get into them could allow you some extra breathing room to delay things until you can do a short sale or take other action.

Delay foreclosure technique number 10- If you’re planning on selling your house and you have an offer, technique number ten would be to tell the bank that you have an offer. Simply call up the bank and in an urgent tone of voice explain that they need to delay the foreclosure process because you have an offer for them that’s going to pay them off. You may need to call the pay off department rather than customer service or the loss mitigation department. My associates and I seen bank halt sheriff sales and delay the foreclosure process numerous times because of this and I know of one title agent that would do this routinely. She would call up the banks for her clients and tell them, “hey we have an offer. we have cash to pay you off don’t foreclose on this.” She would even make the call when the offer would not cover the entire amount and the bank often times would stop the sale with out even asking the amount of the offer. Then after it was pushed off they could work a short sale. So the call could be a plor or it could be legit but either way, it’s an opportunity to get the foreclosure process slowed or stopped.

Delay foreclosure technique number 11- Use a non profit organization as an advocate with the court, the media, the sheriff and your lender. In our area there is a group called ESOP that has had amazing success at using all sorts of tools at their disposal to delay or stopping foreclosure or getting special benefits for their clients. The good thing about this is that most non profits are free. The bad thing is that right now they tend to be busy and overworked.

Delay foreclosure technique number 12- Defend the foreclosure- I have recommended in previous lessons and this one to get an attorney. I realize if you are in foreclosure it might not be financially feasible to retain an attorney. You should have an attorney no matter what technique you are using so that you can have quality advice that keeps you out trouble and puts you in a better position. You need someone you can trust. There are attorneys that specialize in foreclosure defense. A good attorney can rip to pieces most of the foreclosure complaints put together by lender attorneys because most of those complaints are put together in foreclosure factories with form letters by underpaid paralegals. They only work because no one challenges them so they work by default. Usually there is some I that is not dotted and at some point due process is not followed. I have seen attorneys delay foreclosure cases for years with out even using bankruptcy. One of my client’s attorneys just had a case thrown out of court almost with out trying. That was after 4 months of the law suit. Now the lender has to start all over again. Interestingly enough the lender suddenly got real motived to do a short sale with my client. We just received a call from the office of the president of this large bank wanting to get a short sale approved immediately.

Delay foreclosure technique number 13- Recently I’ve seen cases where attorneys challenge the right of a plaintiff to sue based on jurisdiction. The attorney argued that since the foreclosing lender was based out of state that they should be suing in federal court. This got thrown out of the common pleas court and the plaintiff was forced to refile in federal court.

Delay foreclosure technique number 14- I’ve seen defense attorneys challenge the right of a plaintiff to sue based on the fact that they could not prove that the plaintiff actually owned the mortgage. This could stall the case indefinitely or at least until they can trace back from all the servicer transfers and the sale of the mortgage from one investor to the other, to find the original signed document that says that you, the borrower, actually owes the money. In some cases that document does not exist. There has actually been federal judges that have totally eliminated the mortgage balances because they couldn’t prove that the defendant actually owed that amount of money. If you’re planning on doing this type of suit you probably want to find some attorney that has experience doing this and has successfully done so. I will be putting attorney referrals on estopforeclosure.com or you can go to findlaw.com to find such an attorney.

Delay foreclosure technique number 15- Finally, there are thousands of state and federal rules that a lender must abide by as they lend money. There are so many that it’s nearly impossible to faithfully fulfill all the necessary requirements. There are attorneys that specialize in exploiting auditing your loan documentation and bringing law suits against against lenders. If you’re attorney makes a good case your debt could be erased, but most likely your attorney could at least delay a judicial or even a non judicial foreclosure and very often lower the balance of the loan a significant amount (note- I am currently working with one law firm that audits mortgages for compliance with federal law. They have had significant success at lowering balances and slowing/ stopping foreclosure. Email me at andy@eSTOPforeclosure.com for more info). Suing your lender will always motivate your lender to be more aggressive about offering you a reasonable short sale settlement or even better option to keep your house.

That’s 15 ways that you can possibly stop foreclosure and I want you to think if you have any other ways that I missed. if there are any ways I will be glad to include those ways and give you credit for it. Just fill out the comment form at the bottom of this page and let me know. Before you go, take action and jot a reminder to follow up on the methods that would work best for you based on your situation. Until next lesson I wish you a wonderful life.