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While I’m not a lawyer or a mortgage broker, I have done a little research on the topic of Illinois foreclosure and short sales for my clients over the last several days.  I must admit that I was a little surprised by the range of answers that I found on the Internet in regard to alternatives to foreclosure.

That being the case I decided to go straight to the source at MyFico.com.  Basically, A Plainfield short sale and a foreclosure will both damage your credit score to nearly the same extent, about 100-200 points. The difference is really in the recovery time; the time in which your credit score actually begins to improve.

That sounds like pretty crappy news, huh?  Yeah, I was pretty surprised by that realization too, but after a little more digging both, a foreclosure and short sale in and of themselves, are much better alternatives to compounding those situations with a bankruptcy. 

Even with a foreclosure or a short sale it will be about 2 years before you start to see your credit score improve and both will appear on your credit for 7 years.  According to MyFico.com a short sale won’t necessarily be any better than an actual foreclosure if you are over 90-120 days before you are able to negotiate a short sale to the closing table.  On the other hand if you can get everything wrapped up before the 120 day mark you can avoid additional hits to your credit.

The bad news?  Both foreclosures and short sales show up as over 120 days late.  The good news? Their impact on your credit begins to diminish after 2 years, and many people can qualify for a reasonable interest rate after 2 years with a short sale; and 3-5 years after a foreclosure.  Depending on your long term game plan, you would need to decide how long you are willing to wait before you were able to purchase another home.

A bankruptcy compounds credit problems because even credit and credit cards that were previously current become affected as non-performing accounts.  I believe it is reasonably safe to say, based on that information, that a bankruptcy compounded with a foreclosure will have a more derogatory affect on your credit than a foreclosure or short sale alone… although I just want to mention again that I am not an attorney. :)

I personally think that a short sale is still better than a foreclosure, and that a foreclosure should be avoided at all costs.  Still, I guess it all depends on your long term plans.

If you are considering a short sale, I do have a team of professional negotiators working through an attorney’s office to assist me in selling your home.  You can reach me at 630-673-6233 or at JT4NZ @ msn.com. 

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Will County and DuPage County area homeowners who are interested in resolving their foreclosure situationthrough a short sale now have a better option when they chose me to represent them in the sale of their home.  I work with an attorney who has a team of 25 foreclosure specialists ready to assist you with the process of selling your home for less than what is owed by your lender at no out of pocket costs to you.

I have come across a lot of pre-foreclosure listings on the MLS recently that will require a short sale with their lender in order to avoid a foreclosure. I’ve talked to a lot of agents in the process of showing many of these listings, and there is a pretty wide range of how Plainfield real estate agents are handling these short sales.

While I have performed short sales for some of my own listings in the past, I have to say that it is a tedious and time consuming process that I never care to do again.  But that’s not the only reason I don’t like performing short sales.  I don’t do them anymore because I’m a Realtor, not a loss mitigator or a debt negotiator.

Will and DuPage homeowners in foreclosure now have a better option and more hope of sucessfully having their short sale approved by their lender. 

Why Lenders Would Rather Negotiate With a Short Sale Specialist/Attorney Instead of a Realtor:

• Many short sale specialists/attorney’s have established relationships with many of the lenders and can quickly and effectively supply all required documentation and information required to proceed with negotiations. 

• Since the real estate market is so pre-foreclosure and bank owned driven in the Will and DuPage County area, many Realtors are performing short sales out of sheer necessity, but since many Realtors were never trained to perform short sales, the lives of the loss mitigators who are handling these files are overwhelmed with packages that are incomplete or missing information.  Loss mitigators work on files that they know they can close, if your short sale package is missing any information it will sit on the “dead” pile for weeks or months before it is even looked at, if ever.

• Due to the level of inexperience with short sales by so many Realtors, loss mitigators have come to dread files in which they know they will be negotiating with a Realtor, to the point of being difficult and uncooperative in some situations.  If an attorney is handling the documentation, the loss mitigator knows that all of the documentation will be thorough and complete.

I’m not saying that there aren’t agents out there who sucessfully perform short sales, but if they are trying to manage more than 2 or 3 short sales at once, they won’t be left with much time to actually market your home for sale, or be available to answer your questions or phone calls.   Each short sale involves anywhere from 40-55 hours of work to complete depending on the lender.

What will you get when you list your home in foreclosure with me?

• A professionally negotiated short sale with experienced short sale specialists at no cost to you.

• Legal advice from a real estate attorney.

• Convenient option of Power of Attorney to avoid having to attend the closing.

• Experienced negotiators that are familiar with special circumstances such as 2nd mortgages, liens, and IRS situations.

• A professionally marketed property complete with a full MLS description, photos, advertising, virtual tour, and Internet presence.

Below is a list of FAQ’s regarding short sales provided by the law firms

foreclosure specialists:

Q:     The benefits of a short sale?
A:     You can sell the house and walk away.  Credit typically indicates “settled debt".  The foreclosure gets dismissed.  No deficiency judgment.  No bankruptcy. 

Q:     Will I owe the bank any money?
A:     The bank releases and typically writes off the deficiency.

Q:     Will I owe any income taxes on the deficiency?
A:     No, on December 20, 2007 President Bush signed into law the Mortgage Forgiveness Debt Relief Act of 2007 ensuring that any deficiency   written off as part of a short sale will not be taxed.

Q:     What about my closing costs?  Will I need to bring any money to closing?
A:     No.  All of your closing costs, the real estate commission, any back taxes owed, attorney fees, title company charges, etc., will be allowed by the lender and subtracted from the sale price.

Q:     What if I sign a contract to sell my house and the bank doesn’t approve the sale?  Will the buyer be mad?
A:     The buyer has been informed and understands that that this is a short sale and that your obligations are contingent upon your bank’s approval.  It is the real estate agent’s job to price the property to sell and then meet the banks appraiser at the property.

Q:     I owe $600,000 to the bank the but the house will probably sell for $300,000.  Will the bank accept such a huge loss?
A:     It typically has nothing to do with the loan payoff.  It is based on the value of the real estate based upon a bank appraisal of the property.

Q:     I have a second mortgage on the this house for $50,000.  How is this going to be handled?
A:     The property is in foreclosure.  The second mortgage holder knows that the first mortgage is in foreclosure because they were served summons and complaint.  Therefore, the second mortgage holder will release their lien, but they will need to be paid something.  Therefore, when an offer comes in, the Buyers agent will be called and notified that the buyer will need to bring money to closing to release the second mortgage.  This will be addressed in the contract addendum.

Q:     I owe the IRS money and I think they put a lien on my real estate.  How is this handled?
A:     Our foreclosure specialists usually get these released without paying the IRS any money.  They will do a preliminary title search on the property to determine what is present and what needs to be dealt with prior to the Contract for Purchase and Sale, or what needs to be dealt with during the contract phase.

Q:     Does the attorney handling the short sale represent me or the bank?
A:     The attorney’s office represents the seller, and they welcome your questions.  They can be contacted at the office or by cell phone.

Q:     Where will the closing take place?
A:     There are closing locations throughout the state of Illinois.

Q:     I am not going to sell this house for under $300,000!
A:     The Realtor will obtain authority to reduce the price each week in order to tell the property quickly.  No matter what the property sells for, the seller will not be receiving any proceeds from the sale.

Q:     What do you need from me?
A:     Financials I.E. last years tax returns, bank statements, check/pay stubs, W-2’s and a hardship letter.

If you have any additional questions regarding a short sale, or listing your home in foreclosure for sale, please contact me directly at 630-673-6233 or e-mail me at JT4NZ@msn.com.   I look forward to working with you.

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This meticulously kept town-home in Brookside Glen in Tinley Park features 2 bedrooms plus a large loft, PLUS… a 1st floor master suite with a walk in closet and luxury master bath!  There is also a huge unfinished basement, dual sliding patio doors, volume ceilings in the great room, and all of the appliances are included.  A new job forces the sale of this great property, so let his loss be your gain. 

Call the office today at 815-609-0100 to schedule your private showing of 8382 Dunmore Dr. in Tinley Park and you won’t be disappointed!

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Anyone who planned on using the down payment assitance programs of AmeriDream, etc... had better move quick!

All FHA loans requiring the down payment assistance of a variety of programs better plan on closing prior to September 30th, 2008. 

As of October 1st, no down payment assitance programs will qualify for FHA financing.  All FHA financing down payment assistance will have to come in the form of a gift via an immediate family member. No matter when the contract was written, all offer must close before September 30th to qualify for the down payment assistance.  NO EXCEPTIONS!!!

I have been working with a buyer that will immediately be disqualified if we aren’t able to write a qualifying offer by this Friday, August 29th…  disappointing to say the least.

If you require down payment assitance, don’t delay… you will need to be under contract no later than Friday Sept. 29th to close on your property!

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Before bank owned properties and foreclosures became the buzz words for a generation, there were the myths and mystery surrounding them.  Through spending the last 5 years involved in this aspect of real estate, I realize that not many people understand what really happens to a house in foreclosure.  After reading this article if you have any additional questions about foreclosures or bank owned properties in Plainfield, Naperville, or anywhere in Illinois, feel free to contact me with questions.

Plainfield and Naperville Foreclosure and Short Sale FAQ’s:

• Illinois is a judicial state in which the homeowner must be sued by the lender in order to be granted repossession of the asset by a court of law.  Until the auction has taken place and ownership has been transferred the owner is in possession of the home.

• Lis Pendens are the documents filed at the beginning of a foreclosure once a homeowner misses 2-3 payments with their lender.

• The foreclosure process takes about 4-9 months after the Lis Pendens has been filed for the the foreclosure to be complete.

• Foreclosure can be avoided only by selling the property either traditionally or through a short sale, bringing the loan current, or a loan modification.

• Once a payment has been missed a lender will not accept partial payments, and the debt often begins to snowball.

• A property becomes an REO or bank owned property when the minimum bid at the auction (made by the bank)  to satisfy the loan at auction is not met.

• Abandoned properties that are in need of exterior maintenance such as lawn care, vandalism and graffiti can be addressed by contacting “neighborhood services” through the local municipalities.

• Short sales are sales that sell for less than what a homeowner currently owes, that are subject to the banks approval.  While short sales are often fabulous deals, they often take weeks or months to complete.
  

Plainfield and Naperville Foreclosure Myths Revealed…

Myth: REO’s or bank owned properties are the best deal in real estate.

Truth: Pre-foreclosures or short sales will probably give you more bang for your buck.  Pre-foreclosure simply means that the homeowner still controls the property, and a short sale means that the house is being sold for less than what the seller owes with the banks consent and approval.  A short sale done right, gives the buyer the best opportunity to get a great deal… and the seller the best opportunity to avoid a foreclosure.  Short sales take longer to approve than regular residential real estate, but sometimes they are worth the wait.   Bank owned properties have often been damaged by disgruntled owners who were distraught about losing their home; pre-foreclosure properties on the other hand are often in move in condition because the owners are still living there, depending on where they are in the process. 

Myth: If I’m in foreclosure I need to move out right away because I’m going to get evicted anyway.

Truth: Stop! Don’t move out! List your house for sale and attempt to sell your house by performing a short sale!!! While your waiting for the home to sell, start saving the money you would have spent and put it in the bank.  You will need for the 1st and last months rent when you move out.  Expect that the foreclosure will affect your credit for the next 2-7 years depending on whether or not you are able to avoid the foreclosure through a short sale.  Save every penny you can during this time.  Plus your home will probably sell faster if it isn’t vacant and abandoned. Homes that appear to be abandoned will often have the auction date accelerated by the lender.

Myth:  My homeowners association is responsible for the exterior maintenance of vacant properties in my neighborhood.

Truth:  Contact your cities ‘neighborhood services’ contact for properties that are in need of exterior maintenance such as lawn care or weed abatement.  They can place a lien on the property, but you will have better luck contacting the “neighborhood services” contact for the city of Plainfield, or the city of Joliet.  Homeowners associations will not maintain vacant properties, but can put the pressure on the lender if the property actually gets returned to the bank’s possession.

Myth:  Banks will take anything to get rid of a property…

Truth: The banks will take anything that makes sense to their situation.  If an offer does not meet their criteria for a specific property they will not entertain the offer.  Most likely they will counter the offer, but take note:  their counter is a good indication of what they are wiling to negotiate to!

Myth:  If a house is vacant it means that the house has been foreclosed on and the bank owns the property. 

Truth:  A home is only bank owned if there are no bidders at the auction and it then becomes the repossessed collateral for the bank, in exchange for the debt owed by the previous owner.  The deed is recorded at the county assessors office.  Vacant homes can occur for any number of reasons, and most likely if it is not bank owned, it means that the owners abandoned the property during the process of foreclosure.  Who controls the property is a determining factor regarding who is responsible for the property and all of it’s maintenance. 

Do you have a question about foreclosure or bank owned properties that you want to see answered?  Call me at 630-673-6233, or contact me using the button at the top of the page.