In NJ banks have the right to pursue the borrower for any deficiency amount after the short sale or foreclosure, unles it is a HAFA short sale, or they have specifically written that they will not do so in their approval letter.

Bank of America has added a new option for homeowners who want to short sell their homes where there will not be any deficiency amount owed.

It is called the CO-OP program, which is similiar to the HAFA short sale where the borrower will not be responsible for any deficiency amount after the sale.  It will pay the borrower $2,500.00 at closing instead of the $3,000.00 HAFA offers.

There is some added help with this program by virtue of the fact that if you did not qualify for the HAFA short sale based on the rule that the mortgage must be more than 31% of your income, that rule does not apply with this program so you may still qualify here.. In addition it does not necessarily have to be an owner occupied property. Some non owener occupied homes may qualify.

Bottom line is that this program will have more flexibilty that the HAFA program, provided that you only have a mortage with them.  If there is a second with another lender then the HAFA program is your best option since this Co-Op program only applies to Bank of America.

To find out more information about what is available for your specific situation, please call me for a No Obligation Free Consultation, 1-866-696-1998

Many lenders  are now participating in HAFA short Sales. This type of short sale is the best option for a homeowner because the lender can not  go after the borrower for a defiency judgement. This is by far the best scenario for a homeowner that is under water on their home.

Unfortunately  there are many issues with the bank's employess that are determining borrower eligibility.

Many banks are telling homeowner's that they are not eligible for the program when in fact they really are.

The problem's  are that there are many bank employess that do not understand this program and are not properly trained. In additiion the person negotiating the short sale for the homeowner also may not understand it.

If you need to sell your home as a short sale it is very important that you get a  Realtor that has experience with short sales AND can give  you referances from past clients, or possibly an attorney  that was involved in at least one of the short sale transactions they worked on. In addition they should have some special training and be CERTIFIED in one or more of the following courses specifically for short sales and foreclosures, such as an SFR, CSSG or CDPE course. If they are truly "experienced" this should not be a problem.

Remember time is  major factor when you are potentially facing foreclosure. So do not waste time with an inexperienced agent.

Most  buyers think short sales take 6 or more months. That is definately NOT true..  The short sales that I have done for my seller's have taken a lot less time than that. Most under 45 days.. However a Buyer should be prepared to wait 90 days for those banks that take a little longer, like Wells, B of A & Chase. The time it takes will depend mostly on the experience of the Seller's Realtor, or I should say the person negotiating with the bank,

On the other hand I have had offers for Buyer's on properties that are short sales in NJ. that took over 6 months and  still not approved, the buyer decided to walk ,and I must say that I can not blame them.  It should NOT take that long!  When I am not the Seller's agent, I can not do the negotiations or the follow up needed for a successful Short Sale. 

I currently  have about 8 short sale listings right now and have some approved .  Many banks will pre-approve if the correct paperwork is submitted.  It is not rocket science , it just takes a cooperative seller and an experienced Short Sale agent .

If you or someone you know needs help with a Short Sale, please make sure they get someone who has had some training , such as an SFR or CDPE designations AND has a track record. Most importantly, they should be able to give you at least 3 referances; like past seller's, other agents and an attorney or two that know how they performed.

This article was recently posted in a national real estate publication.

RISMEDIA, January 27, 2009-The national foreclosure moratorium imposed by Fannie Mae and Freddie Mac, major banks such as Citibank and Bank of America, and a host of state governments has created a "breather" for homeowners in default. By working with loan servicers, some homeowners will be able to modify their loan terms and stay in their homes. But many won't.

Not all borrowers will qualify for modified loans. Lenders are keenly aware of this, as well as the fact that foreclosing on a home is an expensive proposition: It can cost a bank $30,000 to $50,000 to foreclose on a home, plus carrying costs that equate to 1.0% to 1.25% of the value of each home per month. There is little enthusiasm for increasing bank-owned (REO) inventory in markets already saturated with foreclosed homes and falling prices.

As an alternative, lenders have new enthusiasm to ramp up the volume of short sales.

Short sales, as most know, are when the lender allows a distressed property to be sold at a price lower than the homeowner's mortgage indebtedness, with the difference forgiven. This relieves the homeowner of their ownership and debt burden without marring their credit report the way a foreclosure would. It also typically allows the new purchaser to buy into the neighborhood at a substantial discount . much more in line with the property's true, current market value. In other words, short sales facilitate efficient clearing of the market.

Historically, short sales have not been very appealing to lenders. The short sale is a complex process that requires an agreement by all the lien holders to accept the lesser amount owed by the original borrower. The paperwork and number of players involved in short-sale transactions can easily overburden a servicer who is already dealing with hundreds of thousands of loan modifications, REO dispositions, etc.

But now with over four million new loans in default in this cycle and six million more expected in early 2009 due to coming interest-rate resets, lenders such as Citibank, Bank of America and Wells Fargo are fired up for short sales.

As they see it, if just 25% of current loans in default could be sold through short sales it would stave off one million foreclosures (good for homeowners) and replace one million nonperforming borrowers with one million performing borrowers (good for lenders).

The industry's challenge to accomplish this is two-fold: Evaluating their portfolios to determine which homes are well suited for short sales, and processing the high volume of bulk sales.

So lenders are now assessing a distressed borrower's situation early in the loan modification process, calculating the sensibility of modifying the loan versus offering the property in a short sale or letting it likely roll into foreclosure. In cases where short sales are the best route, lenders are proactively assigning loans in bulk to be put through the short-sale process. (This phenomenon is strangely new to homeowners; in the past it was incumbent on them and their agents to initiate the short-sale process, not the other way around).

The second part of the challenge is how to process the actual sales, considering legacy technology solutions weren't built to handle either the volume or the complexity of today's short-sale transactions.

DepotPoint's TrackPoint, with a new short-sale module, is up to the task. TrackPoint is an online workflow platform that operates in a SaaS environment. The short-sale module can scale an outsourcer's or an asset manager's operation quickly to handle massive amounts of short-sale volume, reducing costs and elapsed time to complete transactions.

Already using TrackPoint featuring the new short-sale module is MMREM, Matt Martin Real Estate Management, which has facilitated more than 10,000 short sales as the nation's largest facilitator of short sales.

"Short sales are often complex, time-consuming transactions," said Matt Martin, President and CEO of MMREM. "In today's high-volume environment, managing them can be even more cumbersome than usual. REO TrackPoint featuring the new short-sale module simplifies and streamlines the process. It's the most comprehensive, efficient national online platform we've seen for managing and processing default properties."

MMREM has increased its short salle through-put by more than 300% by using TrackPoint with the short-sale module.

Tom Gordon is Executive Vice President of Business Solutions for DepotPoint, Inc., which brings greater efficiencies and cost savings to mortgage lenders, loan servicers, foreclosure attorneys and REO asset management firms that use the company's Web-based application suite, TrackPoint, to vertically process properties through foreclosure straight into REO management.

By Tom Gordon