Category Archives: Investing Methods

What is a Short Sale Hardship Letter?

The sadder the hardship letter, the better. The goal of the letter is to bring tears of sadness to the readers eyes with a statement of facts written by the owner describing how they got into the financial bind. The owner should make a plea to the lender to accept less than full payment and to work with you (your name) on the short sale.

Loss mitigators are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family. Lenders are not empathetic to situations involving dishonesty or criminal behavior.

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Authorization To Release Information (ATRI) Form

Lenders will request a signed Authorization Form from the seller before communicating with you. You are much better off using a Limited Power Of Attorney(POA) instead!

With a Power Of Attorney the lender must negotiate with you in good faith for a workout or mortgage modification. With an ATRI the lender only has to release information.

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Short Sale Basics For Working With The Seller

The relationship you establish with the seller in the beginning is critical to your success in the short sale world. The seller is in a difficult position and you may be their last hope to stop a foreclosure and help them move forward with their life. They have entrusted you to take care of them. If you succeed you are their best friend and savior. If you fail they may blame you for ruining their life… unless you take control from the beginning.

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What Can The Investor Legally Pay A Seller When Doing A Short Sale?

Nothing. If the seller is compensated in any way for doing a short sale you risk a felony conviction for mortgage fraud.

Mortgage fraud is a term used to describe a broad variety of actions where the intent is to materially misrepresent information on a mortgage loan application, in order to obtain a loan or when one or more individuals defraud a financial institution. A mortgage fraud conviction is a felony. Continue reading What Can The Investor Legally Pay A Seller When Doing A Short Sale?

Foreclosure vs. Bankruptcy

Which is worse: foreclosure or bankruptcy?

Bankruptcy and foreclosure are both derogatory legal actions in the public record portion of a consumer’s credit report. As such, they will each have a significant impact on any person’s credit standing. How much either would impact your credit would depend on ALL the factors showing in your credit. You should consult with a knowledgeable attorney to discuss the implications prior to proceeding with either action.

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Bankruptcy Explained

Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors. Creditors may file a bankruptcy petition against a debtor (“involuntary bankruptcy”) in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor (a “voluntary bankruptcy” that is filed by the bankrupt individual or organization).

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What Is A Deed In Lieu Of Foreclosure?

A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e., the borrower) conveys all interest in a real property to the mortgagee (i.e., the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

The deed in lieu of foreclosure offers several advantages to the lender but is a bad deal for the borrower. Advantages to a lender include a reduction in the time and cost of a repossession, and additional advantages if the borrower subsequently files for bankruptcy.

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Types Of Real Estate Foreclosures

Foreclosure is the equitable proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) due to the owner’s failure to comply with an agreement between the lender and borrower called a “mortgage” or “deed of trust.” Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, it is typically said that “the lender has foreclosed its mortgage or lien.”

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