The Declaration of Homestead Act basically allows a homeowner to protect up to $500,000 in equity in their home against creditors.  The home must be the homeowners primary residence. 

I have recently run into a situation where homeowners are stunned that creditors have filed a lien against their home, and say to me"I have a Homestead on file they can't do that".  The Declaration of Homestead, does not prevent a creditor from slapping a lien on your home nor wipes out the obligation of the debt.  It does protect the equity in your home, either from your home being forced to sell or on the execution of a sale.  Your homes equity may be protected but having a lien slapped on your home can be cumbersome to be removed if you are trying to sell. (It has recently come up in two short sale situations, where creditors find out the home is being sold)

There are certain types of liens that are exempt from the Declaration of Homestead:

• Federal, state and local taxes, assessments, claims, and liens;
• Mortgages
• An execution issued from the Probate Court to enforce its judgment that a spouse pay for the support of a spouse or minor children;
• Building where the land is rented
  
• Upon an execution issued from a court of competent jurisdiction to enforce its judgment based upon fraud, mistake, duress, undue influence or lack of capacity
• Debts contracted prior to the acquisition of the homestead

Successfully closed on a short sale in Wakefield Massachusetts today. This home was a relatively easy one.  US Bank was the only lien holder and we received short sale approval in 15 days from submitting the package.  No deficiency judgments!!

From the lender standpoint this was perfect, no issues no additional liens.  many times we have to deal with multiple liens, mortgage insurance companies, tax liens and so on.....

Blazing fast... kudos to US Bank for a fast turnaround on this short sale.

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This post was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. You can contact Kevin by email at kevin@kevinvitali.com or call 978-360-0422.

I pride myself in the quality of my work while helpingbuyers and sellers make dreams come true.

Real Estate Services in the northeast Massachusetts, around the Merrimack Valley, Southern New Hampshire including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury

Definition of a short sale: A short sale of a property is where

Many times their can be more than one lien holder, there can be a first mortgage, a second mortgage, a home equity lien of credit and /or private mortgage insurance.  All of these parties must come to terms on the short sale.

Because many of these home owner are under financial distress there can also be tax liens, municipal liens and so on.  Provisions need to be made for all of these entities to be satisfied. 

Why would a bank want to do a short sale?  In many cases a short sale is cheaper for the bank to allow than going into the foreclosure process.  They get the house sold with out ever taking possession of the home.  A short sale can save a bank $20-50,000. 

The short sale process can be very involved and take time.  As a buyer once you have tendered an offer on a short sale, it is packaged with a complete seller financial package and submitted to the loss mitigation department at the bank.  There the short sale package will be assigned to a negotiator for a review.  Once the negotiator has the file they will review the file to see if there is truly a financial hardship and then will order a Broker Price Opinion or Appraisal of the property.  What comes back for a number is what the bank will work from.  Many times the bank must actually talk to the final investor  and /or a private mortgage insurance company to approve the short sale. 

Once the first lien holder has approved the deal many times there are other parties like a second lien holder that must also approve the deal.  All of this takes time!!

Hopefully all parties will come to terms in the negotiating and the short sale will be approved.

Some things to remember about short sales:

• ·          You are negotiating with the home owner, not the bank.
• ·          Short sales require at least 90 days for approval if not more.  If you do not have the time to wait, do not consider a short sale.
• ·          All contracts will be subject to lien holder approval.  Meaning the lien holder(s) must approval the deal for a valid contract.
• ·          Every real estate agent handles a short sale differently.  Make sure you understand how the agent will handle the short sale.
• ·          Make sure the listing agent is experienced in short sales or much delay and disappointment will follow.

Kevin Vitali is a leader in listing Massachusetts short sales, who better to represent you in purchasing a short sale than Kevin Vitali.  If you are a homeowner and are considering a short sale Call Kevin at 978-360-0422 for more information.

18 Jeffery Lane, Haverhill MA 01832-  Sold $160,000

2 Bed, 1.5 Bath, 1240 square feet- Townhouse

Last week we were able to close on this townhouse last week.  The transaction was a short sale and required lien holder approval form the first lien holder, New York Mortgage Trust and the second lien holder, Citi Mortgage.   Two mortgages does present its problems whn negotiating a short sale, but my short sale team is getting them done.                                                      

Kevin Vitali is a real estate agent that has been specializing in helping sellers in a pre-foreclosure.  If you would like to know your options to a short sale or need to list your home as a short sale, call Kevin today at 978-360-0422.

For many homeowners a short sale is the last option before foreclosure.  When a bank is considering a short sale they aren't doing it just because the seller is upside down on their home.  They are generally looking for a financial hardship to justify doing the short sale.  The hardship letter and the financial package basically shows the bank there is no way you can continue to make the payments on your home.  Your financial problems now becomes the banks problem if you can show you can't make the payments.  What are some of the financial hardships a bank will accept?

1. Loss of job
2. Disability to prevent a seller from working
3. Had to take a job for less money
4. Relocation for work
   
5. Illness
6. Divorce
7. Incarceration
8. Failed business
9. Increased Mortgage payment due to ARM adjustment, balloon payment etc.....

There can be other reasons for a hardship that aren't listed here but this list represents some of the more common hardships to have a short sale considered. 

When stating the hardship you need to support your inability to pay with a financial statement as well as documents supporting your hardship such as divorce decree, hospital records and so on.....When it comes time to write your hardship letter to the bank, it needs to be less than one page and simply stated.  Do not make your hardship letter overly complicated but do state the facts in detail.  Any one of the reasons above is enough for the bank to consider a short sale.

Avoid Foreclosure- Know your options including a short sale

Why a Sort Sale?

Free list of non-profits for homeowners facing foreclosure in Massachusetts