Eglin HAP Question - Why Am I Bringing Money to Closing?

One of the biggest sources of confusion I find with Eglin Air Force Base HAP sales from the seller comes at closing.  First, if you don't know what HAP is - it's the Homeowner Assistance Program from the Department of Defense.  It's designed to help military members who have permanent change of station orders (PCS), and are "upside down" in their home values, i.e. owe more on their mortgages than their property's market value. HAP will pay the mortgage deficit under certain circumstances, which helps the service member avoid the credit impact of short sale or foreclosure due to their mandatory relocation.

One of the stipulations of HAP is that the Eglin airman is current on his mortgage payments, taxes and association dues, or that is the extent to which the benefits apply. For example, if you were six months behind in your mortgage, HAP would not pay the amounts in arrears to satisfy your bank. You must. So what's the issue? Even service members who are "current" on their mortgage payments will normally owe a pro-rated amount of mortgage interest, taxes and maybe association dues at closing. Remember, mortgage interest is paid in arrears. If you have a payment due on March 1, that would cover the interest for the month of February, not March. 

My last HAP seller asked me why he had a bill for almost $1500 at time of closing from the U.S. Government title agent.  I told him it was probably his mortgage proration. He said, "But I made my mortgage payment!" I said,"Yes, but that covered the previous month."  If your closing is mid-month, you would owe about two weeks worth of interest to your mortgage company, which will be collected by the title agent to pay your lender at closing.  That goes for taxes and association fees, too. 

Florida's property taxes are paid one year in arrears (not all states handle their property taxes the same way).  That means that the tax bill for your Navarre, Niceville, Crestview, Fort Walton Beach or Destin property covers the previous year (arrears). If you close on September 1, for example, the buyer will still receive the tax bill for the time YOU owned the property during the past year. That wouldn't be fair, would it? So at time of closing, you have to reimburse the buyer the eight months to apply to the tax bill they will be getting at the end of the year. Yes, your mortgage company normally (but not always) escrows this amount in your total mortgage payment. You will get a reimbursement check after closing for any remaining balance in your escrow account. But forthe HAP closing, you will owe the year-to-date taxes that are due.  The same applies to homeowners association dues.  The government won’t pay those on your behalf.

So what is a reasonable expectation for funds the Eglin service member might
need for closing? Set aside enough to cover one mortgage payment, and potentially, almost a year tax obligation. You probably will not need all of it, but be prepared “just in case”.

It's Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.

Call toll-free 1-877-487-9639 or local 850-650-7883 ext 204
Email Wendy: itswendy@rulnickrealty.com 

Lot 83, Grande Pointe at Inlet Beach, Santa Rosa Beach FL - Building Lot

Gorgeous building lot #83 in elegant Grande Pointe subdivision in Inlet Beach. You will be enchanted with this neighborhood in Santa Rosa Beach Florida. Impressive entrance, community pool, "Amenities" pavilion with kitchen and community dock. Located on Lake Powell, east of Rosemary Beach, you will be near public beach access and miles of biking trails. Well-located for the South Walton 30-A lifestyle, the Panama City International Airport makes owning here convenient, too. Minimum home size 1450 square feet.  This is a Regions Bank short sale listing.


Grande Point at Inlet Beach, Lot #83, Santa Rosa Beach FL - Offered for $33,900

It's Wendy!

Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-487-9639 or local 850-650-7883 ext 204
Email Wendy: itswendy@rulnickrealty.com

Citi - VA Compromise Sale in Navarre Florida - Approved in 24 Days

This home in The Meadows, in Navarre Florida was just approved as a VA Compromise Sale.  The gorgeous 2008 property with in-ground pool and three car garage, went under contract in about 30 days.  We prepared the VA short sale package for Citi Mortgage, faxed it, followed up and received approval for our seller in 24 days!

What is normally included in a simple VA Compromise Sale package?
Hardship Letter
Dodd-Frank Certification
Two years tax returns
Financial worksheet
Proof of Income
Bank Statements
Preliminary Settlement Statement
Listing Agreement
Buyer Proof of Funds
Contract (purchase and sale agreement)
Authorization to speak with listing broker
What are the benefits of a VA Compromise Sale?
The borrower will not have to pay back the shortfall (if there was no fraud, misrepresentation or bad faith when the loan was obtained) 
There is currently a $1500 relocation bonus paid to the VA borrower at closing

What are the negatives of a VA Compromise Sale?
You cannot obtain another VA mortgage loan unless you pay back the government lossYour credit will be reported as "Paid in full for less than the full balance"
You may owe federal taxes depending on current tax law and your total financial picture

One of the key differences between VA Compromise Sale program and traditional short sales is that you must have a hardship.  Nowadays, so-called “strategic” short sales are more common, where the borrower no longer wants the property, has no financial hardship, so participates in the loss by contributing cash or agrees to a promissory note to obtain a short sale. This is not the case with a VA mortgage. You must be at risk of default, and not have your own cash available to contribute. 

More questions about VA Compromise Sale?  Email me at itswendy@rulnickrealty.com

Destin Florida Short Sale Agent in Kiplinger Magazine

I was flattered to have been recently interviewed by Kiplinger Magazine regarding the state of short sales. The story, "Escape the Debt Trap" is in the February edition of the magazine. It highlighted one of my Destin Florida real estate client's experiences in short sales of her properties in Destin and Santa Rosa Beach, Florida. Angela Angelovic hired me to help her "short sale" three houses over the last few years, two investment properties and a primary residence. She is now on her way to rebuilding her financial life, feeling "relieved." The Kiplinger article emphasized that one-fifth of U.S. homeowners are "upside down" in their home's market value versus mortgage balance, and that short sale is a strategy that can help free you from your debt "trap". Also discussed were methods of reducing credit card debt, student loan debt and medical bills. The reporter, Pat Mertz Esswein, states "If you pursue a short sale, look for an experienced agent who knows the local market values, is familiar with lenders and their short sale process, and can zero in on patient buyers".
She noted that most of my short sale approvals were obtained with waiver of deficiency.

Fort Walton Beach FL, Ocean City Home - Sold in 60 Days

This beautiful Fort Walton Beach Florida home, near Lowe's and Sam's, was sold in just over 60 days!  Part of the appeal of 728 Hart Dr. was the fantastic remodeling, especially in the kitchen.  Granite counters, tile backsplashes, new cabinets and new appliances were some of the upgrades.  The home, built in 1987, was over 1700 square feet, and was impeccably maintained.  The lot was about one-half acre, which is unusual for Fort Walton Beach, where most lots are smaller. Listed at $177,900, there were multiple offers. 

728 Hart Dr., Fort Walton Beach sold for $170,000. The sellers contributed $5,500 toward buyer closing costs.  Why is that important to know?  When using this sale as a "comparable" sale to price other properties, the significant seller credit means, in essence, the home sold for $164,500.  For example, if a homeowner with an identical property asked me what their home would sell for, I would not tell them $170,000 - that would be too high. I would suggest they keep in mind that relocating military buyers coming into Eglin Air Force Base, typically ask for seller credits to help pay closing costs.  That must be kept in mind when anticipating net proceeds.  I hope that makes sense to you. If not, send me an email and I will explain further.

1215 Thomason Dr., Pine Meadows, Fort Walton Beach - Bank of America Short Sale

This is a fun home at 1215 Thomason Dr., with eclectic and enticing touches in Pine Meadows, Fort Walton Beach, FL. Some of the interesting elements are the arched pass-through from kitchen, repeating arch accent above kitchen entrance. Vibrant pendant lights above breakfast bar. Popping red tray ceiling, dining room with lively and inviting wall decor. Mostly tile and wood laminate floors. Big, fenced back yard with brick barbecue. New fence 2005. Air conditioner replaced within past 5 years.  Seller repairing French door and installing new pedestal sink.  Located in the Wright, Willow Bend area of Fort Walton Beach, this home is perfect for Eglin Air Force Base commuters. It is a Bank of America cooperative short sale.1215 Thomason Dr., Fort Walton Beach FL - offered at $98,700.

Regatta Bay, Destin Florida Short Sales Make Mark

Regatta Bay, the gated golf course subdivision in Destin Florida, had 14 sales in 2011. Six were short sales and four were foreclosures, making distressed home sales the bulk of the market in Regatta Bay.  Who were the lien holders for these Destin homes?  Some of the short sale lenders were Flagstar,  Suntrust,  and Chase. The foreclosed homes that sold were owned by PHH Mortgage, Regions, Washington Mutual and First City Bank.  The incredible thing about the foreclosure sales was that one of the homes was never marketed as a short sale prior to foreclosure, another was only marketed for one month, one was marketed for six months but at a price far too high, and the last only for three months, with a 3 hour showing window available on some days of the week.  What does that tell you?  These foreclosed homes in Regatta Bay could have been successful short sales had they been marketed sooner in the foreclosure process and more aggressively. 

The average foreclosure timeline for Florida is now 749 days, the third longest in the U.S.  So, instead of using the ample time to short sale, these Regatta Bay homes were foreclosed on.  That could leave the owners open to deficiency judgments and at great risk to their financial well-being.

What is the best thing to do if you are a Regatta Bay homeowner and faced with the inability to pay your mortgage?  Immediately contact your mortgage holder for assistance. If that fails, consult with an attorney and an experienced Destin Florida short sale agent, who has successfully sold short sales with all the aforementioned lenders.