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What’s All This About Promissory Notes?

There’s been a lot in the press lately about banks accepting short sales but still requiring all or part of the balance to be paid by the seller. Let’s talk about that and what we do to help avoid that from happening.

When a short sale has been negotiated and approved, there will always be a difference between the amount approved by the bank to release the lien against the property, and the principal balance that was originally owed. Most of the time, that amount, called the “deficiency”, will either be charged off by the bank and they will issue a 1099 IRS form showing the deficiency as income to the seller. Usually, a good accountant will be able to balance that amount out at the end of the year, so that the seller ends up paying nothing out of pocket. This scenario is, of course, ideal.

However, in certain circumstances – usually in the case of a second mortgage – the seller may be asked to sign a promissory note for the deficiency. The amount on the note may be the balance due minus the fee paid to release the lien (which is usually $1,000-$5,000), it may be a percentage of the balance, or it may just be an amount determined by the bank based on your assets, income & expenses.

The way we structure our cases here at Great Lakes Home Solutions, Inc. allows us to negotiate with the bank to have the account in question “settled” (almost all the time). Settled means that there is no amount due from the seller at closing and no promissory note to be paid by the seller in the form of installments for a specified length of time. We exhaust every resource and explore each alternative to avoid this type of situation, which allows the seller to start fresh with a clean slate.

This is more of a complex topic regarding short sales. For further explanation, give us a call and we will answer all of your questions so you can make the best choice. Bottom line is of course the alternative of a Michigan foreclosure is going to be much worse.

See my next article to find out more about what happens when a note is unavoidable.

Melissa

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What Do Colorado and Michigan Have in Common?

I just got back from vacation in Colorado. Being in the Real Estate business, I just am naturally curious about Real Estate all over the nation. So I picked up some of those “Home” magazines that Realtors advertise properties in just to get an idea of what the market was like. I was surprised to see how many houses were listed as “Foreclosure”, “Pre-Foreclosure” or “Short Sale in Process”. Sometimes, every house on the page had one of these label! I had read foreclosure was a nationwide problem, but this really brought the point home. It was almost like being back in Michigan.

 If you are facing a Michigan foreclosure, we assured you are not alone. In fact, recent news articles  indicate that nationwide, there were a record number of houses entering foreclosure in August 2009. This includes almost 10,000 default notices being filed in Michigan alone.

I don’t have a clue how to help those people in Colorado because I am not familiar with the Colorado foreclosure process or laws. However, we have been specializing in helping people facing Michigan foreclosures for more than 4 years. Give our team a call and let us help you get out of being a statistic and get you and your family back to better times.

Ann

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The Bison Eventually benefitted from Government Help, but Will You?

On our recent trip out west, we visited Custer State Park in South Dakota which is famous for having one of the largest Bison herds in the nation.  While we were at the park, we went on a Bison Safari where we learned lots of interesting facts about the bison.

bison-herd

For example, do you know that in the late 1800’s, in a few short years, the number of bison in the West went from millions to thousands all because the government decided that hunting them down would force native Americans to move west in search of more food allowing for white settlers to move into the Native Americans territory more easily. At some point, people realized this was a bad plan and forces rose to protect the bison just in time before they were almost hunted to extinction. Not to mention the devastation to the Native Americans who were also hurt by these policies. Now a large number of bison live under “federal protection” in state and national parks.

In the interest of being politically correct, all I will say is that what started out as a popular government intervention, almost resulted in disaster.

I couldn’t help thinking how some of today’s government programs, particularly those aimed at “fixing” the housing crisis, while sounding good and being popular, are not always the best solution for the people they intend to help. In many cases, they help very few people and just delay the inevitable for others all while putting the economy in a deeper, longer-lasting hole.

If you are facing a Michigan Foreclosure, and decide to try one of these programs, just go into it with your eyes wide open. Don’t expect a miracle solution to your complex problem. Be smart enough to realize when it is just not going to work and start looking for other solutions. In many cases, switching strategies is the best solution. We can help you evaluate your options.

If you realize you need to get out from under the burden of a house you can no longer afford, give us a call. We can help with a proven program that has helped countless other families preserve their credit and get a fresh start. If you wait too long, it could become too late for us to help and you will be on your own to fight for your financial survival.

Ann

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Bankruptcy vs. Short Sale

This week I got a call from Dan and Betty with a beautiful Four bedroom house in Kentwood Michigan. They are facing a Michigan foreclosure and wanted to know if they should consider a bankruptcy or a short sale. I get this question almost every week as it’s something that should be carefully considered.

Of course, I’m not an attorney, so I can’t give legal advice. Most families facing foreclosure have no money to pay an attorney, so I’m forced to give them something to think about. Perhaps this will help you too.

If you’re contemplating the same decision, ask yourself this simple question: “If it weren’t for the house, would you still consider a bankruptcy?” In other words, do you have other debt you need to rid yourself of?

If the answer is “no” (like most families I talk with), you’ll likely decide to see what we can accomplish with a short sale first (at no charge of course). After all, if we get all of the debt forgiven, you’d have no reason to spend the time and money on the bankruptcy right? Did you know that bankruptcies are also public record? Most families would rather avoid that embarrassment unless they have no other choice (additional debt). Consider also that you can only file a chapter 7 bankruptcy once every 7 years and you need to decide if you want to “play that card” now, or hold on to it for a more urgent hardship.

If we can’t get the short sale done (we have about an 80% success rate when a qualified buyer is found), and the lender seeks a deficiency after the foreclosure, then you can consider filing for bankruptcy.

Of course if you do have additional debt that you can not live with, now is the time for you to make an appointment with a bankruptcy attorney so you can look at the pros and cons of going that route. Of course I can refer a good one to you (not someone who simply is going to try to “sell” you a bankruptcy.

Still confused? Give me a call and I’ll do what I can to help.

Emily

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Even Real Estate Investors Need Help (Sometimes)

We have a friend who is a Real Estate Investor. He and his wife had acquired lots of rental properties. Every time we saw them, they were beaming with pride about their rental business.

Then the hardship hit – loss of income. They can’t afford to make the payments on their rentals anymore, especially the vacant ones. They were embarrassed to ask for help because they are Real Estate Investors – they should know all there is to know about Real Estate – right? They shouldn’t need any help fixing their Real Estate problems – Right?

Wrong.

In this tough economy, it is common to see people lose multiple houses. Most Real Estate Investors know a lot about their niche (e.g. acquiring and managing rental properties) but very little about what to do when the market and economy is against them.  That is where we come in. Our specialty is dealing with financially distressed houses. We work with lenders every day, all day, talking about how to turn a losing investment into a winning investment for everyone – the owner, the lender and the buyer. It doesn’t matter if the house is your primary residence or not.

If you are a Real Estate Investor facing a Michigan foreclosure(s), give us a call. We will put our expertise to work for you just like we do for the owners losing their own primary houses to a Michigan foreclosure. Our methods work just as well for you and we can help you get back to better times too. Give Emily a call at 269-685-5921 today!

Ann

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2 More Houses – Another $129,000 of Debt Wiped Out

Last week, we closed on two different houses and my team made $129,000 of debt disappear between both of them. How is this done? This is done with a short sale. Don’t know what a short sale is? Well you can search this blog to learn more, or just give us a call. We’re really good at them though based on all of the testimonials you’ll find here and here. And here are two more!

 


 

“I have had a great experience in using Great Lakes Home Solutions in settling my foreclosure. I had a few health issues and was out of work for some time and acquired a great debt, Medicare and misc. My house payments became late and foreclosure started. G.L.H.S. was able to settle my mortgage of $107,000 for $31,000 saving me $75,000. I highly recommend this company”

Todd, Portage, Michigan

 


 

“After depleting our savings, and with only Social Security, we had debt of $123,000, and not being able to sell the home because of the housing market – we contracted Great Lakes Home Solutions – and they helped wipe out our debt of $54,000. They explained every step in the process; I would definitely recommend this business to anyone. They were very pleasant and very helpful.”

Judith & JoAnn, Grand Rapids, Michigan

 


 

Joel

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End The Nightmare

I’ve been watching a mini-series from 2006 called “Day Break”. In this show, the main character, a cop wakes up to find he has been framed for killing the assistant district attorney. As the day unfolds, he tries to clear his name. Instead, he finds out his friends and family are in jeopardy and his partner has turned against him. Ultimately, he ends up in jail. No matter what he tried to do, things just seem to get worse all day. Then, he goes to sleep to wake up to the same day again! He tries to do things differently, but still the day ends in disaster.

Facing a Michigan Foreclosure can feel a lot like this. You wake up one day to find your financial life crumbling around you. You may try to fix it by calling your lender who gives you the run around, is abusive or makes offers you don’t fully understand or won’t really help. One lady I talked with this week was offered the chance to make double payments for 3 months to get caught up. She is laid off and can’t even make a regular payment – how is she going to make a double payment? Unfortunately, this is a common frustration homeowners faced when trying to work a solution with the lender.

That is where we come in. We will explain your options to you and help you figure out which one is right for your goals and your situation. If you decide that keeping the house just is not an option, we can take the burden of dealing with the lender off your shoulders and negotiate the short sale for you. We can end the futile cycle of no progress and frustration and help you get out from under the financial burden your house may have become.

I have to keep watching “Day Break” to see if the hero ever breaks the insane cycle he is in. I hope he does, but I am sure it won’t be before he goes through many more fruitless days. You can break your frustration cycle today by giving us a call. End the nightmare & get back to better times.

Ann

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Andy’s Divorce and Looming Michigan Foreclosure

Andy called me the other day because he is facing a Michigan Foreclosure. He and his wife unfortunately are splitting up and he is being left with the house and a mortgage to pay without enough income to pay it himself. Andy had obviously done his homework. He knew he wanted to sell the house and knew he needed a short sale. He knew there were several companies that could help him.  After reading all of our testimonials and our FAQ’s, he had some very specific questions which I wanted to share with you along with the answers.

Are we Realtors? No, we are not Realtors. Our specialty is negotiating the discount (or Short Sale) with your bank. We team up with Realtors whom we know understand how to market the house and find a buyer. This way you are getting a team of experts (with specific specialties) who will do what they do best to help you get back to better times. If you don’t have a Realtor, we can one of our Elite Agents find one for you in the areas we cover.

Will you require me to come up with money for closing? No. One of our 4 promises is we will never ask you for any money – ever.  Not at closing and not even to make repairs to the house.

I need 15 days to move. Can I stay in the house after closing? You’ll have much more notice than that! We will be giving you updates during the Short Sale negotiation so you have an idea when we are getting close to approval and can begin looking for a place to move. Once we have short sale approval, we will give you notice that you have 21 days to move. During these 21 days, the buyer will be doing inspections, appraisals and whatever else is needed to finalize their loan approval. This way, once we close, the buyer gets immediate possession. It is the cleanest way for everyone.

Andy was satisfied with my answers. We will be meeting with him soon to get the process started for him so he can be getting back to better times. How about you? If you have other questions than these, give us a call and check out how we can help you get back to better times.

Ann

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Well Underway Onto Fresh Start

This past weekend I ran into a family that we helped out with a short sale earlier this year. I was happy to see them, but even more than that, I was thrilled to see how well they were doing with their fresh start. They said that they were renting a beautiful home (larger and cheaper than the one we helped them stop foreclosure).  Now that the pressure of the foreclosure from their previous house was off their shoulders, they were able to start over again with a clean slate and were so grateful for the opportunity to do that.

They are rebuilding their credit, avoided a Michigan foreclosure or bankruptcy and couldn’t stop thanking me for helping them remove all that stress and to start over.

I’m so glad that I have a career that allows me to help so many people through one of the toughest financial decisions that someone has to deal with. If you find yourself in a situation where you can’t make the house payment anymore, give me a call. I’d be glad to discuss your options with you.

Emily

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