If you are having problems with making your mortgage payments and you know that foreclosure is just around the corner, you will be glad to know there is another way out of the jam. It may not be a piece of cake, but it will keep a foreclosure off your credit report. The ideal short sale for homeowners is when you owe more on your mortgage than what your home is worth.

Foreclosures are on the rise all across America, inventory is high, sales are low, home prices are dropping, and there are fewer buyers. All of this contributes to the situation the housing market is in at this time, however, none of this is good news to the homeowner that is in trouble of losing his or her home. You may have seen the problem coming and put your home on the market, however, it is still sitting after months on the market. Your funds are dwindling and you are now behind in your mortgage payments and foreclosure is peaking around the corner. How can you avoid the inevitable?

The answer is with a short sale. A short sale occurs when the lending company that is holding the note on your mortgage agrees to take less than what is owed on your loan. Most lending companies will not accept a proposal for a short sale until a homeowner is behind 90 days in their mortgage payments and a notice of default has been filed. However, your lending company may differ. The best way to learn if you should work towards a short sale is by talking with a real estate agent in your area that understands all about short sales. Not every real estate agent is experienced in the process and may not be able to give you qualified answers or help.

Practically every lending company would rather have a short sale settlement than have to deal with a foreclosure. A foreclosure will cost them more money and they will lose more money than going through a short sale.

The good news for you, if you decide to go with a short sale, is that you will not have a foreclosure in your credit history. You will have a settlement, but in the majority of cases, you will be able to apply and receive a mortgage loan within 1 to 3 years, whereas a foreclosure it will be much harder for a longer period of time.

If you are on the downhill slide toward foreclosure, it would be in your best interest to talk with a real estate agent that has worked with short sales in the past and has a proven track record. If not, you just as well sit back and wait for the grim reaper to come and take your home and possessions.

With foreclosures on the rise in Southern California, the team at REALESTATE-SANTAMONICA.COM has been getting a lot of inquiries about short sales. Mostly people are asking what they are. Well in short…no pun intended, a short sale is a transaction where the lender is willing to take less money than what is actually owed on the mortgage. The point behind this is to avoid a foreclosure.
Foreclosing on a home is something that the bank as well as the borrower usually tries to avoid. When the borrower defaults on a mortgage (doesn’t pay for months in a row), the borrower begins to accrue much more than just the mortgage payment. Quickly other expenses begin to add up, such as late fees, attorney fees etc…not good.
With a foreclosure the lender can lose nearly half of the mortgage amount because of the costs involved in foreclosing on a property: attorney fees, lost interest, property maintenance, court costs etc. Foreclosure is also a very drawn-out process. It can take over a year in some states. Because of this, many lenders are amenable to a short sale over a foreclosure so that they can simply cut their losses and move on.
Short sales can also be in the homeowner’s best interest as well. Most agree that the primary benefit to the homeowner is that he/she is able to get out from under the mortgage without suffering through a foreclosure. Additionally, the homeowner’s debt is getting taken care of for much less than is actually owed on the home. The homeowner’s credit is usually spared some of the wear and tear caused by foreclosure as well.
What is the process?
When a homeowner gets behind on the mortgage and wants to try and avoid foreclosure, the lender must be contacted immediately. The last thing a lender wants to do is foreclose, but there is a process that needs to be started to make a short sale possible.
The lender will usually require quite a bit of information including:
- Hardship Letter. Basically the homeowner is telling the lender the story behind being late with the mortgage. Additionally the letter should request a short sale.
- Bank Statements. This is to verify assets…or sadly, the lack thereof.
- Income documentation. W-2’s or 1099’s to verify the borrowers’ income.
- Value of Home. Banks will either order an appraisal or a CMA “comparative market analysis.” CMA’s are generated by realtors and we at realestate-santamonica.com can help with that.
- Listing Agreement. This just documents that the home has been put on the market. After it sells, the purchase agreement is included as well.
With any luck the lender will approve the short sale and the home will not go into foreclosure. If the short sale occurs, a preliminary proceeds sheet is generated. This document lists the net proceeds of the sale after the mortgage is paid off, as well the closing costs and all other related fees. This amount will be negative…and is the shortage.
Potential Consequences
Before requesting a short sale, a borrower should consult with his/her attorney and/or accountant as there are a few things to be mindful of.
First, the lender may require the borrower to sign a note to repay the shortage. Also the lender may file a collection or judgement to recover the shortage. A good real estate attorney will be able to guide the borrower through this.
The IRS may also come calling for the income taxes owed on the amount of the shortage. A tax professional should be contacted by the borrower regarding this.
Hopefully this shed a little light on the world of Short Sales and remember REALESTATE-SANTAMONICA.COM is here to help you.

A proof of funds letter can be referred to by many names in addition to the standard meaning of a letter that states you have funds available to complete a transaction. A proof of funds letter is often used in real estate short sale and REO purchases to provide explanation that an investor or buyer has the power to purchase the property they are making an offer on.Understandably, the currently overworked loss mitigation or short sale negotiators wish to be certain that they are working with a buyer that may perform. They need to know the purchaser has the assets if an agreement can be negotiated on the estate property.A “leased proof of funds letter” appertains to monies being deposited into a clients private or business account by a backer for a fixed fee. The bank “blocks” the money so that it is not permitted to be withdrawn by the customer ; however the money is in the account to show proof of funds. Extra terms used for this type of exchange are “standby letter of credit” and “blocked funds letter”.The WSJ said that the U.S. Solicitor’s office claimed “persons who were looking to temporarily lease funds in order to enhance their creditworthiness when applying for loans were instead provided with false proof-of-funds letters on bank stationary showing the funds had been deposited in their accounts.”Needless to say, it is critical to grasp the difference in the sort of proof of funds letter obtained. If you can access private funds, HELOC loans or funds that can be borrowed from buddies or family, then providing bank records would supply the required “proof of funds letter” paperwork. If curious about legit “transaction funding” or “acquisition funding” for short sales or REO flips, a normal “proof of funds letter” can be obtained. Look for a lender or financier that is providing transaction funds for the total amount of the acquisition cost without regard for your money or credit situation. Typically a transaction funding fee is between 2-5% of the total of funds used to flip the property at a “double” or “simultaneous” close. This fee is taken from profits at the closing.

There are basically two ways you can make money from your real estate investment, capital appreciation and monthly rental. In this article we will assume that you are a serious real estate investor and are purchasing this property to rent out and use mortgaging to control 100% of the property with a 30% cash down payment. Note this article does not deal with the no money down methods of property investment which will be covered in a separate article. This article aims to show you how to identify a good real estate investment that can provide you with a good monthly revenue stream and cashflow.
Firstly, ascertain how much cash you have in hand initially. This amount will determine how much financing you can get and the maximum amount of real estate you can control with your initial sum. Taking our example above, if we have $30,000 in hand, we can use this to control a property worth $100,000.
Secondly, once you do a rough estimation of your initial down payment sum, spend some time going to all the mortgage brokers, finance companies and banks in your area to see if they are willing to loan you money. You would probably need some credit reports and other documentations so as to convince them of your credit worthiness. Some things you would want to learn from your financers include, the interest rate and whether its fixed or floating, the monthly instalment size, whether they have special short term mortgages in case you should identify a good property to flip and re-sell. The financing element of a real estate investment deal is very critical and spending some time shopping around for the best bang for your buck would be a prudent move.
Thirdly, now spend some time peering intently at the classified advertisements. You want to ascertain the properties with the best rental yields as if you want your real estate investment to outperform the national rental yield, you would want therefore to look at properties in areas that are high in demand and look for bargain real estate investment deals. Another good way to figure this out is to ask someone who is knowledgeable in property. Ask him for places with good locations for the purposes of rental. A quick tip to note, places near the sea and on a mountain always fetch better prices than any other properties. Thus even commercial properties with a sea view command a slight premium over properties that do not have a sea view.
Fourthly, now after identifying on paper the bargain properties within your budget, start making appointments with real estate agents to look at properties on your list. If you make it clear that you are looking into property investment and that you might be a frequent customer, then there is a chance that these real estate agents would welcome you and inform you of other real estate bargains that you might be not aware off.
Fifthly, always make it a point to be early for the appointment and spend some time observing the surroundings of the real estate in question. Things to take note off include, a bad neighbourhood, no human traffic if you are looking at a commercial property, inaccessibility, no car porch or parking facilities or something that your intuition tells you is not right with the property. This is even more so for bargain properties and auction properties as there might be something very inherently wrong with the property. Spend sometime talking to the neighbours and ask them about the neighbourhood and then ask them if they know of anything wrong with their neighbours property.
If you are purchasing a run down property, you would want to bring along a contractor and building engineer or architect to inspect the property with you so that you can estimate how much you might have to spend to spruce up the property and later rent out or sell. Once you have ascertained the real estate investment is good for your purchase, start asking about rental yields of property in the area and what price the agent will be able to rent out your property.
Finally, once you have the property price, the mortgage instalment payment, the rental yields, and operating expenses, spend some time generating a spreadsheet to estimate whether your purchase is viable from a monthly cash flow perspective. You want to find the property with the best cash flow for your real estate investment. Once you find one property like that, spend your energy finding other similar properties and you will start seeing your monthly income rise.
Note that generally you are more likely to encounter surprises as opposed to surprise income, so factor this into your calculations. Remember to keep some money in your bank account to take into account things like changing of tenants where a month may go by without any rental coming in and you must be able to pay the monthly bank instalments. Also take note of where in the rental cycle you are purchasing the property, a property that may be in positive cash flow now, may not be so in the next few years.
In conclusion, this article has highlighted ways to ensure that you have a good grasp of all the different ways to choose a real estate investment property that will yield you a positive cash flow. Note that always remember that Murphy’s Law may strike at any time so keep some extra cash in your bank when preparing to purchase a real estate investment property to hedge against such uncertainties.

Asset based lending can immensely benefit those companies, which are crippled by sudden cash crunch. It is a viable way of meeting their immediate resource needs. This rapidly growing method of funding helps businesses use their assets, in order to solve their problems of cash flow shortage. Expanding companies in urgent need of ready currency have made asset based lending highly popular.
Manifold Benefits of Asset Based Lending
Asset based lending offers a number of advantages to small or large businesses. Compared to traditional modes of loans, they get a quicker access to fairly large amounts of ready cash. Most asset-based lenders and factoring agencies also frequently offer valuable services, such as accounts-receivable processing, invoicing, and collection services. As is well known, a properly managed accounts receivable portfolio can expedite cash flow and support corporate cash requirements leading to increased working capital. As a result, there are fewer outstanding account balances, which mean fewer bad-debt write-offs, as well as enhanced profitability.
Similarly, invoice factoring provides you with working capital leading to improve your business credit. Thus, you are able to turn your accounts receivable into a strong, predictable source of working capital. These days, a large number of asset based lenders help businesses, not only with credit facilities, but they also help in invoice purchasing, accounts receivable management, credit protection, collection services, outsourcing, letters of credit, and international trade services.
In many cases, a prospective borrower does not have to be necessarily a profitable enterprise or to have a minimum net worth. A commercial venture with tangible assets and qualified management can use its assets to create extra capital, in order to execute its plans for the expansion of its business. They are permitted to use the types of collateral such as accounts receivable, inventories including marketable raw materials, machinery and equipment, owner-occupied real estate, personal assets as well as certain intangibles.
It is the boon of asset-based lending, that today even small companies can get not only more cash, but can also get it more quickly than they could from a traditional bank. Among other key benefits are the facts that asset based lending is a non-bank lending. It does not confine growth, but encourages purchase of capital equipment. It is flexible and provides higher advances against collateral, and does not mandate any additional security, such as personal assets, or warrants against subsidiary stock.
Today, it is widely available with no geographical boundaries either. As a matter of fact, asset based lending gives an impetus to activities, such as reorganizations and debt restructures, capital equipment purchases, mergers and acquisitions, seasonal cash shortfalls, turnarounds, debtor-in-possession loans, amongst others.
At this juncture, it may be relevant to throw a glance at the legal aspects of asset based lending. It is a well known fact, that asset based lenders have a certain amount of liability, the breach, of which in the past, has earned quite a few borrower plaintiffs legal awards, well into millions of dollars. Over the years, borrowers have used their right of suing the lenders for the transactional losses incurred by them. This gives a profound sense of psychological security to a prospective borrower of asset based lending.

If real estate investing is new to you then you might wonder what the term “short sale” means. You might also be thinking, in a market that exists today, what short sales could offer you in the way of opportunities.

The best way to describe short sales is with an illustration:

The loan on a home is greater than the price the owner can sell it for. Let’s assume that the unpaid balance of the loan is $140,000 but the house won’t sell for more than $120,000. Obviously this is not an ideal scenario for the owner or for the lender. It means the lender is at risk of losing money and that’s not something they want! In order to have minimal losses, the lenders agree to accept less than the total amount due. In this illustration, the lender considers the $120,000 as payment in full. Now it’s clear that this amount is “short” of the full $140,000 payment. You can now see where they derived the term “short sale”.

Why in the world would a lender consider a short sale? Well, there are many reasons often related to “hardship cases”; e.g., the homeowner has permanent injuries; financial insolvency; convictions; job layoffs, etc. In such cases, lenders are willing to consider a short sale as part of their “loss mitigation” policy. However, lenders don’t go into business to lose money, so they consider short sales a last resort. Foreclosure can be a better option for them.

So, should you consider short sales as a money-making opportunity?

Well, good deals can be found in short sales, but it’s a much more complicated process than conventional real estate sales. It’s made complicated by the fact that there are so many factors involved: – The loan mitigation policies of the lender and third-party investors – The borrower’s financial condition – The property’s as-is value an as-repaired expenses – Approval for short sale needs to come from the investor who is actually the owner of the loan.

So, how do you know if a short sale is worth pursuing? Here are the steps to follow in order to make that determination:

Step 1: Identify potential short sale properties (e.g., contact a listing agent, check the public records, etc.). Step 2: Check the lender’s loss mitigation policy. For example, if they deal with short sales on a fairly regular basis, they’re a good choice. If, on the other hand, they seldom or never accept short sale offers, don’t waste your time. Step 3: Determine the number of liens recorded against the property and the total amount of money in those liens. Step 4: Determine the borrower’s present financial condition. Step 5: Analyze the type of loan that’s in default and its current status. Step 6: Determine both the property’s as-is market value and its as-repaired value. Step 7: Analyze current real estate market conditions.

Once you’ve followed all these steps and determined that a short sale is worth pursuing, then you’ll need to take further steps. First, keep in mind that all short sales are cash transactions. This means you’ll need to have cash on hand and verifiable proof that you have that money. Otherwise, the lender will not do business with you. Follow these steps:

- Contact the homeowner who’s in foreclosure and determine the homeowner’s financial condition.

- Determine the property’s condition.

- If you conclude that both the financial and property condition are suitable, ask the homeowner to give you written authorization to contact the lender’s loan loss mitigation department.

- Contact the decision-maker in the loan loss mitigation department of the lender and provide him or her with a copy of the authorization signed by the homeowner. Discuss the short sale and ask him or her to send the appropriate short-sale documents to the homeowner.

- Instruct the homeowner to compile all documentation in order to prove financial hardship.

- Get repair cost estimates from at least three licensed home improvement contractors.

- Assess the value of three similar neighborhood properties sold in the last six months (a comparable value study).

- Return the short sale proposal to the lender’s decision-maker. It should include a signed purchase agreement for a percentage less than the amount owed to the lender; e.g., 20%, 30%, less, etc.

- At this point, the lender’s decision-maker reviews your proposal and orders a BPO (“broker’s price opinion”) to determine the property’s as-is and as-repaired values. The decision-maker either accepts your proposal or rejects it.

- If the decision-maker thinks a short sale is appropriate, he or she makes a counteroffer.

- You accept or reject the counteroffer.

- Assuming you accept the counteroffer, you close on the transaction within 30 days.

One last point: Short sales can’t be made to relatives, family members, or close friends of the homeowner. If a lender later finds out after the sale that, say, the homeowner’s sister bought the property, then that lender can sue to have the sale overturned.

My advice: Approach short sales with caution and be prepared to put in a whole lot of work in order to make them succeed.

Jack Sternberg

Proof of Funds, Investment Services July 16, 2009——Standing behind their product and services, Hartwell Ventures, nationwide funder has promised to pay for fees associated with satisfying the condition of Proof of Funds for commercial and residential real estate, project funding, leased funding, and transactional funding, for clients if it is found that their competitors are actually using legal and legitimate funds. 

David Page, manager of Hartwell Ventures states, “We are more than confident that we are the ONLY company that actually have true liquid assets over $5 million. Other companies may claim to offer the same product/service but we have discovered through our experience in the business that in fact their documents are undeniably fraudulent and have an array of legal ramifications.  We take pride in what we do and the services that we provide that we challenge other companies to do the same in conducting business legally.”

Hartwell Ventures is an independently managed investment trust that has been providing transactional funding / proof of funds since 2001 making them the longest standing provider. They have consistently closed over 30 transactions per month since March 2005 making them currently the largest direct proof of funds provider.

Their funds derive from an independently managed investment trust with $110 million under management that is used specifically for transactional funding and proof of funds transactions. As a direct source, they place the funds within 36 hours or less and in most cases within a few hours.

They provide cash on deposit in either an escrow account or directly with the bank depending on the needs of your transaction. Their Trust is fully liquid making them the only proof of funds provider with over $5 million in real liquid funds to invest for your transactions.

They primarily provide and have experience in providing proof of funds for Double Closings, Down Payment Requirements, Earnest Money Deposits, and Verification of Deposits for the following uses:

Commercial and Residential Real Estate 

-Bulk REO

-Flipping Foreclosures

-Short Sale Funding for Short Sale Flipping

-Down Payment Funds

-Double Closings

Project Funding

Construction & Development Loans

Film Finance

Warehouse Lines

Lines of Credit

SBA Loans

Private Placement Programs

Precious Metals

Hartwell Ventures Investment Trust focus: Proof of Funds, Proof of Funds Letter, Seasoned Funds, Leased Funds, Leased Assets, Transactional Funding.

Hartwell Ventures, is located at 3960 Howard Hughes Pkwy Suite 500 Las Vegas, NV 89169. Website is http://www.hartwellventures.com, and can be reached at 888-465-2401 or 702-562-4237.

First of all, ?yes? some short sales take long to sell and ?yes? some short sale listings can be frustrating.

What is a short sale?

When the amount of a mortgage is more than the home is worth, the property may be a candidate for a short sale. A short sale is when the lender agrees to take less money for the home than the amount that is owed on the mortgage. The balance, technically, can be attached to the seller, so if you are considering a short sale it is important to work with an experienced real estate attorney.

A short sale may make sense for a seller if they must sale the home and the value of the property has dropped. A short sale may also make sense if your home is in or close to reaching default status or pre-foreclosure status. If the seller needs a way to get out from under a mortgage, due to unemployment, a divorce, a health crisis or death, a short sale is an option to consider. If the seller has assets, such as in savings or investment accounts, it will probably not be possible to negotiate a short sale with the bank.

Who benefits from a short sale?

The one person who loses the most in a short sale is the seller. While they do get out from under the stress and financial commitment of a mortgage, they will also walk away with nothing. Any equity in the home is gone. The bank, while agreeing to take less money than what is owed on the mortgage, still benefits from the short sale. Because short sales typically occur when a home is in danger of being foreclosed on, the short sale prevents the bank from entering into the foreclosure process. It also takes the home off of the bank’s hands. In a typical foreclosure, the bank has the responsibility of maintaining the property and getting it sold. With a short sale, the bank never has to take responsibility for the property. Those involved in the real estate transaction, such as agents, attorneys, appraisers and title companies, all benefit from the short sale. Although they may not receive their full fee when processing a short sale, they still make money from the process.

The biggest winner in a short sale is typically the buyer. By purchasing a home with a short sale, the buyer gets a home below market value. Because the amount that the bank will lend is based on the appraised value, when a home is purchased for less than that amount, a smaller down payment is required and PMI can be avoided. PMI, or private mortgage insurance, is a costly form of insurance that new home owners must purchase if they borrow more than 80% of the value of the home.

Disadvantages of Short Sale

Short sales can be a good decision for the home owner that cannot afford their mortgage, but they are not the answer to all financial problems. The Mortgage Forgiveness Act of 2007 states that the amount of debt forgiven by the lending institution can be considered income for the seller. Often, the lending institution will issue a 1099 to the seller, which means that they may be required to pay taxes on the forgiven amount.

Short sales also show up on the credit report. Although it would seem that a short sale is a better option than foreclosure, in the case of your credit history, they are the same. The short sale is listed as a pre-foreclosure that has been redeemed. The seller, regardless of how the rest of his credit history looks, will need to wait three years before getting a decent interest rate on a new mortgage.

Convincing the lender to agree

While lenders prefer a short sale to foreclosure, they strongly prefer that you pay off the amount of your loan when selling the home. It is up to the bank whether they will accept a short sale or not. The best way to convince the bank that a short sale is in their best interest it to prepare a package detailing the reasons you are considering accepting a short sale offer.

An estimate closing statement is the first step in convincing the lender a short sale is necessary. This statement should include the estimated sale costs, such as commissions and inspections fees, the unpaid loan amount and any late fees. If property values have dropped recently, leading to your homes value decreasing, ask your real estate agent to prepare a CMA, or comparative market analysis. The CMA shows homes in the area that are actively on the market, those whose sales are pending and homes that have been sold in the last six months. It will help strengthen your case for accepting a lower amount of money for your home. You should also include bank statements and other proof of income and debt, as well as a detailed hardship letter, which explains exactly why you feel it necessary to accept the short sale.

Short sales can be a good choice for buyers and sellers alike, but it is important to know what the drawbacks are before entering into a contract for a short sale.

If you have an interest in purchasing Real Estate Owned or short sale properties, then you want to understand the fundamentals of transactional funding and proof of funds letters and how they relate to your property interests and activities. Basically, the transactional funding refers to the funds borrowed for a very short period to transfer a property from the present owner, to the transaction coordinator, then to the new owner. Proof of funds letters are used to help secure financing and clear the way for the estate transactions you are involved in.
The use of transactional funding allows the short sale process to happen smoothly. The basic grounds for the loan is that once the first owner is prepared to sell and the buyer is prepared to take over the property (usually with the standard mortgage ), there’s a short term loan wanted to help the transfer period. This suggests the transactional funding is a loan that exists for some hours, then was recovered when the final property owner pays for the property.
Transactional funding works not just for the short sale eventuality listed above.
When buying property, the buyer must provide some kind of evidence that they have the funds to cover the property acquisition – this is where a proof of funds letter becomes helpful. This document that the investor can use to indicate to the parties involved in a real estate exchange that you have pre-qualified to purchase the genuine estate.
This kind of document is particularly useful if you are involved in short sale transactions and REO purchases that are structured with a double closing or when using transactional funding. They can also be used for other transactions that require documented evidence of your financial resources.
Using this letter, the buyer/investor is able to secure any required extra funding or to reassure the vendor that they have the means to fund the estate purchase.
After you know how these financial opportunities can be employed to the best advantage, you will be on track to achieving economic security thru real estate investment.
Morgan Foreman is a recommended author in the field of foreclosures and short sales. He will show you how to obtain guaranteed transaction funding with no cash or credit needed. Do you need a proof of funds letter? Learn about Proof Of Funds and visit www.WeProvideTheFunds.com