FREE SHORT SALE INFO

CAN YOU ANSWER YES TO ANY OF THE FOLLOWING:

DO YOU OWE MORE THAN WHAT YOUR HOUSE IS WORTH?

HAVE YOU FALLEN BEHIND ON YOUR PAYMENTS?

HAVE YOU BEEN SERVED A "NOTICE OF DEFAULT"?

ARE YOU POSSIBLY FACING A FORECLOSURE JUDGEMENT?

WOULD YOU LIKE TO SALVAGE YOUR CREDIT AND WALK AWAY OWEING NOTHING?

THEN A SHORT SALE MAY BE JUST WHAT YOU ARE LOOKING FOR!

WHAT IS A SHORT SALE?

DAMAGE CONTROL FOR THE HOMEOWNER

When the owner of a property owes more than what a property is worth and they have for whatever reason, fallen behind on their payments. The bank holding the mortgage may agree to accept a settlement offer (aka a short sale) in exchange for releasing it's lien on the property.

If a short sale offer limits the banks losses and gets a non-performing asset off their books, it will generally be accepted. This is Loss Mitigation and banks have dedicated entire departments for the single purpose of negotiating short sales and limiting their losses.

The Banks Criteria for Considering a Short Sale

The homeowner has a legitimate hardship, as defined by the Bank. The problem(s) that are causing the borrower to be unable to continue making the mortgage payments are not temporary (e.g. just behind a month because of overspending). Poor financial decisions are generally not considered hardship, and full financial disclosure will be required to determine if the borrower has assets that can be applied to the debt.
There must be little or no equity in the property. Obviously, if there were enough equity in the house to sell on the open market and use the proceeds to pay the Bank in full, this would already have been done.
The Bank must receive 100% of the proceeds from the sale. The Bank is already taking a huge loss and as a condition for considering a settlement, they will not allow the homeowner to profit from the sale. All proceeds must be applied towards servicing the debt. Accepting any payment outside the sale (without disclosing it to the bank) in order to circumvent this condition would be defrauding the bank.
The Short Sale Process doesn't actually start until the bank receives a valid offer from a qualified buyer with a "Proof of Funds" or a "Pre-Qualification Letter" from their lender.

Should you consider a Short Sale?

A short sale is not always the best option for every homeowner and should only be considered after every other option for keeping the home has been explored. However, peoples lives change and sometimes owning a home becomes more of a burden than expected.

Nobody buys a home expecting to loose it in a foreclosure, but when your financial picture changes and you can no longer afford the home. It is time to take drastic measures to limit your losses so you can get on with your life with as little damage to your credit as possible. Hard decisions must be made and the sooner you make them the better off you will be.

THE BENEFITS OF A SHORT SALE FOR BOTH YOU AND THE BANK

There are clear advantages to a short sale over a foreclosure for both the homeowner and the Bank in virtually all situations. For homeowners, a short sale removes their burdens and allows them to move on with their lives. Credit ratings are not ruined as with a Deed In Lieu or foreclosure action, allowing you to regain your financial stability and qualify for a new mortgage at some time in the near future.

There is also the question of other liens against the property. They do not simply evaporate as a result of a foreclosure action. An unsatisfied lien might remain on your record for up to 20 years. Negotiating a short sale pay-off and settlements with all lien holders is always far better.

Did you know?

That a homeowner who goes through foreclosure is ineligible for a Fannie Mae backed loan for five years thereafter, and an investor owner is ineligible for seven years.
Future mortgage loans and interest rates will be affected because the foreclosed homeowner must answer "Yes" to the Form 1003 Uniform Residential Loan Application question "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?"
A foreclosure affects credit scores downward by 250 to 300 points, which will typically last for over three years.
Foreclosure stays on your credit history for 10 years or more.
Current and future employment may be affected as many employers now require credit checks, particularly for employees in financial or sensitive positions.
Outside of conviction of a crime, foreclosure is the most serious issue affecting a security clearance. For those employed by a police force, the military, a security company, the CIA or other governmental agency, a foreclosure could mean immediate loss of the security clearance and the position.

What about a deficiency judgment?

This depends on the state you're in and the Bank's loss, bearing in mind the new legislation that relieves owner occupants of this threat. There are costs associated with pursuit, so even on an investor-owned short sale, if there is no money to be recovered a deficiency judgment may not be enforced by the Bank.

Part of any short sale negotiations with the Bank should include that terms of the short sale will include a full release of lien and no deficiency pursuit. This is completely up to the bank and their specific policy.

What about Taxes on a Short Sale?

If a short sale settlement is reached and the borrower is an owner-occupant in a homesteaded property, he will not have a 1099-C tax problem - at least through 2012. The new Mortgage Debt Forgiveness Relief Act http://www.irs.gov/individuals/article/0,,id=179414,00.html was signed into law by President Bush on December 20, 2007. This law can eliminate taxes that would often be due from the homeowner in the event of a short sale. Visit the IRS web site for complete details about the Mortgage Debt Forgiveness Relief Act.

A FINAL LOOK AT SHORT SALE MISCONCEPTIONS:

MYTH: BANKS RATHER PURSUE FORECLOSURE vs. A SHORT SALE
It is still widely assumed that, somehow, a Bank can come out ahead by running up a balance with late fees, accrued interest, etc. and then recoup that money by spending tens of thousands of dollars on a foreclosure to recover a house that can't be sold for what it is worth - which is how it got to the foreclosure stage in the first place.

REALITY: BANKS WOULD RATHER LOAN THAN OWN
For Banks, there will be some sort of monetary loss whether accepting a short sale or pursuing foreclosure. But the time and money lost to a foreclosure, which can and usually does take months, far exceeds the discount a Bank will incur up front in a short sale.

Additionally, in a short sale a Bank does not incur post auction costs of owning, maintaining and liquidating the house before recouping a portion of the debt. Finally, a short sale removes a non-performing asset from the Bank's books, allowing it to lend more money elsewhere.

A Foreclosure affects a Bank's lending capacity.
Foreclosed assets are non-performing assets.
Banks do not wish to be property managers or landlords.
HUD says: "Foreclosure should be considered as a last resort and should not be initiated until all relief options have been exhausted."
On a typical SFR foreclosure, REO costs (legal fees, eviction, property taxes & insurance, repairs & maintenance, security, HOA fees, costs of sale) can add up to $40,000 or more.

MYTH: THE BANK WILL NEVER TAKE THIS OFFER?
The proposed loss is over $100K and there is NO WAY they will look at it.

REALITY: THE ONLY VALUE THAT COUNTS IS TODAY'S
You don't know what they will look at, much less take. The only thing that matters is the fair market value of the property at this time - not what it was worth last year or even last month. In a declining market, look forward to where the even lower value will be three months ahead. This is loss mitigation - for the homeowner and for the Bank.

MYTH: ORCHESTRATING A SHORT SALE IS DIFFICULT
Any sale of real estate entails mounds of paper work and detail after detail that must be handled prior to closing. A short sale is just a different set of details. Once you understand the process and more importantly how to avoid the pitfalls, it's no different from any other transaction. More importantly, choosing who will handle your short sale is probably the most important decision you'll need to make today! Getting this part wrong could mean wasting valuable time all the while you are inching closer to a foreclosure judgment and auction.

REALITY: CONSIDER YOUR OPTIONS CAREFULLY
Should you do this yourself (DIY), hire Pearl Stoescu who specializes in getting short sales completed in the least amount of time possible.

A short sale also prevents additional damage to your credit. Late mortgage payments have already done some damage to your credit; however a foreclosure will do much more damage to your credit score that could take years to repair.

By avoiding a foreclosure and getting your finances in order, you could be in a position to repurchase a new home in just a few short months. Most likely at a much better price.

The typical short sale process can take anywhere from 30 days to several months depending on the bank. It's not a quick sale but it is a quick close and there are a number of things that can go wrong along the way. Impatient buyers, bad appraisals, inexperienced closing agents and weak buyer financing that falls apart at the last minute just to name a few. The foreclosure process in Florida typically will take about 6 months on average, leaving a small window of opportunity to complete a short sale. The longer you wait the smaller that window becomes!

Let Pearl Stoescu help you through this process NOW!!