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After reviewing this page Call Me
to see if you qualify for this program. I have several companies
and attorneys that I work with that will help you to qualify
for a short sale, some with no out of pocket
expense and in strict confidentially. And of course my
advice is FREE.
Why Do Homeowners Go Into
Foreclosure?
Sellers stop making payments for a host of reasons. Few choose
to go into foreclosure voluntarily. It's often an unpredictable
result from one of the following:
- Laid-off, fired or quit job
- Inability to continue working due to medical conditions
- Excessive debt and mounting bill obligations
- Squabbles with co-owner, divorce
- Job transfer to another state
How Short Sales Work
There are many ways to lose a home but signing away ownership
in a manner that destroys credit, embarrasses the family and
strips an owner of dignity is one of the hardest. For owners
who can no longer afford to keep mortgage payments current, there
are alternatives to bankruptcy or foreclosure proceedings. One
of those options is called a "short sale."
When lenders agree to do a short sale in real estate, it means
the lender is accepting less than the total amount due. Not all
lenders will accept short sales or discounted payoffs, especially
if it would make more financial sense to foreclose.
As a real estate agent, I am not licensed as a lawyer and
cannot advise on those consequences. Be aware the I.R.S. will
consider debt forgiveness as income, and there is no guarantee
that a lender who accepts a short sale will not legally pursue
a borrower for the difference between the amount owed and the
amount paid. In some states, this amount is known as a deficiency.
A lawyer can determine whether your loan qualifies for a deficiency
judgment or claim.
Although all lenders have varying requirements and may demand
that a borrower submit a wide array of documentation, the following
steps will give you a pretty good idea of what to expect.
Call the Lender
You may need to make a half dozen phone calls before you find
the person responsible for handling short sales. You do not want
to talk to the "real estate short sale" or "work
out" department, you want the supervisor's name, the name
of the individual capable of making a decision.
Submit Letter of Authorization
Lenders typically do not want to disclose any of your
personal information without written authorization to do so.
If you are working with a real estate agent, closing agent, title
company or lawyer, you will receive better cooperation if you
write a letter to the lender giving the lender permission to
talk with those specific interested parties about your loan.
The letter should include the following:
1. Property Address
2. Loan Reference Number
3. Your Name
4. The Date
5. Your Agent's Name & Contact Information
Preliminary Net Sheet
This is an estimated closing statement that shows
the sales price you expect to receive and all the costs of sale,
unpaid loan balances, outstanding payments due and late fees,
including real estate commissions, if any. Your closing agent
or lawyer should be able to prepare this for you, if you do not
know how to calculate any of these fees. If the bottom line shows
cash to the seller, you will probably not need a short sale.
Hardship Letter
The sadder, the better. This statement of facts describes
how you got into this financial bind and makes a plea to the
lender to accept less than full payment. Lenders are not inhumane
and can understand if you lost your job, were hospitalized or
a truck ran over your entire family, but lenders are not particularly
empathetic to situations involving dishonesty or criminal behavior.
Proof of Income and Assets
It is best to be truthful and honest about your financial
situation and disclose assets. Lenders will want to know if you
have savings accounts, money market accounts, stocks or bonds,
negotiable instruments, cash or other real estate or anything
of tangible value. Lenders are not in the charity business and
often require assurance that the debtor cannot pay back any of
the debt that it is forgiving.
Copies of Bank Statements
If your bank statements reflect unaccountable deposits,
large cash withdrawals or an unusual number of checks, it's probably
a good idea to explain each of those line items to the lender.
In addition, the lender might want you to account for each and
every deposit so it can determine whether deposits will continue.
Comparative Market Analysis
Sometimes markets decline and property values fall.
If this is part of the reason that you cannot sell your home
for enough to pay off the lender, this fact should be substantiated
for the lender through a comparative market analysis (CMA). Your
real estate agent can prepare a CMA for you, which will show
prices of similar homes:
1. Active on the market
2. Pending sales
3. Solds from the past six months.
Purchase Agreement & Listing
Agreement
When you reach an agreement to sell with a prospective
purchaser, the lender will want a copy of the offer, along with
a copy of your listing agreement. Be prepared for the lender
to renegotiate commissions and to refuse to allow payment of
certain items such as home protection plans or termite inspections.
Examples: If the unpaid
balance of a loan is, say, $100,000 and a property sells for
$90,000, under a short sale the lender might accept $90,000 as
payment in full.
Written by: Elizabeth Weintraub |
