What is a Short Sale?
A Short Sale can be an excellent solution for homeowners who need or want to sell, and who owe more on their homes than they are worth.
A Short Sale is the sale of a home for less than what is owed on the property. The lender accepts and approves the sale of the home at a discounted price to fully satisfy the loan.
The good news for you, the existing lender pays commissions, escrow, title fees, and repair costs (if any). Your home gets sold, the loans are paid off and you are out from under that mountain of debt.
Is a Short Sale for me?
With the continued economic hardship we are facing today, many homeowners are suffering financially with no means of relief in sight.
Many bought their homes or refinanced when values were at an all time high. They now owe way more than they are currently worth with no signs of values returning in the near future. And to make matters worse, we are suffering from jobs being lost, income reductions, increases in living expenses and many other factors making it exceedingly difficult to make ends meet.
If you are facing a hardship that makes it likely that you may not meet the obligation of paying your mortgage now or in the future, or if you are depleting your savings, investments, or retirement trying to keep up with your payments, a short could be the best choice for you.
When considering the option of a Short Sale, also remember that if you are upside down in your home, it could take many years for the value to return to the mortgage amount. Can you wait that long?
Frequently Asked Questions
How do I get started on a Short Sale?
It's easy. Give us a call.
We will personally negotiate with your mortgage company on your behalf to accept less than the full amount owed on your mortgage.
Many agents farm this out to third party negotiators who do not take a personal interest in your Short Sale, but We do. Leah is a top negotiator in this field and we will personally give our all to get your Short Sale done successfully.
Sadly, Not all agents are trained to do Short Sales and a well trained professional is the key to Short Sale Success.
If you are interested in getting pre-qualified for a Short Sale, Call us at 209-609-2635 or 209-679-3333
If I do a Short Sale, how much will it cost me?
There are no out-of-pocket costs since the mortgage holder pays all sales costs.
(with the exception of some Home Owner Association fees for transfer documentation done prior to closing.)
It’s true, in most cases you will pay literally no sales costs if your lender approves the Short Sale.
All commissions, title and escrow fees, and sometimes even most repair expenses are paid by the lender as part of the Short Sale approval.
I am current on my mortgage, will my lender consider a Short Sale
Yes !! We are seeing more lenders approve Short Sales even though no payments have been missed.
Some lenders will not accept the file until the loan is delinquent. Still others may accept a Short Sale file for approval on loans that are not delinquent.
The best way to determine whether or not a lender will accept a file for approval on a loan that is current is to submit one for approval. This, at no cost to you, is the best way to know.
You Won’t Know Until You Try !!!
What sort of hardship would my lender consider legitimate?
It depends on the mortgage company, some Lenders don’t even require a hardship.
But in general, as long as the mortgage company believes the loan is very likely to become delinquent, the Short Sale request will be processed by the Loss Mitigation Department.
The following are “hardships” that are usually accepted by mortgage lenders.
· Family illness or injury
· Divorce or split of domestic partners
· Job loss or significant income loss
· Adjustment in mortgage payment
· Job relocation
· Unforeseen increase in living expenses
· Any real inability to pay the mortgage payment.
If you feel that you can not make your payments, please give us a call. Hardships come in many forms and we can convey your situation to your lender.
I have two or three loans, can I still do a Short Sale?
Yes. Working with more than one lender is not a problem. After all, no lender wants to own another home through foreclosure.
My Property needs work, can I still do a Short Sale?
Of course. Lenders understand, the risk of loss goes up, when they foreclose on a property that needs work. So in most cases they would rather Short Sale the Property.
They’re in the business of making loans not fixing homes.
When will I have to move out?
The Home belongs to you until the transaction is complete and escrow closes. On the average, a Short Sale
takes 3-5 months.
I am concerned about my credit, how will a Short Sale affect my credit?
A Short Sale is an approved settlement of debt by your lender even though the amount does not meet the full amount owed. This may cost you some credit points which over time can be restored.
The main thing is to avoid foreclosure. Even worse than bankruptcy, a foreclosure can be the most damaging event your credit can take.
It may happen that during the time that your short sale is being approved you may miss your mortgage payments, and this will show up on your credit report as late payments.
We always recommend that you consult with an Attorney, Accountant and Other Credit Professionals for Tax, Credit and other Legal Questions that you may have.
Will I be held accountable for my Mortgage Deficiency?
In most cases the answer is NO !!
California homeowners who are considering a short sale and wondering about the consequences of this decision can rest easier effective immediately.
SB 931 and SB 458–New Short Sale Anti-Deficiency Law Protects California Homeowners
In October of 2010, former Governor Schwarzenegger signed Senate Bill 931 (SB 931), a landmark piece of legislation securing a more promising future for homeowners. This new law gave peace of mind to homeowners selling their homes through a short sale process by protecting borrowers from allowing the first mortgagor to pursue a deficiency judgment, after approving the short sale payoff.
July 15th, 2011, Governor Jerry Brown just signed Senate Bill 458 into law, which expands upon previous short sale anti-deficiency laws. The new law applies the same treatment to any secondary, or junior loans involved in the transaction. In other words, upon accepting the terms of the short sale, junior lien holders now agree to waive their right to pursue the deficiency judgment. The borrower cannot be required to owe or pay for a deficiency in a short sale.
Again, we recommend that you consult an Attorney, Accountant and other Credit Professionals.
What will my Tax Liability be?
If you have questions or concerns about the Tax liability associated with a Short Sale,
consult with a tax professional. You may find some answers by clicking on the following links.
The Mortgage Forgiveness Debt Relief Act
and Debt Cancellation: www.irs.gov/individuals/article/0,,id=179414,00.html
The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief...
California State Franchise Tax Board - Debt Relief: Mortgage Debt Relief Law
IRS Publication 4681 - Cancelled Debt and Insolvency: www.irs.gov/pub/irs-pdf/p4681.pdf
Again, we recommend that you consult an Attorney, Accountant and other Credit Professionals.
What should I do if I have received a Notice of Default?
Call us immediately, 209-679-3333, it’s not too late to start a Short Sale, but every minute counts!
How Quickly Could a Bank Foreclose on My Home
The following time-line is applicable for non-judicial California Foreclosures under a Deed of Trust.
Foreclosures begin with the borrower not making the monthly payments to the Bank, the first missed payment is technical default, but in practical terms, most Banks do not begin the process until the third payment is missed. If the Borrower cannot resolve the defaulted amount with the Bank, the Bank will instruct the Trustee to begin Foreclosure proceedings.
For Loans made before 1/01/03 or after 12/31/07 on Residential 1-to-4 Unit Owner-Occupied Properties
Day 1: Record the Notice of Default
Day 86 - 91: Record the Notice of Trustee’s Sale
Day 105: Last Day to Cure Default
Day 111: Trustee’s Sale Foreclosure, the property can be sold at public auction to the highest bidder.
For Loans made between 1/01/03 and 12/31/07 on Residential 1-to-4 Unit Owner-Occupied Properties
Day 1: Contact the Borrower
Day 31: Record the Notice of Default
Day 116 – 121: Record the Notice of Trustee’s Sale
Day 135: Last Day to Cure Default
Day 141: Trustee’s Sale Foreclosure, the property can be sold at public auction to the highest bidder.
Bottom Line: The minimum time for a foreclosure is 110 days after the NOD
is recorded for most loans (plus 30 days for loans made between 1/01/03 and 12/31/07 )
The information contained herein is believed accurate as of May 4, 2011. It is intended to provide general answers to general questions and is not intended as a substitute for individual legal advice.
Chances are, you or someone you know is facing the possibility of foreclosure. But you need to understand that YOU ARE NOT ALONE.
Today, 1 out of every 10 homeowners in America is behind on mortgage payments. These are tough and frustrating times. Now more than ever, it's important to identify your options. Foreclosures can be avoided, credit scores and financial futures can be salvaged.
Through our experience handling distressed properties, we’ve found that homeowners today have more questions than answers about their circumstances. We are here to help you understand the possible solutions to foreclosure, as well as provide a detailed explanation of short sales, which may be the best course of action for some homeowners.
The idea of losing a home can be overwhelming, but it’s extremely important that you don’t just walk away.
A Foreclosure on your credit report could haunt you for the rest of your life.
If your home goes into foreclosure :
· Your credit scores could be lowered affecting your ability to get a car, apartment, credit cards, etc.
· A foreclosure is the one credit report item that is almost impossible to be “repaired”.
(removed from your credit report)
· You will have to disclose that you have had a foreclosure on any mortgage application.
· A military or government security clearance could be at risk with a foreclosure.
· Many employers run credit checks on prospective employees and foreclosure is one of the top items that may put a potential new job in jeopardy
· Also, it will take a significantly longer time to get a new mortgage for a new home.
There is a huge difference between Life after a Foreclosure and Life without a Foreclosure.
Remember, today may be hard, but the future doesn’t have to be.
SHORT SALE YOUR HOME INSTEAD OF LETTING IT GO TO FORECLOSURE!
What is HAFA? HAFA expired 12/31/2016
For many families who were are at risk of losing their home through foreclosure, the Treasury Department established a short sales program called the Home Affordable Foreclosure Alternatives Program or HAFA.
For more information on the Making Home Affordable programs
go to: www.makinghomeaffordable.gov
Do lenders approve all Short Sales?
No!!! For this reason you should work with experience real estate professionals like us,
who have the training need to negotiate with your lender on your behalf
and to assure your Short Sale is done successfully.
Steps to a Successful Short Sale
1. Contact us: The first step in the short sale process is to hire a Realtor to represent you in selling your property and negotiating with your lender . We will meet with you to preview your property, discuss your particular circumstance, and offer different strategies as how to best proceed.
2. We contact your lender on your behalf to determine your lenders requirements.
3. We list your property for sale. Getting a good price and a good buyer helps ensure that your lender will approve the short sale request. We will advertise and market your property, conduct an open house and interface with prospective buyers and their real estate agents.
4. A buyer interested in purchasing your home, may write an offer to purchase, which you may accept contingent upon your mortgage lender’s short sale approval.
5. Once we receive an offer, we will prepare a short sale package for submission to your lender.
A short sale package generally includes information about you, your financial situation, your property, and your sales transaction. Your lender may require a hardship letter explaining the reasons your are unable or unwilling to repay your mortgage loan. We may have to obtain short sale approval from other creditors with a security interest in the property you are selling, such as second trust deeds. After we’ve submitted your short sale request, the lender’s response generally takes many weeks to many months.
6. Once we receive approval, we will contact the escrow company. The property will be appraised and inspections may be performed . Towards the end of the transaction, you will generally go to the escrow office to transfer title of the property to the buyer. In the meantime, the buyer goes into escrow to deliver funds for the down payment and closing costs and signs loan documents for the funding of the buyers loan if any. The sale is consummated, possession of the property is transferred and the escrow officer disburses all the funds accordingly.
7. The Short Sale is complete.