Frequently Asked Questions
Q.
What is a short sale?A. A
short sale is a real estate transaction negotiated between a seller facing
foreclosure, the seller's lender (specifically, the lender's
loss mitigation department) and a qualified buyer willing to purchase the seller's property at market value.
The purpose of a short sale is to settle the mortgage debt between the seller and the lender without the need for the lender to incur the expense or risk of foreclosing the mortgage.
In a short sale, the lender is agreeing to release it's mortgage lien after receiving the proceeds of sale from the seller's home. It is less than the actual amount owed and thus called a "short payoff" of the mortgage.
Lenders consider every
short sale offer individually. If they determine accepting a short sale offer will allow them recover more of their funds than by foreclosing they will accept the short payoff and discharge the mortgage so it can legally transfer in ownership.
The seller is completely and legally released from all further financial obligation to the lender without
foreclosure or destruction of credit.
Q. How much is does it cost to arrange a short sale and much will I pay in legal costs?
A.
THERE ARE NO FEES CHARGED TO THE HOMEOWNER FOR ARRANGING A SHORT SALE...NO BROKERAGE FEES AND NO LEGAL FEES!
Q. Will I be responsible for negotiating my own short sale with my lender?
A. No. You will not need to participate in any of the negotiations with the lender. We do all the negotiation and report the progress to you. There is ABSOLUTELY NO CHARGE for the arrangement and negotiation of a short sale. You will not pay a real estate commission or any legal fees!
Q. What is a
Loss Mitigation Department?
A. The loss mitigation department is a staff of loan workout officers that try to work with delinquent borrowers to bring them current. You may have already been contacted by the loss mitigation department if you're in default of your loan. Most likely they discussed altering the terms of your loan or discussed a repayment plan with you. This is also the department that reviews short sales proposals.
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Q. How long will it take to short sell my home?
A. Typically, it can take 3-4 months to close a short sale. Every lender's
loss mitigation department works at their own speed. However, once the lender receives a short sale for consideration, it will typically postpone a scheduled auction date or hold off scheduling one until they've made their decision. This means you buy yourself extra time in your home without having to make any payments to your lender!
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Q. Do I need an attorney to represent me?
A. No, we have already assembled an experienced legal team to coordinate and close the short sale transaction. You will not be charged any legal fees!
Q. What does the "
Lender Short Sale Package" entail and how do I get it?
A. Most lenders have a short sale package that can be downloaded from their website. A typical
short sale package contains:
A Borrower Authorization Form: This form is signed by the homeowner (borrower). It gives your lender permission to discuss your account details with the legal team and myself.
A Financial Statement: This form creates a snapshot of your present financial situation. It is designed to determine if you are a valid candidate for a short sale.
A
Hardship Letter: This is a letter composed by you and gives your lender an understanding of what has occurred to cause you to fall behind on your mortgage (ie. job loss, divorce, serious illness etc.)
You will also need to provide: Inclusion of your last 2 years of tax returns Inclusion of your last 2 months bank statements Inclusion of your last 4 pay stubs Click here to return to Home Page
Q. How will I know that I am being released from all future obligation to pay back my mortgage?
A. The short sale is negotiated to reflect this and upon acceptance of the short sale offer the lender sends an approval letter spelling this out in writing. The only way that the property can transfer in ownership is if the lender releases it's lien on the property. If there is a successful closing, you're released.
Q. I recently filed bankruptcy and my home is included. What can I do if I want to utilize a short sale to
avoid foreclosure?
A. Explain to your attorney that you want to short sell your home to avoid foreclosure and request that he/she remove the property from the bankruptcy. If you don't have any equity in your property it has no value in the bankruptcy since it can't be liquidated for cash.
Q. The real estate market is slow and homes are taking a long time sell. How can you generate an offer on my home quick enough to avoid my foreclosure?
A. In a short sale, the seller is not entitled to receive any money from the short sale.
With no financial interest in the property the seller has no concern what price is obtained for an offer. As long as the lender accepts the offer that's all that matters. Since the seller has no financial interest in the short sale, the price of the property can be adjusted as necessary to generate an offer quickly.
Q. Who should utilize a
short sale and when?
A. ANYONE who is or soon will be facing a foreclosure situation should utilize the short sale option! It makes absolutely no sense NOT to try to short sell your home. The benefits are tremendous! Your lender PREFERS that you attempt to short sell your home because it saves them money by not having to go through the expensive and highly risky foreclosure process.
This option is available to anyone and the only other option is to do nothing which is very foolish!
The best time to implement a short sale is when you know there are no options available to you that will bring the mortgage payments current so you can avoid foreclosure. Starting early drastically enhances your chances for success!
