Short Sale Information

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An explanation of the short sale process by Certified Short Sales Specialist, Rhonda Burgess

Transcript of Short Sale Information

  • 1. Short Sales

2. Short Sales I AM HERE FOR YOU Over 7 out of 10Homeowners in distressgo into foreclosure without seeking help. 3. ShortSales You are not alone There are many reasons why homeowners are unable to pay their mortgages and every situation is unique.My goal is to help you determine your best solution,whether it is to stay in your home or sell.I can negotiate with your lender to help you avoidforeclosure and the ensuing damage to your creditand emotions. 4. ShortSales Facing ForeclosureForeclosure is a legal andprofessional proceeding instigated by a lending institution. As a real estate professional,I can provide you with the ANSWERS you need to avoidforeclosure. 5. Short SalesI have the resources to helpFirst of all, do not panic. Iunderstand how frightening this is.Now is the time to explore youroptions. If you missed your property payment, local taxes, or condo and homeowner associations you may need to seek professional help now. 6. Short Sales Its time to explore your options and youmay need to take immediate action. You can not make your housepayment due to afinancial or situation setback. Your mortgage payments are morethan you canafford now. 7. Short SalesReasons for a Pending Foreclosure Job loss/or job demotion Sudden illness or medical emergency Death in the family Divorce Loss of second income Excessive debt obligations Inability to afford an increase on your adjustable interest rate loan Major home maintenance expense 8. ShortSales Reasons to Avoid Foreclosure Your Credit scores will drop to under 500 points. Damaging to your future credit history In regards to government insured loans, you areheld back for 5 to 7 years vs. 2 years on a shortsale. Foreclosure will remain as a public record on apersons credit history for 10 years or more. Most of your loan and even job applications havequestions regarding credit history and is easilyverified. Has long lasting damaging effects on your credithistory even after its removed. 9. ShortSales Reasons to Avoid Foreclosure Many employers, renters, and insurance companies run credit checks. Any one holding security clearances or holding jobs in the military, law, and government positions are in jeopardy. In some cases, your clearance may be revoked and your position terminated. Your taxes with a foreclosure may be higher. It is advised to seek the council of a tax professional for details. 10. Short SalesYour Options Reinstatement The repayment of all past due payments, late fees, penalties and costs due on an obligation secured by a deed of trust, or mortgage with the effect of reinstating the normal terms of the loan. Resolution is viable up to the day of a bank sale. Will offer you the quickest method for resolving a foreclosure. 11. Short Sales Reinstatement How It Works Homeowner missed 5 payments on a $2000 a month loan. Reinstatement Total: 5 Months of missed Payments @ $2000/month $10,000 Late Fees $500Legal Fees $2000Processing Fee $500 Total Reinstatement $13,000 12. Short SalesRepayment The Most Common Many lenders can provide terms of 12 months allowance for you to repay your past due amount. You are required to make your regular monthly payment plus 1/12 of the past due amount each month for 12 consecutive months.The process involves lenders approval and a statement verifying that your financial hardship was temporary.The disadvantage of this plan is that you are paying a higher monthly payment at a time of financial hardship and your terms remain the same. 13. ShortSalesSell the PropertyIf you have equity, you can of course sell and stop a foreclosure. 14. Short SalesRefinanceDo you have a rising Adjustable Rateloan that is sky high now?This can be a good option even if yourcredit score has been damaged due tomissed mortgage payments. You canrefinance your existing first home loanto lower your monthly payment or getenough cash back to pay off past dueamounts and other debts. 15. ShortSales Refinancing Pitfalls You can spend valuable time trying to qualify for a loan and not qualify due to your credit score and financial situation. You may not qualify for cash back. You may have penalties for refinancing and many times, these can be very steep. Your new loan will probably have higher interest rates resulting in an even higher monthly payment. In many cases, this turns out as a short term solution rather than a permanent avoidance. 16. ShortSalesLoan Modification If you can make your regular payment, but you can't catch up with the past-due amount, Loan Modification is a common option. This can be accomplished by increasing you loan balance or extending your loan for a longer period of time. This will change your current loan and requires lender approval. 17. ShortSalesDeed-In-Lieu of Foreclosure When you are in default, but can not qualify for any other Loss mitigation options, you can sign the house back over to the lender company. This will avoid public notice of a foreclosure, and has less of an impact on your credit scores. This so called "friendly foreclosure is still a foreclosure and has the same effect on your credit and ability to buy another home in the future. There are many things that must be done first and you are well advised to seek the opinion from your lawyer, especially in regards to taxes. 18. ShortSalesLoan Forbearance If you are experiencing a temporary hardship, you may be eligible for this type of help. You may be allowed to reduce or suspend payments for a short period of time, agreeing to pay back the past due when you know you will have enough money to bring the loan current on a specific date. The money might come from an employment bonus, investments, insurance settlement, or tax refund. 19. ShortSales Bankruptcy A legal alternative that allows the borrower to clear any debtobligations by restructuring the payment terms. A bankruptcy stopsthe foreclosure process until the bankruptcy process is completedor the court allows the lender to resume the foreclosure.Unfortunately, many homeowners choose this option and make all the required payments, only to be hit with hundreds or thousands of dollars in additional fees once they emerge from bankruptcy. Unable to meet these additional burdens find themselves facing foreclosure right after bankruptcy. 20. Short Sales Short Sale This allows you once in default to sell your homeand use the net sale proceeds to satisfy themortgage debt even though these proceeds areless than the amount owed.Also known as a real estate short pay-off or a pre-foreclosure workout, a short sale is an agreement with a lender to accept less than the amount owed by a borrower through the sale of the property to a buyer. 21. Short Sales The best time to begin the short sale process Right now, short sale situations are very time sensitive and negotiations can take time. The sooner we can begin negotiating with your lender, the greater the chances of a successful resolution. You do not have to wait for the lender to send you a notice of default or initiate a formal foreclosure proceeding. 22. Short Sales Short Sale Definition A homeowner is short when: When a borrower owes an amount on his property that,when combined with closing costs and commission, ishigher than current market value.A Short Sale Occurs When: A negotiation is entered with the homeowners mortgage company or companies to accept less than the full balance of the loan at closing. A buyer closes on the property and the property is sold short. 23. ShortSalesWhat is a Short Sale An agreement with you, during the beginning stages of aforeclosure, and your lender, allowing the home to sell forless than your outstanding loan balance. The mortgageholder would accept less than the loan amount in order toavoid a foreclosure. The "deficiency" is the differencebetween the amount owed and what the bank collects at theshort sale. Short sales happens when a you owe more on your housethan you can sell it for (upside down). You can startnegotiation with your lender to sell the house for less than isowed. You close on the property and the property is soldshort. 24. ShortSales Qualifying Factors for a Short Sale You must have a financial hardship The home is worth less than the unpaid balance due the lender. This can include prepayment penalties. You have no assets. The mortgage is in or near default status. In the past lenders would not even consider a short sale if the payments were current, but that is no longer the case. 25. ShortSalesWhat I Charge for a Short SaleAbsolutely NothingUnlike other loss mitigation companies, I providemy services at no cost to you. My fees arenever paid by you. I am only compensated if wesuccessfully negotiate a short sale. 26. Short Sales What to Consider a) It takes a buyer with an offer to purchase your hometo qualify for a short sale. So even if you meet all theother criteria, you are still dependant on a buyer. b) You are also dependent on the lender accepting thebuyer's offer. c) You should consult with a real estate or tax lawyer todetermine your tax consequences. 27. ShortSales How Long will a Short Sale Take to CompleteEvery short sale is different. It will usually take about one to four months. The timing depends on how fast we can begin negotiating with your lender. If you are facing foreclosure or have an auction date, the process can be expedited and we may even have the lender postpone the auction date. 28. ShortSalesFour Cautions 1. Start now, do not wait or ignore your situation. It is not uncommon for homeowners to just accept what they see as the inevitable, and let foreclosure start. Dont let it happen the damage to your credit will follow you for years. 2. Do not sell your home at a huge discount. Unless a foreclosure sale is less than 45 days away, you have time. Typically, if someone is pushing you hard to get you to sell your property to them, its probably