Short Sales 101 For Sellers Revised 033011

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    SHORT SALES 101

    FOR SELLERS

    How to Use a Short Sale to Protectyour Finances and your Credit, and

    Stop Foreclosure

    Negotiate a sale to your lender toaccept less than you own on your

    mortgage

    Written by:

    Russ Irizarry

    Licensed Real Estate Broker

    Short Sale Expert

    305-390-0574 Direct

    [email protected]

    South Florida Short SalesA registered member of the Better Business Bureau

    www.seflorida.bbb.org

    South Florida Short Sales is a Florida Licensed Real Estate Brokerage

    License # CQ1038301

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    Legal Disclosure Notice

    The content in this presentation is based upon our research, knowledge and experience. In

    no way is any information contained herein to be interpreted as legal or tax advice. To be

    assured of sound legal advice with regards to foreclosure, real estate, bankruptcy or agency

    laws, please employ the use of a competent legal or tax professional and/or your real estate

    broker.

    Please consult your broker, accountant and attorney, as appropriate, for advice specific to

    your situation. Although every effort is made to keep this presentation current and relevant,

    it is your responsibility to seek guidance from qualified professionals in order to keep up

    with rapidly changing market conditions and periodic changes to the law.

    Mortgage Assistance Relief Services Disclosure

    IMPORTANT NOTICE: Before using this service, consider the following information:Ourcompany cannot charge you any upfront fees in conjunction with providing you any type of

    mortgage assistance relief service. Our company is NOT associated with any government

    agency or program and our company is NOT approved by the government or your lender(s).

    You may stop doing business with us at any time with regard to the short sale, our short sale

    negotiation services (if any), or real estate brokerage services (if any). If you stop paying

    your mortgage, you could lose your home and damage your credit rating.

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    Table of Contents

    1 INTRODUCTION ............................................................................................................................... 4

    2 PRE-FORECLOSURE HOMEOWNER OPTIONS ................................................................................. 5

    2.1 Loan Modification ............................................................................................................... 5

    2.2 Repayment or Forbearance Plan ........................................................................................ 5

    2.3 Refinance ............................................................................................................................ 5

    2.4 Bankruptcy .......................................................................................................................... 5

    2.5 Deed-in-Lieu of Foreclosure ................................................................................................ 6

    2.6 Foreclosure ......................................................................................................................... 6

    2.7 Short Sale ............................................................................................................................ 6

    3 SHORT SALES 101 ................................................................................................................... 7

    3.1 What is a Short Sale? .......................................................................................................... 7

    3.2 Why Lenders Allow Short Sales........................................................................................... 7

    3.3 Standard Documents Required for a Short Sale ................................................................. 8

    3.4 Benefits of a Short Sale ....................................................................................................... 8

    4 PRE-FORECLOSURE TIMELINE ............................................................................................... 10

    5 FORECLOSURE vs. SHORT SALE A SIDE BY SIDE COMPARISION ............................................ 11

    6 POSSIBLE SHORT SALE OUTCOMES ....................................................................................... 13

    6.1 Promissory Note ............................................................................................................... 13

    6.2 1099C vs. Deficiency Judgment ........................................................................................ 14

    7 OUR SHORT SALE PROCESS DIAGRAM ................................................................................... 15

    8 FREQUENTLY ASKED QUESTIONS .......................................................................................... 16

    8.1 What does your company South Florida Short Sales (SFSS) do exactly? .......................... 16

    8.2 How much will this cost me? ............................................................................................ 16

    8.3 How long does the short sale process take? .................................................................... 16

    8.4 What are the sellers responsibilities in a Short Sale? ...................................................... 16

    8.5 Can I receive any proceeds from the sale? ....................................................................... 16

    8.6 Why pursue a Short Sale? ................................................................................................. 17

    8.7 Ive already received a foreclosure notice, is it too late for a short sale? ........................ 17

    8.8 Can the bank still come after me for the balance after the home is sold? ...................... 17

    8.9 Im ready to get started, whats the next step? ............................................................... 17

    9 ATTORNEY BORROWER AUTHORIZATION LETTER ............................................................... 18

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    1 Introduction

    Inside this report you will find valuable information on the Foreclosure process and timeline in

    the state of Florida. It is a brief summary intended to help Homeowners understand their pre-

    foreclosure options.

    This information will provide Homeowners with basic knowledge of a Short Sale, as well as

    introduce our company South Florida Short Sales (SFSS) and explain how SFSS works.

    Whats important is that you understand your options so that you can make the very best,

    most logical decision.

    Websites and other resources that may be helpful:

    To estimate the value of your property:

    www.Eppraisal.com

    HUD Tips for Avoid Foreclosure:

    http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure

    Foreclosure Assistance in Miami-Dade

    http://www.miamidade.gov/csd/foreclosure_prevention.asp

    Foreclosure Assistance in Broward

    http://www.broward.org/Housing/Pages/ForeclosurePrevention.aspx

    http://www.miamidade.gov/csd/foreclosure_prevention.asphttp://www.broward.org/Housing/Pages/ForeclosurePrevention.aspxhttp://www.broward.org/Housing/Pages/ForeclosurePrevention.aspxhttp://www.miamidade.gov/csd/foreclosure_prevention.asp
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    2 Pre-foreclosure Homeowner OptionsBelow are the most common solutions for homeowners who are facing foreclosure. Each

    homeowner has a unique situation with various circumstances. This section provides you with a

    definition of the most common solutions.

    There are two categories of Options:

    1. Staying in the house2. Moving from the house

    OPTIONS FOR STAYING IN THE HOUSE

    2.1 Loan Modification (most common)A loan modification allows for changes to the original terms of a borrowers promissory note,

    which may include an adjustment to the interest rate %, an extension of the loan term, oradding missed payments to principal. Homeowners must qualify for a modification as they

    would qualify for a new loan. Currently, loan modifications have about a 50% success rate. (The

    problem with loan modifications is that lenders are generally not reducing loan principal to the

    current market value of the underlying real estate.)

    2.2 Repayment or Forbearance Plan

    The borrower is allowed to catch up on missed payments by making more than the monthly

    payment until the loan is brought current. The bank allows you to skip monthly payments

    temporarily, or make partial payments for a specified time. Missed payments may be added toprincipal or become part of a repayment plan or loan modification. ( only possible if financial

    problem is temporary)

    2.3 Refinance

    The borrower pays off the existing mortgage loan with proceeds from a new loan with more

    favorable terms. (must apply before missing payments) Refinance will not be an option if there

    is no equity in the home, at least 20 30%. The chances of a homeowner getting refinanced

    while behind in their payments are very slim.

    2.4 Bankruptcy

    Generally, there are two types of personal bankruptcy: Chapter 7 (liquidation of assets), or

    Chapter 13 (repayment plan). In either type of bankruptcy, the court appointed trustee will not

    have much interest in a property that has no equity. In a Chapter 7, once the bankruptcy is

    discharged, the bank will continue with the foreclosure process. In a Chapter 13, the

    homeowner cannot miss one payment of their re-structured payment plan or the lender can

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    continue to pursue the foreclosure process. The vast majority of Chapter 13s do not make their

    scheduled payments, thus resulting in a double penalty on the homeowners credit report of a

    Bankruptcy AND a Foreclosure.

    NOTE: The most important thing you need to know about Bankruptcy as it relates to

    foreclosure is that bankruptcy does not permanently stop or prevent a foreclosure fromoccurring. It can only temporarily freeze a foreclosure action. It is advisable that you speak to

    an attorney and do your own research.

    A FINAL NOTE: All the above options for staying in the house have one thing in common

    the homeowner MUST be in a position to make some sort of reasonable payment that

    is agreeable to the Bank, and make it on time every month.

    OPTIONS FOR MOVING FROM THE HOUSE

    2.5 Deed-In-Lieu of Foreclosure

    Allows for the homeowner to voluntarily transfer a property to the bank without going through

    the full foreclosure process. Essentially, the owner gives the deed back to the bank. A Deed-In-

    Lieu shortens the process for the lender, with less cost. It has the same negative impact on

    homeowners credit as a foreclosure - a black mark for 7 years. The courts are not involved. A

    Deed-In-Lieu is not an option if there is more than 1 mortgage or lien on the house.

    2.6 Foreclosure

    When other options are not pursued, or a Short Sale is not accomplished, the property will go to

    Foreclosure. At a public county auction the foreclosing lender takes possession of the property,or the property is sold to a buyer, usually an investor. The original homeowner has no further

    rights to the property, and will have to vacate. Worse, the homeowner can still have financial

    obligations to mortgage lien holders even after the foreclosure. The foreclosing lender could

    still pursue a deficiency judgment against the original mortgagor for the difference between the

    final judgment amount, and the proceeds received from the auction or REO (bank owned) sale.

    2.7 Short Sale (most favorable)

    The seller can work with specialized Short Sale professionals such as South Florida Short Sales

    (SFSS) who will negotiate with lender(s) to accept a discount on the existing mortgage loanagainst the property. In a successfully negotiated Short Sale, the lender agrees to accept less

    than what is owed to settle the mortgage in full (a discounted pay-off), and release or satisfy its

    lien upon the sale. A Short Sale can help the seller avoid the damaging consequences of a

    foreclosure, and allow a homeowners credit to heal much faster. A Short Sale gives a

    homeowner a much greater opportunity to start fresh, and potentially be able to qualify for

    another mortgage in as little as 2 years.

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    3 Short Sales 101

    3.1 What is a Short Sale?

    A Short Sale occurs when a property is sold for less than the mortgage balance owed on the

    property. The idea of a Short Sale is to prove to the foreclosing mortgage company that seller no

    longer has the ability to pay the mortgage, and the value of the property has fallen below the

    mortgage balance. The seller must prove that he/she cannot recover, and must sell the

    property.

    In order for banks to consider a Short Sale, they require the same paperwork as a loan

    application (ie. tax returns, pay stubs, bank statements). The bank needs to substantiate that

    the seller no longer has the ability to afford the mortgage payment. In addition to this, a case

    must be built as to why the home is not worth what is currently owed.

    NOTE: In 2010, Short Sales accounted for about 22%* of homes sales in Dade, Broward, and

    Palm Beach counties.

    Again, two conditions must exist for the lender to consider a Short Sale:

    1. There must be little or no equity in the property.

    2. Homeowner must prove a legitimate hardship.

    * Source: Southeast Florida MLS

    3.2 Why do Lenders allow Short Sales?

    Lenders will consider Short Sales for the following reasons:

    Lenders are in the business of making loans, not owning real estate.

    If the lender forecloses, the value of the loan increases their liabilities, reduces their ability to

    make loans, and contributes to their insolvency. Approximately 387 major lending instutions

    have become insolvent and have shut down since 2007.

    Foreclosures cost lenders time and money. It costs an estimated $60,000+ to foreclose.

    The Short Sale will result in less of a financial loss to the lender, than what a lender will lose

    by foreclosing and selling the property at a future date (especially in a market where prices

    are depreciating).

    The property is in less sellable condition at time of foreclosure. Lenders created the Short Sale option as an alternative to foreclosure.

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    3.3 Standard Documents required for a Short Sale

    The Sellers Lender will require the following documentation from the Seller to consider the

    Short Sale:

    Purchase and Sale Agreement this is the contract to sell your house between you and thebuyer

    Hardship Letter a letter written by you explaining your hardship and why you can no long

    make your mortgage payments.

    Authorization to Release Information Form signed by you authorizing your lender to release

    information and negotiate the short sale with your agent, or other 3rd party such as attorney

    or title company.

    HUD1 financial summary of the transaction that that tells the lender the sales price and the

    proposed payoff.

    Financial Statement A summary of your monthly income and expenses, your assets and

    liabilities. 2 most recent Bank Statements, 2 most recent Federal Tax returns, and 2 most recent

    paystubs.

    The compilation of the above documents is what makes up a completed Short Sale Package.

    The main purpose of the Short Sale package is to substantiate your hardship to the lender, and

    prove that you can no longer make your payments. Your bank wants to see that you simply

    cannot afford your house anymore.

    The Short Sale Package is similar to making an application to qualify for a mortgage, except

    youre doing it IN REVERSE!! Youre making an application to get out of a mortgage.

    3.4 Benefits of a Short Sale

    The following are the greatest benefits of a Short Sale transaction:

    Credit ratings are not as damaged as compared to a Deed-In-Lieu, or a Foreclosure. Sellerscan regain their financial stability much sooner, and qualify for a new mortgage easier and

    much sooner in the future. Credit will heal much faster.

    The Short Sale can be negotiated so there is no deficiency judgment (no remaining liabilityafter the sale). The mortgage lien can be satisfied (depending upon the lenders approval).

    Sellers always have a greater sense of relief, dignity, and personal satisfaction by havingtheir home sold, versus losing the property to foreclosure.

    The 1099C received by the sellers for the amount of debt relieved by the lender is non-taxable if the home is their primary residence. (The Mortgage Forgiveness Debt Relief Act

    of 2007eliminates taxation on debt forgiveness if the residence was owner-occupied. See

    your accountant for details. This is not tax advice.)

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    Per Fannie Mae guidelines, you can be eligible for a new home mortgage only after 2 years,

    versus 5 years with a Foreclosure

    Sellers get the house sold and remove a major burden. The sale allows them to move onwith their lives.

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    4 Pre-Foreclosure Timeline

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    5 Foreclosure vs. Short Sale A Side by Side Comparison

    FORECLOSURE SUCCESSFUL SHORT SALE

    Primary

    Residence Loans(Fannie Mae)

    A homeowner who loses a home to foreclosure

    is ineligible for a Fannie Mae backed mortgagefor a period of5 years.

    A homeowner who successfully negotiates

    and closes a short sale will be eligible for aFannie Mae backed mortgage after only 2

    years.

    Non-Primary

    Residence Loans

    (Fannie Mae)

    An investor who allows a property to go to

    foreclosure is ineligible for a Fannie Mae

    backed investment mortgage for a period of7

    years.

    An investor who successfully negotiates and

    closes a short sale will be eligible for a Fannie

    Mae backed investment mortgage after only

    2 years.

    Future Loans

    (from any

    lender)

    On any future 1003 Loan Application, a

    prospective borrower will have to answer YES

    to question C in Section VIII, that asks, Have

    you had property foreclosed upon, or given

    title or deed in lieu thereof in the last 7 years?

    This will affect all future rates.

    There is no similar declaration, or questionregarding a short sale.

    Credit Score Score may be lowered anywhere from 250 to

    over 300 points. Typically, this will affect score

    for over 3 years.

    Only late payments will show, and after sale,

    mortgage will be report as account settled

    or account paid. This can lower score from

    50 100 points, if all other payments are

    being made. The credit effect of a short sale

    can be as brief as 12 to 18 mos.

    Credit History

    Foreclosure will remain as a public record on a

    persons credit history for 10 years or ore.

    A short sale is not reported on a credit

    history. There is no specific reporting item for

    short sale. The loan is typically reported as

    account settled or account paid.

    Security

    Clearances

    Foreclosure is the most challenging issue

    against a security clearance outside of a

    conviction for a serious misdemeanor felony. If

    a client has a foreclosure, and is a policeofficer, in the military, a government

    employee, a security officer, or any position

    that requires a security clearance, in almost all

    cases, clearance will be revoked and position

    will be terminated.

    A short sale, on its own, does not challengemost security clearances.

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    (continued) FORECLOSURE SUCCESSFUL SHORT SALE

    Current

    Employment

    Employers have the right, and are actively and

    regularly checking the credit of all employees

    who are in sensitive positions. A foreclosure,

    in many cases, is grounds for immediate

    reassignment or termination.

    A short sale is not reported on a credit

    report, and is therefore not a challenge toemployment.

    Future

    Employment

    Many employers are requiring credit checks

    on all job applicants. A foreclosure is one of

    the most detrimental credit items an applicant

    can have, and, in most cases, will challenge

    employment.

    A short sale is not reported on a credit

    report, and is therefore not a challenge to

    employment.

    Deficiency

    Judgment

    In 100% of foreclosures in Florida, the bank has

    the right to pursue a deficiency judgment.

    In a successful short sale, it is possible to

    convince the lender to give up the right topursue a deficiency judgment against the

    homeowner.

    Deficiency

    Judgment $

    amount

    In a foreclosure, the home will have to go

    through an REO process if it does not sell at

    auction. In most cases, this will result in a lower

    sales price, and a longer time to sell in a

    declining market. This will result in a higher

    possible deficiency judgment with greater

    liability to the homeowner.

    In a property negotiated short sale, the home

    is sold at a price that should be close to

    market value, and in almost all cases, will be

    better than a later REO sale, resulting in a

    lower deficiency amount with less liability to

    the homeowner.

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    6 Possible Short Sale Outcomes

    There seems to be a lot of misinformation and uncertainty surrounding the after effects of Short

    Sales for homeowners. This is due to the fact that there is a wide variety of lenders and lender

    guidelines, and each Short Sale approval is specific to the homeowners financial situation and

    will vary.

    Before you can understand the possible outcomes, you must understand the difference

    between a lien release, and a lien satisfaction.

    Generally, the Lender has the right to approve the Short Sale in one of two ways:

    1. Release the lien - allow the sale of the property to a new buyer, and still pursue furtheraction to collect the remaining debt or a portion of it, or

    2. Fully satisfy the lien allow the sale of the property to a new buyer and forgive theremaining debt.

    NOTE: Its important to realize that if a property goes to Foreclosure, a lender can STILL pursue

    the homeowner for the shortage between what the bank subsequently sells the property for

    and the original mortgage amount plus all collection costs (legal fees). The potential liability to

    the homeowner will be greater if the property goes to Foreclosure due to greater collection and

    holding costs incurred by the lender, and the lower value of the property (in a depreciating

    market).

    In negotiating Short Sales, SFSS will always ask the lender to fully satisfy the lien without the

    homeowner having to bring any money to closing, with little or no consequences to the

    homeowner.

    The Seller should always seek legal and financial advice to help with all Short Sale outcomes.

    The following are the three most common options that Lenders pursue from the homeowner

    subsequent to the Sale.

    6.1 Promissory Note

    On rare occasions, Lenders will forgive mortgage debt, but will ask for an unsecured promissory

    note for a specified amount to be signed by the seller at closing. This is typical if a mortgage has

    PMI on it (Private Mortgage Insurance). For example, as a condition to Short Sale approval, the

    lender may ask for a $10,000 promissory note, zero interest, to be paid over 10 years, with amonthly payment of $83. Usually the terms are very favorable. Or instead of the note, the

    Seller will be asked to bring a cash payment, say $5,000, to closing. The Sellers can refuse the

    note and the cash payment and tell the bank it is not an option they are willing to consider, or

    counter offer with a lower amount. In a Short Sale, everything is negotiable.

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    However, if the Short Sale does not close it may result in Foreclosure with greater potential

    financial liability to the Seller.

    6.2 1099C vs. Deficiency Judgment

    In a Short Sale, there is the risk that the bank can pursue the deficiency (difference b/w totalmortgage owed and sale amount) in what is known as a deficiency judgment. However, if there

    is no money to be recovered (if the seller doesnt have any other assets worth pursuing) a

    deficiency judgment will usually not be enforced by the lender.

    In most cases, the lender is more likely to issue a 1099C in the year after the sale, for the

    amount of debt relief. The 1099C signifies that the lender has forgiven the debt, and has

    written it off.

    It is important to understand that the lender cannot issue a 1099C and pursue a deficiency. It

    can only do either one, not both.

    NOTE: A lender can still pursue a deficiency judgment even if the home goes to

    foreclosure for the difference b/w the REO sale price and the total mortgage balance!!

    HOWEVER, by doing the Short Sale, we can negotiate with your lender to waive the

    right to pursue a deficiency.

    In the state of Florida, certain assets are protected from a deficiency judgment.

    These include your homestead (primary residence), life insurance policies and annuity

    contracts, pension and profit sharing plans, IRAs, disability income and prepaid college

    plans. (see your local attorney for details, do your own research)

    One of the things we always ask for when negotiating a Short Sale is a full Satisfaction of Lien

    or that the lender waive its right to pursue a deficiency. If the bank does satisfy the lien, the

    bank will issue a 1099C for amount of debt forgiven.

    Example: Mortgage balance: $450,000

    Approved Short Sale payoff: $300,000

    Shortage/Deficiency: 1099C Amount

    In this example, the bank may send the seller a 1099C showing $150,000 as income. In the eyes

    of the IRS, debt relief = income to seller. The good news is that in 2007, Congress passed theMortgage Forgiveness Debt Relief Act of 2007which eliminates taxation on debt forgiveness on

    owner-occupied homes. It applies to debt forgiven between 2007 and 2012. So in the above

    example, if the bank sends you a 1099C for $150,000, you would not have to pay income tax on

    it if the property was your primary residence. You can read the Mortgage Forgiveness Debt

    Relief Act of 2007at the IRS.govwebsite here:

    http://www.irs.gov/individuals/article/0,,id=179414,00.html

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    7 Our Short Sale Process Diagram

    Seller considers a Short

    Sale (SS)

    Seller meets with SFSS to

    discuss options. Seller

    determines SS option is best.

    SFSS Attorney creates

    SS Package with a

    payoff Offer to the

    mortgage company.

    SS package sent to

    the mortgage co.

    SFSS agent markets

    property to find end

    buyer while Short Sale is

    being negotiated.

    Lender reviews file for

    completeness. Orders

    additional docs as

    required.

    Lender orders

    appraisal or

    BPO to compare

    with SS offer.

    Attorney negotiates

    SS with lender to get

    lowest possible price

    to get property sold.

    Agent compiles list of

    interested buyers, while

    SS is being negotiated.

    Short Sale successfully

    negotiated with lender.

    Obtain written Short Sale

    approval from lender. SS

    approval must be signed

    by the seller.

    Seller has time to find a

    new place to live. Seller

    has better options with

    no foreclosure on credit

    report.

    Sales contract

    signed with highest

    and best buyer.

    Property is SOLD.Title company receives

    Short Sale approval and

    performs title work.

    Seller and Buyer come

    to closing. Closing Docs

    signed, property is SOLD

    and CLOSED.

    Seller escapes

    Foreclosure. Mortgage

    debt is settled. Seller can

    move on with life.

    0 30

    Days

    30 60

    Days

    60 -120

    Days

    120 - 180

    Days

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    305-390-0574 Main - 786-398-4614 Fax

    8 Frequently Asked Questions

    8.1 What does your company South Florida Short Sales (SFSS) do exactly?

    SFSS is a Short Sale negotiation company, affiliated with a real estate brokerage. SFSS will set an

    initial phone consultation with you to make sure youve explored all of your options (ie. loan

    modification). If you decide that a Short Sale is for you, well set an appointment with you to

    discuss the process in detail. We will guide you through all of the necessary paperwork and

    what is required. We will submit an offer to your lender from one of our transactional buyers

    with a completed Short Sale package. We will market the property and secure an end buyer,

    while we are negotiating with your lender to accept a Short Sale. Once we have a written Short

    Sale approval from your lender, we pay off lender(s) and close with the end buyer. The Short

    Sale negotiations and closing will be handled by a local attorney owned title company at NO

    COST to the Seller.

    8.2 How much will this cost me?

    SFSS does not charge any fees to the Seller. Our commissions and fees will be paid by the

    lender. All seller closing costs will also be paid by the lender. No one should ever charge a

    Seller to do a Short Sale.

    8.3 How long does the Short Sale process take?

    On average, from the time of the initial Short Sale package to the lender to the time of closing,

    the Short Sale process can take anywhere from 3 to 6 months. The process is lengthy and will

    depend on the cooperativeness of the mortgage lender and homeowner. It is important to be

    patient during the process.

    8.4 What are the sellers responsibilities in a Short Sale?

    There are 4 main responsibilities of the seller in a Short Sale transaction:

    1. Gather the required short sale documents required by the lender and give to SFSS. TheSFSS attorney will prepare a Short Sale package and send to the lender to start

    negotiations.

    2. Gather any additional documents required by the lender throughout the process. Manytimes the lender will request updated financial records.

    3. Make the property available and presentable for showing.4. Show up to closing and sign all closing docs at the title company.

    8.5 Can I receive any proceeds from the Short Sale?

    Since you owe more than the property is worth, the lender will not permit you to receive any

    proceeds from the sale.

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    305-390-0574 Main - 786-398-4614 Fax

    8.6 Why pursue a Short Sale?

    In a properly negotiated Short Sale, a homeowner can avoid a credit-destroying Foreclosure on

    his/her credit report and have the mortgage balance forgiven by the lender with NO COSTS to

    the homeowner. Short Sales are a NO COST alternative to avoid foreclosure when all other

    alternatives have been exhausted.

    8.7 Ive already received a foreclosure notice, is it too late for a Short Sale?

    It is not too late to do a short sale if you have received a foreclosure notice. Plus, there are ways

    in which we can help you extend the foreclosure timeline. A Short Sale can be approved and

    completed up to the date of the bank auction. However, time is always of the essence and

    there are never any guarantees.

    8.8 Can the bank come after me for the balance, after the home is sold?

    We will always request that the lender settle the debt in full as part of the Short Sale. In most

    cases the bank will waive its right to pursue a deficiency as part of the written short sale

    approval. That means that typically they wont come after you for the remaining balance.

    Instead, they will issue a 1099C in the following year for the amount of debt forgiven (not

    taxable if property is your primary residence). Unless the homeowner has significant assets

    worth pursuing, most lenders will not pursue the deficiency. Realize that we can never make

    any guarantees, as all lenders have different guidelines. However, lenders are very much aware

    of homeowners inability to pay, so they often see further collections as fruitless. The lender

    will disclose the terms of the Short Sale approval in writing, and give you the opportunity to

    agree or disagree with any of the conditions prior to the sale of the property.

    8.9 Im ready to get started, whats the next step?

    1. SFSS will set an initial phone consultation with you to make sure youve explored all of youroptions and have decided that a Short Sale is for you. We will need you to fax us the

    BORROWERAUTHORIZATION LETTER, (see next page 18) so that we can communicate with

    your lender and confirm what documents they will require for the Short Sale. We will also

    send you our SHORT SALE WELCOME PACKAGE.

    2. We will then set an appointment with you to discuss the process in detail, and collect all ofthe required paperwork. We will assemble the Short Sale package to forward to our

    attorney to start the negotiations with your lender.

    3. We will begin to market the property for sale, and will ask for your cooperation in theprocess.

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    South Florida Short Sales

    6538 C lli A #67 Mi i B h FL 33141

    JEANETTE HERNANDEZ-SUAREZ, P.A.

    ATTORNEY AT LAW

    11400 NORTH KENDALL DRIVE, SUITE 205

    MIAMI, FLORIDA 33176

    Telephone: (305) 596-1044 Facsimile: (305) 596-0981

    BORROWER AUTHORIZATION LETTER

    Date:_____________,2011

    Lender: ______________________________

    LOSS MITIGATION DEPARTMENT

    To Whom It May Concern:

    Property Address:___ ___________________

    Loan Number: ___________________________

    Dear Sir/Madam:

    I/WE hereby authorize the law office of Jeanette Hernandez Suarez, P.A. and its legal assistants

    (Jeannette M. Hernandez and Max Hernandez) to inquire about my mortgage and obtain information

    in reference to same and negotiate any and all issues pertinent to our mortgage, including for

    negotiation of a short sale.

    I hereby agree to indemnify and hold harmless, The Law Office of Jeanette Hernandez-Suarez, P.A. and

    or each of their respective assigns, associates, employees or agents from any liability for actions taken

    by the lender or as a result of this contemplated short sale transaction.

    Should you have any questions, please do not hesitate to contact me directly.

    x_________________________________________

    Borrower:__________________________________

    SS#:__xxx-xx-_______________________________

    x__________________________________________

    Co- Borrower (if applicable):____________________

    SS#:__xxx-xx-________________________________