What is a Short Sale/Payoff?
A short sale, also called a “Short Pay” occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.
What is a mortgage default?
Failure of the borrower to honor the terms of the loan agreement. Lenders (and the law) usually view borrowers delinquent 90 days or more as in default.
Is a Short Sale right for me?
Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you are faced with a hardship that makes it likely you will be unable to meet your obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through foreclosure As you consider the option of pursuing a Short Sale, remember your lender is looking to limit any potential loss on your loan. By completing a Short Sale, your lender has arrived at a solution that is, for them, much better than a foreclosure.
Bottom line, your lender wants to work with you. Contact Sell More Short Sales for a FREE consultation please call
tollfree — 1-510-776-9875
If I do a Short Sale, how much will I have to pay to sell my home?
Nothing. 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 even most repair expenses are paid by the lender as part of the Short Sale approval."
Remember, lenders approve Short Sales and accept the resulting loss in an effort to avoid bigger losses through foreclosure.
What is my potential liability after completing a short sale? What is a deficiency judgment?
Update: many Americans have been going through the hardest times of their lives, owning a Home is supposed to be the American dream. Not a nightmare, finally some relief in site.
The National Association of Realtors® praised the U.S. House of Representatives for passage of the Mortgage Cancellation Tax Relief Act, H.R. 3648, by a vote of 386 to 27. Since the early 1990s, NAR has advocated for repeal of the current law, which forces individuals to pay an income tax when they have had a loan forgiven or have had to foreclose because of their inability to pay their mortgage.
"Congress made a good decision that will affect many Americans who find themselves in a truly bad situation," "Changing the IRS code is an issue of fundamental fairness. It would relieve a tax burden at a time when an individual or family has experienced a true economic loss arising from the sale or loss of their home. These families are already in financial distress and are most likely unable to pay additional taxes."
Sell More Short Sales expressed its commitment to continue efforts to make the horror of losing a home less burdensome for families. "This is not only about the sub prime turmoil we are currently experiencing. This is also about families who have lost their home or a need to sell that home for less than the amount owed on their home mortgage because of job loss, divorce, health issues, a decrease in the value of the home or other unfortunate circumstances. Clearly it is unfair to tax people on phantom income when they most likely have no cash with which to pay the tax. The current tax code requires a lender who forgives debt to provide a Form 1099 to the IRS stating the amount the borrower has been forgiven. This disclosure applies whether it is a short sale, foreclosure, deed in lieu of foreclosure or any similar arrangement that relieves the borrower of the obligation to pay some portion of their debt. If the property is sold at foreclosure or is sold for less than was borrowed, that difference is considered income and is subject to the tax.
H.R. 3648 would ensure that any amount forgiven on mortgage debt secured by a principal residence will not be taxed. The legislation has a provision to safeguard against abuses. That provision is similar to one that already exists for commercial real estate owners and would treat commercial and residential property equally.
Lender recourse: In some states and with certain types of loans, lenders can pursue a court decision called a “deficiency judgment” making you personally liable for the remaining amount owed to them above the short sale price. In some cases, the lender may ask you to pay a portion of the difference back in the form of an IOU.
The lender has sole discretion whether to pursue a deficiency judgment in those instances when a deficiency judgment is permitted. Unlike other loss mitigation companies that offer “basic” and “premium” services, at Sell More Short Sales, as a matter of course, we diligently apply ourselves to every short sale case with the goal of negotiating with the lender to eliminate a deficiency judgment and to consider your debt as settled. Please contact us today at 510-776-9875 for a free consultation with one of our Short Sale Specialists so that we can be of immediate assistance to you.
For more information click here.
What effect will a short sale vs. a foreclosure have on my credit?
While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect their credit rating, at least short sellers avoid having a "debt discharged due to foreclosure" on their credit reports. Mortgage and credit experts say that, having a foreclosure on your credit report will reduce your credit score by over 250 points. You could also have to wait up to seven years to qualify for a mortgage at a reasonable rate.
Short sales show up on a credit report as a "pre-foreclosure in redemption" status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as "discharged." People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 24 months. So, if buying a home is a future goal, then a short sale is the better option for many families.
What solutions are available if I am in default on my mortgage payments?
You may qualify for a broad range of help. Some solutions are:
- Short Sale/Payoff
- Forbearance Agreement
- Loan Modification
- Deed in Lieu
How does filing for bankruptcy impact my ability to do a short sale?
Sell More Short Sales can still help negotiate a short sale with your lender even if you file for bankruptcy protection. However, in our experience, bankruptcy is usually employed only as a last resort in a foreclosure situation. Typically, filing for bankruptcy only temporarily delays the foreclosure process (or in legal terminology, it provides a “stay”). The property will be sold to satisfy debts to creditors
How do I qualify for a Short Sale?
A borrower must prove that a hardship exists. The lender must be willing to accept the short sale proceeds as full settlement of the debt.
What is a Hardship?
A hardship is a situation that has a life changing effect for the borrower that results in an in-ability to pay the mortgage debt in either, short or long term. Some examples are:
- Separation or Divorce
- Medical Bills
- Inability to work due to health reasons
- Death of Spouse
- Job Relocation
- Reduced Income or Unemployment
- Business Failure
Attached is a partial list of our services:
- Possibly will help you avoid foreclosure and eviction.
- Help you minimize credit damages.
- Counsel you through the process.
- Representing you and acting as the liaison between the lender and your Broker/Agent to ensure all parties work together toward a successful solution.
- Provide relief during a difficult time.
In addition to the homeowner proving hardship, lenders require a specific set of supporting financial documents to consider a short sale. Contact Sell More Short Sales today at 510-776-9875 and one of our specialists will help you get started.
When should I begin the short sale process?
Immediately, foreclosure and short sale situations tend to be extremely time sensitive and consuming for negotiations. The sooner we can begin the negotiations with your lender, the greater the chances of a successful resolution. There is no need to wait until the lender sends you a notice of default or initiates formal foreclosure proceedings against you. Time is of the essence! Please contact Sell More Short Sales today at 510-776-9875 for a free consultation with one of our Short Sale Specialists.