WHAT IS A SHORT SALE?
* A Short Sale simply put is when a lender allows a Seller to sell their property for below what they owe on their loan. Let's say you owe $300,000.00 to Chase Home Loans. Your home is worth $200,000.00 due to the lower turn in the market.
The $100,000.00 difference is considered "The Short!"
* The Short Sale process can also help you avoid Foreclosure if you are starting to fall behind on your payments. You can also do a Short Sale if you are current on your payments as well. During market price reductions, you do have a right to sell your home at a lower price than what you owe and based on your current situation.
* Please understand that there is no guarantee that a Short Sale will stop the bank from foreclosure. It is another tool to help you out of a bad situation if you can find a buyer and if the bank helps out during the process. Please read on for additional information!
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*How does the Short Sale process work for me-The Seller?
1) You need a Realtor that has knowledge and experience on how to set up, and operate a Short Sale. This means contacting your lender directly, putting together a "Short Sale Packet" which includes detailed Financial Statements, Taxes, Bank Records, Pay stubs and more so that your lender will approve your Short Sale. This process also starts with creating the ideal marketing situation for your property, getting everything ready prior to bank approval.
2) Short Sales can work if you are current on your payments or if you are behind. Please keep in mind that when a NOTICE OF DEFAULT has been filed and you receive a copy of that notice, TIME IS NOT ON YOUR SIDE!!! In this market, even a Short Sale can take a long time. My average time frame from start to finish is 2-4 months depending on your lender and how fast we obtain a new buyer for your home.
3) Please keep in mind that this page is only a basic understanding of a Short Sale and the process. Contact me anytime for additional information so that I can assist you in any way! I am FREE OF CHARGE to you during the Short Sale process! Your lender/Bank will pay my commission!
Short Sale Program Eliminates Hurdles-(HAFA Program)
The federal government's short sale program (Home Affordable Foreclosure Alternatives, or HAFA), recently made changes to the eligibility requirements that could open up the program to more sellers.
The most sought-after benefit of a HAFA short sale is the elimination of the seller's personal liability on any difference between the sales price of the home and the amount of the mortgage loan.
To be eligible for HAFA, the seller must still demonstrate some kind of financial hardship. However, the lender is no longer required to verify a seller's financial information or to determine if the borrower's total monthly mortgage payment exceeds 31 percent of the seller's monthly gross income.
Another major change to the program concerns the vacancy of property. Originally, the home had to be currently owner-occupied with a narrow, 90-day exception related to job relocation. In the revised program, the property currently must be or recently have been the seller's principal residence, but a vacancy for up to 12 months prior to the short sale agreement is allowable, so long as the seller provides documentation that the property was his/her principal residence prior to relocation and the seller has not purchased a residential property in the prior 12 months. The reason for relocation does not need to be connected to re-employment or transfer of employment, and there is no longer a minimum distance requirement.
Here is a link regarding Short Sales and Tax Issues/Questions from the IRS website:
http://www.irs.gov/individuals/article/0,,id=179414,00.html
The Mortgage Forgiveness Relief Debt Act of 2007 will EXPIRE on December 31, 2012! Now is the time to do a Short Sale! This act will wave any tax liabilities on your primary residence and if the home was purchased as a primary residence! Other terms and conditions will apply with the IRS, please contact your CPA and or tax person to find out more information about your tax liabilities when doing a Short Sale. Call me today for more information about how to start the Short Sale process! rsghh
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Call Paul or Tara today to find out what your legal rights are when doing a Las Vegas Short Sale!
Here are nine options when facing Foreclosure to think about:
1. Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option.
2. Payoff/Refinance – Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home.
3. Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.
4. Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.
5. Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.
6. Partial Claim – A loan from the lender for a 2nd loan to include back payments, costs and fees.
7. Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened.
8. Bankruptcy – This option can liquidate debt and/or allow more time. I can refer you to a qualified bankruptcy attorney.
--Chapter 7 (Liquidation) To completely settle personal debt.
--Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.
--Chapter 11 (Business Reorganization) A business debt solution.
9. Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional home sale. In this case, the homeowner will get cash from the sale. On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value.
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