SHORT SALE - FAQ
Some people think that Short Sales or dying out, but there are still quite a few people requesting information the the whole Short sale process.
This blog is just simply to inform. I get a lot of questions asked about the short sale process.
When thinking about a Short Sale as a alternative it is good to find a knowledgeable Realtor to sit down with to discuss your options, you will need the Realtor to communicate on your behalf with your lender.
What is a short sale? A short sale is an alternative when a home owner is in default on their loan and a lender agree to accept less for the home than which is owed, or you may say that the home is upside down
How long does it take to do a short sale? That is a good question, at one time it was taking from 9 months to a year to complete a short - But with time being of the essence when one has defaulted on their mortgage payments ( usually missed between 4-5 payments in a row) The process of a short sale varies from lender to lender. There are many variables involved to be able to give a definite time frame. Experience with a wide range of lenders show an average of 2-4 months. However, some may take even longer.
Can the mortgagor stay in the house? Yes, however the seller need to be prepared to move out at close of escrow, which happens when the (SS) is approved and home is sold.
Will the seller get MONEY from the sale to relocate or move out? Through the HAFA (Home affordable incentive program) & other programs a seller may obtain some moving expense money. It all depends on the type of financing you have. The extra cash can come in handy and Realtor should request it with your initial package.
What is a "qualifying" hardship? Some examples of bank recognized hardship reasons are; reduction in income, job transfer, illness, divorce, unemployment, payment adjustment etc. A detailed hardship explanation letter will be required from the seller (homeowner). The home being worth less than the homeowner owes is not a qualifying hardship, but it helps.
What is the short sale success rate? Market research suggests a success rate of 50 - 60%, but this varies from company to company.
What if the seller has more than one mortgage? It can be a more difficult process, but in many cases it can be accomplished. The experienced negotiator / Realtor needs to negotiate with all lenders simultaneously. Usually what is agreed on from the sale is 10% or up to 8,000 for seconds, 3,000 for thirds, etc. in some cases the third and all that follow do not receive anything. But this varies also from lender to lender and everything is negotiable.
Will the banks pursue the sellers for the deficiency balance of their loan? This depends on the type of loan Laws and Bills such as SB 931 may protect sellers from banks pursuing them after a short sale. Home Based Realty will review the approval for the best possible terms for the homeowner. You should check out my blog to learn more about the 2013 forgiveness act. www.myrthiehazelrealtor.blogspot.com
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Are there tax consequences to a short sale? Possibly Seller may fall under the protection of the Mortgage Debt Relief Act that has been extended through 2013. The seller should consult with an attorney or tax person, as to whether or not a short sale will result in any taxes owed.
What documents are needed to process a short sale? A complete and up to date set of documentation must be submitted to the lender. When you sit down with your Realtor to start the short sale process your Home Based Realty professional Realtor will give you a checklist of all crucial documentation needed.
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Myrthie Hazel, Realtor
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call 760-475-7240
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