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Wednesday, February 9, 2011
Short Sales Frequently Asked Questions
I speak with a lot of people that are facing the difficult choices of how to best handle defaulting on their mortgage. Here are the most common questions I hear.
1. Why should I do a short sale?
Not everyone is a good candidate for a short sale. However, there are some immediate benefits as well as possible advantages in the future when compared to the consequences of a foreclosure. An ideal candidate for a successful short sale is someone that has investigated other options (such as loan modification without success) and does not want to incur a foreclosure. Some benefits of a short sale include:
A) For people that continue to live in the home, there can be an opportunity to “save” on living expenses while going through the process
B) Short sale participants have some control and input on the timeline for moving versus a foreclosure that can be completed in a very short timeframe leaving you scrambling
C) We have the statistics now that reveal short sales sell for more than foreclosures. This means more market stability in your neighborhood and our communities.
D) There are programs that will PAY YOU a $2,500 or $3,000 Relocation Fee upon successful completion of a short sale
E) A foreclosure may render you ineligible for a home loan for 5-7 years. A short sale will shorten that to 2-3 years. Some lenders have even come out with programs (ALREADY) that will approve someone with a short sale with a larger down payment requirement and higher interest rate.
F) Foreclosures remain on credit history reports for 10 years and can affect future interest rates - on items such as a car loan
G) Many employers require a credit check and a foreclosure can challenge employment; short sales are reported differently
H) Security Clearance or License applications for certain professions may be revoked or denied due to a foreclosure
2. How long does the process take?
This is a very common question but there is NO standard answer. There are many variables that affect the overall timeline. Some of these variables include the experience level and commitment level of the listing agent, homeowner cooperation in providing requested documents, the servicer or mortgage company (i.e. smaller servicers such as local banks or larger servicers such as Wells Fargo, Bank of America, & CitiMortgage) the type of loan it is (a VA, FHA, Conventional, PMI or no MI, etc) and ultimately the experience and cooperation of the person(s) assigned (negotiator) to the file. Another important factor is whether or not the file qualifies for certain programs such as a “Cooperative Short Sale” or HAFA. In the VERY best of circumstances, a short sale could be approved in as little as a month. My experience is usually right around 45 days FROM when an offer is submitted. There are times when it can take an extended period of time (up to 6 months) but again the experience level of the parties involved should minimize that.
3. What happens with the deficiency amount (the difference between the loan balance and the sale price)?
Again, there is no standard answer. Each file is reviewed based on the financial ability of the borrower and who the investor is (i.e. Fannie Mae or Freddie Mac or one of the smaller groups). You owe what you owe and the bank has a legal right to pursue a deficiency judgment whether they foreclose or short sale. Typically though, they do not make it standard practice to pursue a deficiency judgment.
4. What if the property needs repairs?
Due to the financial hardship associated with most short sales, it can be fairly common for the property to need repairs. Therefore, most short sales are sold “As-Is” and this is disclosed to potential buyers. Extensive repairs could significantly reduce the potential buyer pool, but there is a buyer for ever property at the right price. Each situation is different and we can help give you advice on how to deal with repair issues.
5. What if I’ve filed or am thinking about just filing Bankruptcy?
Bankruptcy is a complex legal process and if you feel you need Bankruptcy protection, you should consult with a bankruptcy attorney (or two or three). However, they tend to only look at the problem from a debt perspective and do not always consider some of the other fallout. There is a difference between being legally responsible for the deed and being the legal owner of the home. A bankruptcy can postpone a foreclosure but it will not prevent one. You can still do a short sale if you have or end up filing bankruptcy.
6. What about a Deed-in-lieu?
A deed-in-lieu of foreclosure has to be approved by the servicer/investor and most have guidelines in place that have a pre-requisite that a short sale was attempted first.
7. Can I do a short sale if I have not missed a payment?
Yes. If your home is worth less the balance of the loan AND you have a hardship, it is possible that a short sale may be approved. These are not the typical, but there are exceptions.
8. What if there are other liens against the property, such as past due Homeowners Association Dues?
A lien holder will typically allow these to be paid at closing from the sales price, although they do have limits on the allowable amount.
9. What about closing costs?
This is another concession that the lien holder will typically approve to be paid at closing from the sales price.
10. Who pays the real estate commissions?
Lien holders will approve the real estate commissions paid at closing from the sales price.
If you have questions, we have answers. Contact us for a Free, No Obligation, Confidential Consultation. We specialize in Cobb and Cherokee County, GA. The Brittany Loan Team 404-997-BUY1 (2891) or info@BrittanyLoan.com.
1. Why should I do a short sale?
Not everyone is a good candidate for a short sale. However, there are some immediate benefits as well as possible advantages in the future when compared to the consequences of a foreclosure. An ideal candidate for a successful short sale is someone that has investigated other options (such as loan modification without success) and does not want to incur a foreclosure. Some benefits of a short sale include:
A) For people that continue to live in the home, there can be an opportunity to “save” on living expenses while going through the process
B) Short sale participants have some control and input on the timeline for moving versus a foreclosure that can be completed in a very short timeframe leaving you scrambling
C) We have the statistics now that reveal short sales sell for more than foreclosures. This means more market stability in your neighborhood and our communities.
D) There are programs that will PAY YOU a $2,500 or $3,000 Relocation Fee upon successful completion of a short sale
E) A foreclosure may render you ineligible for a home loan for 5-7 years. A short sale will shorten that to 2-3 years. Some lenders have even come out with programs (ALREADY) that will approve someone with a short sale with a larger down payment requirement and higher interest rate.
F) Foreclosures remain on credit history reports for 10 years and can affect future interest rates - on items such as a car loan
G) Many employers require a credit check and a foreclosure can challenge employment; short sales are reported differently
H) Security Clearance or License applications for certain professions may be revoked or denied due to a foreclosure
2. How long does the process take?
This is a very common question but there is NO standard answer. There are many variables that affect the overall timeline. Some of these variables include the experience level and commitment level of the listing agent, homeowner cooperation in providing requested documents, the servicer or mortgage company (i.e. smaller servicers such as local banks or larger servicers such as Wells Fargo, Bank of America, & CitiMortgage) the type of loan it is (a VA, FHA, Conventional, PMI or no MI, etc) and ultimately the experience and cooperation of the person(s) assigned (negotiator) to the file. Another important factor is whether or not the file qualifies for certain programs such as a “Cooperative Short Sale” or HAFA. In the VERY best of circumstances, a short sale could be approved in as little as a month. My experience is usually right around 45 days FROM when an offer is submitted. There are times when it can take an extended period of time (up to 6 months) but again the experience level of the parties involved should minimize that.
3. What happens with the deficiency amount (the difference between the loan balance and the sale price)?
Again, there is no standard answer. Each file is reviewed based on the financial ability of the borrower and who the investor is (i.e. Fannie Mae or Freddie Mac or one of the smaller groups). You owe what you owe and the bank has a legal right to pursue a deficiency judgment whether they foreclose or short sale. Typically though, they do not make it standard practice to pursue a deficiency judgment.
4. What if the property needs repairs?
Due to the financial hardship associated with most short sales, it can be fairly common for the property to need repairs. Therefore, most short sales are sold “As-Is” and this is disclosed to potential buyers. Extensive repairs could significantly reduce the potential buyer pool, but there is a buyer for ever property at the right price. Each situation is different and we can help give you advice on how to deal with repair issues.
5. What if I’ve filed or am thinking about just filing Bankruptcy?
Bankruptcy is a complex legal process and if you feel you need Bankruptcy protection, you should consult with a bankruptcy attorney (or two or three). However, they tend to only look at the problem from a debt perspective and do not always consider some of the other fallout. There is a difference between being legally responsible for the deed and being the legal owner of the home. A bankruptcy can postpone a foreclosure but it will not prevent one. You can still do a short sale if you have or end up filing bankruptcy.
6. What about a Deed-in-lieu?
A deed-in-lieu of foreclosure has to be approved by the servicer/investor and most have guidelines in place that have a pre-requisite that a short sale was attempted first.
7. Can I do a short sale if I have not missed a payment?
Yes. If your home is worth less the balance of the loan AND you have a hardship, it is possible that a short sale may be approved. These are not the typical, but there are exceptions.
8. What if there are other liens against the property, such as past due Homeowners Association Dues?
A lien holder will typically allow these to be paid at closing from the sales price, although they do have limits on the allowable amount.
9. What about closing costs?
This is another concession that the lien holder will typically approve to be paid at closing from the sales price.
10. Who pays the real estate commissions?
Lien holders will approve the real estate commissions paid at closing from the sales price.
If you have questions, we have answers. Contact us for a Free, No Obligation, Confidential Consultation. We specialize in Cobb and Cherokee County, GA. The Brittany Loan Team 404-997-BUY1 (2891) or info@BrittanyLoan.com.
Tuesday, January 25, 2011
5125 Holloman Road, Powder Springs, GA | Powered by Postlets
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Monday, January 24, 2011
422 Long Branch Way, Canton, GA | Powered by Postlets
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209 Hampton Station Blvd, Canton, GA | Powered by Postlets
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