DO YOU OWE MORE ON YOUR HOME THAN IT IS WORTH?
A short sale occurs when a homeowner owes more than their home is worth and attempts to sell the home without paying the difference between the sales price and the total loans and fees. For example, let's look at a home that is worth $800,000,but the loans on the home total $900,000, and there are $50,000 in sales commissions, property tax, and other fees. The homeowner agrees to sell the home for $800,000 subject to the lender agreeing to reduce the loan payoff from $900,000 to $750,000. Any fees associated with the sale are absorbed in escrow and the homeowner pays no costs or fees.
Each lender has their own criteria for who qualifies for a short sale, so each is handled on a case by case basis. It is best for a homeowner considering short sale to meet with an experienced agent to discuss options. Generally speaking, a borrowers assets and income are carefully reviewed during the short sale process. I have handled many short sale transactions and am familiar with the most recent policies and protocol.
More about HAFA:
The Home Affordable Foreclosure Alternative Program
I will discuss HAFA options during our initial consultation apointment. This government program provides alternatives and benefits to the homeowner that is underwater and facing possible foreclosure. To learn more, here is a link to the HAFA site: http://www.makinghomeaffordable.gov/programs/exit-gracefully/Pages/hafa.aspx
Short Sale Costs
There are no costs to the seller in a traditional short sale, all fees and mortgage debt is paid off at closing. Each situation is unique, and should be evaluated for any deficiency or tax consequences. In most cases, the homeowner is released from all mortgage debt.
What if I am facing foreclosure?
Most lenders will postpone a foreclosure or Trustee’s sale if a short sale offer is presented to them. They will then review the offer for short sale approval. During this time the borrower generally makes no mortgage payment.
In general, most banks have greatly streamlined the short sale approval process and are more than willing to work with homeowners that are looking to a short sale as an alternative to foreclosure. Banks simply would rather have the home sold than take the home back in a foreclosure sale. The process does not differ much from a traditional sale. The biggest difference to the homeowner is two fold. First, the homeowner will not be expected to make any repairs whatsoever, as the sales are generally as-is. Second, the homeowner will need to provide the lender with a package of information at the very beginning of the process. Usually this includes tax returns, bank statements, hardship letter and income verification.
Contact me for a private consultation to discuss your options. I can help provide alternative solutions to foreclosure. And if a Short sale is an option, I can combine my local area expertise with extensive experience handling short sales to provide the most comprehensive solution possible.