Financial Problems Can Be Paralyzing
Often, good people in bad circumstances will feel trapped, afraid, panicked and alone. The stress can be devastating to one's health, marriage, and hopes for a better tomorrow. Do not let this happen to you. Even if you have a year's worth of unpaid bills unopened in a plastic bag and you are afraid to answer the phone for fear of dealing with another abusive collector, just contacting us will get a weight off your shoulders and put you back in control of your destiny. There is help out here, and it won't cost you an arm and a leg.
What is a Short Sale?
A Short Sale is when a home is sold for less than the amount owed and the lender agrees to release the lien and settle for less than the full payment.
Why would a lender accept a Short Sale? A Short Sale is a form of loss mitigation, the lender (investor) is presented with a choice between a smaller loss by Short Sale or a larger loss through foreclosure, so accepting the Short Sale “mitigates the loss.”
The advantage of a Short Sale compared to a foreclosure is that you avoid having a “debt discharged due to foreclosure” on your credit file which can reduce your credit score by over 250 points and keep you from qualifying for a home loan for up to 5 years. With a Short Sale you can qualify for a home loan in just 24 months. Also if a Short Sale is negotiated properly with your lender you can avoid a possible deficiency judgment.
Qualifying for a Short Sale
For a Short Sale to be approved by your lender you must show a hardship. A hardship is defined as a situation that is the result of some extenuating circumstance that forces you into a position where you can no longer afford the mortgage payments. Some examples of a hardship are loss of income, unemployment, divorce, illness and job transfer.
Lenders will also allow a short sale of an investment property. Some examples of hardship include the amount of rent charged does not cover the mortgage payment and related expenses and you cannot afford to pay out-of-pocket to make up the difference. You are unable to rent the property at a price that covers all expenses. You cannot afford to fix damage to the property that keeps you from renting it out.
In California, purchase money loans are not subject to deficiency judgments; however, some hard money loans, equity loans and refinances are, providing certain conditions apply.
Benefit of a Short Sale When Buying A New Home
Fannie Mae's new policies for manually underwritten loans related to the time period that must elapse before borrowers can demonstrate they have reestablished an acceptable credit history after the occurrence of a short sale or foreclosure.
According to Fannie Mae, only 24 months must pass before being eligable to buy a home.
Additional Requirements: None
Note: No exceptions are permitted to the 2-year time period due to extenuating circumstances.
5-year time period from completion date.
Additional requirements that apply after 5 years up to 7 years following completion date:
- The purchase of a principal residence is permitted with a minimum 10 percent down payment and minimum representative credit score of 680.
- Purchase of a second home or investment property is not permitted.
- Limited cash-out refinances are permitted for all occupancy types pursuant to the eligibility requirements in effect at that time.
- Cash-out refinances are not permitted for any occupancy type.
Deed-in-Lieu of Foreclosure
4-year time period from completion date (date deed-in-lieu executed)
Additional requirements that apply after 4 years up to 7 years following completion date:
- Borrower may purchase a property secured by a principal residence, second home, or investment property with the greater of 10 percent minimum down payment or the minimum down payment required for the transaction.
- Limited-cash-out and cash-out refinance transactions secured by a principal residence, second home, or investment property are permitted pursuant to the eligibility requirements in effect at that time.
Tax Considerations of a Short Sale
On December 20, 2007 President Bush Signed H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007.
The law applies to primary residences only and takes effect from January 1, 2007 through December 31, 2009. It provides relief to home owners by shielding them from the additional burden of potential federal income tax on any amount written off or forgiven by their lender in case of foreclosure or short sale. Consultation with an experienced tax professional to see how the law applies in your circumstance is advisable.
For more information Click Here - IRS Guidance regarding The Mortgage Forgiveness Debt Relief Act of 2007
How Do I Get Started?
The first thing we need to do is evaluate your situation, which includes a conference call with your lender to understand your loan terms and current status. Only after discussions with both you and your lender can we determine if a Short Sale is the best solution. Many people have called us resigned to losing their home to happily find out we were able to negotiate a modification of their loan that made it possible to keep their home.
If a Short Sale is the best solution for you, we will immediately begin the process. A Comparative Market Analysis will be ordered and a listing agent will be assigned. A marketing strategy will be developed based on the time frame we have agreed on to complete the Short Sale.
Short Sales normally take 90 days to complete. Lender approval will take up to 60 days from the time an offer is submitted. Once approved 30 days will be given to close escrow.
Is There a Fee to Hire Your Company for a Short Sale?
Absolutely not. Unlike other loss mitigation companies, our services are provided at no cost to the homeowner.
What Areas do You Cover?
We specialize in the South Bay Area and cover the entire state of California.
We will assign a real estate agent in your area, an agent experienced with short sales and in most cases, an agent that is part of our statewide network of agents we successfully work with on consistent basis.
The real estate agent will be responsible for listing and marketing your property and we are responsible for working with you, your lender or lenders, the title and escrow company, the buyer's agent and the buyer's finance company to successfully complete the Short Sale.
Let us be your Advocate.
We are Licensed Professionals with experience in the real estate and lending industry. We specialize in Loan Modifications and Short Sale Services.
Our philosophy can be summed up in one sentence - “Total commitment to our client's needs and what's best for them.”
We have the experience and knowledge to resolve your situation in the most favorable terms possible.
Please fill out the form below or if you prefer, call us direct at 1(800)699-0859 to discuss your situation. We are available Monday to Friday 8:00AM to 8:00PM PDT. By completing this form you are in no way obligated. Our initial consultation is always Free.