The Queen of Short Sales

FAQs

September 23, 2009 | Uncategorized

Can a family member buy my house in a short sale?

No, your lender requires that the sales be an arms length transaction, which is a transaction in which the buyer and seller act independently and have no relationship to each other.

Can I receive any proceeds from the short sale?

No. A universal requirement of lenders in granting a short sale is that the borrower will not get any proceeds from the sale of the property. Since the lender is going to take a loss on your loan they are not going to allow you receive any money.

Can I receive any proceeds from the short sale?

No, since the lender is taking a loss on the mortgage they do not allow the homeowners to receive any proceeds at the closing.

Do I have to make any repairs in order to short sale the house?

No, there is no need for you to spend any money repairing your house. Since you are not entitled to receive any proceeds from the short sale of your house, only the bank or the new buyer will benefit from any repairs you would make.

How can I help the short sale process?

Your lender will require a review of your financial situation which usually includes: two months bank statements, two months pay stubs, two years IRS tax returns and other information. The leading cause of delay and even denial of a short sale by your lender is caused by the homeowner failing to deliver these items in a timely manner. Your lender may request updated bank statements and pay stubs throughout the short sale process.

How long will a short sale take to complete?

The short sale negotiation process is a lengthy one. It may take several months or more to get an approval. Many lenders have several layers of bureaucracy, insurers, and investors that we will have to maneuver through in order to get a short sale approved. So it is important to be patient during this long process.

How much will your service cost me?

Our services do not cost you one cent. Our commission is paid by your lender.

How quickly will I have to move?

You will have to move one week before the closing. We will notify you of the closing date 30 to 45 days in advance.

What are the benefits of a short sale?

The benefits to the homeowners include avoidance of a foreclosure on their credit report and partial control over the monetary deficiency. A short sale is typically faster and less expensive for the lender than a foreclosure.

What happens if my lender does not accept a short sale?

Your house will likely go to foreclosure. A short sale is something we try after you have exhausted your other options.

What happens to the money in my escrow account for taxes and insurance?

The money in your escrow accounts will be forfeited to your lender to reduce the mortgage balance.

What if I have a second mortgage, can I still do a short sale?

Yes we can still do a short sale. Your lender in the first position will dictate how much the junior liens may receive at the closing. If the foreclosure continues to the sheriff's sale, the junior liens will be wiped out and will not recieve anything.

What if I have already filed bankruptcy?

Since a bankruptcy prevents debt collection activity, and foreclosure is a collection activity, and a short sale is an alternative to foreclosure, lenders will not discuss a short sale if the property is involved in an active bankruptcy. Therefore, if you have filed a bankruptcy, we will not be able to negotiate a short sale until either: the bankruptcy is discharged or dismissed, the trustee abandons its interest in the property, or the court issues an order granting relief from the automatic stay and specifically allowing the short sale.

What if I now live out of state, can I still do a short sale?

Yes, we can still do a short sale. We will mail you the necessary documents to sign and return. Our title company will coordinate an out-of-state closing with a title company in your area.

What if I owe back taxes, can I still do a short sale?

Since the short sale buyer and their lender will require a clear title, your lender will pay any back taxes from the proceeds of the short sale.

What if I owe HOA fees or other liens, can I still do a short sale?

Yes we can still do a short sale. Your lender in the first position will dictate how much the junior liens may receive at the closing. If the foreclosure continues to the sheriff's sale, the junior liens will be wiped out and will not recieve anything.

What if I owe more than my home is worth, can you still work with me?

Yes we can still work with you. In fact most homeowners facing foreclosure in Central Ohio owe more than their homes are worth.

What if my house is already scheduled for the sheriff's sale, will I have enough time?

Maybe, maybe not. Just starting a short sale will not automatically stop the sheriffs sale. However, many times we can convince a lender to postpone the sheriffs sale to allow us time to negotiate a short sale. Lenders will not generally begin a short sale if the sheriff's sale is in 45 days or less.

What is a short sale?

A short sale occurs when a lender agrees to accept less than the amount owed to payoff a loan as an alternative to foreclosure. If the property is worth less than the amount owed on the loan, then even if the lender forecloses and takes back the property, they know they are going to take a loss. We can often convince a lender that they will do better if they take less than what is owed now rather than taking the property back by foreclosure and trying to sell it later.

Will I have to be present for the appraisals?

No, in fact we encourage you to not be present during any appraisals. Appraisals are meant to weigh the pros and cons of a house and it's condition and emotions should not be a part of the process.

Will there be any tax consequences?

The Mortgage Forgiveness Debt Relief Act of 2007 provides the discharge of indebtedness up to $2 million which is not considered taxable income from a short sale on a homeowner's primary residence of at least 2 years. As always, questions regarding your individual tax situation should be directed to your tax advisor.