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Short Sales

Short Sales Don't need to be scary!

I firmly believe that Short Sales shouldn't be Scary. The reason why people are threatened by them, is because they don't know what they're dealing with. I'm happy you've landed here because I know you'll leave with more information to take that fear away.

   

 

What is a Short Sale?

 

short sale is a transaction where the loan amount owed on a property is higher than the property’s market value. The mortgage holder (Lender) may be willing to accept to take the loss on the loan as long as the borrower provides evidence indicating a financial hardship presently exists or is expected in the immediate future.

 

The short sale process can be lengthy, as it has to undergo several decision makers. On average it may take between 2-6 months to receive an answer. However, a response may be received in a shorter time period. The decision process with regards to the acceptable price and time frame is determined by the Lender.

 

What is requested?

 

Numerous lenders are willing to negotiate a Short Sale but they will require a set of documents before they can make a decision.

  • Tax Returns for the past 2 years
  • Bank statements for the last month (All pages)
  • Detailed Hardship letter explaining why you are requesting a Short Sale
  • Paystubs, or a Profit and Loss statement (if you are self-employed).
  • Financial spreadsheet (Often provided by the lender requesting to see your monthly income/Assets and Liabilities)

 

 

What are the positive results of a Short Sale?

 

  • You may avoid a foreclosure by being upfront with the lender about your financial situation. You may negotiate fees and terms that may not allowable if subject property proceeds to foreclosure.
  • If you reside in the property you wish to Short Sale, you may be eligible for a Cash incentive offered by your lender, or the government through the HAFA program.
  • Cooperative Short Sales: Several lenders are now doing their own Short sale review process up front. If you are contacted by your lender and they wish to do a Cooperative short sale, this may be a viable route to go through the process without too much paperwork and avoid a lengthy negotiating process. These programs will often times offer the seller a Relocation incentive for participating and may also avoid having to pay the remaining debt (Deficiency Judgment).

 

 

 

What are the negative effects of Short Sale?

 

  • A Short Sale, just like any other debt that you don’t pay on time or in full, will affect your credit score. The adjusted credit score is hard to determine given that there are several creditors involved. You may be able to improve your credit scores in a relatively short amount of time; however, this will depend on how you maintain your outstanding debt.

 

  • You may be able to obtain credit for a future home purchase through an approved FHA Lender program in a shorter length of time if you avoid foreclosure on your existing home.  

 

 

What may be requested by your Lender?

 

As part of a Short Sale approval your lender will generally request the following:

 

  1. That the seller may not receive any money, unless it is through a Cash incentive offered by the bank or the government (HAFA) or a Cooperative short sale program directly with the lender.
  2. The transaction must close on time. Time is of the essence on short sale transactions, you must ensure that throughout the entire process everything is done as soon as possible. A per diem may be requested by the lender if the transaction doesn’t close by the stipulated closing date.

 

An approval will have several other conditions. Some of the other conditions your approval MAY include are:

 

Cash Contribution

This is a sum of money the lender may require the borrower to pay on the day of closing.

 

Promissory Note

This is a Note, or a promise to pay, that a borrower will have to sign at closing. The amount of money will vary depending on the financial situation. The length of time of the promissory note will also vary. A promissory note is generally offered at 0% interest.

 

 

  

Primary Residence vs Investment Home

 

Different criteria will be evaluated by the lender depending if you reside in the property or not. Lenders tend to be more lenient with homeowners who are at risk of losing their primary residence. The government backed program HAFA also works for owners that use the property as their primary residence only.

 

A lender after writing an approval agrees to release the lien from the property if all required and stipulated conditions are met within the time period allowed. After the sale takes place the lender may issue:


Debt Cancellation 1099-C

 

This is issued by your lender to the IRS for the amount of money the lender lost through the transaction. This money is reported as income to the borrower who short sold their home, which will have to be reported by the borrower through their tax returns.

The repercussions of this will vary depending on several factors. You are advised to discuss your personal tax consequences with your own CPA or accountant.


Deficiency Judgment

 

In the state of Florida, lenders have a right to pursue the owner for the remaining debt after the sale of the property (through a short sale or foreclosure).

This has become a major issue for most homeowners and is considered part of the negotiating process.

 

When negotiating a Short Sale, your representative will make efforts to eliminate the deficiency judgment issues. The release of deficiency judgment is up to the lender’s discretion, and they may or may not agree to provide this release in writing.

 

  

It is imperative to research your own personal consequences of a short sale by talking to an accountant, a lawyer or credit counseling agency.



 I have worked on numerous succesful short sale transactions with Bank Of America, Chase, Wells Fargo, First Franklin, Bank United, LBPS, Seterus, Option One, Aurora, Litton Loans, IndyMac & AHMSI to name a few. Short Sales are complicated sales that need experienced people.
 
 

 
Here in the Tampa Bay area, we have numerous Military members moving in and out. For those Military families affected by the economic downturn, there’s now available Short sale programs that make the process available. This program is called HAP and it allows those in the Military to have a way to move on from their property without the terrible effects of a foreclosure.
I've undergone extensive Short Sale training that have helped dozens of clients move on with their life! 

If you or somebody you know is facing financial problems, I can help to avoid foreclosure, but you must act fast. You will need an experienced professional. Don't let the bank just "take the house", take command of the situation, and

Call Claudia Today! (813) 846 8753 


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Future Home Realty
13029 W Linebaugh Ave #101 • Tampa, FL 33626
Phone: (813)846-8753 •
Fax: (866)395-6449


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