What is a short sale? A short sale is a property sale negotiated with a mortgage company in which a lender takes less than the total amount due.
1. The Mortgage Crisis has affected nearly everyone in our country.
We’ve all been affected by the current real estate landscape: all homeowners, future homeowners, home builders, taxpayers, anyone who needs to borrow money, neighborhoods with vacant houses and/or foreclosed houses, the US economy, investors, the lumber industry, concrete industry, landlords, renters, all the laid off employees from these industries, and more. You are not alone.
2. You can try to lower your mortgage payments first.
Your bank may work with you in lowering your monthly payments. A lot of people would rather keep their home even if the value of the home is upside down. This is human nature, your house is your home and you may decide it’s worth trying to keep it. It’s worth a shot to try to lower your payment if you’re in it for the long haul.
3. You cannot do your own short sale.
The banks will require you to hire a real estate agent to negotiate your short sale.
4. There are advantages to short sales.
You can buy a home a lot sooner; your credit takes a lesser hit than if you foreclose. A successful short sale will at least give you the opportunity to start over and have many of the damaging effects of a foreclosure avoided.
5. It’s a lot of work for everyone involved, but it’s better than the alternative.
We’ve yet to come across a distressed owner who is pleased they need to seek relief from the bank because they can’t keep up with their mortgage payments. I can’t imagine an agent would prefer the additional work required to work with a lender on a negotiated short sale transaction. I’ve never worked with a buyer who was excited about the prospect of the uncertainty that a short sale purchase involves, often waiting much longer that it seems logical to find out if they were going to be successful in purchasing a home or not. Short sales are not fun and they are not ideal. What they are is a good solution to a bad situation. So, while I may hate short sales, I hate foreclosures more.
Our Asset Protection Group has dedicated their time and effort to understanding the issues distressed homeowners are dealing with. As Short Sale & Foreclosure Resource professional, they understand the full range of solutions and are ready to help. They have made the commitment to assist people in this situation, and help to stop the foreclosure process one family at a time.
Seven out of 10 people go through the foreclosure process without ever talking to a real estate professional. Please don’t let yourself be one of those people. We understand that it is hard to ask for help, but that is exactly what you need. You really do have some choices and the choices you make will be with you long after the foreclosure process has come and gone.
What you will get from us is a well explained process that you understand after our first consultation. It will make all the difference in the world to you if you are able to have a controlled process that resembles a sale of your home versus a foreclosure and eviction.
Anthony Newarski, President, Business Operations; SFR
More Information & Links
IRS Document on The Mortgage Forgiveness Debt Relief Act and Debt Cancellation
|Issue||Foreclosure||Successful Short Sale|
|Future Fannie Mae Loan
(Effective May 21, 2008)
|A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years.||A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years.|
|Future Fannie Mae Loan
(Effective May 21, 2008
|An investor who allows a property to go to foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years.||An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.|
|Future Loan with any Mortgage Company||On any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 that asks, “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” This will affect future rates.||There is no similar declaration or question regarding a short sale.|
|Credit Score||Score may be lowered anywhere from 250 to more than 300 points. Typically, this will affect a score for more than 3 years||Only late payments on a mortgage will show and an after sale mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all other payments are being made. A short sale’s effect can be as brief as 12 to 18 months.|
|Credit History||Foreclosure will remain as a public record on a person’s credit history for at least 10 years.||A short sale is not reported on credit history. There is no specific reporting item for a “short sale.” The loan is typically reported “paid in full, settled.”|
|Security Clearances||Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a client has a foreclosure and is a police officer, in the military, in the CIA or any other position that requires a security clearance, the clearance will be revoked and the position will be terminated.||A short sale on its own does not challenge most security clearances.|