News

If you’re reading this then you’re looking for an answer to questions about when to do a short sale and not lose your home on sheriffs auction and get evicted? Doest the short sale is the right thing to do for you? How often people do a short sale? What are other options instead of a short sale? I’m a certified short sale agent and i will try to answer all those questions below.

Selling your house “short” might be a good or a bad idea. It depends on various factors. There is many things to consider before going this route.

Things to consider before doing a Short Sale

• Are you selling or buying the house?
• What is your financial situation?
• What is the timeline?

The above points are really important questions to answer before moving forward with purchasing or selling your short sale. Before doing that you have to understand what a short sale is, its advantages, mistakes that you may commit and all things which apply to your situation.

You will never be happy if you continue to search for what happiness consists of. You will never live if you are looking for the meaning of life.

In order to get a short sale approved certain documentation listed below must be provided. After the required documentation is received I can start the process of negotiating the short sale request with your Lender(s).

• Pay Stubs (a full month)
• Two Years Most Recent Tax Returns & W-2’s
• Two Months Bank Statements (all pages)
• Mortgage Payment Coupon (s)
• Explanation of Hardship (Letter to Lender(s), signed & dated)
• Supporting Documents for Hardship
• Letter of Termination/Layoff Notice
• Job Relocation Letter
• Unemployment Benefit Letter
• Medical Bills
• Death or Illness in Family Documentation
• Divorce Decree/Separation Agreement
• Child Support/Alimony Documents
• Rate increase/Payment increase letter
• Repair bills, etc
• Collection/Foreclosure Letters
• Sale Date Notice
• Financial Statement (attached)
• Homeowner’s Questionnaire (attached)
• Authorization to Release Information (attached)
• Hardship Affidavit (attached)
• Indemnity Agreement (attached)
• Privacy Notice (attached)
• FYI on Short Sales (attached)

What information will the bank need to decide whether to accept a short sale?

The sellers’ submission package should include W-2 forms from employers (or a letter explaining the seller is
unemployed), bank statements, two years of tax returns, and other financial documents outlining income and debt
obligations. The bank will also need comps or a broker’s price opinion showing your estimate of value. In
addition, the sellers should submit a “hardship letter,” explaining the circumstances that make it impossible for
them to pay the full amount of the loan. The seller needs to be able to show true financial hardship. Someone with
the assets or the income to pay is unlikely to be considered.

What are the options besides a short sale?

Thanks to programs such as those proposed by Fannie Mae and Freddie Mac to assist sub-prime borrowers,
many lenders are more willing to offer loan modification options. This option can extend the term of the loan, add
on delinquent payments to the loan principal, and/or reduce the interest rate to make the loan more manageable
for the home owner. Another option is a repayment plan that requires home owners to increase their monthly
payments until the loan is current.

What are the credit implications to a short sale?

The property owner’s credit could be negatively and severely affected. Here is why. Say the homeowner owes
$100,000 on the foreclosed property, but the lender only gets $70,000 from the sale. The lender can then sue the
homeowner for the $30,000 difference. But, the homeowner won’t have the $30,000. 

If he did, he most likely
wouldn’t have gone into foreclosure in the first place. If the lender chooses to sue and the homeowner cannot pay;
a deficiency judgment would appear on the homeowner’s credit report, negatively affecting the homeowner’s
credit (At present, Arizona has an anti-deficiency law whereas a borrower has protection against a deficiency
Judgment.)

In some cases, the bank chooses not to sue, but to take the loss as a tax write-off. In this case, there would be
no deficiency judgment on the homeowner’s credit report; however, there is another implication. The $30,000 that
the homeowner did not have to pay would be considered by the IRS to be income. 

The lender can send a 1099c
to the homeowner at the end of the year, and the homeowner could be required to pay taxes on that $30,000.
Even when the bank chooses not to sue, the foreclosure can end up showing up in credit checks because it is a
public record.