What is a Short Sale?   A Short Sale occurs when the net proceeds from the sale of real estate property are not enough to cover the total amount owed necessary to fully satisfy the amount owed.A true financial hardship is a situation that has a life changing effect for the borrower that results in an inability to pay the mortgage debt in either, short or long term.

How do I qualify for a Short Sale?  For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:

Is it too late to do a Short Sale if a Notice of Default has already been filed or I’ve received a Notice of Trustee Sale?  Not necessarily!  This myth probably hurts homeowners the most. Many do not realize that foreclosure is a process, and that there is time to make decisions that may result in better outcomes.   The foreclosing party,  in most cases a lender can stall a foreclosure up to the final day of the process.  

Today, many lenders may stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate purchase offer which based on working with a real estate professional who understand foreclosures and short sales, may be the key you need in avoiding foreclosure!  On the other hand, if the homeowner was evicted or the property was sold at auction, it's too late as a short sale is not possible.

What are the benefits of a Short Sale?  Many experts believe that a foreclosure is much worse than a bankruptcy.  When a Short Sale is successfully achieved,  foreclosure can be avoided, credit can be saved and your financial future can be salvaged. Protect your credit. Foreclosure damages credit up to 7 years and bankruptcy up to 10 years. Many experts believe that a foreclosure is much worse than a bankruptcy; however NOTHING is etched in stone.   Our Short Sale Service is FREE to you; the lender covers all the costs involved.  Controlling future debt.  If your property is sold at an auction, you may owe deficiencies and other expenses to the lender.

Why is a Short Sale a better option for lenders?  As of December 2010, due to the mortgage meltdown and the overall state of our economy, over three hundred and eighty five “Traditional Lenders” have folded since late 2006… primarily due to mortgage defaults, foreclosures, inadequate financing and sustainability.

A properly executed short sale allows lenders to get properties off their books, that most likely will end up in foreclosure.  Generally speaking, when a Lender is forced to foreclose, the actual amount recovered by the lender is drastically reduced when a property is taken back.

Based on a “True Financial Hardship” and hard facts, getting a lender to approve a short sale not only makes good business sense, it creates Win-Win solutions for Homeowners and Lenders alike.  As homeowners may qualify to re-purchase in as little as 2 years, Lenders unload unwanted property and spares many expenses associated with the foreclosure process such as attorney's fees, court costs, holding costs, repairs, maintenance, selling and marketing. 

What is a Deed-in-Lieu of Foreclosure?  Deed-in-Lieu allows the homeowner to return the property to the lender and reduces the lenders loss by eliminating some of the extensive cost associated with foreclosure.  While Deed-in-Lieu’s are a valid option for homeowners, they too require Lender approval and under most circumstances lenders require you apply for a loan modification and/or Short Sale first!

How is a Deed-in-Lieu of Foreclosure reported on my credit?  Deed-in-Lieu is most commonly reported to credit bureaus by your lender as a foreclosure, therefore the impact on a homeowner’s credit report is basically the same regardless if it was a voluntary or a bank forced foreclosure.  According to the Secondary Market’s qualification guidelines, government agencies that insure mortgage loans, a homeowner who has experienced a foreclosure must be seasoned for a minimum of 3-5 years before they can obtain a new home loan and it be insured.  Please refer to www.hud.gov and www.allregs.com for current qualification and underwriting guidelines.

Considering Bankruptcy?  Many have considered bankruptcy as a foreclosure solution however qualifications are based on a case by case basis and can be very costly.  Keep in mind, if a homeowner cannot afford their mortgage payments, a bankruptcy can only stall, not stop the foreclosure process.

At Real Estate Alliance Group, we HIGHLY RECOMMEND you  seek legal and/or tax advice from qualified, licensed real estate and bankruptcy attorneys, credit counseling agencies, tax consultants and CPA’s who specialize in California Law, Short Sales and Foreclosures.

Why NOT just let my lender foreclose?  When facing foreclosure, you may be tempted to just give up and let the lender foreclosure, but before you do, you should be very clear of the possible consequences.  Besides losing your home and having no place to live and/or facing eviction, allowing your home to go to foreclosure affects your credit rating much more drastically and can greatly affect your ability to re-purchase a new home in the future!  In addition, when a foreclosure is recorded on your credit report, which stays on your credit for seven years, it can greatly impact your credit scores which when re-purchasing a home can often times result in higher interest rates and larger down payment requirements!

Lastly, when applying for a new home loan, Page 3 of 5 of the Uniform Residential Loan Application, also referred to as Fannie Mae Form 1003 specifically asks if you’ve had a foreclosure, or Deed-in-Lieu of Foreclosure in the past seven (7) years in which case this creates huge red flags for underwriters, lenders and investors!  However, there is no language pertaining to Short Sales as they primarily are reported as "settled as agreed for less the amount owed.”  In some instances, homeowners have actually been able to increase their credit scores when successfully completing a short sale.

Why do Short Sales fail?  It's important to note that many short sales fail simply because incomplete files are submitted to banks, and far too often result in an unsuccessful sale and a foreclosure that didn’t have to happen! Simply said, completing a few forms and providing documentation according to each lender's requirements is only half the battle and while many Realtors hire third party negotiators who charge absorbent fees, Donna handles everything from start to finish at no additional cost or upfront fees!  In fact, 75% of the short sale package is processed at the very beginning of the listing period, even before the first offer is received.

Today, more than ever banks are aggressively pursuing short sales and working with agents who understand how to process them. Freddie Mac recently hosted  a national training webinar for real estate agents where they expressly stated the organizational goal of “eliminating distressed assets through modifications and short sales.”

Are all Realtors alike?  Definitely Not!  With  over two decades of in-depth experience owning and operating her own real estate and mortgage companies, in addition to being a "Certified Distressed Property Expert", Donna Denton, Broker of Real Estate Alliance Group  has the credentials required to properly manage her transactions and represent her clients directly to the banks, in their best interest!