A Short Sale is when a bank or mortgage lender agrees to take less than what your loan balance is. The home sells for less than the outstanding balance of the loan, and the proceeds of the sale go to the lender with the lender agreeing to a full satisfaction of the debt. You must be able to show them there is a financial hardship on your part and that the house will not sell for a higher amount in the current market. A short sale requires negotiating with lien holders a payoff for less than what they are owed. This negotiation is usually done through a lender’s Loss Mitigation Department. It involves a lot of time, telephone calls, letters & follow-up. There is nothing Short about a Short Sale! Lender approval is required prior to the proposed sale. Second mortgages or other liens complicate the process further, as they all need to agree to take less than they are owed. A short sale does still adversely affect a person's credit report, though the negative impact is typically less than a foreclosure. Short sales are recorded as a type of settlement. Check with your Accountant to see how the settled debt may or may not affect your income. Loan Modification may also be an option. Same information needs to be gathered to negotiate with your lender. If you do not want to sell your house, your loan may be able to be re-cast or modified with the lender so you can afford your monthly payments. When the Bank takes the property, it is a Foreclosure. The foreclosure process can start at 31 days late on your mortgage, but typically starts at 90 days. The homeowner gets letters from the lender in the mail and the notices of intent to foreclose get published in local newspapers. If your late payments, late fees & interest payments are not paid in full and a short sale is not approved, the home is then scheduled for auction. If it is not bought at an acceptable price to the lender, the lender then owns it. A bank will generally agree to a short sale to prevent a home foreclosure if they believe that it will result in a smaller financial loss for them than foreclosing on the property. A short sale is typically faster and less expensive than a foreclosure which takes many months and is very expensive for the lender. Once the lender forecloses on a property, not only have they incurred expenses, they are now a property owner. They now incur carrying costs (taxes, insurance, winterization, etc.) while trying to sell it. When the lender forgives all or a portion of a borrower's debt, the forgiven amount is considered as income for the borrower and is liable to be taxed. The Mortgage Forgiveness Debt Relief Act of 2007, amendments have been made to remove such tax liability. This protection is limited to primary residences. Be sure to check with your accountant to see how you may be affected. Donna Bursey & Christine Andrade at Pristine Homes are certified Loss Mitigation Specialists. They can work directly with the bank on your behalf. Please call or email them in confidence that they will hold any information you give them confidential. They can help you figure out what your best option may be and have been successful through multiple Short Sale transactions.
When does the foreclosure process start?
The process can start at 31 days late on your mortgage, but typically starts at 90 days. What can the homeowner do?
**Call Team Pristine to discuss which option is the best one for you**
- Call the lender
- Make the entire payment to catch up including late charges
- Sell the house & Try for Short Sale
- The Work Out Process
- Non Profit foreclosure prevention agencies
- Bankruptcy
Non payment through Foreclosure Sale: - Soldiers & Sailors Notice
- Scheduling of Auction
- Newspaper Postings
- Auction Sale
When the Bank takes in the property it is officially a Foreclosure Please call or email Donna or Chris in confidence that they will hold any information you give them confidential. They understand that having to consider any of these options is not a pleasant experience and will help you try to figure out what your best option may be. email: team@PristineHomesRealty.com |