DO YOU WANT TO AVOID FORECLOSURE AND GET A FRESH START?
YOU’RE AT THE RIGHT SITE
HERE IS SOME USEFUL INFORMATION REGARDING SHORT SALES, LOAN MODIFICATIONS, AND AVOIDING FORECLOSURE.
- Do you have a Financial Hardship?
- Is your property worth less than your mortgage?
- Are you not able to financially support your
investment or having problems keeping up with bills?
If your answer is YES to these three questions; you qualify for a Short Sale.
- Better return than foreclosure
- Faster than foreclosure
- Savings on expenses
I am a licensed Realtor who has his pulse on the South Florida Market. Call me, I can help.
- By protecting your credit from further degradation.
- By presenting a solution to the lender and negotiating favorable terms.
- By helping to minimize your debt obligations.
- By allowing you, the borrower and her/his family to get a fresh start after the property is sold.
- By expediting the process with knowledge and experience.
- By representing you in the sale of your property.
- By providing you with any consulting needs.
- By attempting to extend your foreclosure process.
What is a Short Sale?
A short sale, also called “Short Pay” or “Pay Off”, is a transaction that allows for the sale of a property for an amount that is less than the amount that is owed to the lender. The bank in return may accept the proceeds as full settlement of the debt.
Short Sale Myths
MYTH: I must stop making my mortgage payments before the bank will approve a short sale.
TRUTH: You do not have to stop making payments on your home in order for the bank to approve a short sale. What the bank needs to see is a solid reason why you are unable to continue making your monthly payments and/or must sell (loss of job, relocation, divorce, etc.). Due to the current market conditions, the banks generally understand why the short payoff is being requested – whether you have missed payments or not.
MYTH: If I am doing a short sale I am in foreclosure or pre-foreclosure.
TRUTH: A short sale is simply requesting the bank to accept a total payoff of your loan for an amount less than what you owe. You are only in foreclosure when you receive the foreclosure notice from the bank.
MYTH: I have a second mortgage or home equity line so I cannot do a short sale on my home.
TRUTH: The majority of people we work with have both a 1st and 2nd or home equity line. In this situation the 1st mortgage generally approves an amount for the 2nd and we negotiate between the two. The 2nd mortgage company is accustomed to taking a much lower payoff.
MYTH: I will receive some money back at closing.
TRUTH: When you sell your property as a short sale you are not entitled to receive money back at closing because there is no equity in your property.
MYTH: The bank will not pay the commission for my real estate agent and/or the costs of listing the property with a real estate agent will be passed on to me.
TRUTH: A real estate agent's commission is taken out of the banks proceeds at close of escrow. There should never be an out of pocket expense for a seller who lists their home as a short sale with a real estate agent.
MYTH: Short sale homes are priced lower than other homes in my area.
TRUTH: Short Sales are priced in line with other comparable properties in your area. Your mortgage company will do their own version of an appraisal of the property to make sure they are getting a fair payoff on the property. Length of time on market, condition of the home and how quickly the Seller needs to close are all conditions that affect the price of every listing – short sales included.
MYTH: I have a foreclosure date approaching so there is not enough time to do a short sale.
TRUTH: Because it is generally far more expensive for the bank to foreclose on your home than to work with us on a short sale we can postpone the foreclosure on your home in most cases while we are marketing and/or negotiating your short sale.
Short Sale Tips
If you are currently facing a situation which is causing you to miss payments or sell your home there are several ways that you can be proactive! These tips will help you make it through the process:
- Don't procrastinate. If you are unable to pay your mortgage – even for only one month, contact your lender and make them aware of your situation. You should also sit down and determine if this is a long term or temporary situation and review all options available to you. If you would like assistance in doing this, please feel free to contact me. We can discuss all of your options for both staying in your home and selling it.
- Prioritize. After determining how you will proceed, prioritize your debts. If you know you plan on staying in your home, it is important to make sure you are not spending money that could be used to pay mortgage payments on other less important debts. Recovering from missed or skipped mortgage payments is far more difficult than recovering from missed or skipped credit card payments.
- Know your finances. Make sure you know what is coming in and out each month and budget accordingly. Your lender will want to see an itemized list of all of your current income and expenses when they discuss your loan with you.
- Know your rights and options. If you have questions about the process or your options, feel free to use our website as a resource or contact us, along with a trusted tax professional and/or attorney to discuss any questions or issues you may have.
- Do not become anxious! You are not alone in this situation and you are certainly not without options. Do not allow yourself to become overwhelmed or ignore the situation. There is help available!
- Develop a plan. Whether you choose to sell your home or make an arrangement with your bank, you should create a plan that extends during this process and well beyond. This will include where you are moving to, how you will spend or save the money you have from missed payments, etc. You will also want to decide how you will deal with your lender.
- Do your research. Make sure that you know everything you possibly can about your options, the foreclosure process in Florida and your lender's requirements.
- Be prepared. Gather all of your financial information – a summary of income and expenses, bank statements, pay stubs, tax returns, mortgage statements, closing documents from when you purchased your home, a list of your reasons for hardship and any other documents you feel might play a role in working with your bank and have them ready before you contact your lender or someone to assist you with your sale.
Work with trusted professionals. If you need advice or assistance make sure you are working with knowledgeable, experienced and trusted professionals.
- Sophisticated financial knowledge
- Understand the lender’s language
- Accurate paperwork
- Legal knowledge
- Negotiation skills
- Strong supportive administration
- Capability to handle high volume
- High success rate
- Strong relationships with lenders
- Avoid the time and frustration of tough negotiations with lenders
Loan Modifications vs. Short Sales
This is not a comprehensive list - to review all of your options please call us or speak with an experienced attorney licensed in the state in which the property is located.
Pros - for Loan Modification
1. Lenders are making a big push for loan modifications. Based on my recent experience some of the large lenders prefer to do a short sale instead of a loan mod.
2. You can do a loan mod on your first, then gain leverage against your second and then see how your options look.
3. As long as you continue to pay you may stay in your home.
4. Someday you might get your entire investment back. (it is theoretically possible, I am not saying it will happen.)
5. You may minimize damage to your credit.
6. You may be able to do a loan mod and not waive your anti - deficiency protections. And if that is the case, you may choose to do a short sale or accept a foreclosure at a later date.
Cons – for Loan Modification
1. Without leverage it is unlikely you will negotiate a principal reduction.
2. In a typical loan modification - you may just be buying time. You get to make payments until you decide to sell or your payments go back up.
3. If you have assets or a salary to protect or you expect to have those things, you should probably speak with an attorney.
4. What will happen to your second loan? They will most likely accept a short payoff, but you would have to modify the loan with both banks.
5. Your modification may be low enough to eliminate stress or financial problems.
Pros - Short Sales
1. If you negotiate successfully, you may be able to get a release from the deficiency in writing. This is becoming more difficult lately but can still be accomplished.
2. You can deal with all the problems at once (1st and 2nd Mortgage). Laws change, if you have good fall back positions today you might not have them in the future. You need to consider all your options.
3. If your property is upside down, you get rid of the liablity now. If you do a loan mod and then have to sell your house in the future, you may still be upside down the same or worse, depending on what happens to home prices or the type of loan you have.
4. Within a few years your credit rating may recover and you will not have to harm your credit to do a short sale in the future.
Cons - Short Sale
1. It is getting more difficult to get released from the deficiencies.
2. You may not be able to buy another house for a while.
3. You will have to move eventually.
4. You do damage your credit, albeit not as much as a foreclosure.
5. You have to deal with the selling process and the information that you need to provide to the bank to state your case for the short sale.
I am a licensed Realtor who has his pulse on the South Florida Market.