Short Sale Process In today’s, economic environment, homeowners find themselves in positions where they cannot afford to pay their mortgages. There are several options that exist for the homeowner in this situation. Options include, loan modification, loan refinance, deed-in-lieu of foreclosure or short sales. Due to the declining real estate market many homeowners find that they owe more than their home is worth. That property is considered to be “Under Water” (which essentially means you owe more than it’s worth). As a result, lenders are open to finding solutions to assist home-owners who can no longer afford to stay in their homes. The short sale process is when a homeowner sells their property for less then what is currently owed. For Instance, John Smith has an outstanding Principle Balance on his home for $100,000 however the property is currently valued at $75,000. If John’s lender agrees, he can sell his property as a short sale for $75,000 which leaves a $25,000 remaining balance owed to the lender. This shortage amount is called a deficiency. Each lender has its own policies on how they handle the deficiency portion of the short sale. Some lenders require the seller to sign a promissory note to cover the deficiency. Some lenders will attach a lien to other properties that the seller owns. Many lenders will agree to completely waive the deficiency. In the case of a deficiency waiver, sellers should request the lender not record this waiver as income and confirm with their tax accountant if the difference will be included as income. As you can see there are various scenarios and options available to a homeowner in financial trouble. As is the case in most real estate transactions, no two situations are exactly the same. If you are in a property that’s considered to be “Under Water” and you determine your option is to sell, always remember the short sale option. Below you will find documents lenders require from the homeowner to consider a short sale: - Current financial statements (Income and Expenses)
- Personal hardship statement
- Proof of all income for the past 3 months
- Monthly banking statements for all assets for past 3 months
- Last two years of complete income tax returns
- List of assets
- HUD1 (Settlement Statement showing all fees related to the transaction)
The information listed above will give your lenders servicing company an overview of your financial situation. The assigned negotiator will in-turn prepares a recommendation for the end mortgage investor, who is actually the holder of your mortgage note. It is very important that the information that you provide be clear and precise as it will have a direct effect on the final decision on the acceptance and approval of the short sale Offer. Short Sales can be time consuming. The key to success with short sales is the submission of a complete package, seek professional help from someone experienced in short sales and understanding that lenders are open to negotiation. Your home is one of many on their books, so it’s up to you and the professionals assisting you to make sure to stay involved consistently throughout the process. Supreme Manor Real Estate Services has real estate professionals who are experts in working with lenders to negotiating short sales. We not only find buyers for your homes but assist in getting the lenders to agree to the short sale prices based upon market analysis of your properties. Should you be in need of assistance, contact us today. Annette Dewberry dewberryrealestate@yahoo.com Supreme Manor Real Estate Services 1840 W. 95th Street Chicago, IL 60643 773-881-9224 www.SMSrealestate.info |