3-9-2014: So why are short sales taking so long? According to the Zillow Blog, banks, bureaucracy, lost paperwork, and more than one lender can’t agree are some reasons.
8-23-2013: It really helps if credit bureaus have a special code for short sales since they are treated differently when scoring credit scores. Fanne Mae corrected it in some credit bureaus
5-7-2013: Anyone ever hear of Short Sale Leasebacks where the lender allows a short sale and you lease the property back? Watch for my post later this week…
2-8-2013: Short sales are still a viable alternative from foreclosure and one that might let you out with less exposure and shorter refresh before you can purchase a home again. This article outlines 10 misconceptions of short sales…so be careful, but don’t get scared using a short sale as an alternative to foreclosure.
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Update 4-25-2012: FHFA (Federal Housing Finance Agency), tasked with US Government oversight of Fannie Mae & Freddie Mac, is trying to set guidelines to get banks to responded to Seller and Buyer within 30-60 days after submitting paperwork or offer to purchase the property. Source: http://www.realestate.com/advice/fhfa-speeds-short-sale-process-existing-home-sales-drop
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Update 4-20-2012: Yes, banks “will” and “do” foreclose on properties during contract talks with same bank regarding approval of the short sale. http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2012/04/ask_a_real_estate_pro_will_len_1.html
Note: I personally know a case where the same bank proceeded with foreclosure action against the “buyer” who bought same house in a short sale two months before they served papers on “new” owners! That’s a strong case for buying Owner’s Title Insurance.
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Update 3-20-2012: A simple comparison between Short sales and Foreclosures. Remember, both actions drop your credit score and involve forgiveness of debt which is normally taxable income. Source: http://www.htrnews.com/article/20120318/MAN04/203180377/Real-Estate-column-How-short-sales-stack-up-against-foreclosures
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Update 3-3-2012: List of ways Sellers can interfere with short sale transactions includes getting behind on mortgage payments and not cooperating with your lender. Check many of the ways here: http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2012/03/ask_a_real_estate_pro_how_not_1.html
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Update: 2-18-2012: US Senate Bill (S.2120) and House Bill (HR 1498) proposed to require decision from lenders within 75 days whether or not they will approve a short sale.
Source: http://www.prweb.com/releases/2012/2/prweb9191026.htm
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I think most people have an idea of the definition of short sale (i.e., selling a property for less than the amount of the loan(s) payoff).
An interesting side note to short sales is that many lenders are paying” sellers to sell their home under a short sale or just leave their homes, but in good shape.
Source 1: http://www.dsnews.com/articles/major-lenders-offering-perks-on-short-sales-2011-07-28
I’m not an agent who lists or negotiates the settlement of short sale properties between banks and borrowers, nor did I sleep in a Holiday Inn recently, but aside from the SAFE Act of 2008 (which outlines licensing requirements of loan originators and others in the mortgage industry more qualified to discuss loan modifications), I have seen and read some expectations:
Here are the IRS’ Ten Facts for Mortgage Debt Forgiveness on what is normally taxable income – forgiveness of mortgage debt – http://www.irs.gov/newsroom/article/0,,id=205004,00.html
Here are some potential things to expect to produce, create, or see when running numbers or negotiating with the bank…
1.) preliminary net sheet – shows what the homeowners’ may receive upon the sale of property, net of any outstanding debts and other fees —- usually zero these days!
2.) hardship letter – succinctly describes facts surrounding homeowners’ situation and addresses why they are forced to pursue short sales,
3.) proof of income and assets – facts disclosing your finances and assets to prove the homeowners can’t afford to meet their mortgage payments or payment of the loan, and
4.) bank statements/financial records – show deposits and withdrawals homeowners have made using their bank accounts and disclosure of financial assets. (i.e., Can the afford and just don’t want to pay?)
Source: http://www.stockmarketsreview.com/realestate/2011/06/30/real-estate-short-sales/%20
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