Real Help With Short Sales In Virginia
What Is A Short Sale?
Acceptable Hardships
- Loss Of Job
- Loss Of Income
- Divorce
- Death Of A Family Member
- Job Transfer
- Business Failure
- Damage To Property
- Inheritance
- Medical Bills
- Military Service
- Payment Increase
- Insurance or Tax Increase
- Too Much Debt
- Incarceration
As a homeowner facing distress, you have to understand what exactly a Short Sale is and what impact it will have on you. Never ever pay anyone for information or advice related to a loan modification or a short sale. There are too many HUD sponsored organizations that will provide all the answers to you without a fee. The fees of selling your home as a Short Sale are an expense of the bank - we do not charge our homeowners any fees for representation and consultation on a short sale.
People over complicate the Short Sale process. A Short Sale is the sale of a home in which the mortgage owed is higher than the contracted sales price. This means that the note holder (Bank) has to agree to release the note on the home. Everything aside from the banks approval is the same as a normal sale. It still is an agreement between a buyer and a seller - plain and simple. Too many times the parties involved over complicate the situation, causing poor communication and uneasiness between the buyer and seller.
There are a couple of options that the seller has when dealing with the bank for negotiating the shortage. Sometimes the homeowner can make the difference up with savings or the liquidation of assets. In this scenario, the seller simply writes a check for the amount owed at settlement and the sale takes place as scheduled. Although this is not necessarily the ideal scenario, the bank will not accept that you want to short them when you have the money available.
A second option that homeowners have is to work out a settlement with the not holder. This will result in a fast agreement and gives you the best odds of a successful closing. In this scenario, the bank will usually accept a payment plan for a portion of the amount owed. A real life example that we have seen is a $175,000 second trust negotiated down to $25,000 to be paid interest free over 10 years. Why would they do this - something is always better than nothing! This scenario should always be considered since there are tax implications in a fully dissolved short sale. A tax accountant will be able to show you the implications of new federal laws that remove tax liability to some in a debt forgiveness situation...this relates to income levels and amount of debt forgiven.
The third option is total debt forgiveness. This situation is where the entire shortage is forgiven from the lien holder. These scenarios are extremely tricky and not always the best result that you could ask for. For example, when the loan is close, your agent should try to negotiate a letter of reporting to the credit bureaus as "PAID As Agreed" or "Satisfied". You also need to make sure that your agreement includes language that states the bank will forfeit the right for future collections. Most homeowners try to get this scenario agreed to by the bank since there is a total debt forgiveness and essentially gives them a clean start with the exception that you may not qualify for a Fannie/Freddie loan for at least two years. Your credit rating will depend on late/missed payments and how the closing of your loan is negotiated. The other scenarios are easier to get these negotiated into - but your individual situation dictates what you should be targeting as a solution.
When evaluating your options, it is best if you have a trained agent evaluating your position. Emotions can impact the solutions we make, and an agent who understands the process will be able to advise you toward the best solution with the least impact on your current lifestyle.
People over complicate the Short Sale process. A Short Sale is the sale of a home in which the mortgage owed is higher than the contracted sales price. This means that the note holder (Bank) has to agree to release the note on the home. Everything aside from the banks approval is the same as a normal sale. It still is an agreement between a buyer and a seller - plain and simple. Too many times the parties involved over complicate the situation, causing poor communication and uneasiness between the buyer and seller.
There are a couple of options that the seller has when dealing with the bank for negotiating the shortage. Sometimes the homeowner can make the difference up with savings or the liquidation of assets. In this scenario, the seller simply writes a check for the amount owed at settlement and the sale takes place as scheduled. Although this is not necessarily the ideal scenario, the bank will not accept that you want to short them when you have the money available.
A second option that homeowners have is to work out a settlement with the not holder. This will result in a fast agreement and gives you the best odds of a successful closing. In this scenario, the bank will usually accept a payment plan for a portion of the amount owed. A real life example that we have seen is a $175,000 second trust negotiated down to $25,000 to be paid interest free over 10 years. Why would they do this - something is always better than nothing! This scenario should always be considered since there are tax implications in a fully dissolved short sale. A tax accountant will be able to show you the implications of new federal laws that remove tax liability to some in a debt forgiveness situation...this relates to income levels and amount of debt forgiven.
The third option is total debt forgiveness. This situation is where the entire shortage is forgiven from the lien holder. These scenarios are extremely tricky and not always the best result that you could ask for. For example, when the loan is close, your agent should try to negotiate a letter of reporting to the credit bureaus as "PAID As Agreed" or "Satisfied". You also need to make sure that your agreement includes language that states the bank will forfeit the right for future collections. Most homeowners try to get this scenario agreed to by the bank since there is a total debt forgiveness and essentially gives them a clean start with the exception that you may not qualify for a Fannie/Freddie loan for at least two years. Your credit rating will depend on late/missed payments and how the closing of your loan is negotiated. The other scenarios are easier to get these negotiated into - but your individual situation dictates what you should be targeting as a solution.
When evaluating your options, it is best if you have a trained agent evaluating your position. Emotions can impact the solutions we make, and an agent who understands the process will be able to advise you toward the best solution with the least impact on your current lifestyle.
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Jimmy Mulhern (w) 571-247-1638 |
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