Are You in a Situation Where You Owe More on Your Home Than What it is Worth and You Don't Know What to do?

 

A short sale occurs when a property is sold at a loss because the mortgage lender agrees to accept an offer that is less than what is owned on the property. Once the lender receives the agreed amount, they will release the lien on the property. A short sale is typically viewed more positively than a foreclosure on a credit report and will allow the seller to regain homeownership in the future. Not all lenders will accept short sales and the terms of which they will accept them may vary from lender to lender. Before agreeing to a short sale, the seller should understand the terms of the lender

Short sales have always been an options for sellers, but recent market conditions have led to an increase in short sales and foreclosures. Some of the market conditions are:

  • Adjustable Rate Mortgages (ARM)
  • Negative Amortization Loans
  • Lending Programs including low down payments
  • Low credit scores, stated income loans, no documentation loans, etc.
  • Less appreciation or depreciation in most markets compared to a few years ago.

Why would a seller want a short sale?

  • The seller is over extended and cannot afford to own the property
  • foreclosure is a very public and sometimes embarrassing option
  • Continuing to be late on mortgage payments or entering foreclosure can be very damaging to the sellers credit
  • The seller may be forced to move due to a job transfer of losing a job.

Why do lenders accept Short sales?

  • The homeowner's financial position has changed and they cannot afford the property
  • The mortgage is past due
  • New construction in a particular area has hurt the value of existing homes
  • The local real estate market has depreciated in value
  • They want to avoid the cost and time required to foreclose
  • The condition of the property has deteriorated

This sounds too good to be true, what's the catch?

 

If the lender does accept the short sale there are still financial and credit implications the seller may face. In the state of California the lender's only recourse for a default in payments on a "purchase money trust deed" is foreclosure. There are no deficiency judgements on purchase money loans in California. However, if the loan was taken after the initial purchase of the home, the lender may even file a deficiency judgement or claim against the seller to try to recoup their money.

 

How long does it take for a short sale?

 

There is no set time frame on a short sale, but it is not uncommon to see the process take up to 90-120 days depending on the lender involved.

 

Do I have to move out during the short sale process?

 

No, you will stay in the home until the property is sold and the lender has approved the sale and the sale has closed escrow.

 

Use the contact me form, call me, or email me right away and let me get you all the information you need to make an informed decision. This can be a traumatic event, let me help you through it. There is light on the other side, I promise.