Tracy Sutherland
Tracy Sutherland

Realty One Group
949-283-0726
Home@MissTracy.net
 
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Short Sales Questions

What is a Short Sale?

A Short Sale is the sale of a home when sales proceeds do not fully pay off  the existing loan(s) and lender(s) accepts a discounted payoff to fully satisfy  the loan.

The best part, the existing lender pays virtually all sales costs, including  commissions, escrow and title fees and repair costs. You get your home sold, the  loan(s) paid off and you avoid foreclosure.

 

Is a Short Sale right for me?

Mortgage lenders are increasingly willing to work with borrowers faced with a  financial hardship to accept a discounted payoff on a mortgage. If you are faced  with a hardship that makes it likely you will be unable to meet your obligation  on your mortgage, your lender would prefer to settle the matter with you as  opposed to taking the property through foreclosure.

As you consider the option of pursuing a Short Sale, remember your lender is  looking to limit any potential loss on your loan. By completing a Short Sale,  your lender has arrived at a solution that is, for them, much better than a  foreclosure.

Bottom line, your lender wants to work with you.

 

If I do a Short Sale, how much will I have to pay to sell my home?

Nothing. It’s true, in most cases you will pay literally no sales costs if  your lender approves the Short Sale. All commissions, title and escrow fees, and  even most repair expenses are paid by the lender as part of the Short Sale  approval. We will include the *following clause in the contract.

"Seller’s agreement to sell is subject to approval by existing lender of a  Short Sale at no cost to Seller. Seller shall not be required to deposit funds  to close escrow."

Remember, lenders approve Short Sales and accept the resulting loss in an  effort to avoid bigger losses through foreclosure.

 

How do I get started on a Short Sale?

It’s easy. If you would like to get prequalified for a Short Sale, we can do  it online.

If you would prefer to discuss it on the phone, or set an appointment call  949-283-0726. There is no charge to you to get started. It is as simple as  contacting us and we will get to work. If you later decide you don't want to do  a short sale, that is okay too.

 

Can I simply deed my property to someone else and avoid the hassle?

Deeding your property to someone without paying off the loan is nearly always  a bad idea. In the first place, the lender still considers you primarily  responsible for payment on the loan. If loan payments do not get paid, or if the  lender ultimately forecloses, this will show on your credit.

Secondly, when you deed your property to someone else, you give up control of  the property. Along with the deed goes the ability to control the property.

Do not deed your property to someone without paying off the loan unless you  have consulted with an attorney.

 

What sort of hardship would my lender consider legitimate?

To some extent, that will depend upon the mortgage company considering the  Short Sale request. Generally, so long as the hardship is real and the mortgage  company believes the loan is likely to become delinquent as a result, the Short  Sale request will be processed by the Loss Mitigation Department. A big key to  getting Loss Mitigation to accept a hardship is to submit a strong hardship  letter. The hardship letter sets the tone for the entire file.

Below you will find a list of “hardships” that are common and frequently  accepted by mortgage lenders.

  • Family illness or injury

  • Illness or injury in the extended family – particularly if it forces relocation

  • Job relocation when the property is equity deficient

  • Job loss or significant income loss

  • Divorce or split of domestic partners

  • Adjustment in mortgage payment or unforeseen increase in living expenses

 

I am current on my mortgage, will my lender consider a Short Sale?

The answer is, maybe. Some lenders will accept a Short Sale file for approval  on loans that are not delinquent. Other lenders will not accept the file until  the loan is delinquent. We can put your Short Sale file together within a couple  days and submit it for approval. (Remember, there is no charge for this). That  is the best way to determine if your lender will accept a file for approval on a  loan that is current.

 

Why would a mortgage company agree to accept a Short Sale?

There are actually several reasons why a mortgage company would approve a  Short Sale payoff, including the following;

Legal Concerns – Mortgage lenders have come under legal pressure to work with  borrowers to equitably resolve situations where borrowers are unable to meet  their mortgage obligation, particularly when the borrower makes an effort to  arrive at a compromise solution.

Wall Street is Watching – Mortgage lenders rely heavily on their ability to  package and sell bundles of loans on the secondary mortgage market. They need to  sell these bundles of loans in order to put the funds back to work by loaning  the money again and collect loan fees along the way. If mortgages perform poorly  after they are sold it could impact the lender's ability to sell their loans on  the secondary market. A successful Short Sale gets the loan payoff resolved  quickly.

Asset Management Expenses- If a lender acquires a property through  foreclosure, the property will be managed until it is repaired and resold. It is  expensive to manage real property assets - homes – spread throughout the region,  the state and possibly even the nation. Keeping properties maintained, keeping  utilities on, making repairs and the administrative costs attached to these  activities are all costs the lender would prefer to avoid. A successful Short  Sale eliminates most of these costs

Reserve Requirement- Delinquent and non-performing loans place another burden  on mortgage lenders. For all delinquent and non-performing loans lenders must  set aside funds in reserve to deal with potential losses. These funds cannot be  put to work generating new loan fees until the bad loans are resolved. A  successful Short Sale lets the lender put more money to work.

 

I have two loans, can I still do a Short Sale?

Yes. We can work with both lenders (many times the same lender hold the 1st  and the 2nd loans) to put together a Short Sale transaction. Even if the value  of your home is below the balance of the 1st mortgage, we can normally get the  two lenders to cooperate.

In the end, neither lender wants to own another home through foreclosure.

 

My property is in rough shape and needs work, can I still do a Short Sale?

Absolutely. In fact, lenders are more motivated to do a Short Sale on a  property that needs work than on a property that does not. The lender knows the  risk of loss goes up when they foreclose on a property that needs lots of work.

Aside from expense of completing the work, lenders are simply not set up to  get the work done. They are in the loan business, not the fix- it business.

 

 

I am concerned about my credit, how will a Short Sale affect my credit?

The big key here is to avoid foreclosure. By nearly any measure, a  foreclosure is the most damaging event your credit status can encounter - worse  than bankruptcy. In the course of getting your short sale approved you may miss  your mortgage payments, and these will show on your credit.

By avoiding foreclosure, you will likely be able to resume normal borrowing  (car loans, credit cards, consumer goods and such) relatively quickly. 

 

What is the difference between having a foreclosure on my credit record versus a Short Sale?

Potential borrowers with a foreclosure on their credit record must wait 5 years to be considered for new funding, and are subject to additional credit and down payment requirements for 5 to 7 years. Deed-in-lieu-of-foreclosures warrant a 4 year wait with additional requirements for 4 to 7 years. Finally, the silver lining...Short Sales require only a two year wait with no additional requirements. *** In some cases selected lender can give new funding with in a year if you had no mortagage lates on your short sale.

 

How soon should we start the Short Sale process?

As soon as possible. As I said before, your lender is much more willing to work with us before your house actually goes into foreclosure. But we can still short sale your house after the foreclosure while you are in the redemption period. But if you wait until you are 3 – 4 months into your redemption period, you waited too long. There will not be enough time to get the process completed. 

 

Contact Miss Tracy

 

 

 

 

Tracy Sutherland
949-283-0726 | Contact Me
23811 Aliso Creek Rd, Ste 181 - Laguna Niguel, CA 92677

110 E. Avenida Palizada, Ste 201 - San Clemente, CA 92672
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