Christopher Rockey
Director of Education, Mortgage Resolution Services

This CHART which shows how ALT-A and pay Option Arms are going to be the next issues in the Mortgage Storm.

Why Should a Homeowner Short Sale their property?

Short sales can help a homeowner to sell their home faster by lowering the price to make the house more competitive with other houses. Beyond that there are several other reasons to do a Short Sale especially vs. foreclosure. In my opinion the number one reason is the potential for ‘Full Settlement Language’ against any further recourse the lender can take against the homeowner. Sellers will receive this language in the approval letters and are urged to seek advice from any attorney if there are questions about the reservation of rights or full settlement. Another Great reason is the potential for less tax exposure or an ongoing liability which I cover in the next paragraph. Another reason for Short Sale vs. foreclosure is the ability to purchase a home again sooner with a Short Sale on your credit than a Foreclosure. Homeowners also can rest assured that they do not generally have to pay agent commissions out of pocket, lenders are almost always paying agent commissions. Finally for a homeowner, how about closing this chapter of there life with some dignity. Walking away from the transaction knowing that they have done the right thing.

What about the difference in what’s owed and what the house sells for?

If you short sale your primary residence and you are insolvent, according to the Mortgage Forgiveness Act of 2007, the IRS will forgive the debt owed. If you get signed up with a good tax accountant, you can have your debt written off. Plus with a short sale you can get your lender to agree not to come after you for the remainder balance. Always talk to a CPA about HR 3648 and if your client qualifies for any leniencies based on section 108 of the tax code.

How long does a Short sale take?

From the time your lender receives a complete short sales package can take anywhere from 2 months to 6 months. The key is to have everything your lender needs when they review the package. Remember a complete and well organized file with the loan number(s) on everything.

Do I need a real estate agent?

In nearly every case a lender will require you to have your home listed with a credible Real Estate professional with a proved track record.

I want some money from the sale is that possible?

More than likely they won’t allow if you have a conventional loan. Only FHA makes it possible for the homeowner to receive cash from the short sale of the property. Usually that money goes towards closing costs and whatever money is left over goes to the owner. The most you can receive from a FHA back house is $1,000. This program is called ‘Cash for Cooperation’ and we are looking forward to conventional lenders participating in this more and more.

A company offered me cash if I agree to sell my house to them, is this ok?

No, this is not ok and can cause problems if your lender finds out. Most investors know the rule ‘Buy Low Sell High’ right? I assure you they are not doing you any favors to be your friend they will ALWAYS have an alternative financial motive.

Plus, any company that wants to pay you, but can show your payment on the HUD is not the type of person you want to sell too. They can flake on you at the last minute because you know you can’t receive cash at closing. They will normally agree to pay you some time after closing and vanish a few weeks later.

Visit Our Website
Pricing Schedule
Logon to TransactionPoint

Posted in Blog