Frequently Asked Questions - Short Sales
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?
Lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you were 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 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.
You do have other options, including foreclosure, bankruptcy, and deed in lieu of foreclosure. Contact the appropriate professional to seek guidance on these alternatives.
If I do a Short Sale, how much will I have to pay to sell my home?
Nothing. Nada. Zip. 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 sometimes needed repairs are paid for by your lender as part of the Short Sale approval.
How do I get started on a Short Sale?
It's easy. If you would like to get prequalified for a Short Sale, call Liane at (951) 454-3805. If you would rather email, Liane@LianeThomas.com. There is no charge to you to get started. 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. 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. When you deed your property 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, as 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 honored. A hardship may be, but is not limited to, on of the following:
- 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 sometimes, it depends on the lenders policy, and these guys change the rules all the time. 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 my lender agree to accept a Short Sale?
There are actually several reasons why a lender would approve a Short Sale, including:
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.
Do lenders approve all Short Sales?
No. That is why it is critical to work with someone that has extensive experience at getting Short Sales approved. From the presentation of the Short Sale package to the lender to working with the lender, we know how to keep the file moving towards approval. The first step is to get pre-qualified for a Short Sale is to call us or send an email message. There is no charge for this, and it's easy.
Please do not wait any longer, Liane has successfully closed so many short sales, and will make this process as easy for you as it can possibly be. We can make the phone calls and the letters from the bank STOP! Don't delay, call today.
Liane Thomas, REALTOR®, Thomas Realty Group
1860 Compton Avenue
Corona, Ca 92881