Short Sales, Foreclosures and Bank Owned Properties

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Short Sale Questions and Answers

Q. What is a Real Estate Short Sale

A. A Short Sale is a little-known alternative, once more commonly used in the real estate downturn of the early '90s, is the "short sale," which works like this: A homeowner falls behind on his or her mortgage payments, usually due to a job loss, rising debt payments, or both. Facing a situation in which the home value has fallen and cannot be sold for the amount of the mortgage owed, Rose Murraro can work out a deal with the lender to sell the home for whatever the market will bear. If the amount of the sale is for less than the amount owed on the mortgage, the lender gets the proceeds and discharges the remaining debt.

Also known as a real estate short pay-off or a pre-foreclosure workout, a short sale is an agreement with a lender to accept less than the amount owed by a borrower via a sale of the property to a third party.

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Q. What are the advantages of a short sale vs. a foreclosure?

A. While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect their credit rating, at least short sellers avoid having a "debt discharged due to foreclosure" on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to several years to qualify for a mortgage at a reasonable rate.

Short sales show up on a credit report as a "pre-foreclosure in redemption" status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as "discharged." People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months. So, if buying a home is a future goal, then a short sale is the better option for many families.

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Q. My mortgage payments are late and I may be facing foreclosure. Is the Short Sale option available to me?

A. Rose  and Denise understand as a homeowner unable to make your mortgage payment or dealing with the possibility of facing foreclosure can be a stressful experience and an emotionally painful time in your life. If you are currently behind on your mortgage payment? or predict that you will soon be unable to continue making your mortgage payments? You´re not alone; you do have an option.

Rose and Denise will assist you to identify and implement the best possible Short Sale solution helping you to avoid foreclosure. After a thorough review of your situation, we will work your lender to come up with the appropriate solution and we will diligently negotiate to secure a fair and equitable solution with your lender.

Many distressed homeowners simply give up and give in to the foreclosure process, often without being fully aware of the Short Sale option available to them.

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Q. Will the Short Sale cost me anything?

A. There are no out of pocket fees associated with the short sales. The borrower´s current lender usually pays us for the real estate services provided.

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Q. What criteria must I meet to be considered in a "hardship" situation?

A. The borrower will usually need to prove a "hardship" and therefore be unable to continue making payments on the mortgage. A hardship situation is one that is the result of some extenuating circumstance that forces the borrower into a position where they can no longer afford their mortgage payments. While every situation is different, some frequent examples of hardship include:

• Unemployment or loss of primary income source
• Inability to work due to health crisis
• Mounting medical expenses
• Employment relocation
• Failure of business
• Bankruptcy
• Death of spouse or significant other
• Divorce or separation

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Q. What do I need to do to get started?

A. In addition to the homeowner proving hardship, lenders require a specific set of supporting financial documents to consider a short sale. Contact Rose and Denise today and we will help you get started.

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Q. When should I begin the short sale process?

A. Immediately, foreclosure and short sale situations tend to be extremely time sensitive and consuming for negotiations. The sooner we can begin the negotiations with your lender, the greater the chances of a successful resolution. There is no need to wait until the lender sends you a notice of default or initiates formal foreclosure proceedings against you. Time is of the essence!

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Q. What effect will a short sale vs. a foreclosure have on my credit?

A. While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect your credit rating but at least short sellers avoid having a "debt discharged due to foreclosure" on their credit report. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst possible result and will reduce your credit score by over 250 points. You could also have to wait up to three years to qualify for a mortgage at a reasonable rate.

Short sales show up on a credit report as a "pre-foreclosure in redemption" status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as "discharged." People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months. So, if buying a home is a future goal, then a short sale is the better option for many families.

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Q. How long does a short sale typically take to process? May the process be expedited if I am facing foreclosure or an auction date has been set?

A. All short sale situations are unique and follow their own timeline. Typically a short sale is completed within one to four months from the time we have a complete short sale package ready to present to the lender. The timing depends on how fast we can begin negotiating with your lender. If you are imminently facing foreclosure or even if an auction date has already been set, the process can certainly be expedited and we may even have the lender postpone the auction date. Please contact us today for a free consultation with one of our Short Sale Specialists so that we can be of immediate assistance to you.

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Q. Why would my lender agree to a short sale?

A. In most distressed mortgage situations, foreclosure is a last resort for all parties involved. The homeowner and the lender usually want to avoid foreclosure at all costs. That is why a short sale is advantageous to foreclosure and lenders are typically very motivated to pursue a short sale prior to foreclosure.

A short sale gives the lender the ability to cut its losses upfront thereby avoiding the expense and time of a foreclosure and potentially greater losses. Lenders want to make loans; they do not want to be in the business of owning and managing real estate. Whether the lender chooses to go through with a foreclosure or agree to a short sale, they are taking a loss either way, but in many cases they would take less of a loss with a short sale and resolve the matter in a comparatively shorter time frame. In nearly every case, a short sale offers a significantly better return on the lender´s investment than a foreclosure does.

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Q. What is your relationship with lenders? Why shouldn´t I negotiate with my lender directly?

A. Rose and Denise work as independent third-party short sale negotiator. Our experience and professionalism ensures homeowners and lenders that we will be the driving factor of the short sale process.

We firmly believe that just as most borrowers use a professional to initially get into a mortgage, it is in their best interest to do so if they are in the unfortunate position that they need to get out of a mortgage. If proactive, you only get one shot to negotiate your way out of foreclosure through a short sale process, and while it is nearly impossible to negotiate with the lender yourself, it is highly unadvisable. Let our professional team represent you through the short sale process.

Most lenders´ loss mitigation departments are understaffed, and the overworked loss mitigators are usually overloaded with all parties vying for their attention. Unfortunately, the loss mitigator can be very difficult to get a hold of, and when you finally do get through, you have very little time with which to make your case. Furthermore, the added stress of foreclosure in itself makes it difficult for a homeowner to effectively negotiate their way out of foreclosure.

Because we work with all lenders and represent homeowners from all over the area, and since we specialize in loss mitigation, we understand how to collect, prepare, and effectively present the information that lenders require to seriously consider a loss mitigation solution such as a short sale. We have excellent working relationships with the lenders´ loss mitigation departments and we will leverage our network and expertise to help you solve your problem.