Get Rid of Your Underwater Home - Once and for All
What types of hardships will the lender consider?
Typically, we see the banks approve short sales when a hardship falls into one or more of the following categories:
Some examples of these types of hardships include:
- Job Loss
- Death of a spouse
- New baby
- Job loss
- Illness/ and or disability
- An accident that caused you to be out of work
- Failure of a business
- Severe loss from litigation
- Job relocation
- Family member illness or aging parent that you need to care for.
We do not know for sure what a bank will consider a hardship or not. What we will do for you is advise you on our extensive past experience and diligently, aggressively work on your behalf to get the best resolution for you and your family.
Should I just give the keys back to the bank?
Only if you want to pick the worst choice in a bad situation. With a foreclosure, your credit will be severely impacted, security clearances can be challenged, your ability to finance ANYTHING in the future will be challenged, and the debt owed will not go away.
How are short sales different than bank owned properties?
A short sale property is being sold by a seller that is upside down on their mortgage, has a valid financial hardship and needs to sell. In other words, it is still owned by the homeowner. The sale of a short sale is contingent on the home owner's lender approving the sale for a deficiency. A bank owned property - you guessed it - has already been foreclosed on and is owned by the bank.
What are the tax implications of a short sale?
As we are not an accountants, we will guide you to the IRS to answer this question. You can find out more information by checking out the Mortgage Forgiveness Debt Relief Act. You will find when you read the guidelines, that if it is your primary residence, you probably have no tax consequence. Be sure to speak with your tax advisor to get clarification for your specific situation.
Will a short Sale effect my credit rating?
It will impact your credit score, but not nearly as devastating a foreclosure or bankruptcy. If you are upside down on your mortgage, have a valid financial hardship, and need to sell, you are not in an ideal situation. A short sale is probably your best choice in this scenario.
Should I pay my HOA or condo dues when doing a short sale?
We recommend to always pay your bills to the best of your ability. In regards to HOA or Condo fees, we absolutely suggest that you pay them. We suggest this because, the association could place a lien on your property and cause more problems. Also, if an association has many delinquent owners, it will make it very hard for ANY buyer to obtain financing for ANY home in your community.
Often, the fees and dues owed to an HOA or condominium association are manageable for an owner to pay. If you have a choice on what to pay first - pay these dues
Can I profit on a short sale?
Nope. Think about it. If you loaned someone a quarter a million dollars or more and they negotiated to repay you less and you accepted because you would be in a better position than if you took the collateral for the loan back, would you allow for that person to profit?
What documents must I get together to do a short sale?
You must provide:
- Hardship letter
- Agency letter (Real estate agent can't communicate with the bank on behalf of the seller)
- Financial statement
- 2-years of tax returns
- 2-years of W2s
- Last 2 payroll stubs
- Last 2 months bank account statements
- Recent comparable sales list / property estimate
When does a bank not approve or accept a short sale?
A bank often rejects a short sale because they do not receive the complete short sale package from the listing agent. When listing your home as a short sale there is paperwork required from the bank to do a short sale additional to a standard listing agreement. Your short sale listing agent should be knowledgeable of what paperwork that the bank requires to do a short sale and guide you through the process of gathering documents and filling out forms. If the short sale packet is incomplete, the loss mitigator probably will not even look at the file.
Often, it takes many attempts from the listing agent to submit the packet because the bank does not have efficient systems. The short sale listing agents job is to be sure that the paperwork is received. This sometimes takes MANY attempts and almost always requires perseverance, dedication, and persistence from the short sale listing agent and their team.
The short sale process can be a frustrating and long process. If you have attempted to do a loan modification on your own, you likely know the frustrations of trying to get this done. The way to improve your odds of success in a short sale is to work with an experienced short sale listing agent.