The biggest disappointment of the housing collapse has been those homeowners that lost their home through foreclosure. These families went in with good intentions and had their dreams shattered due to faulty loans, lost jobs or crumbling home prices. Those homeowners that had their home repossessed by the bank, had their credit destroyed and a loss of dignity. Given a choice, these families might never want to or be able to buy a property again. There are options for any homeowner facing the prospects of a possible foreclosure. Loan modification is one avenue, sell your home for market value and pay the difference, but the best alternative is a short sale. A short sale is defined as an outstanding loan obligation against a property that’s greater than what the property can be sold for.
Every short sale is handled differently depending on the individual bank or banks involved. A large number of owners take out a first loan and a second loan for down payment purposes. If the first and second are being financed by the same bank or mortgage company, the short sale is much less difficult. Short sales are not guaranteed and each case will be judged as a separate entity based on the sellers hardship. Short sales that are approved can take four months or longer. Here’s the protocol to achieve results and expedite the process.
Find A Realtor: An experienced short sale agent will be a valuable asset as a counselor, negotiator, mediator and advisor. Your realtor will wear many hats during this stressful situation and you get his expertise at no cost. The negotiated commission is paid by the bank.
Contact Your Lender: Proceed with the knowledge that you will have to make numerous phone calls before speaking with the supervisor that can actually make decisions. Make sure you keep records of your conversations and who you spoke with. This supervisor will not make a decision on the short sale approval at this time. They will inform you of what is expected to eventually get approval.
Authorization Letter: Lenders will need your written permission to have the realtor negotiate on your behalf. This letter should include the realtors company and name. All correspondence should have your name and loan number. With the large number of short sales being processed, don’t be surprised or frustrated that paperwork is lost or misplaced by the short sale department. Confirm receipt.
Hardship Letter: The letter will describe your hardship and is basically a plea to the lender to accept less than full payment. Honesty is the best policy. Lenders have become more sympathetic to the economic blight many homeowners find themselves in.
Documents Required: The same documents required to buy a home are the same they need to determine your eligibility for the short sale. Proof of income and all assets. Copies of bank statements including any retirement accounts and stocks in your name and taxes over the last couple of years.
Realtor Requirements: A comprehensive market analysis showing an estimate of value. This is a factual estimate substantiating the reason you can not pay off the loan in full to the lender. A listing agreement signed by both seller and their agent and a purchase contract with an agreed sales price signed by the seller and buyer. An itemized net sheet showing fees and cost associated with the sale are required with the accepted offer. Lenders will then decide what if any fees, repairs or cost they will pay. At this point is when the lender will approve the short sale. Both foreclosures and short sales have an adverse effect on your credit, short sales to a lesser extent. There are documented cases of short sale participants buying another home within two years. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.