What is a short sale?
I try in this blog to reach out to and deliver to the public , who may be looking for information, material that may prove useful to them. However, sometimes it is a challenge to try to verbalize the information in a manner that is easy to read and to comprehend. Writing proves to be a difficult challenge for your truly.
Sometimes, rather than reading about something, it is much easier to absorb the information by watching a video. Fortunately, the CDPE organization has published some videos which are short and to the point. Since they have made the effort to produce these little gems, I feel it is only right that I share them with my readers. Enjoy.
This first one answers the question: what is a short sale?
Fighting foreclosure requires custom tailored strategy; there is no off-the-rack solution.
As the San Jose short sale specialist, I get emails from anonymous people who find me on the net here in Silicon Valley. They want to know if they can do short sale. They give me a few lines. ”I’m upside down…….” ”I don’t know if I really have a hardship…….” ”I borrowed $xxxx but owe $xxxxx…….” ”Can I do a short sale?” Really, that is the extent of the email.
Maybe it is because we have been raised in the instant gratification mode for too long, but these emails I get all want an answer now, or yesterday because they are in a tight situation and are worried. They don’t want to talk to me or for me to ask questions. I truly understand the pressure and stress people in this situation suffer from because I talk about it with so many of my clients, but there is a protocol and procedure to how theses things work.
When I write back that I need to sit down and talk in person so that I can get a better determination of what is at the heart of their inability to pay and what is truly at issue, they get mad. They question my ulterior motive and question why I am trying to dig personal information out of them and refuse to answer their question and help them out. I try to explain that is not what I am doing; I need to understand their situation so that I can create a narrative for the lenders to understand and for them to want to approve the short sale, if they qualify. If you can’t/won’t take a few minutes out of your day to explain to me why you cannot pay, then I cannot successfully plead your case to your lender. The more you share with me, the better I can create that narrative on your behalf. Each short sale approval is different because each person’s financial situation and their hardship is different; there is no universal solution, despite what some may claim.
People who have read some things here and there on the Internet seem to believe that getting a short sale approval is their right. I hate to tell you, but you have to qualify for a short sale; it is a privilege and not a right.
Listen, I really do understand the stress and the sleepless nights you are going through from the fear of losing your home and the sense of shame that comes with such experiences. I am committed to helping everyone I can, fight foreclosure. I am willing to commit time out of my day to sit and talk with you. I will tell you if I think you do not qualify. But you have to show me the same level of commitment; afterall, it is your home that is at risk, not mine. Sit down and talk to me, or talk to someone else, but take the time to discuss your case with some specificity if you want a customized strategy to fight foreclosure. We need to find out things like whether you are on a path to dual track foreclosure if you were working on a loan modification, we need to know if a Trustee Sale is right around the corner and you don’t even know.
It is because people are in desperate situations and want to simply hear what they want to hear without having to share “personal” information, that they often fall prey to people who want to take advantage by making guarantees or incredible solutions.
Folks, take a few minutes out of your busy schedule to learn if someone can really help you fight foreclosure. Believe me, it will be worthwhile.
Foreclosure is not your only option. There are other alternatives favored by the government which are less damaging and more beneficial for most homeowners.
What exactly is a Short Sale?
Simply put, it is when you sell a home for less than what is owed on it with the lender’s approval and the lender forgives you for the difference (what is short) between what is owed and for what it ultimately sells. The Federal Government is now pushing for this option for homeowners who are unable to obtain loan modification and offering lenders financial incentives to permit homeowners to choose this route.
Why would the lender agree to do this?
Money. It’s always about the money isn’t it? Typically, it is cheaper for the lenders if the house is sold prior to getting into foreclosure and being sold at auction. There are costly expenses associated with foreclosing on a home (aside from the fact that owners who are going through foreclosure typically destroy the homes before they are evicted); but with short sales, it takes less time (meaning less carrying cost for the lender) and makes more economic sense for lenders if the homeowners have an interest in and participate with the lenders in selling their homes, rather than fighting with them. The lender saves money because they don’t have to pay for eviction, go through an auction only to have to take the property back because the auction did not meet their floor price or no one attempted to bid, make repairs and then pay Realtors to sell it as a bank owned (REO) property which typically gets deeply discounted by buyers anyway, in the meanwhile, still paying for taxes, insurance, association fees, etc… that the seller failed to pay. A home where the seller still resides and maintains will fetch a much higher selling price than an abandoned eye-sore type of property.
Why would it be good for the seller?
It allows them to have control over their economic future and sense of dignity. Let’s face it, if you are contemplating foreclosure, that means your financial situation will not be changing for the better in the immediate future. Don’t let others dictate your financial future; get involved and control and participate in your own financial outcome.
The most important facet to the short sales process is that it permits you to have control over your financial future. If you are forced into a foreclosure situation, your credit score will be devastated as you had no participation with the lender to help address the situation. The net result will be more devastating than bankruptcy from the Fannie Mae Underwriting Guideline point of view and you will not be able to buy a home or apply for a credit card for many years; additionally, now more and more employers are doing credit checks on prospective new hires and a foreclosure on your credit history may put you in jeopardy, especially if the job requires security clearance status, is a government position or involves handling of money. If you choose to take control and complete a lender approved short sale, you will be able to salvage your credit by more than halving the seasoning requirments (only 2 years) for Fannie Mae Underwriting Guidelines for re-establishing credit and give yourself the opportunity to be in a situation to buy a home again in a relatively short time. Naturally, individual sitautions will vary in results.
Who pays for the commission?
Because you are facing financial difficulties, the lender is required to pay for the commission and associated closing costs for completing the short sale. On top of that, if this it is a HAFA approved short sale, you may be entitled for up to $3,000 in relocation expenses to help you move out and find another place to live.
Time is not on your side, please take action.
