What You Should Know About Short Sale
Sometimes the owner of a property is no longer able to pay the mortgage or deed of trust. When this happens, foreclosure often follows -or worse: bankruptcy. But there is an alternative, the short sale.
Short sale is usually the last step taken by the bank to recover losses from a defaulted mortgagor. When lenders agree to a short sale, it means the lender agrees to accept less than the total amount due. They are willing to forgive a certain amount of debt or deficiency. However, not all lenders will accept a short sale or discounted payoffs, especially if it would make more financial sense to foreclose.
That's right, the lender agrees to accept payment that's considerably less than the total amount that's due. Not every bank or lender will accept a short sale -of course it would make much more financial sense to pursue foreclosure and just take the collateral.
To pursue a short sale, consult your real estate attorney if your case is eligible -certain state laws only allow specific values for a loan to qualify for a deficiency judgment in a short sale. Also, consult an accountant, the IRS may consider the unpaid debts as income, affecting your tax records. Also, the borrower is not guaranteed that the lender will not pursue them for the remaining debts beyond the debt already forgiven -an especially good reason to consult your attorney.
The tedious process of securing a short sale is sure to take a very, very long time. 21 days is the usual answer, should you ask the lender. But that's just a minimum, some cases may actually take twice that time to get approved.
Short Sale Strategy Overview
The full process of a short sale will include a contract, an Authorization to Release Information and the addendum. A warranty deed is a tool used in the process. Let's examine the process now, starting with the contract.
The Contract: This can be laid out in a single page, or even 20 pages -any type of generic sales or purchase contract. Should the price be mentioned, it should be followed by the phrase "see addendum".
The Addendum
This is the most important piece of paper in your entire manual! Let's review the Addendum in detail. The first section on the top is just generic information pertinent to the specific property:
Origination of the contract
Date
The names and other info pertinent to the parties involved
The address
It's better if both the simple address and the legal address are listed to avoid confusion.
Any investor, that is, the lenders, should know that in the foreclosure process, there is the opportunity to acquire bargain property -certainly a valid reason to agree to short sale. - 23196
Short sale is usually the last step taken by the bank to recover losses from a defaulted mortgagor. When lenders agree to a short sale, it means the lender agrees to accept less than the total amount due. They are willing to forgive a certain amount of debt or deficiency. However, not all lenders will accept a short sale or discounted payoffs, especially if it would make more financial sense to foreclose.
That's right, the lender agrees to accept payment that's considerably less than the total amount that's due. Not every bank or lender will accept a short sale -of course it would make much more financial sense to pursue foreclosure and just take the collateral.
To pursue a short sale, consult your real estate attorney if your case is eligible -certain state laws only allow specific values for a loan to qualify for a deficiency judgment in a short sale. Also, consult an accountant, the IRS may consider the unpaid debts as income, affecting your tax records. Also, the borrower is not guaranteed that the lender will not pursue them for the remaining debts beyond the debt already forgiven -an especially good reason to consult your attorney.
The tedious process of securing a short sale is sure to take a very, very long time. 21 days is the usual answer, should you ask the lender. But that's just a minimum, some cases may actually take twice that time to get approved.
Short Sale Strategy Overview
The full process of a short sale will include a contract, an Authorization to Release Information and the addendum. A warranty deed is a tool used in the process. Let's examine the process now, starting with the contract.
The Contract: This can be laid out in a single page, or even 20 pages -any type of generic sales or purchase contract. Should the price be mentioned, it should be followed by the phrase "see addendum".
The Addendum
This is the most important piece of paper in your entire manual! Let's review the Addendum in detail. The first section on the top is just generic information pertinent to the specific property:
Origination of the contract
Date
The names and other info pertinent to the parties involved
The address
It's better if both the simple address and the legal address are listed to avoid confusion.
Any investor, that is, the lenders, should know that in the foreclosure process, there is the opportunity to acquire bargain property -certainly a valid reason to agree to short sale. - 23196
About the Author:
Know about short sale an alternatives to bankruptcy or foreclosure only at Don Burnham's website http://www.weknowthewayback.com. Visit today to know all about short sale!
posted by X - Men @ 12:42 AM
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