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Posted by Carol-Ann Palmieri & Al Mussi on 5/8/2018

“Short sales” may have one of the most deceiving names in real estate. Any client who is undertaking the purchase of a short sale property will ask, “Why is this taking so long?” Short sales generally happen due to lapsed payments on a mortgage. In the short sale, the owners take a loss on the property, but it saves them from being foreclosed on by the bank. Many of these sales are circumstantial by divorce, or a sudden change in job. The seller asks the bank to take less money than the amount owed on the house in a short sale transaction. 


If You’re Buying A Short Sale Property


If you have made an offer and the seller accepts it, your dealings are far from over in a short sale. The seller’s bank needs to approve the sale. Since the bank is losing money in the deal, this is where the hold up can be in the entire transaction.


The First Step


The seller’s bank must review the short sale package first. The seller needs to submit a complete picture of their finances to the lender. The seller’s credit score will also be reviewed. A bank would not approve a short sale if, let’s say, the seller happened to have a lot of extra cash just sitting in a bank account. The lender needs to protect themselves.


The listing agent should be on top of all of the paperwork that should be done in order to have the transaction approved. As a buyer, you’ll appreciate a good short sale listing agent. 


Make Sure Everything Is In Order


There’s a lot of paperwork to sign in order to get a house. There’s even more paperwork to sign in order to secure the purchase of a short sale. If just one page of the documents are missing or one signature is left unsigned, the entire process can be slowed down even more. As a buyer, you should confirm that all the required documents have been signed and received. 


Another problem that can occur is that documents quickly become outdated. Bank and other financial statements are a good example of this. By the time paperwork is ready to go through the lender, last month’s bank statement could be completely outdated. The lender will then need an updated statement, holding up the process even more. The seller and agent need to be ready for these circumstances. The faster the lender is responded to, the smoother the process will go.          

 

Remember You’re Working With Two Banks


When you’re purchasing a home that’s a short sale, you’ll need to deal with two banks- your lender and the bank handling the short sale. Be mindful of the timelines that each bank has. If you aren’t, you could be approved hours too late to buy the property, leaving you and the seller to start from scratch. 


Buying a short sale is risky because there is always a greater chance the sale will fall through or succumb to foreclosure due to some kind of circumstances beyond the buyer or the seller’s control. If you have the right realtors on both sides of the table, the process of buying a short sale should go as smoothly as can be expected.      





Posted by Carol-Ann Palmieri & Al Mussi on 4/28/2015

When a homeowner first buys their home foreclosure is probably the furthest thing from their mind. Today’s economy has forced millions of homeowners into a potential foreclosure situation. There are many reasons why people go into foreclosure. Some of those reasons include:

  • Job loss
  • Unexpected death, illness or medical emergency
  • Adjustable rate mortgage increase
  • Unexpected home maintenance expense
There are ways to avoid foreclosure. The best way to avoid foreclosure is to prevent the filing of a Notice of Default. If a home owner knows they are unable to pay their mortgage they should immediately call their lender. Lenders do not want to foreclose. They may be willing to work with the home owner but it is important that the home owner doesn’t ignore contact from the lender. The lender may propose several options:
  • Forbearance
    • Lenders may agree to a repayment plan before taking legal action
  • Debt Forgiveness
    • Very rarely the lender might give you a break and waive your obligation.
  • Repayment plan
    • The lender may agree to spread the payments out over a longer loan term.
  • Modification
    • In some cases, the lender may agree to freeze the interest rate of an adjustable rate loan or extend the amortization period.
  • Refinance
    • Adding payments to an existing loan balance may be an option if the homeowner has sufficient equity and meet the lender’s guidelines for refinance.
  • Partial Claim
    • Certain government loans may contain provisions that allow the homeowner to apply for another loan to pay back missed payments.
Preventing the Notice of Default filing is the best way to prevent foreclosure. If none of the above options have worked there are still some options a homeowner can leverage. Once the Notice of Default is filed, the homeowner only has a small time frame to reinstate the loan by bringing the payments current and pay the costs of filing the foreclosure. If you are unable to make up the payments you still have a few options:
  • Sell your home
    • If you have equity in your home a quick sale is probably the best option at this point. Your home will need the best exposure and marketing to achieve the quickest sale possible.  A full marketing plan and the proper price positioning should get your home sold in time to avoid foreclosure.
  • Attempt a short sale
    • If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale is when you sell your home for less than what the amount owed.  A short sale will affect your credit rating but not as bad as a foreclosure. A short sale is negotiated with the lender.
  • Deed in lieu
    • The homeowner deeds the property back to the lender by giving the lender a properly prepared and notarized deed, and the lender forgives the mortgage.
For more information on how to prevent foreclosure visit the U.S. Department of Housing and Urban Development site to Avoiding Foreclosure. http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure