CENTRAL INDIANA MARKETHousing industry in central Indiana is making respectable gains. Sales of existing homes jumped 28% New Listings decreased 14.7% Pending Sales are up 13.1% Months Inventory down 12.8 % to 7.6 months Median sales price up .3% over three months
IMPACT ON THE HOUSING MARKETSpeculatorsEasy MoneyLow risk for banksHigh DemandLack of check and balance
WHAT IS A SHORT SALE?A short sale happens when the lender is shorted on a mortgage, meaning the lender accepts less than the total amount that is due. If the mortgage is $100,000, but the value of the home is $90,000, there is a $10,000 short, not including costs to close the sale such as real estate commissions, taxes, recording fees, title and escrow charges.
WHAT IS NOT A SHORT SALEIf the property owner has the funds and pays the difference between the mortgage, $100,000, and actual value $90,000 plus expenses. The seller walks away from the property without any blemishes on their credit.
QUALIFICATIONS FOR SHORT SALEThe Home’s Market Value has Dropped Comparable sales substantiate the home is worth less Unpaid balance may include a prepayment penaltyMortgage is in or Near Default Status Lenders would not consider a short sale if payments were current, this is no longer the case.
ACCEPTABLE SHORT SALES REASONSUnemployment/reduced incomeDivorceMedical EmergencyJob transfer out of townBankruptcyDeath
REQUIRED FINANCIALS Letter of authorization, which lets your agent speak to the bank. Preliminary net sheet Completed financial statement Seller’s hardship letter 2 years of tax returns 2 years of W-2s Recent payroll stubs Last 2 months of bank statements Comparative market analysis
REASONS THAT DON’T QUALIFYBad purchase decisionUnhappy with the neighborsBuying another homePregnancyMoving into an apartment
ARMS-LENGTH AFFIDAVIT Document created by a short sale bank in attempt to prevent sellers from selling to a relative and to curb mortgage fraud. Banks do not want sellers to profit from a short sale.What does it contain Legal address No party to the short contract is related via family or business No hidden terms on purchase agreement Seller can not rent back nor regain title No parties will receive any compensation except for real estate agents.
SHORT SALE PROCESS AT THE BANKBank acknowledges receipt of the fileNegotiator is assignedBPO is orderedSecond negotiator maybe assignedFile is sent for review or to the Pooling Service AgreementBank asks all parties to sign Arm’s Length AffidavitBank issues a short sale approval letter.
POOLING SERVICE AGREEMENTAbout two-thirds of the loans made since 2005 have been securitized. Securitization is a process that involves gathering hundreds of loans into one package and selling that package in the secondary market. Often the purchaser is a trust. Trusts are comprised of investors.After the loans are pooled and sold, the trust hires a service provider to collect monthly payments and distribute that money to the investors. That securitization agreement is called a pooling and servicer agreement or PSA.
HOME INVOLVED IN DIVORCEDetermine Value vs. Amount OwedBroker Price OpinionRequired Documents Prior Closing Documents Mortgage Documents Property Tax Statement HOA Documents List of improvements made to property