The short sale

The Short Sale: A Seller’s Guide Compliments of: John Mazzara, Broker Associate

Mortgage Problems?
Are you facing the threat of possible foreclosure?
Has the value of your mortgaged property fallen below the price your originally paid?
Can you no longer afford your monthly mortgage payments?
There is hope in this difficult & stressful time. You may be in a position to consider a Short Sale .

What is a Short Sale?
This is a sale of property in which the proceeds of the sale are less than what is still owing on your mortgage with the Bank
The entire proceeds from the sale of the home are turned over to the Bank
The Bank makes the final decision to accept or decline any offers made on your home
The Bank may close the book on your outstanding debt
For Homeowners in the U.S. This is the official site: www.makinghomeaffordable.gov/ 7-9million Homeowners are eligible for this plan

Do I Qualify for a Short Sale ?
You must answer YES to these 4 requirements:
The Market Value of your home has dropped (requires documentation to support)
The Mortgage is in default or potential default
You are experiencing Financial Hardship (submit a Letter of Hardship to the Bank)
You, the Seller, has not other Assets

Financial Hardship Defined
A Letter of Hardship has to be submitted to the Bank that includes the following:
Why you can no longer pay your mortgage
Why you will not have the funds to pay off the balance remaining from the short sale (see below)
Example: Mortgage Balance $120,000
Short Sale -$ 80,000
$ 40,000 owed
E xplain why you can’t pay the balance

Examples of Financial Hardship:
Lost your job and currently unemployed
You are experiencing a medical or health emergency or a sudden illness
Recently divorced
Your spouse passed away

Important Points about Short Sale:
To qualify for a short sale, a Buyer must make an offer to purchase your home
The Bank has a right to reject the Short Sale
If assets are identified, this may impact the terms of the short sale

The Short Sale Process
You it is very important that you understand this process:
Know who owns your Mortgage (the Bank is a loan server) Ex: Fannie Mae
You sign a listing agreement with your Realtor before selling a Short Sale with third-party approval
Your Realtor finds a Buyer who makes an offer for less than the amount you owe on your mortgage
You accept the Buyers purchase offer
You & your Realtor prepares a Short Sale Package to fax to your Bank
You sign a Borrower’s Authorization Form, allows Bank to release
info

The Short Sale Process cont’d
The Short Sale Package is assigned to a Loss Mitigator, who works with the Bank and communicates with your Realtor
The Loss Mitigator is a third party participant, who’s role is to design the best financial deal possible for the Bank in an effort to keep their losses as low as possible
The Loss Mitigator determines if you qualify for a Short Sale
If you qualify, the Bank will request a third-party Interior BPO (Broker Price Opinion) or a full appraisal of your property. (You do not have to pay for this)
To determine the amount of equity, the Bank assigns a Real Estate Broker to submit a BPO report. This includes: real estate market info, an analysis of the neighborhood & comparable prices of similar
homes in your region to detmine Current Market
Value

The Short Sale Process cont’d
5. The Bank will make a decision on accepting the offer and the Short
Sale
Note: In the meantime, your house will keep listed for sale. In some States, they Buyers are not locked into purchasing the home until the Bank actually signs off on an offer. A realtor can generate multiple offers. This gives the Bank a wider selection to choose from, that may increase the chance of the Bank accepting and approving one of the offers .
6. Once the Bank signs off on the Short Sale, the process reverts back into a typical house sale
7. The transaction will close when the Buyer delivers the funds, the Bank
releases the lien on the property and you, the Seller delivers the deed
8. The Bank now releases you from your outstanding mortgage!

Understanding the Short Sale Package
You are required to submit this to the Bank. The purpose: show the financial hardship & unable to pay the mortgage or the outstanding balance between the short sale & the balance
This can vary according to Lender, but includes:
A Cover Letter : Loan number, social security number, foreclosure date if applicable, name and contact info, property address, name and contact info of your Realtor & the contents (additional info in this package)
Letter of Authoriazation: authorizes the Bank to release info to your Realtor

3. Purchase & Sales Agreement: You must have an agreement completed before submiting to the Bank. This agreement sets the terms of the sale. (The final Sales Agreement will be drawn up after final negotiations)
4. HUD-1 Settlement Statement: This is an estimate only. Shows the Bank you will not profit from the sale
5. A Financial Statement: Shows the Bank, that you, the Seller are financially unable to make further mortgage payments (Must be updated every 30 days)
6. A Hardship Letter: A letter you write to the Bank
explaining your circumstances (financially) 1
to 2 paragraphs

7. Last 2 Years Tax Returns
8. Last 2 Paystubs (update every 30 days)
9. Last 2 Bank Statements (update every 30 days)
10. Repair Estimates: Consider getting a Home Inspection done. This shows the buyers the state of the home. Submit a list of known repairs to the Bank, along with estimates on the cost of completing the repairs

Behind the Scenes
Your Realtor needs to know the name of your Loss Mitigator & their contact info, do not fax your Short Sale Package without the appropriate follow-up
A Loss Mitigator works on hundreds of cases at once. This increases the risk of misplacing documents!
Your Realtor will develop constant contact to ensure the documents & other requirements are received and being processed
This is a lengthy process – Be Patient

Delays in Short Stays
Reasons a Short Sale delays:
Offer price is too low
The Short Sale Package is incomplete
The Seller does not qualify
The Buyer does not qualify
Poor communication between the Seller, the Realtor &/or the Bank

Thank You for reading our complimentary guide, contact me for a Free consultation if you are interested in pursuing if you qualify for a Short Sale

http://www.foreclosure.mn	36
http://www.foreclosuresminnesota.net	14
http://www.slideshare.net	13
http://www.minnesotaforeclosure.org	13
http://www.mnshortsale.org	10
http://www.twincitiesreosales.com	6
http://www.reo.mn	5
http://www.minnesotashortsale.net	4
http://www.houseshortsale.net	2
http://www.foreclosuresmn.com	2

The short sale

by John Mazzara on May 27, 2010

Accessibility

Categories

Upload Details

Usage Rights

10 Embeds 105

Statistics

The short sale — Presentation Transcript