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Short Sale FAQ - Frequently Asked Questions.
How do I stop foreclosure?
1) What is a Short Sale (Short Pay, Pay
Off)?
A Short Sale is a process where the lender will look at the loan(s)
which you have with them and determine whether or not the house owes more than its Fair Market
Value or has such a small amount of equity that if sold, could not cover the agent or closing
costs. When they determine that to be true they will then consider discounting the loan(s) to
reflect a price which will facilitate the property to sell on the market.
The lender would much rather take a discounted price than have to foreclose on the property and
incur all of the costs of a foreclosure and then have to sell the house at auction. This is a very
time consuming and costly process for the lenders and they will try to avoid it at all costs.
2) What is
HAFA?
Initially announced on May 14, 2009, with guidance and standard
forms issued on November 30, 2009,
the program will help owners (referred to below as borrowers)
who are unable to retain their home
under the Home Affordable Modification Program (HAMP).
Also see HAFA FAQ
A borrower (the current owner) may be able to avoid a
foreclosure by completing a short sale or a deedin-lieu of foreclosure (DIL) under
HAFA.2) Getting Short Sale Help When is the best time for me to start
the process for my Short Sale?
It is best to begin the Short Sale process as soon as you realize that you have an unaffordable
payment for your budget; you know that your loan owes more than the ‘Fair Market Value’ and cannot
sell for what you currently owe; or you have little equity in the property which won’t cover the
realtor, closing, or any other associated costs that you need to cover in order to sell the
property.
3) Why would my Lender
want to allow a Short Sale to help me?
It’s simple really. Often a short sale has a far better return on an investment to the lender than
a foreclosure. The average savings a lender sees from a short sale property is far higher than the
savings of a foreclosure property. Not only does the lender receive higher savings when they allow
a short sale, they also get paid on the loan 6 months earlier than in the foreclosure process. This
allows them to collect and cash-out earlier than they would if they foreclosed on the property. Not
to mention the costs the lenders have to pay their attorneys to complete the foreclosure process.
Lenders created the short sale process as an alternative to foreclosure for those reasons. It is a
win-win situation for the banks to allow short sales. They do not look at this as helping you, they
look at it as a positive solution to a very costly and time consuming issue.
4) How long does the process usually take once I get Short Sale
Help?
The entire process of a Short Sale generally takes 30 to 180 days (1 to 6 months). Some lenders
take as little as two weeks, some over six months. The only way to know is to start the process.
All situations are unique and therefore we cannot guarantee a specific amount of time.
5) What is the difference on my Credit between a Foreclosure and a
Short Sale?
A Foreclosure will show as A Foreclosure or A Debt NOT PAID. It is a very negative mark on
your credit that can stay there for up to seven years! A short sale will show as - Debt Paid
or settled. It is a much better mark and will make it easier for you to get credit in the
future. Please consult one of the three major creditors for further explanation.
6) What is a Deficiency Judgment?
A Deficiency Judgment is what can happen if the bank sells a house in a foreclosure sale
auction. The bank has the right to sell the house for an amount less than the debt owed and
all other fees they may have. If the house sells for less than the mortgage debt, then a
Deficiency Judgment can be placed against you. By this you will be held responsible for the
portion of the loan that was unpaid. Example: Initial Mortgage Loan of $400,000.
The bank collects $300,000 at a Foreclosure Auction. A Deficiency Judgment is placed against
you for $100,000 which is the difference. If this is placed on you it will also show on your
credit along with the Foreclosure. Once this is placed as a judgment against you the lender
can proceed with further legal actions and garnish your wages to collect on the debt. Some
states have regulations and restrictions on Deficiency Judgments, but unfortunately MOST DO
NOT.
Once again, this is where our presence in a short sale negotiation is invaluable as we will do our
best in negotiating with the lender and try to get them to agree on a “release” and “satisfy”
position.
If you are doing athe HAFA program, where all lenders agree to participate,
the Deficiency Judgment will not be pursued.
7) Why hire an experienced professional to give
you short sale help?
Home Solutions in Utah's knowledgeable staff are experts at short-sale proceedings and believe we
are a viable solution. We are here for you with answers. We want you to feel confident that you are
making the right decision for your specific situation. We work with all our clients in top
confidentiality, integrity and thoroughness. You will feel confident with us by your
side.
8) Do I need to sign a Power of Attorney when processing a Short
Sale?
NO! At no time should you have to sign a power of attorney to process a short
sale.
9) Can you negotiate a Short Sale when a home has more than one
mortgage?
Yes. The process is the same regardless of the number of liens. In fact most short do
involve more than one mortgage.
10) Can you guarantee that my short sale will be
successful?
No, but we can guarantee that we will do all that is required to complete a successful short
sale. Unfortunately we cannot guarantee what the lenders will make as their decision.
At Home Solutions in Utah we know what the lenders require and are looking for as a discounted
price. This makes our success level much higher.
11) Where can I get help with a short sale
in Utah?
We can cut weeks, even months off the Short Sale process.
Whether you are a Buyer or a Seller you need to make sure you are working with Real Estate agent
that has the experience and knowledge to keep you safe and shorten the length of time it takes
to complete this process.
We hope these Short Sale FAQ have helped. If you are a Seller, you can get Short Sale
Help here. If you are a buyer, contact one of our Experienced Buyer’s Agents to help
you through this process.
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Short
Sale FAQ